Case law confirms alternative routes to serve court proceedings as technology evolves

Fraud cases now often involve the transfer of virtual assets via cryptocurrency wallets, where the identity and location of the fraudsters are unknown - leaving victims facing an uphill battle to serve court documents personally or by post as traditional mode of service requires the identity and address of the persons to be served.

Given the anonymity of blockchain technology, advancements in technology and the way people communicate, courts in different jurisdictions have become more receptive to innovative alternative modes of service and this has been confirmed in recent case law in England and the US, as well as the Hong Kong (SAR).

These case developments mean that victims can meet the service requirements under the court rules. However, which mode of service is most suitable in any given case should be determined on its own facts, including but not limited to the availability of effective traditional means of service, urgency, behaviours of the defendants and volume of documents involved.

In D’Aloia v Persons Unknown, Binance Holdings Limited & Others, the fraudsters induced the victim to transfer USDT and USDC tokens to the wallet of persons unknown for alleged investment purposes. The investment was subsequently found to be a scam and the victim was unable to realise any of his investments. Some of these tokens were further transferred to various private wallet addresses.

In an application for injunctive relief against the fraudsters and cryptocurrency exchanges controlling the wallets where tokens were dissipated to, the UK court for the first time allowed substituted service on the fraudsters via non-fungible token (NFT) by airdropping documents on a blockchain wallet in addition to service by email. The court is convinced that it is likely to lead to a greater prospect of the fraudsters being put on notice of the court order and the commencement of the proceedings. This alternative mode of service was later confirmed and adopted in Jones v Persons Unknown.

In the US, a California district court recently granted an order in Commodity Futures Trading Commission v Ooki DAO to permit alternative service on a ‘decentralised autonomous organisation’ (DAO). The court backed service methods including communications via the DAO’s help chat box and by posting on the DAO’s online forum. It remains to be seen if this decision will be successfully challenged.

In Hong Kong SAR, substituted service is governed by Order 65 rule 4 and 5 of the Rules of the High Court (cap 4A). Hong Kong courts have on a number of occasions permitted service to be effected by the use of email, Facebook, WhatsApp and even data room.

In Hwang Joon Sang & Another v Golden Electronics Inc & Others the court recognised the virtue of using WhatsApp as an alternative mode of service as it may show the sender when a message has been sent and when it has been read by the recipient. The court further ordered service of future documents via an online data room given the substantial volume of papers involved and the evasive behaviours of some defendants in that case.

Co-written by Joyce Chow of Pinsent Masons.