A person named Mr.Chechetkin was interested in the world of crypto assets and trading. He was well aware of the potential risks and dangers, but he was confident in his knowledge and experience as a banking lawyer. He opened a “Pro” account on the Kraken platform and started trading.
However, things did not go as planned. Mr. Chechetkin lost more than £600,000 as a result of the trades he made on the Kraken platform. He felt that the trades were a result of the platform’s breaches of the Financial Services and Markets Act 2000 and wanted to get his money back.
The Kraken platform had included an arbitration clause in its terms and conditions, which referred disputes to JAMS arbitration in San Francisco. Mr. Chechetkin was aware of this, but he wanted to fight for his rights. He started proceedings in the UK, while the Kraken platform initiated arbitration proceedings.
In the arbitration proceedings, Mr. Chechetkin argued that the sole arbitrator lacked jurisdiction, but his arguments were dismissed by the sole arbitrator. A final award was made on 22 October 2022, which held that the Kraken platform was not liable to Mr. Chechetkin.
The Kraken platform then applied to the High Court of England & Wales to dismiss Mr. Chechetkin’s proceedings and declare that the Court lacked jurisdiction over the claims brought. The High Court had to consider two questions: whether Mr. Chechetkin was to be considered a consumer under the Civil Jurisdiction and Judgments Act 1982, and whether the prior arbitration awards meant that the English courts did not have jurisdiction.
The High Court held that Mr. Chechetkin was to be considered a consumer for the purposes of the contract with the Kraken platform and that the arbitration award did not deprive the English court of jurisdiction over the claim. Miles J concluded that the sophistication and knowledge of Mr. Chechetkin was irrelevant and that the test was simply whether he had entered into the contract for a purpose regarded as outside his trade or profession.
The decision in Soleymani, serves as a warning to international companies in the web3 space that inappropriate consumer terms that may be considered unfair are vulnerable to challenge from consumers in England & Wales. With the volume and complexity of crypto-related disputes rising, this case highlights the importance of companies reviewing and updating their standard terms and conditions to ensure they are fair and legally compliant.
The jurisdiction application was dismissed and in the end, Mr. Chechetkin was able to have his case heard in the English courts, despite the arbitration clause and the final award in the arbitration proceedings.