Maltese Court may still have jurisdiction irrespective of foreign jurisdiction clause

The Maltese Court may have jurisdiction to hear and decide cases where the parties have signed a contract which indicates another country to have judicial jurisdiction.

This was decided in John Mifsud and Rose Mary Mifsud v Pierre Debono and Dr Patrick Valentino and PL Gillian Muscat as curators of a British Virgin Islands company Chimera Group Limited. The judgement was delivered by Mr Justice Lawrence Mintoff on 10 April 2017.

The Mifsuds in their application explained that John Mifsud had met the defendant Pierre Debono in August 2014, the latter informing him that he was in business with a certain Michael Bridge, a financial services company.

Debono enticed Mifsud to invest with this company and promised he would have a 15% return and risk free. He informed him that the minimum investment had to be €200,000. Mifsud was a friend of Debono’s family, and therefore, the former trusted him. A draft loan agreement was sent and Mifsud read and signed it. Mifsud sent the first €53,000, which followed by an email from Michael Bridge thanking him for the investment. By the end of August 2014, Mifsud had sent all the investment.

In October 2014, Mifsud was meant to receive his first payment, as promised by Debono. From this point onwards there was a flurry of emails and messages between Mifsud and Debono and Bridge, where the latter two gave numerous explanations why the money never hit Mifsud’s account. Legal letters were also exchanged, where Debono seemed to wash his hands of the whole affair. Mifsud asked the court to order the two defendants to pay the sum invested together with damages.

The BVI company held that the contract signed with Mifsud mentioned Florida, United States as the place where jurisdiction laid if there was a dispute.

Debono also filed a statement of defence stating that he had no judicial relationship with Mifsud and that there is no legal basis for him to refund the money invested.

This judgment limited itself to whether the Maltese courts had jurisdiction to hear and decide the case. The contract between Mifsud and the BVI company mentioned that the laws of the State of Florida is the applicable Federal law governing the loan agreement. The same contract further states that in the event of a dispute the jurisdiction lies with the State and Federal Courts located in Miami-Dave County, in the United States.

The BVI company held that this was a valid and enforceable contract in terms Articles 992 and 1002 of the Civil Code. The BVI company held that according to Article 742 of the Code of Organization and Civil Procedure, a Maltese court would no longer have jurisdiction if the action is based on the actions of the defendant and not of the plaintiff. Furthermore, the plaintiffs failed to show that they can enforce a favourable judgment in Malta and that the obligation to pay has to take place in Malta.

The plaintiffs replied by saying Debono did not raise the plea of lack of jurisdiction and that in fact Article 742 gives jurisdiction to the Maltese Courts, since amongst other things no action was instituted in the US.

The Court quoted from a previous judgement Maltrad (Holdings) Ltd -v- Norbet Coll which had held that since there was no agreement for payment to take place in Malta, it was not shown that the payment could not take place in Malta. The party that pleaded lack of jurisdiction should prove that the judgement could not be enforced in Malta. Another judgement made reference to was C&F Building Contractors Limited -v- Siegried Generics (Malta) Ltd, which held that irrespective of jurisdiction clauses, the Maltese courts have always held that Malta would have jurisdiction if it is the forum most convenient to hear the case. 

From the evidence produced, particularly the copies of emails produced, Bridge had described Debono as his business partner. Furthermore, it is evident that Mifsud is a client of both defendants. The Court did not agree that it should hear the case limited to Debono and not to the BVI company, because this would render the case as piecemeal litigation, which is never desirable. 

Mr Justice Mintoff then moved to declare that the Court had jurisdiction to hear and decide the case.

Dr Malcolm Mifsud is a partner at Mifsud & Mifsud Advocates