Janesh s/o Rajkumar v Unknown Person (“CHEFPIERRE”)  SGHC 264 was a landmark case where the Singapore High Court granted a worldwide freezing injunction preventing the sale or transfer of a non-fungible token (“NFT”). The case sets a significant precedent for the recognition of NFTs as legal property in Singapore, following the approach taken in the UK. That said, this judgment was granted in the context of an urgent ex parte injunction, and the Court expressly stated that a different conclusion may well be reached with the benefit of full arguments on the issue.
In this update, we review the High Court’s decision and provide a comparison against the position in the UK and our takeaways.
The Claimant was the owner of an NFT known as the Bored Ape Yacht Club (“BAYC”) ID #2162 (“the Bored Ape NFT”) and regularly entered into loan transactions to borrow cryptocurrencies with the Bored Ape NFT as collateral on the platform NFTfi. As part of the loan agreement, the Claimant would specify, amongst other things, that (a) the lender shall not utilise the “foreclose” option of NFTfi’s Smart Program on the Bored Ape NFT without first granting the Claimant reasonable opportunities to make full repayment of the loan and retrieve the Bored Ape NFT from the escrow account, and that (b) the lender shall not obtain ownership nor any right to sell or dispose of the Bored Ape NFT.
The Claimant entered into a similar loan agreement with “chefpierre.eth” (“the Defendant”), whose real identity and physical whereabouts are currently unknown. He was unable to repay the loan in time, and the Claimant and the Defendant agreed to enter into a refinancing loan. However, the Defendant later changed his mind and issued an ultimatum stating that he would exercise the “foreclose” option of the NFTfi’s Smart Program if the loan was not fully repaid. The Claimant was unable to repay the loan, and the Defendant exercised the “foreclose” option of the NFTfi’s Smart Program and the Bored Ape NFT was transferred from NFTfi’s escrow account into the Defendant’s cryptocurrency wallet. The Defendant then listed the BoredApe NFT for sale and refused to accept any further repayments of the loan from the Claimant.
The Claimant filed a suit against the Defendant on the basis that he had an “equitable proprietary claim” over the Bored Ape NFT and that the Defendant was liable to him in the tort of conversion, breach of contract, and unjust enrichment. The Claimant also filed an urgent application for
- A proprietary injunction prohibiting the Defendant from in any way dealing with the Bored Ape NFT until after the conclusion of the trial and any appeals in the suit; and
- Leave to serve the court process on the Defendant’s Twitter Account, Discord Account, and the messaging function of the Defendant’s cryptocurrency wallet.
The Singapore High Court’s decision
The Singapore High Court granted the Claimant’s application and issued a worldwide freezing injunction preventing the sale and transfer by the Defendant of the Bored Ape NFT pending the outcome of the suit commenced by the Claimant. The Court also addressed 3 procedural issues arising from the anonymity of the Defendant.
- Whether the Singapore Court has jurisdiction to hear the application even though the domicile, residence and present location of the Defendant was unknown The Singapore High Court confirmed that it has the jurisdiction to hear the Claimant’s application. While the decentralised nature of blockchains pose difficulties in establishing jurisdiction, there has to be a court which has the jurisdiction to hear the dispute. In this case, this would be the Singapore court as the Claimant was located in Singapore and carried on his business here.
- Whether the Court has jurisdiction to hear an application against an unknown person Additionally, while the identity of the person behind the pseudonym “chefpierre.eth” was unknown, a failure to name the defendant or his identification number did not amount to non-compliance with the Rules of Court 2021. The Court would interpret these purposively to ensure that access to justice is not restricted. As long as the description of these unknown persons was sufficiently certain to identify the persons falling within and outside of that description, the court could grant an injunction against unknown persons. In the alternative, even if this amounts to non-compliance of the form requirements set out in the Rules of Court 2021, the Court was prepared to waive this instance of non-compliance in accordance with the powers provided to it under O 3 r 2(4) the Rules of Court 2021.
- Whether the application for substituted service out of jurisdiction should be granted The Court confirmed that it has the power to allow substituted service out of jurisdiction and that such leave should be given to the Claimant in this case. To find otherwise would deprive the Claimant of the only practical manner of effecting service on the Defendant.
- Whether the Injunction restraining the Defendant from dealing with the Bored Ape NFT should be granted The requirements to obtain an injunction are that:
The approach taken in England and Wales
The approach taken by the Singapore High Court follows the global trend towards finding that NFTs give rise to a proprietary interest. Earlier this year, the High Court of England and Wales in Lavinia Deborah Osbourne v (1) Persons Unknown (2) Ozone Networks Inc. trading as Opensea  EWHC 1021 (Comm) similarlyrecognised that there was at least a realistically arguable case that NFTs were to be treated as legal property for the purposes of granting an injunction against persons unknown and a Bankers Trust Disclosure Order against Ozone Networks Inc, trading as OpenSea (“OpenSea”).
In that case, the Applicant and founder of ‘Women in Blockchain Talks’, Laviniah Deborah Osbourne (“LO”) opened an account on a peer-to-peer NFT market operated by OpenSea. LO was subsequently transferred a gift of various NFTs by a third-party entity on or around 24 September 2021 in connection with support provided by LO to that entity. This included two NFT artworks from the Boss Beauties collection, which showcase successful career women from a range of diverse backgrounds.
On 17 January 2022, persons unknown unlawfully accessed LO’s wallet without her knowledge or consent and removed the two Boss Beauties NFTs. LO discovered the loss on or about 27 February 2022.
Upon investigation it became apparent that the NFTs were traceable to two other accounts opened by OpenSea.
LO therefore sought to commence proceedings against persons unknown for an order restraining the dissipation of the NFTs by persons unknown as well as a Bankers Trust Disclosure Order against OpenSea requiring it to provide information enabling LO to trace or identify the persons unknown who control the wallets to which the NFTs had been transferred.
The High Court was satisfied that LO had demonstrated a good arguable case that she had been defrauded of the NFTs. In handing down his judgment, HHJ Pelling QC stated “[t]here is clearly going to be an issue at some stage as to whether non-fungible tokens constitute property for the purposes of the law of England and Wales, but I am satisfied… that there is a least a realistically arguable case that such tokens are to be treated as property as a matter of English law”.
The growing acceptance of NFTs as property is good news for owners of digital assets, providing them with greater protection of valuable assets. While it remains to be seen how the main suit between the Claimant and the Defendant will be resolved, it is clear that courts globally will have to increasingly deal with these novel issues. Judicial decisions which offer stronger protection would certainly boost these jurisdictions’ position as digital and legal hubs.