Beltran v Terraform Labs: Stay of Proceedings, Arbitration Agreements & Online Contracts
In Beltran, Julian Moreno and another v Terraform Labs Pte Ltd and others, the General Division of the High Court of Singapore dismissed appeals by Terraform Labs Pte Ltd, Kwon Do Hyeong, Nikolaos Alexandros Platias, and Luna Foundation Guard Ltd against the decision of the Assistant Registrar to dismiss their applications for a stay of proceedings. The claimants, Julian Moreno Beltran and Douglas Gan Yi Dong, representing 375 individuals, sought relief for misrepresentations inducing them to purchase and stake TerraUSD (UST) tokens. Hri Kumar Nair J held that Terraform had taken steps in the proceedings, precluding a stay in favor of arbitration, and dismissed the appeals with costs.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Appeals dismissed with costs.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court dismisses stay application, finding Terraform took steps in proceedings despite arbitration clauses in online contracts.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Julian Moreno Beltran | Claimant | Individual | Appeal Dismissed | Lost | Mahesh Rai s/o Vedprakash Rai, Yong Wei Jun Jonathan, Yap Keong Wee Brandon, Shreya Vijay Kittur |
| Douglas Gan Yi Dong | Claimant | Individual | Appeal Dismissed | Lost | Mahesh Rai s/o Vedprakash Rai, Yong Wei Jun Jonathan, Yap Keong Wee Brandon, Shreya Vijay Kittur |
| Terraform Labs Pte Ltd | Defendant | Corporation | Appeal Dismissed | Lost | Teh Kee Wee Lawrence, Thng Huilin Melissa, Shirlene Leong Hong Mei, Paul Aman Singh Sambhi, Zhao Heng |
| Kwon Do Hyeong | Defendant | Individual | Appeal Dismissed | Lost | Teh Kee Wee Lawrence, Thng Huilin Melissa, Shirlene Leong Hong Mei, Paul Aman Singh Sambhi, Zhao Heng |
| Nikolaos Alexandros Platias | Defendant | Individual | Appeal Dismissed | Lost | Ong Tun Wei Danny, Teo Jason, Tan Mazie |
| Luna Foundation Guard Ltd | Defendant | Corporation | Appeal Dismissed | Lost | Teh Kee Wee Lawrence, Thng Huilin Melissa, Shirlene Leong Hong Mei, Paul Aman Singh Sambhi, Zhao Heng |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Hri Kumar Nair | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Mahesh Rai s/o Vedprakash Rai | Drew & Napier LLC |
| Yong Wei Jun Jonathan | Drew & Napier LLC |
| Yap Keong Wee Brandon | Drew & Napier LLC |
| Shreya Vijay Kittur | Drew & Napier LLC |
| Teh Kee Wee Lawrence | Dentons Rodyk & Davidson LLP |
| Thng Huilin Melissa | Dentons Rodyk & Davidson LLP |
| Shirlene Leong Hong Mei | Dentons Rodyk & Davidson LLP |
| Paul Aman Singh Sambhi | Dentons Rodyk & Davidson LLP |
| Zhao Heng | Dentons Rodyk & Davidson LLP |
| Ong Tun Wei Danny | Setia Law LLC |
| Teo Jason | Setia Law LLC |
| Tan Mazie | Setia Law LLC |
4. Facts
- Claimants purchased TerraUSD (UST) tokens issued by Terraform.
- Terraform operates the Terra ecosystem, which includes the Anchor Protocol.
- Kwon Do Hyeong is the co-founder and CEO of Terraform.
- Luna Foundation Guard Ltd supports the growth of the Terra Ecosystem.
- Claimants allege misrepresentations induced them to purchase and stake UST.
- The value of UST plummeted in May 2022.
- The Terra and Anchor Websites contained terms requiring disputes to be resolved by arbitration.
5. Formal Citations
- Beltran, Julian Moreno and another v Terraform Labs Pte Ltd and others, Originating Claim No 247 of 2022 (Registrar’s Appeals Nos 185 and 186 of 2023), [2023] SGHC 340
6. Timeline
| Date | Event |
|---|---|
| Terra White Paper published. | |
| Anchor White Paper published. | |
| Value of UST plummeted. | |
| Suit filed by Julian Moreno Beltran and Douglas Gan Yi Dong. | |
| Terraform filed Pre-Case Conference Questionnaire. | |
| Terraform filed its Defence and Counterclaim. | |
| Platias filed his defence. | |
| Platias filed SUM 235. | |
| Terraform, Kwon and Luna filed a Request for Permission to File Application. | |
| Terraform, Kwon and Luna filed SAPT Summons. | |
| Terraform, Kwon and Luna filed SUM 1427 for a stay of the Suit. | |
| SUM 1427 amended. | |
| Appeals dismissed; brief grounds issued. | |
| Terraform's further arguments dismissed; earlier decision affirmed. | |
| Full grounds of decision issued. |
7. Legal Issues
- Stay of Court Proceedings
- Outcome: The court held that Terraform had taken a step in the proceedings, precluding a stay in favor of arbitration.
- Category: Procedural
- Sub-Issues:
- Step in the proceedings
- Existence of a Prima Facie Arbitration Agreement
- Outcome: The court found that Terraform had made out a prima facie case that an arbitration agreement existed between it and all the claimants on the basis of the Terra Terms of Use.
- Category: Substantive
- Sub-Issues:
- Online agreements
- Incorporation of terms
- Jurisdictional Challenges
- Outcome: The court addressed the procedure for dealing with jurisdictional challenges under the Rules of Court 2021.
- Category: Jurisdictional
- Representative Actions
- Outcome: The court discussed the interaction between representative actions and arbitration agreements, noting the potential for conflict.
- Category: Procedural
- Sub-Issues:
- Interaction with arbitration agreements
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Misrepresentation
- Breach of Contract
- Tortious Conspiracy to Injure
- Deceit
10. Practice Areas
- Commercial Litigation
- Arbitration
- Civil Litigation
11. Industries
- Financial Services
- Technology
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Carona Holdings Pte Ltd and others v Go Go Delicacy Pte Ltd | Court of Appeal | Yes | [2008] 4 SLR(R) 460 | Singapore | Cited for the principle that an act indicating an intention for court proceedings to proceed instead of arbitration is a 'step in the proceedings'. |
| Reputation Administration Service Pte Ltd v Spamhaus Technology Ltd | High Court | Yes | [2021] 2 SLR 342 | Singapore | Cited for the principle that an act will be a 'step in the proceedings' where it cannot be explained except on the assumption that the defendant accepts the court's jurisdiction. |
| Shanghai Turbo Enterprises Ltd v Liu Ming | High Court | Yes | [2019] 1 SLR 779 | Singapore | Cited for the principle that an act will be taken to be a 'step in the proceedings' where it cannot be explained, except on the assumption that the defendant accepts that the court should be given jurisdiction, or that any objection to the court’s jurisdiction has been waived or has never been entertained. |
| Zoom Communications Ltd v Broadcast Solutions Pte Ltd | High Court | Yes | [2014] 4 SLR 500 | Singapore | Cited for the principle that an act will be taken to be a 'step in the proceedings' where it cannot be explained, except on the assumption that the defendant accepts that the court should be given jurisdiction, or that any objection to the court’s jurisdiction has been waived or has never been entertained. |
| Maniach Pte Ltd v L Capital Jones Ltd and another | High Court | Yes | [2016] 3 SLR 801 | Singapore | Cited to distinguish that a striking-out application based on a procedural defect is not necessarily a 'step in the proceedings'. |
| Australian Timber Products Pte Ltd v Koh Brothers Building & Civil Engineering Contractor (Pte) Ltd | High Court | Yes | [2005] 1 SLR(R) 168 | Singapore | Cited for the principle that an act, which would otherwise be regarded as a step in the proceedings, will not be treated as such if the applicant has specifically stated that he intends to seek a stay or expressly reserves his right to do so. |
| Chong Long Hak Kee Construction Trading Co v IEC Global Pte Ltd | High Court | Yes | [2003] 4 SLR(R) 499 | Singapore | Cited for the principle that an act, which would otherwise be regarded as a step in the proceedings, will not be treated as such if the applicant has specifically stated that he intends to seek a stay or expressly reserves his right to do so. |
| L Capital Jones Ltd and another v Maniach Pte Ltd | High Court | Yes | [2017] 1 SLR 312 | Singapore | Cited for the principle that an application to strike out proceedings on the basis that it is unmeritorious is an act that signifies a submission to the court’s jurisdiction to resolve the dispute on the merits. |
| Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals | Court of Appeal | Yes | [2016] 1 SLR 373 | Singapore | Cited for the requirements to grant a stay of proceedings in favor of arbitration. |
| Tjong Very Sumito and others v Antig Investments Pte Ltd | Court of Appeal | Yes | [2009] 4 SLR(R) 732 | Singapore | Cited for the principle that it is only in the clearest of cases that the court ought to find an arbitration agreement invalid or inapplicable. |
| Malini Ventura v Knight Capital Pte Ltd and others | High Court | Yes | [2015] 5 SLR 707 | Singapore | Cited for the principle that it is only in the clearest of cases that the court ought to find an arbitration agreement invalid or inapplicable. |
| Koh Chong Chiah and others v Treasure Resort Pte Ltd | Court of Appeal | Yes | [2013] 4 SLR 1204 | Singapore | Cited for the factors the court considers when determining whether there is a common interest between claimants in a representative action. |
| AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Co) | Court of Appeal | Yes | [2020] 1 SLR 1158 | Singapore | Cited for the principle that winding-up applications cannot be used as a method of circumventing parties’ agreement to submit their disputes to arbitration. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act 1994 | Singapore |
| Rules of Court 2021 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- TerraUSD (UST)
- Terraform Labs
- Anchor Protocol
- Terra Ecosystem
- Arbitration Clause
- Representative Action
- Stay of Proceedings
- Terms of Use
- Terms of Service
- Jurisdictional Challenge
- Step in the Proceedings
- Prima Facie Case
- Kwon Do Hyeong
- Luna Foundation Guard Ltd
15.2 Keywords
- arbitration
- stay of proceedings
- online contracts
- cryptocurrency
- misrepresentation
- representative action
- jurisdiction
16. Subjects
- Arbitration
- Civil Procedure
- Contract Law
- Cryptocurrency
- Financial Technology
17. Areas of Law
- Arbitration Law
- Civil Procedure
- Contract Law
- International Arbitration Law