Mr Soleymani commenced court proceedings in England, advancing three claims: Nifty commenced arbitration in New York for breach of contract. Some time after discovering it was a ranked auction, Mr Soleymani withdrew his cryptocurrency from his account on the platform to avoid paying the amount of his bid. Mr Soleymani alleged that he was unaware that the auction was in this form, which he said made little commercial sense for the bidder, since editions that are not the ‘first edition’ carry a significantly lower value, whereas all the bids would have been submitted on the basis of seeking to obtain the ‘first edition’. Mr Soleymani’s bid of US$650,000 was the third highest. The subject of the dispute was a ‘ranked’ auction, in which the 100 highest bidders each received NFTs associated with the artwork, which were in effect a numbered edition corresponding to the position of their respective bids. These auctions had been conventional, with a single highest bid securing the relevant NFT. Prior to the auction that was the subject of the dispute, Mr Soleymani had purchased over US$2.5 million of NFTs through Nifty’s platform and had participated in 24 auctions. Nifty’s terms of use included a New York governing law provision and an arbitration clause providing for arbitration with seat in New York. The NFTs were traded by individual sales or by auctions held on Nifty’s platform. The defendant, Nifty Gateway LLC (‘Nifty’), operated an online platform for the display and sale of digital art, which was traded as NFTs. The claimant, Mr Soleymani, was a collector of fine art and non-fungible tokens (‘NFTs’) associated with art.
The Court of Appeal considered that the case had significant implications for consumers in general and it was therefore important that the issues were considered and ruled upon in public in an English court rather than privately in a US arbitration. The stay had been imposed by the Commercial Court under section 9 of the Arbitration Act 1996 (the ‘AA’) in favour of arbitral proceedings in New York. The Court of Appeal of England and Wales in Soleymani v Nifty Gateway LLC has set aside a stay to allow the English court to determine the validity of an arbitration clause contained in a contract between an English consumer and a foreign company.
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