Fenech & Fenech Advocates
Established in 1891, Fenech & Fenech Advocates is one of the oldest full-service law firms in Malta, providing value driven, tailored legal services across all practice areas to a predominantly international clientele.Show more
Employment & Immigration
In recent years, there has been an apparent upwards trend in the Industrial Tribunal granting compensation to successful plaintiffs, thereby significantly increasing the risks for employers, and 2020 was no exception. How the hardships brought about by the COVID-19 pandemic will affect compensation awarded by the tribunal is yet to be seen. However, the tribunal will likely not go easy on employers that are perceived to have dishonestly exploited the pandemic to the detriment of employees.
This article highlights recent amendments to employment law, including with regard to increases to the cost of living, amendments to the minimum wage, confirmation of public holidays and vacation leave in 2021 and clarification of the Industrial Tribunal's jurisdiction, particularly with respect to fixed-term contracts.
In a recent press conference, the government announced details of a revision of the Wage Supplement Scheme, under which COVID-19 business aid will no longer be calculated on the basis of an entity's Statistical Classification of Economic Activities in the European Community classification code, but rather on loss of turnover. This is a key change in approach and will likely affect many businesses.
Maltese law sets out various obligations for employers regarding disability within employment. The employment of persons with disabilities is currently regulated by the Persons with Disability Employment Act and the Equal Opportunities (Persons with Disability) Act, according to which employers are, among other things, prevented from discriminating against persons with disabilities.
Pursuant to a recent European Court of Justice judgment, recourse to a series of successive temporary agency contracts must be justified, as the assignment of a temporary agency worker is, by its very nature, intended to be temporary. This article summarises the judgment and answers FAQs with regard to its impact on Maltese employment law.
In 2017, by means of Subsidiary Legislation 452.114, the legislature set out the minimum requirements to grant paid leave to employees who undergo medically assisted procreation processes, also known as 'in vitro fertilisation'. By means of Legal Notice 263/2020, the legislature has amended the national standard order and further extended the limits of this law to include more beneficiaries.
Under Maltese law, employers and employees can terminate an employment agreement during the probation period without giving a valid reason. This is subject to certain exceptions brought about by lex specialis introduced to Maltese legislation over the years to protect pregnant employees. In a recent decision, the Industrial Tribunal awarded €10,000 in compensation to a pregnant employee who was terminated during her probation period.
The Court of Magistrates recently decided a case wherein an employer claimed that a former employee had abandoned work within six months of returning from statutory maternity leave and, as such, claimed back all of the wage payments that it had made to her during that time pursuant to Maltese law. The defendant rejected the claim, arguing that she had not willingly resigned or abandoned her employment.
In light of COVID-19, Identity Malta's Department of Citizenship and Expatriates has released a number of measures which seek to assist third-country nationals and EU, EEA and Swiss nationals currently residing in Malta with their respective obligations in terms of the Immigration Act and its subsidiary legislation. In addition to these changes, the Central Visa Unit has implemented more rigid measures in light of the travel restrictions imposed. This article provides an overview of the salient changes.
One year has now passed since the European Parliament passed the EU Work-Life Balance Directive for parents and carers, but what did it really achieve? In Malta, this directive has been a breath of fresh air for employees, who are now able to better balance their work and family responsibilities. In turn, employers should benefit from more motivated and productive workers. However, the question remains: is the directive's impact on Malta significant or too small?
In response to the ongoing COVID-19 pandemic, the superintendent of public health has published the Minimum Special Leave Entitlements (Amendment) Regulations 2020. These regulations amend the Minimum Special Leave Entitlement Regulations, introducing a new paid quarantine leave for all employees, payable by their employer.
In 2013 Malta promulgated the Protection of the Whistleblower Act. However, as few EU member states have similar whistleblower protection legislation, on 16 December 2019 the EU Whistleblowing Directive entered into force. So what does this mean for Malta?
The new Trade Secrets Act entered into force in May 2019. This article examines what the new act means for employment relationships with regard to copyright, patents and trade secrets. Among other things, employers should prepare written policies to inform employees of their rights and obligations, explain what IP rights are and clarify that any creations belong to the company.
The Work-Based Learning and Apprenticeship Act provides a framework for the development of effective work placements, apprenticeships and internships. It outlines responsibilities and governance structures, while defining the rights and obligations for vocational education and training providers, sponsors and learners. Despite its introduction in March 2018, few employers and students are aware of this legislation.
In light of the continuous developments and ambiguity surrounding the Brexit negotiations, as well as the uncertainty facing British citizens who currently reside in EU member states, the Maltese government recently propagated regulations concerning the residence and employment rights which will be upheld for British citizens who already reside and work in Malta. The regulations are set to come into force in the event of a no-deal Brexit.
Industrial Tribunal cases tend to be sensitive in nature as they essentially deal with a person's livelihood; however, when the Industrial Tribunal is faced with matters which have also been referred to the courts of criminal jurisdiction, such cases are even more complex. In particular, there are questions around how an employer should regulate itself regarding an employee's employment when it is confronted with a pending decision by the criminal court.
The Court of Appeal recently upheld an Industrial Tribunal decision and confirmed that a company operating in the iGaming industry had been entitled to dismiss an employee who had, on one occasion, forgotten to upload games to the company's platform. Nonetheless, this is a contentious judgment which, at face value, seems to diminish the burden that an employer must prove continuous or repetitive misconduct or underperformance substantiated by valid warnings.
The Industrial Tribunal recently examined the concept of reasonable accommodation and what employers should do to accommodate their employees appropriately. In this case, the employee claimed that he had been discriminated against due to his heart condition and unfairly dismissed. The tribunal ruled in the employee's favour and awarded him €20,000 for unfair dismissal and another €10,000 for discrimination.
Four new legal notices were recently published in the Government Gazette. However, these were short lived, as just a few days later, ministry representatives reportedly declared that the legal notices would be suspended. While it is uncertain whether the Annual Leave National Standard Order will be enacted, it is worthwhile to analyse the proposed changes, as these would alter current employment law should they come into force.
Four new legal notices affecting employment laws were recently published in the Government Gazette. Whether the notices must be considered as law and enforceable before the Maltese tribunals and courts is now the subject of debate. However, it is clear that the government intends to introduce some piecemeal changes that will affect employers significantly, including new rules on payslips that all employers – irrespective of size – must issue and new limitations on holiday leave arrangements.
If enacted, a recently published legal notice will introduce amendments to the Temporary Agency Workers Regulations, including expanding the concept of assigned temporary workers, redefining 'pay' and removing the equal pay rule exception. This article summarises the proposed amendments to the regulations and raises some pertinent questions.
Maltese income tax legislation provides specific rules for determining the types of expense that are deductible against income. Legal Notice 67 of 2018 on tax deductions for employee transportation costs provides for a new tax deduction. The new rules will apply to transportation costs incurred for the transport of employees from assessment year 2018 and will remain in effect until assessment year 2020.
Shipping & Transport
Brexit has given rise to a new opportunity for the Malta Ship Registry to consolidate its prominent global maritime flag position and may have a lasting positive impact in this respect. However, the uncertainties caused by Brexit are not the only reason why Malta is a popular flag choice; this article outlines some of the additional benefits.
The Malta maritime flag is chosen by corporate entities and individual owners alike for both commercial and pleasure crafts of all types and sizes. Owners have various options when it comes to deciding the ownership structure for a vessel that is to be registered under the Malta flag. However, non-Maltese owners must appoint a resident agent that is habitually resident in Malta for the purposes of acting as a channel of communication between the Maltese authorities and the non-Maltese owner.
A creditor recently obtained a Section 37 order on a provisional basis from the Maltese courts as security for a claim arising from a dispute under a charterparty. The purpose of the order was to prohibit the sale, transfer or deregistration of the vessel while the merits of the case were being determined. While the law allows owners to opt to deposit security, the legislature has catered for these instances to ensure that creditors' rights are not prejudiced.
The Malta flag is often considered a flag of choice for shipowners, charterers and financiers alike. Among the various aspects which make the Malta flag an attractive option are the Tonnage Tax Rules. Legal Notice 128/2018 has significantly contributed to the further enhancement of the Maltese legal framework, and the response by management companies to this new scheme has been positive.
A Section 37 injunction allows creditors, in circumstances which give rise to a maritime claim attracting the jurisdiction of the Maltese courts in rem, to obtain a court order which prohibits the vessel from being sold or entering any further mortgages until the merits of the case have been decided in the appropriate jurisdiction. This has proven to be a useful and effective tool for protecting maritime claims.
Malta recently implemented the amendments to the Maritime Labour Convention 2006 into domestic law. As one of the largest ship registries in the world, these changes will have a significant impact on the world's shipping workforce. The new amendments can be divided into two parts introduced in the form of standards: one on seafarers' employment agreements and one on wages. A third amendment, which refers to specific entitlements, was introduced in the form of a guideline.
COVID-19 lockdown measures have significantly disrupted cruise ship operations and the financing arrangements in place between financiers and cruise liner companies. Anxious to maintain the good standing of cruise liner companies during the suspension of operations, financiers have been quick to offer debt restructuring solutions to borrowers to fill the liquidity void. At the local level, the most common refinancing exercise involving Malta-flagged vessels is the renegotiation of debt holidays.
Malta has always been at the forefront of offering solid, reliable solutions to yacht owners depending on their individual requirements and the intended use of their yacht. The first half of 2020 has seen the introduction of updated rules affecting operating leases and streamlined importation procedures, offering owners the possibility of availing themselves of a number of solutions and procedures catering to their individual requirements.
Transport Malta's Ports and Yachting Directorate recently issued a port notice to remind recipients about the Dispute Resolution (Procedures) Regulation. The regulation applies to bunkering operations where a dispute has arisen between the bunkering fuel operator and provider and the receiving vessel. The procedure provides for an alternative dispute resolution mechanism that aims to be swift, economical, transparent and simple.
Faced with the threat of the COVID-19 pandemic, many EU states are increasingly adopting stringent measures to ensure that the spread of COVID-19 is, to the extent possible, contained. Malta is no exception in this regard, with most sectors having been affected to some extent. The local shipping industry has also been hit with several restrictions in recent weeks.
Maltese law is straightforward in terms of who has a right to arrest and which claims can be secured by means of an arrest. However, while ship arrests are a powerful legal remedy for creditors, they have one major limitation: they are possible only where the targeted vessel actually enters Maltese waters. As such, the legal system has introduced the Section 37 injunction, which provides creditors with an interesting, cost-efficient remedy where a ship arrest is not possible.
If an event of default occurs, a power of attorney executed by the mortgagor will allow the mortgagee to apply for the immediate closure of the vessel's Maltese register on the mortgagor's behalf and to pay all fees, make all declarations and receive all certificates, including the deletion certificate. While not essential for enforcement, registration of the irrevocable power of attorney is nevertheless an option for mortgagees and provides the added benefit of allowing for swifter enforcement in cases of default.
Asset-backed securitisation in the shipping sphere has recently come to prominence in light of traditional financiers' reluctance to finance shipping activities. The amalgamation of Malta's securitisation framework and merchant shipping laws makes up for a sui generis alternative corporate vehicle to facilitate such transactions and provide the stability and security for which investors yearn.
The practice of inserting a reference to a physical supplier's applicable terms and conditions in a bunker delivery note is rife within the local bunkering community. Historically, case law on the subject has been sparse. However, a recent court judgment supports the view that bunker suppliers cannot pursue a vessel or its owners for unpaid bunkers unless that claim is privileged or the order came directly from the vessel, its owner or its agent.
A mortgage over a Malta-flagged vessel may be drawn up to secure the payment of a principal sum and interest, an account current or the performance of any other obligation – including a future obligation – due to a creditor by the debtor. The parties to an underlying security document may enter into negotiations resulting in changes to the terms set out in the security document. The question that therefore arises is whether a mortgage amendment should be registered to reflect the new terms.
The registration of a mortgage over a Malta-flagged vessel in favour of an individual, corporate lender or security trustee (the mortgagee) requires the filing of a statutory mortgage instrument (the deed) at the Maltese Ship Registry. However, what happens if the original mortgage instrument is misplaced? Maltese law affords two remedies in such instances; the chosen remedy will depend on the remaining duration of the registered security.
The June 2018 sale of the Indian Empress has attracted the attention of the superyacht community worldwide and international brokers, the international yachting media and potential owners and creditors of the yacht are watching this space very closely. This was the first time that a Maltese court ordered bidders in a judicial sale by auction of vessels to make a cash deposit in court prior to the sale taking place and the first time that a bidder was held liable for the payment of the difference.
Following the collapse of OW Bunkers, physical bunker suppliers worldwide have had to rethink their business model with respect to the potential debt exposures that they face when conducting business through bunker traders. The matter is further complicated due to the fact that in many cases, there is not just one bunker trader involved, but rather a series of intermediaries, brokers and intermediary traders.
While primarily introduced to amend and update the Aircraft Registration Act and other ancillary-related laws, Act LII/2016 also promulgated particular amendments which go beyond aviation law into the realm of shipping. These recent changes are making Maltese law an ideal legal regime to govern and regulate disputes which may arise under certain types of shipping contract – namely, ship sale and purchase agreements, promise of sale agreements and charterparties.
At the start of 2017 Transport Malta, the authority responsible for the administration of the Malta flag, introduced new guidelines that allow more than 12 persons on board privately registered yachts. The new guidelines stem both from a recognition that there is a gap in the superyacht market and the administration's continued effort to remain at the forefront as a leading yachting flag.
Following the issuance of a provisional arrest warrant at the request of a physical bunker supplier, the Maltese court determined that it was not vested with jurisdiction in rem and accordingly lifted the arrest. This judgment sheds important light on the onus of proof with which an arresting creditor is burdened. The court held that it was insufficient merely to procure evidence of knowledge of the supply or proof of acceptance of the product from the supplier.
The term 'Maritime Malta' perfectly describes Malta – a country which has always had close connections with the sea and maritime sector. In addition to its strategic position, Malta has a stable and reliable legal regime and laws which give investors and their financiers a high degree of confidence. These achievements are a direct result of careful planning, a strong workforce that is prepared to deliver value for money and a 'can do' attitude.
The Maltese Civil Court recently held that underwriters need not make payments under an insurance policy when the loss or damages occurred due to a fault or negligence on the part of the assured and where the assured's behaviour constitutes a breach of policy. This judgment highlights the importance of ensuring that owners are familiar with the content of their insurance policies – in particular, with the responsibilities arising thereunder.
In a recent court-approved private sale, the Maltese Civil Court unprecedentedly permitted a mortgagee to purchase a vessel animo compensandi, meaning that rather than paying the purchase price from its own pocket, the amount was offset against the existing debt owed to the mortgagee. This judgment is significant, as it offers mortgagees more flexible enforcement options.
While the arrest of vessels is an exceptionally effective and powerful tool which genuine creditors have every right to use, it is paramount that the rule of law is observed and the law's high standards are maintained. Otherwise, there is a risk of increased lawlessness. The Maltese courts have addressed arresting parties' failure to follow the law in several cases, taking immediate action to correct any misinformation.
A Maltese civil court recently considered whether the penalty proceedings under Article 865 of the Code of Organisation and Civil Procedure can be brought against a vessel in rem. The court found that such proceedings can be commenced only against the person or persons that removed the vessel from Maltese waters in violation of the court order, not against a vessel in rem.
A recent case has highlighted a weakness in Maltese law in relation to the right to claim damages resulting from an illegal arrest. Despite finding that the arrest was illegal, the court stopped short of ordering reparations because it held that the defendants' failure to satisfy the criteria outlined in Article 742(D) Code of Organisation and Civil Procedure was not malicious, frivolous or vexatious and thus no damages could be sought.
The third annual Opportunities in Superyachts Conference was recently held in Malta. Over the past eight years Malta has enjoyed success within the superyacht sector, steadily increasing the size of its registered fleet and the number of yachts which benefit from the solutions offered by the jurisdiction. As such, the conference largely focused on what Malta offers owners and operators of private and commercial yachts.
In 2006 the Organisation and Civil Procedure Code was radically overhauled in relation to the provisions governing Maltese enforcement mechanisms, among other things. The changes to enforcement mechanisms included the introduction of court-approved private sales, under which mortgagees can source private buyers at the highest possible agreed price and, on court approval, sell vessels free and unencumbered.
The Civil Court recently upheld a request to have bunkers supplied to the defendant vessel excluded from a court-approved private sale on the basis that retention of title clauses existed, which governed the supply of the bunkers. The decision demonstrates that the inclusion of retention of title clauses can help to mitigate any possible losses in relation to bunkers.
With its centuries-old maritime tradition and as an EU member state, Malta has become the largest European maritime flag and also the seventh largest flag worldwide. Thanks to the unstinting efforts of the government and the maritime industry, Malta has developed into a reputable flag of choice and quality, which offers a wide array of international maritime services and fiscal incentives.
Following similar announcements recently made by France and Italy, the Maltese authorities published the Guidelines for the Value Added Tax Treatment of Short-Term Yacht Chartering. The guidelines address situations in which a short-term charter of a yacht with a crew (or on a bareboat charter basis) is entered into between the owner or operator and the charterer for a consideration.
Following an incident at sea, the master of a ship can make a so-called 'sea protest' in which he or she can declare the facts of the incident as known to him or her. Under Maltese law, a sea protest tends to hold significant probative weight in subsequent settlement negotiations or litigation, since it is often taken as being a correct statement of facts. However, failure to submit a sea protest properly can prove detrimental.
Following the recent increase in attacks on vessels travelling in the vicinity of Somalia, demand has grown for private maritime security companies that can provide professional armed guards on board a vessel to assist in anti-piracy measures. Malta has therefore recently taken steps to regulate the licensing of such companies to ensure that they meet appropriate standards and employ quality personnel of high integrity.
In a recent judgment the Maltese courts rejected a foreign liquidator's application to have a precautionary warrant of arrest lifted on the basis of the EU Insolvency Regulation. This judgment is to date the only judgment delivered by the Maltese courts in which the effects of the regulation on legal proceedings instituted in Malta to secure maritime claims in rem have been discussed.
A Maltese civil court recently further confirmed the rights of mortgagees granted by the law. Despite leaving a number of questions unanswered, this ruling should reassure international financiers of vessels registered under the Malta flag. Provided that the contracts into which they enter are in line with the provisions of the Merchant Shipping Act, financiers can rest assured that their rights will be fully upheld and safeguarded.
Legal history was made recently when a Maltese civil court granted an application requesting approval of a private sale. Court-approved private sales are intended to address the respective disadvantages of private sales and judicial sales by auction. Notwithstanding that this remedy has been on the statute book since 2006, this case represented its first test.
Following the violence in Libya over the past weeks, numerous shipping companies have been operating round trip charter evacuations between Libya and Malta, mainly on the request of governments in Europe, Latin America and the Far East. While tragic in its humanitarian implications, such a crisis presents those with the requisite resources and expertise with a commercial reality that warrants attention.
In 2010 the Maltese courts issued their highest-ever damages award in a case involving a failure to transfer shares in a company that was the owner of a new Aframax tanker. An Italian company filed an action against a Monegasque company for breach of a promise to sell shares in a Maltese registered company which had been formed for the purposes of entering into a shipbuilding contract.
Recent uncertain economic times, together with an increasingly safety and security-sensitive environment, have instilled in owners a greater awareness of and sensitivity to the advantages that may be offered by a particular flag when choosing a jurisdiction for registering their superyacht. This update looks at the key factors that are playing a determinative role in leading owners to opt for the Maltese flag.
The financial crisis has brought with it increased requests from mortgagees about how best to protect their interests. Fortunately for mortgagees of vessels registered in Malta, a mortgage duly registered in the Shipping Register is an executive title and therefore equivalent to a judgment. This means that in case of default, the mortgagee need not prove title or go through any court procedures to enforce the mortgage.
In December 2008 Parliament passed Act XV/2008, which brought into force a number of procedural changes, including the creation of one single warrant of arrest of a seagoing vessel to replace the previous warrant of impediment of departure and warrant of seizure.
EU Directive 2008/8/EC, amending EU Directive 2006/112/EC as regards the place of supply of services, introduced new rules on the place of supply of means of transport. Following timely intervention by Malta during the negotiations and drafting of this amending directive, a provision has been introduced specifically targeting the place of hiring of a pleasure boat to a non-taxable person.
As Malta is not a signatory to international arrest conventions, the arrest of ships is governed entirely by domestic law. In order to be arrested in Malta, the vessel must be present in Malta and the claim must exceed LM3,000. The grounds for arrest are equivalent to the grounds upon which Maltese courts exercise jurisdiction either in rem or in personam.
As the term 'ship' is widely defined under the Merchant Shipping Act, all types of vessel (including those under construction) as well as other marine structures (eg, oil rigs and pontoons) may be registered under the Maltese flag. Vessels may be registered under the Maltese flag only if evidence of seaworthiness is established by one of the internationally recognized classification societies.
In Finaval SpA v Scorpio Ship Management SAM the Civil Court awarded Italian-registered company Finaval SPA over LM7 million in damages. Finaval filed a writ against Scorpio Ship Management SAM and others when Scorpio failed to transfer ownership of a newly built ship to Finaval, as set out by an agreement between the two parties.
The Department of Value Added Tax (VAT) has announced an attractive VAT incentive package through new guidelines on the VAT payments applicable to yacht leasing. The guidelines address scenarios where a Maltese company purchases a pleasure yacht and enters into a lease-sale of the yacht with a third party.
Last year the Commercial Yacht Code came into force to regulate the use of commercial yachts. Commercial yachts benefit from paying tonnage tax rather than income tax on the earnings of the owner company. The new regulations have proven to be extremely popular, with a marked increase of European yachts used for commercial purposes registered under the Maltese flag in the first year of operation of the code.
A new section of the Code of Organization and Civil Procedure has finally brought Maltese law on jurisdiction in rem and arrest out of the Victorian era. Further amendments have introduced the concept of court-approved sales and simplified the process of issuing warrants for the arrest of a vessel.
For some time now there have been calls to update the legislation relating to transportation. However, 2006 is due to see the introduction of three new laws that have been outstanding for a number of years. One of these acts is expected to incorporate the Convention on the Contract for the International Carriage of Goods by Road.
A Maltese court recently gave an interim judgment on the issue of whether items supplied to a yacht by the agent qualified as necessaries. Under Maltese law, the court has jurisdiction in rem over a vessel in the case of necessaries supplied to the vessel.
A judgment on actions in rem and debts incurred by bareboat charterers which is diametrically opposed to two earlier decisions has recently been published. The court disregarded the defendant vessel's attempt to distinguish between the grounds on which courts can exercise jurisdiction and the right of a plaintiff to file an action against a vessel in rem for the debts of a bareboat charterer.
In Maltese shipping legal circles the name 'Poker' has become synonymous with the debate over whether an action in rem can be instituted against a vessel for debts incurred by the vessel's bareboat charterer. To date, seven service providers have filed actions in rem against the Poker.