Amir Soleymani v Nifty Gateway LLC

This appeal raises issues of general importance for consumers in respect of the jurisdictional protections afforded to them in respect of arbitration clauses under the Arbitration Act 1996 (“the AA”), the Consumer Rights Act 2015 (“the CRA”) and the Civil Jurisdiction and Judgments Act 1982 (“the CJJA”), as amended by the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 No 479 (“the EU Exit Regulations”).

The Claimant, Mr Soleymani took part in an auction held on the Defendant’s (“Nifty’s”) online platform between 30 April and 2 May 2021 placing a successful bid of US$650,000 for a blockchain based non-fungible token (“NFT”) associated with an artwork by the artist known as Beeple called “Abundance”. Nifty’s terms of use, contained on the website, contain a New York governing law provision and an arbitration clause providing for arbitration in New York under the auspices of JAMS, a large and well-known private provider of alternative dispute resolution services based in the USA.

Nifty commenced an arbitration in New York against Mr Soleymani claiming the US$650,000 which he had bid. Mr Soleymani challenged the jurisdiction of the arbitrator, and brought proceedings in England against Nifty by a Claim Form and accompanying Particulars of Claim dated 9 September 2021. Three distinct claims are advanced:

Mr Soleymani sought to establish jurisdiction in relation to all three claims under section 15B of the CJJA. Nifty brought an application seeking to challenge jurisdiction by way of an application for:

Ms Ambrose, sitting as a deputy judge of the High Court (“the Judge”) gave judgment on 24 March 2022 (“the Judgment”). She granted the declaration in respect of the Arbitration Claim and stayed the Governing Law Claim and Gambling Act Claim pursuant to s. 9 of the AA. Mr Soleymani appeals against both aspects of her order.

Mr Soleymani is of Iranian origin and moved to the UK in 2011 in order to seek political asylum. He lives in Liverpool, which is the place of his domicile. He describes himself as a wealthy individual in part as a result of working in the technology sector, amassing significant crypto currency holdings, and in part as a result of substantial family inheritance, much of which is invested in real estate mainly in the United Arab Emirates, Turkey and the UK. He describes himself as an entrepreneur, activist and philanthropist. He collects fine art, and has collected NFTs associated with art for some time. He has a private gallery to display his art collection. For the purposes of the application under Part 11, Nifty accepts that he has the better of the argument that he is a consumer, and is accordingly to be treated as a consumer for the purposes of that application. Nifty does not, however, accept that he is in fact a consumer for the purposes of the CRA and CJJA, to the extent that that falls to be determined on the balance of probabilities in respect of the stay application or the substantive determination of the claims here or in the New York arbitration. He is not a typical consumer, if he be a consumer at all, and the transaction involving the purchase of an NFT for US$650,000 is not a typical consumer transaction, but nevertheless the arguments with which we are concerned must be tested by reference to the rights and protections afforded to consumers generally.

Nifty is a limited liability company incorporated in Delaware, USA and operating the digital platform from New York. The platform involves the display, sale and purchase of digital art which is sold or traded as NFTs. Such NFTs are traded by individual sales and purchases, or by auctions held by Nifty on the website.

Prior to the auction which gave rise to the current dispute Mr Soleymani had purchased approximately a hundred NFTs through the platform with a combined value of over US$2.5m, and participated in some 24 auctions. Each of those auctions had been what might be described as a conventional auction, in which there was a single winning bid, the highest bid securing the relevant NFT. The auction which has given rise to the dispute was a “ranked” auction in which the 100 highest bidders were successful and each received NFTs associated with the artwork in question. They were in effect awarded a numbered edition of the artwork corresponding to the position of their respective highest bids. The effect was that Nifty/the artist was entitled to be paid the total sum of the 100 highest bids. Mr Soleymani says that he was unaware that the auction was in this form and it made little sense commercially for the bidder; editions which are not the “first edition” carry a significantly lower value, and yet all the bids would have been submitted, he says, on the basis of seeking to obtain the “first edition”. Mr Soleymani’s bid of US$650,000 came third in the auction. Some time after his discovery that the auction was a ranked auction of the kind described, Mr Soleymani withdrew his cryptocurrency held on account on the website so as to avoid paying the amount of his bid in what he regarded as a deceptive and unfair transaction.

Mr Soleymani had opened an account on the platform in February 2020 under the username “Mondoir”. The “sign up for Nifty Gateway” page stated: “By signing up, you agree to the Terms and Conditions and Privacy Policy”. On Nifty’s case, the user of the platform accepted the terms by clicking “I Accept” or completing the website registration process or by using the website itself. When Mr Soleymani opened his account with Nifty, the relevant terms of use were those effective as of 4 February 2020. These were subsequently amended on 30 April 2021, but there was no difference in the new terms which is material to the current appeal. We will therefore refer to the February 2020 terms as “the Terms” and use the numbering of the clauses in those terms.

Paragraph 1 of the Terms drew attention to the fact that the Terms contained an arbitration clause and that by agreeing to the Terms the customer agreed to resolve all disputes through binding individual arbitration, which meant that the consumer waived any right to have the dispute decided by a judge or jury; and waived any right to participate in collective action whether that be a class action, class arbitration or representative action.

Clause 16 was the governing law clause which provided:

“These Terms of Use … your rights and obligations, and all actions contemplated by arising out of or related to these Terms of Use shall be governed by the laws of the State of New York, as if these Terms of Use are a contract wholly entered into and wholly performed within the State of New York. YOU UNDERSTAND AND AGREE THAT YOUR USE OF NIFTY GATEWAY AS CONTEMPLATED BY THESE TERMS OF USE SHALL BE DEEMED TO HAVE OCCURRED IN THE STATE OF NEW YORK AND BE SUBJECT TO THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.”

Clause 17 was headed “Disputes” and contained the arbitration clause in the following terms:

“Please read the following agreement to arbitrate (“Arbitration Agreement”) in its entirety. This clause requires you to arbitrate disputes with Nifty Gateway and limits the manner in which you can seek relief from us.

You agree that any dispute or claim relating in any way to: your access, use, or attempted access or use of the Site; any products sold or distributed through the Site; or any aspect of your relationship with Nifty Gateway will be resolved by binding arbitration, except that (1) you may assert claims in small claims court if your claims qualify; and (2) you or Nifty Gateway may seek equitable relief in court for infringement of other misuse of intellectual property rights (such as trademarks, trade dress, domain names, trade secrets, copyright, or patent). You agree that any such arbitration shall be settled solely and exclusively by binding arbitration held in New York, New York, administered by JAMS and conducted in English, rather than in court.......

The arbitrator shall have exclusive authority to (1) determine the scope and enforceability of this Arbitration Agreement; and (2) resolve any dispute related to the interpretation, applicability, enforceability or formation of this Arbitration Agreement, including but not limited to any claim that all of part of this Arbitration Agreement is void or voidable; (3) decide the rights and liabilities, if any, of you and Nifty Gateway; (4) grant motions dispositive of all or part of any claim; (5) award monetary damages and grant any non-monetary remedy or relief available to a party under applicable law, arbitration rules, and these Terms of Use (including the Arbitration Agreement). The arbitrator has the same authority to award relief on an individual basis that a judge in a court of law would have. The arbitrator shall issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded. Such an award is final and binding upon you and us.

You understand that by agreeing to this Arbitration Agreement, you and Nifty Gateway are each waiving their right to trial by jury and to participate in a class action or class arbitration.

If any part of this Arbitration Agreement is found to be invalid or unenforceable, then such part shall be of no force and effect and shall be severed and the remainder of the Arbitration Agreement shall continue in full force and effect. This Arbitration Agreement shall survive the termination of your relationship with Nifty Gateway.

....”

On 20 July 2021 Nifty commenced an arbitration in New York against Mr Soleymani, relying upon the arbitration clause in its Terms, claiming US$650,000 for breach of contract.

On 9 September 2021 Mr Soleymani filed a motion to stay the arbitration on the grounds that (1) there was no valid agreement to arbitrate; (2) the dispute was pending before the English High Court (the English proceedings having been commenced the same day, 9 September 2021); (3) the arbitration clause contained terms which are contrary to English consumer rights and the JAMS Policy on Consumer Arbitration.

The JAMS Policy on Consumer Arbitration contains various provisions directed to providing minimum standards of fairness relating to pre-dispute arbitration clauses between companies and consumers. A consumer is defined essentially as an individual who seeks or acquires any goods or services, primarily for personal family or household purposes. Amongst other provisions, the Policy provides that if the company commences the arbitration then it must bear the costs; and consumers also have a right to an in-person hearing in their hometown area.

On 28 October 2021 the arbitrator, a retired judge, His Honour Theodore H. Katz, ordered the parties to lodge submissions addressing the question of whether the arbitration is appropriately subject to the JAMS Policy on Consumer Arbitrations and in particular on the question of whether Mr Soleymani meets the definition of a "consumer".

On 7 December 2021, having considered the parties' submissions, the arbitrator issued two decisions. First, he made a procedural order that the preliminary determination made by the JAMS national office, that the JAMS Policy on Consumer Arbitrations applied to the proceedings, should remain undisturbed “for present purposes”. Whether or not it applies remains an issue to be decided in the arbitration.

On the same day the arbitrator also issued a ruling denying Mr Soleymani’s motion to stay and indicating he would set out a briefing schedule to determine Mr Soleymani’s jurisdictional objection. He set out his decision and reasoning in a 16 page document. At page 8 he held that whatever factual arguments Mr Soleymani raised about his knowledge of the Terms, their fairness, whether he effectively agreed to them, whether they are unconscionable or inconsistent with his rights under English law, and whether the auction rules were deceptive or unlawful, could not be resolved on the instant motion. His decision was, he said, not intended to reflect any conclusion on the merits of Mr Soleymani’s “arbitrability arguments”. “The only question to be resolved is whether the Arbitrator has jurisdiction to resolve those issues, and the answer to that question is clear that he does.” He explained his reasoning for that conclusion in the following passages. In essence it was that under both Federal and New York Law, and the arbitration clause in the Terms, he had jurisdiction to determine his own jurisdiction (i.e. what in European jurisprudence is often labelled Kompetenz-Kompetenz). At page 13 he observed that “The only truly jurisdictional argument [Mr Soleymani] advances is that as a British Citizen, he has the right to have an English court determine, under English consumer laws, the issues in contention between the Parties. But he provides no legal support for his position.” The arbitrator supported this view by referring to the fact that by agreeing to the Terms, which agreement had to be assumed for these purposes, Mr Soleymani had agreed to arbitration under New York law. At page 15 he concluded: “Virtually all of the other arguments raised by [Mr Soleymani] relating to the validity of the arbitration provision in the Terms of Use and whether he is bound by them, as well as whether the auction at issue was deceptive and violative of New York Law (or, if relevant, English law), cannot properly be resolved on the instant motion…”. The significance of this decision for the present appeal is twofold. First it meant that jurisdictional issues in the arbitration, including questions of the validity of the arbitration agreement, would fall to be decided together with the determination of the merits of Nifty’s substantive claim. Secondly it made clear that it was an open question whether English law and consumer protection rights would be applied in determining the validity of the arbitration clause.

On 21 January 2022 Mr Soleymani issued a motion to dismiss the arbitration on the grounds that (1) Nifty lacks legal capacity to bring an action in New York; (2) the tribunal had no personal jurisdiction over Mr Soleymani in respect of the claim; (3) Nifty’s claim was barred under the doctrine of payment and release; and (4) Nifty had failed to state a claim for breach of contract. Its relevance for present purposes is that it raised issues about the arbitration agreement which overlap with those which would arise in a consideration of unfairness under English consumer protection law, in particular in relation to the requirement that the term must be contrary to good faith. The motion was opposed and, as I understand it, the issues raised fall to be dealt with as part of the evidentiary hearing and post-hearing briefs.

Meanwhile on 7 February 2022 the arbitrator issued a procedural order making provision for pre-hearing disclosure and factual depositions, and listing an evidentiary hearing on 13-14 September 2022. We were told that the JAMS Rules provide that an award is required to be made within 30 days of the conclusion of the evidentiary hearing.

On 2 June 2022 Mr Soleymani applied to the arbitrator by letter seeking confirmation that English law, and specifically the CRA, CJJA and Gambling Act 2005, would be considered and applied. Nifty responded that such a determination was premature. On 9 July 2022 the arbitrator ruled that he agreed that the issue was premature and that it would be considered in the evidentiary hearing and post-hearing briefs, subject to the parties seeking to have it addressed in pre hearing briefs.

Mr Lewis QC confirmed to us during the course of the hearing that Nifty did not accept that English law consumer protection rights fell to be applied in the arbitration. This stance was qualified after the conclusion of the hearing. At the end of the hearing we indicated that we would reserve judgment but that, conscious of the 13/14 September hearing date in the arbitration, we would let the parties know the following day whether we were able to announce a decision on some or all of issues, with reasons to be contained in our judgments delivered later. We concluded that our decision on Ground 3 could be announced without waiting for the reasons to be drafted, and put in hand arrangements for it to be communicated to the parties first thing the following morning. In the morning, in an email received by my clerk, which arrived one minute before he sent our decision to the parties, Mr Lewis sent an undertaking offered to the Court by Nifty. That aspect is dealt with in the judgment of Birss LJ below.

Before turning to the judgment under appeal and the rival arguments, I should set out the relevant statutory framework of consumer protection, and the jurisdictional framework for the issues which arise on the appeal.

Part 2 of the CRA provides protections for consumers against unfair terms in consumer contracts. A consumer contract is a contract between a consumer and a trader, save for contracts of employment or apprenticeship (s. 61(1) and (2)). By s. 2 a consumer is defined as “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.”

Section 74 provides that the protection in Part 2 applies despite a choice of foreign law if, but only if, the consumer contract has a close connection with the United Kingdom.

Section 62(1) provides that “An unfair term of a consumer contract is not binding on the consumer”. Section 62(4) provides that “A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.” Section 63(1) provides that “Part 1 of Schedule 2 contains an indicative and non-exhaustive list of terms of consumer contracts that may be regarded as unfair for the purposes of this Part.” Part 1 of Schedule 2 lists 20 terms, including at paragraph 20:

“20.

A term which has the object or effect of excluding or hindering the consumer’s right to take legal action or exercise any other legal remedy, in particular by–

(a)

requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions,

…”

Sections 71(2) and (3) provide that the court must consider whether the term is fair even if none of the parties to the proceedings has raised that issue or indicated that it intends to raise it, unless the court considers that it does not have before it sufficient legal and factual material to enable it to do so.

Sections 89-91 of the AA also contain relevant provisions in respect of arbitration agreements with consumers. Section 89 provides:

“(1)

The following sections extend the application of Part 2 (unfair terms) of the Consumer Rights Act 2015 in relation to a term which constitutes an arbitration agreement.

…

(3)

Those sections apply whatever the law applicable to the arbitration agreement.”

The “following sections” referred to are sections 90 and 91. Section 90 applies the Part 2 CRA protection where the consumer is a legal person as it applies to an individual. Section 91 makes an arbitration clause automatically unfair for the purposes of Part 2 of CRA insofar as it relates to a claim for less than an amount specified by statutory instrument. This figure was set at £3,000 in 1996. At that time, s. 64 of the County Courts Act 1984 provided for the reference of small claims in the County Court to arbitration; and under Order 19 rule 3 of the County Court Rules then in force, claims were automatically referred to this statutory arbitration process if for less than £3,000 (or £1,000 in personal injury claims). The purpose of the provision therefore appears to have been to prevent contracting out of this statutory arbitration. In 1999 the amount was increased to £5,000 with effect from 1 January 2000. By then the Civil Procedure Rules had introduced the Small Claims track in Part 27 and the limit for such small claims had been increased in April 1999 to £5,000 (£1,000 for the pain suffering and loss of amenity elements of claims for personal injuries). Since then the small claims limits have increased but there has been no change to the specified amount under s. 91 AA, which remains at £5,000.

Accordingly, for consumer claims under £5,000, arbitration clauses are automatically unfair and foreign law clauses are automatically disapplied. This seems to have its origins in a legislative intent to preserve a right to statutory arbitration in the County Court which no longer survives. For consumer claims over £5,000, foreign law clauses are to be disregarded if but only if the consumer contract has a close connection with the United Kingdom (s. 74 CRA), and in such cases the fairness protections in Part 2 of the CRA apply to arbitration clauses for legal persons under s. 90 AA and for natural persons under the terms of the CRA itself.

Prior to the UK’s withdrawal from the European Union, jurisdiction was governed by the Recast Regulation (Parliament and Council Regulation (EU) 1215/2012 (OJ 2012 L351 p1)) (the “Recast Regulation”). Recital (12) was new, not being contained in the predecessor Brussels regime in the 1968 Brussels Convention (Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters 1968 (OJ 1978 L304 p36)) and the Judgments Regulation (Council Regulation (EC) 44/2001 (OJ 2001 L12 p1)) (the “Judgments Regulation”). It provided:

“(12)

This Regulation should not apply to arbitration. Nothing in this Regulation should prevent the courts of a Member State, when seised of an action in a matter in respect of which the parties have entered into an arbitration agreement, from referring the parties to arbitration, from staying or dismissing the proceedings, or from examining whether the arbitration agreement is null and void, inoperative or incapable of being performed, in accordance with their national law.

A ruling given by a court of a Member State as to whether or not an arbitration agreement is null and void, inoperative or incapable of being performed should not be subject to the rules of recognition and enforcement laid down in this Regulation, regardless of whether the court decided on this as a principal issue or as an incidental question.

On the other hand, where a court of a Member State, exercising jurisdiction under this Regulation or under national law, has determined that an arbitration agreement is null and void, inoperative or incapable of being performed, this should not preclude that court’s judgment on the substance of the matter from being recognised or, as the case may be, enforced in accordance with this Regulation. This should be without prejudice to the competence of the courts of the Member States to decide on the recognition and enforcement of arbitral awards in accordance with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958 (‘the 1958 New York Convention’), which takes precedence over this Regulation.

This Regulation should not apply to any action or ancillary proceedings relating to, in particular, the establishment of an arbitral tribunal, the powers of arbitrators, the conduct of an arbitration procedure or any other aspects of such a procedure, nor to any action or judgment concerning the annulment, review, appeal, recognition or enforcement of an arbitral award.”

Chapter 1 of the Recast Regulation is headed “SCOPE AND DEFINITIONS”. Article 1(2) provides:

“2.

This Regulation shall not apply to:

(a)

the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship or out of a relationship deemed by the law applicable to such relationship to have comparable effects to marriage;

(b)

bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings;

(c)

social security;

(d)

arbitration;

(e)

maintenance obligations arising from a family relationship, parentage, marriage or affinity;

(f)

wills and succession, including maintenance obligations arising by reason of death.”

Section 4 is headed “Jurisdiction over consumer contracts”. Article 17 defines its scope, which for present purposes can be treated as contracts between a consumer, defined as someone who contracts “for a purpose which can be regarded as being outside his trade or profession”, and a counterparty who is a person “who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State.” Its full terms are reproduced in s. 15E(1) CJJA which is quoted below.

Article 18 provides for allocation of jurisdiction in the following terms:

“1.

A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or, regardless of the domicile of the other party, in the courts for the place where the consumer is domiciled.

2.

Proceedings may be brought against a consumer by the other party to the contract only in the courts of the Member State in which the consumer is domiciled.

3.

This Article shall not affect the right to bring a counterclaim in the court in which, in accordance with this Section, the original claim is pending.”

Article 19 addresses the ability to derogate from the allocation of jurisdiction in Article 18. It provides:

“The provisions of this Section may be departed from only by an agreement:

(1)

which is entered into after the dispute has arisen;

(2)

which allows the consumer to bring proceedings in courts other than those indicated in this Section; or

(3)

which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same Member State, and which confers jurisdiction on the courts of that Member State, provided that such an agreement is not contrary to the law of that Member State.”

Upon the UK’s withdrawal from the European Union, most of the Recast Regulation was not introduced into domestic law. However part of the Recast Regulation was retained and restated (and Mr Soleymani argues expanded) by an amendment to the CJJA, made by the EU Exit Regulations pursuant to the European Union (Withdrawal) Act 2018. Those Regulations inserted sections 15A to E of the CJJA in the following terms:

“15A Scope of sections 15B to 15E

(1)

Sections 15B to 15E make provision about the jurisdiction of courts in the United Kingdom—

(a)

in matters relating to consumer contracts where the consumer is domiciled in the United Kingdom;

(b)

in matters relating to individual contracts of employment.

(2)

Sections 15B and 15C apply only if the subject-matter of the proceedings and the nature of the proceedings are within the scope of the Regulation as determined by Article 1 of the Regulation (whether or not the Regulation would have had effect before IP completion day in relation to the proceedings).”

15B Jurisdiction in relation to consumer contracts

Section 9 AA provides:

Stay of legal proceedings.

(1)

A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.

(2)

An application may be made notwithstanding that the matter is to be referred to arbitration only after the exhaustion of other dispute resolution procedures.

(3)

An application may not be made by a person before taking the appropriate procedural step (if any) to acknowledge the legal proceedings against him or after he has taken any step in those proceedings to answer the substantive claim.

(4)

On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed.”

The Judge identified the two key issues as being:

The first question applied only to the Arbitration Claim. It was common ground that the Governing Law Claim and Gambling Act claim fell within section 15B of the CJJA so as to found jurisdiction.

The second issue applied to the Governing Law Claim and the Gambling Act Claim, and also, if the first issue were resolved in favour of Mr Soleymani, to the Arbitration Claim. The same considerations applied to both: because of the separability of the arbitration agreement (s. 7 AA), it was not contended that the allegation that the contract was void under the Gambling Act itself provided a ground of objection under s. 9.

The Judge’s reasoning and conclusion on the first issue can be summarised as follows. The law of both the English courts and the Court of Justice of the European Union, formerly the European Court of Justice, (together “CJEU”), on the scope of the Recast Regulation was clear. It provided that by reason of article 1(2)(d), the Recast Regulation did not apply where the essential subject matter or the principal focus of the claim was arbitration. The principal focus and subject matter of Mr Soleymani’s Arbitration Claim fell within that exception because it was solely concerned with whether he was legally obliged to arbitrate the dispute as to whether he should pay the US$650,000. Section 15A of the CJJA made clear that section 15B only applied if the subject matter of the proceedings and the nature of the proceedings were within the scope of the Recast Regulation. There was no basis on the wording of the CJJA, or its application by the authorities, to suggest that it gave a consumer domiciled in England an entitlement to have the validity of an arbitration agreement in a consumer contract decided in England, and nowhere else. Section 15D(1) cast no doubt on this, because it was obviously concerned with agreements about the jurisdiction of a court, not arbitration agreements. Accordingly the jurisdiction application succeeded and the court had no jurisdiction over the Arbitration Claim.

On the second issue the Judge’s essential reasoning and conclusion were as follows. The correct approach under section 9 was that identified in Aeroflot v Berezovsky [2013] EWCA Civ 784 [2013] 2 Lloyd's Rep. 242 and Golden Ocean Group Ltd v Humpuss Intermoda Transportasi Tbk Ltd (The “Barito”) [2013] EWHC (Comm) 1240 [2013] 2 All ER (Comm) 1025. There were factual issues as to whether this was a consumer contract, which depended on whether Nifty was directing its activities at the UK, and as to whether the arbitration clause and governing law clause were unfair within the meaning of the CRA. Mr Soleymani’s evidence on those matters was not conclusive. The Court had a discretion as to whether to have those issued determined by the English court or leave them to be determined by the arbitrator who has Kompetenz-Kompetenz to determine his own jurisdiction. That balance fell in favour of leaving the matter to be determined in the New York arbitration because:

Mr Soleymani was granted permission to advance three grounds of appeal.

Ground 1 is that that the Court had jurisdiction under s. 15B CJJA because the exception for arbitration under Article 1(2)(d) of the Recast Regulation did not apply to the Arbitration Claim. Rather Mr Soleymani was invoking the jurisdiction of the English Court as a consumer under a consumer contract, and as such his claim fell within Articles 17 to 19 of the Recast Regulation. It was his English law consumer protection rights which were the “nature of the rights to be protected”, the “principal focus” or “essential subject matter” of the claim. In the way the ground was formulated, no distinction was drawn between the scope of s. 15B and the scope of articles 17 to 19 of the Recast Regulation. In written and oral argument on the appeal, however, it was argued that if the Recast Regulation did not have the effect contended for, s. 15B did.

Ground 2, as formulated, was that having correctly determined that the Court had jurisdiction over the Governing Law Claim and the Gambling Act Claim under section 15B of the CJJA, and there being no dispute that the arbitration agreement did not meet the requirements of section 15B(6), the Judge erred in concluding that section 15D(1) of the CJJA did not apply to those claims.

Ground 3 was that the Judge erred in staying the proceedings under section 9 of the AA without determining the fairness question or directing a trial before the English Court of the issues raised by that objection.

I agree with the judgment of Popplewell LJ.

My task is to address Ground 3 of the appeal. That is the aspect of the case arising under s9(4) of the Arbitration Act 1996. As Popplewell LJ explains, at the conclusion of the hearing we announced our decision to allow the appeal on Ground 3 and directed a trial of the s9(4) issue. These are the reasons why.

My Lord’s judgment sets out and fully explains the background and relevant legislation. There is no need to repeat it, but I will recap very briefly and expand on aspects relevant to Ground 3.

In addition to the application by Nifty for orders under CPR Part 11 concerning jurisdiction, Nifty also applied for a stay of proceedings under s9(4). In fact the stay was also put on a wider basis by reference to CPR 3.1(2)(f) but nothing now turns on that.

Mr Soleymani’s claim consisted of claims for three distinct declarations: (i) a declaration that the arbitration clause was unfair and not binding, (ii) a declaration that the governing law clause was unfair and not binding, and (iii) a declaration that the contract formed in the auction was illegal under the Gambling Act 2005. The first two claims were put on the same basis. The relevant clauses were said not to be binding pursuant to s62(1) of the Consumer Rights Act 2015 (the CRA) because they were unfair terms, or were inconsistent with s15B(2),(3) and (6) of the Civil Jurisdiction and Judgments Act 1992 (the CJJA) and therefore ineffective and not binding.

The jurisdiction issues under Grounds 1 and 2 of the appeal relate only to the first of these three, the arbitration clause claim. The judge decided that the Arbitration Claim was within the arbitration exception which now forms part of the CJJA (and had its origin in the Brussels Convention and the later Recast Regulation). Like Popplewell LJ, I would dismiss the appeal from that decision. The judge also decided (at paragraph 62) that the other two claims, that is the Governing Law Claim and the Gambling Act Claim were not clearly within the arbitration exception. Therefore they were at least capable of falling within the jurisdiction gateway provided for in s15B(2)(b) CJJA 1982. For that section to apply Mr Soleymani would have to be a “consumer” and the relevant contract would have to be a “consumer contract”. Both terms are defined in s15E(1).

By s15E(1) a “consumer” is a person who “concludes a contract for a purpose which can be regarded as being outside the person’s trade or profession”. For present purposes Mr Soleymani has a properly arguable case that he satisfies that definition and is a consumer. Although for the purposes of the application under Part 11, Nifty accepted that Mr Soleymani had the better of the argument that he is a consumer, Nifty does not accept that he is in fact a consumer for the purposes of the CRA and CJJA.

The relevant aspect of the definition of “consumer contract” in s15E(1) is that the person with whom the consumer contracts directs their commercial or professional activities to the United Kingdom. Nifty did not accept that before the Judge and the matter was addressed in evidence from both sides. In a careful analysis (paragraphs 63-79) the Judge decided that Mr Soleymani had the better of the argument that Nifty was indeed directing commercial activities to this country and that he had a good arguable case for the application of the s15B(2)(b) jurisdiction gateway to the second and third heads of claim.

There is no appeal from that conclusion. In any event, in my judgment, the Judge was plainly right. Therefore the court had before it two claims which were within a jurisdiction gateway. Nifty’s case was that these claims were each in respect of a matter which, under the arbitration clause, is to be referred to arbitration, and so they should be stayed under s9 of the Arbitration Act or the inherent jurisdiction. The Judge granted the stay and Ground 3 of the appeal is Mr Soleymani’s challenge to that decision.

There is no need to set out section 9 of the Arbitration Act, which is in Popplewell LJ’s judgment above. From now on I will refer to the arbitration clause as an arbitration agreement because that is what s9 and the authorities refer to. The distinction does not matter in the present case. Under the doctrine of separability, an arbitration clause in a contract can be treated as a separate agreement from the contact in which it is found.

In terms of authority, the proper approach to the court’s exercise of the power to direct such a stay is set out fully in the judgment of Aikens LJ in Aeroflot v Berezovsky [2013] EWCA Civ 784, especially in paragraphs 72-79 and which also approved of the judgment of Popplewell J in The Barito (Golden Ocean Group Ltd V Humpuss Intermoda Transportasi Tbk Ltd) [2013] EWHC (Comm) 1240 (see in particular the summary in paragraph 59). There is no need to set out these passages.

The essential point arising from the authorities is as follows. Assuming, as here, the Court is satisfied that the defendant (Nifty) has brought itself within s9(1) – because there is an arbitration agreement to which it is a party and the claims are matters which under the agreement are to be referred to arbitration – then the question turns to s9(4). Under that section the court shall (my emphasis) grant a stay unless satisfied the arbitration agreement is “null and void, inoperative or incapable of being performed”. I will use “null and void (etc.)” to refer to that expression. To resist such a stay it is for the claimant (Mr Soleymani) to satisfy the court that the arbitration agreement is indeed null and void (etc.). If that is not clear on the evidence before the court then the court may order a trial of the issue but is not bound to do so. In considering whether to order such a trial, the court will consider all the circumstances of the case. This is the s9(4) issue.

The concept of Kompetenz-Kompetenz plays a role here. A suitably drafted arbitration agreement will confer on the arbitral tribunal the authority to decide on the scope of its own authority, in other words it will confer Kompetenz-Kompetenz on the arbitral tribunal. In the present case there is no dispute that the arbitration agreement is drafted that way. It matters in the context of stays because it means that the arbitral tribunal itself has authority to rule on the dispute about whether the arbitration agreement is null and void (etc.), and that may well be the best forum in which to undertake that task, especially if it involves issues which overlap with questions the arbitral tribunal is going to address anyway. As Aikens LJ explained in para 79 of Aeroflot,

“79.

In theory I suppose the court could order that there be a trial of an issue to determine whether the arbitration agreement was “null and void” or “inoperative”. But if the evidence and possible findings going to the issue of whether the arbitration agreement is “null and void” or “inoperative” also impinge on the substantive rights and obligations of the parties the court is unlikely to do so unless such a trial can be confined to “a relatively circumscribed area of “investigation”. Otherwise, in such a case, where the court is satisfied of the existence of the arbitration agreement and that the matters in dispute are within its scope, then logically it must be for the arbitral tribunal finally to decide the “section 9(4) matters”, assuming it has compétence-compétence to do so. In such a case, the right course for the court to take is to grant a stay under section 9(4) and let the arbitral tribunal get on with determining the dispute.”

The Judge correctly identified the applicable law derived from Aeroflot and The Barito at paragraphs 83-86. She summarised the parties’ arguments accurately at paragraphs 87-95 and reached her conclusions on the issue of a stay at paragraphs 99-118, deciding to grant a stay of all parts of the claim.

The Judge identified the essential starting point as follows. There was a concluded arbitration agreement and the two disputes, about the governing law and under the Gambling Act, while directed to the auction contract, did not impugn the arbitration agreement itself. They were matters within the arbitration agreement. Therefore s9(4) applies. There are triable factual issues, about whether Nifty directs its business to the UK and whether the arbitration agreement and governing law clause are unfair within the CRA 2015. There were some strong arguments that the inclusion of the arbitration agreement in the auction contract was unfair under consumer legislation albeit not so strong as to mean there was no triable issue. There were also factual issues about Mr Soleymani’s own status as a consumer and other consumer law questions such as whether sufficient care had been taken to bring the relevant terms to the consumer’s attention. There was no evidence of procedural imbalance in favour of Mr Soleymani, such as might arise from the cost of disputing a claim in New York as compared to London.

The important factors which led to granting the stay are in paragraphs 107-116. At paragraph 107 the Judge identified an overlap between the court and the arbitration on the question of fairness, putting it this way:

107.

[…] factual issues going to the unfairness of the arbitration agreement and the governing law clause [are] closely linked to underlying factual issues relevant to whether he is bound by the terms of the Auction, and liable to pay the sum claimed in the NY arbitration. The arbitration is currently subject to the JAMS Policy on Consumer Arbitration, and this includes questions as to whether the arbitration clause meets "minimum standards of fairness" . There is a real risk that the court's enquiry would overlap with that enquiry and the Claimant's existing case that he is not liable to pay. The enquiry into fairness may not require a very lengthy trial but both sides are entitled to challenge the factual assertions put forward by the other and wished to do so.

At paragraph 108 the Judge noted that since Mr Soleymani has assets outside the jurisdiction, it was not inevitable that questions going to fairness of the arbitration agreement and governing law clause would come back to be decided here e.g. on enforcement. This is relevant because if the matter is likely to arise before the domestic court on enforcement of the arbitral award that can be a powerful factor against a stay (The Barito paragraph 59(7)(a)).

At paragraphs 109 and 110 the Judge addressed the point raised by Mr Soleymani that the issues were matters of our domestic consumer law, best decided here. The judge held:

109.

I take into account that the issues raised by the Claimant are issues of English consumer law, and that an English court would be better placed to decide them than a US arbitrator. I also take into account that on his case he would have to argue those points in what counsel described as "an unfair arbitration". However, the questions were ones of fairness rather than technical questions of English law. In the context of transactions that were acknowledged to be "fundamentally de-centralised and borderless" an English judge could not be said to be significantly better placed than a US judge or arbitrator to decide the questions of fairness raised.

110.

Significantly, there was no evidence to suggest any legitimate concern as to the quality of the arbitral tribunal or the arbitral process in New York or the supervision of the New York courts, or indeed the applicable New York law or its ability to protect consumers, or its ability to address questions of English law including matters of public policy.

At paragraph 111-112 the judge held that factors such as the cost to Mr Soleymani of having to litigate in New York do not weigh in favour of a stay. Then at paragraph 113, concluding on these “forum non-conveniens factors” (as the judgment puts it), the Judge held:

[113] […] The only connection between England and the dispute on section 9(4) issues is that the Claimant is resident in England, he has the better of the argument on the Defendant directing its activities to England (among 49 other jurisdictions named in its borderless business) and he invokes English legislation.

Finally, paragraphs 114-116 conclude the analysis as follows:

114.

The Claimant accepted that any contract was concluded on terms expressly providing for choice of New York law and arbitration with a New York seat. It is open to him to challenge the fairness and enforceability of that choice of law (and forum) and argue that principles of English law are applicable. Consumer law may mean that the express agreement is unenforceable. However, at this interim stage the matters put forward did not justify using that as the starting point prevailing over the express choice, or assuming that the English court was best placed to decide these issues. Mr Soleymani has not yet explained why English gambling legislation would apply if any contract were subject to New York law so there is similarly little basis for assuming that English law applies to underlying issues of illegality at this interim stage.

115.

Here there was an express choice of New York law (and seat) and the Claimant's evidence is not conclusive on the factual issues. Accordingly, the relevance of English law remains highly disputed. In these circumstances the balance is in favour of leaving the US arbitrator and the New York court to decide issues going to the validity of the arbitration clause (especially since they are linked to the underlying merits of the debt claim), and supervise the arbitration. English judges and arbitrators are frequently asked to decide questions of foreign law, and trusted to do so, including on matters based on social policy where foreign law may be quite different from English law standards. This typically happens where there is a dispute as to whether the parties have chosen London as a forum but also applies where the English jurisdiction is entirely non-consensual. English or foreign consumer law does not fall outside this approach. The questions of consumer protection raised by the Claimant are not matters that can only be adjudicated upon by an English court.

116.

English law also recognises that the starting point is that an agreement as to the seat of an arbitration is an exclusive jurisdiction clause in favour of the courts of the seat (Enka Insaat v OOO Insurance Co Chubb [2020] UKSC 38). This principle, together with the approach under section 9 and the English application of Kompetenz-Kompetenz, means that the existence of English law issues raised by the Claimant do not tip the balance in favour of the English court deciding those issues.

Thus the stay was granted.

Mr Soleymani’s case on appeal is that the Judge fundamentally failed to take into account the nature of domestic consumer rights protection, which includes jurisdictional protection. Section 89 of the Arbitration Act applies the unfairness provisions to terms which constitute arbitration agreements whatever the applicable law of the arbitration agreement is. The refusal of the stay means that the consumer, Mr Soleymani, has been forced to arbitrate in a jurisdiction which, while it may have its own consumer protections, will not automatically recognise the UK law consumer rights (and may not recognise them at all). Contrary to the judgment, in fact the domestic court is better placed than a New York arbitration to apply the unfairness test in our consumer law and the judgment is in error in equating the ability of the two tribunals to carry out this task. The fact that fairness arises under New York law or the JAMS Policy on Consumer Arbitration is no answer to that. Included within this submission is the point that under s71 CRA 2015, assuming the CRA applies and subject to an irrelevant exception, the domestic court is obliged to consider whether a contract term is fair even if neither party raises it.

Finally Mr Soleymani also contended that there would be no need for a factual enquiry to decide the relevant issues, however it is clear that that argument is wrong. There would be a number of factual disputes to be resolved and I will consider this appeal on that basis. It follows that the issue is whether the Judge’s grant of the stay should be upheld, or whether there should be directed a trial of the issue whether the arbitration agreement is null and void (etc.) in respect of the Governing Law and Gambling Act Claims.

Nifty’s submissions to the contrary were these. First Nifty reminded the Court of the limited basis on which an appellate court will interfere with an exercise of discretion (G v G [1985] 1 WLR 647 at 652D-E). The Judge’s conclusion was right or, at its lowest, within the range of reasonable responses available and so this Court should not interfere. Nifty also noted that the choice before the Judge (and in this Court) was between a trial of the objections in this jurisdiction or a stay. The option of summary determination was not realistic. Nifty also contended that the Judge correctly identified an overlap between the issues to be addressed in this jurisdiction and the substantive issues in the arbitration – one example being whether the Terms of Use were properly drawn to Mr Soleymani’s attention. There are other examples.

Second Nifty submitted that the Judge was right to determine that the proper forum for questions as to the validity of an arbitration agreement is normally the place of the seat of the arbitration absent strong reasons to the contrary (which are absent), citing The Barito paragraph 59(7)(g). Third the Judge correctly held that there was no substantial connection with this country other than the fact Mr Soleymani lives here. The proper law of the issues of the validity and scope of the arbitration clause is New York law.

Fourth the discretion under s9 should be exercised in a coherent fashion consistent with the law generally, and in that respect Parliament has provided that domestic courts have no necessary jurisdiction over all claims under the consumer rights provisions of the CRA and the CJJA (see Ground 1 of the appeal). Similar points to this were taken in Nifty’s Respondent’s Notice (para 3), submitting (a) that absent exceptional factors the court should not exercise its discretion in favour of determining under s9(4) a claim which the court has no jurisdiction to determine; and (b) that the public policy relating to the vindication of consumer rights before the domestic court instead of in the arbitration had no or little weight when Parliament had identified in s15 CRA those cases in which that public policy was engaged and the arbitration claim in this case was not one of them.

Nifty’s fifth and sixth submissions were that in fact the Judge did take into account the public policy relating to the vindication of Mr Soleymani’s alleged consumer rights, it is just that in doing so the Judge held that the New York arbitration was an available and proper forum for the resolution of these issues. Also, and in answer to a point made by the Competition and Markets Authority, Nifty submitted that s71 CRA 2015 does not in this case impose on the court a positive and non-delegable duty to try the validity of the arbitration agreement itself because that provision only applies when the court is seized of a substantive consumer dispute. The section does not confer jurisdiction on a court to determine such a claim which it would not otherwise have jurisdiction to try.

Nifty’s final four submissions were as follows. Seventh, the Judge was right that there was no evidence of any doubts about the quality integrity or availability to Mr Soleymani of the arbitral tribunal or the New York court as the supervisory seat. Also the arbitrator has indicated an ability and willingness to apply English consumer law if that law is applicable (which he will be determining), and even if it does not apply the arbitrator is able to assess fairness of the arbitration clause under the applicable law and the JAMS Consumer Policy. Eighth the Judge was right at para 108 that there may not be any enforcement in England and so the issue would not inevitably have to be addressed here. Ninth, the Judge was right that Mr Soleymani’s case was not so strong that the court should grasp the nettle immediately even without a mini trial. Tenth, there is a risk of duplication precisely because Mr Soleymani has engaged with the arbitration both on the substance and the question of validity of the arbitration agreement. He should not be in a better position than he would be if this was a domestic arbitration, to which s72 of the Arbitration Act would apply. Section 72 provides that a party may seek a declaration from the court that there is no valid arbitration agreement where it has not taken any part in the arbitral proceedings. Reliance on s72 is in my view misplaced and I will deal with that now:

Nifty’s Respondent’s Notice took one further point, that the arbitration agreement does not fall within paragraph 20(a) of Schedule 2 of the CRA 2015 because the agreement does not require the consumer to take disputes to “arbitration not covered by legal provisions”. It is not clear whether that last point was pressed, but it does not support a conclusion in Nifty’s favour on Ground 3 in any event because the issue can always be argued if need be at a s9(4) trial.

The CMA’s written submissions were addressed essentially to this aspect of the appeal (i.e. Ground 3). The CMA asked the Court to consider the manner and forum in which a UK consumer can challenge the fairness of a compulsory clause in an online consumer contract which (a) waives their right of access to the UK courts and (b) requires any dispute to be arbitrated abroad in accordance with foreign law. The CMA was concerned that while UK law affords a high level of protection to consumers, the decision of the court below could erode that protection in relation to such clauses. The CMA’s written submissions were focussed on two points. First a submission on the principles governing the fairness of arbitration clauses: that in a consumer context compulsory clauses, particularly those which specify a foreign seat, are generally unfair and not binding. Second a submission that in consumer cases the English court should itself determine the issue of arbitrability and should not leave that issue to an arbitrator, particularly one with a foreign seat. In this context the CMA relied on s71 of the CRA 2015. Overall the CMA submitted that in applying s9 of the Arbitration Act relating to arbitration clauses in consumer contracts, the court is under a positive and non-delegable duty (originally formulated by the CJEU and now enshrined in statute in s71) to consider, investigate and determine the fairness of such clauses and that the consumer should not bear the burden of proving the unfairness of the term.

Finally, before turning to decide Ground 3, it is worth noting that although the judgment below does not grapple with s71 neither side criticised the Judge in that respect because, while it was mentioned, it was not elaborated upon below in the way it now is. No party on appeal suggested we should not take it into account.

In my judgment the starting point is that this is a case about commerce on the internet in which the trader in question has traded via a website which is – at least well arguably - directed to the UK. That matters because in a number of areas of law, the problem of which laws apply to activities on the internet, is addressed by the question whether the activities are directed to or targeted at this country (directed and targeted mean the same thing.). That is true in intellectual property law (see e.g. Warner Music v Tune In Radio [2021] EWCA 441 at paragraphs 60-61) and it is true in relation to our domestic consumer legislation by means of the definition of s15E(1) of a consumer contract (derived from EU law).

As I mentioned above, there is no appeal from the Judge’s finding that Mr Soleymani has the better of the argument about directing commercial activities to this country. The case therefore falls to be analysed on that footing. Therefore Mr Soleymani has the better of the argument that the auction contract is a consumer contract under the CRA. This is a critical feature because no matter how global, borderless or decentralised a trader would say its internet business is, if the trader has directed its relevant commercial activities to this country then its dealings with consumers here are subject to our consumer law.

The next important point is that one of the underlying claims (the attack on the governing law clause in the auction contract as unfair), and also the basis for Mr Soleymani’s contention under s9(4) that the arbitration agreement is null and void (etc.), are an attempt to enforce a consumer’s rights. It is true that Mr Soleymani himself could be seen as an unusual sort of consumer, bidding much more than the value of the average British home on a non-fungible token in an online auction, but the argument that he is indeed a consumer in domestic law is properly arguable. The application falls to be considered on that basis, albeit recognising he might turn out not to be.

Next, under the relevant legislation, the fairness provisions in Part 2 of the CRA apply despite a choice of foreign law clause, as long as the consumer contract has a close connection with the UK (s74 CRA). Again, it is (at least) properly arguable that this contract, assuming it is a consumer contract, does have such a close connection. The commercial activities were directed to this country and the bidder in the auction was here when he entered into the contract and made his bid. Thus, as a matter of domestic law, the fact the contract has a New York law clause does not insulate its terms from the fairness test under the CRA.

Moreover in a consumer context arbitration clauses are expressly identified as being clauses which may be regarded as unfair because they have the object or effect of excluding or hindering the consumer’s right to take legal action or exercise a legal remedy (paragraph 20 of Part 1 Schedule 2 of the CRA, quoted in the judgment of Popplewell LJ above). As my Lord explained (at paragraphs 29-30), under s89-91 of the Arbitration Act, for consumer claims under £5,000, arbitration clauses are automatically unfair and foreign law clauses automatically disapplied. Whereas for consumer claims above £5,000, assuming the close connection provision in s74 applies, the clause is subject to the fairness provisions of the CRA irrespective of a choice of foreign law clause.

Given all these provisions, one might think it was odd that, as my Lord has explained, a free standing claim to declare the arbitration agreement unfair and unenforceable is not one which falls within the extant jurisdiction gateways, including in particular the gateways in s15B CJJA which relate expressly to consumer rights. In different ways Nifty places significant weight on this point (see Nifty’s fourth submission above). I agree with my Lord that that is the state of affairs at the relevant the date for this case, albeit the expansions to the gateways in CPR Part 6B in October 2022 are likely to mean that in most cases a consumer could bring such a claim within a gateway in future. However irrespective of the position on jurisdictional gateways, there is a complete and simple answer to this point. The answer is that the court’s authority under s9 of the Arbitration Act to rule on whether the arbitration agreement is null and void (etc.) – in relation to considering a stay of a case which is within the court’s subject matter jurisdiction such as the second and third claims in this case – exists independently of any jurisdictional gateway which may or may not exist relating to the validity of the arbitration agreement itself. This ability of a court to rule on such an issue in those circumstances is inherent in the relevant provisions of the New York Convention and is also recognised in Recital 12 of the Recast Regulation, which is the successor to the Brussels Convention. As my Lord did (at paragraph 92 above), I would also explain the decision of the Krefeld Landesgericht in Germany in Zellner v Phillip Alexander Securities and Futures Ltd (Case 6 O 186/95) [1997] I.L.Pr 716 as an example of the application of the same principle.

Aeroflot and The Barito were not cases about consumer rights or about the impact of express provisions of domestic consumer law which have something to say about arbitration agreements. I agree with them as they apply outside that context. However in a case like this one, provided it is properly arguable that there is a consumer contract with a close connection with the UK and a consumer seeking to rely on their rights under domestic law, then in my judgment the vindication of those consumer’s rights in that context is best decided by a domestic court. That applies directly to the submission under s9(4) that the arbitration agreement is null and void (etc.) because it is unfair under domestic law. That is because the domestic court is better placed to undertake the fairness assessment under domestic law than a foreign arbitrator would be applying that law.

Accordingly in a case in which a claimant seeking to avoid a stay under s9 is relying on their rights under domestic law as (arguably) a consumer to contend that the arbitration clause is null and void (etc.) then that feature would be a powerful factor in favour of the court deciding the issue rather than leaving it in the first instance to the arbitral tribunal, despite any overlapping issues. I put the matter this way as a deliberate echo of paragraph 59(7)(a) of The Barito which recognises that if the arbitrability issue is likely to come before the court in any event under enforcement, then that is a powerful factor in favour of the court deciding the issue rather than leaving it to the arbitration despite the arbitration agreement giving Kompetenz -Kompetenz to the arbitrator.

I reach this conclusion irrespective of s71 of the CRA, however it provides further strong support for the principle identified above. I do not accept that this provision operates so as to confer on the court a subject matter jurisdiction that it would not otherwise have (and so I do not see s71 as relevant to Ground 1 of the appeal) but that does not mean it does not come into play when the court is deciding whether to conduct a trial under s9 of a question whether an arbitration agreement is enforceable. If it is arguable that there is a consumer contract with a close connection with the UK and a consumer seeking to rely on their rights under domestic law, then as a consequence s71 itself will also arguably apply as part and parcel of that characterisation of the contract.

In a commercial context arbitration, both international and domestic, is a hugely valuable way of resolving disputes. However one of the recognised characteristics of arbitration, which often has important value in a commercial context, is that it is private. Transposed into a consumer context, the privacy of arbitration is not such an advantage from a public policy standpoint. Part of the purpose of s71 itself is so that decisions on consumer rights are made in public. They may have precedential value. The decisions are not only for the benefit of the individual consumer in the instant case but for the benefit of the consumers as a class (see Oceano Grupo Editorial v Murciano Quintero CJEU 27^th June 2000, Joined cases C-240.98 to C-244.98 [2000] ECR I-4941 at paragraph 28). This publicity feature is a further reason why the principle articulated in the previous paragraphs should apply in the consumer context. Decisions about consumers’ rights should normally be made in public, in a court.

With these points in mind I turn to the judgment. I have well in mind the limited basis on which an appellate court can review an exercise of discretion of this kind, however the judgment cannot stand since the matter was not approached on the correct basis. In this case, despite the overlapping issues, there is a powerful factor in favour of the court deciding the issue rather than leaving it to the arbitrator.

Moreover paragraph 113 underplays important features of the circumstances in that it describes as “the only connection” between England and the dispute on section 9(4) issues as the facts that: (i) the claimant is resident in England, (ii) he has the better of the argument that Nifty directed its activities to England, (iii) and he invokes English jurisdiction. However these are the three key features which any consumer based in England would rely on to give them domestic law consumer rights in the first place – which include jurisdiction protections relating to arbitration agreements. They are significant factors.

Considering the matter afresh: there are a number of factors, as the Judge identified, which weigh in favour of granting a stay of the s9(4) issues. One important one is the existence of some overlap between the issues relating to fairness which will arise under New York law (and under the JAMS Consumer Policy) as compared to the issues under UK law, albeit I do not believe the overlap is as substantial as Nifty makes out. Another is the likelihood that there will be no enforcement of any arbitral award in the UK because Mr Soleymani has assets outside the jurisdiction.

These are not at all sufficient, in my judgment, to overcome the powerful factor in favour of refusing a stay arising from the fact that the challenge to the arbitration agreement under s9(4) is based on a vindication of a claimant’s arguable consumer rights.

Save for one further aspect, in my judgment this would be a clear case to refuse a stay. The strongest reason why a court might grant a stay on the facts of this case arises from Mr Soleymani’s unusual position as a consumer. While no doubt he would rather not, he clearly has the resources to defend himself in the New York arbitration – irrespective of where it takes place (there was a suggestion of it happening here as a result of the hometown provision in the JAMS Consumer Policy). Overall, at a practical level, there is no obvious imbalance in an ability to litigate between Nifty and Mr Soleymani. Put bluntly, in this case Mr Soleymani can look after himself so why does he need the court’s help?

There are in my view three answers. The first comes back to the public importance of decisions vindicating (or not) consumers’ rights. The case Mr Soleymani is seeking to make has implications for consumers in general in this jurisdiction and it is important that they are considered and ruled upon in public in a court. Therefore the s9(4) issues should be decided at a trial and not left to be decided in the arbitral tribunal.

The second answer is that the consumer protection rights under our law involve domestic concepts which our court is far better placed to adjudicate upon than a New York arbitrator. Even if it were certain that the New York Tribunal would apply UK law (as to which see the effect of the proffered undertaking addressed below), it engages principles which are the subject matter of our domestic jurisprudence, not simply some general notion of fairness.

The third answer is that the suggested approach prejudges the issue, which is not suitable for summary determination, as to whether the arbitration agreement does in fact operate unfairly on Mr Soleymani. If the invalidity argument is good, the very reasons which make it good, namely that it places an unfair burden on Mr Soleymani, weigh against allowing the tribunal to decide the issue under its Kompetenz-Kompetenz jurisdiction. The Judge’s finding that there would be nothing unfair about leaving it to the arbitrator to decide that issue is inconsistent with her recognition that there was a triable issue whether this was an unfair arbitration agreement.

I would therefore allow the appeal on Ground 3. There should be directed a trial of the issue whether the arbitration agreement is null and void (etc.) in respect of the Governing Law and Gambling Act Claims.

At the conclusion of the hearing we decided that we would allow the appeal on Ground 3 with reasons to follow. This judgment represents those reasons. Moments before that decision was to be communicated to the parties the court received an unsolicited undertaking from Nifty, which I will explain in more detail below. We had not seen the undertaking when we made our decision and the decision was communicated to the parties before we had seen it. Nifty then formally requested the Court to reconsider its decision in the light of that undertaking, pursuant to the Re Barrell Enterprises [1973] 1 WLR 19 jurisdiction, and bearing in mind the Supreme Court’s decision in Re L (Children) [2013] UKSC 8 [2013] 1 WLR 634 at [19] and [27]. We informed the parties that we declined to reconsider our decision, with reasons to follow in the judgment to be handed down.

In substance Nifty’s undertaking was that in the event the appeal on Ground 3 was dismissed (and irrespective of Grounds 1 and 2), so that the stay under s9 was maintained, then they would promptly agree with Mr Soleymani a submission to the arbitrator providing that the arbitrator must hear and decide the questions of (i) Mr Soleymani’s status as a consumer under the CRA 2015, (ii) the contract’s close connection with the UK, also under the CRA 2015 , and (iii) the fairness of the arbitration agreement under the CRA 2015. Question (iii) would only arise if Mr Soleymani won on questions (i) and (ii). And if Mr Soleymani won on all three questions the submission required the arbitral tribunal to declare, find and award that it had no jurisdiction.

One of the points made in argument during the appeal hearing was that as matters stood there was no guarantee the arbitrator would even consider the fairness issue and the threshold points (i) and (ii) under the CRA 2015 because the auction contract contains a New York governing law clause and the arbitrator might rule that that meant the CRA had no application. Moreover at that time Nifty were at least not conceding that the CRA should be applied by the arbitral tribunal at all. The problem canvassed at the hearing of the appeal was that this meant that given the stay under s9 by the High Court, Mr Soleymani’s domestic law consumer rights might never be decided upon at all. The purpose of this undertaking is to take away that concern and ensure that Mr Soleymani’s domestic law rights would be considered by the arbitral tribunal come what may.

In AIC v Federal Airports Authority [2022] UKSC 16 15 June 2022 the Supreme Court has recently addressed the principles applicable when a court is asked to decide whether to reconsider a decision. A significant feature of that decision (see paragraph 33) is to make clear that there is no rule of law or practice that an application to reconsider must always be addressed by a two-stage process. The two stage process (which the Court of Appeal had held was the right approach) had a first stage at which the court was to consider whether in principle the re-consideration application should be entertained at all. However the Supreme Court was also at pains to point out that in a proper case:

“32 […] It may be a perfectly appropriate judicial response just to refuse the [reconsideration] application in limine after it has been received and read, if there is no real prospect that the application could succeed. Judges should not re-open proceedings just to allow debate on the point if it is already clear that the judgment or order should not be re-opened. That would defeat the Overriding Objective in the CPR that cases be decided “justly” and “at proportionate cost”.”

In my judgment, leaving aside the lateness of the undertaking, there is in any event no real prospect that the reconsideration application could succeed in this case. The undertaking offered does not make any material difference to the decision to allow the appeal on Ground 3. The crucial factors I have identified in paragraphs 151 to 153 apply even if the arbitral tribunal was inevitably going to consider Mr Soleymani’s status as a consumer and the other aspects of his unfairness claim under domestic law.

I agree with both judgments of my Lords and have nothing to add.