Bitcoin Mining Company Bound By Arbitration Agreement It Never Signed

Faes & Co. (Faes), a UK company that engages in Bitcoin mining, contracted to purchase fifty Bitcoin mining machines from a U.S. company, Blockware Solutions, LLC (Blockware) for $525,000.  The parties’ relationship was governed by two agreements: a “Services Agreement” and “Co-Location Agreement.”   The Services Agreement basically just provided for Blockware’s obligation to procure mining systems for Faes once Faes had purchased them.  The Co-Location Agreement covered Blockware’s obligation to provide for the installation, maintenance, and operation of mining equipment, as well as electrical power and Internet.  The Co-Location Agreement included an arbitration clause.

The machines didn’t work right.  I won’t bore you with the technical details, and because of my limited understanding of these things, I couldn’t if I tried.  It seems like the machines did not operate at full capacity.  There was a lot of down time, which cost Faes $5000/month.  So Faes sued, and Blockware dutifully moved to dismiss for improper venue, which the court generously construed as a motion to compel arbitration.  

Bitcoin Mining, image by DALL-E

In Faes & Co., Ltd. v. Blockware Solutions, LLC, the District Court for the Northern District of Illinois granted the motion to compel arbitration.  Faes argued that it was not bound by the Co-Location Agreement’s arbitration clause because it never signed it.  That’s just silly.  It accepted the machines and used them.  Their conduct rendered their signature unnecessary.  If Faes did not think it was contractually bound, why did it pay in exact accordance with the terms of the agreement?  Faes next argued that it was not bound by the Co-Location Agreement because it expressly rejected it.  In fact, Faes had quibbled with one clause of the agreement, but upon receiving assurances from Blackware that the clause would not operate as Faes feared, it proceeded with the transaction.  It never objected to arbitration.

The case is stayed pending arbitration.