High Court rules UK judgment for gambling debt is unenforceable in Ireland

In Sporting Index Limited v John O'Shea [2015] IEHC 407, the High Court allowed an appeal against an order of the Master of Irish High Court deeming enforceable a judgment, obtained in the County Court in London, in respect of losses arising from the defendant’s online spread betting account in the amount of €118,000.  The High Court held that the applicable legislative regime in Ireland, namely the Gaming and Lotteries Act, 1956, prohibits the enforcement of betting contracts as they are manifestly contrary to public policy, and the court was thus prohibited from recognising the order of the London court.

Facts

The defendant (an Irish resident) opened an online spread betting account with the plaintiff, a U.K. based company specialising in sports spread betting.  The defendant placed an unsuccessful bet on a Heineken Cup rugby match, and as a result, his online betting account became overdrawn, resulting in liability for gambling debts.

The plaintiff issued legal proceedings against the defendant in London, and obtained two judgments.  The first judgment, in the amount of EUR €118,000 related to the defendant's gambling debts, The second judgment concerned the plaintiff's costs in relation to a failed application by the defendant to set aside the first judgment, which was in the sum of STG £17,500.

The Master of the Irish High Court made Orders deeming both judgments enforceable in Ireland, and it is these Orders which were appealed in the present case.

The defendant alleged that the enforceability of the said judgments would be contrary to section 36(2) of the Gaming and Lotteries Act, 1956 (the 1956 Act), which prohibits the enforcement of betting contracts. The defendant relied on articles 34(1) and 34(3) of the Brussels Regulation (44/2001) as the basis for his assertion that the judgments should not be recognised in Ireland.

The Law

The Brussels Regulation, which provides for the effective enforceability of judgments in other Member States,   allows for certain exceptions to the otherwise harmonious enforcement of judgments. The Regulation was incorporated into Irish law under the Jurisdiction of Courts and Enforcement of Judgments (Amendment) Act, 2012.

Article 34(1) of the Brussels Regulation provides that a judgment shall not be recognised: "(1) if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought" or "(3) it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought".

Also of relevance was section 36(2) of the 1956 Act, which provides that: "No action shall lie for the recovery of any money or thing which is alleged to be won or to have been paid upon a wager or which has been deposited to abide the event on which a wager is made".

In Emo Oil Limited v Mulligan [2011] IEHC 552, Ms Justice Dunne noted that the public policy ground for refusing to enforce a foreign judgment will only arise in exceptional circumstances, such as where a fundamental right of an individual or an entity has been engaged.

Decision

Mr Justice Mac Eochaidh, at the High Court, allowed the appeal of the defendant against recovery of the gambling debt (the first judgment), but not in respect of the costs of the proceedings incurred by the plaintiff (the second judgment).

(i) Recovery of the Gambling Debt

The Court held that enforcing the first judgment would have the effect of enforcing a gambling debt in the State. Mr Justice Mac Eochaidh found that in assessing the extent to which public policy in a member state must be offended so as to disallow enforcement, the case law has consistently stated that the infringement "must constitute a manifest breach of a rule of law regarded as essential in the legal order of the state in which enforcement is being sought."  He noted that he did not read the dicta of Ms Justice Dunne in Emo Oil as meaning that the public policy exception may only be invoked if the foreign trial breached fundamental rights.

The Court held that there was a manifest conflict between the foreign court order arising from the gambling debt and Irish public policy as expressed in the 1956 statute. Mr Justice Mac Eochaidh stated that: "The rule reflects public policy on the control of gambling. It is an essential measure in as much as the Oireachtas has considered it necessary for the purposes of controlling gambling". Accordingly, he refused to enforce the order in respect of the gambling debt in the sum of EUR €118,000.

(ii) Enforcement of the Costs Order

The Court took a different view of the second judgment, concerning the costs incurred by the plaintiff in seeking to enforce the gambling debt.  Mr Justice Mac Eochaidh did not regard that order as constituting enforcement of a gambling debt, as the monies were not owed from a betting transaction, but rather concerned litigation expenses only.  Therefore he held that the costs order in the sum of STG £17,500 was enforceable under the Brussels Regulation.

Comment

This decision shows that the public policy ground for refusing recognition of a foreign judgment will be interpreted strictly by the courts, otherwise there is a risk of defeating the purpose of the Brussels Regulation.  The Irish courts will only allow the public policy ground to be invoked where there is a manifest breach of a rule of law regarded as essential in Ireland. 

This is an important judgment for the gaming industry, particularly in light of the rise in operators operating across multiple jurisdictions in the EU via the internet.

The implications of the judgment may be said to be two-fold;

• It reinforces the existing prohibition on the enforcement of 'gaming and wagering contracts' in section 36 of the 1956 Act; and
   
• It ensures that should a gambling debt arise in respect of an Irish domiciled customer and a foreign operator, such a foreign operator will not be able to enforce the debt against the Irish-domiciled customer in Ireland, even if judgment is successfully obtained in another Member State.

Whilst public policy appears to be framed to discourage gambling and wagering, it is questionable whether or not this public policy is in keeping with recent developments in Irish gambling law and, in particular, the introduction of the Betting (Amendment) Act, 2015. This Act requires all offshore bookmakers who accept bets from Irish customers to obtain an Irish bookmakers' licence. If the policy is to require offshore operators to obtain an Irish licence, it seems inconsistent for public policy to then fail to take account of the commercial realities of the market by not allowing operators the opportunity to enforce gambling debts, particularly if an enforcement order is obtained in another jurisdiction.

For further information, please contact Joe Kelly at jkelly@algoodbody.com, Máire Conneely at mconneely@algoodbody.com or Davinia Brennan at dbrennan@algoodbody.com.

Date published: 28 July 2015