By Darren Parkin
London’s Court of Appeal has sensationally announced that a claim by Tulip Trading Limited against 16 developers who are alleged to be responsible for the Bitcoin network will go to trial.
Tulip’s claim alleges the developers owe ‘fiduciary duties’ and ‘duties of care’ to effectively police the Bitcoin network.
The ‘core’ developers – named in court documents as Wladimir Jasper van der Laan, Jonas Schnelli, Pieter Wuille, Marco Patrick Falke, Samuel Dobson, Michael Rohan Ford, Cory Fields, George Michael Dombrowski, Matthew Gregory Corallo, Peter Todd, Gregory Fulton Maxwell, Roger Ver, Amaury Séchet, Jason Bradley Cox, Bitcoin Association for BSV (a Swiss verein) and Eric Lombrozo – had previously succeeded in dismissing the claims summarily in March 2022.
However, the Court of Appeal has today ruled that Tulip’s claims give rise to a “serious issue to be tried” and should therefore proceed to a full trial in London, expected to be early next year.
Astraea Group acted for fourteen of the developers instructed by Bird & Bird.
James Ramsden KC, who was lead and sole advocate for them in the Court of Appeal, said the outcome was one the Court of Appeal may have felt driven to because the developers were all outside the jurisdiction of the court permission to serve the proceedings on them.
“And that required Tulip to show that its claim gave rise to a serious issue to be tried,” he explained.
“As observed by the Court of Appeal in granting permission to appeal last August, it is in many ways a shame that this incredibly important case fell to be decided according to this low threshold test rather than at a full trial. The Court of Appeal has effectively agreed with that observation by deciding that the issues raised by this case are so important they merit determination at a full trial.
“Tulip’s claim has been bedevilled by pleading and presentational issues but once again the Court of Appeal have looked through them in favour of a ruling at a full trial that will deliver greater legal certainty.”
The King’s Counsel added that the courts in this jurisdiction continue to lead the common law world in developing a legal structure for the DeFi sector.
“This case will be the most important so far in maintaining that lead and continuing to establish this jurisdiction as the leader for DeFi litigation,” he said.
“The outcome of this claim at trial will therefore have a profound impact and not just in the UK. That impact will apply regardless of whatever regulation the UK Government eventually settles on. So watch this space. I expect a full trial in early 2024.”
The four ‘relevant’ grounds of appeal were listed in the official documents briefly as…
i) Ground 1: this is a developing, complex and uncertain area of law and therefore the point ought to go to trial;
ii) Ground 2: the conclusions are in error because they are based on findings impermissibly assumed against Tulip (5 specific points are taken);
iii) Ground 3: Taking into account the Law Commission project was an error;
iv) Ground 4: The judge was wrong to hold that Tulip has no real prospect of establishing that the claimed fiduciary duties exist (this ground involves 7 specific points).
Concluding proceedings, Lord Justice Birrs, said he would allow the appeal. Lord Justice Lewison and Lord Justice Popplewell agreed.
“The conclusion is not that there is a fiduciary duty in law in the circumstances alleged by Tulip, only that the case advanced raises a serious issue to be tried,” Lord Justice Birrs stated.
“The time to decide on the duty in this case is once the facts are established. As the judgment itself showed, to rule out Tulip’s case as unarguable would require one to assume facts in the defendant developers’ favour which are disputed and which cannot be resolved this way.
“If the decentralised governance of Bitcoin really is a myth, then in my judgment 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 post Court of Appeal orders Tulip Bitcoin case to go to full trial appeared first on CityAM.
