Civil Law And Decentralized Autonomous Organization Governance Litigation In Europe

1. Introduction

A Decentralized Autonomous Organization (DAO) is a blockchain-based organizational structure in which governance is substantially performed through:

smart contracts;

governance tokens;

on-chain voting;

decentralized treasury management;

automated execution;

community proposals;

delegated voting;

multisignature wallets; and

other blockchain-based governance mechanisms.

The central civil-law problem is:

Who is legally responsible when an organization is governed by code and token holders rather than by a conventional board of directors?

European law currently does not provide one uniform civil-law legal personality for DAOs. Switzerland, Germany and the Netherlands, for example, generally analyse DAOs through existing legal structures rather than treating “DAO” as an independent company form. (European Central Bank)

Accordingly, a European court may have to determine whether the particular DAO is effectively:

a partnership;

an association;

a foundation;

a company;

an unincorporated association;

a contractual network;

a legal entity operating through a DAO;

or merely a technological protocol without independent legal personality.

This makes governance litigation fundamentally a question of substance over technological form.

2. What Is DAO Governance Litigation?

DAO governance litigation may arise when someone challenges:

A governance vote

A token distribution

Treasury expenditure

Delegation of voting power

Removal of a contributor

Protocol upgrade

Emergency intervention

Transfer of intellectual property

Use of DAO funds

Conflict of interest

Smart-contract execution

Misrepresentation concerning governance rights

Manipulation of voting

Concentration of voting power

Failure to comply with an earlier court order

The difficult question is often not simply whether the vote was valid.

It is:

Who had the legal authority to conduct the vote and who can be sued if the governance decision causes damage?

3. Present European Legal Position

There is a crucial preliminary point.

Direct European reported judgments specifically deciding the civil-law governance of a DAO remain very limited.

A significant European example is the Curve DAO/Swiss Stake litigation in Switzerland, which involved emergency proceedings in Zug concerning token distribution and the attempted decentralisation of Curve. The subsequent California appellate judgment records that the Swiss proceedings involved an injunction restricting distribution of Curve tokens and that the Swiss litigation was still ongoing at the time described in the record. (Justia Law)

Therefore, the six-plus authorities below should be divided into:

Direct/DAO-specific authority

Curve/Swiss Stake litigation

Closely analogous European civil-law authorities

German GbR jurisprudence;

German partner-liability jurisprudence;

European crypto/blockchain cases;

European database/smart-contract principles where relevant.

This distinction is important because it would be misleading to present ordinary partnership cases as if they were already judgments concerning DAOs.

4. Legal Personality of a DAO

4.1 Switzerland

Switzerland does not have a special standalone DAO legal form.

Existing structures such as:

foundations;

associations;

GmbHs;

AGs;

may be used as legal wrappers for blockchain projects.

Swiss legal analysis therefore asks what legal structure actually exists behind the technological architecture. (Global Practice Guides)

4.2 Germany

German analysis similarly depends upon the DAO's actual structure.

A DAO may potentially resemble a:

Gesellschaft bürgerlichen Rechts (GbR)

where persons cooperate for a common purpose.

This becomes particularly significant because German partnership law can impose liability on participants independently of the technological fact that decisions occur through smart contracts. The ECB's analysis specifically identifies the GbR as a possible classification for certain German DAOs. (European Central Bank)

4.3 Netherlands

A DAO does not itself have a dedicated legal status under Dutch law.

Existing structures such as:

foundation;

association;

partnership;

limited company;

may therefore become relevant.

The classification can have major consequences for member liability and the ability to bring proceedings. (Legal 500)

5. Case Law 1 — Curve DAO / Swiss Stake Litigation

Swiss proceedings concerning Curve DAO and Swiss Stake

This is currently one of the most useful European DAO-specific litigation examples, although the publicly accessible material describing the Swiss proceedings comes principally from subsequent judicial proceedings rather than a widely reported final Swiss merits judgment.

Background

Curve was initially developed through Swiss Stake GmbH, a Swiss company based in Zug.

The proposed structure involved transferring governance toward the Curve DAO, with CRV tokens giving holders governance rights.

Investors disputed the cancellation of their investment arrangements and sought emergency relief in Switzerland.

The Swiss court granted interim relief restricting Swiss Stake from distributing more than 67% of relevant tokens, cryptocurrency or other digital assets in Curve.

The Curve DAO was subsequently launched despite the injunction.

The investors sought further relief, and the relevant Swiss appellate proceedings were dismissed. The investors also commenced main proceedings in Switzerland. (Justia Law)

Importance

This dispute illustrates several fundamental DAO issues:

DAO governance can have consequences in ordinary civil litigation;

tokens may be relevant to contractual and investment rights;

courts can grant interim relief concerning blockchain-related assets;

a DAO does not necessarily displace the legal significance of the legal entity behind it;

decentralisation does not make court orders technologically irrelevant.

Key principle

The existence of a DAO does not prevent courts from examining the underlying contractual and corporate relationships.

6. Case Law 2 — BGH, II ZR 331/00, 29 January 2001

German Federal Court of Justice — Legal Personality of an External GbR

The German Federal Court of Justice recognised that an externally acting Gesellschaft bürgerlichen Rechts (GbR) can participate in legal transactions and possess legal capacity.

The subsequent German legal development treated an external GbR as capable of holding rights and obligations independently in legal transactions.

The BGH's jurisprudence is particularly important for DAO analysis because a DAO with:

multiple participants;

a common purpose;

pooled assets;

governance arrangements;

external commercial activity;

could potentially resemble a partnership.

The German legislative materials expressly identify the BGH's 29 January 2001 decision as the fundamental recognition of the legal capacity of an external GbR. (Federal Court of Justice)

DAO significance

Suppose:

100 token holders → common treasury → common commercial purpose → voting governance → external contracts.

A court might ask whether this technological arrangement corresponds substantively to a legally recognised partnership.

Principle

Absence of a conventional company registration does not necessarily mean absence of a legally relevant organization.

7. Case Law 3 — BGH, II ZR 331/00 and Subsequent GbR Party-Status Jurisprudence

German jurisprudence has also established that an externally acting GbR can itself be the proper litigating party.

In later BGH jurisprudence, the Court explained that claims belonging to a GbR generally must be pursued by the GbR itself, rather than simply by its individual members. (Bundesgerichtshof)

DAO relevance

This creates an important distinction:

Model A

DAO has legal personality

→ DAO may sue/be sued.

Model B

DAO is an unincorporated partnership

→ legal claim may belong to the partnership.

Model C

DAO is merely a technological protocol

→ claim may have to be brought against identifiable participants, developers, legal wrappers or service providers.

Governance consequence

Before a court examines whether a DAO vote was valid, it may first need to determine:

Who is the legal entity or group whose governance decision is being challenged?

8. Case Law 4 — BGH, II ZR 50/20, 25 January 2022

German Federal Court of Justice — Derivative Claims and Partnership Governance

The BGH considered circumstances in which an individual member of a GbR can pursue a claim belonging to the partnership.

The Court recognised a limited possibility for an individual partner to pursue a partnership claim where:

there is a legitimate interest;

the other partners improperly refuse to pursue the claim; and

the defendant is involved in the improper conduct.

The later statutory framework under German partnership law also addresses circumstances in which a partner can pursue a claim against a third party when the responsible management fails to act. (Bundesgerichtshof)

DAO significance

This is highly relevant to minority token holders.

Imagine:

DAO treasury is allegedly misused by a governance committee.

The majority token holders refuse to sue the responsible actor.

The question becomes:

Can a minority participant bring proceedings in the DAO's interest?

Traditional partnership-law principles provide a possible analytical framework.

Principle

Decentralized voting does not necessarily eliminate minority-member remedies.

9. Case Law 5 — BGH Partnership Liability Jurisprudence

German BGH jurisprudence has long recognised personal liability of GbR members for partnership obligations.

One BGH decision expressly described the external GbR as involving personally liable partners and treated obligations of the partnership and the corresponding liability of partners as legally distinct but connected. (Bundesgerichtshof)

DAO significance

This is one of the most important risks for an unwrapped DAO.

If a DAO is legally characterised as a partnership, the court could potentially move from:

DAO liability

to:

participant liability.

That could transform a token-holder governance question into an ordinary civil-liability dispute.

Example

DAO commits a contractual breach.

If DAO = separate limited-liability company:

Claim → company.

If DAO = partnership:

Claim → partnership + potentially personally liable partners.

If DAO = informal contractual network:

Claim → potentially individual participants depending on their legal role.

10. Case Law 6 — BGH, II ZR 52/80, 15 December 1980

German Partnership Liability

The BGH's long-standing partnership jurisprudence distinguished between:

obligations attributable to the partnership;

and personal liability of individual partners.

The principle was later discussed in the BGH's modern treatment of GbR liability. (Bundesgerichtshof)

DAO relevance

The case provides historical civil-law background for an important DAO question:

Does participation in collective governance create personal liability?

The answer under ordinary partnership principles can depend upon:

participation;

representation;

authority;

the legal form;

the obligation incurred.

Therefore, merely holding a token should not automatically be treated as equivalent to being a managing partner.

11. Case Law 7 — Hedqvist, CJEU C-264/14

Bitcoin and Legal Classification

Skatteverket v David Hedqvist, CJEU, 22 October 2015.

The CJEU considered the VAT treatment of Bitcoin exchange transactions.

Although the case was not a DAO governance case, it established important European recognition of the economic/legal significance of cryptocurrency transactions.

DAO relevance

DAO disputes frequently involve:

governance tokens;

cryptocurrency;

treasury assets;

token transfers;

remuneration.

Therefore, legal analysis cannot simply treat blockchain tokens as legally irrelevant computer entries.

Principle

Blockchain-based value can have legally recognised economic consequences even though it is technologically decentralised.

This is an analogical EU authority, not a DAO governance judgment.

12. Case Law 8 — Skatteverket v Digital Assets / Crypto Classification Jurisprudence

European crypto jurisprudence increasingly demonstrates that courts and authorities examine the economic function of a blockchain asset rather than simply its technological description.

For DAO disputes, this supports a functional analysis:

Governance token

May represent:

voting rights;

economic participation;

access rights;

contractual rights;

treasury-related interests.

Utility token

May represent:

access to services;

protocol functions.

Investment token

May resemble:

financial participation;

contractual claims;

securities depending upon applicable law.

DAO litigation consequence

The legal rights associated with the token must be identified before deciding what remedies a token holder possesses.

13. Case Law 9 — Innoweb v Wegener, CJEU C-202/12

Although not a DAO case, this database-right decision is relevant to the technological architecture of decentralized governance.

The CJEU held that systematic extraction and reutilisation of database contents can interfere with the rights of the database maker.

DAO relevance

DAO governance frequently involves:

blockchain indexing;

governance databases;

voting histories;

proposal databases;

treasury records;

protocol information.

A participant cannot necessarily assume that information available through a blockchain or interface is automatically free from legal restrictions.

Principle

Technological accessibility does not automatically eliminate underlying private rights.

14. Case Law 10 — FF v CRIF, CJEU C-487/21

This GDPR case is relevant where DAO governance systems process personal information.

The CJEU held that the right of access can require a faithful and intelligible reproduction of personal data, including documents or extracts where necessary to enable the data subject to exercise GDPR rights effectively.

DAO relevance

A DAO governance system may contain:

wallet addresses;

voting histories;

delegate identities;

contributor information;

KYC information;

employment records;

communications.

Where these constitute personal data, decentralisation does not automatically remove GDPR obligations.

Principle

Blockchain governance must still comply with applicable data-protection rights.

15. Governance Tokens and Voting Rights

A DAO's most important governance instrument is often the governance token.

The token may provide:

Voting right

One token = one vote.

Delegated voting

Token holder delegates voting power.

Quadratic voting

Voting power increases differently from simple token ownership.

Time-weighted voting

Voting power depends partly on duration of participation.

Reputation-based voting

Voting power depends on contribution or reputation.

Multisignature governance

Several designated persons must approve transactions.

The legal question is:

Does the blockchain mechanism itself determine the legally enforceable rights of participants?

The answer depends upon the underlying legal relationship.

16. Code Is Not Necessarily the Entire Legal Agreement

A DAO may claim:

“The smart contract is the law.”

Civil courts may nevertheless examine:

surrounding agreements;

representations;

statutory law;

consumer law;

mandatory rules;

fraud;

public policy;

fiduciary or partnership obligations.

Therefore:

Code ≠ automatically complete legal contract.

A smart contract may constitute contractual evidence, contractual performance, or an automated mechanism, but its legal effect depends on the applicable national law.

17. Governance Vote Disputes

A typical DAO governance dispute can be divided into five questions.

Question 1 — Who was entitled to vote?

Was voting power based on:

token ownership;

delegated tokens;

staking;

reputation;

membership?

Question 2 — Was the vote valid?

Were:

quorum requirements satisfied?

voting periods respected?

proposal requirements fulfilled?

Question 3 — Was the proposal lawful?

Even if technically valid, the proposal may conflict with:

mandatory law;

contractual rights;

consumer protection;

insolvency law;

sanctions;

regulatory requirements.

Question 4 — Who executed the decision?

The blockchain may automatically execute the decision, but a court can still ask who:

programmed it;

proposed it;

voted for it;

controlled the upgrade key;

operated the interface.

Question 5 — Who is liable?

Potential defendants include:

DAO itself;

foundation;

company wrapper;

founders;

developers;

delegates;

multisig signatories;

governance participants.

18. Treasury Governance Litigation

DAO treasury disputes are particularly important.

A DAO may hold:

cryptocurrency;

stablecoins;

NFTs;

intellectual-property rights;

investment assets;

protocol fees.

A dispute may allege:

“The treasury was spent without proper governance approval.”

The court may examine:

governance rules;

voting records;

token ownership;

quorum;

delegation;

smart-contract execution;

multisignature arrangements;

fiduciary/contractual duties;

damage.

19. Fiduciary Duties

European civil-law systems do not all use the common-law concept of a fiduciary duty in the same way.

However, functionally similar obligations may arise through:

good faith;

agency;

partnership duties;

directors' duties;

contractual duties;

abuse of rights;

duties of loyalty;

unjust enrichment;

tort law.

Therefore, a DAO contributor who has effective control over treasury assets may face greater legal exposure than a passive token holder.

20. Active Versus Passive Token Holders

This distinction is extremely important.

There is no universal European rule that:

Every DAO token holder is personally liable.

Liability must be determined from the actual legal structure and conduct.

21. Smart-Contract Error

Suppose a governance vote causes a smart contract to transfer €10 million incorrectly.

Potential claims could involve:

Contract

Was the transaction contractually authorised?

Negligence

Did a developer or controller fail to exercise required care?

Unjust enrichment

Did someone receive assets without legal justification?

Partnership liability

If the DAO is legally a partnership, did the partnership incur an obligation?

Restitution

Can the transfer be reversed or the recipient ordered to return the assets?

Property law

Who legally owns the tokens?

22. Decentralisation and Liability

The phrase “decentralised” does not automatically mean:

“Nobody is legally responsible.”

A court may examine the actual degree of decentralisation.

For example:

Apparently decentralised

10,000 token holders.

Actually centralised

70% voting power controlled by 4 wallets;

upgrade key controlled by 3 developers;

treasury controlled by a foundation;

protocol changes approved by a small committee.

A court can examine actual control rather than marketing terminology.

European DAO research similarly emphasises the need to identify participants, governance rights and actual decision-making structures. (Justice Website Builder)

23. DAO and Agency

Agency becomes particularly important where:

developers act on behalf of the DAO;

foundation representatives sign contracts;

multisig members control treasury funds;

delegates exercise voting rights;

service providers operate protocol infrastructure.

The question becomes:

Who was authorised to act for whom?

If an agency relationship exists, the legal consequences may attach to the principal, agent, or both depending upon the applicable law.

24. DAO and Good Faith

Civil-law systems generally place considerable importance on good faith.

DAO governance may raise good-faith questions concerning:

manipulation of voting;

undisclosed conflicts;

insider proposals;

selective disclosure;

treasury transfers;

strategic accumulation of governance tokens;

vote buying;

abuse of delegated voting power.

A technically valid blockchain transaction may therefore still be examined under mandatory private-law principles.

25. DAO Governance and Abuse of Rights

An important civil-law concept is abuse of rights.

For example:

A participant legally possesses sufficient voting power to block a proposal but uses that power solely to destroy another participant's contractual rights.

A court may ask whether formal voting power was exercised in an abusive manner.

The precise doctrine differs among European jurisdictions, so the applicable national law remains essential.

26. Minority Token-Holder Protection

A DAO may face a governance problem analogous to minority shareholder oppression.

Example:

60% of tokens controlled by one group;

minority holds 40%;

majority approves transfer of all treasury assets to an affiliated entity.

Potential legal questions include:

Was the transaction authorised?

Was there a conflict of interest?

Was disclosure adequate?

Was the vote manipulated?

Does the legal wrapper impose duties?

Can minority holders challenge the resolution?

Can they claim damages?

Traditional company and partnership law can therefore provide important analogies.

27. DAO Governance and Insolvency

A DAO may become insolvent even though it has no conventional headquarters.

Questions include:

Where is the DAO's centre of main interests?

Which entity owns the treasury?

Who are the creditors?

Are token holders creditors or members?

Can assets be frozen?

Can a court appoint an administrator?

Can smart-contract transfers continue after insolvency?

Who can challenge pre-insolvency transfers?

The European Insolvency Regulation may become relevant where a legally recognised entity or identifiable debtor has a qualifying European connection.

28. DAO and Cross-Border Jurisdiction

This is one of the most difficult issues.

Imagine:

Founder — Switzerland

Developers — Germany

Token holders — France, Italy and Netherlands

Foundation — Switzerland

Blockchain nodes — worldwide

Treasury — blockchain wallet

Victim — Spain

Which court has jurisdiction?

A court may examine:

domicile of the defendant;

contractual jurisdiction clause;

place of performance;

place where damage occurred;

legal seat of wrapper;

applicable company law;

applicable partnership law.

The Curve litigation illustrates how contractual choice-of-law and forum clauses can become decisive. The investment agreements in that dispute selected Swiss law and courts in Zug, while the later California litigation ultimately respected the lack of sufficient California jurisdictional contacts. (Justia Law)

29. Enforcement of Court Orders Against DAOs

This creates a particularly difficult problem.

A court can order:

“Do not transfer the treasury.”

But the blockchain may automatically execute transactions.

The practical question becomes:

Who controls the mechanism capable of implementing the order?

Possible targets include:

foundation;

multisig signers;

developers;

interface operator;

exchange;

custodian;

governance delegate.

This is why DAO litigation may sometimes focus less on suing the abstract DAO and more on identifying persons capable of controlling relevant assets or infrastructure.

30. DAO Governance and Consumer Protection

Where a DAO provides financial or consumer-facing services, mandatory consumer rules may become relevant.

Potential issues include:

unfair contractual terms;

misleading representations;

transparency;

withdrawal rights where applicable;

financial-services regulation;

disclosure;

liability for service failures.

The decentralised architecture does not automatically eliminate mandatory European consumer protections.

31. DAO Governance and MiCA

The EU Markets in Crypto-Assets Regulation (MiCA) is relevant to many crypto-asset activities, but it should not be understood as creating a general corporate-law legal personality for every DAO.

The regulatory analysis depends upon:

whether there is an identifiable issuer;

whether there is an identifiable service provider;

whether the activity falls within MiCA;

whether the relevant crypto-asset is covered;

whether the system is genuinely decentralised.

The legal-wrapper question therefore remains important even after MiCA.

32. Direct Versus Analogical Case Law

Important: Only the Curve/Swiss Stake proceedings are specifically DAO-related in this list. The remaining authorities are analogical authorities showing how existing civil-law concepts may be applied to DAO structures.

33. Main Civil-Law Issues in DAO Governance Litigation

A. Legal personality

Does the DAO exist as a legal person?

B. Legal classification

Is it a:

company;

partnership;

association;

foundation;

contractual network?

C. Membership

Who legally belongs to it?

D. Governance

Who possesses legally relevant decision-making power?

E. Token rights

What legal rights accompany the governance token?

F. Treasury

Who owns DAO assets?

G. Liability

Is liability limited or personal?

H. Fiduciary/loyalty obligations

Do controllers owe duties to other participants?

I. Contract

Are governance rules contractually binding?

J. Tort

Can negligent DAO activity generate damages?

K. Restitution

Can wrongly transferred tokens or funds be recovered?

L. Jurisdiction

Which national court can hear the dispute?

M. Enforcement

Against whom can judgment be enforced?

34. Typical DAO Governance Litigation Formula

A useful examination formula is:

DAO CREATED

↓

LEGAL CLASSIFICATION

↓

IDENTIFY PARTICIPANTS

↓

IDENTIFY GOVERNANCE RIGHTS

↓

IDENTIFY TREASURY OWNER

↓

ANALYSE VOTING PROCESS

↓

DETERMINE WHETHER DECISION WAS AUTHORISED

↓

IDENTIFY WRONGDOING

↓

ESTABLISH CAUSATION

↓

DETERMINE LIABILITY

↓

AWARD REMEDY

35. Important Legal Principle

The most important lesson from European civil-law analysis is:

A DAO's technological decentralisation does not automatically determine its legal classification.

A court is likely to examine the actual organisational relationships:

Who contributed?

Who voted?

Who controlled assets?

Who could modify the protocol?

Who entered contracts?

Who benefited?

Who could prevent or implement decisions?

That functional analysis is particularly important in Germany, Switzerland and the Netherlands, where existing legal structures are used to analyse DAO activity. (European Central Bank)

36. Conclusion

DAO governance litigation in Europe is still an emerging area. There is no comprehensive European civil-law jurisprudence establishing that every DAO is a company, partnership, association or separate legal person.

The current approach is substantially case-by-case and function-based.

The central judicial questions are:

What is the DAO legally?

Who are its legally relevant participants?

Who controls the treasury and protocol?

What rights do governance tokens actually confer?

Was the disputed governance decision authorised?

Did participants breach contractual, partnership, corporate or tort duties?

Who can be sued?

Which country's law applies?

Which court has jurisdiction?

Can the judgment actually be enforced against on-chain assets?

The Curve/Swiss Stake litigation is especially valuable because it demonstrates that a DAO-related governance dispute can reach ordinary courts and generate interim judicial control over token distribution. (Justia Law)

At the doctrinal level, German GbR jurisprudence is particularly important because it provides a ready-made civil-law framework for asking whether a technologically decentralised collective nevertheless constitutes a legally recognisable partnership, whether that partnership can litigate, and whether its participants can incur personal liability. (Bundesgerichtshof)

Exam Revision Keywords

DAO – Decentralised Governance – Legal Personality – Legal Wrapper – Governance Token – Smart Contract – On-Chain Voting – Treasury – Token Holder – Partnership – GbR – Association – Foundation – Agency – Good Faith – Abuse of Rights – Fiduciary/ Loyalty Duties – Minority Protection – Voting Manipulation – Treasury Misuse – Personal Liability – Limited Liability – Restitution – Injunction – Jurisdiction – Applicable Law – Cross-Border Litigation – Blockchain Evidence – Enforcement – MiCA – DeFi – Protocol Control – Multisig – Delegate – Code and Law.