High Court Refuses to Enforce Arbitration Award Relating to Crypto Consumer Contract

In Payward, Inc. and Others v. Chechetkin,[1] the High Court of England and Wales refused the claimants’ claim for the enforcement of a US arbitration award against a UK-based consumer. The court ruled that enforcement of the award would be contrary to public policy as it contravened key provisions of the Consumer Rights Act 2015 (CRA) and the Financial Services and Markets Act 2000 (FSMA).


Maxim Chechetkin brought a claim in the English courts against Payward – which operates Kraken, a cryptocurrency exchange – for losses of more than £600,000 he incurred whilst trading on its exchange. His case was that Payward’s activities in the UK amounted to dealing in or arranging deals in investments, which constituted regulated activities that Payward was not authorised to carry on. Section 26 of the FSMA provides that agreements made by a person carrying on an authorised activity without authority to do so are unenforceable.

Payward’s terms of service included an arbitration clause requiring disputes to be arbitrated in California under JAMS rules. In accordance with this provision, Payward brought arbitral proceedings in California in respect of the dispute. A final award was issued by the arbitrator denying Chechetkin’s claim for the repayment of his losses and enjoining Chechetkin from bringing a claim against Payward in court (either in the UK or another jurisdiction).  

As reported in this 11 July 2023 On the Record blog post, Payward then unsuccessfully applied for a declaration that the English courts had no jurisdiction over Chechetkin’s claim, on the basis that parallel arbitration proceedings had taken place in California in which an award had been issued in Payward’s favour. Following that failed application, Payward brought a claim for enforcement of the arbitration award under section 101 of the Arbitration Act. 

Chechetkin argued that enforcement of the award should be refused in accordance with section 103(3) of the Arbitration Act on the grounds that it would be contrary to public policy. He argued that the CRA has the effect that the imposition of arbitration in California was unfair on him as a consumer and stifled his claim under the FSMA, contrary to public policy.   

The High Court’s decision

The court refused to enforce the arbitration award, finding that enforcement would indeed be contrary to public policy, as the award contravened provisions of the CRA and FSMA. The court came to this conclusion as follows:

Chechetkin was a consumer under the Consumer Rights Act.

This finding was in line with the High Court’s previous decision on its jurisdiction. Section 2(3) of the CRA defines a consumer as an individual acting for purposes that are ‘wholly or mainly outside that individual’s trade, business, craft or profession’. The relevant time to meet this definition is at the time that the contract is concluded. In this case, that was when Chechetkin opened his account with Kraken. As Chechetkin is a lawyer, his trading on Kraken was clearly outside his trade, business, craft or profession. He was, therefore, a consumer under the CRA.

Chechetkin could not have brought his claim under the FSMA in the arbitration.

Payward argued that Chechetkin should not be allowed to pursue his claim under the FSMA in the English courts, as it had already been determined against him in the arbitration, and Chechetkin was therefore estopped from pursuing a claim in the English courts when it could and should have been pursued in the arbitration.

The court rejected Payward’s arguments, finding that:

  • As the arbitrator had repeatedly made it clear that she was against the application of any law other than the law of California, there was no scope for Chechetkin to bring the FSMA claim in the arbitration.
  • An English court is not bound by a tribunal’s decision on its own jurisdiction. The arbitrator’s finding in this respect was therefore irrelevant.
  • A US arbitrator with no experience of English law is, in any event, not the appropriate tribunal for this kind of claim.

The CRA and FSMA are expressions of UK public policy.

The court noted the definition of public policy in Alexander Brothers Limited (Hong Kong SAR) v. Alstom Transport SA[2] with approval: ‘“Public policy” as referred to in section 103(3) of the Arbitration Act means the public policy of England and Wales … in maintaining the fair and orderly administration of justice’.

In respect of the CRA:

  • The act is, in part, the enactment in the UK of the European Union Directive 1993/13 on unfair terms in consumer contracts. It has been authoritatively established by the Court of Justice of the European Union that this directive represents public policy.
  • The fact that the CRA is UK (as opposed to English) statute ‘arguably’ underlines its general significance in policy terms.
  • The fact that the CRA obliges the court to consider the fairness of consumer contract terms even if the issue is not raised by parties to the litigation reinforces its importance as public policy.

In respect of the FSMA:

  • The act sets out the Financial Conduct Authority’s duties, which include the advancement of ‘the consumer protection objective’, ‘the integrity objective’ and ‘the competition objective’, all of which have been expressly identified by Parliament as matters of public policy.
  • Again, the FSMA is UK statute, and thus is an expression of UK national policy.

Enforcement of the award would be contrary to public policy.

Section 71 of the CRA obliges the court to consider the fairness of the contract. To enforce the award would ignore this obligation in light of the following:

  • Section 74 of the CRA requires that, where a consumer contract has a close connection to the UK, consumer rights issues under the scope of the statute should be dealt with under the UK statute rather than foreign law. The contract between the parties in this case had a close connection with the UK, but the arbitrator did not apply the UK statute (i.e., the FSMA).
  • Section 62(4) of the CRA provides that if a contract causes a significant imbalance to the parties’ rights and obligations, to the detriment of the consumer, then that term is unfair. Applying an objective test (as required), the jurisdiction clause caused a significant disadvantage to UK consumers:
  • The US federal courts and US arbitrators are not competent to determine or supervise disputes concerned with English law and UK statute.
  • The right to appeal on the basis of an error of English law is lost.
  • The UK-based consumer would be required to retain US lawyers, which would be expensive and inconvenient.

It would be inconsistent with the fair and orderly administration of justice – as well as fundamental conceptions of justice – if consumer protections could be outflanked merely by the choice of a different system of law.

Enforcing the award would stifle Chechetkin’s claim under the FSMA. That made it both contrary to the essential public policy considerations underlying the FSMA and unfair under the CRA. The court also noted that enforcement would be contrary to the FSMA, because obliging consumers with grievances to engage in confidential arbitration proceedings in California would reduce the likelihood of offences under the act being investigated and prosecuted.  


Arbitration agreements can be attractive to tech companies operating globally given international enforcement advantages and confidentiality, amongst other reasons. But careful thought must be given to the relevant governing law and seat of the arbitration, particularly where such companies enter into contracts containing arbitration clauses with consumers in England and Wales.

We note that the judge did not rule out arbitration in all cases, stating that ‘the mere fact that a consumer contract provides for disputes to be resolved in arbitration does not make it unfair’, so unfairness will depend on each particular set of facts. However, based on the recent body of English case law on the non enforceability of consumer arbitration – including in this case – it is becoming increasingly difficult to persuade the English courts to defer to foreign arbitrators in relation to consumer claims. Therefore, as a rule of thumb, companies will be better off not incorporating arbitration clauses into consumer contracts with English citizens or residents.

[1] [2023] EWHC 1780 (Comm).

[2] [2020] EWHC 1584 (Comm).


Juan Nascimbene

Alicia Johnson-Cole