An Austrian law firm and a German lawyer have written to the European Commission accusing the Maltese government – and particularly Economy Minister Silvio Schembri – of undermining European rule of law through a Bill which was recently tabled in Parliament to amend Malta’s gaming regulations.

The letter, seen by The Malta Independent, accuses the government of wanting to introduce provisions in Maltese law which would prevent Maltese courts from enforcing sentences handed down against Maltese gaming companies in foreign jurisdictions.

The Bill in question – Bill 55 – went through its first reading in Parliament on 24 April, and its second reading is currently on Parliament’s agenda.

The letter was addressed to Justice Commissioner Didier Reynders and to Economy Commissioner Paolo Gentiloni, while European Parliament President Roberta Metsola was amongst those CC’ed in the letter.

In the letter, the lawyers described the Bill as an “attempt by the Government of the Republic of Malta to blatantly undermine European Rule of Law by blocking the fundamental rights of EU Citizens and Residents.”

The letter reads that the law firm and the German lawyer represent a number of Austrian and German citizens against Maltese gaming companies “which offer their service in blatant violation of Austrian and German Gaming Laws which fall under National Competence where the same Maltese Gaming Companies do / did not have a license to operate.”

They say that their clients are being awarded final and definitive judgements from the Austrian and Germany courts against Maltese gaming companies, whereby those companies are being ordered to pay all the money they deposit and lose on Maltese sites back to the clients.

This is because “they are offering these games illegally and making an unjustified enrichment over our Clients,” the letter reads.

It continues that these judgements are then executed and enforced by an associated law firm in Malta.

It then moves on to accuse Economy Minister Silvio Schembri of tabling a Bill – Bill 55 to amend the Maltese Gaming Act – in order to “accommodate the gaming companies registered in Malta.”

The lawyers argue in their letter than the government wants to pass this law in a “fast track and ‘hush hush’ manner with total disregard to the other fellow EU member States and the rights of their respective Citizens and Residents and above all with total disregard to the Rule of Law we are used to in the European Union including Regulation EC 1215/2012 which is automatically applicable to all Member States.”

“With this bill Minister Silvio Schembri wants to enshrine into Maltese Law that Gaming Companies having a license under Maltese Law and its Officers (Past and Present) will not be able to be held accountable for their actions if their action conflicts with or undermines the legality of the provision of Gaming Services in or from Malta on the back of a license issued by the Malta Gaming Authority,” the letter reads.

Furthermore, it continues by saying that the Bill would introduce a “blanket prohibition” on Malta’s courts which would prevent them from recognising or enforcing any foreign judgements, including ones within the EU against Maltese gaming companies – something which the lawyers said is “in total violation and disregard” of EU regulations.

“It is only the Courts in any Democratic Country including Malta which have a right to determine what constitutes Public Policy in that State and the Government of Malta has no right to intervene in the independent arm of the Judiciary to determine what constitutes public policy or otherwise especially when the Government of Malta has a vested biased interest totally in favour of Gaming Companies against the right of Citizens and Residents of Countries like Austria and Germany,” the lawyers write.

“Minister Silvio Schembri through his bill is literally dictating to the Maltese Courts to refuse recognition and/or enforcement in Malta of any foreign Judgement and/or decision against any Maltese Gaming Company,” they continue.

They allege that through this Bill, there is a “blatant violation” of European rule of law and “a clear interference by the legislature in the independent judiciary and the courts in Malta.”

“There is no similar law in Malta or any other EU member state to the one that Minister Silvio Schembri is attempting to introduce into Maltese law and should the Government of Malta forge ahead as it seems to forge ahead with various matters in blatant violation of EU law like the purchasing of a Maltese passport just to mention one example, this will set a very dangerous precedent not only for any action to be taken or not against Maltese Gaming Companies but for any EU Member state Judgement to be enforced in the Maltese State,” the letter reads.

“This would simply undermine European laws which are supreme and cannot be disregarded as Minister Silvio Schembri and the Labour Government are attempting to do with this bill,” it continues.

The lawyers therefore sought the “immediate and urgent intervention” of the European Commission in the matter to prevent the Maltese government from moving forward with the “total disregard to the Rule of Law that we have enshrined in the European Union.”

The letter was signed by Austrian lawyer Karim Weber and German lawyer Benedikt Quarch.  Weber works for Austrian law firm G&L Legal, while Quarch himself was named as one of the Forbes 30 Under 30 in 2020.

What does Bill 55 say?

Tabled last month, the aim of Bill 55 is written as being “to codify in law the longstanding public policy of Malta encouraging the establishment of gaming operators in Malta who offer the local and cross-border supply of their services in a manner compliant with local legislation, in an effort to encourage private enterprise in line with article 18 of the Constitution of Malta.”

The full amendment reads as follows:

56A. Notwithstanding any provision of the Code of Organization and Civil Procedure or of any other law, as a principle of public policy:

(a) No action shall lie against a licence holder and, or current and, or former officers and, or key persons of a licence holder for matters relating to the provision of a gaming service, or against a player for the receipt of such gaming service, if such action:

(i) conflicts with or undermines the legality of the provision of gaming services in or from Malta by virtue of a licence issued by the Authority, or the legality of any legal or natural obligation resulting from the provision of such gaming services; and

(ii) relates to an authorised activity which is lawful in terms of the Act and other applicable regulatory instruments.

(b) The Court shall refuse recognition and, or enforcement in Malta of any foreign judgment and, or decision given upon an action of the type mentioned in sub-article (a).