Blockchain and Private International Law – The Perspective of the United States of America

Abstract

Lawyers in the United States apply rules on ‘conflict of laws’ rather than ‘private international law’ when it comes to the applicable substantive law, jurisdiction of one forum versus another, and the recognition and enforcement of foreign judicial decisions. These conflict rules are largely the same whether the conflict is between sister states in the U.S. (California, New York, Ohio, etc.) or between a foreign jurisdiction and the U.S. This should make things relatively easy. However, many areas of law, such as contract law, labour law, tort liability, as well as real and personal property law, are matters of state law in the U.S. Disputes in these areas of law have to be brought in state court or, if they can be brought in federal court, for example based on diversity jurisdiction, they will still be subject to state law. Unfortunately, state law is often not codified at all or at least not comprehensively, and it is certainly not uniform across the 50+ jurisdictions in the U.S. This includes the conflict rules. Therefore, analysis of Private International Law as applied to a given blockchain and digital currency transaction or dispute in the U.S. potentially requires analysis of statutory material and – more likely – case law from a variety of states where the matter could be brought to court. This will be hard, if not impossible, for foreign lawyers. The problem is exacerbated by the fact that the U.S. allows several options for creating jurisdiction over foreign parties that are commonly referred to as exorbitant jurisdictions. For example, the so-called transient jurisdiction of a forum can be established by serving a natural person or an executive representing a corporation while they are merely travelling through the forum state. Private parties can reduce their exposure with carefully crafted contracts containing suitable choice of law and arbitration clauses, although this obviously does not work in tort cases and in disputes with regulatory agencies like the SEC and the CFTC. Therefore, the chapter elaborates not just on conflict rules but also on blockchain and cryptocurrency regulation and regulatory authorities in the U.S.