Malta Introduces New Legislation to Safeguard Operators from Foreign Liability

An increase in the number of lawsuits levied abroad against Malta-based operators has prompted the government to consider introducing additional legal protections. The proposed amendment aims to shield businesses from potential liability arising from legal actions initiated in foreign jurisdictions. However, European lawyers heavily criticized the new measures, arguing Malta was trying to circumvent local courts.

Gaming Companies Will Have Another Layer of Protection

The proposed amendment is a response to growing concerns within the industry about the potential risks associated with cross-border legal actions against operators. By establishing clear guidelines and limitations, Malta aims to provide operators with greater regulatory certainty, enabling them to focus on growing their businesses and delivering safe and responsible gambling services.

Introducing such legislation would primarily benefit operators offering their services in Europe’s gray market, skirting local restrictions to provide an alternative to regulated companies. These operators often have significantly fewer restrictions and frequently draw the ire of local regulators. If the new bill passes, such businesses will operate with relative impunity.

The Court shall refuse recognition and, or enforcement in Malta of any foreign judgment and, or decision.

Malta Bill 55 Gaming Amendment

The bill also addresses the issue of “forum shopping,” wherein plaintiffs deliberately choose jurisdictions that may be more favorable to their claims, irrespective of the operator’s primary licensing jurisdiction. By setting explicit criteria for foreign jurisdiction enforcement, Malta intends to discourage such practices and promote a fair and balanced legal landscape for operators.

The Bill Can Obstruct EU Judiciaries

Malta’s decision to proceed with the legislation had an immediate impact abroad. Austrian and German lawyers have approached the European Commission, arguing Malta was attempting to obstruct European courts. If successful, the amendment will immediately interfere with enforcing past and present offenses, potentially nullifying several verdicts against Maltese operators.

Karim Weber and Benedikt Quarch represent clients engaged in legal battles against Maltese operators violating local regulations. If successful, the operators must reimburse the plaintiffs’ deposits and possibly suffer additional sanctions. According to the lawyers, the amendment would deprive EU citizens of their fundamental right to legal protection.

The government of Malta has no right to intervene in the independent arm of the judiciary…, especially when (it) has a vested biased interest totally in favor of gaming companies.

Lawyers Karim Weber and Benedikt Quarch

In 2021 Malta was put on FATF’s greylist for systemic regulatory and enforcement failings. Even though the country eventually appeased the financial watchdog through substantial reforms, corruption, and money laundering remain endemic issues that still plague the nation’s reputation. With tensions quickly rising, the European Commission should soon settle the matter and prevent potential escalation.