The new commercial section of the Civil Court will boost Malta’s ease of doing business ranking, increase efficiency, and potentially make it more appealing to foreign investors, according to a number of stakeholders interviewed by this newspaper.
This section of court, which came into force on 9th April, will now be competent to hear and adjudicate cases relating to matters governed by the Companies Act, such as bankruptcy, insolvency proceedings, and winding-up proceedings, striving to better address the various issues that business face on a commercial level.
Minister for Justice, Culture and Local Government Owen Bonnici.
“When carrying out the judicial control function, well-functioning courts are an indirect determinant of economic performance,” said Minister for Justice, Culture and Local Government Owen Bonnici. “In fact, the enforcement of contracts is one the criteria on which countries are judged by the World Bank (WB) in the ‘Ease of Doing Business’ report.”
“This indicator measures the time and cost involved in resolving a commercial dispute through a first instance court, as well as the quality of the judicial processes index. It evaluates whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. Pleasingly, it is an area that Malta has fared quite well in – we are in 37th place, which is comparable to the average.”
According to the WB, it takes 505 days to resolve a case of this kind in Malta, whereas it can take 578 in some high-income OECD countries. Singapore, on the other hand, is way ahead, with cases taking an average of 164 days to wrap up. “So, even though we aren’t doing badly, Government is cognisant of the benefits of having a dedicated commercial court and, since we always strive for improvement, we are very pleased that this decision has been taken.”
Malta Chamber of Commerce Director General, Kevin J. Borg.
“This is a matter of listening to the industry’s needs and implementing them,” Dr Bonnici said. “In the business world there’s the famous phrase ‘time is money’. The main issue with not having a commercial court was that companies willing to invest were encountering unnecessary bureaucratic procedures consequently affecting the pace of the companies’ operations. Now that is being addressed.”
Welcoming the move, the Malta Chamber of Commerce, Enterprise and Industry said it believes the Civil Court will better address the various issues which citizens involved in business structures encounter on a commercial level, adding that the Chamber had been promoting the idea for a number of years.
“In our Economic Vision document, we argued that the present judicial system in Malta is one of the least efficient in the EU, especially when it comes to the duration of cases,” explained the Chamber’s Director General, Kevin J. Borg. “This is naturally detrimental to both local and foreign investors who need a justice system which is efficient.”
Finance Malta chairman Kenneth Farrugia
“The Chamber is hopeful that this court will bring about an elevated level of efficiency for all parties involved, contributing directly to the competitiveness of the country. “Given that, like any other system, the commercial court will need to take its time to start operating to its full potential, the Malta Chamber believes this is a step in the right direction, as it will continue to monitor its developments for the benefit of our members,” Mr Borg continued.
Finance Malta chairman Kenneth Farrugia also believes it will strengthen Malta’s competitiveness in general. “I have no doubt that it will,” he says. “International financial and non-financial operators often undertake a review of the way litigations are managed in any jurisdiction before extending their footprint there. So, the fact that a jurisdiction has a dedicated court to address commercial matters will be a comfort. Of course, it is very early to predict or forecast the long-term changes that the establishment of this court will induce but I certainly expect the incidence of protracted commercial court cases to be markedly reduced, especially as this is neither in the interest of the litigant or the defendant. The ultimate service level metric will be the actual timeline within which court cases are now adjudicated.”
The full version of this article originally appeared in The Malta Business Observer