Andrew Spink KC and Justina Stewart secure re-trial in landmark crypto-fraud appeal in the DIFC Court of Appeal

Andrew Spink KC and Justina Stewart have succeeded in securing a re-trial in (1) Gate Mena DMCC (2) Huobi Mena FZC v Tabarak Investment Capital Ltd and another DIFC CA-002-2023 (‘Huobi v Tabarak’).

In a much anticipated judgment, the DIFC Court of Appeal (Justice Black KC giving the leading judgment) has reviewed the law in relation to digital assets, and developed DIFC jurisprudence in other areas.

The DIFC recently enacted wide-reaching legislative reform, in the form of the DIFC Digital Assets Law and Law of Security and associated amendments to numerous DIFC laws (a project on which Andrew and Justina, alongside other OTC members, were instructed). 

These bespoke and innovative legislative reforms, alongside the Court of Appeal’s decision in Huobi v Tabarak and the high regard in which the DFSA is held internationally, serve to confirm the DIFC’s pre-eminence in and commitment to the digital assets, banking and financial services sectors.

The re-trial will focus on whether a contract was formed. 

Andrew and Justina were instructed by Charles Russell Speechlys (Sara Sheffield, Peter Smith, Max Davis, James Colautti, Reem Faqihi).

Andrew and Justina will be in the DIFC region on 8 July 2024 to speak about the judgment. Details on their talk will be announced in due course. Please contact communications@outertemple.com if you are interested in attending.

Key takeaways from the decision in Huobi v Tabarak:

• The decision casts doubt on the hereto widely accepted view that, under the DIFC Contract Law, consideration is not a prerequisite for the validity or enforceability of a contract. 
• Not only are bitcoin (‘BTC’) property, but they fall also within a ‘third’ category of property (as also confirmed in the DIFC Digital Assets Law).
• The concept of control is the most apposite way of expressing ‘possession of a digital asset’ and ‘someone who exercises control over a crypto asset in which another superior title, with consent of that other, may be considered a custodian of the asset’ (consistent with Huobi’s case at trial).
• As a matter of statutory construction, it is possible to argue that the definition of bailment in the DIFC Law of Obligations can extend to factual control of crypto assets (as Huobi contended at trial).  This approach diverges from the common law position, which requires possession of a tangible object, and might be considered surprising given the common law roots of the DIFC Law of Obligations’ articles on bailment.
• The re-trial will enable the DIFC Court to explore the important issue of whether relief for breach of contract may include an award in the form of digital assets in specie or its value at the time of (say) judgment as opposed to the date of loss.  Central to this will be a consideration of the meaning of the word “money” and whether BTC is “money” or analogous thereto. A definition of “money” which allows digital assets to be classified as such (subject to satisfaction of certain conditions) is provided as part of the DIFC’s recent landmark legislative reform. This is of significant practical significance for those operating in the digital assets sphere.  
• Justice Black considered principles governing findings of assumption of responsibility under the DIFC Law of Obligations.   The decision suggests that in future cases, when the DIFC Courts are required to determine whether a defendant has assumed responsibility to the claimant (even when the parties are commercial and not in a contractual relationship), the fact that a defendant has undertaken a specific task for a specific purpose for the claimant may play a pivotal role.
• The DIFC Court of Appeal appears to adopt a more relaxed approach to a delay between trial and handing down judgment than the English High Court and Court of Appeal.
• The Court of Appeal’s decision highlights the dilemma that litigants face in relying on the ground of serious procedural irregularity on the basis of massive disparity in the time afforded to respective parties for cross-examination of key witnesses (here, c.9 hours vs c.2 hours). It appears that, even though the outcome of the appeal might be a re-trial (as was the case here), an appellant is required to give a detailed account of what the cross-examination would have involved had (what the appellant contends would have been) adequate time been afforded for cross-examination and what responses were hoped to be elicited as a result of the cross-examination.  This would of course give the witness advance notice of the details of the cross-examination for the re-trial, giving them months to fine-tune their answers. 

For more detailed observations on the judgment, see here.

Find out more

Andrew Spink KC has an extensive business law practice, specialising particularly in disputes or advisory work relating to the interpretation or breach of most types of commercial  contract and trust deed, claims for fraud or breach of fiduciary duty, freezing injunctions and asset recovery, cross-jurisdictional issues, claims for damages and other relief in the context of pensions and other commercial trusts, banking & financial services, fintech  and a wide range of other commercial contracts, professional negligence claims and company law and insolvency issues. Andrew was nominated as Legal 500 technology, data & crypto KC of the Year 2023 (in which OTC also won “set of the year“). He is listed as a leading KC in the UK in multiple practice areas including Crypto & Blockchain Assets (L500, Tier1); Pensions (L500 & Chambers, Tier 1); Commercial Dispute Resolution; Professional Negligence. Internationally, he is ranked as a leading KC in the Middle East in Commercial, L500 (Tier 1) and has for many years led teams of OTC barristers advising the DIFC governing body on a series of law reform projects including company law, trusts, and most recently and significantly the major initiatives in the fields of digital assets and smart contracts, banking and finance and securities leading to, amongst other things, the enactment of the ground-breaking DIFC Assets Law and Law of Security and consequential amendments to multiple other DIFC Laws.

Justina Stewart is recognised in the leading legal directories in multiple practice areas including commercial dispute resolution, banking & finance, financial services regulation and insolvency alongside Crypto & Blockchain Assets, L500 (Tier 1) and Cryptoassets, C&P (Band 1) and UK Bar: Middle East, L500 (Tier 1). Justina was nominated as Legal 500 Technology, Data & Crypto Junior of the Year 2023.  Comments in legal directories have included ‘phenomenally bright’, ‘an absolute delight to work with’, ‘a hard-hitting litigator. She is able to parachute into a dispute and turn it 180 degrees in favour of her clients’, ‘brilliant for banking litigation’, a ‘leading crypto barrister in the UK’, ‘an excellent eye for detail [who] always thinks outside the box’, ‘no matter how stressful the situation, Justina has a way of calming matters so that the focus is always on the issues at hand’, ‘impressive’, ‘strong, dynamic and commercial’, ‘great to use on difficult insolvency claims’, ‘a highly intelligent and tenacious litigator, she is also far more financially literate than most barristers’, ‘incredibly impressive and a force to be reckoned with’ and ‘a fantastic communicator’, ‘a phenomenal addition to any team when you have claims against banks’ with ‘outstanding legal acumen’, ‘proactive in moving difficult issues forward’, ‘a formidable advocate, whose oral and written advocacy are top notch’, and ‘extremely bright, responsive and a punchy advocate. She is excellent at forming a view on complex cases’, ‘A real team player and a pleasure to work with.’ Her instructions typically involve matters which are noted for their complexity and novelty and which often involve allegations of fraud.  Justina was instrumental in the drafting of the ground-breaking DIFC Digital Assets Law, the new Law of Security and the numerous associated amendments to DIFC Laws.  Before coming to the Bar, she was an investment banker.

News 13 Jun, 2024