Court to decide on airport concession deal next week

Mr Justice Gino Camilleri in the Civil Court is to decide by next week whether to uphold or reject an application filed by Leaders Limited against Malta International Airport plc over the operation of a shop at the airport's departures lounge.

The judge yesterday heard submissions by the parties after Leaders requested the Civil Court to stop MIA from taking any action (excluding judicial proceedings) to impede the company and its employees from entering the shop "Skincare and Cosmetics" at the airport departures lounge.

The court was also requested to prohibit respondent from impeding Leaders from continuing to operate the shop or from retaining possession of it.

The application was provisionally upheld when it was filed with urgency last Saturday.

Leaders, which had operated its business at the airport departures lounge since 1992, claimed that although its contract classified its relationship with MIA as a service provider, the company was in effect renting the shop from MIA. The civil law provisions governing commercial leases therefore applied and Leaders was entitled to preference in the grant of a new lease on the expiry of the current agreement.

However, the company claimed that MIA had entered into a new agreement with another company, Franks Travel Retail Limited (FTR), with effect from July 1. The latter company would be running the shop instead of Leaders.

It further resulted that the shareholders of FTR included relatives of the shareholders of a company that held 40 per cent of the shares in MIA, and which ran the airport, including the grant of shops.

It also resulted that FTR's offer was substantially lower than that by Leaders.

Leaders therefore submitted that the choice made by MIA in the grant of the shop was not based upon commercial reasons and that it would sustain irremediable damage should its application for the issue of a warrant of prohibitory injunction be dismissed by the court.

But MIA categorically denied the allegations of favouritism and nepotism as made by Leaders, adding that it had acted correctly in accordance with the contract it had with Leaders.

It was Leaders that was violating the basic legal principle that contracts were to be observed.

Leaders was also unilaterally attempting to override the juridical relationship between the parties when such could only take place with the consent of all the parties to the agreement.

The contract between the parties provided for recourse to arbitration in the event of any dispute.

Once Leaders had submitted that the contract entered into was one of lease, rather than a service agreement, then Leaders could have taken the matter to arbitration during the contractual period rather than applying for a warrant of prohibitory injunction just when the contract was due to expire.

This, said MIA, clearly showed that Leaders was acting in bad faith.

No warrant of prohibitory injunction could be issued unless the court was satisfied, on a prima facie basis, that the applicant had a right that had to be protected.

In this case, not only was it clear that no such right existed but that Leaders was trying to establish the relationship of landlord and tenant between the parties.

Leaders had accepted, in writing, that it was aware that its concession ended on July 19.

The warrant could not be issued to change an acceptance already made by the applicant company.

Furthermore, MIA submitted that Leaders had not proven that it was going to suffer irremediable harm should the warrant not be issued.

MIA further added that the contract between the parties was not a rental agreement, for the location of the concession could vary and the consideration payable varied according to the sales made.

MIA insisted that it had acted correctly and that it had selected Franks Travel Retail Ltd, rather than Leaders, on purely objective and scientific criteria, and not out of nepotism.

In yesterday's sitting before the court, counsel to Leaders submitted that the affidavits exhibited with the application clearly showed that the agreement entered into between the parties was not a contract of provision of services but a lease agreement.

Counsel added that MIA was entitled to a minimum payment from Leaders and the business carried out at the airport by Leaders belonged solely to the company.

Furthermore, Leaders required protection from the court in its possession of the premises.

The company had possession of the premises at the airport departures lounge, but it required assurances that MIA would allow the company's staff to enter the airport.

However, counsel to MIA submitted that Leaders was basing its possession on the fact that the warrant of prohibitory injunction had been provisionally upheld by the courts.

Leaders had waited until the very last day of the agreement with MIA to file its application and it had also accepted, in writing, that the concession it enjoyed at MIA expired on July 19.

When referring to Leaders' submission that the agreement was in reality a lease agreement, and that the agreement had been simulated, MIA submitted that this was not the issue of a warrant of prohibitory injunction for the issue of simulation ought to have been raised before another court that could enter the merits of the case.

MIA submitted that the agreement with Leaders had not been a lease, for the consideration received by MIA varied on a monthly basis and the area allocated to Leaders could change at MIA's discretion.

Furthermore, the right of preference had been excluded by the parties as it had not been included in the contract where Leaders was appointed as a service provider.

In the course of the submissions made, Mr Justice Camilleri declared that the court had to rule on the state of fact, for the hearing of a warrant of prohibitory injunction was on a prima facie basis.

The case was put off for a decree in chambers.