The Singapore Court of Appeal has handed down an important judgment in the widely followed cryptocurrency case of Quoine Pte Ltd v B2C2 Ltd [2020] SGCA(I) 02, dealing with difficult legal questions thrown up by the algorithmic trading of crypto.
The Court of Appeal by a majority (comprising four judges including the Chief Justice of Singapore and the former Chief Justice of Australia) upheld the trial judge’s conclusion that the cryptocurrency exchange, Quoine, was liable to B2C2 for unilaterally reversing trades in Bitcoin and Ether (the token which trades on the Ethereum blockchain).
In particular the Court examined how, in the doctrine of unilateral mistake, the requirement of knowledge of the mistake is to be assessed where the contract is concluded by way of deterministic algorithmic trading, concluding that the non-mistaken party has sufficient knowledge if the algorithm’s programmer had actual or constructive knowledge that an offer automatically made by the algorithm would only ever be accepted by a party operating under a mistake, and if the programmer was acting to take advantage of that mistake.
Lord Mance, the sole dissenting judge, proposed an adaption of the rules of equitable mistake so that the requirement of “knowledge” would be satisfied by evidence that the parties actually knew (cf “ought to have known”) that there had been a fundamental mistake as soon as the computerised transaction came to their attention – that is, even if that knowledge only arises after the transaction in question.
Fountain Court’s Nik Yeo acted for B2C2, assisting in the written submissions to the Court of Appeal. The majority cited an article by Nik Yeo and Joseph Farmer at (2019) 5 JIBFL 290, which was itself cited by the amicus curiae. A copy of the judgment can be found here.
