A Japanese court recently sided with a cruise ship operator which filed a lawsuit against a Japanese patron who had gambled at its casino while on the Asia-Pacific high sea using a credit facility granted by the casino.

In its decision handed down in March 2021, the Tokyo District Court allowed the plaintiff to enforce its claim against the defendant the sum of approximately HK$6.18 million with interest, which was incurred by the defendant under a check-cashing facility agreement with the plaintiff for gambling.

The plaintiff obtained a default judgment in Hong Kong and then filed a suit in Japan against the defendant who is a Japanese national to enforce the Hong Kong judgment.

The defendant contested the suit in Japan relying on a number of grounds, with the main one being contravention of public policy. Despite the defendant’s opposition, the Hong Kong default judgment was recognized by the Tokyo District Court, and thus can be enforced against the defendant.

In reaching its decision, the Tokyo District Court ruled on the following key points:

  1. Money loaned under a foreign law-governed agreement for gaming outside of Japan was not contrary to Japan's public policy as stated in Article 118(iii) of the Code of Civil Procedure; and
  2. Enforcement of a Hong Kong judgment based on gaming debts was not contrary to the public policy of Japan.

Background

The plaintiff operates a cruise ship in the high sea of the Asia-Pacific region. The patron is a Japanese national residing in Japan who entered into a check-cashing facility agreement with the plaintiff (i.e. credit facility). The governing law of the agreement is Panama law with a non-exclusive jurisdiction clause in favour of Hong Kong courts.

After the patron defaulted and did not respond to plaintiff's demand letter, the plaintiff commenced legal proceedings against the patron in Hong Kong, served the writ of summons on him in Japan through the Japanese authorities, and successfully obtained the default judgment in Hong Kong.

Decision

In allowing the plaintiff's claim, the Tokyo District Court construed the agreement as an agreement on the making of money loans for the purpose of enjoying entertainment at the casino. The patron sought to challenge the Hong Kong judgment based on, amongst other things, "violation of public order of Japan". On this issue, the Court accepted that the operation of a casino on a ship on the high sea and money loaned for the purpose of enjoying entertainment at a casino was not illegal under the laws of Panama, where the vessel was registered. Further, the relevant transactions were all conducted outside Japan. Therefore, the Court found that there was insufficient ground to say the judgment was contrary to the public order of Japan.

The patron also sought to challenge the proceedings on other grounds, including service of the judgment, but the same were rejected by the Court.

Significance

The significance of this case is the recognition by the Japanese court of a Hong Kong default judgment based on gaming credit. This is positive news not just to cruise ship operators but also to the gaming industry as a whole, which may now consider suing Japanese nationals or VIP patrons who have assets in Japan in a jurisdiction where it can get judgment, and then try to domesticate the judgment in Japan for enforcement.

This decision is also a welcome trend as Japan is eyeing to develop world-class integrated resorts in the country where VIP credit patrons are natural contributors to its gaming revenue.