THE LOCATION OF DAMAGE IN THE EU CONFLICT OF LAWS: THE CASE OF FINANCIAL LOSS IN THE CONTEXT OF BLOCKCHAIN TRANSACTIONS

Starting from a technical reconstruction of the blockchain, understood as a distributed ledger, and an analysis of the regulatory initiatives proposed at international, European and national level to regulate its use, the thesis analyses the case of pure financial loss that may occur when financial investments are made using these new technologies and the resulting impact from an international private law perspective. Part I introduces blockchain technology and the private international legal regime developed so far. Title I examines blockchain technology from a historical and technical perspective. It starts with the analysis of its evolution and then focuses on concepts such as distributed ledger technology (DLT), block, node, consensus, cryptocurrencies, smart contracts and initial coin offerings (ICOs). Title II investigates the existing regulatory framework, which at the international level consists of soft-law initiatives (i.e. the UNIDROIT Principles on Digital Assets and Private Law, the UNCITRAL Model Law Texts and Taxonomy, the HCCH Digital Tokens Project and the HCCH–UNIDROIT Joint Project on Digital Assets and Tokens), and at the European level of Regulation No 2023/1114 on markets in crypto-assets (MiCA) and Regulation No 2022/858 on a pilot regime for market infrastructures based on distributed ledger technology (the DLT Pilot Regime). At the national level, it examines the legislative texts and case law in eighteen States, including Italy, France, Germany, Switzerland, Spain, Liechtenstein, the United Kingdom, the United States and Singapore, with particular attention paid to the (limited) conflict-of-laws rules provided therein. Part II is dedicated to private international law issues arising from the Court of Justice of the European Union (CJEU) case law concerning pure financial loss. Title I analyses the CJEU’s rulings, illustrating the tortuous development of the interpretation of Article 7(2) of Brussels I bis Regulation from Marinari (C-364/93), through Kolassa (C-375/13), Kronhofer (C-168/02), Universal Music (C-12/15), Löber (C-304/17), to VEB (C-709/19). In these judgments, albeit not autonomously characterising pure financial loss as falling within the scope of non-contractual liability rules, the Court of Justice has excluded – on factual grounds – the contractual route as well as the consumer-investor protective forum. Accordingly, for the purpose of determining jurisdiction, it becomes essential to locate the damage, which, as above stated, in the present context is immaterial and potentially multi-localised. For these reasons, Part II, Title II deals with the issues of characterisation of the claims (if contractual or non-contractual), the possible characterisation of the investor as a consumer, the problems of collective redress, the location of damage and the conceivable solution of a forum actoris. Although the CJEU’s judgments have been delivered in relation to jurisdiction, similar implications arise for the determination of the applicable law under the Rome II Regulation. Problems relating to the location of damage are particularly evident in cases where financial loss occurs in a wallet managing crypto-assets, which are addressed in Part III. Starting with a brief introduction of English jurisdictional rules, Title I analyses UK rulings concerning jurisdiction and applicable law in cases of pure financial loss resulting from investments carried out through the use of blockchain. These judgments have been delivered by the English High Court of Justice, which has generally identified the place where the damage occurred as the claimant’s domicile, sometimes stressing that this is the place where the claimant is able to exercise control over their assets. Mirroring Part II, Title II of Part III investigates private international law issues arising from the case law, such as claim characterisation, investor-consumer protection, collective redress, location of damage, liability under MiCAR, possible new heads of jurisdiction de lege ferenda, the forum actoris solution, and, lastly, the repercussions on the applicable law. In light of the difficulties encountered both in the characterisation of pure financial loss and in the location of damage, the thesis reflects on the desirability of amending the existing instruments of EU private international law governing jurisdictional grounds and connecting factors for the determination of the applicable law (respectively, Brussels I bis and Rome II Regulations), in order to adapt the normative framework to the challenges posed by current developments and by the increasing use of new technologies in the future.