INTRODUCTION

There is no ‘one size fits all’ definition of Artificial Intelligence (hereinafter AI); different scholars define it differently.

John Haugeland in his book, ‘Artificial Intelligence: The Very Idea (1985)’ defines it as "the exciting new effort to make computers think and to have machines with minds."

Richard Bellman defines it in ‘An introduction to Artificial Intelligence (1978)’ to be "the automation of activities that we associate with human thinking, activities such as decision-making, problem solving, learning ..."

"The study of mental faculties through the use of computational models" is the definition contained in ‘An introduction to Artificial Intelligence’ (1985)’ by Charniak and McDermott.

In a nutshell, AI is the science of automating intelligent behaviors currently achievable by humans only. This entails:

1. Natural language processing-to facilitate communication with humans,

2. Knowledge representation- to enable information storage during and after interrogation,

3. Automated reasoning- to use the information that has been acquired to answer questions and draw conclusions,

4. Machine learning - to adapt to new circumstances and to detect and infer patterns.

The field of AI therefore attempts not just to understand the human mind but also to build intelligent entities.

Examples of AI include Machine Learning algorithm developed by Google for recognizing cat from millions of images and Google’s self-driving cars. Here in Kenya, Sophie Bot developed chat bots which provides a platform for questions on sexual and reproductive health. In a society where talking about sexual health is often a taboo, Sophie Bot provides anonymity, credible answers, platform independence and a user-friendly conversational interface.

Strathmore University (Strathmore) in Nairobi has established the iLabAfrica Research Centre, which seeks to promote cutting-edge research on emerging technologies such as Big Data, Artificial Intelligence (AI), Block chain Technology, Cyber Security, Internet of Things (IoT) and Cloud Services to achieve development goals and contribute toward Kenya’s Vision 2030. It aims to provide direction for academic researchers and technology experts in Kenya to collectively innovate and develop applications in areas such as energy, banking, healthcare, education, and transport as well as champion development of the local technology ecosystem.

Among other technologies that jointly work with AI is block chain which shall be discussed in turn.

Block chain is a shared, distributed ledger that facilitates the process of recording transactions and tracking assets in a business network.

Block chain owes its name to the way it stores transaction data — in blocks that are linked together to form a chain. As the number of transactions grows, so does the block chain.

The blocks record and confirm the time and sequence of transactions, which are then logged into the block chain, within a discrete network governed by rules agreed on by the network participants.

The block chain architecture allows the participants to share a ledger that is updated, through peer-to-peer replication, every time a transaction occurs.

The shared, distributed ledger is a record of all transactions on the network, a record that all network participants can access. It is important to note that this ledger is immutable. With the immutable-shared ledger, transactions are recorded only once, thus preventing duplication.

Each block contains a hash (a digital fingerprint or unique identifier), time-stamped batches of recent valid transactions, and the hash of the previous block.

The previous block hash links the blocks together and prevents any block from being altered or being inserted between two existing blocks.

In this way, each subsequent block strengthens the verification of the previous block and hence the entire block chain. The method renders the block chain tamper-evident, lending to the key attribute of immutability.

In simple terms, block chain technology resembles a spread sheet that can be duplicated numerous times across a network of computers and is updated regularly. To give it context, think of an entity such as a law firm. Documents may be stored in folders that contain the client’s names or the nature of the document for ease of retrieval. In the typical office work, one would arrange all the word documents related to a client in chronological order and protect them from being viewed by other users by using a password or other digital record management system they may have in place. The act of arranging all related documents together is referred to as bundling the data into blocks in block chain technology, while protecting them using a password or other technology would be the equivalent of crypto-graphically binding together the blocks of data.

Advantages of block chain technologies

• The block chain network is less vulnerable because it uses consensus models to validate information i.e. for a transaction to be valid, all participants must agree on its validity. Further, no participant can tamper with a transaction after it’s been recorded to the ledger. If a transaction is in error, a new transaction must be used to reverse the error, and both transactions are then visible.

• Block chain increases the level of trust among network participants. This is because every transaction builds on every other transaction, therefore any corruption is readily apparent, and everyone is made aware of it.

• This self-policing can mitigate the need to depend on the current level of legal or government safeguards and sanctions to monitor and control the flow of business transactions. The community of participants does that through the use of consensus algorithms.

CHALLENGES THAT FACE BLOCK CHAIN AND AI TECHNOLOGY

Stephen Hawking has warned that because people would be unable to compete with an advanced AI, it “could spell the end of the human race.”

The case of Millitonic Mwendwa Kimanzi Kitute v Independent Electoral and Boundaries Commission & 2 others [2017] eKLR enumerates on the challenges that come with the use of technology.

“Computer equipment runs on an artificial intelligence which receives interpretes and applies human commands. This artificial intelligence has been known to go awry. System crashes, viruses, and/or botnets often occur, compromising the integrity of the material captured, preserved or presented using a computer.”

Crypto-currencies like Bitcoin are offering new avenues for economic empowerment to individuals around the world. However, they also provide a powerful tool that facilitates criminal activities such as human trafficking and illegal weapons sales that cause great harm to individuals and communities.

The complete absence of any regulatory provisions has the potential of threatening the stability of the financial sector.

Smart contracts come with various challenges. For instance, in the event where disputes arise between parties in cross jurisdictional boundaries. i.e. the challenge of identifying the person to sue as the transactions are done over a computer interface, the uncertainty over jurisdiction and governing law, the procedures and the enforcement of decisions. To lessen the impact of these issues, it is strongly recommended that creators of smart contracts insert clauses that foresee these types of problems.

RECOMMENDATIONS

The law continuously adapts to changing societal needs. A decade ago, the legal sector had to address digital media rights issues, and some lawyers soon focused on this segment of the law. Now, with block chain technology having the potential to be used across many sectors, the law will need to adapt again, and there is already a need to have lawyers specializing in block chain law – the new cutting-edge for digital law.

• Creating a Collaborative Environment

Following the example of leading countries in AI, Kenya should increase cooperation and exchange of information between diverse stakeholders i.e ministry, academia; industry (including start-ups and entrepreneurs), civil society (including NGOs and think tanks) and policy makers. These actors must work together.

• Research and development

Regulating crypto currency is very different from regulating banks and therefore a lot of research and development has to be undertaken. Among these should include the new crypto currencies and exchanges launch, understanding the regulatory landscape and adapting quickly to changing rules which will be imperative for company’s eager to benefit from the massive growth of the crypto currency industry.

• Data privacy and security

Securities law is very essential in regulation of crypto-currencies. This is because in such transactions; digital wallet services, registration requirements, among other things are triggered and all these falls under securities laws.

A data privacy and security framework that individuals can trust encourages and empowers them to use AI-based solutions that require their data to work. Data privacy and security laws should aim to protect users’ data without restricting the ability to move data across borders.

In drafting these laws, the government should look to benchmark with international best practice(s), which includes avoiding burdensome requirements which would foreclose the benefits of AI and put Kenyan companies at a disadvantage. The legal profession should ensure that uses of block chain technology actually comply with the law and do not tamper with fundamental rights, like the right to privacy.

• Intellectual property

Intellectual property laws that provide for clear protection and enforcement against misappropriation and infringement of technological developments, including proprietary algorithms, are indispensable to promote continued innovation and advancement in AI.

• Consumer protection

Additionally, regulation of crypto-assets ought to be informed by the public policy need to protect consumers of a service from any information asymmetry that may undermine their ability to make informed decisions or seek to ensure that their investments are secured against any foreseeable loss that can be mitigated. In most forms, regulatory approaches to consumer protection may appear in either a sophisticated form that seeks to strike a balance between consumer interest and free market ideals or a naïve form that sees consumers as gullible players whose fate can only be exploitation and state intervention is essential to functional markets.

KENYAN CONTEXT

In Kenya, crypto-currencies remain de-regulated after the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) recently warned investors that investing in such deals is risky as they are not legal tenders i.e. they are neither considered legal nor recognized as a medium of exchange and payment.

With disregard to this caution, various players continued to use blockchain technologies. For example, ‘Boxlight Electronic’, a Kenyan company has become the first adapter of bitcoin payment in Kenya for its products which include inter alia, TV sets, home theatres and home appliances. In other instances, block chain-based intermediaries offer money transfer services via Bitcoin and subsequent conversion of bitcoins back into fiat currency for withdrawal by recipients through either their mobile phones or a bank account.

The government however softened its stance when it created a Blockchain & Artificial Intelligence task force in February 2018 to study the benefits and challenges associated with block chain technologies. The report forwarded to the Ministry of Information, Communications & Technology is however still not in the public domain. There are however hints on the recommendations the task force came up with. These are:

They proposed a digital asset registry for the country. They held that the digital asset registry will help small enterprises have an alternative source of funding other than banks.To facilitate the establishment of a registry, SMEs would be required to create a portfolio composed of information such as websites, videos and logos which potential investors can view.

They propose that the digital currency to be introduced into the market through an initial coin offering (ICO). The digital currency they proposed would be fixed in nominal terms, a legal tender for both private and public transactions, and universally acceptable.

The taskforce has further recommended a trusted identity for every Kenyan citizen.

The Capital Markets Authority is also working on a sandbox policy that will guide fintechs, the utilisation of blockchain technology, and digital currencies.

NEED FOR REGULATION

As it stands, if regulators fail to regulate block chain technology and its associated financial derivatives, they stand to lose from the revenue that could be generated from the sector and the first move advantage of influencing the development of the technology. Other countries have begun tentative steps towards regulation as they seek to gain a measure of influence over the development and utilization of the technology.

On the other hand, should domestic regulators move in and enact stringent regulations that seek to box in the technology, they may stifle innovation and the dynamism that lies at the heart of block chain technology. Over-regulation will also push out investors and innovators who will move to unregulated jurisdictions to continue with their operations away from the oversight of burdensome regulators.

However, if regulators adopt a laissez-faire approach that allows the investors and other players to self-regulate, there is the threat of a race to the bottom as each domestic jurisdiction moves to deregulate the sector as a move for attracting investors and innovators to their jurisdiction. This holds the threat of unraveling the stability of the financial sector, an outcome undesirable to all the players.

The optimal position, therefore, becomes a measure of hybrid-regulation where the regulator cooperates with the market players to develop responsive regulations that promote the industry without pushing away investments or undermining the stability of the financial sector through deregulation.

Regulators have the unenviable task of protecting individuals without crushing massive new opportunities for investors. In their current manifestation, there lacks a substantive legal framework to regulate the creation, storage, and transactions related to crypto-assets.

IMPACT OF BLOCK-CHAIN AND AI IN THE LEGAL PROFESSION

Being new in the Kenyan market, the impact of block chain and AI is still to be felt. The impact the technology has had in other jurisdictions can be a slight indicator of the things to come on this side of the globe. The same shall be discussed in turn.

• Preservation and storage of evidence

Due to the immutable nature of block chain technology, the same has been applied to not only track the custody of documents, but to also store documents. Block chain has the potential to act as a secure database where documents, such as evidence, can be stored and then referenced later.

Jurisdictions such as China have ruled on the binding nature of block chain evidence. The Supreme Court ruled that evidence authenticated with block chain technology is binding in legal disputes. (September 3, 2018, Supreme People's Court Judicial Committee, 1747th; adopted by the meeting, effective from September 7, 2018)

“Internet courts shall recognize digital data that are submitted as evidence if relevant parties collected and stored these data via block chain with digital signatures, reliable timestamps and hash value verification or via a digital deposition platform, and can prove the authenticity of such technology used."

Because there is permanent record of the chain of custody, evidence stored in this way is well preserved and any changes made have to be authenticated and agreed on by all parties. This further eliminates the need for testimony about the preservation of the chain of custody. The evidence is therefore reliable.

To sum it up, block chain in Kenya has the potential to create more efficiency, with secure and transparent transactions. The chain of custody is trackable therefore preventing tampering of evidence that is prevalent in our judicial system.

• Smart contracts

A smart contract is an agreement between two or more people where all or parts of legal agreements are modelled in the form of computer code. The parties involved transact directly with one another through the computer interface. They are self-executing agreements in nature and are made accessible to all participating parties. Though accessible to all participating parties, they cannot be changed as they run on block chain.

The transactions that happen can then be sent automatically without a third party. Parties can exchange anything of value, including money, property and stocks while eliminating the need for intermediaries like escrow agents or notaries. It is also often faster, cheaper, and more secure than traditional transactional mechanisms.

Smart contracts are being used in other jurisdictions. For instance, an American group, the Open Law group, creates legal agreements that are then securely stored on the Ethereum [cryptocurrency] block chain. Open-Law endeavors to use the block chain to decrease “the cost and friction of creating, securing, and generating binding legal agreements. It also plans to provide the tools for storage of these agreements, without the requirements for intermediaries.

Within Kenya, it has the potential to decrease the cost of creating, securing, and generating binding legal agreements which in turn means that the involvement of advocates will be decreased. A decrease in the involvement of advocates will have the effect of a reduction of costs for legal consumers.

• Dispute resolution

The rate of technological development has rendered traditional judicial systems too slow and most often inadequate in solving many issues, especially as smart contracts are becoming prominent.

To solve these problems, platforms such as ‘Jury.Online’ is creating a protocol for interaction between arbitrators and the parties to deal, as well as a transparent, secure and convenient platform for making deals using block chain and modern cryptographic systems. It is a decentralized arbiters market where anyone can apply to be an arbitrator with a background and experience description. The platform provides an avenue where disputes can be resolved quickly with minimal difficulties.

When a dispute arises, it goes before a panel of jurors who are randomly chosen from a pool. Every information on the platform is open and accessible by any computer connected to the network, therefore contract and arbitration proceedings are transparent, secure and immutable.

While this has the potential to encourage out-of-court settlements, which are ideally considered faster, it has the potential of posing legal challenges. Where does one go in the event they want to appeal a decision made by arbitrators? Will our Kenyan courts recognize these decisions?

• Intellectual property

The law has struggled when it comes to protecting intellectual property in the digital age, including images, audio, and video files, as well as designs and symbols. Artists and musicians attempt to protect their work but too often it gets used without their permission, and royalties do not get paid from audio streaming services that struggle with profitability. Companies such as ‘Nkor’ promise to have a platform for registering intellectual property and ‘anchoring’ it to the block chain.

Block chain technology in Kenya has the potential to address the challenges that come with protection of intellectual property. How does it intend to do this? A number of block chain-based projects in other jurisdictions are making it their goal to allow their users to easily register their intellectual property. Once registered, the permanent nature of the block chain will make ownership over a piece of intellectual property indisputable. The same will advance the protection of intellectual rights here in the country.

• Notary public

Currently, notary publics (or general notaries) are used to confirm and verify signatures on legal documents, such as deeds and contracts. Using block chain technology, these documents can be preserved digitally as part of a digital ledger. ”Block notary’ is a company that seeks to apply block chain technology to legal documents, and offers timestamps and fingerprints for media files, thereby eliminating the need for the rubber stamp of today’s notary public.

Impact: Using these services can provide proof of the existence of a document at a given time. It can prove ownership of a block chain hash. Once hashed, the document is independently verifiable.

• Conveyancing

Property rights encompasses how property is bought, sold and rented. Our Kenyan land registry is stuck in the last century, with piles of ledgers, titles, and property cards all tracking property ownership.

The block chain, with its inherent security and digital ledger function, promises to be an effective, secure and immutable method to store the data essential for property rights, including land ownership, and the details of when it changed hands.

India hosted an international conference in 2017 entitled ‘Block chain for Property Governance: A Conference on Distributed Ledgers for Secure Property Rights’, addressing the issue of digital property rights. Sweden and Georgia are pioneering the application of block chain for secure land record maintenance.

The end result of using block chain in conveyancing is a secure process for real estate transactions with the following characteristics:

All parties that are involved will have a digital file representing the transaction process.

The authenticity of the process, the signatures, the file confirming ownership, mortgage deeds will be secured with a block chain. The Lands registry will store the block chain as proof of the transaction. The same will be validated by other actors. It will then be easy for other third parties such as banks, buyers, sellers, to verify the transaction.

As changes in the block chain cannot be made without consensus from all transacting parties, fraud will be done away with. This will improve investor confidence in land transactions and thus improve our economy.

• Predict legal outcomes

AI has the capability of analyzing data to help it make predictions about the outcomes of legal proceedings better than humans. Clients are often asking their legal counsel to predict the future with questions such as “If we go to trial, how likely will it be that I win?” or “Should I settle?” With the use of AI that has access to years of trial data, lawyers are able to better answer such questions.

AI’s ability to predict court decisions has the potential to increase out-of-court settlements. Dispute resolution will therefore grow at the expense of large and long-term legal battles and court filings.

‘Big Data’ has a huge part to play in the legal sector, with technologies like natural language processing and machine learning highly applicable when it comes to mining large volumes of data and content for actionable insights.

This information gathered can be used by Kenyan lawyers to better determine the possible outcome of cases, develop winning legal strategies and forecast litigation costs.

CONCLUSION

Block chain technology is the most trans-formative technology to emerge since the advent of the Internet. Transformation is set to affect most aspects of day to day business life, including smart contracts, corporate filings, criminal cases, dispute resolution, document notarization, industry organizations, intellectual property rights, land registries, law firm operations, and public service records.

The biggest fear around technology naturally comes in its potential to impact jobs. Block chain and AI, contrary to popular belief comes with its advantages. First, different industry sectors will demand that their lawyers know which laws apply to block chain technology once these laws emerge. Lawyers, in various capacities, will then ultimately determine how laws are enforced to this new technology.

The use of block chain technology will also free up time that is currently spent on the more mundane aspects of developing routine contracts and transactions. For example, lawyers need to invest a lot of time in perusal of documents such as diligence, research, investigations and compliance related works. If lawyers were to use AI for this job using predictive coding in electronic disclosure, the speed and accuracy of the outcome can be much higher. Lawyers will be able to invest time in the more challenging, in-depth issues of practicing law.

Evidently,the future belongs to AI enabled lawyers.