November 2007

On 28th September 2007, P.M.U.’s attempt to enforce in Malta French courts’ decisions against Zeturf, a Maltese remote gaming licensee, and BellMed, Zeturf’s co-location service provider, has been finally proven as futile. This article provides a summary of the major acts in the play.

In 2005 P.M.U. initiated proceedings against Zeturf in France seeking to prevent Zeturf from offering its ‘illegal services in France’. P.M.U. also instituted proceedings against BellMed, seeking to force BellMed to disable access to Zeturf’s website. The French Court sided with P.M.U. in both cases, which was confirmed on appeal.

P.M.U. subsequently sought to enforce the French judgements against Zeturf and BellMed in Malta under the EU’s Council Regulation on the jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Reg 44/2001”). Reg44/2001 provides for a speedy enforcement procedure in one EU country of judgments originating from another EU country, allowing only very restricted grounds for enforcement’s refusal. Precluded from debating such grounds at the application stage, the Maltese Court upheld P.M.U’s application for the recognition of the French judgements, declaring them enforceable in Malta.

Both Zeturf and BellMed appealed, separately, from the above decisions, requesting to refuse enforcement. One common argument presented by each company was that the French judgments should be refused enforcement in Malta due to the fact that they are contrary to Maltese public policy, which is a ground for refusal under Art.34(1)(1) of Reg44/2001. The Maltese legislator has chosen to regulate remote gaming activity, established the relevant legislative and institutional framework, and gave the power to the LGA, the regulator, to grant relevant licenses. Allowing the enforcement would effectively mean that the Maltese legislator and the regulator can be restricted in the exercise of their legitimate powers. Furthermore, allowing enforcement would go against the fundamental EU freedom to provide services cross-border, which principle forms part of the Maltese public policy.

Zeturf and BellMed also argued that a simplified cross-border enforcement procedure under Reg44/2001 cannot be utilised by P.M.U., since Reg44/2001 only applies to enforcement relating to civil or commercial matters, while the matter under discussion was an administrative one.

Referring to a number of ECJ’s decisions on the interpretation of a ‘civil or commercial matter’, on 9th January 2007 the Maltese Court of Appeal held in the Zeturf case that although P.M.U. is incorporated in France as a commercial entity, it is nevertheless regulated by an ‘ad hoc’ law which gives it power to enforce French policy on relevant gaming matters, which power is not afforded to private enterprise. The Court concluded that P.M.U. is an entity of an administrative nature, the matter in question falls outside the scope of the Reg44/2001 and could not be enforced on the basis of Reg44/2001.

While battling with P.M.U. in Malta, Zeturf continued legal action in France as well. Unfazed by the lost appeal in France, Zeturf appealed further to the Cour de Cassation.  On 10th July 2007, drawing upon the interpretation given by the ECJ to the EU Treaty provisions guaranteeing the freedom to provide services cross-border, the court of last resort in France stated that any restrictions to such freedom need to be adequately justified, such as in the interests of public policy. It held that restrictions on the provision of gaming services could be justified if they are instrumental in preventing exploitation of games of chance for criminal or fraudulent purposes, or in reducing gaming and the danger of addiction. The Court, holding that public policy objectives are not realised when national authorities adopt a policy of growth in the gaming sector to increase government revenue, did not accept outright that P.M.U. is a legally standing monopoly justified on the basis of public policy. In the light of the above arguments, the Court quashed the French Court of Appeal’s decision and remitted the matter back to the said Court of Appeal to consider the legality of P.M.U. as a state monopoly.

The Cour de Cassation’s decision raised doubts as to the feasibility for P.M.U. to further its lawsuit against BellMed in Malta, which was still pending before the Maltese Court of Appeal at that time. The final decision was given by the said Court on 28th September 2007. Drawing upon jurisprudence on the matter, the Court once again held that if the person seeking enforcement had rights and duties beyond those afforded to private persons, the matter was deemed administrative in nature, and that in the case under consideration P.M.U., in exercising the regulatory powers vested in it, acted in the ambit of public policy. Echoing the reasoning in the Zeturf case, the Court held that P.M.U.’s activities under discussion were administrative in nature and that the French judgement was consequently unenforceable in Malta under the Reg44/2001.

Whilst the Cour de Cassation’s decision appears to indicate a significant challenge to the French gaming regime by the country’s highest court, one should note that the Cour de Cassation did not replace the French Court of Appeal’s judgment, but rather disapproved the approach taken by the Court of Appeal in arriving at its decision and ordered the matter to be re-examined on the basis of proper considerations.

In a somewhat similar vein, since the legal instrument (Reg44/2001) chosen by P.M.U’s for the enforcement of the French decision in Malta was deemed to be inapplicable, the P.M.U.’s claims were refused on this procedural matter. Consequently, the Maltese Court did not have the opportunity to discuss other arguments, such as unenforceability of the French judgment under Reg44/2001 due to such judgment being contrary to Maltese public policy.

Nevertheless, the Maltese Court of Appeal’s decisions have effectively impeded P.M.U’s actions against Zeturf and BellMed. This is of particular significance to the remote gaming industry in general and, more specifically, to Maltese remote gaming licensees, as it shows that a favourable judgment in a monopoly’ home country does not translate into a no-questions-asked enforcement in Malta. The recent decisions of the Court de Cassation and the Maltese Court of Appeal appear to indicate yet another set-back for monopolies in Europe, further advancing the remote gaming industry’s efforts to be able to provide services cross-border in accordance with EU laws – in every EU Member State.

Author:

Olga Finkel(olga.finkel@whpartners.eu)

First Published: 2007