On the 27th of February 2025, the First Hall of the Civil Court , presided by Honourable Justice Francesco Depasquale, delivered two highly anticipated decisions in the names of TSG Interactive Gaming Europe Limited vs Gerhard Posch et. and European Lotto and Betting Limited vs Philip Wahl et, whereby it refused the recognition and enforcement of a number of judgments delivered by the Courts of Austria ordering operators licensed by the Malta Gaming Authority to refund losses realised by Austrian players when using their services.
The two decisions in question are the first to be delivered in the midst of a plethora of applications being heard by the Maltese Courts wherein gaming operators licensed by the Malta Gaming Authority are requesting that the court refuses attempts made by Austrian players to enforce similar judgments delivered in Austria.
By way of background, the gambling industry is not harmonised at a European Union level, meaning that Member States are generally free to regulate the sector. Regulation at Member State level must, however, respect the fundamental freedoms enshrined in the Treaty on the Functioning of the European Union, most notably Article 56 which establishes the freedom to provide services within the European Union. By virtue of the principle of primacy of European Union law, if national regulation conflicts with Article 56 of the Treaty on the Functioning of the European Union, the courts of a Member State are to disapply national law in favour of European Union law.
While the general rule is, therefore, that the freedom to provide services liberally within the European Union must be respected, the Courts of Justice of the European have held that Member States may, on an exceptional basis, implement measures which restrict this freedom if a number of cumulative criteria are satisfied, including if it pursues a legitimate objective, if it is absolutely necessary to realise such objective, and if it is proportionate. This means that operators licensed by the Malta Gaming Authority are free to provide services, including in the field of online gambling, in other Member States, so long as they have a legitimate reason to do so and no valid restriction is in place.
In Austria, the gambling, casino, and lotteries sector is subject to a federal monopoly, the most severe restriction to the freedom to provide services which can be implemented, while the sports betting sector, on the other hand, is subject to a separate and considerably more liberal legal framework. In light of the extreme nature of this monopoly and substantial inconsistencies with the objective it purports to pursue, the compatibility of the aforementioned monopoly has long been questioned, both in litigious and academic fora. In fact, a number of local judgments in Austria had previously found the monopoly to be in breach of European Union law.
Notwithstanding this, the highest court in Austria a few years back delivered a judgment ruling that such monopoly does not violate Article 56 of the Treaty on the Functioning of the European Union. On the strength of this ruling, many Austrian players filed claims in the Austrian Courts arguing that operators licensed by the Malta Gaming Authority could not legally offer online gaming services in Austria, thus demanding a refund of all losses realised using such operators’ platform.
Despite an emphasis being placed by the Courts of Justice of the European Union on Member States courts continuously reassessing the validity and legitimacy of a measure restricting the freedom to provide services on a dynamic and ongoing basis, thus not solely relying on previous rulings, a trend of judgments emerged in Austria where lower courts would uphold claims by players that operators licensed by the Malta Gaming Authority were operating illegally in Austria by simply relying higher courts’ previous rulings declaring the monopoly compatible with European Union law, without carrying out such dynamic reassessment.
Therefore, the courts would order that such operators were to refund players of all losses realised by them. On appeal, these judgments would be invariably confirmed, where courts would state that operators did not provide sufficient evidence to merit a departure from the decisions of the higher courts. Having obtained such judgments, the players, including the respondents in the two cases in question, would then come to Malta and attempt to enforce against the operators, who would in turn file an application to have the recognition and enforcement of such judgments refused.
In the cases in question, upon being notified that the players were seeking to such Austrian judgments in Malta, the applicant companies filed applications before the First Hall of the Civil Court requesting that the court orders the refusal of the recognition and enforcement of the relative judgments on the strength of Article 45(1)(a) of EU Regulation 1215/2012, which provides that the courts of a Member State shall refuse the recognition and enforcement of a judgment delivered in another Member States if such recognition and enforcement would run manifestly contrary to the public policy (ordre public) of that Member State. This ground for refusal poses a limited and exceptional reason where the recognition and enforcement of a judgment delivered in another Member State may be refused, and is only admitted in extraordinary circumstances where the recognition and enforcement would be inconsistent to an unacceptable degree with a fundamental rule of the Member State where enforcement is sought.
The Malta Gaming Authority successfully applied to the court to intervene early on in both proceedings as an interested party. The Authority argued in favour of the acceptance of the relative applications for refusal, similarly contending that the Austrian judgments ran contrary to Maltese public policy.
The parties arguing in favour of such refusal of recognition and enforcement argued that Article 56 of the Treaty of the Functioning of the European Union, being one of the four fundamental freedoms enshrined in the Treaty, is a fundamental rule of European Union law, and, by extension, a fundamental rule of Maltese law by extension as a Member State of the European Union. As such, it was argued that the recognition and enforcement in Malta of such judgments delivered in Austria would undermine Article 56 of the Treaty of the Functioning of the European Union as a fundamental rule of the Maltese legal order.
In their final submissions, such parties also referred to article 56A of the Gaming Act (Chapter 583 of the laws of Malta), promulgated recently to codify this position, which confirms that any decision which “(i) conflicts with or undermines the legality of the provision of gaming services in or from Malta by virtue of a licence issued by the Authorityor the legality of any legal or natural obligation resulting from the provision of such gaming services; and (ii) relates to an authorised activity which is lawful in terms of the Act and other applicable regulatory instruments” indeed contravenes Maltese public policy.
In its decisions, the First Hall of the Civil Court accepted these arguments and ruled that the recognition and enforcement of such Austrian judgments would run manifestly contrary to the public policy of Malta, thus refusing the recognition and enforcement sought by the Austrian players.
The Malta Gaming Authority was represented in these proceedings by Dr Karl Briffa and Dr Luke Mifsud of VB Advocates.