Court throws out company’s claim of human rights breach in bankruptcy case

Court says MFSA’s directive to hold back liquidation of All Invest did not violate director’s fundamental human rights.

A constitutional court has today thrown out an application by the director of a bankrupt financial services firm after he claimed that a Malta Financial Services Authority (MFSA) directive to delay the winding down of his company violated his fundamental human rights.

Wallace Falzon, the director of All Invest Co. Ltd – a financial services company which is alleged to have lost thousands in clients’ investments – claimed that the MFSA’s decision to delay the liquidation of the company until he pays off his dues denied him access to the court.

Filed against the financial watchdog, Falzon argued that through the directive, the MFSA had “unfairly” delayed the bankruptcy of his business.

Rebutting any claims of “abuse of power,” the MFSA argued that it only implemented the bankruptcy of the firm until the transfer of the clients’ holdings and investments was completed, and until any pending court proceedings are determined – a “decision which was taken in the clients’ best interests.”

Moreover, it claimed that it was the plaintiff – “rather than itself” – who was committing abuse because he was taking advantage of the constitutional procedures for his ulterior motives.

““It is ironic that a person who is alleging a breach of his fundamental human rights is trying to desist from shouldering its responsibility and paint itself as a victim and a martyr and try to ignore their clients’ interest,” it said.

However, in its decision, the First Hall Civil Court in its constitutional jurisdiction ruled that there was no breach of the plaintiff’s fundamental human rights because by ordering All Invest to hold back bankruptcy of its business, the authority was not acting beyond its powers.

Therefore, it said, the company could not complain that the directive stopped it from starting bankruptcy proceedings in court.

Mr Justice Anthony Ellul also ruled that the company could not cease its operations unless it obtained the consent of the MFSA and therefore turned down the plaintiff’s application.