Judgment has been handed down by the Court of Appeal (Birss LJ, Popplewell LJ and Lewison LJ) in Tulip Trading v Van Der Laan. The Court of Appeal reversed the decision of Falk J and dismissed the jurisdiction applications brought by various of the Defendants against the Claimant, Tulip Trading.
Tulip Trading says that it is the owner of many billions of dollars of digital assets, commonly (but Tulip Trading says, mistakenly) referred to as Bitcoin, and that it had its access to those digital assets taken from it in a theft, when an unknown third party stole its private keys and related information.
Tulip Trading claims that the Defendants are the developers of the digital currency networks in question and that they owe Tulip Trading, as the true owner of the digital assets, fiduciary and/or tortious duties to restore Tulip Trading’s ability to access and use the digital assets.
At first instance, Tulip Trading succeeded in showing that the Claim could be served out under the gateways in PD6B and that England was the appropriate forum (which findings were not challenged on appeal). However, Falk J was persuaded that there was no serious issue to be tried that the duties were in fact owed by the Defendants.
The Court of Appeal has now unanimously reversed Falk J’s decision, finding that there was a “significant flaw” in the Judge’s reasoning because she impermissibly made factual findings contrary to Tulip Trading’s case.
The Court of Appeal held that there was a serious issue to be tried as to the existence of the duties, and, in fact, that – if Tulip Trading is right that the digital currency networks are not decentralised – “there is much to be said for the submission that bitcoin developers, while acting as developers, owe fiduciary duties to the true owners of that property”.
The Court also held that, while the facts were, “quite a long way from factual circumstances which the courts have had to examine before in the context of fiduciary duties… if the facts change in a way which is more than incremental I do not believe the right response of the common law is simply to stop and say that incremental development cannot reach that far.” The Court also stated that “The internet is not a place where the law does not apply.”
This decision – which would allow Tulip Trading’s case to proceed to trial – will therefore be of significant interest. The trial of this Claim will address the question of whether or not digital currency networks are in fact decentralised, as well as determining the existence of the fiduciary and tortious duties in question.
The leading judgment of Birss LJ (with which Popplewell LJ and Lewison LJ agreed) also contains an interesting exposition of concepts relating to digital assets and confirms that they were located in the jurisdiction on the basis of Tulip Trading’s residency in England.
John Wardell KC, Bobby Friedman and Sri Carmichael acted for the successful appellant, instructed by a team at Ontier LLP.
A copy of the judgment can be accessed here.