Digital tokenisation allows tangible and intangible objects, rights and claims to be virtually represented and stored electronically, usually in decentralised or distributed storage mechanisms. The digital nature of these tokens, compounded by their storage on decentralised or distributed storage mechanisms, necessarily raises issues of localisation which, in turn, have an impact on the private international law (PIL) analysis. The variety of actors and participants in transactions involving digital tokens may also challenge the application of traditional connecting factors, as there may be several objective connecting factors to a number of jurisdictions. PIL questions regarding which law would be applicable and which forum would have jurisdiction may arise.
In March 2024, the Council on General Affairs and Policy of the HCCH (CGAP) adopted Conclusion and Decision (C&D) No 12:
12. Recognising the importance of avoiding fragmentation among legal instruments developed by different intergovernmental organisations on related subject matters, including the UNIDROIT Principles on Digital Assets and Private Law, CGAP mandated the PB, in partnership with relevant subject-matters experts and Observers, to study the PIL issues relating to digital tokens. The PB will report to CGAP 2025 on the outcomes of this study, including proposals for next steps.
The study will begin with a general, indiscriminate taxonomic study of existing international and regional instruments, as well as earlier and ongoing work on the topic, in order to inform the discussions. The study will also include consultations with the nominated experts and Observers throughout the year, such as the provision of responses to enquiries from the PB, as well as the voluntary submission of legal position papers and other policy papers. Experts will also be called upon to provide feedback in writing on a scoping paper that poses various questions on the PIL aspects of digital tokens.
- Prel. Doc. No 5B REV of March 2024 - Proposal for a Normative Project: Private International Law Issues Relating to Digital Tokens