Zoe Wyatt comments on the High Court granting service by blockchain in New Law Journal
Partner and Head of Crypto, Zoe Wyatt, comments on the High Court granting permission to serve court documents on unknown fraudsters via the transfer of an NFT, in New Law Journal.
Zoe’s comments were published in New Law Journal, 13 July 2022.
“Whether it’s tax or legal, the courts will do what they can within their remit to find an equitable outcome. In tax, the courts will, where possible, take a purposive interpretation of law. In this case, the court allowed an application for service by alternative means to serve on unknown persons using the very type of technology (blockchain, smart contracts & NFTs) that was at the heart of the subject matter; creating an NFT with the court proceedings embedded that could be delivered to the wallet addresses of the Defendant.
“Interestingly, the court considered it was appropriate to hear the case in the UK on the basis that the cryptoassets were UK situs. The Claimant had an English domicile and the court held that domicile was determinative in establishing the situs of the cryptoassets, citing a 2020 case on the subject. However, in March 2022 (i.e. before the D’Aloia case was heard), the High Court held in Tulip Trading Ltd v Bitcoin Association that residence or place of business, not domicile, is the test to apply when assessing the situs of cryptoassets.
“The D’Aloia judgement does not comment on the residence status of the Claimant and we are left wondering whether, if he was a non-UK resident, it was right to hear this case in the UK.
“We will need to consider whether HMRC’s view, that beneficial ownership of cryptoassets is disposed of when staking or undertaking other DeFi transactions, is in any way undermined as a result of the Court concluding the Defendants held the cryptoassets on (constructive) trust for the Claimant. We would also be interested to understand the wider legal ramifications for exchanges on the constructive trust point.
“This case gives hope to those who have fallen victim to cryptoasset scams, whilst showcasing that NFTs can have many different real world use cases and are here to stay.”