Service Of Court Proceedings On Unknown Defendants In The Time Of Crypto

• Published date: 01 December 2022
• Subject Matter: Immigration, Technology, General Immigration, Fin Tech
• Law Firm: Ogier
• Author: Ms Victoria King, Christopher Levers and William Jones Esq

On 24 June 2022, in the case of D'Aloia v Persons Unknown and others [2022] EWHC 1723 (Ch), the High Court of England & Wales granted for the first time an order permitting service of Court proceedings on persons unknown by transfer of an NFT (non-fungible token - a digital asset that cannot be replicated or interchanged).

In that case, service would be effected by way of a form of airdrop into the digital wallets in respect of which the claimant had made his first transfer to those behind the website. The effect of service by NFT would be that the drop of documents into the system would embed the service in the blockchain. The Court determined that service in this manner was likely to lead to a greater prospect of those behind the website being put on notice of the making of the order and the commencement of the proceedings.

The English decision came just weeks after a New York court also allowed service using NFTs on an anonymous defendant in a cryptocurrency theft case. The notice of a $1.3m asset freeze was served by embedding a hyperlink into the notice in an NFT sent to the defendant's blockchain address.

These recent firsts have been widely reported, but the law has permitted service against unknown defendants via various methods for at least several decades.

History behind service on persons unknown

Before modifications to modernise the English court procedural rules, proceedings had to specify the names and addresses of the defendants in order to be valid, and they could not be too vague.

The reasoning behind requiring such specificity was that a defendant who is unknown cannot by definition appear at court and defend themself, because they would not know they were a defendant. There would also be no one to be bound by any order made by the Court. The principle was summarised by the English court as follows: "Justice in legal proceedings must be available to both sides. It is a fundamental principle of justice that a person cannot be made subject to the jurisdiction of the court without having such notice of the proceedings as will enable him to be heard. The principle is perhaps self-evident."¹

An exception to this requirement arose in cases of selling pirated goods: if a plaintiff could identify one such trader, the court would make a "representative" injunction preventing them on their own behalf and as representative of all other such unknown traders continuing the infringing activities².

The scope to serve proceedings on persons unknown was...