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CJEU ruling imposes need to reassess risk, observes lawyer
On 15 January, the Court of Justice of the European Union delivered a ruling in Case C-77/24 (Wunner) dictating that the damage sustained by a player is deemed to have occurred in the country in which that player resides.
Game Lounge Media contacted Vincent Micallef, Managing Partner at Vincent Micallef & Associates, for his observations and thoughts on potential ramifications for the industry following the ruling. Micallef clarified that he is not a specialist in gaming law, and that his observations have been provided without assumption of gaming law expertise.
Game Lounge Media has also previously spoken with lawyer Davinia Cutajar and Maltese MEP Peter Agius regarding the ruling.
Wunner ruling
Going over the details of the case, Micallef said that the CJEU delivered a preliminary ruling concerning a reference from the Austrian Oberster Gerichtshof in proceedings brought by an Austrian national against two directors of Titanium Brace Marketing Ltd, a Maltese-licensed online games provider that did not hold a licence in Austria, seeking to recover losses incurred through online gambling.
Micallef continued that the central issue referred was whether and under what law a claim for damages could be pursued in cross-border gaming contexts, and, more specifically in this case, whether Austrian law could govern a tort or delict claim against the directors of a company operating without the requisite local authorisation.
“The CJEU’s ruling interprets the Rome II Regulation (Regulation (EC) No 864/2007) on the law applicable to non-contractual obligations and affirms that in the context of an action for damages arising from participation in online games of chance offered by an operator without the required licence in the Member State where the player is resident, the damage is to be deemed to have occurred in the Member State of the player’s habitual residence,” stated Micallef.
“Accordingly, Austrian law would generally be applicable, even where the operator is incorporated, licensed and based in Malta, and irrespective of where the causal conduct or indirect effects took place, because the financial loss and associated consumer protection interests materialise at the place where the player resides and participates in the gaming activity.”
He said that the Court specifically clarified that an action for tortious liability against company directors for infringing a national prohibition on unlicensed gambling does not fall within the corporate law exclusions under Article 1(2)(d) Rome II, and therefore is subject to the general Rome II rule on the applicable law. “This dispels arguments that Maltese law should govern simply because the operator held a Maltese licence and because Maltese law, unlike Austrian law, does not impose director liability towards a company’s creditors or otherwise for unlicensed activity,” he added.
Micallef said that what this jurisprudence means in practical and legal terms is that operators licensed in one EU Member State but offering services to players in another Member State without a local licence can be subject to civil liability claims in the home jurisdictions of the players under domestic tort law. He commented the law of the players’ home jurisdictions may define the illegality of the underlying contract, the scope of prohibited conduct, and the extent of remedies differently from the operator’s home regime.
Micallef said that, from a private international law perspective, this in turn creates a significant shift in the “conflict-of-laws landscape” for cross-border gaming services, “reducing the extent to which freedom to provide services under Article 56 TFEU shields operators from private law claims in other Member States”. He continued that it also heightens litigation risk for operators and their managements due to claimants being able to pursue damages where they are resident under the law of that jurisdiction, rather than being confined to the law where the operator is based.
What the ruling signals to the industry
He remarked that this judgement signals to industry participants that cross-border provision of online gambling carries not only regulatory compliance obligations, but also potential civil liabilities enforceable in multiple EU countries, “which could precipitate a wave of similar claims where local licensing requirements are breached”.
Micallef commented that this judgement also places greater emphasis on obtaining local authorisation in key markets, “or otherwise ensuring that offering services without authorisation does not give rise to tortious liability”. He added that it may also render defensive doctrines increasingly incompatible with EU private international law and enforcement frameworks, “given ongoing infringement proceedings by the European Commission challenging Malta’s approach”.
“In sum, the CJEU’s decision establishes that the locus of ‘damage’ for Rome II conflict-of-laws purposes in online gambling tort claims is anchored in the player’s Member State of residence and that local substantive law can therefore govern such actions against foreign operators and their directors, imposing a need for industry actors to reassess risk, compliance, and cross-border strategy in light of this binding interpretation of EU law,” concluded Micallef.
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