Communicated on 16 March 2015
FOURTH SECTION
Application no. 47108/08
ALBA GAMES
against Albania
lodged on 17 September 2008
STATEMENT OF FACTS
The applicant, Mr Eduard Biti, is an Albanian national, who was born in 1968 and lives in Tirana. He is the Director General of Alba Games sh. a (“the applicant company”), which is a company incorporated in 2002 under Albanian law. They are represented before the Court by Mr Sh. Muci, a lawyer practising in Tirana.
A. The circumstances of the case
The facts of the case, as submitted by the applicants, may be summarised as follows.
On 31 December 2002 the applicant company was granted an operating licence to provide facilities for games of chance (leje për ushtrim veprimtarie për lojëra fati). The operating licence was valid for ten years from that date.
Between 19 July 2003 and 14 March 2007 the applicant company purchased eighteen electronic roulettes having more than one gaming position, costing a total of 45,274,289 Albanian leks. The applicants claim that the applicant company paid all duties and taxes due.
Between 2003 and 2008 the applicant company concluded various lease contracts for renting several venues in different cities in the country.
On 28 May 2007 parliament amended the Games of Chance Act 2000 (“the 2007Act”) to the effect that only slot machines were considered lawful “electronic games of chance for an immediate prize” (lojëra me fitim në çast). Licensees were required to remove all other electronic gambling machines, including roulettes having more than one gaming position, which did not fall under the new statutory definition.
B. Constitutional proceedings
Consequently, on 10 September 2007 the Association “Union of Games of Chance Businesses – Lidhja e Biznesmenëve të Lojërave të Fatit”, of which the applicant company was a member, lodged a constitutional complaint against the 2007 Act pursuant to Article 134/f of the Constitution complaining principally about a breach of its members’ property rights, a breach of its members’ right of access to court and a breach of the principle of legal certainty and acquired rights.
The Association submitted that by excluding the operation of gaming machines having more than one gaming position, the authorities had selectively curtailed the use of its members’ property and their economic activity. All the Association’s members had obtained a ten-year operating licence and invested heavily in the conduct of their business activity by purchasing and installing 80 gaming machines throughout the country. The Association submitted that they had not been able to obtain a copy of the explanatory report accompanying the adoption of the 2007 Act justifying the lawful and public interest in the control of their business operations. However, the Association admitted that the provision might be justified on the ground of combatting people’s addiction to gambling. Still, they argued that the authorities had neither carried out a study nor collected any statistics to substantiate that gambling had become a social addiction in Albania. They further contended that addiction to gambling had not been aggravated by gambling machines having more than one gaming position, since slot machines were to be found everywhere.
In their view, the provision was equivalent to a de facto expropriation, given that the prospects of re-selling such gaming machines were nil. The legal provision created a monopoly situation favourable to the only casino in operation in the country. A monopoly situation could be justified if the State were to control it and if the revenues were to be used for charitable purposes. This was not the case of the casino in Albania, whose majority of shares were privately owned by foreigners. Moreover, the provision provided for no possibility of compensation, which should be considered a condition sine qua non to justify such limitation.
The Association further submitted that the legal provision had de facto suspended or revoked its members’ operating licences. Regrettably, the Act provided for no possibility of lodging a civil action with a competent court in breach of, inter alia, the principle to be heard by a tribunal as enshrined in Article 6 § 1 of the Convention.
Lastly, the Association stated that the operating licences had been obtained lawfully and not for an indefinite period. They questioned the adoption of such provision at a time when its members had complied with the payments of taxes and fiscal obligations and were operating within the scope of their licences. The infringement of their rights and freedoms, without legal grounds, was counter to the principle of legal certainty and that of acquired rights.
Constitutional Court’s decision
On 19 March 2008 the Constitutional Court, by five votes to three, rejected the Association’s constitutional complaint.
The majority stated that gaming machines having multiple gaming positions were excluded from the amended definition of the concept of “electronic [gaming] machines”. This interference constituted a limitation to licensees’ economic activity. In amending the provision, the legislator was justified by several public interests such as: increasing security to participate in games of chance through intensified control over licensees exercising such activity, tightening licencing rules and improving the geographical distribution of licensees, increasing revenues in the State budget by raising taxes, categorisation and separation of games of chance, better protection of juveniles, etc. The addition of a new criterion for carrying out a defined (economic) activity, without being attended by exclusionary or discriminatory measures against other licensees, could not be considered unconstitutional in so far as the gist of the economic activity was not impeded or its exercise was not barred. It was open to all licensees to obtain a licence to operate machines having multiple gaming positions if they met the statutory requirements. Given this relatively new activity in the country, the authorities were obliged to control and stop the spread of addiction to gambling. In view of economic and social factors, the legislator considered adding a licensing criterion to be an appropriate exercise of the State’s regulatory role.
The majority further found that the provision was not aimed, either directly or indirectly, at the expropriation of concerned licensees. In so far as the statutory criteria were satisfied, the operation of machines having multiple gaming positions would be allowed. It was open to licensees to sell, rent or otherwise dispose of such gaming machines. The legislator had also provided for a six-month period during which licensees would still operate such gaming machines, in order to avoid immediate adverse consequences.
In their view, the Association had not substantiated the financial, irreversible damage that would result from the limitation to its members’ economic activity. The provision did not purport to revoke the licence entirely; it limited it in so far as gaming machines having more than one gaming position were concerned. The remainder of the licence, in so far as it concerned other gaming machines, continued to be valid.
The Constitutional Court considered the Association’s complaint that the addition of a criterion gave rise to a monopoly unfounded. It reasoned that the existence of a single casino in the country was not conditioned by the law, but by the market. This could change with the passage of time, since the law provided for the geographical distribution of casinos.
The dissenters stated that the new addition was not justified by the public interest, because sections 3, 15 and 16 had already introduced tightened measures. Other less drastic measures could have been considered by the legislator such as: limiting or discontinuing granting new licences. The fact that gaming machines having more than one gaming position were allowed to operate in casinos pointed to the fact that the interference was not proportionate. The operation of a casino was based on different legal requirements, which the Association’s members might not satisfy. Even assuming that such conditions were met, it was open to licensees to choose freely their type of business engagement. In these circumstances, their activity could be restricted only at the end of their operating licence instead of being suspended immediately.
The dissenters considered that the new provision was akin to de facto expropriation. The gaming machines would not be used by their owners. The act prohibited their use in the country and selling or renting them would be objectively impossible. The legislator should have been concerned by such a situation given that the licensees had made significant investment (not less than 70,000 euros for each gaming machine; there were 120 electronic machines having more than one gaming position in the country).
The fact that licensees had been paying corresponding taxes for such gaming machines meant that they were used frequently. Licensees had drawn up business plans, obtained bank loans, rented venues and made long-term investments by purchasing expensive gaming machines. The licence entitled them to believe that there would not be drastic changes to the extent that such gaming machines could not be exploited in the market. The Association had thus acquired the certainty that the legislation would not be altered until the expiry of the operating licence. The Act provided no form of compensation to such licensees. In view of the above considerations, the dissenters considered that there were no special circumstances dictating the legislator’s choice.
B. Relevant domestic law
1. The Constitution
The relevant provisions of the Constitution state as follows:
Article 131
“The Constitutional Court shall decide on:
(f) final complaints by individuals alleging a violation of their constitutional rights to a fair hearing, after all legal remedies for the protection of those rights have been exhausted.”
Article 134
“1. The Constitutional Court may initiate proceedings only at the request of:
...
(f) political parties and other organisations;
2. The entities designated in the first paragraph, letter ... (f) ... may lodge applications only on issues connected with their interests.”
2. Games of Chance, Casinos and Hippodromes Act -“The Games of Chance Act 2000” (law no. 8701 of 1 December 2000 as amended by laws nos. 9408 of 19 May 2005, 9459 of 21 December 2005, 9567 of 19 June 2006)
For the purposes of the Games of Chance Act 2000, electronic games [of chance] for an immediate prize (lojëra me fitim në çast) means a game of chance played by the assistance of electronic computers or electronic gaming machines, which the licensee has installed in a particular area and, through which a participant in the game, by putting a stake, may earn a determined amount which he receives either directly from the machine or in any other pre-determined way (section 3 § 4).
Section 6, as amended, empowers the Minister responsible for the economy to grant an operating licence for games of chance. Under section 9 the licence is valid for ten years. The licence may be suspended or revoked by the Minister responsible for economy if the licensee fails to comply with certain conditions enumerated in the Act (section 8 as amended). The decision suspending or revoking the licence is amenable to appeal in accordance with the provisions of the Code of Administrative Procedure (section 27/2).
Section 22, as amended, listed the taxes applicable to gaming machines having more than one gaming position.
3. The 2007 Act (law no 9744 of 28 May 2007 amending the Games of Chance Act 2000)
On 28 May 2007 parliament further amended the Games of Chance Act 2000. Section 2 added a provision to the effect that electronic games [of chance] or electronic computers having more than one gaming position were no longer considered electronic games [of chance] for an immediate prize. Only slot machines were considered electronic games [of chance] for an immediate prize. Licensees were required to remove the machines which did not comply with the added criterion within six months from its entry into force. The provision entered into force on 4 July 2007.
The 2007 Act provided that only people who were 21 years of age or above could access facilities operating games of chance and be employed in such facilities. It stated that a warning sign should be visibly placed in order to indicate participants the possibility of negative effects resulting from games of chance (section 3).
Section 15 and 16 of the 2007 Act expanded the list of administrative offences that may result from violating the provisions of the Games of Chance Act or from failure to comply with taxes and other fiscal obligations.
COMPLAINTS
Under Article 1 of Protocol No. 1 to the Convention the applicants complain that there has been a breach of their property rights. They further complain under Article 13 in conjunction with Article 6 § 1 that, in so far as the new legal amendments were not directed against the applicant company and in so far as its operating licence had neither been suspended nor revoked, they did not have an effective remedy to complain about their inability to institute proceedings before a national court.
QUESTIONS TO THE PARTIES
1. Can it be said, having regard to the facts of the case, that the applicants are a victim of a breach of their Convention rights within the meaning of Article 34 of the Convention?
2. Did the applicants have an effective domestic remedy in respect of their complaints? Is so, did the applicants exhaust it? If not, has there been a breach of Article 13 of the Convention?
3. Has there been an interference with the applicants’ peaceful enjoyment of possessions, within the meaning of Article 1 of Protocol No. 1? If so, was that interference necessary? In particular, did that interference impose an excessive individual burden on the applicant (see, for example, Depalle v. France [GC], no. 34044/02, ECHR 2010)?
Full & Egal Universal Law Academy