A European Court of Justice case opinion delivered by Advocate General (AG) Anthony Michael Emiliou on 30 October has raised concerns that Malta’s Article 56A could put operator assets based in other EU countries at higher risk of cross-border freezing orders.
In his opinion, the AG said it could be argued that Maltese law increases the risk of an operator dissipating its assets or failing to enforce a freezing order. This could result in assets based outside of Malta facing higher scrutiny.
This is particuarly relevant to any ongoing player losses cases being heard either locally or at a European level.
The opinion related to a player-losses case against Evoke-owned Mr Green, which was initiated in Austria where it does not hold an operating licence.
In this particular case, an Austrian consumer gambled and lost €62,878 ($72,419) with Mr Green between January 2017 and April 2019. They brought brought civil proceedings in Austria against the Malta-based Mr Green, arguing their contract with the operator was void.
Austrian courts agreed and ordered Mr Green to refund the consumer’s stakes, plus interest and costs.
However, the player elected to push the case further. In February last year, they applied for a European Account Preservation Order (EAPO) to freeze Mr Green’s bank accounts in other European Union member states, including Ireland, Malta, Sweden and Luxembourg.
An EAPO is a legal tool used in the EU to help creditors recover debts. This is done by freezing funds held in a debtor’s bank account in another EU member state.
EAPO uncertainties leads to concerns
At first, the court rejected the application as it did not believe there was an “urgent need” for the condition to be met.
The court’s primary concern was whether Malta’s Article 56A would block the EAPO. Article 56A is a hotly debated amendment within Malta’s gambling laws which protects local licensees from legal cases brought against them in other EU states
It also flagged the risks of enforcing an EAPO amid concerns that assets could have been moved around or further enforcement obstacles could block the effort. It also noted a delay in filing the claim from the original dispute. The AG warned judgments in other EU states, including EAPOs, could still be enforced despite the protection of Article 56A.
No automatic protection with Article 56A
With this, the AG said licensing in Malta did not automatically protect an operator from actions carried out in other jurisdictions. He advised operators to keep clear records, avoid dispersing or hiding assets post-judgment and ensure prompt responses to legal claims. Failure to do this, the AG said, increases the risk of successful preservation orders and enforcement overseas.
In addition, the AG picked up on the issue of timing around when an EAPO is filed. In the case of Mr Green, what counted for the operator was that it had terminated its Austrian-facing payment service provider arrangement in early 2021. This, the AG, said was taken into account upon the EAGO filing.
Article 56A could cause issues rather than protect
Summing up the case, it places further pressure on the impact of Article 56A in Malta. While it can be applied in some instances, its validity could be questioned if it tried to prevent foreign court rulings.
EU states can continue to pursue EAPOs on the grounds that Malta’s Article 56A poses risks to the judicial process. As such, operators could see their assets outside Malta frozen.
Incidentally, the opinion seems to support recent comments from the European Commission that the amendment undermines judicial processes across EU member states. In June, the commission wrote to the Maltese government over Article 56A, saying it does not automatically protect Malta-licensed operators from overseas judgments.
In the commission’s letter, it argued Article 56A unfairly shielded Malta licensees against legal challenges brought by other EU markets, and therefore “undermined the principle of mutual trust in the administration of justice”.
Once again Malta’s Article 56A amendment comes into question, as a recent ECJ case opinion warns it could put operator assets outside of Malta at higher risk of freezing orders.