NFT case goes to Court of Appeal

Russells’ litigation team is acting for Amir Soleymani in his claim against Nifty Gateway which will appear before the Court of Appeal later this month. Mr Soleymani’s claim relates to the applicable laws and jurisdiction of a case concerning the acquisition of a non-fungible token (“NFT”) by the artist Beeple.

The decision could have significant consequences for traders who seek to avoid English consumer laws or the jurisdiction of the English Courts by imposing a foreign arbitration clause in their online terms and conditions. As far as we are aware, it will also be the first time the Court of Appeal has considered a matter involving NFTs.

Summary of the case to date

Mr Soleymani participated in an online auction on Nifty Gateway’s platform to acquire a NFT of the digital artwork ‘Abundance’ by the artist Beeple.

Mr Soleymani came third in the auction but Nifty Gateway claimed that under its terms and conditions Mr Soleymani was liable to pay the full sum of his highest bid in return for the third edition of the NFT. Mr Soleymani had not understood or agreed to these unusual terms.

Nifty Gateway began arbitral proceedings against Mr Soleymani in New York relying on a clause in its terms and conditions which provided for a New York-based arbitration to be decided under New York law.

Mr Soleymani issued his own proceedings in the English Courts to protect his rights as an English consumer. His claim sought, among other things, a declaration that the arbitration clause incorporated into Nifty Gateway’s terms of conditions was unenforceable as (1) unfair under the Consumer Rights Act 2015, and/or (2) inconsistent with his rights under the Civil Jurisdiction and Judgments Act 1982 (which was amended post-Brexit to transpose certain jurisdictional safeguards) to sue and be sued in his home country. He also made claims in relation to the governing law clause of Nifty Gateway’s terms and conditions and under the Gambling Act 2005.

At a hearing in March 2022, an English Deputy Judge held that the English Court did not have jurisdiction to make one of the declarations that Mr Soleymani sought (in relation to the arbitration clause) and stayed the proceedings relating to the other two declarations in favour of the New York arbitration.

The appeal

Mr Soleymani has been granted permission by the Court of Appeal to appeal the Deputy Judge’s decision.

The Competition and Markets Authority (the body with primary responsibility for enforcing consumer rights in the UK) has also been granted permission to intervene on the basis of the important consumer rights issues the appeal raises.

The appeal is scheduled to be heard on an expedited basis before a Court of Appeal panel, including the Master of the Rolls, on 27 July 2022.

Steven Tregear, Dan Hoyle and Alice Rudge act on behalf of Mr Soleymani.