Smart and Computable Contracts
Most of Clack's research since 2015 has been in the area of Blockchain and Smart Contracts. The focus has been especially (but not solely) in the area of smart contracts for long-lived high-value financial derivatives: (i) Smart Contract Templates, (ii) analysis of the semantics of legal contracts, and (iii) Computable Contracts. The latter work on Computable Contracts has evolved from close engagement with lawyers and an increasing understanding of the interplay between legal agreements and smart contract code.
- Smart Contract Templates enable smart contract code for financial derivatives contracts, and Clack's research, in collaboration with Braine and Bakshi at Barclays Bank, has strongly influenced the design of the R3 Corda architecture and led to three “Smart Contract Templates” international conferences jointly organised by R3 and Barclays. The slides for the first two summits can be found here:
The first two research papers on Smart Contract Templates have already attracted over 170 academic citations by researchers from over 40 countries, together with many industry citations (e.g. from leading law firms and financial services institutions worldwide such as Linklaters, King & Wood Mallesons, and the US Depository Trust & Clearing Corporation). Much of Clack's research has focused on analysis of the standardised contracts for financial derivatives issued by the International Swaps and Derivatives Association (ISDA).
- Semantics of legal contracts. Smart Derivatives Contracts support autonomous performance of derivatives contracts; not simply to automate payments and calculations, but also to automate the deontic aspects of the legal agreements (the rights, obligations, permissions and prohibitions of the parties) and the associated detailed commercial strategies and management of lifecycle events including defaults and potential defaults. There is an absolute requirement that the smart contract code be faithful to the contractual rights and obligations, yet this is a considerable research challenge. The meaning of the contracts must be specified, and smart contract code must be validated against that specification; this requires a comprehensive understanding of both the contract and the code. The second key theme of Clack's current research is therefore an investigation of the semantics of legal agreements, seeking to establish a formal model (representations, algebraic properties and logic) that can be used for code validation.
- Computable Contracts. The third key theme of Clack's current research addresses Computable Contracts; i.e. legal contracts that are drafted by lawyers using a language that is understandable by both humans and computers. The long-term aim is that smart contract code should be “correct by design” as it will be directly created from the legal text. Not only will the code be faithful to the contract by design, but also this will facilitate more sophisticated and expressive agreements (because it will be easier to express complex concepts) and advanced tools for contract analytics to detect inconsistencies, conflicts and missing cases (because the underlying formal representations will be amenable to such analysis).
Three research networks have been explored:
- An international financial services network, investigating Smart Derivatives Contracts, Smart Contract Templates and the semantics of legal contracts. This comprises a central core (UCL, ISDA, and Barclays Bank) and an outer ring of law firms (e.g. Linklaters and Clifford Chance in the UK, and King & Wood Mallesons in Australia), technology and consultancy firms (e.g. R3, D2LT in the UK, Deon Digital in Switzerland, and LogicalContracts in Portugal) and academic researchers (e.g. at Imperial College London, the University of Copenhagen and very recently at the University of Cagliari in Italy and CSIRO in Australia).
- A domestic construction industry network, with a consortium comprising UCL, A.G.Midgley, B.C.Networking, Bitrecon, Streeva, P.Brogden, Trowers and Hamlins, 3PM Consulting, Clearbox, Built Intelligence, BSB Construction, De Roy Consult, and the University of Portsmouth. This network is currently investigating Blockchain and Smart Contracts support for construction industry contracts, including temporal aspects of the contracts and their performance.
- An international computable contracts network, comprising an Innovator in Residence at UCL (via funding secured from EPSRC), connections to the above two networks, and a growing number of collaborations at institutions such as Imperial College London (UK), CSIRO (Australia), Stanford University (USA), LSE (UK), University of Maryland (USA), University of Sydney (Australia), and University of Vaasa (Finland).
Additional nascent networks are linked to contract automation in specific industry sectors: the International Association for Contract and Commercial Management (IACCM) are interested in automating services contracts, and there is growing interest from the insurance industry.