Malta defends Gozo Channel contract before the European Court of Justice

Malta is insisting it acted in "good faith" when it decided to give Gozo Channel a six-year direct contract in 2004, a few days before its accession to the EU.

Attorney General Silvio Camilleri yesterday appeared before the European Court of Justice and rebutted European Commission accusations that Malta infringed EU rules.

Dr Camilleri, accompanied by maritime law expert Anne Fenech, said the island's actions were according to what had been discussed and agreed upon with the Commission and EU member states before accession.

He told the Court that, according to a negotiated common position reached with the EU in 2001, Malta had already said it would be giving a public service obligation contract to Gozo Channel and Sea Malta and this is what it did.

On the other hand, the Commission argued that a common position was not EU law and, by giving a contract to Gozo Channel without making a call for tenders, the island clearly infringed EU cabotage rules.

The Commission is being defended by Jacqueline Aquilina, a Maltese lawyer working in the legal services of the EU Executive, and lawyer Knut Simonsson. According to them, to conclude a public service contract for the provision of cabotage services between Malta and Gozo, the authorities had to demonstrate such a contract was necessary to impose public service obligations in order to secure an appropriate service between the two islands.

While they acknowledged that a satisfactory service was paramount for the Malta-Gozo route, the two lawyers insisted the Maltese authorities had not provided such proof. They had not even sought to establish whether one or more private operators were capable of providing the service with the same conditions on a purely commercial basis.

In addition, according to the Commission, Malta had not shown that the exclusivity given to the Gozo Channel was an appropriate and adequate means to achieve this end. "The fact that this contract was concluded without a prior open call for Community tenders to ensure access on a non-discriminatory basis in respect of all Community ship owners, runs counter to the requirements of Regulation No. 3577/92 regarding maritime cabotage," the Commission argued.

The court case, being heard by five members of the ECJ, will now pass to another stage where the Court's Advocate General is expected to give an opinion in a few weeks. This will be followed by a final judgment.

The contested Gozo Channel contract expired in mid-April but the government has not issued a new call for tenders yet, citing ongoing talks with the Commission as the reason.

In the meantime, the Malta-Gozo service continues to be operated by the state-owned company. A government spokesman had told The Sunday Times a few weeks ago it decided to "engage the current service provider (Gozo Channel) to continue the service on current terms until the new tender is awarded".

Gozo Channel has been running the ferry service on a monopoly basis for the past three decades. It employs 249 staff members.