The State Duma adopted a draft law on digital rights at the 2nd reading

The amendments to the Civil Code define the basic concepts of digital rights, protect transactions on the Internet, and also regulate the issues of smart contracts.

These innovations in the Civil Code establish several basic provisions that give the opportunity to legislatively regulate the market of new digital objects of economic relations that have not been previously regulated. In particular, the norms on digital rights have been significantly changed; the provisions on the form of the transaction have been clarified; the provisions on digital money have been excluded. The digital rights have been defined as special “obligations and other rights, content and conditions, the exercise of which is determined in accordance with the rules of the information system that meets the criteria established by law.” Implementation, disposal, including transfer, pledge, encumbrance of a digital right by other means or restriction of disposal of a digital right are possible only in the information system without recourse to a third party.

Establishing the concept of the “digital right” in the Civil Code will determine its place in the system of civil rights objects, allow for the trade of this object, including acts of purchase and sale, as well as provide protection for citizens and legal entities in transactions with digital rights.

The draft law also improves the rules on the form of transactions, including concluding contracts, to facilitate the execution of transactions with digital rights. For example, it equates expressing by an entity of its will using electronic or other similar technical means with a simple written transaction. At the same time, the Civil Code of the Russian Federation establishes that it is possible under only two conditions: the technical means used for the expression of one’s will must allow the content of the transaction to be reproduced on a tangible medium; only technical means that reliably identify the person who expressed the will can be used. Special methods (biometric identification, etc.) will be necessary in cases expressly directly provided by the legislation, other legal acts and agreement of the parties.

In addition, the changes introduce certainty in the use of "self-executable" transactions – the so-called Smart contracts. A Smart contract is not considered a separate transaction – it is only a condition about the automatic execution of any civil law agreement (purchase/sale agreement, lease agreement, contractor's agreement, etc.) ease, contract, etc.). At present, such agreement terms are common in the banking sector — for example, when a client instructs a bank to write off fees in the mode of auto payment. They are also widely used in e-commerce. The amendments to the Civil Code provide for the parties to fulfill their obligations when certain circumstances occur with the help of information technology. In other words, the information system will independently execute the transaction, and the person who buys a certain virtual object will receive it automatically upon the occurrence of the circumstances specified in the agreement.

The draft law also resolves the issue of legalizing the collection and processing of large amounts of impersonal information (“big data”). To this end, the new article 783.1 of the Civil Code of the Russian Federation introduces the form of an agreement on the provision of services to provide information. It establishes that the agreement may provide for the obligation not to take actions the consequence of which could mean disclosing information to third parties.

“The adoption of the draft law will establish the basic norms of the Civil Code and create the foundation for the further development of legislation in the field of the digital economy. Introducing the basic concepts of digital objects to the Civil Code will create a legal environment for making transactions in the digital environment, and will provide protection to citizens and organizations during such transactions,” said the Deputy Minister of Economic Development of Russia Savva Shipov.

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