Thursday Law Report: Gaming dispute decision was not arbitration

6 November 1998 O'Callaghan v Coral Racing Ltd Court of Appeal (Lord Justice Hirst, Lord Justice May and Sir Christopher Slade) 19 November 1998

A BOOKMAKER'S rule for the resolution of disputes with customers could not be construed as an arbitration clause within the terms of the Arbitration Acts.

The Court of Appeal dismissed the appeal of Terence Matthew O'Callaghan against the refusal of his applications for an order for remission, pursuant to section 22(1) of the Arbitration Act 1950, of an award made in a dispute with the respondent firm of bookmakers, and for leave to appeal under section 1(3)(b) of the Arbitration Act 1979.

The appellant, who was a professional gambler, had placed a bet at a Coral shop. The betting slip had not been photographed, despite Coral's procedures requiring that all betting slips be photographed in order that there could be no dispute about verification.

The bet placed by the appellant was a pounds 50 "correct score" accumulation bet on four football matches, predicting correctly, as it turned out, the actual score of all four. If the bet was valid, he would have won pounds 259,000, i.e. a win at odds of more that 5,000 to 1.

Coral's rules, which were on prominent display in all their betting shops, included the following:

1. Conditions of acceptance . . . We reserve the right to refuse the whole or any part of any bet offered to us and to declare void any betting slip with whose bona fides we are not satisfied. In addition, we reserve the right to refuse payment on any lost or stolen bet that cannot be substantiated by reference to our photographic records; on any bet where the validity of the bet cannot be substantiated for reasons beyond our reasonable control; and on any bet

for which no claim has been received within two months of the date of the event.

21. Disputes. In the event of a bet giving rise to a dispute which cannot be resolved by Coral personnel, it will be submitted for arbitration to the editor of the Sporting Life. The editor's decision will be considered final, save that in the case of horse racing bets, they can, at the customer's wish, be subsequently referred to the Tattersalls Committee for a final decision.

Coral informed the appellant that in view of the lack of photographic evidence they were relying on rule 1, and returned his pounds 50 stake. Their decision to declare the bet void was submitted by the parties to the editor of the Sporting Life pursuant to rule 21. He appointed a panel to fulfil his functions under rule 21, and the panel decided in Coral's favour.

Following the editor's refusal of the appellant's request to reconsider the matter, the appellant applied to have the award remitted, and for leave to appeal. The judge refused those applications, and the appellant appealed to the Court of Appeal.

Robert Englehart QC and Joanna Pollard (Denton Hall) for the appellant; William Norris QC and Lucy Moorman (Nicholson Graham & Jones) for Coral.

Lord Justice Hirst said that in the present case the wagering contract between the appellant and Coral was declared null and void by section 18 of the Gaming Act 1845. It was manifest therefore that the arbitrator (if such he was) would be obliged to hold that the gaming transaction was void. He would also be obliged to acknowledge that he was debarred from awarding any sum of money alleged to have been won on the bet. Consequently, rule 21 had to be treated as part and parcel of the void agreement and could not survive independently.

It had been submitted for the appellant that rule 21 was in truth an arbitration clause because it applied to a dispute; was categorised as arbitration, not mediation or conciliation; the third party adjudicator was identified; and his decision was final.

However, the hallmark of the arbitration process was that it was a procedure to determine the legal rights and obligations of the parties judicially, with binding effect, which was enforceable in law, thus reflecting in private proceedings the role of a civil court of law.

Rule 21, on the other hand, established a procedure which was devoid of any legal consequences whatsoever, and which lacked most of the key characteristics identified by the text books. It would be stretching the traditional concept of arbitration beyond breaking point to hold that rule 21 qualified as an arbitration clause.