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(Jun 04, 2014) It was reported on May 19, 2014, that a court in Overijssel, The Netherlands, had issued a decision in a civil suit involving an uncompleted Bitcoin transaction between two parties. The court held, citing a written interpellation of the Minister of Finance by the Dutch parliament, that the virtual currency "is a medium of exchange" like gold and fails to "meet the definitions of 'common money', 'legal tender' or 'electronic money'." (Pete Rizzo, Dutch Court Declares Bitcoin Isn't Money in Civil Trial, COINDESK (May 19, 2014), http://www.coindesk.com/dutch-court-declares-bitcoin-isnt-money-in-civil-trial/; Rechtbank Overijssel, Uitspraak, Case No. C/08/140456 / HA ZA 13-255 (May 14, 2014), de Rechtspraak website [Ref. No. ECLI:NL:RBOVE:2014:2667], ¶ 4.8.)
The case involved a never-completed Bitcoin (BTC) transaction carried out in 2012 between two parties. The buyer had sought to purchase BTC2,750 – paying €22,000 (about US$30,000), or about €8 per Bitcoin – from the seller, but only received BTC990. The buyer sued the seller after repeated delays in the delivery of the remaining BTC1,760. (Rizzo, supra.) Ruling in favor of the buyer, the court ordered the defendant to pay back to the plaintiff the original value of the unpaid amount (roughly €14,000, about US$19,100 at the time) and also to be responsible for payment of interest and legal costs. The court declined to award the buyer his claim of €130,000 in damages based on lost Bitcoin profits, given that the digital money surged in value last year. (Id.)
It was pointed out in the press that "[t]he case could set a precedent in the Netherlands for similar lawsuits, as the ruling answers the question of what damages need to be assessed when an agreement to trade bitcoin is not fulfilled as promised." (Id.)
The Ruling and Bitcoin
The court stated in the ruling, "Bitcoin is not legal tender [wettig betaalmiddel] and in view of the foregoing it cannot be concluded that Bitcoin can be regarded as 'current money' [gangbaar geld] as referred to in article 6:112 BW [Burgerlijk Wetboek, the Civil Code]." (Id.) According to article 112 of the Code, "[m]oney paid to perform an obligation must, at the time of payment, be current in the country in whose currency payment is made." (Book 6: General Part of the Law of Obligations, THE CIVIL CODE OF THE NETHERLANDS 665 (Wolters Kluwer 2009).) The definition of legal tender in the Netherlands, according to the court, "is limited to euros and other coins issued by the European Central Bank (ECB)." (Rizzo, supra; Case No. C/08/140456, citing to arts. 10 & 11 of Regulation 974/98 of the European Community.)
In its decision, the court referred to the response by the Minister of Finance to written questions from the Parliament, in which the Minister "took the view that Bitcoin does not fall under the definition of (electronic) money within the meaning of the Financial Supervision Act" and that it can be viewed as a medium of exchange between individuals. (Case No. C/08/140456, supra.)
The court concurred that Bitcoin can be considered as a medium of exchange and therefore is acceptable as a form of payment in the Netherlands. (Id., Inhoudsindicatie [Indication of Content]; Rizzo, supra.)
|Author:||Wendy Zeldin More by this author|
|Topic:||Currency More on this topic|
|Financial services More on this topic|
|Foreign exchange More on this topic|
|Torts More on this topic|
|Jurisdiction:||Netherlands More about this jurisdiction|
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Last updated: 06/04/2014