English High Court refuses recognition and enforcement of Californian arbitral award by cryptocurrency exchange Kraken

England is often seen as an arbitration-friendly jurisdiction. London is a popular choice as the arbitration seat and English courts rarely refuse recognition and enforcement. The most recent statistics show how reluctant English courts are to interfere in the arbitral process, with challenges under ss. 67, 68, and 69 of the Arbitration Act 1996 particularly unlikely to succeed.

However, the Commercial Court’s decision in Payward Inc & Ors v Maxim Chechetkin [2023] EWHC 1780 (Comm), handed down last week, is a rare example of the English courts declining to enforce an arbitral award. This case involved s. 101, with such cases making up less than a quarter of arbitration cases before the Court.

The decision may ultimately have important implications for cryptocurrency exchanges and other businesses who seek to incorporate arbitration clauses providing for into their agreements with UK-based consumers.

Enforcement of a foreign award generally

An award creditor may wish to enforce an arbitral award in England and Wales if there has been a failure of an alleged award debtor to carry out the award (e.g., pay a sum ordered). Assets in the jurisdiction is likely another factor a claimant takes into account when deciding to pursue an award in England.

That award creditor would usually commence enforcement by filing arbitration claim form in the High Court under Part 8 of the CPR. The process is usually quite efficient and will be based on written evidence, with permission needing to be granted if there is to be any cross-examination.

Enforcement and recognition of a foreign award may also be sought in an attempt to prevent a claim arguably covered by an arbitration agreement from being pursued in the English courts.

Enforcement is sometimes refused, typically under one of the exceptions contained in Article 5 of the New York Convention (largely mirrored by s. 103 of the Act). Payward Inc & Ors v Maxim Chechetkin is a case which falls into this category.


Kraken is a cryptocurrency exchange with whom the defendant opened an account in 2017. The three claimants (collectively “Kraken”) are said to be three of the corporate entities responsible for the Kraken exchange, with Payward Limited being the UK registered subsidiary that UK users contracted with.

When signing up for the Kraken exchange, a clickwrap agreement said to bind users included a clause titled “23. Applicable Law; Arbitration”, which provided for disputes to be resolved by arbitration under JAMS rules and seated in San Francisco. The clause contained, in capital letters, statements that it should be read carefully, that it limits the manner in which the user may seek relief, and that it prevents the user from suing in court.

Mr Chechetkin, a lawyer, started to increase his usual trading activity on Kraken in 2020. At some point his trading positions turned negative. He was allowed to continue trading by Kraken. According to him he then started to panic, attempted to trade his way out of trouble, and ended up losing a balance of £608,534.


Mr Chechetkin sent a letter before claim attributing blame for his losses to Kraken, and then proceeded to bring a claim in the English High Court, alleging breaches of the Financial Services and Markets Act 2000 (“the FSMA proceedings”). The crux of those allegations was a breach of the “general prohibition” in s. 19 of the Act, which prohibits regulated activity in the UK except where authorised. Should Kraken be in breach of this, Mr Chechetkin’s case is that Payward Ltd must repay his funds pursuant to s. 26 of the Act. Such a breach by Payward Ltd would in fact almost certainly be a criminal offence under s. 23 of the Act, Bright J held, though also finding that it was not his place to make a final decision on the merits of those arguments in this case.

Kraken commenced arbitration in California against Mr Chechetkin after he raised his dispute. Mr Chechetkin participated in that arbitration, though made his position clear that the dispute was not arbitrable and that he was entitled to pursue his court proceedings in England. Kraken was successful in this arbitration – they were held not responsible for his losses and the arbitrator refused to countenance applying English law. Further, the final paragraph of the final award “enjoined [Mr Chechetkin] from filing or prosecuting a claim against Payward in court, whether in the U.K. or other jurisdiction.

More recently, a decision was handed down in the FSMA proceedings rejecting Kraken’s jurisdiction challenge (Chechetkin v Payward Ltd and others [2022] EWHC 3057 (Ch)). Kraken brought this arbitration claim in another attempt to halt the FSMA proceedings. In addition to seeking enforcement of the award and the paragraph stating that Mr Chechetkin was enjoined from filing suit against Payward, Kraken relied on issue estoppel and Henderson v Henderson abuse of process.

In response, Mr Chechetkin argued two exceptions from the Arbitration Act 1996, the main one being s. 103(3) (which mirrors Article 5 of the New York Convention): Recognition or enforcement may be refused if it would be contrary to public policy.

Ultimately, Bright J held in favour of Mr Chechetkin. Whilst Kraken argued here that Mr Chechetkin could have pursued an FSMA counterclaim in the arbitration but chose not to, Bright J noted that it would not have been tenable Mr Chechetkin to do so where the arbitrator had made it clear that English law was not applicable to the dispute. Because of this, in addition to public policy concerns, Bright J held that there was no issue estoppel or Henderson abuse.

Section.15B of the Civil Jurisdiction and Judgments Act 1982 was also relevant, providing that a party may apply to their local court where there is a dispute under a consumer contract, which right only disappears in limited circumstances (which did not apply in the current case).

In relation to the s. 103(3) public policy exception argued for by Mr Chechetkin, Bright J held that there is no doubt that prohibitions on unfair contract terms represent public policy, citing EU (retained) caselaw. The FSMA was also clearly an expression of English/ UK public policy, and both of these acts invoked the s. 103(3) exception accordingly.


Though a first instance decision, in addition to illustrating the limits on enforcement of foreign arbitral awards in England, this case shows the difficulty that cryptocurrency exchanges may continue to face where they seek to impose foreign law (and foreign seated) arbitration clauses on UK-based consumers. The related FMSA proceedings by Mr Chechetkin may in fact be of great significance for cryptocurrency exchanges operating in the UK should Mr Chechetkin’s main claim succeed.

Categorized as Uncategorized