Australia: e-Commerce: Enforceability of Website Terms and Conditions. Centrebet v Baasland – Australia v Norway: Which Courts Have Jurisdiction in Respect of Cross-Border Online Gambling Consumer Claims?

The recent decision of Centrebet v Baasland in the Northern Territory Supreme Court represents a milestone in the consideration of disputes involving cross-border online gambling transactions.

In this decision, the Northern Territory Supreme Court (the NTSC) ruled in favour of Centrebet Pty Ltd (Centrebet), a sports bookmaker licensed by the Northern Territory Racing Commission, in a case involving a Norwegian customer, Mr Bjarte Baasland (Baasland). Initially, in 2009, Baasland commenced proceedings against Centrebet in Norway seeking to recover gambling losses incurred from betting on the Centrebet website. In 2012, Centrebet commenced their own proceedings in the NTSC. The NTSC concluded that Centrebet did not owe Baasland any money and that the proceedings could continue in the NTSC as the Northern Territory is not a 'clearly inappropriate forum'.

Proceedings in Norway

In 2009, Baasland filed a claim in the Norwegian courts seeking recovery of gambling losses amounting to $15 million. It was alleged by Baasland that Centrebet owed a duty of care and was negligent in allowing him to continue gambling large amounts of money. Baasland claimed that he was a gambling addict and had been gambling with money obtained by fraud, but that Centrebet should have stopped him from gambling further instead of encouraging him to continue to place bets for increasingly larger amounts.

Initially, both the Oslo City Court and the Norwegian Court of Appeal dismissed the case on the basis that Centrebet could not be sued in Norway. However, on 13 October 2010, following Baasland's appeal, the Norwegian Supreme Court found that there was a "sufficient connection" to Norway,¹ given that Centrebet had modified its website and products to be directed towards Norwegian customers, for example, by offering betting via a Norwegian homepage and on Norwegian sporting events with values stated in Norwegian currency.

As a result, the Norwegian Supreme Court found that the Norwegian courts had jurisdiction to hear the claim, and that Baasland was able to commence legal proceedings against Centrebet in Norway.

Proceedings in Australia – Overview

On 11 October 2012, Centrebet commenced proceedings in the NTSC seeking a declaration that any dispute between Centrebet and Baasland should be governed exclusively by and determined by reference to the laws of the Northern Territory of Australia. Centrebet also sought a declaration that, under the contract between Centrebet and Baasland, Centrebet owed no liability to Baasland and rather, Baasland had breached the terms and conditions of the contract by gambling with other people's money.

Proceedings in Australia – Were Australian Courts the Appropriate Forum?

A preliminary issue to be determined by the NTSC was whether it should grant leave to allow Centrebet to serve the NT Supreme Court documents on Baasland in a foreign jurisdiction.

The Court found in favour of Centrebet and held that Australian law is the relevant law of the contract on the basis that:

• the contract between Centrebet and Baasland was formed in Sydney;
• Centrebet's computers (upon which its betting websites were run) and its management were located in Sydney;
• Centrebet is licensed to carry on its sports betting business by the Northern Territory government; and
• the agreement between Centrebet and Baasland contained express provisions which stated:
• • the contract is to be construed in accordance with the laws of the Northern Territory; and
  • the parties submit to the jurisdiction of the Courts of the Northern Territory.

Finally, Baasland's claim sought damages on the basis that Centrebet had contravened the Australian Trade Practices Act.²

Another significant factor considered by the Court was whether Centrebet had a prima face case for relief. The Court again found in favour of Centrebet, reiterating that it is well settled in Australia that gamblers are not owed a duty of care by the person with whom bets are placed.³ Therefore, Baasland is not likely to be in a position to establish a cause of action against Centrebet. The Court also concluded that there was no evidence that Centrebet knew or should have known that Baasland was gambling with money he had obtained from others and that, when Centrebet management discovered this, they acted promptly in closing Baasland's betting account.

The Court referred to the decision of the English High Court in a claim brought against Baasland by bet365 in Hillside (New Media) Ltd v Baasland⁴, where the court had held that bet365 was not liable in any way for Baasland's gambling losses. In the present proceedings, reference was also made to Baasland's substantial betting history with other operators (such as bet365) which indicated that, even if Centrebet had owed a duty of care, Baasland would have incurred the loss in any event through betting with other parties. In this case, there was no breach by Centrebet, and therefore it could not be concluded that the damages and losses Baasland suffered were caused by any breach by Centrebet of a duty of care.⁵

Finally, in determining whether there were any other matters relevant to the exercise of discretion to grant leave, one key matter relevant to the consideration of whether the current proceedings should be stayed was that proceedings had been commenced in Norway and the Norwegian courts had already concluded that they had jurisdiction.

Master Luppino in the NTSC reiterated that the test is whether the local court – in this case the NTSC – is a clearly inappropriate forum, and not a test of the comparative appropriateness of the Australian court and the foreign court. Master Luppino again found in favour of Centrebet on the basis that the NTSC was not a clearly inappropriate forum (i.e. that it was an appropriate forum), as any judgment delivered by the Norway Supreme Court would not be enforceable in Australia. Further, as outlined above, there was a clear connection between Centrebet and the Northern Territory and a lack of any real connection between Baasland and Norway, with the exception that he is a Norwegian citizen.

For these reasons, Master Luppino held that the NTSC was not a clearly inappropriate forum to hear the proceedings and therefore the proceedings should not be stayed. Accordingly, the Court concluded that Centrebet be granted leave to serve the writ and documents on Baasland (who was in prison in Norway for fraud).

Proceedings in Australia – Determination of Centrebet's Cause of Action (2013 proceedings)

Introduction

Centrebet's application was heard in the NTSC on 8 July 2013. Baasland did not appear. The primary question for consideration was whether Centrebet was liable to Baasland under or in relation to the agreement with Centrebet.

Among the other issues determined by Hiley J was whether the NTSC had jurisdiction, what law applied in determining disputes under the agreement with Centrebet and whether Baasland had any valid cause of action against Centrebet (whether in negligence, under or in relation to the agreement with Centrebet, or any other cause of action).

The Contract

Hiley J found that the agreement was created on 26 May 2004 when Baasland first opened his account with Centrebet.

Importantly, Hiley J found that the Centrebet rules at that time, and at all other material times, included among other things, clauses that provided:

• A dispute in relation to a bet must be lodged with the Northern Territory Racing Commission and that the decision of the Commission is final and binding on both parties;
• That Centrebet does not represent or warrant that Internet betting complies with the legal requirements of any jurisdiction, except those of the Northern Territory of Australia;
• That the website is governed by and is to be construed in accordance with, the laws in force in the Northern Territory of Australia;
• That each party irrevocably and unconditionally submits to the jurisdiction of the courts of the Northern Territory of Australia, and any courts which have jurisdiction to hear appeals from any of those courts, and waives any right to object to any proceedings being brought in these courts.

Hiley J held that, once the account was opened, a binding contract came into force between Centrebet and Baasland, which included the various terms and conditions contained in those rules.

Jurisdiction and Applicable Law

Most importantly for betting operators, the Court found that it was clear from the Centrebet rules that Centrebet and each person who opened an online account with Centrebet had selected the law and jurisdiction of the NT as the appropriate governing law and jurisdiction. This resulted in a binding contract between Baasland and Centrebet which provided the NTSC with jurisdiction, and that the contract would be governed by and construed in accordance with, the laws in force in the Northern Territory, Australia.

It was also clearly stated and apparent to any customer that Centrebet was not representing or warranting that the internet betting conducted complies with the legal requirements of any other legal jurisdiction other than the Northern Territory.

In addition, Hiley J found that most, if not all, of Centrebet's conduct occurred in Australia (being in the Northern Territory and New South Wales) given that its computer facilities were based in Sydney, as were the bank accounts that held his funds and all of his bets were processed at the operations centre in Alice Springs (NT).

In other words, the Court concluded that the terms and conditions of the contract between Centrebet and Baasland (that was formed on the opening of an account), was the major determining factor. This caused the Court to hold that the relevant jurisdiction and court to hear the matter was the NTSC.

Baasland's Claims Against Centrebet

The main claim brought by Baasland was based on negligence – namely that Centrebet owed Baasland a duty of care to stop Baasland from placing bets with money he had obtained by fraud and that Centrebet had breached that duty causing damage to Baasland.

As in the initial NTSC proceedings, Hiley J referred to the virtually identical proceedings brought by Baasland against bet365, in which bet365 had successfully obtained a negative declaration that there was no liability owed to Baasland. Hiley J reiterated the position in Australia that, prima facie, gamblers are not owed a fiduciary type duty or duty of care by companies with which they choose to place bets to prevent them from continuing to bet or otherwise to protect their interests. Hiley J followed the principles set out in the recent High Court decision of Kakavas where this position was held to exist.

Hiley J held there was no evidence before the Court that could be used to base any relevant duty of care by Centrebet to Baasland and, further. that Baasland could not establish the necessary element of causation because he chose to embark and continue his betting and gambling activities, not just with Centrebet but other betting operators. Therefore, even if Centrebet had prevented him from continuing his betting activities, he would have gambled with someone other than Centrebet and may well have suffered the same losses.

Claims in Contract or Otherwise

The Court reiterated that the terms and conditions of the contract between Centrebet and Baasland placed responsibility on the customer to ensure that his use of Centrebet's services complies with the legal requirements of any other jurisdiction from which the gambler places his bet. Accordingly, Centrebet could not be held liable to Baasland in Australia for non-compliance with the legal requirements of another jurisdiction, such as Norway.

Stay of Proceedings

Further, the Court considered whether he should grant Baasland's application to stay the proceedings. This application was made on the basis of the principle of forum non conveniens. This required Baasland to establish that the NTSC was a clearly inappropriate forum.

Hiley J found in favour of Centrebet. The Court concluded that the proceedings should not be stayed, and that the Northern Territory is not a "clearly inappropriate forum" for many of the same reasons discussed in the 2012 NT proceedings.

In particular, Hiley J concluded that:

• The NT is the jurisdiction which Baasland agreed, by contract, to submit to, and its laws are the laws which he agreed were to apply, when he opened his account and continued his gambling with Centrebet;
• The facts and circumstances upon which Baasland relied in the Norway proceedings would not provide him with a cause of action in Australia;
• Centrebet's claim under the Trade Practices Act would not be available in Norway as this is an Australian Act;
• A judgment in the Norway proceedings will not be enforceable in Australia;
• The proceedings in Norway were not significantly advanced.

Where does this leave the Norwegian Proceedings?

Ultimately, the Court concluded that Baasland would not have been successful had he brought the claims made in the Norwegian courts in the Northern Territory on the basis that there was no money owing to Baasland in his Account or otherwise under the agreement. Most importantly, Hiley J held that the Northern Territory Supreme Court was an appropriate forum and had jurisdiction to hear the matter.

In particular, Hiley J refused to stay the proceedings and proposed to make a declaration to the effect that there is no money owing by Centrebet to Baasland and that Centrebet has no liability to Baasland under the contract or in relation to its performance.

Further, as noted, the Norway Supreme Court has asserted that they have the jurisdiction to hear Baasland's original claim. However, at the time of writing, nothing further appears to have progressed in respect of the Norwegian proceedings, perhaps due in part to the fact that in October 2009, Baasland was convicted of fraud and sentenced to 4 years in prison in Norway. Watch this space for any further updates on the proceedings.

Conclusion

This decision represents an important precedent for online wagering companies licensed, and other e-commerce companies based, in Australia as it provides that disputes that arise between the company and a customer will be handled in an Australian forum. This will certainly be the case for disputes with betting operators licensed in the Northern Territory and where the terms and conditions on an operator's website makes it clear that the relevant jurisdiction is the Northern Territory.

However, the case also has far broader impact for all e-commerce and international online companies when choosing (or failing to choose) the appropriate jurisdiction to hear disputes. The Baasland decision suggests that, in the event that there are no international conventions or protocol establishing the appropriate jurisdiction to hear a matter or dispute, a company's terms and conditions represent the contractual relationship and intention of the company and its customers. Accordingly, the fact that customers are expected to have read and consent to be bound by these terms and conditions, including terms that unconditionally bind the parties to the jurisdiction of certain courts, are a major factor in determining the appropriate jurisdiction.

Other factors that will be relevant in the choice of jurisdiction question include the extent to which the legislation that set out statutory causes of action will apply and whether the judgment is enforceable in Australia.

Most importantly, the Baasland decision indicates that Australian courts are willing to assert jurisdiction and hear matters even if proceedings have already commenced in an overseas court that has assumed jurisdiction. However, Australian courts will not be able to set aside or stay proceedings in an overseas court, nor can they rule that an overseas court is an inappropriate forum to hear the matter. Rather, the key question will be whether or not the Australian court is a clearly inappropriate forum to hear the matter.

Footnotes

¹The Norwegian position on territorial jurisdictionand international matters is that, where no international convention applies,the Norwegian courts will only have jurisdiction to hear the matter if there is a "sufficient connection" to Norway as provided by s4-3 of the Norwegian Dispute Act. See Richard Clark (ed). The Dispute Resolution Review(Law Business Research Ltd, 3rd Edition, 2011 632). This was confirmed in the October 2010 Supreme Court of Norway proceedings between Baasland and Centrebet.
² These provisions are now contained in the Australian Consumer Law.
³ Reynolds v Katoomba RSL All Services Club Ltd, Foroughi v Star City Ptyand Kakavas v Crown Melbourne Ltd
⁴ [2010] 2 CLCQB 986
⁵ This is consistent with the findings of the UK Court of Appeal in Calbert v William Hill.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.