The High Court has said that a UK hosting company does not have to comply with a US state court's order demanding that it hand over a gambling company's domain name.
Last year Kentucky took action against the holders of 141 gambling related domain names, saying that the online gambling activities broke Kentucky law and that the domain names should be handed over to it to stop the infringements.
The Commonwealth of Kentucky then wrote to SafeNames Ltd, a UK company which has a contract to host the gambling website of Pocket Kings.
Pocket Kings went to court in the UK to argue that its host should not be allowed to comply with the Kentucky order because its activities were legal in the UK.
The High Court has said that Kentucky cannot claim the immunity available to nation states and that its court order is not enforceable in the UK.
The State Immunity Act forbids a UK court from finding against another country. The High Court considered whether The Commonwealth of Kentucky counted as a "state" for the purposes of that immunity.
"It is clear that the Kentucky Proceedings have been brought under local Kentucky law by a Kentucky public official (the Secretary of the local Justice and Public Safety Cabinet) and not by any federal agency. It thus seems clear, certainly on the evidence before me, that the actions of Kentucky which might give rise to a claim to immunity in the present case are actions of the Commonwealth of Kentucky, and are not the exercise of or manifestation of any sovereign authority of the federal government of the United States," said Mr Michael Furness PC, sitting as a Deputy Judge of the High Court.
"There is no independent immunity for separate entities or constituent territories; such immunity as they enjoy is parasitic on the immunity conferred on the state. The mere fact that the separate entity performs public functions is clearly not, of itself, sufficient to attract immunity," he said in his ruling.
The Court had to decide whether or not by not being a sovereign state Kentucky paradoxically was able to enforce penal laws in the UK.
"The authorities have in the case of both penal laws and public laws identified the basis of non-enforceability as being that one state does not recognise within its own jurisdiction the penal or public (in the sense of governmental) acts of another sovereign state," said the ruling. "Does that mean, therefore, that my conclusion that in the regulation of gambling the Kentucky is exercising its own, non-sovereign authority, and not the authority of the sovereign federal state means that its penal and public laws can be enforced in this jurisdiction? In my view that cannot be right."
"If a sovereign state's penal and public acts are not enforceable, the non-enforceability of the penal and public acts of the government of a constituent part of the sovereign state must be an a fortiori case," said the ruling.
"I therefore conclude that the Kentucky proceedings are not enforceable in English law as being penal or governmental in nature," it said.
SafeNames said that it would agree not to comply with Kentucky's order to hand over the domain name if Pocket Kings got a court declaration that Kentucky's order was unenforceable. The Court granted that declaration.