Smart contract legal review: when and why
A smart contract legal review differs from conducting a dispute: it is an analysis carried out before a dispute — or within one — that answers the question of what the code does legally and whether this corresponds to the parties' intended agreement. Georgia has no separate rule for this — the expertise institution of the Civil Procedure Code applies, regulating technical assessment before the court.
The need for expertise arises in two typical situations. The first — preventive: the parties check the contract before release so that a dispute does not arise at all. The second — judicial: during a dispute the court resorts to special knowledge, because interpreting the code's behaviour without it is impossible. In both cases the form and content of the expertise are determined by procedural norms.
The appointment and conduct of the expertise
Under Article 162, where a judge lacks special knowledge on a question connected with the examination of a case, the court may, on its own initiative, appoint an expertise, if the interpretation of the question has essential significance and a decision cannot be made without it. The parties may also independently ensure the conduct of an expertise and submit the conclusion at the stage of the initiation or preparation of the case.
Article 166 regulates conduct in a special expert institution: the court sends the institution its ruling and the necessary materials; the head of the institution entrusts the expertise to one or several employees and explains to them their rights, duties and responsibility; the written undertaking is sent to the court together with the conclusion. Article 167 regulates conduct in a non-special institution: there the expert is appointed by the court itself, which verifies his speciality and competence and warns him about responsibility.
The form and content of the conclusion
Under Article 170, the expert gives the conclusion in written form; the court has the right to propose that the expert give an oral explanation, which is entered into the minutes of the hearing. The conclusion must contain a written description of the investigation conducted, the conclusions obtained and substantiated answers to the questions posed by the court.
For smart contract expertise this requirement is decisive: the precise posing of the questions — by what logic the code operated, which condition was activated, whether another result was possible — determines the value of the conclusion. A correctly posed question frees the expert from inventing the task; an incorrectly posed one makes the answer meaningless.
Specialist and expert: the difference
Article 204 regulates the institution of the specialist: in the performance of a procedural action — inspection on site, examination of witnesses, securing of evidence, compilation of plans and calculations — the court may summon a specialist, who is obliged to appear, give a consultation and provide technical assistance; the oral consultation is entered into the minutes, and written answers are attached to the case.
For smart contracts this difference is practical: the specialist helps during the process — in understanding documentation and capturing the picture of the system; the expert gives substantiated answers to final questions. Formulating the task of a legal review begins precisely with this distinction.
How to start the review
For a preventive review the path is as follows: preparing the contract and its technical description; formulating the questions in terms that are legally significant; selecting an independent expert; receiving the conclusion and comparing it with the initial agreement. For a judicial expertise — submitting questions to the court and preparing the materials.
Frequently Asked Questions
In practice the questions of a smart contract expertise fall into four groups. The first — functional: what the code does on a given input, which evaluations and conditions are activated. The second — correspondence: whether the code's logic matches the written agreement or the parties' intended result. The third — alternative: whether another result was possible with the same code, and which circumstance determined the choice. The fourth — breach: from which moment the expectation was violated and what technical root that violation has. Each group yields a legally different consequence, which is precisely why mixing them damages the conclusion.
Experience also shows that half the value of an expertise lies in posing the questions and half in preparing the materials: the exact version of the code, the execution environment and the records of the period the question concerns. Without these two, even the most qualified expert cannot give you a reliable answer. The Legal.ge team assembles a smart contract legal review: from formulating the questions, through building a bridge between the technical and legal languages, to bringing the conclusion into court format — so that the result of the code is clear in legal language.
Below we answer the questions most frequently asked on this topic.
When does a smart contract need an expertise?
In two cases: preventively — before release, to determine the code's correspondence to the intended agreement; and in court — where interpreting the code's behaviour requires special knowledge.
In what form is the conclusion given?
In written form, containing a description of the investigation, conclusions and substantiated answers to the questions posed. The court may also request an oral explanation, entered into the minutes.
Where is the expertise conducted?
In a special expert institution — by ruling of the court, or in a non-special institution, where the expert is appointed by the court itself, which verifies his competence.
What is the difference between a specialist and an expert?
The specialist assists the court in performing procedural actions with consultations and technical help; the expert gives a substantiated conclusion on the questions posed.
How We Help on Legal.ge
The specialists of Legal.ge structure the legal review of a smart contract: we formulate the task for the conclusion, organize the questions and translate the conclusion into court form. Contact us on Legal.ge — a review begins with the right task.