Has there been any judicial consideration of blockchain concepts or smart contracting in your jurisdiction?


Australia Small Flag Australia

At the time of writing, there has not been any specific judicial consideration of blockchain or smart contracts in Australia.

France Small Flag France

No, as far as we are aware.

Germany Small Flag Germany

The Berlin Appellate Court decided in its judgment of 25 September 2018, [Ref. (4) 161 Ss 28/18 (35/18)], that Bitcoins are not units of account within the meaning of the KWG and thus opposes hereby the view of BaFin. Since there are very few judgments relating to cryptocurrencies, this judgment is understood as a fundamental decision. In view of a criminal legal background, it deals with the question, which legal nature lies within the classification of cryptocurrencies.

The defendant operated an internet-trading platform, over which, Bitcoins could be traded. As he had not obtained a permission of the BaFin for his trading platform, the District Court of Berlin-Tiergarten sentenced him to pay a fine because of negligent infringement in accordance with sec. 54 para. 1 no. 2, para. 2 KWG. In response to the defendant’s appeal, the Regional Court of Berlin acquitted the defendant on the grounds that the sale of Bitcoins on the trading platform was not subject to the obligation of obtaining a permission, which is why there was no starting point for a criminal liability. The Public Prosecutor’s Office turned against this with an appeal before the Court of Appeal in Berlin, (“KG”), which decided upon the initial case in the second instance and concurred with the opinion of the Regional Court. With its decision, the KG has set a tone that contradicts the current administrative practice of Bafin.

Ireland Small Flag Ireland

None other than the criminal case mentioned in questions 9 and 18.

Italy Small Flag Italy

Italian courts and authorities have not expressed clear views on blockchain aspects, although they have issued a few decisions regarding cryptocurrencies.

In a case involving a company’s capital increase through a contribution in kind of cryptocurrencies, the courts ruled that cryptocurrencies were too volatile to provide a reliable economic valuation .

Moreover, in the famous “BitGrail” case, the Court of Florence defined cryptocurrencies as “commodities” under Italian law.

Japan Small Flag Japan

There has thus far been no judicial consideration of blockchain concepts or smart contracts in Japan. As noted under Q14, however, legal ownership or title in respect of Crypto Assets under the Civil Code has been considered by the courts.

Liechtenstein Small Flag Liechtenstein

There have been liquidation proceedings of blockchain based businesses.

The Netherlands Small Flag The Netherlands

Apart from legal proceedings related to crypto activities (for example, non-performance under contracts to deliver cryptocurrency), we do not know of any judicial consideration of blockchain concepts or smart contracting in the Netherlands.

Russia Small Flag Russia

Provided that the amendments involving the concept of smart contracts entered into force in the beginning of October 2019 only, there is no stable court practice on this issue yet.

Meanwhile, in 2018 cryptocurrency was for the first time in Russian judicial practice recognized as property. An individual filed an application for his personal bankruptcy. The insolvency officer was insisting on the inclusion of cryptocurrency owned by the individual into the bankruptcy assets, since there are no restrictions on cryptocurrency foreclosure prescribed by law.

The request of the insolvency officer was finally approved by the Arbitrazh Court of Appeal and the ruling for the inclusion of the cryptocurrency located in the individual’s crypto wallet was issued.

This court decision provoked a lot of discussions in the professional community. Provided that the regulations of cryptocurrencies are still not adopted, the questions concerning the enforceability of this ruling reasonable appear.

South Korea Small Flag South Korea

There has been no judicial consideration of blockchain or smart contracts, but the Korea Information Society Development Institute (“KISDI”) released a report entitled “Research on the Application of Smart Contracts to the Public Sector” (the “Smart Contract Research”) with a focus on blockchain technology and smart contracting. The Smart Contract Research compares smart contracts to traditional contracts under the Korean Civil Code and calls for the need to update the regulatory framework to accommodate smart contracts.

Sweden Small Flag Sweden

We are not aware of any judicial consideration of blockchain concepts or smart contracting.

Switzerland Small Flag Switzerland

We are not aware of any relevant Swiss case law at the federal level with respect to the concepts discussed herein.

Uganda Small Flag Uganda

These issues have not arisen in Uganda yet.

United Kingdom Small Flag United Kingdom

There have been no significant reported cases concerned with blockchain technology in the UK.

In the 2019 case of Ang v Reliantco Investments Ltd the EWHC held that it had jurisdiction to hear a case between a Cyprus-based trading platform that included Bitcoin futures, and one of its retail customers, Ms Ang, because she was classified as a consumer under the Brussels I Regulation (recast) (EU) 1215/2012 (which enables a consumer to bring proceedings in the courts of the member state in which they are domiciled). This case concerned the procedural question of claiming jurisdiction, rather than a substantive question.

As noted in question 8 above, the Court of Justice of the European Union has accepted in the 2014 case Skatteverket v David Hedqvist that no VAT is payable on an exchange of cryptocurrency for a national currency. Various UK tax cases have acknowledged the findings in the Hedqvist case.

We refer in question 14 above to the decision in the 2019 case B2C2 Ltd v Quoine Pte Ltd in the Singapore International Commercial Court which considered specifically whether cryptocurrencies were property for the purpose of being held in trust. The case does not give rise to any form of precedent in England and Wales, but the summary judgment application was heard by an English judge. We also refer in question 14 to the recent interlocutory decision in Robertson v Persons Unknown, in which the EWHC granted an asset protection order over Bitcoin, and to the decision in AA v Persons Unknown in which the EWHC found that cryptocurrencies are a form of property capable of being the subject of a proprietary injunction.

The Financial Markets Law Committee has considered questions of governing law and the application of conflict of laws rules, proposing several potential solutions (‘Distributed Ledger Technology and Governing Law: Issues of Legal Uncertainty’ (March 2018)). As discussed in more detail at questions 14 and 16, the UKJT has also recently considered legal questions relating to cryptoassets including whether they constitute property under English law and the validity of smart contracts.

United States Small Flag United States

The federal agencies defer to the courts to enforce certain of their actions against infringers but private litigation, mainly pertaining to cryptocurrency, is also developing both at the state and federal level. This has brought to light other aspects of legal violations through the use of blockchain beyond federal securities laws, including patent infringements, breach of contract and antitrust.

Singapore Small Flag Singapore

The B2C2 Case had applied the law of contract to cryptocurrencies. In doing so, the court analysed the terms and conditions of the agreement between users of a digital token exchange and the digital token exchange operating entity.

The court recognised that the contractual relationship between the buyers and sellers exists when a trade is executed on the digital token exchange notwithstanding that this contractual relationship was represented by a smart contract.

A takeaway from the B2C2 Case is that even though the contracts between the buyer and seller were smart contracts, ordinary contract principles such as the doctrine of unilateral mistake at common law apply. The court also pointed out that in circumstances where it was necessary to assess the state of mind of a person where the acts of deterministic computer programmes were in issue, regard ought to be had to the state of mind of the programmer of the program in issue when that program (or the relevant part of it) was written. However, the court also highlighted that the court did not intend to express any views on the precise legal relationship between computers and those who control or program them.

Separately, the B2C2 Case also dealt with the law of trusts. It was held that unless expressed clearly in the agreed terms and conditions between the users of the platform and platform operating entity, where the cryptocurrency exchange holds a user’s crypto assets to the order of the user who could withdraw it at any time, then the cryptocurrency exchange was holding such crypto assets on trust for the individual user.

Hong Kong Small Flag Hong Kong

There has been very limited judicial consideration of blockchain concepts or smart contracting in Hong Kong to date.

However, given Hong Kong’s increasing prominence as an Asian ICO hub and the recent surge in local interest in cryptocurrency trading (discussed in the responses to questions 10 and 12 above), combined with well-publicised governmental and regulatory scrutiny of cryptocurrency trading and ICO / STO issuances (discussed in the responses to questions 8 and 12 above), future judicial consideration in this area seems likely.

Updated: February 17, 2020