Jurisdiction and Applicable Law in NFT-Related Contractual Disputes Under EU Private International Law

Abstract

This chapter examines the jurisdiction and applicable law issues that arise in NFT-related contractual disputes under EU private international law rules, namely the Brussels I (recast) Regulation and the Rome I Regulation. It begins by analysing the key characteristics of distributed ledger technologies (DLTs) from a private international law perspective, including decentralisation, pseudonymity, and immutability. The analysis shows that these characteristics, in particular decentralisation and pseudonymity, pose challenges to the current territoriality-based PIL framework. The chapter then discusses how to determine the international nature of digital ledger transactions. It argues that NFT transactions often have objective international elements that do not require courts to presume internationality simply because the transactions utilize DLTs. The chapter then turns to jurisdiction and applicable law issues in NFT-related contractual disputes under the Brussels I (recast) and Rome I regulations. It examines the different types of contracts that may arise in the NFT ecosystem. The analysis demonstrates that NFT-related contractual disputes may not present a significant challenge for the application of EU private international law rules when the parties’ agreement includes jurisdiction and/or choice of law clauses. Where no such choices are made, however, the discrepancy between the decentralised, pseudonymous nature of digital ledgers and the territorial connecting factors in EU private international law rules will create difficulties for the courts. Courts may also face problems of characterisation when applying those PIL rules that cover specific kinds of contracts. As the chapter argues, these potential challenges highlight the need for a broad, flexible interpretation of the rules in light of the specific characteristics of DLTs and of digital assets (including NFTs). The chapter concludes by noting that such difficulties may eventually lead the EU legislature to introduce specific rules for DLTs that would cover digital assets including NFTs, but not before the first cases reach member-state courts or the CJEU.