Law commission consultation on digital assets and (electronic) trade documents in private international law

We provisionally propose the creation of a new discretionary power of the courts of England and Wales to grant free-standing information orders at the initial stage of investigations in cases where the features of the digital and decentralised environments make it otherwise impossible for a claimant to obtain the information they need to formulate and bring a fully-pleaded substantive claim.

We provisionally propose that such power should be based broadly on the principles of access to justice, necessity, and preventing injustice in the modern digital and decentralised environments.

Do consultees agree?

We provisionally propose the following as the threshold test that the claimant must be able to meet before the discretion to grant an order under the proposed power may be exercised. All four limbs would have to be satisfied.

1. A case of certain strength: the court must be satisfied that there has clearly been wrongdoing on facts that disclose a potential case that is more than barely capable of serious argument and yet not necessarily one which the judge believes to have a better than 50 per cent chance of success.
2. Necessity: the court must be satisfied that the relief sought must be necessary in order to enable the applicant to bring a claim or seek other legitimate redress for the wrongdoing.
3. Impossibility or unreasonableness: the court must be satisfied that there is no other court in which the claimant could reasonably bring the application for relief.
4. A link to England and Wales: the court must be satisfied that there is a connection to England and Wales, such as the claimant’s habitual residence, domicile, or nationality.

Do consultees agree?

We invite consultees’ views on the potential impact of this proposal if it were implemented.

For example, would this information power be useful for obtaining information ultimately leading to the recovery of crypto-tokens in cases of fraud or hacking?

Do consultees consider that claimants would rely on the proposed new power, as well as free-standing freezing orders, rather than relying on a gateway?

We invite consultees’ views on whether exchanges and other third-party respondents are likely to comply with any such free-standing information orders.

We provisionally propose that:

1. 1. The appropriate court to hear a cross-border property claim concerning a crypto-token is the court of the place where the crypto-token can effectively be dealt with at the relevant point in time.
2. 2. The relevant point in time should be the time when proceedings are issued.

Do consultees agree?

We invite consultees’ views on whether there is a need for a new gateway/ground of jurisdiction explicitly providing that the courts of England and Wales have jurisdiction when a crypto-token can be controlled from within the jurisdiction at the time when proceedings are issued.

We provisionally propose that:

1. Where it is necessary or desirable to “localise” loss for the purposes of the locus damni rule by reference to the victim, the damage is sustained where the victim physically was present at the time the damage occurred.
2. Where damage consists of being denied access to an online account that, in principle, could previously have been accessed from anywhere in the world and if no real reason can be given for saying the damage “occurred” in one location over the others, the defendant should be sued in their home court, where this is possible.

Do consultees agree?