Maltese courts have jurisdiction irrespective of jurisdiction clause

Civil Procedure allows Maltese courts to take cognisance of legal issue even though a written agreement may say otherwise. This as held in Seagull Maritime Security Limited -v- Unitaf PTE Limited et decided on 26 January 2022 by the First Hall of the Civil Court presided by Mr Justice Francesco Depasquale.

The Plaintiff company filed a sworn application in which it explained that it entered into an agreement with the Defendant company to provide security services for a particular ship between August and October 2019. The Plaintiff company issued a number of invoices amounting to USD19,200, which remained unpaid, and it asked the Court to other the Defendant company to pay these invoices.

The shipowner Panamanian company held that the agreement was between Seagull Maritime Security Limited and Unitaf PTE Limited and therefore, it was not involved in this transaction. The Court held that the parties to this case had made use of a BIMCO standard form contract. Clause 19 of this contract there is written that if there is a dispute between the parties it should be referred to London arbitration. The Court, therefore, examined whether it has jurisdiction to hear the case. Article 742(3) of the Code of Organisation and Civil Procedure reads:

“(3) The jurisdiction of the courts of civil jurisdiction is not excluded by the fact that there exists among the parties any arbitration agreement, whether the arbitration proceedings have commenced or not, in which case the court, saving the provisions of any law governing arbitration, shall stay proceedings without prejudice to the provisions of sub-article (4) and to the right of the court to give any order of direction.”

Camilleri -v- Zammit noe decided on 4 May 1998 by the Court of Appeal, dealt with this article of law. It held that this article assures that the Maltese Courts are not excluded simply because there is an arbitration clause in the parties’ agreement. The Court would be able to decide on the validity of the contract and to decide on whether the contract may be executed. Article 742(3) is not intended to neutralise arbitration clauses, but to make sure that the Court may regulate on how these clauses may be adopted.

The Court pointed out that the Plaintiff company is a Maltese registered company, and that the Defendant company is in default, because it did not file a statement of defence. The Court held that there is no dispute registered between the two companies, but the claim concerns unpaid invoices. There was nothing stopping the parties informing the court that they prefer to go to London arbitration; however, the Defendant companies did not communicate with court. The Plaintiff is free to bring the issue before the Maltese civil courts.

With regard to whether the other Defendant company Cypress Maritime (Panama SA) is the correct defendant, the Court held that the BIMCO contract indicates this company as the ship owning company and Clause 7 states that the owner is responsible to pay all invoices. The Court held that both defendant companies are jointly responsible to pay the sum due.

The Court then moved to order the defendant companies to pay the Plaintiff company USD19,200.