Malta : at odds with French P.M.U.

By Olga Finkel, head of Betting and Gaming Practice, GFT Advocates, Malta.
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During the last few years the remote gaming industry in Europe has been busy, not only with developing new games, new channels, and new markets, but it has also been continuously forced by various monopolies to fight legal battles for its basic right to carry on business. This year, some of these battles involved Malta-based remote gaming licenses and also drew in industry service providers.

      One such case in point is the case of French horse racing monopoly P.M.U. against Malta-based operator Zeturf. P.M.U. asked Tribunal De Grand Instance de Paris to order Zeturf to stop providing its ‘illegal services ’ in France’ and, in default, to impose exorbitant fines P.M.U. clearly stated in its writ that its revenue streams are prejudiced by Zeturf’s activity.

      Notwithstanding the fact that under the Gambelli ruling of the European Court of Justice economic considerations do not justify restrictions to the freedom to provide services across border within the EU, the judge sitting in the Tribunal decided against Zeturf. What is more shocking, is that the Tribunal handed down its order without giving any chance to Zeturf  to defend itself: Zeturf  has been notified in Malta about the sitting in Paris just two hours before the hearing had to start. The French court, however, without   having any qualms about this unacceptable situation, concluded that ‘the procedure is in order’ and proceeded to condemn the defendant in his absence, thus completely disregarding fundamental principles of law.
      Naturally, Zeturf has appealed the above judgment (appeal is currently pending) and has also lodged a formal complaint with the European Commission against P.M.U. and France.

      P.M.U. however, went further than just directly attacking Zeturf. It proceeded to attack Zeturf’s co-location service provider in Malta, bell Med. By deploying threats and scaremongering tactics, P.M.U. tried to intimidate Bell Med and to force it to remove or disable access to Zeturf’s website.
      One must note that Bell Med, as a co-location service provider to remote gaming licensees, cannot interfere in any way with operations of the licensees, whether by disabling websites or otherwise, since any such act is only allowed if authorized by the malta Lotteries and Gaming Authority. This was clearly explained to P.M.U. but the French monopoly persisted in its demands.


Tired of P.M.U.’s insinuations, bell Med Initiated legal proceedings in Malta against P.M.U. asking the maltese court, amongst other things, to declare that Bell Med’s operations are legal and in full conformity with the applicable law; to declare that P.M.U.s demands and  claims are illegal and abusive; to order P.M.U. to stop and desist from its illegal, abusive and vexatious actions against Bell Med, which actions are prejudicial to Bell Med’s legitimate operations in Malta.

      Even though P.M.U. knew of the above-mentioned proceedings in Malta, it subsequently initiated proceedings in France against Bell Med and sought an interim order forcing Bell Med to disable access to Zeturf’s website and, in default, imposing hefty fines. On 2nd November, the French court decided against Bell Med. Turning down the lies pendent argument based on EU Regulations 44/2001 (i.e. since there is a pending case between the same parties on the same matter in Malta, a French court should not seize the case), the argument that there is no close link between Bell Med and France (i.e. Bell Med is a Maltese entity, none of its operations is in France and therefore, a French court is not competent to real-deal with the case)  and other serious arguments, both procedural and substantive, the French court gave its ruling against Bell Med, ordering it to block Zeturf’s website and stipulating daily penalties for non-compliance. Bell Med filed an appeal against this interim order.

      Incidentally, the judge who ruled against Bell Med was the same judge who ruled against Zeturf. P.M.U. has obviously reported the above interim orders as its victory. One should not forget, however, that the French decisions are not final, as both Zeturf and Bell Med filed their respective appeals in France. In Malta, moreover, the battle is just beginning of the game .
      Bell Med’s proceedings against P.M.U. (2 separate cases shave been instituted ) are currently at the preliminary procedural please stage. As was expected, P.M.U. submitted its plea of lack of jurisdiction of Maltese courts. The maltese court invited both parties to make written submissions explaining the basis of, or lack of, jurisdiction. Bell Med has already submitted its arguments, strongly founding jurisdiction of Maltese courts on EU law P.M.U. was given until February 2006 to present its arguments. Written submission on jurisdictional plea will be followed by oral pleadings and presentation of evidence of both parties. Once the competence of the courts is established, the cases will proceed to pleas on merits.

      Bell Med’s cases reveal the monopoly’s attempt to widen the circle of legal battle by drawing into it co-location service providers. Business activities of a Maltese co-location service providers. Business activities of a Maltese co-location service provider generally consist of offering to other Maltese companies its premises for placing therein such other companies ‘equipment. These activities are, by their nature, local operations, completely confined to the country where co-location is offered. Consequently, it appears that the necessary pre-requisites under Regulations 44/2001 for establishing the competence of a foreign court over such Malta-based co-location provider, whether in respect of general or special jurisdiction, are absent. Therefore, the fact that the French court assumed jurisdiction over Bell Med and passed judgment against it is very disturbing and can potentially result, if unchecked, in server repercussions for the whole remote gaming industry and beyond.

      The cases outlined above, as well as a number of other cases currently underway in Malta, also show an important development in European litigation involving remote gaming industry. Until now, the usual course of events was that a monopoly would ‘play home’ and try its best at ousting private operators from what it perceived to be its own territory. The situation is now changing as we see private iGaming operators, properly regulated in their jurisdiction, starting to take preemptive actions. A judicial pronouncement in favour of a remote gaming operator would be another step forward in the industry’s fight for its rights.
      While monopolies become progressively frustrated and aggressive in their attacks on remote gaming industry – in the wide sense and including its service providers – the industry is prepared to stand its ground and defend its position all the way.