De Marco suggests changes to controversial bill on court procedures

Nationalist MP Mario de Marco yesterday made a series of suggestions aimed at fine-tuning a bill to amend the Code of Organisation and Civil Procedure, which has been the subject of fierce debate in legal circles.

The bill provides, among other aspects, that in actions for the recovery of a debt which does not exceed Lm5,000 the creditor shall file an official letter to be served upon the debtor and where the debtor does not oppose the claim within 30 days, the letter shall have the same effect as a court judgment.

It also provides that traffic disputes which do not involve personal injury and do not exceed Lm5,000 will be referred for mandatory arbitration before the Arbitration Centre.

Dr de Marco, who was speaking in parliament, said a balance had to be struck between the interests of creditors and debtors.

It was well known, he said, that many small businesses suffered serious casflow problems when they were not paid on time. It was also true that many people were reluctant to go to court to recover a debt because of the costs involved.

This bill introduced a procedure whereby one could seek recovery of a debt through the filing of an official letter, thus avoiding the need for a court case when the claim was not contested.

There could, however, be valid reasons why a debtor refused to pay the sums that were claimed - such as when a product or service did not meet the required standards or when other conditions were not met.

Article six of the European Convention on Human Rights laid down that in the determination of one's civil rights and obligations, everyone was entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. This was a fundamental right which was part of Maltese domestic law.

The European court, in a judgment on January 17, 1970 had stressed that one could not have a restrictive application of this article six.

Dr de Marco observed that a fierce debate was raging in legal circles. One side argued that this bill was necessary and they did not see it as violating the convention since access to the courts was not being restricted as long as the requirements laid down by the bill were followed. A debtor could contest a claim for the recovery of a debt within 30 days, in which case the creditor would be obliged to file a court case.

The other side felt that this bill could create problems with regard to article six of the convention.

Dr de Marco said he was making a number of suggestions to fine tune the bill in the interest of both creditors and debtors.

He felt that the clause which laid down special procedures in respect of certain unopposed claims needed to specify (in the Maltese text) that a debt had to be certain, liquidated and also "due."

And the bill should define the terms "certain, liquidated and due" because of different interpretations given over the years.

He viewed as rather problematic the proviso of this clause which provided that where the debt was not liquidated, the creditor may proceed with this procedure if he limited his debt to not more than Lm5,000 and renounced to any part of the claim that, upon liquidation, may exceed Lm5,000. This proviso should be reconsidered. Alternatively, this procedure should not apply when the sum due was not liquidated.

The bill should also lay down a procedure for the notification of the debtor. He felt that the official letter for the recovery of a debt should be served by a court official personally to the debtor. That would avoid abuse such as when the letter was delivered to an address not used by the debtor.

When the debtor was away from Malta, one should not be able to serve the official letter by requesting the appointment of curators since they could, sometimes, not have contact with the debtor.

The official letter should clearly state the reasons for the claim and enclose documentation, statements and invoices.

The statement of facts in the claim should be a sworn statement, a procedure which would not cost the creditor anything.

Dr de Marco said this part of the clause should specify when the 30-day period for the claim to be contested would start running - would that be from the filing of the letter or the date of notification? Indeed, the bill later mentioned 30 days "from notification".

He felt, Dr de Marco said, that when a debtor did not oppose a claim within 30 days, the official letter by the creditor should have the effect of an executive title, not "judgement of a court" as laid down in the bill since that was dangerous and caused issues related to res iudicata.

He also felt that a debtor should be able to oppose a claim though a note deposited at the court registry rather than through a judicial letter served on the creditor since this procedure could cause problems. For example, a creditor could avoid being served with the debtor's contestation of the claim within the 30-day deadline.

It was also important that the court was given greater leeway to rescind, for justifiable reasons, an executive title granted when no objection to a claim was made within 30 days. There could be circumstances where a creditor was notified of a claim but was not in a position to contest it on time, such as when he was suddenly hospitalised.

These proposals, he said, should help to bring about a greater balance between the interests of creditors and debtors.

Turning to the provisions of the bill on mandatory arbitration in traffic cases, Dr de Marco said he understood that the government wanted to act because the Small Claims Tribunal was inundated with cases. But one should be careful to protect everyone's rights. Article six of the European Convention on Human Rights spoke of the need for a fair and public hearing by an "independent and impartial" tribunal. An important element for independence was security of tenure, which arbiters did not have.

It would be useful to learn form the experience of the Small Claims Tribunal and instead of having a list of arbiters which changed frequently, one would have an agreed list and the arbiters would have a fixed term appointment so that no one would question their independence and impartiality.

Dr de Marco said this bill was courageous and a step in the right direction. He was confident that with fine-tuning, it would be a step forward.