Taiwan High Court upholds Melco casino debt claim of HKD320.47 million

Taiwan's High Court has upheld a claim by Melco Resorts & Entertainment that a Taiwanese customer must repay about HKD320.47m ($40.7m), plus default interest, according to court judgments reported by the Taiwanese media. The court rejected the customer's challenges to the debt and to the evidence and sustained the lower courts' decision. The ruling remains open to appeal.

The defendant, referred to as Ku, held top-tier VVIP status with Melco Resorts. Court judgments reported by the Taiwanese media indicate that on 17 May 2020, at a Melco casino, he was given non-redeemable chips worth roughly $38m that stood for his line of credit. His debt balance came to approximately HKD289.57m ($36m), from which HKD10.43m ($1.3m) in commissions and rebates was subtracted, and he then lost the entire sum. With default interest set at 29.25% a year, the amount owed had climbed to nearly HKD320.47m by April 2021. Because interest keeps building until the debt is repaid, the sum the court upheld leaves the ongoing interest obligation in place.

Ku's case included an accusation that documents put forward by Melco were forged or altered. He further challenged the casino's surveillance footage, saying it was either incomplete or had been modified. The High Court weighed that footage against testimony from employees and immigration records. From this it concluded that Ku had been present in Macau on the relevant date, had taken the chips and had gambled. On that basis the court dismissed his objections to the evidence.

Another of Ku's arguments was that taking chips rather than cash could not be treated as a monetary loan under Taiwanese law. The court rejected that reading of the arrangement. In its view, the parties had agreed that Ku would draw cash credit and swap it for chips of the same value. Melco held legal authorisation to extend gaming credit in Macau, the place where the transaction happened, and the two sides had chosen Macau law to govern their arrangements. Because the loan was lawful in Macau and Ku, an adult, had accepted it voluntarily, the court held that it should not be annulled on grounds of Taiwanese public policy or morals.

Under the credit agreements, Macau courts were named as one possible venue for disputes. The High Court nevertheless held that this clause was non-exclusive, so it did not bar Melco from suing in Taiwan. The repayment claim could thus go ahead outside Macau, while the parties' choice of governing law stayed relevant to the credit arrangement.

Melco had extended gaming credit to Ku before, and he had paid it back, a borrowing record that stretches back to 2018. Those earlier repayments were what allowed him to secure larger credit limits ahead of the debt now in dispute. According to reports, he is the owner of 2 companies registered in Taiwan and currently lives in mainland China. The High Court's ruling is still open to appeal.