He obtained a Law degree from the University of Santiago de Compostela and a Sacred Theology degree from the University of Navarra, later earning a Doctorate in Sacred Theology and in Law from the same institution. In 1989, he passed the competitive examinations to become State Attorney and Legal Advisor to the Council of State. Since 1993, he has been dedicated to business law and founded the network COELLO DE PORTUGAL ABOGADOS. Over two years ago, he joined BACS to promote an Arbitration Court. Today, we learn more about his career and knowledge through the following interview:
Could you explain how a jurist of your experience, and a member of the Council of State, leads such an innovative project as BACSIT, an International Arbitration Court specializing in Blockchain and Crypto Assets?
When Cole Porter was asked about his inspiration, he would say: “the call of the Producer.” That’s what happened to me. The “Blockchain Arbitration and Commerce Society” knocked on my door asking if I could promote a specialized Arbitration Court for blockchains, and I said yes.
Is the team leading the Court highly competent and authoritative? There are very prominent profiles from Portugal, Switzerland, Germany, Spain, Singapore, and the United States. Do you believe this institution provides the “auctoritas” desperately needed in the crypto assets sector?
Holders of tokenized assets favor “peer-to-peer,” which offers great freedom but also opens the door to wrongdoers. Not in the blockchain itself, but in the use of blocks as exchange assets for illicit purposes. So, we’re in the wild west. Since the asset is very valuable and adds productivity in exchange far beyond any expectation, it is essential to civilize the activity by applying the rules of the city, not those of the underworld. For this, rules alone are not enough; auctoritas is necessary. The State is not required. The State is the despised potestas, not the renowned auctoritas. Without auctoritas, it is useless to create an arbitration court, where freedom from power, including judicial power, is axiomatic. So yes: BACSIT brings a lot of auctoritas. Moreover, I would say it is its main asset because in the almost immediate peer-to-peer world, we do not focus on arbitration or mediation but on the IEJ, Independent Expert Judgment. It is an idea by Pepe Merino that will be very influential. It will soon be a standard in this industry.
Following the previous question, the regulations for arbitration, mediation, and independent expert judgment incorporate anti-money laundering policies. It seems very appropriate for an International Crypto Asset Court to include these measures. What do you think?
It is essential. No matter the asset, if it is used to launder criminal activities, the asset becomes tainted, turning toxic, and that’s exactly what we want to avoid. The crypto world needs the speed and confidentiality of the IEJ, but also the cleanliness of the transaction. Criminal transactions are null and void by law. In a peer-to-peer system as well. It is necessary for each blockchain to incorporate the technology needed to ensure this. There is no need to centralize the asset. What is needed is to respond with justice, certainty, and speed. That is why BACSIT was created.
Do you believe we are witnessing a legal transformation with the emergence of the Internet, blockchain, and crypto assets?
Blockchains, especially those like Ethereum (tokenization of physical assets), and of course NFTs, have already surpassed current commercial realities. In the 21st century, it doesn’t matter if you trade a physical asset or its token, with the difference being that the certainty of the transaction and the speed of exchange are incomparable. Tokenization allows for productivity that will exponentially increase trade. Today, a shipment can be traded a thousand times before it reaches its destination with a third-party guarantor. With tokenization, the same is achieved, always faster and without a trusted third party. Trust is in the system. The transaction may not be legitimate, but it is completed. Whether it is legitimate or not is another matter.
BACS is an association that promotes the use of blockchain technology and crypto assets among commercial enterprises. Do you believe we are witnessing a new era in business, primarily international commerce? Should companies be aware of the advantages this technology can bring them?
There is no new era in business, but there is in the way transactions are structured. The monetary asset is changing (patterns like bitcoin), and the way of trading (tokenization, or securitization, as you may call it) of physical and electronic assets is evolving. Commercial law will significantly evolve to account for these new credit instruments. Just as there was a Uniform Law of Geneva, there will be one on tokens. It will emerge from reality, not the other way around. Companies will adapt on their own once they see the advantages. It won’t take long. Schumpeter is always right. With new forms of productivity, entrepreneurs will emerge who will achieve wealth. Let’s hope, however, that politicians leave us alone. Public law only wants to control, not produce, and is usually designed by fools. Countries that adopt DeFi patterns will be free. Those that centralize will also be more oppressive. Read and reread Nakamoto’s “Bitcoin: A Peer-to-Peer Electronic Cash System.” The essence of the matter is not in cryptography. It is in Peer-to-Peer. That is the essence of freedom. It is not about hiding anything. Encryption is necessary for the functioning of the chain. The electronic money system lies in the community that dispenses with a central authority. It is not rebellion. It is another way of organizing society. Companies are not outside of society. And it is in freedom where money is found. In the State, there is only the Treasury. There is no productivity. There is no creation. Only the distribution of what is created.
Do you not think that for a company, being able to use these new technologies and have the support of an International Arbitration Court adds a layer of security and legality?
It is a necessity, pure and simple. Behind every token, including monetary ones like Bitcoin, there is only technology. But underlying the token is the business, which is legal, not technological. An example: a tokenized shipping container can be traded in two ways: with “old-fashioned” bills of exchange or with tokens. Both worlds can have dysfunctions: fraud, double sales, errors, penalties, interests, executions, deterioration, losses… The law is there to solve these problems, not just the technological ones. They come with the token. Because the valuable asset is not the token, but what the token represents. That’s where the law is, where it has always been. It’s commercial law. The merchandise travels protected by a contract. As Professor Íñigo Navarro Mendizábal, who was the Dean of the Faculty of Law at ICADE, says: “the first piece in the construction of an airplane is not a blueprint: it is a contract.” The same applies to everything. The law travels with the merchandise.
The Arbitration Court includes smart contracts for its executions. Being able to execute arbitral awards without going to a judge seems like an unprecedented change. How do you evaluate this?
The term “smart contracts” is misleading. They are neither “smart” nor “contracts.” They are programs that execute a pre-established contract based on the fulfillment of pre-established milestones. As these automatic execution systems for awards are incorporated into Court regulations, the intended goal will be achieved, going far beyond ordinary jurisdictions. The so-called “smart contract” allows those who submit to the jurisdiction of a Court to dispense with the judge not only to determine the applicable law but also to execute the award. This is what those who use blockchain want and, therefore, what they get. If judges don’t like it, there’s nothing we can do. Remember that judges are even more protective of their intervention than politicians. They think they are indispensable, but they are not. They are public servants. Quite slow ones, by the way. Both in procedure and in execution. Ordinary judgments and executions do not fit in the blockchain world because of their sublime inefficiency. Go to any court and you will see.
