First NFT Written Judgment in Asia is Out, Singapore High Court Recognizes NFTs as a Form of Property

In addition, Justice Lee held that the present case demonstrated that it was perfectly possible for a person to conclude a contract with someone online where the parties to the contract have concealed their true identities using pseudonyms. Hence, even though the identity of Chefpierre was unknown, the judge’s view was that the Singapore court had the jurisdiction to grant the interim relief sought by Janesh.

Justice Lee also held that NFTs can be regarded as property. The judge considered that the classic definition of a property right in the English judgment National Provincial Bank Ltd v Ainsworth [1965] AC 1175 (“Ainsworth”) could be applied to determine if crypto assets (such as NFTs) were property.

The Singapore courts would examine whether the four requirements in Ainsworth could be satisfied:

1. First, the right must be definable whereby the asset must be capable of being isolated from other assets whether of the same type or of other types and thereby identified. Justice Lee held that this requirement was fulfilled; metadata was central to an NFT and it was this metadata which distinguishes one NFT from another.
2. Second, the asset must have an owner capable of being recognized as such by third parties; an important indicator is whether the owner has the power to exclude others from using or benefiting from the asset. Where NFTs were concerned, the presumptive owner would be whoever controlled the wallet which was linked to the NFT. Similar to cryptocurrencies, excludability was achieved as one was unable to deal with the NFT without the owner’s private key.
3. Third, the right must be capable of assumption by third parties; this in turn involves two aspects: (a) that third parties must respect the rights of the owner in that asset; (b) and that the asset must be potentially desirable. In the present case, Justice Lee was of the view these requirements were met: the nature of the blockchain technology gave the owner the exclusive ability to transfer the NFT to another party, which underscored the “right” of the owner; and such NFTs were clearly the subject of active trading in the markets.
4. Last, the right and in turn, the asset, must have some degree of permeance or stability. Justice Lee’s view was that the Bored Ape NFT had as much permanence and stability as money in bank accounts (the latter which, nowadays, exist mainly in the form of ledger entries and not cold hard cash).

Concluding thoughts

This case is significant not only because it is the first judicial decision in Asia to protect an NFT, but also because it is the first judgment in Singapore which dealt with whether NFTs were counted as assets. With other jurisdictions (e.g., the United Kingdom) recently recognizing NFTs as “legal property”, it is encouraging to see that the Singapore judiciary has now followed suit and recognized NFTs as property in its landmark ruling.

Additionally, we note that the decision included the High Court granting permission for Janesh to serve court papers on Chefpierre through Twitter and other chat platforms (e.g., Discord), as well as the messaging function of the latter’s cryptocurrency wallet. This decision is, in our view, a practical one. In cases of digital art theft or unauthorized use, the location of the defendant is always a major issue, given that their physical location cannot always be ascertained. Effecting service through social media/Internet messaging platforms would, in most scenarios like the present case, be the only practical manner.

Going forward, the express recognition by the Singapore High Court of an NFT as property means that, in practice, crypto assets will be capable of being the subject of freezing order and proprietary injunctions, which will provide greater protection to NFT owners in enforcing their rights in respect of their digital assets.

It is also important to note that a few days back, The Court of Rome sets a landmark precedent by granting an injunction against the creator of NFTs displaying images of a football player, reproducing without authorization the registered trademarks owned by Italian football club Juventus FC.