The case centres on an Austrian consumer ("TE") who lost over EUR 18,000 gambling on www.drueckglueck.com, a website operated by Titanium Brace Marketing Limited ("Titanium Brace"), a company licensed in Malta which did not hold, however, a gambling licence in Austria.
With no recourse against the Company, while Titanium Brace later became bankrupt, TE sued its former directors personally before the Austrian courts, raising complex questions under EU private international law.
Tort or Corporate Law?
The first legal issue referred by the Austrian Supreme Court to the CJEU concerns which law governs TE's claims: the law of the country where the damage occurred, or the company's corporate law? Under the Rome II Regulation, "non-contractual obligations arising out of the law of companies", including "the personal liability of officers and members as such for the obligations of the company", are excluded from its scope. At the heart of the matter: can directors be held personally liable under tort law for their company's regulatory breaches, or does this fall under the protective umbrella of company law?
Advocate General Emiliou draws a key distinction: where the directors' conduct violates general legal obligations – such as gambling law – this results in a separate, independent liability from strictly corporate law duties. Such claims should fall within the remit of Rome II Regulation and be assessed under the law of the country where the damage occurred.
The impact of such interpretation goes beyond gambling. It could expose directors in a wide variety of regulated industries to liability in any EU country where the company's activities cause harm, regardless of where the company is based.
Where Does Digital Harm Occur?
The second issue tackled was how to determine the applicable law based on the country where the damage occurred.
The Rome II Regulation broadly defines "damage" as "any consequence arising out of [a] tort/delict" while distinguishing between direct damage and indirect consequences, with only the former being relevant for determining the applicable law. For purely economic or financial losses, such as the gambling losses incurred by TE, identifying this direct damage can be complex due to the absence of a physical manifestation. CJEU case law typically interprets "damage" by focusing on the "place where the harmful event occurred" and limits it to the "initial damage", ensuring consistency in objectives like close connection, foreseeability, and legal certainty.
Advocate General Emiliou revisits this analysis through a digital lens.
He distinguishes this case from the CJEU's Kronhofer judgment, where direct damage was deemed to have occurred at the place where an investment account was held and managed, and not at the investor's domicile. That logic fits consensual asset management cases but is inapplicable to consumer protection contexts like online gambling. In TE's case, the damage was not tied to poor fund management, but rather to participating in unlicensed gambling. The core harm lay in the provision of illegal services to an Austrian consumer and the losses incurred by such as a result.
A Consumer-Centric Approach
Advocate General Emiliou concludes that the "damage" suffered by TE relates to the infringement of consumer interests, primarily protected by Austrian gambling law, specifically the interest in not being offered unlicensed games of chance. Consequently, he held that the damage occurred in Austria – where TE placed the bets – regardless of where the Company's infrastructure was located and even if the website could have been accessed by TE from anywhere. Despite objections that TE's physical location might have varied, the Advocate General endorses a consumer-centric view: the relevant place is TE's habitual residence in Austria, where the gambling activity was targeted and legally restricted. This reasoning aligns with Austrian gambling law, which protects consumers from being offered unlicensed games of chance. As such, the legal harm occurred not where the company was headquartered, but where the protected interest was infringed.
Rejecting the "Escape Clause"
The arguments of the "escape clause" (Article 4 para. 3 of the Rome II Regulation), which would have allowed the application of the Maltese law on the grounds of the case's closer connections to Malta, were rejected, although the Player's Account was managed by a bank established in Malta and Titanium Brace's operations were based there. In the Advocate General's view, the application of Article 4 para. 3 of the Rome II Regulation is an exception, not the rule, and should apply only in clear-cut cases. In the case at hand, the ties to Malta were not found as "manifestly more significant" than the connections with Austria.
Having located the damage in Austria, Advocate General Emiliou supported the legal fiction that the games took place in Austria, TE's habitual residence. Despite the neutral ".com" domain and Malta-based servers, the site was clearly aimed at Austrian consumers: the website's language was German and it was advertised in Austria. In such cases, the digital border dissolves in favour of the consumer's legal environment.
This article was first published in Casino Inside Magazine.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
