Malta Introduces New Legislation to Protect Operators from Foreign Liability

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Malta, a prominent hub for the online gambling industry, has introduced new legislation in an effort to protect operators from potential liability arising from legal actions initiated in foreign jurisdictions.

The move comes as an increasing number of lawsuits have been filed abroad against Malta-based operators, prompting the government to consider additional legal protections. While the proposed amendment aims to provide a secure and stable regulatory framework for operators, it has sparked debate and criticism from European lawyers who argue that Malta is attempting to circumvent local courts.

The objective of the proposed amendment is to address the concerns within the industry regarding cross-border legal actions against operators. By establishing clear guidelines and limitations, Malta seeks to provide operators with greater regulatory certainty. This, in turn, would allow operators to focus on expanding their businesses and offering safe and responsible gambling services.

One of the primary aims of the legislation is to protect operators that operate in Europe's gray market, providing services that circumvent local restrictions. Such operators often face fewer gambling regulations compared to their regulated counterparts and are often subject to scrutiny by local regulators.

If the new bill is passed, these operators could potentially operate with relative impunity.

The proposed legislation also seeks to address the issue of "forum shopping," wherein plaintiffs deliberately choose jurisdictions that may be more favorable to their claims, regardless of the operator's primary licensing jurisdiction. To discourage such practices and promote a fair and balanced legal landscape for operators, Malta intends to set explicit criteria for the enforcement of foreign jurisdictions.

However, the introduction of this legislation has raised concerns abroad. Austrian and German lawyers have approached the European Commission, arguing that Malta's proposed amendment obstructs European courts. If successful, the legislation could interfere with the enforcement of past and present offenses, potentially nullifying several verdicts against Maltese operators.

Lawyers Karim Weber and Benedikt Quarch, representing clients engaged in legal battles against Maltese operators who violated local regulations, have voiced their opposition to the proposed amendment. They argue that the legislation would deprive EU citizens of their fundamental right to legal protection and accuse the Maltese government of favoring gaming companies.

Reputation and Potential Results

It is worth noting that Malta's reputation has been under scrutiny in recent years. In 2021, the country was placed on the greylist by the Financial Action Task Force (FATF) due to regulatory and enforcement failings.

While Malta has since implemented substantial reforms to address these concerns, corruption and money laundering remain persistent issues. With tensions rising, the European Commission is expected to intervene and resolve the matter to prevent potential escalation.

The outcome of Malta's proposed legislation and its implications for operators and legal proceedings in foreign jurisdictions will likely be closely monitored by industry stakeholders, legal experts, and regulatory bodies.

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