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Unlocking Cryptocurrency: Commercial Court Facilitates Recovery From Outside Jurisdiction

The London Circuit Commercial Court has handed down a significant judgment regarding the recovery of crypto-assets held on cryptocurrency exchanges and the practicalities of the enforcement of judgments against ‘persons unknown’ located outside the jurisdiction of England and Wales.

The court’s decision in Law v. Persons Unknown and Huobi Global Limited paves the way for future claimants to recover crypto-assets that have ended up outside of the jurisdiction with greater ease and highlights the English courts’ practical approach to the resolution of crypto-asset disputes.

The Million Pound Question: Is My Contract Unfair?

The decision of the High Court of England and Wales in Parker-Grennan v. Camelot UK Lotteries Limited is a helpful case study in how to host a consumer-facing website. It is surprising, given how much care and attention is afforded to the content of terms and conditions, how the presentation of those same terms and conditions to consumers can often be an afterthought. If companies do not get this right, there is a real risk that they may be providing consumers with the ammunition they need to argue that any relevant terms and conditions are unenforceable against them. Accordingly, companies would be well served to revisit their practices to ensure they are not creating unnecessary hurdles for themselves to overcome when seeking to rely on their terms and conditions in any dispute.

Right to Repair

The European Commission recently published proposals for rules promoting the repair of goods. It is likely that there will be class actions in relation to right to repair. The EC has proposed that the legislation would be added into scope of the new Representative Actions Directive that would enable class action style claims where the new obligations have not been complied with.

Stolen Cryptoassets: Further Guidance on Injunctions and Jurisdiction

In Osbourne v Persons Unknown & Others, the High Court of England and Wales confirmed that there is ‘at least a realistically arguable case’ that non-fungible tokens are to be treated as property as a matter of English law and that their inherently unique nature makes them suitable objects of prohibitory injunctions.

The Court also held that it is ‘strongly arguable’ that when a cryptoasset is stolen from a victim located in England, a constructive trust arises that is governed by English law. Further, if that cryptoasset is subsequently transferred to others, the question of whether they are constructive trustees is also a matter of English law. As such, the Court has jurisdiction over claims against those subsequent recipients of the stolen cryptoasset regardless of their location.

Court of Appeal decides that cryptoasset software developers may have a duty to help recover bitcoin

The Court of Appeal has decided that cryptoasset software developers may owe fiduciary duties or a duty of care to help recover bitcoin which is inaccessible as a result of criminal activity.

This is not a final decision. The Court has simply decided that the claim, against foreign defendants, is arguable and can go to trial.

Crypto Exchange Found to Hold Stolen Assets on Trust for Victim of Crypto Crime

In Jones v Persons Unknown & Others the High Court made several rulings of interest in the developing area of crypto fraud litigation.

After granting judgment in favour of the claimant for claims of deceit and unjust enrichment against fraudsters, the court went on to rule that a crypto exchange controlling the wallet holding the claimant’s stolen Bitcoin was a constructive trustee. The court ordered the fraudsters and the exchange to deliver up the Bitcoin to the claimant.

The decision that an exchange is a constructive trustee in these circumstances remains controversial and will likely be tested in future contested litigation where the stolen funds have been deposited and then withdrawn from an innocent exchange. Contested cases may also explore the question of whether and in what circumstances stolen crypto assets can be traced through intermediary accounts, particularly where they have been mixed with other assets that are not part of the fraud.

Crypto-Recovery: Bitcoin Association Produces Software to Freeze Coins

As reported in a blog post earlier this year, the High Court of England and Wales held in Tulip Trading Limited v Bitcoin Association for BSV & Others that software developers do not owe a legal duty of care to assist owners in recovering lost or stolen cryptocurrency. Despite the High Court’s decision, Bitcoin Association agreed a settlement with Tulip Trading, which included a commitment that it would release software making it possible for bitcoin to be frozen where a court order has been issued to this effect. Last month, Bitcoin Association announced that it has now done so.

Court of Appeal Lifts Stay to Allow English Court to Determine the Validity of Arbitration Clause

The Court of Appeal of England and Wales has set aside a stay in order to allow the English court to determine the validity of an arbitration clause contained in a contract between an English consumer and a foreign company. The stay had been imposed by the Commercial Court under section 9 of the Arbitration Act 1996 in favour of arbitral proceedings in New York. The Court of Appeal considered that the case had significant implications for consumers in general and it was therefore important that the issues were considered and ruled upon in public in an English court rather than privately in a US arbitration.