Category: Opinion

Introduction

The High Court’s judgment in Amir Soleymani v Nifty Gateway LLC is a bold step in the law of cryptoassets and NFTs. This case is the first to concern NFTs, but is arguably a concerning one for NFT purchasers, as the courts have sided with a large platform over a small consumer in this case. It was held that a ‘decentralised and borderless’ NFT auction could not be subject to English consumer protection legislation. Cases like these emphasise the value of partnering with a boutique which offers legal protection such as Ad Astra for your offering.

What were the facts of the case?

Mr Soleymani (the Claimant), a notable Liverpool-based NFT collector under his alias ‘Mondoir’, took part in an NFT auction held on the online platform of Nifty Gateway (‘Nifty’) (the Defendant), a prominent US NFT platform. In order to use the platform and place bids, the Claimant had to sign up to Nifty’s Terms of Use.

The Terms of Use provided that (1) by agreeing to them one also agreed to resolve all disputes with Nifty through arbitration held in New York; and (2) the Terms of Use shall be subject to the laws of the State of New York (the ‘Governing Law Clause’). In the auction Mr Soleymani placed a bid for an NFT associated with an artwork by Beeple. He placed the second highest bid, and thus Nifty informed Mr Soleymani that he had been among the highest 100 bidders and therefore a ‘winner’ in the action. They refused to give him his money back, and instead he was awarded a ‘second edition’ of the same Beeple he had bid for. Mr Soleymani claimed he was unaware of the non-traditional rules of the auction. There was a dispute as to whether Mr Soleymani was liable to pay the sum of the Bid.

What claim was brought before the English courts?

Alongside the New York arbitration, Mr Soleymani brought a claim before the English courts, seeking a declaration that the arbitration agreement in Nifty Gateway’s terms of use was unenforceable because it was unfair under the form of the Consumer Rights Act 2015.

What was the judgment?

The court upheld Nifty Gateway’s challenge, dismissing Mr Soleymani’s claims. The Court rejected Mr Soleymani’s argument that the subject-matter of the claims was “consumer rights” rather than “arbitration”. The court further held, that while Mr Soleymani was entitled to raise English consumer protection issues under the Arbitration Act 1996, it was not suitable legislation to deal with the question of “fairness”. Issues regarding the validity of the arbitration agreement, including questions of the fairness of the terms of use, were more properly dealt with by the arbitral tribunal. The consumer rights issues raised by Mr Soleymani would require the English court to make factual findings that overlapped with the substance of the dispute and so were properly within the arbitral tribunal’s jurisdiction. The relevance of English consumer protection law was disputed given that the terms were governed by New York law. Thus, the claim was dismissed.

Comment

The case is concerning for consumers of NFTs, who seem to have little recourse for auctions that they consider ‘unfair’. It will be interesting to see where NFT case law goes, as the court in this case did not deny that NFT sales could be protected under consumer protection law, but merely that this was superseded in this case by the arbitration agreement. This case not only highlights the necessity of reading the terms of use of an individual platform, but the importance in this space of partnering with platforms which aim to protect your consumer rights. Ad Astra is a platform which puts consumers and creators first, and our dedicated legal team is on hand to ensure your rights are protected.

Increasingly, we are beginning to see an increase in the number of educational articles online and in print around the NFT space. From the Financial Times to Right Click Save, those who have previously been unable to access the industry are able to read articles breaking down the jargon and demystifying the infrastructure. This is buoyed by an increase in talks, panels, and conferences, open to both those currently building in Web3, but also those who looking to understand and explore it. And yet, we are leaving large parts of the world behind.

An English-dominated space

The overwhelming majority of information currently online around NFTs, DeFi, and blockchain technology is written and produced in English. Whilst it is true that basic English is taught in many countries globally, this is a different level of comprehension to that required to be able to grasp complex, new ideas and structures. I was born in England, and grew up with English as my native language, yet there are still many blockchain articles that it takes work for me to process and linguistically digest. It is unsurprising then that we see a significantly slower adoption of web3 in countries where English is not broadly spoken.

Adding to this, the blockchain space is well known for its regular, international, conferences. This year, we will see ETHLisbon, ETHBarcelona, NFTBerlin, and ETHPrague, alongside many others. This could be an opportunity for the blockchain community to build accessibility and outreach talks and panels for the local people in each city. However, although the national languages in the countries that the above conferences are held in are Portuguese, Spanish, German, and Czech, the conferences themselves take place in English.

Of course, this makes sense. Since English is the most commonly spoken and comprehended language globally, it benefits the majority to write our articles and hold our conferences in English. By doing so, it is true that these articles are conferences reach more people than if they were written and hosted in any other single language. However, it is not clear to me that ensuring content is available in English needs to come at the expense of creating accessibility in other languages. So, how can we be doing better?

A way forward

The easiest way to increase accessibility would be to have articles about Web3 translated into a range of languages, beginning with those that are most widely spoken. This would enable those from non-English speaking backgrounds to start to read about the concepts underlying DeFi, NFTs and blockchain technology, and to begin engaging in discussions around them. With this access to knowledge increasing interest in the space, there would then be significant traction to start holding panels and talks in these languages.

Furthermore, I would suggest that at each conference that takes place in a country where the national language is not English, that there runs a parallel schedule of events that are held in that location’s language, for the local community. The Web3 space is incredibly diverse – one of the great characteristics of the industry – and I do not believe that we would struggle to find speakers with insights that they are interested in sharing who speak the local language. This would allow conferences to give something back to the city that is hosting them, and would create a space for different international communities to share ideas, without having to cross an unnecessary language barrier.

The Web3 space is heralded as being special, specifically for its level playing field and its accessibility. Actively working to make these changes would enable us as a community to actually play out the values we are praised for. The change begins with us.