The new notion of “distributed ledger technology” under Italian Laws.

The notion of “distributed ledger technology” under Italian Laws.

The notion of “distributed ledger technology” (or DLT) was instroduced in Italian law system under d.l. no. 135/2018 (the so-called Decreto Semplificazioni ), which has been converted into Law no. 12 on 11 February 2019.

In this context, pursuant to Article 8-ter(1), Law no. 12, “distributed ledger technology” means “computer technologies and protocols that use a shared, distributed, replicable, simultaneously accessible, architecturally decentralized ledger that is based on cryptography”, therefore it “allow the recording, validation, updating and storage of data both in clear text or protected by cryptography but verifiable by each participant, not alterable and not modifiable”.

Furthermore, in accordance with Article 8-ter(3) of Law no. 12 , the “storage of an electronic document through the use of distributed ledger technologies has the legal effects of electronic time stamp”, the legal effect is referred to in Article 41 of Regulation (EU) No 910/2014 of 23 July 2014 of the European Parliament and Council concerning the electronic identification and trust services for electronic transactions in the internal market (“eIDAS Regulation”). Finally, Law no. 12, mandeted the Agenzia per l’Italia Digitale (AgID) to identify, within ninety days, the “technical standards that distributed ledger technologies must possess in order to produce [legal] effects”. As of today, the regulation has not yet been issued.

Primarily, it should be noted that the regulation of electronic time stamp concerns the value of digital documents as evidence. Italian Civil Code does not qualify the notion of “documentary evidence”, pursuant to Articles 2699 et seq., it merely lists the type of acts and documents that may be used as evidence (e.g. public deeds, authenticated private records, accounting records, mechanical reproductions, copies of legal document, etc.). The list evidently reflects the set of instruments existing at the time of drafting the Civil Code, that can allow the indirect knowledge of a fact, while it does not take into account modern techniques and methods of document creation. Alongside the provisions of Civil Code concerning the documentary evidence, over time the category has been enhanced in accordance with d.l. no. 82 of 7 March 2005 (the so-called Digital Administration Code) and the eIDAS Regulation.

Among scholars, it is widely held that the list of documentary evidence does not to be construe as a numerus clausus, since the notion of documentary evidence should be understood as any instrument useful to the judge for the evaluation of the questions and statements made by the parties during the trial, because it provides the representation of the fact on stable media.

Therefore, pursuant to Article 3-ter(3) of Law no. 12, the range of instruments that can be used as documentary evidence seems expanded again. However, in order to understand the innovative extent of the prescription, it should be analysed the notion of “electronic time stamp” and “qualified electronic time stamp”, two categories provided by the eIDAS Regulation. In particular, pursuant to art. 3(1), no. 33 of eIDAS Regulation, “electronic time stamp” means “data in electronic form which binds other data in electronic form to a particular time establishing evidence that the latter data existed at that time”. Whereas, “qualified electronic time stamp” (defined in no, 34 below), means an electronic time stamp that also achieve the following additional requirements ( laid down in Article 42 of eIDAS Regulation):

1. it binds the date and time to data in such a manner as to reasonably preclude the possibility of the data being changed undetectably;
2. it is based on an accurate time source linked to Coordinated Universal Time; and
3. it is signed using an advanced electronic signature or sealed with an advanced electronic seal of the qualified trust service provider, or by some equivalent method.

Having in regard to the extent of the legal effect of these forms of electronic time stamp, Article 41 of eIDAS Regulation states that “electronic time stamp shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements of the qualified electronic time stamp”.

Therefore, the new notion of distributed ledger technologies falls within the EU regulatory framework described above, giving to documents stored through “distributed registers” value of documentary evidence .

Moreover, the so-called time-stamping through DLT would guarantee the same legal effects as the “time stamp”, without the services, prescribed by Articles 20 et seq. of eIDAS Regulation, provided by a trust service provider (qualified or not) .

However, Article 8-ter of Law no. 12, referencing only to Article 41 of eIDAS Regulation, seems arise the question whether the Italian lawmaker has acknowledged to DLTs the legal value of simple electronic time stamp or qualified time stamp or the value of both forms. The legal effect of both electronic time stamps is regulated pursuant to Article 41 of eIDAS Regulation governs, thus paragraph no. 1 states that “an electronic time stamp shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements of the qualified electronic time stamp”, and paragraph no. 2 sets out that “a qualified electronic time stamp shall enjoy the presumption of the accuracy of the date and the time it indicates and the integrity of the data to which the date and time are bound”. Doubts concerning the constue of Article 8-ter because it does not expressly refer to the “qualified” nature of electronic time stamp.

In light of the above, Article 8-ter(3) of Law no. 12, might reffer to both type of electronic time stamp, leaving to law operators to assess on a case-by-case basis whether the characteristics of the DLT or the Blockchain used for time stamp meet the requirements of qualified electronic time stamp. In this regard, it should be noted that pursuant to Article 42(1) of eIDAS Regulation, the requirements laid down for “qualified electronic time stamp” are allegedly achived if “[…] the binding of date and time to data and the accurate time source meets those standards”.