In February, the Maltese Civil Court in its Superior Jurisdiction issued a landmark decision by refusing to enforce two Austrian judgments which awarded a refund of gambling losses to Austrians playing on Malta-licensed gaming websites.
Davinia Cutajar and Jonathan Muscat from WH Partners in Malta represented the interests of MGA licenced operators in repelling the enforcement of these judgements.
Summary
In Austria, the gambling and sports betting markets are segregated. While the latter is more liberal and regulated by state laws, gambling, casino and lotteries (including online gaming) are subject to a de facto federal monopoly regulated by the federal law on games of chance (“GSpG”).
The Austrian monopoly’s compliance with EU law has come into question on a number of occasions, with numerous rulings from the Court of Justice of the European Union (CJEU) supporting the position that it violates Article 56 of the Treaty on the Functioning of the European Union (TFEU), which guarantees the freedom to provide services within the EU.
This notwithstanding, Austrian courts, including Austria’s highest court, have maintained the monopoly’s compliance with EU law and have awarded Austrian players who gambled on Malta-licensed websites, refunds for their gambling losses.
The players argued that offering a service without a concession was illegal in Austria and therefore rendered the contract between a player and the Malta-licensed operator, as well as any resulting gains made by the operator, null and void.
On the other hand, the Malta-licensed operators maintained that they had a legitimate reason to operate within the Austrian territory and on this basis, refused to pay the awards.
This led to a number of these player claims being bought by litigation funders who then sought to enforce them against the companies in Malta.
Judgments from EU Member States are automatically recognised and enforceable in another Member State, in terms of the Brussels Recast Regulation. There are limited instances when enforcement can be contested, and the Malta-licensed operators contested the enforcement of these Austrian player judgements by invoking the public policy argument under Article 45(1)(a) of the Brussels Recast Regulation.
The argument made by the operators in these proceedings in Malta was that the GSpG’s violates Article 56 TFEU, a cornerstone of EU law, and this represented a clear breach of Maltese public policy. They further argued that the freedom to provide services, protected under EU law, is a crucial aspect of Maltese law, therefore, a breach of Article 56 TFEU was “inconsistent to an unacceptable degree with the EU legal order” resulting in Maltese public policy being likewise infringed.
In its decision the Maltese court stated that the Austrian judgments were manifestly contrary to Maltese public policy (ordre public).
This decision has significant implications for the gambling industry, reinforcing the autonomy of Maltese regulatory authorities and the jurisdiction of Maltese courts over gambling-related matters.
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