EU court ruling clears path for cross-border freezing of operator accounts
The European Court of Justice (ECJ) said courts can consider Malta’s controversial legal shield of its gambling industry when deciding whether to freeze accounts.
The judgement, delivered by the ECJ’s Fourth Chamber, arose from a dispute in which an Austrian player known as TQ lost €62,878 gambling on Mr Green’s platform between 2017 and 2019.
Austrian courts had already ruled in TQ’s favour and ordered the company to repay the losses, on the basis that Mr Green held a Maltese but not an Austrian licence, rendering the underlying contract void.
But with the money still unpaid, TQ sought a European Account Preservation Order, a mechanism designed to freeze a debtor’s bank accounts across EU member states, targeting Mr Green accounts in Ireland, Luxembourg, Malta and Sweden.
The key question before the ECJ was what a national court can take into account when deciding whether there is sufficient urgency to justify issuing such an order.
The court ruled on two points; that a debtor’s past conduct, even from several years earlier, can be considered, and that the existence of a law in the debtor’s home member state that could block enforcement of a claim is also a relevant factor.
That second point carries particular weight in the context of Maltese gaming law, due to the country’s controversial law protecting locally-licensed gambling operators from liability, known as Article 56A or Bill 55.
TQ had argued that Mr Green might move assets to Malta, where they would be shielded by that provision.
Article 56A in the frame
Gaming lawyer and partner at law firm GTG Terence Cassar said the ruling was expected given the broader litigation landscape, but significant nonetheless.
Cassar said: “What the court is stating here is that yes, it may take into account, on the one hand, conduct of a debtor that took place long ago, and on the other hand, the existence of a law in another member state that can prevent the recovery of the claim concerned.”
He noted that the judgement marked a shift in how courts have traditionally approached the urgency test for preservation orders.
Cassar added: “It has always been interpreted as courts look at real urgency and real risk from the aspect of what the debtor is doing, maybe emptying bank accounts or trying to move money to some jurisdiction where they are outside of their reach.”
The court was careful to limit the scope of its ruling on Article 56A, finding that a creditor cannot rely on such legislation alone to prove there is a “real risk” within the meaning of the regulation.
However, it held that a national court carrying out an overall assessment of relevant circumstances may take a blocking law into account as context for evaluating the debtor’s intentions.
Cassar said the ruling did not resolve the broader question hanging over the industry, which is whether Article 56A is compatible with European law.
On that question, Cassar was direct about where he expects resolution to come from. He said: “The reality is going to be that the resolution on Article 56A ultimately derives from the infringement action ongoing between the Commission and Malta, and to my mind the dynamic is not per se legal, it is political, and the resolution here has to be a political solution, not a legal solution.”
He argued that the deeper issue is the EU’s lack of a coherent framework for gambling regulation, though he pointed to the forthcoming anti-money laundering regulation as a rare step towards harmonisation, noting it would introduce a legal definition of gambling services across the bloc for the first time.
Cassar said: “The more sane approach would be if the EU could come up with some form of regime similar to adjacent areas like currencies or financial services.”
For TQ specifically, the ruling is not necessarily the end of the road. The ECJ was interpreting EU law rather than ruling on the merits of this particular case, which returns to the Austrian courts.
https://next.io/news/regulation/eu-ruling-clears-path-cross-border-account-freezing/