How Can Gamblers Get Their Winnings? Not Under Article 6 of Rome I!
Sometimes You Lose, Sometimes You Win
I have reported about Austrian customers’ attempts to recover their losses from Maltese online casinos and the resulting conflict of jurisdiction previously. Yet sometimes the customer actually wins! And – surprise, surprise – the online casinos refuse to pay out by invoking the prohibition of gambling under the Austrian customer’s local law. (picture: Rishabh Shreyas)
What Rome’s Got To Do With It
This seems to be wholly unfair and a blatant fraud, along the lines of ‘heads I win, tails you lose’. But according to an order of the CJEU, it works! Under Article 6(1) of the Rome I Regulation, given the absence of a choice of another law, the Austrian law at the consumer’s habitual residence applies. This law must be obeyed, says the Court, even if this means the consumer will lose the case.
Can You Have Your Cake and Eat It Too?
The referring Austrian judges had interpreted Article 6 differently. They believed that the provision encapsulates the principle of ‘the more favourable law’ (Günstigkeitsvergleich). As they pointed out, if Article 6(1) Rome I Regulation did not apply, the gambling contract would be governed by Maltese law as the law of the service provider according to Article 4(1)(b) Rome I. If gambling contracts are enforceable under Maltese law – as they seem to be –, the customer’s action would have to be granted. In the eyes of the Austrian court, the fact that the customer was a consumer must not lead to a less favourable result.
We Already Told You
The CJEU disagrees. It points to its earlier decision in Club La Costa, where it had held that Art 6 Rome I Regulation is
not only specific, but also exhaustive, so that the conflict-of-law rules laid down in that article cannot be amended or supplemented by other conflict-of-law rules laid down in that regulation, unless they are expressly referred to in that article,
and
On account of the specific and exhaustive nature of the rules for determining the applicable law set out in Article 6, no other law can be accepted, even though that other law, determined in particular on the basis of the connecting factors laid down in Article 4 of that regulation, would be more favourable to the consumer.
The CJEU repeats these formulas in a somewhat distorted combination (para 30). It thinks they already have settled the matter (that is why it decides by order and not by judgment). The court notes that any deviation from Article 6 Rome I would ‘necessarily seriously’ undermine the general requirement of predictability of the applicable law, and therefore the principle of legal certainty (para 31).
Bad Luck for Winning Gamblers
Although it seems counter-intuitive, the CJEU’s order must be applauded. A consumer cannot enjoy the benefits of both Article 6 and Article 4 Rome I simultaneously, whichever is more advantageous. Such a view would cause legal uncertainty and create significant disadvantages for the co-contractor. As the court rightly underlines, Article 6 Rome I is the exclusive conflict-of-laws rule for consumer contracts falling in its scope. No other rules can be used, even if they result in a more favourable outcome for the consumer.
As a result of the CJEU’s view, only the Austrian law as the law of the habitual residence of the consumer applies to the present case. The gambler who believed to have won in the casino loses in court. Yet this is merely the consequence of the Austrian provisions prohibiting gambling. They do not allow the gambler to claim the gains and recover losses simultaneously. Because that would also be a case of ‘heads you lose, tails I win’.
— Thanks to Felix Krysa for reviewing this post.
Interesting case but predictable outcome since the CJEU’s decision in Scheckler. I make the point to my students that the protection offered to employees and consumers in Rome I is limited. It’s not that favourable. This is another CJEU case that demonstrates it.
Thanks for the comment, Chukwuma. Do you mean the Schlecker case (C-64/12)? But this was about an employment contract.
So the consumer chose to sue in a court whose domestic law, as he knew or had the means of knowing, prohibited the claim ? I’d say he got what he deserved.
Good point!
Thanks for your response Matthias. Yes I am referring to Schlecker case (C-64/12). My apologies for the wrong spelling initially.
In Schlecker, the employee was not allowed to rely on a more favourable law outside the conflict rules in determining the applicable law in the absence of choice for employment contracts. The CJEU held that the employee’s protection was confined to the principle of proximity based on neutral and objective connecting factors and not substantive justice principles. So in Schlecker, even though the habitual place of work (Netherlands) offered the employee a more favourable outcome, the escape clause pointed to another country (Germany) that was not the habitual place of work, which provided a less favourable outcome. The CJEU stressed that the choice of law rules for employee contracts must not necessarily provide a favourable outcome for the employee, even though employees are offered protection in EU choice of law rules.
This analogy in Schlecker applies with equal force to consumer contracts because they are both contracts for the protection of weaker parties. So in the case of consumer contracts, the protection offered to consumers is confined to the law of their habitual residence; they cannot rely on a more favourable law, such as that of the place of business of the professional they are dealing with, if it is not the consumer’s habitual residence. This is why I say that the protection offered to employees and consumers in EU choice of law rules are limited.