Regulator to pay 25% of flood damage bill after failing to deny Malta Resources Authority debt

In a definitive ruling delivered on Wednesday, the Court of Appeal rejected an appeal by the Regulator for Energy and Water Services (REWS) against a decree compelling it to pay a significant debt related to damages caused by rainwater.

The judgment, presided over by Judges Lawrence Mintoff, Miriam Hayman, and Francesco Depasquale, confirmed that REWS is the legal successor liable for the obligation of the former Malta Resources Authority (MRA), which had been held responsible for 25% of the damages suffered by private companies P.O.G. Limited and Petralux Ltd.

The debt originated from a Court of Appeal judgment dated 18 November 2024, which found the MRA responsible for 25% of the damages sustained by the plaintiffs in a case concerning failures in supervision. This liability concerned conduct that occurred well before the 2015 Act that established REWS came into force.

Following that definitive 2024 judgment, P.O.G. Limited and Petralux Ltd issued an executive warrant of seizure on 25 June 2025, targeting REWS as the successor to the MRA.

REWS subsequently challenged the warrant in the First Hall Civil Court, arguing the 2024 judgment did not constitute an executive title against it because it was not a party to the original proceedings. The First Court rejected this argument, ruling that the obligation had been transferred to REWS by law, leading REWS to file the appeal on 20 August 2025.

REWS based its appeal on three principal grievances. First, it argued that the First Court should have recused itself because the presiding judge had previously formed part of the Court of Appeal that issued the executive title underlying the case. Second, it maintained that REWS is not the legal successor of the Malta Resources Authority with respect to the specific matter of the debt in question. Third, it contended that it cannot be bound by a judgment delivered in proceedings from which it had been entirely excluded for nine years.

The Court of Appeal comprehensively rejected all three grievances, upholding the First Court's decree.

The court ruled that the appeal concerning the recusal of the judge was legally inadmissible. The Court cited Article 738(1) of the Code of Organisation and Civil Procedure which explicitly states that no appeal is granted against a judge's decision regarding an objection ofrecusal. The attempt by REWS to use Article 281 of the same chapter to challenge the recusal decision was therefore dismissed.

Addressing the core issue of liability (Grievances 2 and 3), REWS argued that the debt should have passed to the Environment and Resources Authority (ERA) under Act XVII of 2024, as the subject matter related to the Second Schedule of the Act that created REWS.

The court definitively rejected any challenge to REWS’s liability, confirming that the obligation rested squarely on REWS. It further held that the ERA was correctly excluded, as the damages arose from flooding (rainwater), which falls under the Regulations on the Assessment and Management of Flood Risks.

Procedures related to these regulations are expressly excluded from transfer to the ERA.

Since the debt concerned non-mineral resources, namely rainwater, the obligation was transferred by operation of law. 

The court concluded that since the debt was definitively crystallized against the MRA, and MRA’s obligations for non-mineral resources had been transferred by law, REWS must assume what was imposed on the former authority.

The appeal was rejected, and REWS was ordered to pay the costs.