Judge orders Italian firm to pay over Lm7m in damages

Mr Justice Tonio Mallia, sitting in the First Hall of the Civil Court, yesterday awarded Italian company Finaval SPA over Lm7 million in damages after ruling it had jurisdiction to hear and decide the case under local law.

Finaval, represented by lawyer Ann Fenech, filed a writ against Scorpio Ship Management SAM, Ferentino Shipping Co. Ltd, Itario Shipping Co. Ltd, Arthur George Ltd and Victoria International Ltd.

Lawyer Louis Cassar Pullicino was appointed by the court to represent the companies.

The court heard that Finaval had been negotiating for some time with Scorpio Ship Management abut the construction and sale of a ship. An agreement was reached between the parties and was contained in a letter sent by Scorpio to Finaval in December 2002.

The agreement was that Scorpio, through two companies that were to be set up, would enter into two contracts with the firm Samsung of Korea, for the construction of two ships.

The two companies to be set up were Ferentino Shipping Co. Ltd and Ilario Shipping Co. Ltd, both of which had Liberian shareholders.

Before the ships were ready for delivery, the shares in one of the two new companies were to be transferred to Finaval. The price of the shares was the cost of the ship and pre-delivery costs. In this manner, Finaval would become the owner of one of the two ships.

However, Finaval filed its writ after Scorpio refused to transfer the shares in the new company. Finaval requested the court to order Scorpio to transfer the shares.

In yesterday's judgment, the court ruled that an agreement had been reached between Finaval and Scorpio. The issue was to be decided in terms of Maltese law which the court ruled was the proper law of the contract.

Although it was true that the agreement had been reached between two foreign companies, the execution of the agreement was to take place in Malta.

In terms of Maltese law, company shares were considered to be movable items, and therefore no formalities were required for a promise of sale agreement in respect of such shares. The court added that the documents exhibited proved that an agreement had been reached that the shares were to be sold.

The court ruled that it could not uphold Finaval's request for the share transfer to take place because the shares had been sold before the case was decided.

However, the court found in favour of Finaval and liquidated the damages the Italian company had suffered in the sum of $22.2 million. Scorpio was ordered to pay Finaval the sum of Lm7,093,785, equivalent to $22,200,000.