Spoiler alert! "If a party was not prepared to name itself, it cannot participate in proceedings"[1], but we hope you are nevertheless encouraged to follow along to read about what is a first-of-a-kind decision from the English court in the ever-changing, digital asset jurisprudence landscape.
The saga and mystery of who really is behind the creation of Bitcoin continues as the person who claims to be Satoshi Nakamoto pursues litigation internationally to prove his claim as its creator.
What has recently emerged from this saga is an interesting decision of the English court as to what an unnamed but identified Defendant can or cannot do in proceedings to which it has been made subject. In other words, can you keep the mystery alive before the English court? Long story short, you probably cannot (unless you have good reason to do so).
Background and summary of facts
Satoshi Nakamoto is the pseudonym of the person who claims to be the creator of Bitcoin and the author of the Bitcoin White Paper.
A claim was brought against the domain owner of Bitcoin.org (the website on which the White Paper was first published).
The underlying proceedings pertaining to the present judgment relate to the Claimant Dr Craig Wright, who claims to be Mr Nakamoto and invoked the English court's jurisdiction through a copyright infringement claim to have the White Paper taken down from Bitcoin.org, on which he alleges the White Paper was published without his permission.
Dr Wright obtained permission to serve out and to effect service by an alternative method i.e., to the email address domain@bitcoin.org. The Defendant opted not to file an acknowledgment of service due to the necessary precondition that he waive anonymity. This meant that the Claimant was able to obtain a default judgment and, since large sums were being claimed in costs (c. £600,000), the judge ordered that a detailed assessment of costs hearing should take place. It was at this point that and for the first time, the Defendant sought to engage with the proceedings by filing and serving points of dispute in the costs' proceedings through his costs lawyer. Dr Wright took issue with this and questioned the Defendant's ability to actively participate in the detailed assessment hearing without identifying himself, so filed an application to seek redressal.
Dr Wright's application was heard by Costs Judge Rowley who, among other things, vacated the hearing in the costs' proceedings. Most importantly, he both debarred the Defendant from participating in the detailed assessment of costs and disregarded his points of dispute, unless he agreed to identify himself by a specified date.
The Defendant filed an Appellant's Notice against Judge Rowley's decision.
Decision
The appeal judge, Justice Smith, upheld Judge Rowley's decision in all respects, confirming that the Defendant would not be permitted to take part in the proceedings without identifying himself. The CPR expects parties to identify themselves at the outset of the proceedings – indeed the first active involvement of a party in proceedings was the trigger for its identification.[2]
Justice Smith was not prepared to accept the Defendant's proposition that he enjoyed a right to anonymity.[3] This was especially so because the Defendant had not adduced any evidence on why the non-disclosure of his identity was necessary.
Justice Smith considered that there were multiple risks to the court in not knowing the identity of the Defendant, about whom nothing more than a Twitter handle and website was known. These risks diminished the court's ability to supervise and control its own proceedings.[4]
What appears to have been a tipping-over factor was the balancing exercise of some fundamental principles in English law. The court carefully considered the need to uphold a Defendant's right to be heard and the importance of access to justice, set against what was required of the principle of open justice. Lady Hale has previously regarded this as "one of the most precious in our law"[5]. The public interest requires that not only should justice be done in open court, but also that the names of the people whose cases are being decided should be public knowledge. Perhaps, had the Defendant disclosed to the court why it had an interest in preserving its anonymity (for example, by explaining that they would be exposed to the risk of violence upon being named in the proceedings), the court could have weighed that interest against that of the wider public. However, the Defendant had failed to do so.
Takeaways
This decision is notable because we had not previously seen a reported decision in which a 'person unknown' had sought to take an active role in the proceedings while maintaining their anonymity.[6]
The purpose of the 'persons unknown' device is to aid the administration of justice. The English court is not prepared to allow its misuse, and will certainly not allow it to be used to undermine its authority by allowing a party to engage with it without revealing its identity.
The Defendant's desire to remain anonymous was seen as an affront to both the court and the public, going against the principles of open justice. Justice Smith highlighted that " the Defendant seeks not only anonymity against the public at large, but against the Claimant and the court as well".[7]
English judges are armed with the flexibility afforded by the CPR to administer justice in such novel situations. It is no wonder that England is a forum where one can expect cutting-edge legal decisions supporting the development of the law.
The decision also reinforces the attractiveness of England as a forum for disputes in digital assets. However, it will be interesting to see how the court's decisions operate generally and moving forward in the context of what is a cornerstone of blockchain technology i.e., privacy and confidentiality.
It is yet to be seen if the court would have accommodated the Defendant's desire to remain anonymous had an application been made pursuant to CPR 39.2(4) which allows the court not to disclose any person's identity in order to protect the interests of that person. However it seems inherently unlikely that simply operating in the world of cryptocurrency, which is underpinned by pseudonyms and confidentiality, would be sufficient to persuade the court to permit anonymity on this basis. The principles of open justice would probably outweigh this. Again something more, such as a "risk of violence", would surely be required.
[1] Paragraph 10 of the Judgment
[2] Paragraph 9 of the Judgment
[3] Paragraph 27 of the Judgment
[4] Paragraph 44 of the Judgment
[5] R (on the application of C) v Secretary of State for Justice [2016] UKSC 2 at [1]
[6] Paragraph 8 of the Judgment
[7] Paragraph 42 of the Judgment
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