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Damage sustained by players occurs where they reside, rules EU court
The Court of Justice of the European Union (CJEU) has ruled that the damage sustained by a player is deemed to have occurred in the country in which that player resides.
In a press release relating to the Judgement of the Court in Case C-77/24, the Court’s Communications Directorate reported that, with regard to online games of chance, “A player may, as a general rule, rely on the law of his or her country of residence when bringing an action to establish liability in tort or delict on the part of the directors of a foreign provider that does not hold the required licence.”
Prominent lawyer comments on the case
Davinia Cutajar, a partner at WH Partners, spoke with Game Lounge Media regarding the ruling and stated that, “Irrespective of whether one agrees or disagrees with the CJEU’s decision in Wunner, the fact remains that not all EU Member States will – nor should they – readily accept the enforcement of decisions in tort against company directors for debts of a company.” She continued that such a situation touches on the fundamental principle of separate legal personality, “which underpins company law across Europe”. At WH Partners, Cutajar regularly advises on cross-border matters, particularly in the EU.
“In Malta, for instance, directors are generally not personally liable for the company’s debts, save for specific statutory exceptions such as wrongful trading or fraudulent conduct,” she added. “The law recognises the company as a distinct legal entity, and piercing that corporate veil is reserved for exceptional circumstances.”
CJEU Case C-77/24
The Communications Directorate stated that a client, residing in Austria, of the Maltese games of chance provider Titanium Brace Marketing, had initiated proceedings against the two directors of Titanium Brace Marketing before the Austrian courts in order to recover losses incurred from when the client had participated in online gambling.
Titanium Brace Marketing held a Maltese gambling licence, but did not hold any licence in Austria. With that in mind, the client submitted that the gambling contract was therefore null and void, further arguing that the two directors of the games provider were personally as well as jointly and severally liable under Austrian law for the fact that Titanium Brace Marketing offered illegal games of chance in Austria.
The two directors reportedly dispute the international jurisdiction of the Austrian courts, arguing that both the place where the event which gave rise to the damage occurred as well as the place where the damage occurred were in Malta. Furthermore, they claim that the substantive law applicable is Maltese law, and not Austrian law. The Communications Directorate stated that Maltese law “does not provide for liability on the part of company’s officers vis-à-vis the company’s creditors”.
Times of Malta have reported that Malta has previously sought to shield local gaming companies from foreign court judgements, referring to a law known as Bill 55, which has been the cause of dispute.
Observations by the CJEU
Austria’s Supreme Court has put questions to the Court of Justice, and the Court of Justice observes that “the law applicable to a non-contractual obligation arising out of a tort or delict is, as a general rule, the law of the country in which the damage occurs”. This is irrespective of the country in which the event giving rise to the damage occurred, and it is irrespective of the country or countries in which the indirect consequences of that event occur, the Communications Directorate commented.
“This regulation applies to an action seeking to establish tortious liability, such as that at issue, aimed at the directors of a company, for infringement of a prohibition imposed by national legislation on offering games of chance to the public without holding a licence for that purpose,” stated the Communications Directorate. It continued that such an action is not covered by the exclusion provided in respect of non-contractual obligations arising out of the law of companies.
According to the CJEU, the damage sustained by a player in the context of an action for damages for losses incurred when participating in online games of chance offered by a company in a Member State where that company did not hold the licence required by law must be deemed to have occurred in the Member State which that player is habitually resident in.
With regard to this particular case, that would mean that Austrian law would be applicable, and not Maltese law. With that said, the Communications Directorate added that, “where it is clear from all the circumstances of the case that the tort or delict is manifestly more closely connected with another country,” then the Rome II Regulation would allow the court seised to depart from the general rule and to apply the law of that other country.
Clarifications
The Communications Directorate clarified that the place where the damage occurred is the place where the alleged damage actually manifests itself. In this case, “the alleged tort consists in interference with the client’s interests, which are protected in law by the prohibition, applicable in the Member State in which he has his habitual residence, on offering the public, without holding a licence for that purpose, the possibility of participating in online games of chance”.
It continued that the damage alleged by the client had actually manifested itself when he participated from Austria, meaning that in those circumstances, “the damage must be regarded as having occurred in Austria”.
Game Lounge Media approached other parties for comment on the CJEU ruling; none responded by the time of publication.
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