Malta set to win Gozo Channel case

Malta is set to be cleared of any wrongdoing following the government's decision to award a direct contract to Gozo Channel a few days before it joined the EU in 2004.

According to the opinion of the Attorney General assigned to this case, Malta was not bound by EU rules when the contract was signed.

Although the European Court of Justice (ECJ) is yet to deliver its final judgment on the case, an opinion put forward by the court's Attorney General, Eleanor Sharpston, takes Malta's side, stating that "the court should dismiss the application and, as requested by Malta, order the (European) Commission to pay costs".

After examining the case and the arguments brought up by both Malta and the Commission, Ms Sharpston said: "Malta's intention to conclude that contract (Gozo Channel), for a period extending some three years or more beyond the date of Malta's accession to the Union had been made clear during the accession negotiations... the Commission did not at the time object to that intention."

Sources close to the ECJ told The Sunday Times that the Attorney General's opinion made it clear Malta was not at fault and that "it is very rare" that the final judgment will be different from the AG's opinion.

"Malta is definitely set to win this case," the sources said, "and it is clear that the Commission didn't do its homework properly before filing this case against Malta," the sources said.

The issue goes back to a few days before Malta's accession to the EU (May 1, 2004) when Austin Gatt, then the minister responsible for Gozo Channel, signed a direct contract with the state-owned company to continue providing its ferry services on the Malta-Gozo crossing without any competition.

The contract also stipulated that Gozo Channel be given millions of euros each year in subsidies in the form of a Public Service Obligation.

The European Commission had instituted infringement procedures against the island and accused the government of breaking EU rules when it failed to issue an international call for tenders.

However, the government argued it was not bound by EU regulations at the time since Malta did not yet form part of the EU on April 16, 2004 - the date the contract was signed.

During a hearing held last May before five judges in Luxembourg, Malta claimed its actions were in "good faith" and in line with what had already been discussed and agreed with the Commission before EU membership.

Meanwhile, the contested Gozo Channel tender has come to an end. The government has not yet issued a new call for tenders and is citing ongoing discussions with the Commission before issuing a new offer.

The Malta-Gozo service is still being run by the state-owned company, Gozo Channel, which employs 249 workers and has been running the ferry service on a monopoly basis for the past three decades.