Malta’s Article 56A Amendment: A Controversial Stance with Valid Grounds
Malta’s recent defenses concerning the Article 56A amendment to its Gaming Act have sparked considerable debate, with local legal professionals asserting the country has a justified position.
The ongoing clash with the European Commission (EC) revolves around how EU law is interpreted, creating a complex legal landscape. Experts suggest that Malta might have a strong case as it challenges an EC directive issued in June, which insisted on compliance with EU regulations.
Local legal practitioners from firms like GTG Legal and CSB Group contend that the EC’s intervention may exceed its authority. "This situation is evolving into a philosophical discussion rather than purely a legal one," noted Dr. Terrence Cassar, a partner at GTG Legal, in an interview with iGB. He emphasized that the Treaty on the Functioning of the European Union (TFEU) is meant to delineate a specific scope for EU jurisdiction, traditionally excluding gambling activities. He remarked, "The EU’s roots lie in trade agreements, yet it now extends its focus to broader issues, often diving into philosophical territory."
The heart of the dispute centers on Article 56A, a recent amendment designed to safeguard Maltese operators against legal actions from other EU member states. Malta interprets the TFEU as permitting unhindered provision of services—including online gambling—across EU borders.
In June, the EC issued a formal alert to Malta, demanding the jurisdiction rectify its approach to enforcing court rulings from other EU nations against local licensees. A significant case involved Malta’s decision to ignore an Austrian court’s ruling favoring players seeking refunds for betting on unlicensed sites, which a Maltese court deemed inconsistent with national public policy.
What Is at Stake for Malta?
Malta’s gambling authority staunchly defends its reading of the TFEU and insists that Article 56A aligns with its legal framework. According to Cassar, Malta is not against regulations within other jurisdictions, provided they adhere to Maltese laws.
"Malta has had a framework for online gambling in place since 2004, and Article 56A serves to clarify its long-held beliefs," Cassar asserted. He clarified that any local licensing requirements should exist only as exceptions to the EU principle of free service provision, particularly when public health is at stake.
The Maltese government does not dismiss the necessity for operators to abide by local laws globally; however, it argues that its licensing regulations could supersede laws from other nations in contested scenarios. "Malta maintains its refusal to recognize foreign judgments based on its public policy, particularly when the other country’s regulatory framework does not align with EU standards," Cassar explained.
Is Malta Justified in Its Argument?
Legal experts assert that Malta’s argument has merit, asserting that Article 56A should not be interpreted as contravening EU laws. Kyle Scerri, legal manager at CSB Group, emphasized that the amendment encapsulates Malta’s established public policy and does not contradict existing EU regulations.
He noted, “EU law permits member states to refuse the recognition of judgments that are evidently contrary to their public policy. Thus, Article 56A can be seen as a reaffirmation of these EU principles.”
Cassar added, "The EU’s attempt to regulate matters that lie outside its purview raises concerns. Malta is confident in its framework and believes it can withstand scrutiny against other EU regulations."
Looking Ahead: What’s Next for Malta?
Should Malta fail to address the EC’s June directive within two months, the case could escalate to the European Court of Justice (ECJ), potentially resulting in a prolonged legal battle. However, an existing case under consideration by the ECJ regarding player losses in Germany and Austria could expedite proceedings, with an update expected soon.
The outcome of this case could significantly influence Malta’s argument, particularly if the ECJ favors the EU’s perspective on trade law and freedom of movement. “A definitive resolution may take at least two to three years,” Cassar predicted. “However, the implications of the ECJ’s rulings, especially regarding Article 45 of the TFEU, will directly affect Malta’s position on Article 56A.”