Drawdowns on letters of credit, for example, which are supposed to be automatic on presentation, are occasionally enjoined for nonperformance, fraud or on other grounds. Similar processes could be explored to automate aspects of other proceedings such as divorces, immigration cases and traffic violation appeals.īut this view has at least one major shortcoming other than in the simplest of contracts, code cannot necessarily account for every eventuality. If the landlord had already paid the tenant, a process could verify the relevant financial transaction and automatically close the case. If a landlord fails to explain to a tenant why their security deposit was not refunded or stopped replying to the tenant altogether, there would be an automated initial judgment favoring the tenant. Similarly, code operating as law could be used to protect tenants in security deposit disputes. For the former, if a customer were to dispute a charge that was refunded, the case could be closed automatically. The automation of rules governing transactions and dispute resolution through code, rather than traditional legal avenues, has been cited as viable in areas such as credit card disputes and security deposit agreements. Since algorithmic law is unambiguous, they argue that it reduces the subjectivity inherent in the traditional legal and judicial systems.
Those who accept Lessig's literal meaning contend that, even in the event of a bug or glitch in the code, that same code still governs. Under an expansive view of “code is law,” if the code of a smart contract permits something then it is “legal.” This theory holds that code shall prevail, whether or not it conflicts with anything else. Thus, if the digital world remains “fundamentally skeptical about self-government,” and leaves regulations to coders only, we cannot ensure that our values will be embedded in the code that undergirds the Internet. That is, regulation will always exist, whether led by coders or by the government.
Absent government regulation, the interests of coders-which may not prioritize shared values, such as privacy-will reign. According to Lessig, minimal government intervention in cyberspace will not mean less regulation. Lessig argues that we are preoccupied with nonregulation and that we view the concept of regulation as binary it is either present or absent.
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