The Reinforcement of Malta’s Role as a Regulatory Hub for Remote Gaming - Part 1

Remote Gaming in the EU

The perplexity is caused primarily from the difficulties encountered when attempting to regulate the virtual world using conventional enforcement methods, or, put another way, the obstacles that must be overcome by sovereign states when enforcing their laws and public policies against operators that are not affected in any manner by geographical distances and/or national boundaries. Indeed the only physical elements on which such operators depend is the physical infrastructure required to deliver their services through the virtual world of the internet to internet users in the physical world.

1. Obstacles in the way of enforcing public policy restrictions applicable in an EU Member State against Malta-based operators- The Zeturf Case
   
   The case of Paris Mutuelle Urbain vs Zeturf Limited, otherwise referred to as the “Zeturf Case” was a significant legal milestone from a Maltese legal perspective as it gave interpretational life to the application of Council Regulation on the jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (EC 44/2001), creating a procedural obstacle for the enforcement in Malta of any public policy judgments delivered by a court in another Member State.
   
   By way of general factual background, Zeturf Limited, a Maltese-registered company was licensed by the Malta Lotteries and Gaming Authority (LGA) in 2005 to act as bookmaker, holding a Class 2 Remote Gaming Licence and began its operations in June of that year. Barely a fortnight after launched its online operations, Zeturf was served with a writ issued by PMU alleging that Zeturf was breaching PMU’s monopoly to organize betting activities on horse races, a monopoly which is granted to PMU by law. An interim order was issued by the French tribunal on the 8th July 2005 in which Zeturf Ltd was ordered "to cease on-line bet taking operations on horse races organised in France" and a penalty of €15,000 per day was to apply with effect from the lapse of 48 hours from notification of the court’s decision. This decision was subsequently confirmed by the Paris court of appeal on the 4th January 2006.
   
   Subsequently, PMU sought to have the judgment recognised and enforced in Malta, in terms of Regulation 44/2001. On the 16th March 2006 the Maltese First Hall of the Civil Court upheld PMU’s request and ordered that the decision given by the Court of Appeal in Paris become enforceable against Zeturf. At this stage Zeturf appealed to the Maltese Court of Appeal to overturn this order for the recognition and enforcement of the French judgment. Zeturf based the main thrust of its appeal on the arguments that the order issued by the French court was in fact of an administrative nature and that consequently regulation 44/2001 could not be invoked for administrative matters.
   
   The Maltese Court of Appeal observed that although PMU was organised as a commercial company, it is controlled by the State as a non-profit making organisation with the primary objective - enshrined in its statute - of safeguarding French public policy in respect of betting on horse races. Consequently, it was reasoned by the Court, PMU acted before the French Courts not within the ambit of private law that regulates civil or commercial dealings between private persons, but in the ambit of public law intended to safeguard a monopoly in the interest of l’ordre public francais. The Court concluded that it necessarily follows that the subject matter of the decision of the Court of Appeal of Paris dated 4th January 2006, although formally or apparently of a civil nature or commercial, in reality falls within the ambit of Public law, therefore it is expressly excluded from the remit of Regulation 44/2001. On the basis of this conclusion the Court cancelled and revoked the decision of the First Hall of the Civil Court and denied the request for the enforcement of the judgment against Zeturf in Malta.
   
   The effect of this decision was that it created a barrier to any sovereign states or person/s acting under their authority attempting to enforce public policy judgments pronounced by the courts in their jurisdiction against operators established in and operating from Malta.

The Reinforcement of Malta’s Role as a Regulatory Hub for Remote Gaming - Part 2