hi
there's no law that says you have to tile, but the 4 layers of paint are only water resistant and not waterproof. eventually the paint could start to break down after continuous use of the shower and you could find the water will seep into the plasterboard and start to ruin the boards both inside the bathroom and the other side if a room adjoins. And when plasterboard gets wet and cannot dry out thoroughly, it will start to go mouldy. I had this problem within my shower cubicle (which was tiled, very badly) and the plasterboard was crumbling and the tiles were almost dropping off the walls because water was ingressing into the plasterboard. Also the insulation and adjoining plasterboard from the next room were turning mouldy.
There are other options on the market that are an alternative to tiles, however I would suggest you do your research as these can prove just as expensive as tiles.
my recommendation would be to strip back the existing tiles, check the existing plasterboard is sound, tank it (either a paintable waterproofing gum or sheets of tanking material by any of the big tile adhesive manufacturers), re-tile full height from bath to ceiling using the right adhesives and grouts.
nothing is impermeable forever. Eventually tiles and grouts will break down, but modern manufacturers have this high on their agendas and are working to produce the most technologically advanced materials that they can so people don't have to replace tiles/adhesives/grout for years and years.