I write with reference to the recent interview given by the Hon. Minister for Justice Owen Bonnici carried on The Business Observer on the 14 January, 2016 in relation to the Ministry's initiatives to speed up commercial cases.
Needless to say, every initiative is commendable. However, if Malta is to achieve any tangible results, we need to go way beyond the measures being proposed by the Ministry for Justice. In the eyes of many serious international institutions, the way our enforcement and judicial system works is at odds with Malta's drive to attract serious institutional foreign investment.
Insofar as the proposed insolvency law reform is concerned, my understanding is that these consist of some fine-tunings to certain laws aimed at speeding up enforcement and to facilitate certain corporate recoveries. Although the proposals are all positive legislative amendments, these remain short-term fixes. Insofar as the arbitration initiative is concerned, as laudable and innovative as it may seem, this remains another piecemeal approach to a huge and complex problem of delays in commercial dispute resolution and enforcement in Malta.
In my view, Malta needs a holistic and more thorough approach to commercial and insolvency legislation led by leading commercial practitioners in the field; a major legislative project such as occurred in Malta in the years 1994/1995. This would encompass a new Insolvency Act which would resolve the various uncertainties and bring together the myriad laws dealing with insolvency. This should be coupled with a fresh look at our corporate legislation to bring it in line with recent developments overseas.
Necessity is the mother of invention. One must remember that many competing jurisdictions have recently overhauled their commercial and insolvency laws due to the economic downturn suffered during the financial crisis. Malta, in contrast, escaped rather unscathed by the crisis, but this left us complacent in our legislative efforts.
As for the need for a specialized commercial court, this should not be so easily dismissed by the Government. One has to mention a few initiatives of other jurisdictions competing for international business:
- London: in 2015, the High Court in London established a so-called 'Financial List', a specialist court that will be staffed by judges with particular experience of financial disputes.
- Singapore: the Singapore International Commercial Court (SICC) was officially launched in 2015 and the SICC serves to entrench Singapore's position as the premier dispute resolution hub in Asia, with a jurisdiction to hear matters of an 'international' and 'commercial' nature. We should not forget that Singapore was ranked 1st out of 148 countries in the 2013-2014 World Economic Forum report with regard to the efficiency of the legal framework in settling disputes.
- Ireland: a specialized Commercial Court as a division of the High Court has been established since 2004 to deal specifically with commercial cases with a value of not less than €1,000,000 or specific important commercial matters.
Whilst I am aware that in practice there is a commercial division of the First Hall, Civil Court dealing with commercial law issues and very ably handled by selected judges, it is respectfully submitted that the judicial infrastructure requires a different and more focused approach to commercial law aspects. My suggestion is the establishment of a specialised Commercial Court with jurisdiction to hear large commercial disputes and with a set of specific flexible procedures designed to achieve a fast final judgement. This would of course require a different approach to the way disputes are currently handled and a rigorous 'no nonsense' approach to large commercial litigation. The process would require detailed preparation at pre-trial stage (possibly involving a mandatory full disclosure process at pre-trial stage) and a completely different approach by the lawyers involved, with penalties involved for any lawyer or party who contributes to a delay or who does not respect the length and content of pleadings. Cases coming before this Commercial Court should have a minimum threshold or relate to important commercial aspects. This Commercial Court would then be in a position to determine any issues of substance relating to shipping, aviation, banking, company law, financial services and intellectual property with a degree of efficiency, specialisation and sensitivity to the commercial nature of the dispute. Possibly, the Commercial Court would also be able to hear so-called 'test cases', so important in establishing certainty of law.
Whereas tweaks to the law could be useful, without a bolder big bang approach, insofar as insolvency and large commercial disputes are concerned, I regret to say that we would not be addressing the nub of the matter.
This article was published in The Business Observer, 28 January 2016.
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