Malaysia’s top court declares gambling debts irrecoverable by law
Malaysia’s Federal Court has upheld that gambling debts remain unenforceable , reinforcing the country’s established legal position on gambling. This means if you lose money while gambling, creditors cannot take you to court to force payment. This principle applies to everyone, including winners—they can’t legally compel losers to pay them either while gambling.
The government aims to discourage gambling by refusing to support legal claims regarding gambling debts. Furthermore, the ruling stemmed from a case involving tour agent and junket operator Ting Siu Hua, who attempted to recover approximately $1.5 million (€1.44 million) from a client who failed to repay credit extended during a gambling excursion to Cambodia’s Naga Casino.
The legal battle began after Siu Hua provided a substantial credit line to the client during their visit to Cambodia.
Apex court overturns high court ruling
When the client subsequently failed to return the amount, Siu Hua took unusual measures to recover the money, including posting notices in a local newspaper and on social media platforms accusing the client of non-payment.
These public accusations led the client to sue Siu Hua for defamation, prompting Siu Hua to counterclaim for the unpaid debt.
The High Court dismissed both claims, ruling that gambling debts are unenforceable under Malaysian law. However, the court of appeals reversed the decision and ordered client to pay back the amount. Later on, an appeal was filed in Federal Court, the country’s highest judicial authority.
The Federal Court overturned the Court of Appeal’s decision, ruling that the credit was gambling-related and could not be reclassified as a standard loan to bypass legal restrictions.
The Federal Court’s decision was grounded in several key legal provisions, including Sections 24 and 31 of the Contracts Act 1950 and Section 26 of the Civil Law Act 1956, which collectively render gambling-related debts null and void under Malaysian law.
A move to discourage gambling?
In their ruling, the judges emphasised that gambling debts are considered “debts of honour” that rely on personal integrity rather than legal enforceability.
“The law does not favour gamblers,” the court clarified, “but applies equally to all parties involved in gambling activities, including those attempting to claim winnings.”
The court ordered Siu Hua to pay RM200,000 ( $45,000) in legal costs to the client. This landmark ruling reinforces Malaysia’s broader legal and social stance against gambling, acknowledging its negative perception in Malaysian society.
In Malaysia, gambling is largely illegal due to its predominantly Muslim population and the government’s stance against it. The Common Gaming Houses Act 1953 and the Betting Act 1953 criminalize most gambling activities, rendering gambling debts unenforceable under Malaysian law. This latest ruling might be seen as an attempt to discourage more Malaysians against gambling.
