The recent decision by Malaysia’s top court over a gambling debt dispute with Cambodian gaming operator NagaCorp is an important legal precedent that could reshape the legal framework surrounding gambling debts in the country, a legal expert told AGB.
According to court documents consulted by AGB, the Federal Court of Malaysia, the highest court and the final appellate court in Malaysia, recently ruled that gambling debts are not legally enforceable under Malaysian law, a ruling that favors Dato’ Ting Ching Lee, a prominent businessman from Sarawak, Malaysia.
The case arose from a gambling trip to NagaWorld, a casino and resort complex in Phnom Penh, Cambodia, where Dato’ Ting and others were allegedly extended credit lines for gambling activities.
Initially, the High Court dismissed a counterclaim from Ting, asserting that the attempt to recover these debts was unenforceable under Section 26 of the Contracts Act 1950, which voids any agreements based on gambling or wagering.
The Court of Appeal had previously overturned this decision, claiming that the credit lines and rolling rebates were not gambling debts but rather constituted loans or credit.
However, the Federal Court ultimately sided with the High Court, reaffirming that the credit facilities were granted solely for gambling purposes and could not be considered genuine loans.
The court emphasized that the legislature intended to curb gambling activities in Malaysia, and allowing the recovery of such debts would directly contradict this aim. Consequently, the respondent, Ting Siu Hua, was ordered to pay costs of MYR200,000 ($44,791) to the appellant, contingent upon the payment of the allocator fee.
This ruling reinforces Malaysia’s position on gambling debts, affirming that any agreements made in the context of gambling are void and unenforceable, thereby protecting individuals from being held liable for debts incurred through gambling activities.
Gambling debts not “legally enforceable”
Commenting on the implications of this ruling, Malaysian solicitor Ahmad Deniel Roslan, from Mohd Fadzli & Co, told AGB that Malaysian courts will now “not recognize gambling debts as legally enforceable”.
“Therefore, if a party attempts to recover a gambling debt through the courts, the claim is likely to be dismissed,” highlighting that this decision sets a significant legal precedent for future cases.
For Roslan, if the decision becomes part of Malaysian court jurisdiction, it will affect many gaming debt disputes currently in progress in the country’s courts and cause a potential impact on ongoing disputes related to gambling debts.
As gambling-related disputes continue to surface, the ruling may deter future claims and influence how such cases are approached in Malaysian courts.
The court’s decision also inferred that the negative effects of gambling have ‘resulted in government policies and laws aimed at curbing these activities, including nullifying gaming contracts and making the recovery of gambling debts unenforceable’.
Malaysia’s approach to gambling is shaped by a blend of Islamic law and its multicultural society. For Muslim citizens, gambling is strictly forbidden under Sharia law, and this prohibition significantly impacts the general legal and societal views on gambling.
However, certain forms of gambling are available for non-Muslims, including activities like those offered at licensed casinos such as Resorts World Genting, as well as lotteries and horse racing.
The Malaysian government actively regulates gambling through various agencies, primarily to control and monitor these activities while also generating revenue.
Nevertheless, there are ongoing social concerns regarding the impact of gambling, particularly worries about addiction and its effects on families, alongside consistent concerns about illegal gambling operations.
