Update 30 01 2023 on cryptocurrency and arbitration see meanwhile Soleymani v Nifty Gateway LLC [2022] EWCA Civ 1297 and Chechetkin v Payward Ltd & Ors [2022] EWHC 3057 (Ch) discussed here.
When prof Bookman asked my input on Celsius’ choice of court and governing law’s clause in its GTCs, I was otherwise engaged. Subsequently I waited with an answer for I used the issue for an exam question. – so here is my primer.
Celsius are one of the leading crypto currencies exchanges (future readers may not be familiar: crypto currencies were an early 21st century Ponzi scheme).
The question I put to the students, was: A fellow academic and practitioner from the US asks you how clause 33 of the standard Celsius contract, copied below, would be received in the EU. Celsius are one of the world’s leading crypto currencies exchanges.
How do you respond to this question? Argue with reference inter alia to relevant CJEU case-law.
Students had two pages to answer. I did not specify Celsius’ domicile. This is what I expect to be included in the reply. Both for jurisdiction and for there is a clear distinction between the B2B and B2C scenario.
Re: B2C: For the contract to be a true ‘consumer’ contract within the meaning of Brussels Ia, Celsius would have had to target their activities at the consumer’s Member State etc.: CJEU Peil and Reliantco are good pointers, as are Ramona Ang and Khalifeh v Blom Bank. Whether Celsius are domiciled in the EU is of no consequence for the consumer section to be engaged. At the jurisdictional level, the choice of court clause would have no consequence (A19 BIa), and the consumer would be able to sue Celsius either in the consumer’s EU domicile, or in Celsius’ EU domicile if it has one. Celsius would only be able to sue in the consumer’s domicile. Articles 33-34 BIa lis pendens rules would not be engaged.
At the applicable law level, the choice for New York law would stand, however mandatory law of the consumer’s habitual residence (which would include transposition of EU consumer law) would trump any conflicting provisions (A6(1) and (2) Rome I).
Re: B2B or indeed a B2C contract which does not trigger the consumer section, the picture would be quite different. Here, whether Celsius as contracting partner has a domicile in the EU, does matter.
If there is such domicile, then at the level of jurisdiction, the EU based party is likely to seize the A4 domicile court, potentially also seeking out a forum contractus if the currency services were to be provided elsewhere than in the place of Celsius’ domicile. That is where Celsius, had it seized an ex-EU court first, then might seek application of A33-34. For this it may come to regret having included hybrid choice of court: recital 24(2)’s reference to the ex-EU court having exclusive jurisdiction arguably does not apply to hybrid choice of court.
Were Celsius to sue the other party in an EU court first (taking ‘any applicable jurisdiction’ at its face value and understanding it as including EU courts), the other party is likely to raise the invalidity of the hybrid choice of court. This is where BIa knickers will get into their proverbial twist: for recital 20’s lex fori prorogati’s instruction as lex casae for the validity of the clause, only refers to ‘a court or courts of a Member State’. Celsius could of course chose to ignore choice of court (implicitly accepting its invalidity) and seize the A4 court of the EU counterparty.
At the level of applicable law, choice for New York law will in any case stand in this scenario, with however A3(4) Rome I’s rule for ‘purely EU’ contracts kicking in, and potentially Article 9 Rome I’s lois de police.
If there is no EU Celsius domicile, Celsius is unlikely to sue in the EU (for it risks having an EU court apply EU banking, finance etc law as mandatory law) however if it does, it would either do so on the basis of A4 domicile jurisdiction, or invoking, as above, the ‘any applicable jurisdiction’ instruction in the hybrid choice of court. Only A9 Rome I could then marginally upset choice of NY law.
Finally, assuming Celsius were to sue the consumer outside the EU, and were to seek enforcement of the judgment in an EU Member State, this would engage the Member States’ residual rules on recognition and enforcement.
Quite a set of variables in the end, and I would be much happy to hear others’ thoughts.
Marking me will look out for core B2B /B2C and domicile considerations.
Geert.
gavc law - geert van calster 
Hi, how do you state that “B2C contract triggers the consumer section”.
Celsius did no specific advertising but had an ambassador program (they earned coins for each new subscription) + a main referral code program (with retribution) to push users to recruit new members.
Celsius had more than 120 000 customers in Europe and there was an Lithuanian address in each mail they sent.
Could it be considered as targeting their activities toward EU customers.
Thank you.
Thank you indeed and apologies for late rely. The post sets out the skeleton approach which one would have to follow in assessing the issues. Whether or not there was ‘targeting’ depends on a more detailed breakdown of the facts, where issues such as the LIT address you mention would have relevance (even if it would not be singlehandedly decisive).
Dear Geert,
Do you think that Celsius consumers who in the course of normal business that withdrew their funds away in the 90 day period which are being potentially considered for clawbacks are therefore a bit more protected if they are from the UK based on the above? Or is it just the EU? Celsius were founded in 2017, Brexit wasnt official until Jan 2020 and Celsius was actually started in the UK and had FCA registration, these were the only reasons I used it. They then changed and updated their Terms of service just in time for the 90 day bankcruptcy proceedings. If they get to the point of sending demand letters to us in the UK what should we do? Not even sure which bankcrupcy lawyers would be familiar with something like Celsius. Do you take clients? Thank you so much for your insights. There are a whole bunch of people wondering the same in the EU version of the Celsius retail clawbacks telegram group, would love to have you there: https://t.me/clawbackprotectioneu