To arbitrate in Malta - Anton Micallef

Arbitration has received some press recently as the Malta Arbitration Centre (MAC) turned 21. It is unfortunate that debate on the concept is rare. It deserves focus because this area represents a niche segment in support of the financial services, foreign investment, maritime, yachting and iGaming sectors.

The development of a proper arbitration centre for the settlement of domestic and international commercial disputes contributes to the country’s economy and enhances the rule of law because the administration of justice is better served.

The current structure is incapable of the task because it lacks funds, infrastructure, resources, skills and most of all the culture and savoir faire otherwise taken as sine qua non by the highly successful and established centres of the world.

I make this statement on the basis of my experiences as a user of MAC.

In October 2011, my company filed arbitral proceedings on the basis of a domestic arbitration clause contained in a retainer agreement.

The respondent could not be notified for 30 days so this had to be done through one of the local papers. This led to the lapse of no less than six months before the arbitral tribunal was fully composed.

Hearings began in June 2012. An interim decision rejecting a preliminary plea was given in June 2013.

In May 2014, the respondent woke up one day and declared to have discovered that the arbitrator we had nominated (a lawyer of 30 years standing) shared an office with one of the members of our board of directors. His replacement was formally requested.

MAC displayed a degree of hesitancy on how to manage the request but after five weeks of deliberation the challenge was rejected. The decision regrettably was couched in language which was less than courteous to the challenged arbitrator as it questioned his integrity when there was no cause for it. The arbitrator resigned. This meant more delay until another arbitrator was nominated and appointed.

Arbitration is a business and a profitable one if run professionally. The local state of play is not a government problem

When the hearings turned to the merits, we called three witnesses and the respondent called one. All evidence was submitted by affidavit, so few sessions were required for cross examination. But they were spread out over 36 months.

Due to the nationality of one of the parties proceedings were held in English. The witness cross-examination transcripts took months to be delivered and when received they revealed one of the most horrific mutilating assaults on the English language.  Proceedings were concluded in July 2016 when they were adjourned for a final award.

Two years later, that award is still pending and there is no sight of it at all. Throughout the seven-year period the MAC never called or e-mailed me to apologise for the delay or to offer an explanation, much less waive its fees.

From my perspective recent events represent more a memorial service than birthday celebrations. It is also safe to say that compared with the Maltese arbitration experience, the trials of the Spanish Inquisition are more deserving of the title “reliable and efficient”.

Currently the MAC survives on mandatory arbitrations; a legal misnomer if there was ever one. Other than this, it has no real business.

Arbitration is a business and a profitable one if run professionally. The local state of play is not a government problem.

There is no point in changing the organ grinder with the monkey.

If it desires to be constructive, the government should endorse and support, legislatively rather than financially, private initiatives.

There is interest in the private sector to establish specialist focused arbitral centres in Malta which will provide a service for the resolution of disputes to foreign companies doing business in or from Malta. This will make Malta the principal arbitration centre in the south of Europe.

Once the correct model is up and running a degree of foreign arbitration business will be captured. But interestingly domestic commercial disputes will gradually flow away from the particular brand of medication offered by the local courts and ease the gross burden under which they labour.

Anton Micallef is an international corporate lawyer and senior lecturer in law, University of Malta.

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