Italian company not required to have judicial representation

The First Hall of the Civil Court, presided over by Mr Justice Joseph Zammit McKeon, on July 16, 2012, in the case “Mediterranea Distribuzione Srl vs Dr Richard Galea Debono as liquidator of the company IFIX Trade Ltd”, held, among other things, that it was not necessary for an Italian company to have judicial representation physically in Malta during the course of legal proceedings in Malta. The court noted in addition that the defendant company would not be prejudiced.

The facts in this case were as follows.

The Italian company claimed that IFIX was in possession of goods belonging to it and that, therefore, the proceeds of sale should be delivered to it

The Italian company Mediterranea Distribuzione SRL was in the business of supplying merchandise, mostly domestic appliances, to third parties. The Maltese company IFIX Trade Ltd received goods on consignment from the Italian company for resale in Malta.

The Italian company claimed that IFIX owed it €1,235,139, consisting of €931,695 represented the price of goods sold to IFIX which had not yet been paid for and €303,443 for goods which IFIX had to sell on its behalf.

Reference was made to a court decision dated December 15, 2009 in the names of Mediterranea Distribuzione SRL vs IFIX Trade Ltd, and another court decision dated March 30, 2011 in the names Mediterranea Distribuzione SRL vs Jovan Mizzi et. IFIX was not a party in the second case, however.

It so happened that IFIX became insolvent and on March 2, 2010 the court ordered its dissolution. Richard Galea Debono was appointed liquidator of the company.

The court also authorised the provisional administrator to sell all movable items in IFIX’s possession. The Italian company claimed that IFIX was in possession of goods belonging to it and that, therefore, the proceeds of sale should be delivered to it. As its claim was not formally recognised, the Italian company had to file this lawsuit.

The Italian company, in addition, said that it was the owner of the goods in IFIX’s possession. It said that the proceeds of the sale of such goods amounting to €173,519 should not be deemed to form part of the assets of IFIX.

This amount belonged to it as the owner of the aforesaid goods.

Faced with this situation, the Mediterranea Distribuzione SRL proceeded by filing a lawsuit against IFIX Trade Ltd, represented by its liquidator Dr Galea Debono.

It requested the court:

(1) To declare that the court decision dated March 30 2011 in the names of Mediterranea Distribuzione SrL vs Jovan Mizzi et should be recognised in a formal way in the liquidation proceedings of IFIX Trade, in particular in relation to that part of the judgment which declared that the goods were delivered to IFIX on consignment and that these goods were the property of Mediterranea;

(2) To declare that the proceeds of sale of the goods in IFIX’s possession and which were delivered “on consignment” (€173, 519) belonged to Mediterranea, as owner of the goods and this without prejudice to any additional amount due to it;

(3) To order the liquidator, within the time limit to be established by the court, to pay €173,519, representing the proceeds of sale with eight per cent interest, and this without prejudice to any additional amount due to it.

IFIX disputed the Italian company’s claims. It raised the preliminary plea that the Italian company should have a person in Malta, having judicial representation. It argued that, under Article 181, Chapter 12, a person absent from Malta had to be represented by a procurator.

IFIX said that it did not result who was the person in Malta vested with judicial representation of Mediterranea.

It put forward the argument that it was not legally acceptable for a decision given in a case involving third parties, and in respect of which it was not a party, to be made binding upon it. This decision could never constitute a res judicata decision against it. IFIX maintained that the Italian company’s lawsuit was filed prematurely, as there was a case which was still pending before the Court of Appeal.

It argued that the court could only accept the Italian company’s second claim – to declare that the proceeds of sale belonged to Mediterranea – if it accepted its first claim, that the decision of the court dated March 30, 2011 in the names of Mediterranea Distribuzione SrL vs Jovan Mizzi et was binding upon it.

The Italian company did not request the court to declare the goods in question to form part of its assets. It assumed that the decision of March 30, 2011, would be enforceable automatically, which was not legally correct. In this respect, IFIX maintained, the court should dismiss its claims.

Mediterranea Distribuzione SRL should produce evidence to show that the goods in question belonged to it and that this was the position before IFIX was placed into dissolution.

IFIX disputed further that the goods in question belonged to the Italian company.

It said that the indications were that the goods were sold to IFIX and that IFIX was a creditor as regards the price of the goods.

The court limited its focus to decide the first preliminary plea as raised by IFIX that the Italian company had no judicial representative in Malta. At the time of presentation of this lawsuit, its director was not resident in Malta, nor did it have any agents in Malta.

Article 181A, Chapter 12 provides: “Where a written pleading is filed by or against a body having a distinct legal personality, it shall be sufficient to state the name of such body.”

The full name of the Italian Company was mentioned in the okkju. It was not disputed that Barbara Ferrigno was authorized to confirm the application on oath.

The court did not feel that IFIX was prejudiced if the Italian company’s judicial representative was not present in Malta during the whole course of the court proceedings. It was not the case where it was necessary to involve curators. Nor had IFIX raised the issue of curators in terms of Article 930, Chapter 12.

As regards the costs of the lawsuit, the court made two observations:

(1) Mediterranea Distribuzione SRL was a company registered in Italy, which was a member of the EU. If the court were to condemn it to pay the court expenses, IFIX would be entitled to enforce this decisions against it in Italy as well as throughout the EU on the basis of Council Regulation (EC) no 44/2001, of December 22, 2000, on the jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

(2) It was established principle in case law that the relations between client and lawyer or legal procurator appointed in respect of judicial matters was based on mandate (Vol. XXIX-1-617, Vol. X.301 and Vol. XIX-1-129).

IFIX, as defendant, had a remedy against a mandatory of the applicant company in case it were to acquire the right to collect the judicial costs against it, after the decision became res judicata.

For these reasons on July 16, 2012, the First Hall of the Civil Court gave judgment by dismissing the preliminary plea, relating to the presence of the judicial representation in Malta.

Dr Grech Orr is a partner at Ganado & Associates.