In the landmark decision of D'Aloia v Person Unknown & Others [2022] EWHC 1723 (Ch), the English High Court has, for the first time, granted permission for proceedings to be served by non-fungible token ("NFT").
The case was brought by the victim of a scam who had been conned into transferring cryptocurrency to wallets operated by fraudsters, whose identities were unknown. The claimant sought, amongst other things, permission to effect alternative service of proceedings on the persons unknown by (i) email, which is now considered relatively mainstream and has generally been permitted for a number of decades and (ii) NFT in the form of an 'airdrop' into the wallets used to perpetrate the fraud, which would embed the service in the blockchain.
The Court granted alternative service of the proceedings by email and NFT. In respect of service by NFT, Mr Justice Trower went as far as saying "There can be no objection to it; rather it is likely to lead to a greater prospect of those who are behind the [fraud] being put on notice of the making of this order, and the commencement of these proceedings".
It remains unsettled whether service by NFT alone would be permissible. Whilst the Court was not asked to consider this issue, Mr Justice Trower did note that "I do not think it is appropriate... to make an order for service by alternative means in circumstances in which it would be sufficient, without serving by email as well." However, given that in most instances a fraud would have been preceded by some form of correspondence/contact, there will likely be rare instances where a postal address or email address for service is unavailable, even if the identity of those behind the address is unknown.
It is notable that this decision was preceded by a judgment of the New York Court which permitted service of a freezing notice by NFT against an unknown defendant in a case concerning the theft of cryptocurrency.
D'Aloia is one of a number of decisions over the course of the last two years, in which the English High Court has shown a willingness to embrace crypto assets and modernise legal mechanisms established long before the development of this technology to ensure that England remains a key legal centre for disputes of this nature (for example see our articles: Crypto Assets – No Longer a Safe Haven for Fraudsters, Crypto Currencies: Too Volatile to Provide Security). It will be interesting to see how the use of NFTs in legal proceedings evolves, given the benefits associated with blockchain recognition as referred to the Court in this case. For example, we could foresee a particular benefit in NFTs being incorporated into the electronic signing of Court related documents.
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