The choice of law may be deduced from the terms of the contract

The choice of law in a contract may be determined either if it is expressly mentioned or else from what one can gather from the terms and conditions which one applies. This was decided on 14 October 2025 by the Court of Appeal presided by Chief Justice Mark Chetcuti and judges Robert Mangion and Grazio Mercieca. The case was Malta Fishing Trading Limited vs Dr Fransina Abela noe.

The case concerns a loan that the defendant company, Al Safa Fishing Joint Stock, represented by Mohamed Fathi Emran Morad, took and which was to finance the purchase of fishing vessels. Part of the debt was assigned to the plaintiff.

This case was instituted in order for the debt to be paid and if not paid, the plaintiff would acquire the vessels. The appeal concerned whether Maltese law or French law should apply.

The debt amounted to slightly over €1.5 million. A fishing vessel was sold in January 2005 to the defendant for €550,000. Another fishing vessel was sold to the defendant for €480,000 in April 2006. Both vessels were financed by a ‘contrat de financement’. One of the conditions of these contracts was that in the event the debt was not paid, the creditors, in this case the plaintiff had a right to acquire the vessels. Following this there was a bareboat charter agreement between the defendant and the financiers of the purchase of the vessels. The plaintiff company claimed that the financing took place by means of three investors through a company called BDS. One of the investors and shareholders of BDS transferred his shares to the other two shareholders and a third investor. There was another transfer of shares in March 2007. The court also took cognisance of a contract of 20 December 2007 where BDS assigned all its rights and credit in respect of the defendant to Armement Scannapieco Ltd to the tune of €740,653. In March 2007, the defendant purchased a third vessel. Scannapieco financed the purchase of the third vessel and invested €835,000. On the same day the defendant entered into a charter agreement with a company owned by the investor. In the agreement the defendant bound itself to transfer the vessels to the investors or pay back the debt. Fast forward to 2014, the defendant company entered into a bareboat charter agreement for the three vessels to operate in Libyan waters. In 2019, Armement Scannapieco transferred the debt of the defendant to the plaintiff company.

The plaintiff asked the court to declare that the defendant owed it €1,575,653 and order that the three vessels be transferred to it.

The first court held that the contract should apply Maltese law because it was signed in Malta and the fact that it was written in French did not matter.

The defendant also claimed that the 2019 agreement of the assignment of debt between Scannapieco and the plaintiff company could not be enforced in terms of the Rome Regulations I, arguing that what had to be established first was whether French law should be applied.

The first clause of the 2019 agreement mentions that the agreement should be regulated by Articles 1321 to 1326 of the civil code and that Scannapieco should notify the defendant of the assignment of debt. The agreement does not state whether the civil code it refers to is the Maltese or French one. The court held that the applicable law should be Maltese law.

The court referred to the notification of a letter sent on 19 September 2019 to a French lawyer as a notification of the transfer of the debt. Article 1471 of the Maltese Civil Code refers to a judicial act. No judicial act was sent. Furthermore, Article 1473 reads: “The notice is not necessary if the debtor has acknowledged the assignment.”

The first court concluded there was no evidence that the defendant accepted the assignment and even if French law applied, the agreement was not enforceable because the letter was not addressed to the defendant.

The plaintiff company appealed this judgment, insisting French law should be applied.

The Court of Appeal determined that the law on contracts (Rome I) does not mention only that the applicable law should be expressly mentioned but also that the choice of law be manifested in the terms of the agreement. In this case the agreement just mentions articles 1321 to 1326 of the civil code. The Court of Appeal pointed out that these articles in the Maltese Civil Code refer to the community of acquests in family law. In the French Civil Code, they refer to the assignment of a contract. The Appeals Court determined that French law should be applied.

The Appeals Court also disagreed with the first court on the validity of the notification. Although the notification did not mention by name the defendant, it was obvious that it referred to him. But this issue was not part of the dispute and therefore, the court should not have entered into it.

The Appeals Court upheld the plaintiff’s appeal.