The Irish High Court recently delivered its first decision* concerning the scope of the E-Commerce Directive and the transposing Irish Regulations (EC (Directive 2000/31/EC) Regulations, 2003, S.I. 68 of 2003). The Court clarified that while the E-Commerce Directive and the Regulations do not apply to gambling activities, they do apply to other services provided by a betting company that do not directly form part of its gambling activities, such as a chatroom service.

The proceedings arose out of two linked cases in which the claimants, both bookmakers, have claimed damages for libel against the defendant, a provider of an online betting exchange. The libel proceedings concern alleged defamatory comments posted on the chatroom of the defendant's website, by registered clients of the defendant. The claimants allege that the inclusion of those comments on the chatroom constitutes a publication by the defendant of those comments.

In its defence, the defendant denies publication of the relevant alleged libels. As an alternative or additional ground of defence, the defendant relies on the limitation of liability for providers of hosting services contained in Regulation 18 of the Regulations. In order to avail of that defence, a defendant must show that it is an "intermediary service provider" providing a relevant service (hosting) consisting of the storage of information provided by a recipient of the service. In addition a defendant must prove that it had no actual knowledge of any alleged publication of the allegedly defamatory material, it was unaware of any facts and circumstances giving rise to such publication and, if such publication did occur, it acted expeditiously to remove the relevant material on obtaining knowledge of such facts and circumstances.

In reply to the defence, the claimants have argued that the defendant is not entitled to rely on any provision of the Regulations because the Regulations do not apply to gambling activities.

The Court ruling considered, as a preliminary issue, the question of whether the defendant is entitled to rely upon the Regulation 18 exclusion of liability. Two issues arose for the Court to determine:

  1. Whether the exemption of gambling activities from the protection afforded to intermediary service providers by the Regulations applied, so as to take the defendant's chatroom outside the scope of the protection of the Regulations.
  2. If the gambling exemption did not apply, whether the protection of the Regulations applies to chatrooms. It was accepted by the parties that no actual betting activity takes place through the chatroom. Rather, its purpose is for registered customers of the defendant to make comments concerning sports, betting or other issues.

In relation to the first issue, the Court ruled that the gambling exemption did not prevent the defendant from relying on the Regulations in respect of chatroom activities. The Court held that there is no significant connection between the defendant's chatroom activity on the one hand and its betting activity on the other hand, which could reasonably lead to the characterisation of the chatroom as being part of any betting activity that might be said to take place on the defendant's website.

Regarding the second issue, the Court went on to find that the provision of a chatroom falls within the definition of an "information society service" in the Regulations. That being so, the Court also found that the provision by the defendant of the chatroom qualifies it as an "intermediary service provider" and, consequently, a "relevant service provider" for the purposes of the Regulations. (These terms are both used in the Regulations and the Court found that if one qualifies as an intermediary service provider, one will also qualify as a relevant service provider.) The defendant is therefore entitled to the protection of the Regulations, provided it can establish at trial that the conditions concerning knowledge and expeditious action under the Regulations are also met.

Comment: The decision on the preliminary issue in this case is important for two reasons. Firstly, it examines for the first time the scope of the gambling exemption in the E-Commerce Directive and the transposing Irish Regulations. It highlights that doubt exists as to whether the gambling exclusion provisions of the Regulations are as broad as the exclusion contained in the E-Commerce Directive. Whilst the E-Commerce Directive excludes from its scope gambling activities generally, "including lotteries and betting transactions", the Regulations exclude activities defined by reference to specific legislation, including the Betting Act, 1931, and the Gaming and Lotteries Act, 1956-1959 and the National Lottery Act, 1986.

Mr Justice Clarke significantly noted that betting per se is not an activity covered by any of the relevant statutory provisions contained in the Regulations. The Regulations may possibly offer protection to a betting exchange. This issue was not before the Court however and remains to be addressed in the future. In the present case, Mr Justice Clarke ruled that the focus of the gambling exclusion is on the relevant activity, rather than the general business of the person engaged in the activity concerned.

Secondly, the Court has decided that chatrooms fall within the meaning of intermediary service providers and relevant service providers for the purposes of the Regulations (and the E-Commerce Directive). Companies offering chatrooms are, in principle, entitled to rely upon the hosting exclusion of liability contained in the Directive and Regulations.

Applying that finding to the present case, betting companies offering chatrooms and other information society services not connected with their principal gambling business may avail of the protection of the E-Commerce Directive and Regulations in respect of such activities.

*Seamus Mulvaney -v- The Sporting Exchange Limited t/a Betfair & Others; Ellen Martin -v- The Sporting Exchange Limited t/a Betfair & Another, High Court, 18 March 2009 [2009] IEHC 133