Contracts Manifestly Contrary To Irish Public Policy – Implications For Contingent Fee Arrangements And Third Party Funding?

The Irish High Court recently declined to recognise an English judgment in respect of a gambling debt on the basis that to do so would be manifestly contrary to Irish public policy. By close analogy, this has the potential to affect, amongst other things, the enforceability of contingent fee arrangements and third party funding arrangements entered into by Irish parties and their lawyers in relation to litigation outside Ireland.

Background

In Sporting Index Ltd -v- O'Shea1 the plaintiff sought to enforce two English judgments, in Ireland, pursuant to the Brussels Regulation.2 The judgments were in respect of:

a debt incurred as a result of spread betting (the "Debt Judgment"); and the costs of obtaining the Debt Judgment (the "Costs Judgment"). The Brussels Regulation provides for almost automatic recognition of judgments from other EU Member States. In this case, the plaintiff obtained orders ex parte from the Master of the Irish High Court declaring the English judgments enforceable and served them on the defendant.

The defendant then appealed the Master's order to the High Court primarily on the basis that article 34.1 of the Brussels Regulation provides that a judgment shall not be recognised:

"if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought".

Section 36 of the Gaming and Lotteries Act 1956 (the "1956 Act") provides:

"(1) Every contract by way of gaming or wagering is void.

(2) 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...."

The defendant submitted that this section was a clear prohibition on the enforcement of betting contracts on public policy grounds and prevented the enforcement of the English judgments as it engaged the public policy exception provided by Article 34.1 of the Brussels Regulation.

The plaintiff contended that:

it was seeking the enforcement of court orders, not gambling debts; and denying enforcement would require the Court to review the English judgments as to their substance, which is prohibited by the Brussels Regulation. As regards the Debt Judgment, the court held that:

While the Court was not permitted to go behind the judgment, for example to examine the merits of the case, it was not prohibited from knowing what the substance of the proceedings was. The intention of the legislature is perfectly clear...