The “Legal Pardon” for Gaming Companies in Malta

Players and other creditors of Maltese gaming companies have discovered that obtaining a judgment in another EU jurisdiction does not give them an automatic right to enforce the judgment against the gaming company in Malta. Neither are they entitled to proceed in Malta against the gaming company since a recent amendment has granted them a form of immunity.

In June 2023, an amendment to the Gaming Act (Chapter 583 of the Laws of Malta) was enacted, granting a form of immunity or pardon from legal action, as it is aimed at shielding licenced operators in Malta against cross-border enforcement. This provision of the law states that no action shall lie against a licence holder and, or current and, or former officers and, or key persons of a licence holder for matters relating to the provision of 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 Authority, or the legality of any legal or natural obligation resulting from the provision of such gaming services; and
• Relates to an authorised activity which is lawful in terms of the Act and other applicable regulatory instruments.

Furthermore, the law also categorically states that the Court shall refuse recognition and, or enforcement in Malta of any foreign judgement and, or decision given upon an action of the type mentioned above.

The object and reason of this amendment, is to codify in law the principle of public policy of Malta, thereby encouraging the establishment of gaming operators in Malta who offer the local and cross-border supply of their services.

In fact, this amendment was passed under the express motive that it is in line with Malta’s supreme law: The Constitution. As a principle of public policy, the Constitution enshrines the State’s responsibility in encouraging private economic enterprise – and in a separate article of law, it states that if any other law is inconsistent with the Constitution, the Constitution shall prevail, and the other law shall be void.

The above is the legal basis upon which a handful of recent judgements handed by the First Hall Civil Court of Malta have confirmed the above provision quoting the supremacy of Maltese Constitutional Law vis-a-vis EU law. Importantly, in Malta there is no rule of precedent, and one court’s decision does not bind others – even if it may serve as an informed reference. In fact, there are other Courts who took a different approach and have not thrown out similar cases.

In what may be a landmark case before the Courts of Malta, a German citizen has instituted debt collection proceedings against a Maltese gaming licence holder company. Yet on 14^th July 2023, the judge resorted to request a preliminary ruling from the European Court of Justice and has posed seven preliminary questions related to the matter at hand. This case has been adjourned indefinitely, pending the decision from the European Court of Justice and unfortunately there is no timeline or expected date on which the matter will be decided upon.

Regardless of the above, many creditors have still resorted to instituting proceedings in Malta or attempted at enforcing judgements obtained in other jurisdictions.

As a way forward, nearly a year after this amendment came into effect, it is clear that the Maltese legislator aims to protect and shield gaming licence holders from legal action based on the principle of public policy. Therefore, if the European Court of Justice rules against this legal amendment, sparking a constitutional debate, there is no assurance that the Maltese legislator will not take further measure to safeguard licence holders in this crucial economic sector.

Therefore, beware legal immunity for gaming licence holders: you’re not in the clear just yet!