A bill in Malta that would all but block the transfer of court judgments against gambling companies from other EU states breaks EU law, say lawyers that represent the industry, but could buy operators time as they seek to avoid repaying losses in Germany and Austria.
A bill introduced in April would prevent lawyers from transferring judgments in other EU nations to Maltese courts if they “undermine the legality of the provision of gaming services in or from Malta”.
Its publication sparked outrage from attorneys pursuing operators to reclaim online casino losses in other European countries.
Most prominently in Austria, but also to a lesser extent in neighbouring Germany, gamblers are able to successfully take operators to court to reclaim all money lost gambling, on the grounds that the operators were unlicensed.
Claims approved by the courts have stretched into the triple-digit millions of euros so far, sources say.
Some operators are seeking to avoid repayments by arguing that they are headquartered in Malta and therefore not under the jurisdiction of Austrian or German courts. Bill 55, introduced by Malta’s Ministry of Finance, would act as a way to prevent the judgments being ratified in Maltese courts.
But even lawyers that represent the industry agree that the bill likely flies in the face of EU law, and would potentially not survive a legal challenge in front of the European Commission.
“This is against European law,” said Joerg Hofmann, a partner at German law firm MELCHERS.
“It’s a clear infringement of EU law,” agreed Arthur Stadler, a partner at Stadler Völkel in Vienna, who recently won a Supreme Court ruling in favour of the industry that appears to shield online sports-betting operators from loss-reclaiming lawsuits.
However, any EU infringement proceedings against the bill, if it becomes law, will take time. In the meantime, the Malta-based gambling industry would be shielded from Austrians hunting for repayments, the lawyers agreed.
Hofmann and Stadler were speaking on a panel at the Mare Balticum conference in Riga on Wednesday (May 17).
The Maltese bill also risks further harming Malta’s reputation within the European community, the lawyers warned. The country was removed from the Financial Action Task Force greylist less than a year ago.
“Definitely it’s a risky move,” said Hofmann.
However he added, in comments to VIXIO GamblingCompliance, that Malta's move may be as much about protecting itself from rulings in Germany that, in his view, also violate EU law.
"One will have to take into account that the Maltese government has a legitimate interest in protecting its licensees from the enforcement of judgments which themselves raise doubts as to their compatibility with EU law.
"Almost all judgments handed down by German civil courts in gambling cases do not deal in depth with the argument that gambling regulation in Germany, prior to the establishment of the licensing procedures themselves, is subject to massive concerns with regard to the European freedom to provide services. The German courts would have had good reason to refer the matter to the ECJ long ago. It is about time for clarification."
Likewise in later comments to VIXIO, Stadler pointed to what, in his view, is a conflict of EU legal quandaries. He added that in regard to Austria, Malta would probably invoke the so-called “Ordre Public“ clause, based on the argument that Austrian gambling law also violates EU law.
“This leaves Malta with the paradoxical situation of being obliged by EU law to execute rulings that themselves are not compatible with EU law. We will see how the EU Commission legally qualifies the refusal in the context of a potential infringement proceeding,“ Stadler said.
A welcome and possibly intended effect, according to Stadler, would be that the European Commission’s attention would once again be drawn to the online gambling monopoly and its player protection situation in Austria.
In a statement to VIXIO GamblingCompliance, the Malta Ministry of Finance defended the publication of the bill.
“The regulatory standards in Malta in this regard are second-to-none and respect the fundamental freedoms afforded to every individual and establishments in the European Union (EU); including the freedom of establishment and the freedom to provide services,” the ministry told VIXIO.
“In the absence of harmonisation of regulation of this service [within the EU], the government has given regulated operators the necessary assurance against unfounded challenges, as a matter of public order for the country. The bill is solely intended to enshrine this approach in law."