Views
Bitcoin and public policy in the field of international commercial arbitration
Is a foreign arbitral award granting damages in bitcoin compatible with substantive public policy? The Western Continental Greece Court of Appeal was recently confronted with this question. Within the framework of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, it ruled that the recognition of a US award runs contrary to Greek public order. Cryptocurrency, such as bitcoin, favors tax evasion and facilitates economic crime, causing insecurity in commercial transactions to the detriment of the national economy.
FACTS
The applicant, a German national, was a member of a website, governed by a US company. The website was a platform through which members could conclude credit contracts in cryptocurrency (bitcoin). The applicant agreed with a resident of Greece to finance his enterprise by providing a credit of 1.13662301 bitcoin. The Greek debtor failed to fulfill his obligations, and he refused to return the bitcoin received. On the grounds of an arbitration agreement, an award was issued by an online arbitration court, located in the USA. The debtor appeared in the proceedings and was given the right to challenge the claim of the applicant. The court of first instance decided that the arbitral award may not be recognized in Greece for reasons of substantive public policy (CFI Agrinio 23.10.2018, unreported). The applicant lodged an appeal.
THE JUDGMENT OF THE COURT APPEAL
The appellate court began with a short description on the nature of bitcoin. It then mentioned the position of the European Central Bank with respect to the same matter. It concluded that the use of bitcoins endangers transactions both for the parties involved and the state. This comes from the fact that any income resulting from the use of cryptocurrency is tax-free, given that this kind of transactions are not regulated in Greece. Hence, importing capital in bitcoins and generally any kind of cryptocurrency, irrespective of the type of legal matter, infringes the domestic legal order, because it favors tax evasion and facilitates economic crime, causing insecurity in commercial transactions to the detriment of the national economy.
As a result of the above, the recognition of an award which recognizes bitcoin as a decentralized currency unit (peer to peer), and orders the payment of a certain debt in bitcoins, runs contrary to public policy, i.e., to fundamental rules and principles of Greek legal order in present times, reflecting predominant social, financial, and political values.
Finally, by enhancing transactions in bitcoin and promoting its equalization to legal currency, the recognition of such an award in Greece would essentially disturb prevailing standards of the country, given bitcoin’s sudden and unpredictable fluctuations [Western Continental Greece Court of Appeal 27.09.2021, unreported].
COMMENT
Unlike the profound analysis of the first instance court, the appellate court confirmed the judgment mechanically, with zero references to legal scholarship and case law. The developments in the subject matter between 2018 (publication of the first court’s ruling) and 2021 (publication of the appellate court’s judgment) were not taken into account. The Hellenic Republic has transposed crucial directives related to cryptocurrency (see DIRECTIVE (EU) 2019/713 of 17 April 2019 on combating fraud and counterfeiting of non-cash means of payment and replacing Council Framework Decision 2001/413/JHA). New income tax rules and regulations focusing on cryptocurrency are prepared by state authorities. Even now, i.e., without a special law on cryptocurrencies, bitcoin profits must be declared for taxation purposes. Bitcoin exchange offices are active in the country. To conclude, the judgment seems to be alienated from contemporary times.
Referring to the judgment of the CJEU in the case Skatteverket / David Hedqvist (C-264/14), the first instance ruling underlined that the decision focused on the Swedish economic environment, which may not be compared to the situation in Greece. Therefore, and in light of recent developments in the country, we may hope that the courts will soon shift course towards a more pragmatic approach.
[Many thanks to Professor Euripides Rizos, Aristotle University of Thessaloniki, for his valuable insight into the field of cryptocurrencies]
EFFORTS Questionnaire on Digitalization of Civil Procedures Relating to Cross-Border Enforcement
In the framework of the EFFORTS Project, a questionnaire has been drawn up on the digitalization of civil procedures relating to cross-border enforcement.
The questionnaire aims at collecting quantitative and qualitative data on the digitalization of enforcement procedures at the national and European level, with a view to identifying technical solutions and legislative amendments to implement such digitalization.
The questionnaire, together with information on the EFFORTS Project, may be accessed here
The EFFORTS project partners thank you in advance for your time and contribution!
Project JUST-JCOO-AG-2019-881802
With financial support from the Civil Justice Programme of the European Union
Ranking the Portability of ASEAN Judgments within ASEAN
Written by Catherine Shen, ABLI
The Asian Business Law Institute (ABLI) has recently released a free publication titled Enforcement of Foreign Judgments in ASEAN: Ranking the Portability of ASEAN Judgments within ASEAN, a derivative publication under its Foreign Judgments Project.
The Association of Southeast Asian Nations (ASEAN) comprises of Brunei Darussalam, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. These jurisdictions are of different legal traditions of civil law (Cambodia, Indonesia, Lao, Thailand and Vietnam), common law (Brunei Darussalam, Malaysia, Myanmar and Singapore) and hybrid law (Philippines) tradition. There are two primary hurdles for increasing the portability of ASEAN judgments within the bloc. First, some ASEAN jurisdictions, such as Indonesia and Thailand, have no law that allows foreign judgments to be recognised and enforced. Second, most civil law jurisdictions in ASEAN still have rather rigid requirements on reciprocity. These two hurdles are the main influencers of the ranking.
Three key takeaways can be gleaned from the ranking.
First, Vietnamese judgments claim the crown of being the most portable of ASEAN judgments within ASEAN. They can be enforced in seven out of the other nine ASEAN countries, provided, of course, that the requirements for enforcement under the laws of those countries are satisfied. This is a portability rate of close to 78%. Compared to other ASEAN jurisdictions, Vietnam has the benefit of having bilateral agreements with Cambodia and Lao which allow its judgments to be enforced in the latter two jurisdictions. Cambodia requires a guarantee of reciprocity while Lao PDR requires a bilateral treaty with the relevant country covering the enforcement of each other’s judgments before reciprocity is satisfied.
Second, judgments rendered by the other civil law countries of ASEAN come in second place. They can be enforced in six out of nine ASEAN countries.
Third, judgments from the common law countries of ASEAN and the hybrid law jurisdiction of the Philippines are jointly in third place. They can be enforced in five out of nine ASEAN countries, namely in the other common law and hybrid law jurisdictions, as well as Vietnam. Although Vietnam, being a civil law jurisdiction, imposes a condition of reciprocity, it appears relatively easy to satisfy this requirement.
This result may be surprising or even perverse since most civil law jurisdictions, i.e., Cambodia, Indonesia, Lao and Thailand, have comparatively illiberal regimes for the enforcement of foreign judgments (whether due to the rigid requirement of reciprocity or the lack of relevant laws), while the common law and hybrid law jurisdictions in ASEAN have comparatively liberal rules for foreign judgments enforcement. This “asymmetry” is mainly due to the inability of those civil law jurisdictions to return the favour of the more liberal rules of the common law and hybrid law jurisdictions in ASEAN given the state of their laws, namely, the requirement that there be reciprocity between the two countries.
The Enforcement of Foreign Judgments in ASEAN: Ranking the Portability of ASEAN Judgments within ASEAN is available for free and can be downloaded here. ABLI regularly publishes latest developments in the field of recognition and enforcement of foreign judgments in Asia on its website and LinkedIn.
News
The 2024 Annual Inter-regional and International Family Law Forum of Chinese Society of Private International Law was held in Guangzhou
(This post was drafted by Zhang Yong, a PhD student in the University of Macau and revised by Guangjian Tu)
The Annual Inter-regional and International Family Law Forum of Chinese Society of Private International Law was held on September 21, 2024 in Everwin Law Office, Guangzhou. Scholars, practitioners and notaries from all over the country working in the field came together to discuss the relevant issues. After the opening ceremony chaired by Prof. Guangjian Tu from the University of Macau, keynote speeches were delivered: 1, Prof. Yong Gan, School of Law of Wuhan University, who is a member of the Expert Group, introduced the progress of the Expert Group’s work on the Parentage/Surrogacy Project in the Hague Conference on Private International Law; 2, Prof. Faqiang Yuan, School of International Law of East China University of Political Science and Law, shared his research article titled “Annual Report on the Development of Rule of Law in the Field of Family Affairs: Domestic and Abroad in 2022-2023″.
In the parallel sessions, participants had heated debates and discussions on new developments in foreign-related family law in the Mainland China, foreign-related and Hong Kong and/or Macao-related marital property relations and agreements, parentage and maintenance support, recognition and enforcement of inter-regional marriage and family judgments, foreign-related and Hong Kong and/or Macao-related inheritance, and jurisdiction over inter-regional family issues etc.
Of course, the Arrangement on Reciprocal Recognition and Enforcement of Civil Judgments in Matrimonial and Family Cases by the Courts of the Mainland China and of the Hong Kong Special Administrative Region (the Arrangement) was the focus of this forum. The Arrangement was adopted on 20 June 2017 and came into effect on 15 February 2022. In order to achieve closer and more extensive judicial assistance in the area of marriage and family law between Mainland China and Hong Kong, except for inheritance-related issues, the Arrangement covers a broad range of matters, almost everything in marriage and family laws such as validity of marriage, marital property relationships, parentage, maintenance, adoption etc. This is very different from the Regulations enacted in the European Union, which regulated those issues one by one in a piece-meal approach.
Revue Critique de droit international privé – issue 2024/3
Written by Hadrien Pauchard (assistant researcher and doctoral student at Sciences Po Law School)
The third issue of the Revue Critique de droit international privé of 2024 was released on October 1st. It contains four articles and several case notes. In line with the Revue Critique’s recent policy, the doctrinal part will shortly be made available in English on the editor’s website (for registered users and institutions). Read more
Delhi High Court Grants Rare Anti-Enforcement Injunction: Implications for International Disputes
By Ananya Bhargava, Jindal Global Law School, OP Jindal Global University, India.
Recently, the Delhi High Court in the case of Honasa Consumer Limited v RSM General Trading LLC granted an anti-enforcement injunction against the execution proceedings instituted in the Dubai Court on the ground that it threatened the arbitral process in India. The Court deemed the proceedings before the Dubai Court as an attempt to frustrate a possible arbitration envisaged by the contract between the parties. The injunction was granted under S.9 of the Indian Arbitration and Conciliation Act 1996 as an “interim measure.” This is a significant turning point in the intersection of arbitration and cross-border litigation in India since the remedy of anti-enforcement injunction is rarely granted by judicial authorities across jurisdictions.