Pocket Kings Ltd v Safenames Ltd
| Jurisdiction | England & Wales |
| Judge | Michael Furness QC; |
| Judgment Date | 16 October 2009 |
| Neutral Citation | [2009] EWHC 2529 (Ch) |
| Docket Number | Case No: HC08C02783 |
| Court | Chancery Division |
| Date | 16 October 2009 |
[2009] EWHC 2529 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand. London. WC2A 2LL
Mr Michael Furness Pc
(sitting As A Deputy Judge Of The High Court)
Case No: HC08C02783
Mr Romie Tager QC and Mr Jeremy Reed (instructed by Jeffrey Green Russell) for the Claimant
Mr Christopher de Mauny (instructed by Franklins Solicitors LLP) for the First Defendant The Second Defendant did not appear
Hearing date: 30th July 2009
This is an application by the Claimant, Pocket Kings Limited (“Pocket Kings”) for summary judgment in default of acknowledgment of service by the Second Defendant, the Commonwealth of Kentucky (“Kentucky”). The First Defendant, Safenames Limited (“Safenames”) is willing to submit to judgment on agreed terms provided that Pocket Kings obtains judgment in default against Kentucky.
The factual basis of Pocket Kings' claim is succinctly pleaded in the Particulars of Claim the material parts of which I quote below.
“1. Pocket Kings Limited (“PKL”) is engaged in the provision of online gaming services, and facilitates and licenses the use of the domain name fulltiltpoker. com(“the Domain Name”). Safenames Limited (“Safenames”), a company incorporated under the laws of England and Wales, provides PKL with various services pursuant to a Managed Services Agreement executed by Safenames on 26 th May 2009 (“the Agreement”). The Agreement is governed by English Law. Clause 1.18.1 of Safenames' General Terms Applicable to All Services provides that the Agreement is subject to the exclusive jurisdiction of the courts of England and Wales. Safenames is contractually responsible for pointing the Domain Name at the correct domain name servers to the order of PKL, and is the Registrar of the Domain Name.
By Second Amended Complaint filed on 18th September 2008 in Civil Action No. 08-C1–1409 in Division II of the Franklin Circuit Court in Kentucky (“the Kentucky Proceedings”), the Commonwealth of Kentucky brought a civil in rem forfeiture claim against 141 domain names, one of which was the Domain Name. In the Kentucky Proceedings the Commonwealth of Kentucky is acting in its sovereign capacity and pursuant to its public law powers to enforce that State's criminal law and/or gaming regulatory legislation, and seeks the penal forfeiture of the Domain Name by the transfer thereof to the Commonwealth of Kentucky on the basis that: (1) the Domain Name has been used in the commission of multiple crimes and statutory violations within Kentucky, (2) unless forfeited in that way, the Domain Name will continue to be used in the commission of multiple crimes and statutory violations within Kentucky and (3) that the use of the Domain Name constitutes a public nuisance.
By Order dated 18 September 2008 made in the Kentucky Proceedings (“ the Seizure Order”),Circuit Judge Thomas Wingate ordered inter alia that the 141 domain names, including the Domain Name, should immediately be transferred by their respective Registrars to an account of the Commonwealth of Kentucky. The Seizure Order provided that the said domain names were properly seized by the Commonwealth of Kentucky pursuant to Kentucky's criminal and/or penal legislation (namely, KRS 528.100). The Seizure Order included directions for its service of upon the Registrars of the domain names in question: in particular, for the service of the Seizure Order on Safenames as the Registrar of the Domain Name.
The Seizure Order was made in proceedings which had not been served on the parties who would be affected thereby (including PKL and Safenames) who had no opportunity to defend the same.
By emailed letter dated 19 th September 2008 from Hurt, Crosbie & May PLLC (the Commonwealth of Kentucky's attorneys in the Kentucky Proceedings) to Safenames, which was received by Safenames in England, Safenames was purportedly served with a copy of the Seizure Order. The aforesaid letter asserted that Safenames was required by order of the Franklin Circuit Court to immediately transfer the Domain Name (and 4 other domain names) to the account of the Commonwealth of Kentucky.
Following a hearing on 26 th September 2008 the Franklin Circuit Court directed the Commonwealth of Kentucky not to take any action relative to the operation or disposition of inter alia the Domain Name unless and until further ordered to do so by that court; however the court refused to stay the execution of the Seizure Order. By Order dated 16 th October 2008 Circuit Judge Thomas Wingate reinstated the Seizure Order subject to various amendments, and ordered that a forfeiture hearing take place on 17 1” November 2008.
By letter dated 30 th October 2008 PKL's solicitors asked Safenames to give an undertaking that it would not transfer the Domain Name to the Commonwealth of Kentucky or to any official thereof or to any agent or other person nominated for that purpose by the Franklin Circuit Court of the Commonwealth of Kentucky or to any other person. The letter also sought an undertaking that Safenames would not do any act that interferes with or inhibits PKL's use and enjoyment of the Domain Name. By the said letter PKL asserted and sought to enforce its contractual rights under the Agreement.
By letter dated 3 rd November 2008 Safenames acknowledged that there was a conflict between the Seizure Order and its contractual duties owed to PKL, but Safenames refused to give the undertakings sought by PKL or any other comfort that the Domain Names would not be transferred.”
The Particulars of Claim go on to allege that Pocket Kings will suffer serious and irreparable harm if Safenames transfers the domain name to Kentucky or otherwise takes any other step that interferes with Pocket Kings' use and enjoyment of the domain name. It is then pleaded that the seizure order (whether in the original or amended form) should not be recognised or enforced by this Court on the basis that (a) the enforcement of the seizure order would amount to the exercise of the sovereign authority of Kentucky within this jurisdiction and would amount to the enforcement of the penal or public law of a foreign state, or (b) the enforcement of the seizure order within this jurisdiction would be contrary to public policy because the Kentucky proceedings breached all known principles of natural justice. It is also pleaded for the same reasons that this Court should not recognise or enforce any order for forfeiture of the domain names that is made in the Kentucky Proceedings.
The only relief claimed in the prayer for relief against Kentucky is a declaration that this Court will not recognise or enforce the orders currently made in the Kentucky proceedings or any subsequent order for the seizure or forfeiture of the domain name.
Since the commencement of these proceedings there has been a further significant development in the Kentucky proceedings, in that the Kentucky Court of Appeals, on the application of a number of domain name owners (but not Pocket Kings), has ruled that an internet domain name is not a gambling device, and therefore the Seizure Order was wrongly made. A further appeal by Kentucky to the Kentucky Supreme Court is still pending. As I understand the position Pocket Kings does not have the benefit of the Court of Appeals' ruling because it was not one of the appellants, so the Seizure Order against its domain name remains in force. Beyond serving the Seizure Order on the First Defendant, no attempt has been made to enforce that order to date.
These proceedings were issued on the 3r October 2008. On 3r December 2008 Warren J granted permission to serve the claim on Kentucky out of the jurisdiction in accordance with the requirements of the State Immunity Act 1978. Pursuant to that order the claim was served on Kentucky by means of service at the United States Department of State. The time for acknowledgement of service expired on 15th May 2009 and the application for judgment in default was issued on 9th June 2009. On 12th June 2009 directions were given by Floyd J for the service of the application for judgment in default on Kentucky. Service was effected in accordance with those directions on 24th June 2009.
The issues which arise
Although, as appears below, Kentucky are well aware of these proceedings and this application, they have chosen neither to appear nor to make any submissions in writing as to why a judgment should not be entered against them. There are, nonetheless, a number of issues on which I must satisfy myself before giving judgment against Kentucky. In considering these issues I am indebted to Mr Tager QC who has taken me through them carefully and indicated the possible lines of argument which Kentucky might have taken had it chosen to appear. It is, nonetheless, regrettable that this Court is obliged to give rulings on some important issues concerning state immunity without the benefit of adversarial argument. The issues which I need to consider are as follows.
(a) Is Kentucky entitled to state immunity under the State Immunity Act 1978? If it is, then unless one of a number of exceptions in the Act apply to these proceedings, judgment may not be entered against it.
(b) If Kentucky is not a state within the meaning of the Act, has it been properly served both with the proceedings and with this application?
(c) Do the facts of the case justify the granting of the declaratory relief which Pocket Kings claims against Kentucky?
Is Kentucky a state for the purposes of the State Immunity Act 1978?
Before considering this question I will set out the relevant provisions of the Act.
“1.—General immunity from jurisdiction.
(1) A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the...
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