Bitcoin and Public Policy in International Arbitration Enforcement

Bitcoin and Public Policy in International Arbitration Enforcement

Cryptocurrencies are a rapidly spreading form of transaction in the global financial system and regulators have recognized that crypto-assets are here to stay; they can support financial inclusion, provide secure payments and improve controls. Hovever, cryptocurrency technology, with its innovative features such as the decentralised nature, the absence of a central authority and inherent anonymity of users, creats significant concerns in terms of tax evasion, money laundering and terrorist financing.

Greece, among other countries, has not adopted an apropriate and specific regulatory framework to regulate all issues arising from the way cryptocurrencies operate within Greece, and Greek jurisprudence appears hesitant to its recognition.

Τhe Court of Appeal of Western Central Greece recently published decision No 88/2021, ruling that the recognition of a US award granting damages in bitcoin runs contrary to Greek public policy (within the framework of New York Convention 1958 on the Recognition and Enforcement of Foreing Arbitral Awards).


The facts presented in the Court decision are as follows: The Applicant, residing in Germany, was a member of a website owned by a US company. This website enabled its members to conclude credit contracts in cryptocurrencey (e.g. bitcoins). The Applicant has agreed with a Greek resident to finance his enterprise by providing a credit in bitcoins. Ηowever, the Greek debtor failed to fulfill his obligations on the agreed date or to refund the loan amount.

The parties had agreed that any dispute between the members of the aforementioned website and any claim relating to an overdue loan debt concluded through the website shall be resolved on the basis of an express agreement to this effect by arbitration by the internet operator. Οn such grounds of the arbitration agreement, an award wasissued by an online arbitration court (located in the US) and the Court of First Instance of Agrinio (by its decision No 193/2018), being competent to recognize the arbitral award in Greece, decided that the arbitral award cannot be recognized in Greece for reasons of substantive public policy. The Applicant lodged an Appeal in the Court of Appeal of Western Central Greece.

The ruling under No 88/2021 decision of the Court of Appeal of Western Central Greece

The Court of Appeal of Western Central Greece rejected the application of the enforcement of the foreign arbitral award, ruling that the enforcement of such an award identifying bitcoin as a decentralised currency unit (peer-to-peer) and ordering the debt payment in bitcoins, runs contrary to public policy, i.e. to fundamental rules and principles of Greek legal order, reflecting predominant social financial and political values.

The Court of Appeal stated that according to the Greek legal order, bitcoin is considered a “digital asset” and not a currency. In essence, it is a digital unit of value that can be exchanged electronically and has no physical form. Bitcoin is created and monitored by a network of computers through complex mathematical formulas, not by a single authority or organisation. Due to its nature, the European Central Bank does not consider it to be money and it is not issued by any central public authority. For this reason, the ECB does not guarantee anyone’s right to use it as a means of payment. It concluded that the use of bitcoins endangers transactions both for the parties involved and the State, mainly because any income resulting from the use of cryptocurrency is tax-free, while, further, these kinds of transactions are not regulated in Greece.

Finally, the Court of Appeal concluded that importing capital in bitcoins and generally any kind of cryptocurrency, irrespective of the type of legal matter, infringes the domestic legal order, encouraging tax evasion and facilitating economic crime, causing insecurity in commercial transactions to the detriment of the national economy.


Following the publication of the above Court decision, Greek legislators appear hesitant and to be observing a standby attitude by avoiding proceeding to a structured legal framework of the cryptocurrencies. Further, Greece has not yet issued any specific legal provisions regarding the taxation of cryptocurrency income (either from mining or transactions). However, the Independent Public Revenues Authority (IPRA) expressed its intention to propose the taxation of income that results from cryptocurrency transactions as income from portfolio investments.

Furthermore, Greece has agreed to follow any EU initiatives, starting by incorporating the EU’s Fifth Anti-Money Laundering Directive (5AMLD) by virtue of Law 4734/2020 (G.G.(A) 196/08.10.2020), pursuant to which a broad definition of virtual currencies was offered: “digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically”. The said Directive also tightened KYC/CFT obligations and standard reporting requirements. Τhe Hellenic Capital Market Commission is currently expecting the new European Regulation of the European Parliament and of the Council on Markets in Crypto-Assets to be published in order to plan the next legislative initiatives.

Consequently, in light of all the above legislative developments, we may expect a positive approach of the Greek Courts on that matter.

However, the Greek court’s conservative approach towards enforcing an arbitral award tied to a payment in cryptocurrency may be reflective of similar court decisions to come in other jurisdictions. One might expect that the courts of those jurisdictions which lack adequate regulation on cryptocurrencies may indeed be prone to refuse enforcement in similar circumstances. Notwithstanding the foregoing, one should be mindful that courts of the contracting states of the New York Convention are free to interpret the public policy test envisaged in Article V(2)(b) of the Convention and that accordingly, it is equally possible for the courts of different jurisdictions to adopt a more liberal approach, even in the absence of a regulatory framework on this matter.

Ergin Mizrahi
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