As we learn more about the types of uses of cryptocurrency, some legal experts are taking advantage of the blockchain linked to one’s centralised wallet to serve legal documents, even if the person is deliberately avoiding service, flying under the radar, in a different jurisdiction or just incognito.
But how? Recently courts in both the United States and United Kingdom have allowed lawyers to serve documents by substituted service over the blockchain1 on parties to a proceeding by way of a non-fungible token (NFT). In these instances, the NFTs were air-dropped on wallets allegedly holding stolen currency.
NFT is a digital identifier that is so unique that it isunable to be copied as it comprises of a uniquely identifiable asset, which is non-fungible and is recorded on a blockchain2.
In the US court case, the judge ordered that the Plaintiff’s attorneys:
shall serve a copy of this Order to Show Cause, together with a copy of the papers upon which it is based, on or before June 8, 2022, upon the person or persons controlling the Address via a special-purpose Ethereum-based token (the Service Token) delivered-airdropped into the Address. The Service Token will contain a hyperlink (the Service Hyperlink) to a website created by Holland & Knight LLP, wherein Plaintiff’s attorneys shall publish this Order to Show Cause and all papers upon which it is based. The Service Hyperlink will include a mechanism to track when a person clicks on the Service Hyperlink. Such service shall constitute good and sufficient service for the purposes of jurisdiction under NY law on the person or persons controlling the Address.’
The result of the order was that the legal claim documents acted as a service token in affect by way of NFT. The function of which, once accessed (opened) triggered the token and thus the plaintiff was able to demonstrate effective service.
It has recently been discussed that service over the blockchain in New Zealand may come soon across the ditch as there have already been instances whereby NZL courts have allowed substituted service via email and social media.
There are specific methods of serving legal documents, that is by providing or delivering a legal document to another party that satisfies the court the recipient has both received and has been made aware of the legal document. Traditionally is it by either personal or ordinary, that is by delivering it by hand after confirming the recipient’s identity or by email or post respectively.
But what if the other party is avoiding such traditional means of service or located in a different jurisdiction? Well that’s where substituted service can come into play. This method requires the relevant courts permission for an alternative method of serving legal documents. Usually courts would take the following into account:
- whether you have taken reasonable steps to serve the document;
- whether your prior attempts to serve the document were likely to have made the person aware of the existence and nature of the document;
- whether there is an alternative method of service that would likely be successful in making
- the person aware of the existence and nature of the document; and
- the likely cost of serving the document and your ability to meet this cost.
Given the current Australian civil procedure rules, it is quite possible that service of legal documents may be attempted by way of NFTs (subject to the approval of the court). Watch this space!
With the gold standard being replaced by fiat money, it’s certainly exciting to consider how we will be placed in the future when (if) the world moves towards stable coins and or a gold-backed cryptocurrency!
SV Partners has developed an in-depth understanding of the complexities and regulations impacting the industry through first-hand experience dealing with cryptocurrency businesses and exchange platforms facing financial difficulties, stress or insolvency.
Our team have gained knowledge around the specific requirements that businesses and stakeholders face through our engagement in a variety of matters of varying scope and complexity.
1 A blockchain is a distributed ledger or database, shared among nodes of a computer network that is immutable.
2 The blockchain is used to certify ownership and authenticity.
i LCXAG v John Doe Nos 1-25
ii D’Aloia v Person Unknown & Ors EWHC 1723 (Ch)