The Constitutional Court of Appeal, composed of (outgoing) Chief Justice Vincent De Gaetano, Mr Justice Joseph A. Filletti and Mr Justice Giannino Caruana Demajo, on September 6, 2010, in the case Joseph Muscat vs the Prime Minister, the Minister of Justice and the Attorney General, held, among other things, that mandatory arbitration did not violate the human right to a fair hearing.

The facts in this case were as follows:

Joseph Muscat challenged the validity of mandatory arbitration in traffic collision disputes. He claimed that mandatory arbitration was in violation of his fundamental right to a fair hearing by an independent and impartial tribunal in the manner guaranteed by Article 39(2) Malta Constitution and Article 6(1) of the European Convention of Human Rights.

Dr Muscat was involved in a “compulsory” arbitration traffic dispute.

As the parties had not agreed on the appointment of the arbitrator, the arbitrator was appointed by the chairman under article 20 (2) of Chapter 387 of the laws of Malta.

Dr Muscat asked the court:

• to order the cessation of the arbitration, and

• to give remedies, which, it felt were appropriate to protect his human rights.

The defendants, the Prime Minister, the Minister of Justice and the Attorney General in reply submitted that mandatory arbitration under legal notice 279 of 2005 and Article 15 (II) of Chapter 387 did not violate the fundamental right to a fair hearing.

The Prime Minister requested to be freed from the proceedings, as he disputed, being a legitimate defendant in the proceedings.

On May 29, 2009, the First Court declared “mandatory arbitration” to be in breach of the human right to a fair hearing.

Independence of a tribunal. The European Court laid down the principle that: “In determining whether a body can be considered to be independent – notably of the executive and of the parties to the case – the court had to have regard to the manner of appointment of its members and the duration of their term of office, the existence of guarantees against outside pressures and the question whether the body presents an appearance of independence” – Le Compte; Piersack; Delcourt).

The First Court felt that an arbitrator did not enjoy security of tenure. He could be removed by the centre. It was the centre or the chairman who could reappoint him. He had no fixed term and may not be reinstated.

It also noted that the arbitrator can be subject to disciplinary proceedings and “interference” by the centre.

In addition a party was denied the right to appeal save for limited cases on a point of law.

While this could be tolerated if a person agreed to arbitration, the court did not think that it was acceptable in mandatory arbitration, in particular when the case was not determined by an independent and impartial tribunal.

In Terra Woningen BU vs Netherlands 1996, it was held: “Where claims may be put before a court but the court does not have full jurisdiction over the facts and legal issues in the case, there may be a denial of access to court.”

Impartial tribunal. The European Court stated: “As regards ‘impartiality’, the court pointed out that the existence of impartiality for the purposes of Article 6 (1) must be determined according to a subjective test, that is on the basis of the personal conviction of a particular judge in a given case, and also according to an objective test, that is ascertaining whether the judge offered guarantees sufficient to exclude any legitimate doubt in this respect.”

According to the European Court: “The objective approach refers to the question of whether the way in which the tribunal is composed and organised, or a certain coincidence or succession of functions of one or more of its members, may give rise to doubt as to the impartiality of the tribunal or that member. If there is justified reason for such doubt, even if subjectively there is no concrete indication of basis of the person in question, this already amounts to inadmissible jeopardy of the confidence which the court must inspire in a democratic society”.

In the circumstances there existed serious doubts on the objective impartiality of an arbitrator: in the light of his manner of appointment, and in the way the arbitration was organised.

The First Court, for these reasons, concluded that the parties did not enjoy the freedom to choose whether to submit to arbitration. It held that an arbitration process did not provide adequate guarantees and that the dispute should be referred to the ordinary courts, which provide safeguards of independence and impartiality.

Aggrieved by the decision of the First Court, defendants entered an appeal, calling for its revocation. They reiterated their pleas that:

• The Prime Minister was incorrectly sued, and that he should be freed from the proceedings.

• That arbitration did not violate a person’s right to a fair hearing by an independent, impartial tribunal.

On September 6, 2010, the Court of Appeal gave judgment by accepting the appeal and by revoking the decision of the First Court.

The following reasons were given for the court’s decision.

• The raison d’être of arbitration was to relieve the burden on the courts, and to allow the courts of justice to concentrate on cases of graver importance. It was reasonable therefore that dispute such as traffic collision cases be referred to arbitration.

• Contrary to the First Court, the Court of Appeal did not think that an arbitrator was not independent and impartial. The short list of arbitrators did not affect the independence of an arbitrator. The criteria to appoint an arbitrator was designed so that the person appointed was professional, competent and of integrity.

• When in a case of no agreement between the parties, an arbitrator was appointed by the chairman, the chairman had to ensure that the person appointed was independent. It said that Chapter 387 provided adequate guarantees of independence in the appointment of an arbitrator by the chairman of the centre.

• The fact that an arbitrator could be removed was not considered to be a threat to his independence. A remedy existed against any abuse under Article 469 A B (III) Chapter 12.

• The First Court felt that an arbitrator had a personal interest to pass decisions, which would not upset the centre, in order to stand a better chance to be reinstated. The Court of Appeal did not accept this argument; as it would mean that no judge was independent.

The power of the centre to intervene was intended to strengthen the efficiency and correctness of proceedings and not to weaken the independence of the arbitrator. Besides any unlawful interference by the centre was subject to judicial review under Article 469A of Chapter 12 of the laws of Malta. There existed judicial protection against abuse. In this light, the Court of Appeal did not think there was an actual and real threat to the independence of the arbitration tribunal.

It disagreed with the Court of First Instance and considered the arbitration tribunal to be objectively impartial. An arbitrator was not under the control of any of the parties.

In addition, there was legal protection against interference by the authorities.

At law, there were provisions to provide for the impartiality of an arbitrator. The chairman had to appoint someone who was independent and impartial. The parties could always challenge the appointment of the arbitrator.

It noted that in the circumstances, Dr Muscat had not challenged the appointment of the arbitrator. It was never alleged that he was not impartial. For these reasons the Court of Appeal concluded that the arbitrator tribunal should be considered as an impartial tribunal, as required by law.

Dr Grech Orr is a lawyer at Ganado & Associates.