Beyond Territorial Sovereignty: Reconstructing Legal Integrity in the Metaverse

Abstract

The arrival of the virtual reality-based metaverse has raised complex legal issues across countries worldwide. These legal systems are ever-evolving; however, in the context of the metaverse, which is itself transitional and immaterial, keeping up with legal developments has become a complex challenge. 

The current global technological laws have territorial jurisdiction. Only a few jurisdictions, such as the European Union, the United States, China, Singapore, and the United Arab Emirates, have developed relatively advanced legal frameworks for digital assets. Most other countries have not made comparable progress in regulating the metaverse, largely because of its borderless nature, which transcends territorial laws and conventional jurisdictional boundaries. It thus becomes incredibly complicated to impose municipal laws on the use of the metaverse. These raise genuine questions, such as who should be held accountable for arising liabilities, who will have jurisdiction to preside over any violations of intellectual property (IP) in the metaverse, and which laws would specifically apply.

The scope of this research will be on the jurisdictional friction between sovereign states and Decentralised Autonomous Organisations (DAOs). It will also investigate the civil liabilities that have arisen from disputes over virtual property and the regulatory gaps that exist in the protection of the user’s “Biometric Sovereignty” within the existing framework of international data privacy laws.

The central argument is that the current “Westphalian” architecture of territorial sovereignty is incapable of transitioning to the decentralised model of the metaverse. This research is to find out and prevent global ‘regulatory race to the bottom’, So that the international community can adopt a system of metaverse-specific laws or “Lex Metaversi”, a self-implied, code based on legal framework which uses smart laws (laws embedded through coding in the system so that it can be self-imposed) to enforce IPR and commercial agreements automatically, therefore replacing reactive litigation with proactive, algorithmic integrity.