Justice Ministry will not comment on ongoing Pilatus Bank ICSID proceedings against Malta

The Justice Ministry has declined to comment on what appears to be a fatal flaw in the case filed by Ali Sadr’s Alpene Ltd against Malta.

The ministry said it cannot comment “in any manner whatsoever” on the pending case in front of ICSID, an international tribunal.

“The Justice Ministry cannot engage with any third party on the pending ICSID case in any manner whatsoever and will decline to comment on any matter relating to the case,” a ministry spokesperson told MaltaToday.

Earlier this month, Attorney General Victoria Buttigieg and State Advocate Chris Soler asked the judge presiding over a case filed against them over the failure to prosecute senior figures at Pilatus Bank, to hear the case behind closed doors so as not to violate the confidentiality of linked proceedings ongoing before a foreign court. 

It later emerged that Malta is the defendant in ongoing proceedings filed by Alpene Ltd before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), which proceedings are not public. 

Alpene is owned by Ali Sadr Hasheminejad, and has been referred to in separate proceedings in the USA, as the “100% indirect owner” of Pilatus bank.

The Hong-Kong based company is accusing Malta of unfairly targeting the bank and using it as a scapegoat for Malta’s FATF greylisting, with a view to expropriating it and claiming millions of US Dollars in damages.

News of the foreign lawsuit caught many by surprise, raising the question of how that court, memorably described as “a private, global super court that empowers corporations to bend countries to their will,” could expect to have any jurisdiction over the sovereign State of Malta, in the apparent absence of a treaty submitting to ICSID’s jurisdiction.

However it would seem that such a treaty does indeed exist, but only bestows ICSID jurisdiction over matters involving Chinese investments and Malta.

Employing tortuous logic, Sadr’s lawyers are arguing that, as Alpene Ltd is a company registered in Hong Kong, the legal basis for the request emerges from that  2009 bilateral agreement between Malta and China.

However, the agreement also imposes the clear condition that local legal remedies must be exhausted before the case is filed before ICSID. Article 9(3)(b) of that agreement reads “with respect to Malta the investor concerned shall submit the dispute to a domestic court, tribunal or arbitration so as to exhaust the local procedures before proceeding to international arbitration." 

And this does not appear to have been done in this case. There is no record of Pilatus bank having any appellate or Constitutional judgments for or against it in Malta, much less one connected to the issue at hand. This would suggest that the local legal remedies have not been exhausted, which one would expect to leave Alpene’s ICSID case dead in the water.