Bill 55 is “crystallising the long-standing public policy in Malta” – Antonio Ghio

Malta’s Bill 55 has received its fair share of attention in recent months. In April of this year, it was tabled in the Maltese Parliament, a proposed amendment to the Gaming Act of Malta that aims to protect the gaming companies licensed by the Malta Gaming Authority (MGA) from legal actions taken by foreign players or authorities. Bill 55 was unanimously approved in Parliament in June 2023. It is now Article 56A of the Malta Gaming Act.

The Article states that no action shall lie against a licence holder or its officers or key persons for matters relating to the provision of a gaming service, or against a player for the receipt of such gaming service, if such action conflicts with or undermines the legality of the provision of gaming services in or from Malta by virtue of a licence issued by the MGA. Furthermore, the Article states that Maltese courts shall refuse recognition and enforcement of any foreign judgment or decision given upon an action of this type.

Criticism of Article 56A

Article 56A has been criticised by some Austrian and German lawyers who represent players who have sued Maltese gaming companies for offering their services in violation of Austrian and German gaming laws, more specifically to recoup money lost. The lawyers claim that the amendment is an attempt by the Maltese government to undermine European rule of law and block the fundamental rights of EU citizens and residents. They have written to the European Commission to express their concerns and request intervention.

Speaking during a SiGMA podcast recently, Antonio Ghio, senior partner at Fenech & Fenech Advocates said that Article 56A “is crystallising the long-standing public policy in Malta vis-a-vis the provision of gaming services from Malta through a Maltese gaming license from a point of supply principle”. This has always been adopted by the MGA and reflects Malta’s position vis à vis the freedom of movement of goods and services within the EU. He added that, in practice, the new amendment “provides that the Maltese operators should be protected through the Maltese regulatory landscape especially when we’re looking at the enforcement of foreign judgments which do not fully reflect the basic principles and pillars on which the Maltese regulatory regime is based.”

Echoing this point, a spokesperson for the MGA, in comments to SiGMA News added that “the scope of the amendments enacted into law is highly restricted. The law does not automatically apply to all foreign judgments and it does not, in any way, prevent legal action from being taken against a Maltese licensee. It therefore should be emphasised that not every judgment relating to the operations of gaming operators with an MGA licence would be in violation of Maltese public policy.”

Malta spearheading gaming regulation

Malta has been a pioneer on the international map when it comes to the regulation of legal online gaming, markedly before becoming a full EU member state. Ghio added that gaming is an area of substantive law which “is still not harmonised at a European level… The established position today is that through judgments and decisions of the European Court of Justice (ECJ) we saw that member states are free to impose their own national localised regulatory frameworks when it comes to the provision of gaming services.”

Malta’s long-standing position over the years has been that the provision of online gaming throughout Europe should be protected under the fundamental freedoms. These include the freedom of movement of goods and services. However, “there were ECJ judgments which basically stipulated that member states have a right to impose their own national regimes for various reasons including player protection and consumer legislation.” The complexity of the current situation, explained Ghio, is that “on one side we have a situation where the underlying substantive law is not harmonised. On the other side we have a long-established heritage as far as EU legislation is concerned when it comes to mutual recognition of court judgments.  We have the Brussels 1 Recast Regulation which provides that a decision which is published from a court in a member state could be enforced in another member state.” This complexity has led to some circles voicing criticism targeted at Article 56A, as detailed above.

Ghio elaborated that “when a foreign member state is applying its own national laws through its own national courts and have a judgment promulgated which goes against a Maltese gaming company, one could dare to say that indirectly they are trying to enforce that specific regulatory regime outside of their shores through the mutual recognition of judgment. Referring specifically to Austria, Ghio explained that the jurisdiction has a gaming “regime which is monopolistic in nature”. Referring to gaming related court cases, Ghio added that “the Austrian courts repeatedly have refused to refer certain matters up to the European Court of Justice”. Ghio referred to the court cases against Maltese licenced operators, where “the absolute majority of these decisions in Austria relate to players seeking to recoup their losses.”

Enshrining public policy into law

In comments to SiGMA News, MGA commented that “The legislator’s intention behind the introduction of Article 56A is to enshrine into law the long-standing public policy of Malta in relation to the gaming sector.” It added, “It is important to note that the Maltese law does not create additional or separate grounds for refusing to recognise or enforce judgments to those already established under EU regulations (the Brussels I Recast Regulation). It is simply an interpretation of the ordre public grounds for refusal envisaged in said EU regulation.” To this end, Ghio commented that “the whole discussion now is determining what is public policy”. It is important to clarify that the protection which Article 56A is providing is limited to Maltese license holders and their officers and there is no specific retroactivity written in the Article.

Additionally, Ghio clarified that “under the Maltese Constitution there is a specific principle which is that the state has an obligation to protect private Enterprise in Malta and that is Article 56A is attempting to do.” Ghio explained that in recent years, the European commission has put gaming law on the back burner whereas in Malta, gaming regulation was prioritised. He added that whilst it is good news that the European Commission is looking into the current situation in the industry, it should be done consistently across member states and not exclusively for Malta.

In a recent statement published on its site, the German Gaming Regulator (Joint Gambling Authority of the Länder or GGL) referred to Article 56A as a “protective shield”, which is “unlikely to be compatible with European requirements for the recognition of decisions”. Referring to these comments, in particular the analogy of the shield, Ghio commented that throughout the centuries, Malta has had a long history of acting as a shield protecting others who have made its shores their home. The “protective shield” analogy of Article 56A defending Maltese interests and the interests of those who choose to conduct their business within the robust regulatory framework of the Malta Gaming Act is indeed fitting.

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