Id-Dritt XXIX - Volume 1

ID - DRITT volume xxix

2019 Published by Għaqda Studenti tal-Liġi

Produced and published by Għaqda Studenti tal-Liġi (GħSL), the University of Malta’s Law Students’ Society.

Correspondence in relation to this publication should be forwarded to: The Publications Officer / Editor-In Chief, Id-Dritt Room 219, GħSL Office Faculty of Laws University of Malta Msida, Malta or Email us at: publications@għsl.org © Għaqda Studenti tal-Liġi 2019 All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of the copyright holder and the publisher, application for which shall be made to the publisher.

Proofreading and editing done by the Editorial Board and the Publications Office. Some articles have been modified for reasons of clarity and/or uniformity.

Opinions expressed in Id-Dritt Volume XIX do not necessarily represent the views of the Editorial Board, the Publications Office, the Publications Officer, or Għaqda Studenti tal-Liġi.

Printed in Malta by Progress Press Co. Ltd Żona Industrijali, Triq L-Intornjatur, Mrieħel, BKR 3000, Malta Cover and Publication Design by Matthew Charles Zammit ISBN no: 978-99957-857-9-6

Preface Lara Attard President Għaqda Studenti tal-Liġi

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nother year, another Id-Dritt.

Tradition and innovation are two pillar values which have been ingrained within Għaqda Studenti tal-Liġi’s Publications Office throughout our history and, through this, GħSL boasts a legacy unprecedented by any other organisation.

The publication of the Id-Dritt has always been on the forefront of GħSL’s agenda throughout the years. This stems from the fact that GħSL, together with our contributors, recognises the academic value of such a publication. We have, over the years, continued to ascertain that the material published within the Id-Dritt has a value, both academic and legal in nature, useful to students and practitioners alike.

Our organisation has unabatedly shown passion towards legal discourse and academic thought. Notwithstanding the anti-academic climate that’s currently prevalent in today’s modern discourse, which has even led to some organisations opting to reduce or withdraw their output, Id-Dritt XXIX is testament to GħSL’s unwavering faith and effort in this field, notwithstanding the challenges we face.

I would like to thank GħSL’s Publications Officer Ms. Emma-Marie Sammut, as well as her Editorial Team, and our in-house designer Matthew Charles Zammit, who through their perseverance and dedication to the project, have successfully managed to compile and publish the twenty-ninth edition of the Id-Dritt.

Good luck to all future generations of the Publications Office, and may we continue to celebrate the publication of Id-Dritt for years to come!

Thank you, Lara

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Opening Address Emma Marie Sammut Publications Officer Għaqda Studenti tal-Liġi

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On behalf of the GħSL Executive Board, the Publications Committee and the Id-Dritt Editorial Board, it is with great honour and privilege that I present to you Id-Dritt XXIX, the annual law journal published by the Malta Law Students’ Society.

This law journal is, of course, the concerted effort of many people, ranging from; our contributors - who dedicated large swaths of their time to form and research their professional and educated points of view, which will now be forever immortalised within the pages of Id-Dritt; our editors - who shaped and formatted the content into a standard fitting of the prestigious Id-Dritt; our peer-reviewers - who pragmatically reviewed the intricacies of the content and provided professional and well-versed feedback; and lastly, to the GħSL Executive Board, without whose backing the compilation of this edition of Id-Dritt would not have come to fruition.

Initially starting out in 1944, the project of going about publishing Id-Dritt was always seen as a highly-ambitious project, especially considering that it was a small handful of law students, with an amaranthine passion for the law, who came about the idea of compiling it.

Through many trials and tribulations, the legal journal has now transformed itself into a quasi-customary obligation for Għaqda Studenti tal-Liġi; both because of its timely delivery year after year, and because of the notion of it being the product and detailed examination of external events, technological advancements and societal questions which are prevalent in our community.

Id-Dritt, along with its online sibling the GħSL Online Law Journal, nowadays abbreviated as the ‘OLJ’, are amongst the few mediums available which are accessible by students, academics and professionals in the legal field. The dissemination of legal knowledge, and appraisal, is perhaps more wide-spread now than in the past, encouraging fruitful and healthy academic discourse and wellresearched criticism, in a world often seemingly lacking of both.

The world of academia, in Malta, is unfortunately somewhat x

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dismissed and sidelined, and this can be felt in perhaps every strata of the legal society. It is often seen that the freshly graduated lawyers of today, heavily rely on previously researched material and, this sort of attitude breeds mediocrity. That is not to say, of course, that there are not hard-working individuals in the legal sphere doing their utmost to further the legal profession and its collective legal brain. With this, it is no secret that we have not all at some point fallen victim to mediocrity - myself included.

Mediocrity however, gets stamped out by those who choose to work to eradicate it, and such is the function of Id-Dritt; from our committee members who are students themselves, and to the contributors who opt not to regurgitate material and think independently.

Id-Dritt combines the past and present, and imagines new legal worlds for the future. Rousseau, Voltaire, Montesquieu and Moore, who all contributed towards the thinking that constitutions hold the power to invent and create better worlds for us all through words. This is, in its entirety, Id-Dritt’s mission; the journal provides a platform to its authors, enabling them to envision new eras for the legal world.

The Publications Office has survived lo-these many years thanks to the dedicated contributors who always have fresh and well-read input on the legal world today. Id-Dritt is a testament to the ever dynamic world of law. Every day, a new sector emerges; one which would yield new academics, new practitioners and new legislation, eager to be researched.

With this, I would like to thank a large number of people who, without their effort and dedication, would have rendered the 29th Edition of Id-Dritt but a pipe-dream: To all the contributors and peer-reviewers: your collective efforts, which have exhibited a high-standard of academic calibre, have continued to elevate Id-Dritt’s reputation within the legal profession. On behalf of everyone at GħSL, we thank you for your contributions and we hope that we have given them the recognition xi

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they deserve.

To Danielle, Diana, Carla, Chris, Cressida, Ethan, Elle, Justine, Lenka, Sean, Maria, Marie Claire, the Martinas, Maya, Michela, Raphäel, Stephanie and Steve: I could not have possibly asked for a better editorial team. Your dedication in ensuring that the finalisation of this project, as well as your unwavering loyalty and commitment, are qualities which are to be echoed throughout the ages.

You have set the standard for the future of the publications committees. The future is bright for all you and with this, I wish you the very best, from the bottom of my heart. It’s been a pleasure, and no words can simply convey how grateful I am to all of you for the countless sleepless nights you have probably spent fixated on editing articles, and safeguarding the decade-long distinction that id-Dritt boasts.

To my direct predecessors, Matthew Charles and Ariane: living up to the standards that you had established for id-Dritt was indubitably always going to be a challenge. To this end, I couldn’t have finalised this compilation without your help and input, especially without you - Matthew Charles - who has spent countless hours editing and designing the final product. With two parents such as yourselves overseeing this vast project, there was no room for error, and one can only hope that this office has lived up to your standards.

With this, I can only hope that my successor is just as fortunate as me - I had, undeniably, an excellent support-system.

To Lara, Cynthia, Aidan, Nathaniel, Jessica, Aleandro, Raphael, Marc, Celine and Michela: my fellow executive board members.

Without your support and input, id-Dritt would have not been the class act it is; not just presently, but even for years to come.

To my parents, Gaetano and Dorothy, and to my loved ones: Thank you for always being there for me to listen to me rant. Thank you for always calming me down when I doubted myself on this project; and for helping me see reason when I was at my lowest. It is thanks to your love and patience that Id-Dritt has been published. xii

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And finally, to you, dear reader: on behalf of everyone in the Publications Committee and the GħSL Executive Board, we extend our deepest gratitude towards your interest in this publication. We hope that this journal goes on to encourage and inspire you to read, analyse, critique and participate in such projects in the future, even if such endeavours seem inconceivable in nature.

Here at GħSL, we believe that achievement is best garnered through great difficulty. Id-Dritt would have never been achieved without the blood, sweat and tears of many a collective. And with this, I shall conclude with a quote by Charles Darwin himself;

‘It is the long history of humankind (and animal kind, too) that those who learned to collaborate and improvise most effectively have prevailed.’

Thank you, Emma

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Preamble Diana A. Ungureanu Editor-In-Chief Id-Dritt XXIX

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he annual publication of Id-Dritt is a testament to the ever-changing legal landscape faced by students and legal practitioners alike - whether they choose to practice in Malta or abroad. It is also an indicator of the deep-seated sense of duty to inform and, educate, on the part of those who have garnered a degree of expertise in a given field of legal practice.

This is why, for years on end, this peer reviewed law journal has proved itself to be an indispensable and reliable part of every law student’s toolbox. Indeed, many law students consider this publication as their first real exposure to the lesser known fields of legal practice and, thus, opening up a world of possibilities for their future careers as legal practitioners.

With the rise of digitisation we have seen the emergence of new areas of legal practice such as block chain and crypto-currency.

However, we have also witnessed technology changing the way in which more traditional areas of law operate and, the subsequent implications brought with it. In reality, this exposes legal practitioners to challenges which they could not have foreseen or trained for. In this context, technological advancement is an equalizer which puts law students and legal practitioners - with decades of experience - on equal footing, urging them to collaborate and contribute to the aquis of knowledge in these emerging areas of legal practice.

This edition of Id-Dritt has proven the value of tackling legal topics that are not yet easily accessible as topics of research. In addition, it has also been a platform where this collaboration can take place first hand.

On a different note, it is with pride that I commend the editorial board for their tireless commitment to this publication and for giving their time and energy to ensure that it maintains the high standard it has always adhered to.

In addition to this, I would like to congratulate the editorial teams for consistently publishing articles in the Maltese language, and the contributors who choose to submit high quality content in xvi

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Maltese. The importance of this practice becomes evident with the discomfort that sets in when one is faced with an academic work in any other language besides English. It is with a sense of hope that I encourage future contributors and editorial members to embrace this discomfort as there is a great deal to be gained from increasing the number of academic articles in the Maltese language. This will certainly contribute to the process of putting the Maltese language in a more prominent position in relation to academia and legal training.

Finally, I must conclude by showing my appreciation and gratitude to the members of the Għaqda Studenti tal-Liġi Executive Board who have worked towards an incredible term. I owe a special thank you to the Publications Officer, Emma-Marie Sammut, for the challenging and unique experience of contributing to the publication of the 29th edition of Id-Dritt. I have come to realise that this is a publication which improves with time.

Whilst the publication process remains unchanged, the challenges faced by the back office team will always vary. No amount of preparation and foresight can prepare someone to avoid and overcome these challenges seamlessly. Despite this, it is always the hope of any team that its successors will be better and aspire to bigger things. I draw this experience to an end knowing that future editorial boards will exceed all expectations, Many thanks, Diana

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Foreword Professor Kevin Aquilina Dean Faculty of Laws

NOTES

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t gives me pleasure to be able to write this Foreword to Id-Dritt, Volume XXIX (2019). This year, once again, the topics covered in this student peer-reviewed journal span over a plurality of branches of the law ranging from Public Law subjects (such as Constitutional Law, Administrative Law, Sports Law), to International Law subjects (such as European Union Law and International Space Law), and to Private Law subjects (such as Notarial Law and Financial Law). This variety of legal branches written upon in this annual publication ensures that a wide breadth of the law is covered so that the reader will surely find a paper which appeals to him/her interests.

These myriad subjects also indicate how complicated and diversified the law has become. Indeed, the study of law no longer spans around the Codes and a handful of special laws as used to be the case in the past. In our day and age, the law has evolved from the traditional branches of Civil and Criminal Law to encompass new emerging branches such as those related to Animal Welfare Law, Fintech Law and Sports Law. Unfortunately, in Malta, there are very few legal journals where an academic, legal professional or student may publish. The Chamber of Advocates’ Law and Practice is one such journal. ELSA Malta used to publish their own journal – the ELSA Malta Review – but this was last published a few years ago and, at least to this writer, it remains unclear whether it has been discontinued. Hence, the avenues for publishing legal material in Malta tend to be sparse. Suffice it to state here that even the Faculty of Laws has ceased publishing its own Mediterranean Journal of Human Rights and the new journal which had replaced it – the Mediterranean Human Rights Review – is still in its infancy: only one issue has been published so far.

In the dearth of legal periodical publications in Malta, Id-Dritt stands out conspicuously for it has managed to survive the onslaught of time and continued to be published intermittently over the years boasting of ground-breaking contributions by the best legal luminaries in Malta. I refer here, in this volume, for instance, to the papers by two Maltese judges on the European Court of Human Rights – Judge Giovanni Bonello and Judge Vincent De Gaetano – xx

NOTES

who have regaled us with two papers in the realm of Constitutional Law. Judge Bonello questions whether Civil Law still dominates over Constitutional Law – as was the position when the five Codes enjoyed superiority over the Constitution – whilst Judge De Gaetano reflects upon a traditional fundamental subject, though yet still very topical to date, of Constitutional Law – the rule of law. Needless to say, these two (and the other) papers in this collection are a valuable source of information and enrichment to the Law Student to whom this volume is after all addressed.

Although the Għaqda Studenti tal-Liġi have their own website, where they also publish articles of legal significance online, they have – to date – not yet begun to publish Id-Dritt electronically, apart from the print form – the latter currently being the case. By publishing electronically, even if only on their website, they would make all these papers compiled in Id-Dritt available worldwide, especially to comparatists with a keen interest on the Maltese Legal System who would be able to access this wealth of material published in Id-Dritt, especially when one bears in mind that few and far between are those books that are published on such a system and which cover such a span of Maltese Law subjects as Id-Dritt effectively and laudably does.

Hopefully, the day comes which Id-Dritt becomes more accessible in electronic format in this digital era of technology.

I thank the Editors and Members of the Editorial Board of IdDritt as well as their contributors for all the good and hard work they are putting in during their free time to develop progressively and intermittently the study of Maltese Law making it more accessible to the law student, legal practitioner, the judiciary and society in general.

Professor Kevin Aquilina Dean, Faculty of Laws Msida, 11th April 2019

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Editorial Board

Publications Officer Emma-Marie Sammut Editor-In-Chief Diana Ungureanu Editors Carla Farrugia Michela Pace Justine Xuereb Steve Vella Cressida Scorfna Maria Refalo Stephanie Camilleri Lenka Portelli Maya Spiteri Dalli Chris Vassallo Laferla Raphael Buttigieg Marie Claire Mizzi Martina Calafato Sean Portelli Danielle Gauci Martina Cassar

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Executive Board 2017 / 2018 Għaqda Studenti tal-Liġi (GħSL)

President

Lara Attard

Vice President for Educational Affairs

Cynthia Duncan

Vice President for Social Affairs Aidan Cutajar

Secretary General

Jessica Napier

Financial Controller

Nathaniel Falzon

Academic Officer

Raphael Sammut DeMarco

International Officer Aleandro Mifsud

Marketing Officer Michela Galea

Events Officer Marc Dimech

Policy Officer

Celine Cuschieri Debono

Publications Officer Emma-Marie Sammut

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Contents

Volume 1

Administrative Law The notion of “public authority” in judicial review actions under Article 469A, Cap. 12

Dr. Tonio Borg

2

Animal Welfare Law Analysis of de facto & de jure Animal Zoos in Malta

Dr. Ariane Aquilina

16

Company Law The register of Beneficial Owners

Dr. Priscilla Mifsud Parker

63

Constitutional Law The right to a healthy environment as enshrined in our Constitution

84

The Rule of Law

96

Maltese citizenship: A historical perspective, from Independence to Present Day

119

Dr. Jose Herrera

Chief Justice Emeritus Vincent A. De Gaetano

Dr. Jean Philippe Chectuti

Criminal Law Il-ħelsien mill-arrest, u l- ‘house arrest’ Dr. Veronique Dalli

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147

The Inquiring Magistrate

157

Is “white collar crime” a crime? A critical analysis into the criminalisation of white collar crime

192

Judge Consuelo Scerri Herrera

Dr. Charles Mercieca

D evelopment Planning Law Determining a planning permission: From Act I of 1992, to Act III of 2016 Dr. Robert Musumeci

210

European Union Law The Malta Armed Forces Act, set against Maltese neutrality and developments within the European Union frameworks

248

How is the service of judicial and extrajudicial documents, in civil or commercial matters, done in Member States?

286

Dr. Mark Ellul

Judge Consuelo Scerri Herrera

Financial Law The Basel Accords, as a Transnational Regulatory Law Dr. George Bugeja

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306

Volume 2

Fintech Law Civil Law implications of Smart Contracts

339

The Virtual Financial Assets Regime regulating the future economy

360

Dr. Silvana Zammit

Dr. Cherise Abela Grech

Human Rights Law Detention of asylum seekers in Malta a study of Malta and Strasbourg Jurisprudence Dr. Carla Camilleri

386

The right to time? Unequal working hours, and the failure of gender equality policies and legislation

411

When Civil Law trumps the Constitutional Court

427

The impact of the judgements of the European Court of Human Rights on domestic legal systems

446

Professor Frances Camilleri Cassar

Dr. Giovanni Bonello

Dr. Kathleen Vella

I nternational Space Law Il-Liġi Spazjali: Il-Passat, il-Preżent u l-Futur

Dr. Eliza Borg Rizzo

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465

L egislative Drafting and Statutory Interpretation Select principles of Maltese Law applied in legislative drafting and statutory interpretation

Professor Kevin Aquilina

488

Notarial Law The E-Notary: A study of the progress of electronic notarisation and registration in Europe

Dr. Chantelle Borg

524

Sports Law A legal overview of recent developments concerning match-fixing in Malta Dr. Robert Dingli

545

Utilities Law Reflections on the independence of utility regulators in Malta

Dr. Paul Edgar Micallef

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Administrative Law

The notion of “public authority” in judicial review actions under Article 469A, Cap. 12

Dr. Tonio Borg 2

Dr. Tonio Borg is a resident lecturer in Public Law at the University of Malta and a former European Commissioner (2012-14) and former Deputy Prime Minister (2004-12) and Cabinet Minister (1995-95, 1998-2012).

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1.

Introduction

T

he rules relating to judicial review of administrative acts are found in article 469A of the Code of Organization and Civil Procedure. The provisions are mainly based on English Common law as regards to grounds of review; but they apply only to public authorities, and unlike the English legal position, a respondent can only be a public not a private entity.

Article 469A is absolutely clear as to who may be a respondent to such an action, that is to say, which part of the public sector is considered to be bound by the rules of judicial review. A `public authority` – the only possible respondent in such an action – according to sub-article (2) means ‘the Government of Malta, including its Ministries and departments, local authorities, and any body corporate established by law.’ The public sector in Maltese administrative law and practice may be divided into three categories or sections:

2.

The Civil Service

The first to be mentioned in article 469A is the Government of Malta, including its ministries and departments. This would cover the political masters of the public service composed of public officers such as ministers and parliamentary secretaries, but also constitutional offices such as that of the Auditor General or the Attorney General.

(a) The public service is made up of public officers who are accountable to a Minister or any other public officer or authority according to law. This is what is commonly known as the civil service: it has been described as anonymous in the sense that it loyally serves successive administrations, and as a rule, the political master is usually a minister who is responsible for its actions, omission, operations and workings to Parliament.

A distinctive feature of the Civil Service is that, as a rule, its 3

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members, according to article 110 of the Constitution, 1 can only be recruited by the Prime Minister on the binding recommendation of the Public Service Commission (PSC) or any person or authority delegated by it. This is the litmus test to distinguish a civil servant from any other employee in the public sector.

Casual employees, provided they are employed for a two month period, do not require PSC approval. The fact that an express provision of the Constitution exempts them from the PSC process proves that they are still considered, by arguing a contrariu senso, to be public officers. A public officer is defined by the Constitution as ‘the holder of any public office or of a person appointed to act in such office.’ 2 Public office in its turn is defined as ‘an office of emolument in the public service’. Public service is defined as ‘the service of the Government of Malta in a civil capacity.’

The practice has also evolved of appointing persons to positions of trust, paid fully from the public purse, bypassing the entire PSC procedure. There are serious and genuine doubts as to how much such procedure, applied in various degrees by different Administrations, is consonant with the strict recruitment provisions of the Constitution. For if even a temporary employment for two months with Government needed to be mentioned as an exception to the rule of PSC recruitment and vetting, this means that any office of emolument in the service of the Government of Malta in a civil capacity, falls within the remit of the Commission and any holder of such office is considered as a public officer3.

1 Appointment, etc.,of public officers. Amended by:LVIII.1974.55. Article 110. (1) Subject to the provisions of this Constitution, power to make appointments to public offices and to remove and to exercise disciplinary control over persons holding or acting in any such offices shall vest in the Prime Minister, acting on the recommendation of the Public Service Commission: Provided that the Prime Minister may, acting on the recommendation of the Public Service Commission, delegate in writing, subject to such conditions as may be specified in the instrument of delegation, any of the powers referred to in this sub article to such public officer or other authority as may be specified in that instrument.

2

Art 124 (1) of the Constitution.

3

See Kevin Aquilina: Positions of Trust: A Constitutional Quagmire Malta Today 22 June 2016 : ` The Constitution makes no provision for the engagement of staff in positions of trust, so the legality of this practice could be questionable even where ministerial secretariats are concerned.`

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It is submitted that the actions of such persons of trust are reviewable under article 469A for even such persons, irregular though their recruitment might be, are public officers according to the Constitution and therefore their acts are reviewable under art 469A.

3.

Body Corporate Established by law

The second category of the public sector are the body corporates established by law, commonly called public corporations or statutory bodies which have mushroomed to a large extent in the past forty years. Statutory authorities are bodies created by Parliament under specific legislation, unlike departments which can be created by the Government without any direct parliamentary involvement (however the Government must have Parliament’s approval before it can allocate money to any particular department). Unlike departments, statutory authorities cannot be altered or abolished, except by a further Act of Parliament.

While traditionally such bodies were created by a separate Act of Parliament, recent trends show that following the enactment of the Public Administration Act (Cap 497), the Prime Minister is allowed to establish and create such corporations having a distinct legal personality from the Civil Service, through orders or regulations.

These regulations then regulate their powers and functions or procedures . Creation of such corporations is therefore never debated in the House, and knowledge by the public of their creation implies examining Legal Notices issued every day by Government and laid on the Table of the House.

Indeed, in one case,4 a public corporation was established by 4

Żfin Malta, the national dancing ensemble was created as a public corporation through Legal Notice 476 of 2014 by means of an extensive interpretation of the enabling section (article 33) empowering the Minister responsible for Culture to pass Regulations for the better administration of the Malta Council for Culture and the Arts Act .’

33. (1) Subject to the provisions of sub-article (2) the Minister may, after consultation with the Council, make regulations in respect of any of the functions of the Council and for any matter prescribed under this Act. (2) The Minister may also by regulation amend the Schedules to this Act. (3) Without prejudice to the provisions of sub-articles (1) and (2), the Minister may also

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a Government Minister rather than the Prime Minister through subsidiary legislation.

4.

Government foundations etc.

Companies,

partnerships,

The third category in the public sector comprises any partnership or body in which the Government of Malta or any body corporate established by law has a controlling interest or over which they have effective control. Although in view of a wide privatisation process which started in the late eighties such bodies or partnerships are rare to come by, some still stubbornly survive. These bodies are not considered to be a `public authority` for the purposes of article 469A.5 This legal position in Malta therefore contrasts sharply with that obtaining in England where any body performing a public function, even if private, let alone a partnership in which government has a majority of share, is considered liable to judicial review.

Under the Ombudsman Act (Ch 385), the Commissioner for Administrative Investigations in accordance with section 12 of the Ombudsman Act, 1995 can receive a complaint against;

the Government including any government department or other authority of the Government, any Minister or Parliamentary Secretary, any public officer and any member or servant of a public authority; to any statutory body and any partnership or other body in which the Government has a controlling interest make regulations in respect of: (a) administrative and organizational procedures to be followed by the Council and the Executive Director and by any entity named in any one of the Schemes at the end of this Act; (b) schemes for the purpose of funding or subsidising cultural and artistic programmes, initiatives and events; (c) any matter related to officers and employees of the Council; (d) any matter related to the expenditure and income of the Council, its estimates and accounts, and their verification.’It is doubtful whether such empowering section authorises the Minister to set up a public corporation .

5

For other purposes e g. the provisions on discrimination in art 45 of the Constitution, they have been considered as a public authority. See as regards Air Malta , Debono Grech vs. Mizzi noe (CC) (11th February 1991)(Kollezz. Vol. LXXV.I.68).

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or over which it has effective control including any director, member, manager or other officer of such body or partnership or of its controlling body; and to local councils including Mayors, Councillors and members of staff of all local councils.

Consequently, government companies which are neither part of the civil service nor established by law as a body corporate, fall under the jurisdiction of the Ombudsman including public-private partnerships so long as public funds are involved, but they are not subject to the review envisaged in article 469A.

5.

Not just Solitary Swallows

In the Cerviola case6 the Court ruled that a commercial company in which Government had a majority shareholding was a public authority for purposes of article 469A. It said:

Regarding this definition, the Court considers that the defendant company qualifies as a public authority on the basis of the provisions above-mentioned and this because it results that the company is constituted and registered under the laws of Malta and therefore is a body corporate established by law in the sense that it has a distinct legal personality for it is a company registered under the Companies Act of 1995 and also belongs to the Government of Malta which is the majority shareholder, as can be seen from the Memorandum of Association of the said company.7 The Court of Appeal compounded the error committed by the 6 Hotel Cerviola Ltd v. Malta Shipyards Ltd (FH)(31 May 2007)(359/06)(Mr Justice R. Pace) (COA) (23 September 2009).’

7

see also Paul Licari v. Malta Industrial Parks Ltd (FH)( 10 July 2017 )(25/10)(Mme Justice Miriam Hayman) .

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lower court by stating that:

Although a private commercial company was constituted, in effect the proper control remained in the hands of Government with the intention to negotiate the sale of the Dry Docks. As has been decided in other cases relating to fundamental human rights, the Court is of the view that even as regards judicial review actions, it must look at the substance of things and of what is being sought to be protected; and not rest simply on appearances and formal definitions or classifications.

Although the defendant company as successor in title of Malta Drydocks and Malta Shipbuilding Co. Ltd was given the form of a commercial company, in substance and considering the context in which it was constituted, it was essentially a body corporate established by law and belongs and is controlled by Government, and therefore as a public authority completely under control of Government is subject to the jurisdiction of this Court to examine and decide whether the said company acted according to the powers vested in it by law in the exercise of its functions.

The flaw in the argument is evident. The moment one considers a commercial company duly established under the Companies Act 1995 as a body corporate established by law, then any commercial company, not necessarily those in which Government holds a majority shareholding or control, will be considered a public authority and therefore, subject to article 469A; for the definition of public authority merely states ‘a body corporate established by law.’ If one were to erroneously extend this definition to commercial companies, there is no qualification in the definition limiting it only to government owned companies and all companies of whatever nature, provided they have a distinct legal personality, will come under the definition of `public authority`. This is evidently not the case for only public corporations set up expressly by law.

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In another case,8 two years later , the Court without even citing the Cerviola case, reached an identical conclusion and ruled that a government company, the Malta Industrial Parks Limited (MIP), in which government controlled practically all the shareholding, was a public authority for the purposes of article 469A. In that case the court remarked that:

MIP is in fact a public authority which alone has the power to decide whether to issue an eviction order and gives advice to the Commissioner of Land to order the issuing of such an Order. The fact that such authority has the form of a commercial company does not eliminate its classification as a body corporate established by law, as mentioned in article 469A (2). This ‘public’ nature results also from its shareholding, where the principal shareholder is the Finance Ministry (with 9,999 ordinary shares) and the minority shareholder is MIMCOL (with one ordinary share), another company with a strong public investment. MIP considers itself also as a ‘government agency responsible for the management, development and administration of Government-owned industrial estates.’ Apart from that a look at the relative provisions of Chapter 169 of the Laws of Malta make it clear that MIP was given power by delegation which characterizes any authority with a public function. The same provisions show as well that MIP enjoys powers of a regularity function, which are public and administrative.

The Court also notes that it was MIP itself which declared so,…. when it said that it was the successor of the Malta Development Corporation.

A more reasoned approach was made by the court in another case9 where Malta Industrial Parks Limited (MIP) was considered to be a public authority, but only because it had succeeded to all the rights 8 Euro Chemie Products Ltd vs. Malta Industrial Parks Limited )(PA)(29 September 2009)(Mr Justice JR Micallef) (1006/06).

9

H.P. Cole Ltd v. Malta Industrial Parks Ltd (FH)(28 March 2012)(547/08)(Mr Justice A. Ellul).

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and obligations of the Malta Development Corporation which was a public corporation.

In another case,10 the Court assumed upon itself the definition of public authority by stating that:

The fact that Government chose to operate through a company and not a body corporate established by law does not mean that consequently such company which is exercising a public function cannot be subject to review under article 469A of Chapter 12 when it performs an administrative act . It is a known fact that the actions of public corporations are judicially reviewable in the same way as those of other bodies, where they have powers of a public law character. Thus the Independent Television Commission’s licensing decisions are subject to judicial review, and a decision of British Coal, before privatisation to close certain coal mines was successfully challenged.11 The Court cannot find any reason why the same argument cannot be applied to a government company such as the defendant company.

It is submitted that this reasoning is not correct. The court equates the phrase ‘body corporate established by law with any commercial company which has a majority government shareholding,’ the more so if it has a regulatory function. That the two concepts, body corporate established by law and a government commercial company are two distinct legal notions borne out by the Constitution itself in article 110 (6), regarding recruitment in the public sector, where it makes the distinction between the two quite clear. It distinguishes between ‘any body established by the Constitution or by or under any other law and a partnership or other body in which the Government of Malta , or any such body as aforesaid, have a controlling interest or over which they have effective control.’ To lump the two notions together and treat them equally was certainly not the legislator`s intention in drafting article 469A. A government commercial company is not 10

Captain Mario Grech et v. Gozo Channel Co Ltd (CMSJ)(27 April 2010)(2/09)(Magte A. Ellul).

11

Administrative Law, 10 Edizzjoni H.W.R. Wade, u C.F.Forsyth, (2009 pg. 123).

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a body corporate established by law. That term is reserved for public corporations or bodies established specifically by the Constitution or by an Act of Parliament and not for a commercial partnership set up, like all other partnerships, with a memorandum of association under a general law regulating commercial partnerships.12 Finally one must observe that though government commercial companies are body corporate established under law, they are not set up by law as article 469A requires.

The 2010 amendments to the Ombudsman Act widened the Ombudsman’s jurisdiction to:

any agency established as provided by article 36 of the Public Administration Act’; ‘any foundation established by the Government or by any statutory body and any partnership or other body referred to in article 12(b)’ (of the Ombudsman Act); and ‘chairmen and members of boards, committees, commissions and any other decision making bodies, whether established by law or by an administrative act, which can take decisions affecting any member of the public ......

This scope of widening of the Ombudsman’s jurisdiction rested on the belief that whenever citizens’ lives and destinies can be affected by any measure that may be taken by any new government agency that may be set up in future by or under any law or by order of the Prime Minister in the Gazette and which makes use of public funds, any such authority is duly subject to scrutiny by the Parliamentary Ombudsman.

But still, public funds must be involved for the decision to be 12

One must however note that in Paul Licari vs.Malta Industrial Parks Limited (CA)( 25 November 2016) (25/10) the Court of Appeal hinted obiter that it approved this line of reasoning at least as regards Malta Industrial Parks Ltd: ‘It is true that the defendant company (MIP) is exercising a public function, in so far as its task is to administer the industrial zones property of the Government and may also qualify as a public authority for the purposes of article 469A of Chapter 12 of the Laws of Malta.’ The First Hall of the Civil Court in a decision on the merits in the same case allowed judicial review of actions by the Malta Industrial Parks Limited even though the latter was not a public corporation. (FH)(10 July 2017)(Mme M. Hayman).

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reviewed by the Ombudsman. 13 Appeals by the Ombudsman to extend such jurisdiction to private companies providing public utilities has fallen on deaf ears, even though private public partnerships with the 2010 amendments fall under the jurisdiction of the Ombudsman.

6. Interesting Developments Regarding Private Companies Although private companies do not fall within the ambit of article 469A, the Court of Appeal has on one occasion decided that where such company executes a power given to it by law, then the norms of judicial review, including the principles of natural justice apply. In Armando Tramontano vs. Dragonara Casino Limited 14 the Court of Appeal applied these principles to a private company managing the Dragonara Casino which was empowered by the Gaming Act 15 to take decisions regarding entry of persons into the kursaal.

13 This Office has on several occasions in the last few years expressed its views on this subject and has put forward proposals so that activities that are now provided by the private sector but that invariably still comprehend a strong public service obligation should fall under the scrutiny of an independent overseer. This authority will be fully entitled to investigate levels of service provision to citizens and to inquire into complaints on quality standards with a view to ensuring that these obligations are respected and that citizens’ interests are placed foremost.

To date, however, this proposal remains largely on the shelf although the 2010 amendments to the Ombudsman legislation left the door ajar and served to register the first inroad into areas that were hitherto out of bounds for the Maltese ombudsman institution. The fact that the amended legislation allows scope for review by Commissioners for Administrative Investigations in the context of public-private partnerships in the field of higher education and in the provision of healthcare services is considered by this Office as marking a step in the right direction.` ( Ombudsman Annual Report (2010) p 15).

14

(CA)(25 May 2007)(1765/01).

15

Cap 400 of the Laws of Malta, 25. (1) It shall be the duty of the casino licensee to ensure that persons entering the casino premises are identified and may at any time request such persons to produce their legally valid identification document or passport for inspection.

(2) The casino licensee shall cause the particulars of persons entering the casino together with details of a legally valid identification document or passport produced to be registered in a register kept at the casino premises for such purpose…

(3) Without prejudice to the other provisions of this Act, admission to a casino shall be at the discretion of the licensee who shall ensure that persons who may have a problem of pathological gambling are not given access to the gaming area: Provided that no person shall be refused admission to a casino by reason of his race, place of origin, political opinion, colour, creed, sex or physical infirmity.

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In this case, the same appellant company refers to the powers granted to it by the Gaming Act16 to control who enters the Casino, and therefore, such power could not be exercised ‘without first hearing the person who is going to suffer’.

This judgment can be lauded in its attempt to spread the net of judicial review as far as possible, but at law it is flawed, particularly in view of the fact that even if the act of controlling entry into a casino can be considered as administrative, the private company was certainly not a public authority as defined by article 469A.17 The solution therefore lies with Parliament. The House of Representatives ought to launch a complete overhaul of our judicial review norms which should inter alia clarify by statutory intervention the true meaning of a public authority which can stand as respondent in any judicial review case. The fairest solution would be to include all companies , agencies and entities which are controlled by Government as well as private entities which perform a public function, i.e a function which would have been regulated by law had it not been exercised by a private entity. The current confusion is compounded by issues relating to the different laws which apply to different administrative actions, the lack of a harmonized Administrative Law Code and the thorny question of juridical interest in public law actions.

16

Cap 400 of the Laws of Malta.

17

See also Dr David Camilleri noe v. Players Coaches Complaints Board (FH)(23 November 2001)(1378/98)(Mr. Justice A. Magri) where the Court decided that the Board had not infringed the principles of natural justice, assuming therefore that these applied even vis a vis an entity of a private organization, namely the Malta Football Association.

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Animal Welfare Law

Analysis of de facto & de jure Animal Zoos in Malta Dr. Ariane Aquilina

Dr Ariane Aquilina obtained the degree of LL.D. from the University of Malta in 2017 and was subsequently called to the bar in 2018. She specialises in environmental law, with a specific interest in animal welfare, and is currently reading for a M.Sc. in International Animal Welfare, Ethics, and Law with the University of Edinburgh, Scotland. While reading law at the University of Malta, Dr Aquilina took an active part in Ghaqda Studenti tal-Ligi, fulfilling the roles of both editor and editor-in-chief for Id-Dritt law journal, and serving as Publications Officer on the Executive Board 2016/2017.

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‘God loved the birds and invented trees. Man loved the birds and invented cages’ - Jacques Deval 1.

I

Introduction

n June 2017, a tiger cub was photographed among a group of people celebrating the opening of a new establishment. The photograph was uploaded to social media where it quickly garnered attention from the public and resulted in a swathe of online arguments between those who decried the action as animal abuse and those who stated that the tiger cub was much better off in the hands of her private owner, than in the wild.1 The incident piggybacked on the outcry that had erupted due to two previous events that had garnered the attention of the public. In November 20152 and April 2016,3 two young children were injured by wild animals in an unlicensed zoo, inexplicably open to the public even after numerous enforcement procedures.

The arguments that ensued are not the subject of this paper – rather it is the reality that we are facing in Malta today, where numerous private individuals are keeping wild animals, many of them classified as dangerous. These private collections oftentimes transform themselves into zoos, which in turn has numerous consequences.

This paper aims to delineate the definition of a zoo, the legal obligations incumbent on zoo operators in Malta, as well as compare 1

David Grech Urpani, ‘This Photo of a Baby Tiger at a Maltese Club caused an Uproar Online’ (Lovin Malta, 10 June 2017) <https://lovinmalta.com/lifestyle/pets/this-photo-of-a-baby-tigerat-a-maltese-club-caused-an-uproar-online> accessed 3 July 2017.

2

Ivan Martin, ‘Doubts raised over Zoo Handler’s Licence’ (Times of Malta, 1 December 2015) <https://www.timesofmalta.com/articles/view/20151201/local/doubts-raised-over-zoo-handlers-licence.594106> accessed 3 July 2017.

3 --, ‘Update 2 – Charles Polidano questioned by Police after Boy, 5, is injured by Lioness at Montekristo’ (Times of Malta, 4 April 2016) <https://www.timesofmalta.com/articles/ view/20160404/local/boy-5-injured-by-lioness-at-montekristo.607765> accessed 3 July 2017.

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the legal regime to the de facto state of zoos in Malta. The author also aims to elicit the various problems faced by Maltese zoos, as well as suggest solutions to ameliorate the situation.

2.

The Legal Definition of a Zoo

The legal definition applicable to Maltese zoos comes from Directive 1999/22/EC relating to the keeping of wild animals in zoos (the Directive),4 transposed into Maltese legislation as Subsidiary Legislation 439.08 (SL 439.08)5 under the Animal Welfare Act, via Legal Notice 265 of 2003 (LN 265/2003).6 Article 2 of the Directive states that a zoo is:

Any permanent [establishment] where animals of wild species are kept for exhibition to the public for 7 or more days a year, with the exception of circuses, pet shops, and establishments which Member States exempt from the requirements of this Directive on the grounds that they do not exhibit a significant number of animals or species to the public, and that the exemption will not jeopardise the objectives of this Directive.

LN 265/2003 transposes this definition verbatim in Article 2, and therefore does not include any exemptions, as opposed to other Member States such as Germany, where the transposing legislation specifies that a facility which houses not more than twenty individual animals of any species is not considered a zoo and therefore does not fall under the regulations imposed by the Directive.7 Therefore, 4

Council Directive 1999/22/EC of 29 March 1999 relating to the keeping of wild animals in zoos [1999] OJ 94/24 <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:1999:094:0024:0026:EN:PDF> accessed 3 July 2017.

5

Keeping of Wild Animals in Zoos Regulations, Subsidiary Legislation 439.08 <http://www. justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=11047&l=1> accessed 2 July 2017.

6 The Keeping of Wild Animals in Zoos Regulations Legal Notice 265 of 2003 <http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lp&itemid=17380&l=1> accessed 3 July 2017.

7

Das Gesetz über Naturschutz und Landschaftspflege 1977, article 42(1)3 <http://www.gese-

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in Malta, any establishment that showcases wild animals for at least 7 days in a year is a zoo. This definition incorporates in it those establishments which may not be considered to be stereotypical zoos by the public, such as aquaria. The authority responsible for zoos in Malta, the Veterinary and Phytosanitary Regulation Directorate (the VPRD), officially recognises five licenced zoos.8 However, it is public knowledge that other establishments that fall within the definition of a zoo, are currently operating without a licence.9

3.

De Jure: The Legal Obligations Incumbent upon Zoo Operators in Malta The legal obligations which impinge upon Maltese zoo operators derive from numerous legal sources, ranging from international law to EU law to domestic law. Although Directive 1999/22/EC as transposed into domestic law by LN 265/200 can be considered to be the main source of legislation regulating zoos in Malta, other laws exist that impose obligations on zoo operators. These legal obligations can be generally grouped into four categories: 1. Legal obligations regarding the administration of zoos; 2. Legal obligations regarding the duty to promote biodiversity & conservation, including public education; 3. Legal obligations regarding animal welfare; 4. Legal obligations regarding public health and safety.

This section will analyse the legal obligations in each category, highlighting the different legal regimes that these obligations derive from. tze-im-internet.de/bnatschg_2009/> accessed 4 July 2017.

8

List of Licensed Zoos in Malta (Agriculture.gov.mt) <https://agriculture.gov.mt/en/vrd/Documents/2017/animalWelfareSection/Lists%20of%20Zoo.pdf> accessed 4 July 2017.

9 --, ‘Polidano pleads not guilty after Montekristo Tiger injures Boy’ (Times of Malta, 3 July 2017) <https://www.timesofmalta.com/articles/view/20170703/local/polidano-pleads-not-guilty-after-montekristo-tiger-injures-boy.652311> accessed 4 July 2017.

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3.1. The Competent Authorities related to Zoos in Malta 3.1.1.

The Competent Authority

Directive 1999/22/EC states that ‘Member States shall designate Competent Authorities for the purposes of this Directive’. In article 2 of the Animal Welfare Act10 (hereinafter the ‘AWA’), it is indicated that the Department responsible for the AWA is the Department for Veterinary Services, nowadays known as the VPRD. The VPRD is the main department dealing with animal health and welfare in Malta. It incorporates the Veterinary Regulation Directorate, the Animal Promotion and Services Directorate, and the Plant Health Directorate.

The work of the VPRD is also supplemented by the Animal Welfare Council and the Veterinary Surgeons’ Council, which act as consultatory and advisory bodies to the Minister responsible for veterinary services on issues of animal welfare and the veterinary profession respectively. The Veterinary Surgeons’ Council is also responsible for the administration of the veterinary profession in Malta, including keeping a register of veterinary professionals and prescribing and maintaining ethical standards. Furthermore, the Planning Authority (hereinafter the PA) and the Environment and Resources Authority (hereinafter the ERA) are responsible for monitoring the development planning, and environmental situation with regard to zoos, and ensuring that zoo owners comply with their obligations under the Development Planning Act11 (hereinafter the DPA) and the Environment Protection Act12 (hereinafter the EPA).

3.1.2. The Commissioner for Animal Welfare The Commissioner for Animal Welfare (hereinafter the CAW) was introduced in 2014 by the implementation of article 44A of the AWA. 10

Animal Welfare Act, Chapter 439 of the Laws of Malta, Article 2.

11

Development Planning Act, Chapter 552 of the Laws of Malta.

12

Environment Protection Act, Chapter 549 of the Laws of Malta.

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The CAW acts as a watchdog and a promoter of moral animal rights and of animal welfare in Malta, including the animals kept in zoos. It is important to note that the CAW solely occupies a monitoring role with regard to animal welfare.

3.1.3.

Enforcement Officers

The various legal regimes concerned with zoos in Malta incorporate several officers that are meant to enforce legal obligations arising from different legal sources. Animal welfare officers are established under article 44 of the AWA and are tasked with enforcing the obligations arising out of the AWA. Notably, under the same article, every member of the Police Force and every local warden are also considered animal welfare officers. They act under the management of the VPRD Director. Unlike the CAW, animal welfare officers have both a monitoring and an enforcement role, and their monitoring and enforcement powers extend beyond animal welfare conditions.

Veterinarians are also required as the officials that can monitor animal health, in particular when faced with zoonoses.13 Currently there is no veterinary degree offered in Malta, therefore Maltese students must go abroad to earn this qualification, often with the support of the Government.14 Public officers in charge of monitoring the development of zoos and ensuring that zoo owners comply with their environmental protection obligations are in the hands of other regulators.15 Although legislation establishes several public officers responsible for compliance and/or enforcement, the law does not elaborate much about delineation of duties. This is a notable default considering that 13

Fred Koontz, ‘Wild Animal Acquisition Ethics for Zoo Biologists’ in Bryan G Norton et al (eds), Ethics on the Ark: Zoos, Animal Welfare, and Wildlife Conservation (Smithsonian Institution 1998) 141.

14

‘Students helped to follow veterinarian courses abroad’ (Times of Malta, 4 January 2012) <http:www.timesofmalta.com/articles/view/20120104/local/students-helped-to-follow-veterinarian-courses-abroad.401011> accessed 7 May 2018.

15

DPA (n 11) Article 12 and EPA (n 12) Article 14.

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zoos are complex operations that give rise to multidisciplinary issues.

Furthermore, legislation does not provide for the training of officials in charge of inspecting zoos, a fact lamented upon by numerous CAs a report published in March 2017 by the European Commission on interviews carried out to support a REFIT evaluation of Directive 1999/22/EC16 (hereinafter the Interviews Report). Training is vital for inspectors and enforcement officials to carry out their work accurately.17

3.2. Legal Obligations regarding the Establishment and Administration of Zoos 3.2.1. Obtaining a Permit for the Development of a Zoo The building of a zoo, or the development of existing land into such anticipates the action of ‘building [and] other operations for the construction […] or alterations in, on, over or under any land […] or the making of any material change in use of land or building’.18 This is considered as ‘development’ under article 70 of the DPA. Before any such development takes place the zoo developer must apply for permission from the PA.19 A question that arises in the application stage of a permit for a zoo is whether such an application requires an Environmental Impact Assessment (EIA). According to Legal Notice 412 of 2017 (hereinafter LN 412/2017) the authority responsible for directing an EIA is the ERA.20 Regulation 10 states that any proposed development which is listed under Category I to Schedule I of LN 412/2017 shall require an 16

European Commission, ‘EU Zoos Directive Good Practices Document’ (European Commission, 1 July 2015) <http://ec.europa.eu/environment/nature/pdf/EU_Zoos_Directive_Good_ Practices.pdf> accessed 7 May 2018.

17

Paul A Rees, An Introduction to Zoo Biology and Management (1st edn, Wiley-Blackwell 2011).

18

DPA (n 11) Article 70.

19

Ibid.

20

Environmental Impact Assessment Regulations [2017] Article 3.

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environmental impact assessment, while any proposed development which is listed under Category II to Schedule I of LN 412/2017 shall require screening from the ERA. Whilst the development of a zoo is not specifically indicated in either Category I or Category II, there are several development activities that are required in a zoo which fall under Category II. Clause 8.1.2.9. of Schedule I to LN 412/2017 classifies ‘any establishment rearing (i) exotic animals (e.g. emus, ostriches, kangaroos, or crocodiles) whether for consumption or otherwise; or (ii) other animals (e.g. snails, insects, or frogs) that can create an ecological imbalance or other impacts if they escape into the wild’ under Category II of this Schedule I. While, as stated above, developments under Category II do not tacitly require an EIA, it must be stated that regulation 10(3) of LN 412/2017 states:

[ERA] may require an environmental impact assessment or screening for a project which is not included in schedule I if it is of the opinion that the project may have significant environmental impacts and that a normal development consent application or an assessment other than provided by these regulations is not sufficient for their proper evaluation.

In arriving at such requirement, the Authority shall have regard to the criteria set out in Schedule III. Schedule III to LN 412/2017 involves numerous criteria, inter alia, the characteristics of the project, the location of the project, and the type and characteristics of the potential impact. Zoos have a prodigious effect on the surrounding environment.21 Therefore it can be said that the application for development of a zoo should require an EIA due to the criteria set out in Schedule III to of 412/2017 The EIA procedure requires the Planning Board, which receives an application for a zoo, to refer the application to the ERA as a 21

Mark Rosenthal and William A Xanthen, ‘Structural and Keeper Considerations in Exhibit Design’ in Devra G Kleiman et al (eds), Wild Mammals in Captivity: Principles and Techniques for Zoo Management (2nd edn, University of Chicago Press 2010).

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statutory consultee. Upon receiving the application the ERA carries out the required assessment of the proposal in terms of relevant environmental legislation, including overall assessment of the proposal, and EIA screening, depending on the particular factors of the location of the proposal. Consultations with the relevant thematic units within the ERA are carried out, such as permits related to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (hereinafter CITES), and any other nature permits arising from relevant legislative instruments. Once the appropriate measures have been taken, a consolidated ERA reply is referred to the PA for their perusal as part of the assessment of the development permit. The outcome is referred to the PA Board or the relevant environment planning committees for their consideration.

Under Schedule 1 of LN 162 of 201622 (hereinafter LN 162/2016) the application for a zoo falls under the criteria of a Major Application.

Furthermore, it can be assumed that the application for the development of a zoo would cover a site of more than 5,000m2 which also makes the application a Major Application. Such an application would need to undergo a screening process as detailed in regulation 3 of LN 162/2016. As with any other Major Applications, an application for a zoo would only be considered valid if the application follows the criteria laid out in regulation 4 of LN 162/2016, including the publication of the application on the website of the Department of Information. The application for development of a zoo must then go through the normal application procedure as outlined in LN 162/2016 and the DPA. One observes a trend where both the PA and the ERA are refusing applications either for the development of a zoo or to register an existing zoo.

3.2.2. Obtaining and Maintaining a Zoo Licence A licence to operate a zoo is required under article 4 of Directive 1999/22/EC, transposed into regulation 4 of LN 265/2003. An 22

Development Planning (Procedure for Applications and their Determination) Regulations [2016].

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unlicensed zoo or a zoo that does not meet the conditions set out in its licence, is liable to incur penalties prescribed under the same provisions of law. The application for a licence ties in with the obligation on owners and keepers of live animals to declare their activity to the VPRD under the Veterinary Services Act (hereinafter the VSA).23 After obtaining a valid development permit, the potential zoo operator must commence the zoo licensing process with the VPRD. The zoo licence must be obtained from the VPRD after an inspection of the premises by officers in line with regulation 4(4) of LN 265/2003.

Once a licence is obtained it must be kept up to date. Legislation does not stipulate when the licence must be renewed, however as a matter of administrative practice, the VPRD endeavours to ensure that licenses are renewed annually. Before the licence is renewed another inspection is carried out to ensure that the conditions of the licence are being met. The VPRD also issues a set of guidelines to be followed by the inspectors. These guidelines are developed from Directive 1999/22/EC, LN 265/2003, the AWA, and the Swiss Animal Welfare Ordinance, the latter providing guidelines on the housing of animals.

If the zoo does not hold a valid licence or defaults in its compliance with the conditions of the licence, the VPRD has two options.24 It may impose requirements on the zoo to ensure that it complies with its licence conditions. Directive 1999/22/EC stipulates that the zoo must come into compliance with requirements made by the VPRD within two years, otherwise risk losing its licence. Unlike the Directive however, LN 265/2003 does not stipulate a specific time frame.

The VPRD may also decide to close the zoo to the public. Apart from this, any person who is convicted of infringement of the provisions in LN 265/2003 is liable to a fine of not less than twentythree thousand and two hundred and ninety-three euro and seventythree cents, as well as being liable for any expenses incurred by the 23

Veterinary Services Act, Chapter 437 of the Laws of Malta, article 35(1)(a).

24

LN 265/2003 (n 6) regulation 4(5).

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VPRD as a result of the infringement.25 If the zoo includes falconry species, the owner must also obtain a licence from the Wild Birds Regulation Unit as according to Legal Notice 249 of 2016 (hereinafter LN 249/2016).26This licence covers the activity of falconry and any other related activities. Certain activities also require a ‘special falconry activity licence’ in addition to the normal licence which is also obtained from the Wild Birds Regulation Unit.27

3.2.3. The Transport of Animals A zoo exhibits animals to the public, and this act is the foundation upon which zoos operate.28 This gives rise to legal obligations stemming from the fact that animals must be transported to the zoos.29 Before bringing in an animal the zoo keeper must deal with the VPRD, specifically the Trade Unit. The applicant must inform the Trade Unit that one is importing an animal at least forty-eight hours before it actually arrives. The Trade Unit makes use of a database known as ‘TRACES’ to keep track of wild animals being brought into Malta.30 Once the Trade Unit is informed of the animal being transported, the Animal Welfare Unit inspects the premises to ensure that it is adequate for the safety and welfare of the animal. If the site passes this inspection, the animal can be legally brought in.

EU Regulation 1 of 200531 (hereinafter Regulation 1/2005) pronounces rules regarding, inter alia, documentation required for 25

Ibid regulation 6.

26

Conservation of Wild Birds (Falconry) Regulations [2016], regulation 3(1).

27

Ibid regulation 4(3).

28

Dale Jamieson, ‘Zoos Revisited’ in Bryan G Norton et al (eds), Ethics on the Ark: Zoos, Animal Welfare, and Wildlife Conservation (Smithsonian Institution 1995).

29

Andrea Dorst, ‘Transportation and Shipping’ in Mark D Irwin et al (eds), Zookeeping: An Introduction to the Science and Technology (University of Chicago Press 2013).

30

The European Commission ‘TRACES: Trade Control and Expert System’ (European Commission) <http://ec.europa.eu/food/animals/traces_en> accessed 7 May 2018.

31

Council Regulation (EC) No 1/2005 of 22 December 2004 on the protection of animals during transported and related operations and amending Directives 64/432/EEC and 93/119/EC and Regulation (EC) No 1255/97.

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transport,32 transporters licensed to transport animals,33 inspection and approval of transport methods,34 authorisation for transport,35and enforcement and penalties in case of non-compliance.36 The rules become stricter if the journey is over 8 hours long.37 It is imperative that proper documentation is provided for any transported animals, to ensure that the transportation was carried out in a legal and proper manner.38 The VSA also provides regulations on how animals are to be transported. Legal Notice 203 of 200339 (LN 203/2003), which deals specifically with marine mammals, states that any person who ‘sell[s] by any method, buy[s], exchange[s], import[s], or export[s] any specimen in contravention of these regulations’ and ‘conspires or attempts, or aids, abets, counsels, or procures any other person to commit any of the above offences’ shall be ‘guilty of an offence’ under these regulations.40 LN 249/2016 states that the transport of falconry species must comply with ‘the provisions of these regulations’,41 and, if applicable, the provisions of CITES. Furthermore, both Malta and the EU as an institution are Parties to CITES,42 a widely adhered to treaty regulating trade in endangered species.43 ‘CITES is implemented in the EU through a set 32

Ibid Article 4.

33

Ibid Articles 5 and 6.

34

Ibid Article 7.

35

Ibid Article 10.

36

Ibid Articles 23 and 25.

37

Ibid Article 2(m).

38

Koontz (n 13) 141.

39

Marine Mammals Protection Regulations [2003].

40

Ibid regulation 10(1).

41

LN 249/2016 regulation 3(3).

42

CITES List of Contracting Parties (CITES) <https://www.cites.org/eng/disc/parties/chronolo.php> accessed 7 May 2018.

43

Ardith Eudey, ‘To Procure or not to Procure’ in Bryan G Norton et al (eds), Ethics on the Ark: Zoos, Animal Welfare, and Wildlife Conservation (Smithsonian Institution 1998) 149.

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of Regulations known as the EU Wildlife Trade Regulations’.44 CITES lists several species and categorises them into Appendices I, II, and III, affording such species different levels of protection according to which appendix they are listed under. CITES Parties ‘shall not allow trade of specimens of species included in Appendices I, II, and III except in accordance with the provisions of [CITES]’45 and ‘shall take appropriate measures to enforce the provisions of [CITES] and to prohibit trade in specimens in violation thereof.’46 EU Regulation 3626 of 82 (Regulation 3626/82)47 implements CITES into EU Law. Malta became a Party to cites in 1989 before it joined the EU, and transposed the provisions of the treaty in Legal Notice 236 of 2004 (hereinafter LN 236/2004).48 Therefore, if a zoo owner in Malta decides to engage in trade of an animal listed under these appendices, they must abide by these regulations. LN 236/2004 names the ERA as the Management Authority49 under these regulations and states that any person seeking to engage in trade of a specimen even if it is not in the appendices of CITES ‘shall apply in writing to the Management Authority on forms made available for the purpose by that Authority’.50 Moreover, anyone engaging in trade of such species has an obligation to obtain ‘the necessary information from the Management Authority [the ERA]’ to establish whether it is prohibited.51 A person possessing a species that is subject to these regulations also has the obligation to keep all documentary evidence available, 44

‘The European Union and Trade in Wild Fauna and Flora’ (European Commission) <http:// ec.europa.eu/environment/cites/legislatiron-en.htm> accessed 7 May 2018.

45

Convention on International Trade in Endangered Species of Wild Fauna and Flora [1973], article 2.

46

Ibid Article 8.

47

Council Regulation 3626/82 on the implementation in the Community of the Convention on International Trade in endangered Species of wild Fauna and Flora [1982] OJ L 384/1.

48

Trade in Species of Fauna and Flora Regulations [2004].

49

Ibid Article 3(1).

50

Ibid regulation 5.

51

Ibid regulation 6.

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including permits, certificates, and licences relating to that species.52

3.2.4.

The Registration of Animals

Under the VSA the owner or keeper of any animals must ‘identify and register animals’53 and ‘keep individual registers for each holding for which they are responsible’.54 Article 7 of the VSA establishes that the minister responsible for the VPRD has the power to make rules ‘establishing systems for the identification and registration of animals’.

Legal Notice 292 of 200555 (hereinafter LN 292/2005) transposes Directive 92/102/EEC56 into Maltese Law, according to which certain species of animals must be registered. However these regulations only apply to ‘bovine, ovine and caprine species and swine’.

Zoos are more likely to exhibit animals classified as exotic as opposed to the animals mentioned above.57 In 2016, Legal Notice 46 of 201658 (hereinafter LN 46/2016) were published. The aim of these regulations is to lay down a procedure for the registration of ‘dangerous’ animals.

However these regulations do not apply to licensed zoos.59 It should be noted that LN 265/2003 imposes an obligation on zoos to keep ‘up-to-date records of the zoo’s collection appropriate to the 52

Ibid regulation 7.

53

VSA (n 23) Article 35(c)(iii).

54

Ibid Article 35(c)(iv).

55

Identification and Regulation of Animals Rules [2005].

56

Council Directive 92/102/EEC of 27 November 1992 on the identification and registration of animals [1992] OJ L 355/32.

57 Mark Rosenthal and William A Xanten, ‘Safety Considerations in a Zoological Park’ in Devra G Kleiman et al (eds), Wild Mammals in Captivity: Principles and Techniques for Zoo Management (2nd edn, University of Chicago Press 2010).

58

Owning and Keeping of Dangerous Animals Regulations [2016].

59

Ibid regulation 1(3)(c).

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species recorded’,60 and one of the requirements issued with zoo licences is that of keeping a register of animals. Under LN 203/2003 any institution, including dolphinaria, oceanaria, and aquaria, that has been issued a permit to import and keep marine mammal species, will be written down in a register.61

3.2.5. Cooperation with Enforcement Procedures and Animal Health Laws Owners and keepers of animals have an obligation to ‘provide’ the necessary cooperation and assistance to all the officers of the veterinary services, the official veterinarian or his authorised staff, in the performance of any State veterinary activity’.62 The owner or keeper must allow the performance of veterinary inspections or examinations of any live animals63 and must also allow access to veterinary officials at any time, to the place where live animals are kept,64 and produce the necessary certificates or documents when a veterinary officer requests them.65 Neither Directive 1999/22/EC, nor LN 265/2003, nor the AWA impose such obligations on the owners or keepers of animals. However, they delineate the penalties to be imposed when such deviate from complying. These penalties will be discussed further on.

3.3. Legal Obligations regarding the Establishment and Administration of Zoos 3.3.1.

Protecting the Environment

60

LN 265/2003 (n 6) regulation 3(5).

61

LN 203/2003 (n 39) regulation 8(1).

62

VSA (n 23) article 35(b).

63

Ibid Article 35(b)(i).

64

Ibid Article 35(b)(iv).

65

Ibid Article 35(e).

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Under Articles 1166 and 19167 of the Treaty on the Functioning of the European Union (hereinafter the TFEU) and Article 368 of the EPA, it is clear that zoo owners must keep in mind the protection of the environment while carrying out any activity related to operating a zoo.

The requirement for an EIA to be carried out before a zoo is actually developed to protect the environment during the construction of the zoo has already been discussed. However the zoo owner is also obliged to protect the environment during the operation of the zoo. The EPA also imposes a duty on the Government to ‘protect the environment for the benefit of the present and future generations’.69 It must be noted, however, that these obligations are not ‘directly enforceable in court’, but rather that the principles should be ‘employed in the interpretation of the other provisions of [the EPA] or of any other law 66 Treaty on the Functioning of the European Union, Article 11: ‘Environmental protection requirements must be integrated into the definition and implementation of the Union’s policies and activities, in particular with a view to promoting sustainable development.’

67

Ibid: ‘1. Union policy on the environment shall contribute to pursuit of the following objectives: — preserving, protecting and improving the quality of the environment, — protecting human health, — prudent and rational utilisation of natural resources, — promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change.

2. Union policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Union. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay. In this context, harmonisation measures answering environmental protection requirements shall include, where appropriate, a safeguard clause allowing Member States to take provisional measures, for non-economic environmental reasons, subject to a procedure of inspection by the Union.

3. In preparing its policy on the environment, the Union shall take account of: — available scientific and technical data, — environmental conditions in the various regions of the Union, — the potential benefits and costs of action or lack of action, — the economic and social development of the Union as a whole and the balanced development of its regions.

4. Within their respective spheres of competence, the Union and the Member States shall cooperate with third countries and with the competent international organisations. The arrangements for Union cooperation may be the subject of agreements between the Union and the third parties concerned. The previous subparagraph shall be without prejudice to Member States’ competence to negotiate in international bodies and to conclude international agreements.’

68

EPA, article 3, ‘It shall be the duty of every person and entity, whether public or private, to protect the environment and to assist in the taking of preventive and remedial measures to protect the environment and manage natural resources in a sustainable manner’.

69

EPA (n 12) Article 4(1).

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relating to matters governed by [the EPA]’.70 A zoo has a prodigious effect on the surrounding environment.71 The EPA ensures that the performance of any activity in any ‘protected area’ is either ‘prohibited’ or ‘restricted as provided in relevant regulations or in a conservation order’.72 More specifically, LN 265/2003 obliges zoo owners to ‘prevent the escape of animals in order to avoid possible ecological threat to indigenous species and preventing intrusion of outside pests and vermin’.73 As party to the Convention on Biological Diversity (hereinafter the CBD) Malta has ‘to ensure that activities within [its] jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction’.74

3.3.2. Conserving and Protection Biodiversity Malta became a party to the CBD in 2001, whereas the EU as an institution became a party in 1994.75 The CBD was transposed into Maltese Law by Legal Notice 160 of 2002. Under the CBD, activities related to zoos fall under ex-situ conservation, which is ‘the conservation of components of biological diversity outside their natural habitat’.76 The CBD focuses on obliging Parties to implement policies that promote and conserve biodiversity in their country. In article 6, the CBD imposes upon Parties the obligation to create or adapt existing national strategies, plans, or programmes for the purposes of ‘conservation and sustainable use of biological diversity’. Article 6 also states that Parties must as much as possible, 70

Ibid Article 5.

71

Linda M Penfold, ‘Population Management’ in Mark D Irwin et al (eds), Zookeeping: An Introduction to the Science and Technology (University of Chicago Press 2013).

72

EPA (n 12) Article 69(3).

73

LN 265/2003 (n 6) regulation 3(5).

74

The Convention on Biological Diversity [1992] United Nations Article 3.

75

Convention on Biological Diversity List of Parties (CBD) <https://www.cbd.int/information/ parties.shtml> accessed 7 May 2018.

76

CBD (n 74) Article 2.

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and as appropriate, assimilate the conservation and sustainable use of biological diversity into ‘relevant sectoral or cross-sectoral plans, programmes, and policies’.

In the spirit of the CBD, LN 265/2003 establishes that one of the main obligations of zoo owners is the conservation of biodiversity:

The objectives of these regulations are to protect wild fauna and to conserve biodiversity by providing for the adoption of licensing and inspection of zoos on the territory of Malta in order to strengthen the role of zoos in the conservation of biodiversity. (emphasis added).77 Regulation 3 of LN 265/2003 lists the measures that zoos must take to conserve biodiversity. According to this regulation, zoos are obligated: 1. To participate in research benefitting the conservation of species, and, or, 2. To participate in training in applicable conservation skills, and, or, 3. To exchange information with other institutions concerning species conservation, and, or 4. If suitable, to participate in programmes involving captive breeding, repopulation, or reintroduction of species into the wild.

Zoos are also obliged to house animals in conditions which are in line with the biological and conservation needs of individual species, particularly ‘by providing species specific enrichment of the enclosures and maintaining a high standard of animal husbandry with a developed programme of preventing and curative veterinary care and nutrition.’ Furthermore, zoos are required to prevent the escape of animals to ‘avoid possible ecological threats to indigenous species’ and to prevent the ‘intrusion of outside pests and vermin’ as 77

LN 265/2003 (n 6) regulation 1.

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well as to keep up-to-date records of its collection.

Similar to the CBD, LN 265/2003 does not impose the obligation on the zoo operators, but rather states that it should be the VPRD that ‘takes measures’ using licences, the closure of zoos, and penalties imposed upon non-compliant zoo owners, ‘to ensure [that] all zoos implement [these] conservation measures’.78 However as of the writing of this article, the VPRD has only issued internal and nonbinding guidelines which are not publicly available, and no national legislation exists on the matter.

3.3.3.

Providing Public Education

Public education is one of the main responsibilities of modern zoos in their quest to promote the conservation of biodiversity.79 Among other obligations it imposes on Parties, the CBD specifies that Parties shall actively support public education and awareness by promoting and encouraging the ‘understanding of the importance of and the measures required for, the conservation of biological diversity, as well as its propagation through media and the inclusion of these topics in educational programmes’.80 Public education is also imposed upon zoos by LN 265/2003 which states that zoos must implement measures to promote ‘public education and awareness in relation to the conservation of biodiversity, particularly by providing information about the species exhibited and their natural habitats’.81 Therefore, it is the VPRD’s responsibility to ensure that the promotion of public education is listed as a requirement in any licence issued to a zoo, and to ensure that this requirement is adhered to through inspections and the threat of penalties.

78

Ibid.

79

Rees (n 17).

80

CBD (n 74) Article 13.

81

LN 265/2003 (n 6) regulation 3(b).

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3.4. Legal Obligations regarding Animal Welfare 3.4.1. General Animal Welfare Provisions The American Veterinary Medical Association defines animal welfare as ‘how an animal is coping with the conditions in which it lives’.82 Once a zoo introduces an animal to its enclosures, it has the obligation to protect that animal,83 particularly since ‘successful zoos’ require their animals to be healthy.84 Currently there are no international treaties that deal with animal welfare, although numerous animal welfare organisations are lobbying for a proposed Universal Declaration on Animal Welfare to be adopted by the United Nations. In the EU, animal welfare has gradually been given more importance.85 Article 13 of the TFEU states that the Union itself as well as the Member States shall ‘pay full regard to the welfare requirements of animals’.

Existing EU regulations on animal welfare are industry-specific such as Council Directive 98/58/EC, applying to farm animals.86 Currently there is no EU legislation dealing with animal welfare in general. In fact Directive 1999/22/EC does not mention animal welfare, limiting its scope to the protection of wild fauna and the conservation of biodiversity.

The AWA establishes the VPRD as the department concerned with animal welfare in Malta.87 The AWA imposes obligations on the State as well as any person who owns or keeps animals. In Article 3, the AWA states that the State must aspire to afford protection to 82 Animal Veterinary Medical Association, Animal Welfare: What Is It? (Avma) <https://avma. org/KB/Resources/Reference/AnimalWelfare/Pages/what-is-animal-welfare.aspx> accessed 8 May 2018.

83

Terry Maple and Bonnie M Perdue, Zoo Animal Welfare (Springer 2013).

84

Terry Maple et al, ‘Defining the Good Zoo’ in Bryan G Norton et al eds), Ethics on the Ark: Zoos, Animal Welfare, and Wildlife Conservation (Smithsonian Institution 1998) 222.

85

Jessica C Whitham and Nadja Wielebnowski, ‘New Directions for Zoo Animal Welfare Science’ [2013] 147 Applied Animal Behaviour Science 247-260.

86

Council Directive 98/58/EC of 20 July 1998 concerning the protection of animals kept for farming purposes [1998] OJ L 221/23.

87

AWA (n 10) Article 2.

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animals, prevent and punish the ill-treatment of animals, promote the welfare of animals through ‘the intervention of the State through the legislative, judicial and administrative organs’, as well as cooperate with animal welfare voluntary organisations.88 Furthermore, the AWA states that ‘animals shall not be caused any unnecessary pain, suffering or distress and no animals shall be abandoned’,89 and that ‘any person who keeps any animal or who agrees to look after an animal shall be responsible for its health and welfare’.90 These obligations apply to zoo operators as persons who keep animals.

More specifically, LN 203/2003 states that ‘no person shall, directly or indirectly […] maltreat or attempt to maltreat’ any of the marine mammals listed in its schedules.91 LN 249/2016 states that anyone owning and keeping a falcon species must safeguard the welfare of these animals, inter alia, by providing shelter and protection from the natural elements and ensuring the physiological needs of the animals.92 Additionally, ‘no person shall kill or injure, or cause any harm or attempt to kill or injure or cause any harm to any falcon either voluntarily, whether directly or indirectly, or through negligence or want of care’.93 On a political and ethical level, one of the ways to measure animal welfare is through the Five Freedoms of Animals (hereinafter the Five Freedoms), developed by the UK Farm Animal Council, and adopted by various professional animal groups such as the World Organisation for Animal Health and the American Society for the Prevention of Cruelty to Animals. These Five Freedoms are: i.

Freedom from hunger and thirst;

ii.

Freedom from discomfort;

88

Ibid Article 3.

89

Ibid Article 8(2).

90

Ibid Article 8(3).

91

LN 203/2003 (n 39) regulation 5(1).

92

LN 249/2016 (n 26) regulation 8(1).

93

Ibid regulation 8(2).

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iii.

Freedom from pain, injury, and disease;

iv.

Freedom to express normal behaviour;

v.

Freedom from fear and distress.94

Although these Five Freedoms themselves are not legally binding, they are used as guidelines to monitor animal welfare, particularly by the CAW, which serves as a watchdog of animal welfare in Malta.

3.4.2. Animal Welfare during Transport The AWA states that any animal which becomes sick or is injured while during transport must be given first-aid treatment at the first opportunity, including proper veterinary treatment, and if the animals has to undergo emergency slaughter than this should be done in a way that minimizes suffering.95 Regulation 1/2005 states that ‘no person shall transport animals or cause animals to be transported in a way likely to cause injury or undue suffering to them’.

Article 3 provides further conditions to be complied with, including that measures should be taken to minimise the length of the journey and to ensure that the animal’s needs are met during the journey, that the animal itself is fit to undertake the journey, and that the means of transport as well as loading and unloading facilities are such so as to minimise suffering and injury, and guarantee the safety of the animal. Furthermore any personnel handling the animal should be trained and cannot resort to methods that may cause fear, injury or suffering to the animals, the floor area and height provided should be appropriate for the size of the animal and the length of the journey, and proper water, feed and rest should be offered to the animal at appropriate intervals.

94

The Farm Animal Welfare Council, ‘Farm Animal Welfare in Great Britain: Past, Present, and Future’ (GOV UK, October 2009) <https://assets.publishing.service.gov.uk/government/ uploads/system/uploads/attachment_data/file/319292/Farm_Animal_Welfare_in_Great_Britain_-_Past__Present_and_Future.pdf> accessed 8 May 2018.

95

AWA (n 10) Article 26(2).

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3.5. Legal Obligations regarding Public Health and Safety 3.5.1.

Public Health and Safety

When humans and animals mix, as they do in a zoo, such a situation may give rise to threats to public health and safety,96 especially when taking into consideration the existence of zoonoses, which are diseases that are communicable between animals and humans.97 Disease is not the only way animals can threaten human health and safety. Many animals in zoos can pose physical dangers to human beings due to their strength or aggression.98 Therefore the possibilities of the escape of animals from a zoo or direct contact between animals and humans need to be minimised.99 The TFEU emphasises public health, stating that ‘a high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities’.100 The European Parliament and the Council have an obligation to contribute to the achievement of public health by adopting ‘measures in the veterinary and phytosanitary fields which have as their direct objective the protection of public health’.101 The Civil Code states that every person ‘shall be liable for the damage which occurs through his fault’,102 and that a person shall be deemed at fault if ‘in his own acts he does not use the prudence, diligence, and attention of a bonus paterfamilias’.103 Article 1040 of the Civil Code states that the owner of an animal, or any person using an animal, is responsible for any damage that the animal causes, and this applies even if the animal at the time had strayed or escaped. Consequently if any animal belonging to a zoo causes damage, it is the zoo owner who is responsible, even if the 96

Rees (n 17).

97

Rosenthal and Xanthen (n 57), Safety Considerations in a Zoological Park.

98

Ibid.

99

Rosenthal and Xanthen (n 21), Structural and Keeper Considerations in Exhibit Design.

100

TFEU Article 168(1).

101

Ibid Article 168(4)(b).

102

Civil Code, Chapter 16 of the Laws of Malta, Article 1031.

103

Ibid Article 1032(1).

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animal at the time had escaped and was outside of the zoo property, and that the zoo operator has the obligation to act with the level of attention of a bonus paterfamilias in preventing damage happening, whether to property or people.

Directive 1999/22/EC and LN 265/2003 do not mention the protection of public health and safety, although both state that one of the obligations set out in zoo licenses should be the prevention of the escape of animals. However this is qualified because the prevention of the escape of animals should be done ‘to avoid possible ecological threats to indigenous species and preventing intrusion of outside pests and vermin,’104 and therefore not actually to protect human health and safety.

The AWA states that ‘aggressive animals which may present a danger to the safety of man or other animals and which are classified as such by the Minister shall not be bred, imported or sold in Malta’.

In 2016 LN 46/2016 was promulgated, however these regulations do not apply to licensed zoos.105 Currently there are no regulations concerning the keeping of dangerous animals in zoos in relation to public health and safety. This is a serious lacuna.106 Article 5 of the VSA gives the Minister responsible for veterinary services the power to prescribe rules on the prevention and control of diseases. So far, this has resulted in subsidiary legislation dealing with particular diseases.107 Legal Notice 78 of 2005 transposed Directive 92/117/EEC concerning measures for protection against specified zoonoses and specified zoonotic agents in animals and products of animal origin in order to prevent outbreaks of food-borne infections and intoxications.108 104

Directive 1999/22/EC (n 4) Article 3; LN 265/2003 (n 6), regulation 3(d).

105

Ln 46/2016 (n 58) regulation 1(3)(c).

106

Rees (n 17).

107

Vide LN 58 of 2004, LN 510 of 2004, LN 145 of 2005, LN 305 of 2005, LN 310 of 2005, LN 208 of 2009, LN 314 of 2005, LN 256 of 2010, LN 267 of 2010, LN 225 of 2012, and LN 385 of 2012.

108 Council Directive 92/117/EEC of 17 December 1992 concerning measures for protection against specified zoonoses and specified zoonotic agents in animals and products of animal origin in order to prevent outbreaks of food-borne infections and intoxications [1992] OJ L 62/38.

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However, Directive 92/117/EEC was repealed and replaced by Directive 2003/99/EC on the monitoring of zoonoses and zoonotic agents. This Directive obligates Member States to regularly monitor, compile, analyse, and publish information about zoonoses. This Directive has yet to be transposed into Maltese Law. If any disease is identified the VPRD is obligated to notify trading partners of Malta within 24 hours.109 The VSA also imposes public health obligations on keepers of animals. Any owner, keeper, or importer of animals must observe the requirements imposed under the VSA concerning contagious diseases, and implement any rules related thereto.110 These include the obligation to ‘co-operate and assist in the control of contagious diseases, and in the declaration and notification to the veterinary services of any suspicion’ of contagious diseases,111 to ‘observe the orders imposed by the veterinary services in case of a suspected outbreak’ of disease,112 to ‘notify the veterinary services of any suspicion of zoonosis or other disease or any other phenomenon or circumstance liable to present a serious threat to animal or public health’,113 and to ‘generally assist and cooperate with the veterinary services in any activities, ordered by the veterinary services, designed to avoid the outbreak of diseases among animals or for the control thereof’.114 3.5.2. Animal Waste The presence of animals means the presence of animal waste, the disposal of which can create problems for zoo operators.115 The 109

VSA (n 23) Article 6.

110

Ibid Article 35(1)(c).

111

Ibid Article 35(1)(c)(i) and (vii).

112

Ibid Article 35(1)(c)(ii) and (viii).

113

Ibid Article 35(1)(f).

114

Ibid Article 35(m).

115

‘Keeping Animals in Captivity’, in John E Fa et al, Zoo Conservation Biology (Cambridge University Press 2011).

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legislation applicable with regard to animal waste116is Regulation 1774/2002117 which ‘lays down animal and public health rules for […] the collection, transport, storage, handling, processing, and use or disposal of animal by-products, to prevent these products from presenting a risk to animal or public health’.118 Regulation 1774/2002 organises different animal by-products into different categories, placing ‘manure and digestive tract content’ under Category 2.119 It sets out the means by which animal waste ‘shall be collected, transported, and identified’120 including, inter alia, regulations on the vehicles used for transport, commercial documents and health certificates, the retention of records and documents, temperature conditions, and control measures.121 Noticeably, Regulation 1774/2002 states that unless animal waste is being used for diagnostic, educational, and research purposes,122 it must be ‘directly disposed of […] by incineration in an incineration plant’,123 or processed in a processing plant to be then ‘disposed of […] by incineration’,124 or ‘used as an organic fertilizer or soil improver in compliance with requirements’,125 or ‘transformed in a biogas plant’,126 or ‘disposed of as waste by burial in a landfill’.127 Therefore it can be concluded that any animal owner has the 116 LN 184 of 2011 as amended by LNs 441 of 2011, 384 of 2012, 6 of 2014, and 382 of 2015 provides waste regulations however by virtue of regulation 3(2)(b) of these Regulations, animal waste is excluded as it is covered by Regulation 1774/2002.

117

Council Regulation 1774/2002 of the European Parliament and of the Council of 3 October 2002 laying down health rules concerning animal by-products not intended for human consumption [2002] OJ L 273

118

Ibid Article 1(1)(a).

119

Ibid Article 5.

120

Ibid Article 7.

121

Ibid annex II.

122

Ibid Article 23.

123

Ibid Article 5(2)(a).

124

Ibid Article 5(2)(b)(i).

125

Ibid Article 5(2)(c)(i).

126

Ibid Article 5(2)(c)(ii).

127

Ibid Article 5(2)(c)(iii).

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legal obligation to get rid of animal waste in the appropriate manner.

The glaring problem is that in Malta there are no actual sites where animal waste can be disposed of, save for the incinerator at the Public Abattoir which is frequently shut down for maintenance. As a result most animal waste is dumped illegally either onto farmlands to be used as manure even though it is untreated, or directly into the sewage system, which is also illegal as it can cause problems such as blockage.

3.6. Conclusion Proper regulation and legislation of zoos is critical to ensure that zoo operators work within a solid framework that imposes obligations upon them to guarantee the maintenance of proper standards in the zoo.128 Furthermore legislation is key in obligating the Competent Authorities to monitor zoos and hold zoo operators to their legal obligations, as well as giving such authorities the powers required to be able to enforce legal obligations. The piecemeal nature of legal obligations pertaining to Maltese zoos has consequences on both the actual conditions of zoos as well as the enforcement of these legal obligations. These consequences will be discussed further on in this thesis.

4.

De Facto: The Reality of Zoos in Malta and Institutional Problems Having elicited the various legal obligations incumbent on zoo operators in the previous chapter, it is apt to say that the current state of play is far removed from what the law expects of zoos in Malta.

This chapter will analyse the reality of zoos in Malta, in particular the reality of the administration of zoos, as well as the de facto situation with regard to the zoos’ duties of promoting the conservation of biodiversity and public education, promoting animal welfare and 128

Rees (n 17).

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protecting public health and safety. The chapter will then attempt to identify the institutional problems that give rise to the current challenging situation.

Due to a lack of published literature on the subject and the unwillingness of zoo owners to divulge information, one of the main reference points in assessing the state of play of zoos in Malta will be the EU wide inquiry carried out by the Born Free Foundation (hereinafter the Inquiry).129 The Inquiry involved inspections carried out in several EU Member States, including Mala. Individual reports were conveyed for each country investigated, and one general report (hereinafter the General Report)130 was issued for the EU as a whole.

The report issued for Malta specifically concerns the situation of zoos in Malta (hereinafter the Maltese Report).131 Moreover, as of 2016, the EU Commission has initiated a roadmap regarding the intended evaluation of Directive 1999/22/EC as part of the EU Commission’s REFIT Evaluation programme.132 In March 2017 the European Commission published the Interviews Report.

Although Maltese stakeholders did not take part in the Interviews Report such report is pertinent as it aims to evaluate the applicable EU legislation on zoos and its implementation in Member States.

129 ‘The EU Zoo Inquiry’ (Born Free Foundation) <http://www.bornfree.org.uk/campaigns/zoocheck/zoos/eu-zoo-inquiry/> accessed 8 May 2018.

130

The Born Free Foundation in association with ENDCAP, The EU Zoo Inquiry 2011: An Evaluation of the Implementation and Enforcement of the EC Directive 1999/22, relating to the Keeping of Wild Animals in Zoos – REPORT FINDINGS AND RECOMMENDATIONS (Born Free Foundation 2012) <http://endcap.eu/wp-content/uploads/2013/02/EU-Zoo-inquiry-Report-Findings-and-Recommendations.pdf> accessed 10 May 2018.

131

The Born Free Foundation in association with ENDCAP, The EU Zoo Inquiry 2011: An Evaluation of the implementation and Enforcement of the EC Directive 1999/22, relating to the Keeping of Wild Animals in Zoos – MALTA (Born Free Foundation 2012) <http://www.bornfree. org.uk/zooreports/Malta/> accessed 10 May 2018.

132 Evaluation and Fitness Check (FC) Roadmap, ‘REFIT Evaluation of the Zoos Directive 1999/22/EC’ (European Commission 2015) <http://ec.europa.eu/environment/nature/legislation/refitzoosdirective/index_en.htm> accessed 8 May 2018.

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4.1. The Condition of Zoos in Malta This section will attempt to analyse the situation of zoos in Malta, organising itself into the same categories used to analyse legal obligations binding on zoo owners and the VPRD, i.e. the administration of zoos, the duty of zoos to promote environmental conservation and public education, the duty of zoos to animal welfare principles, and the duty of zoos to protect public health and safety.

This section will rely heavily on the Inquiry. In Malta the Inquiry observed three zoos, one of which was unlicensed.133 The Maltese Report sums it up thus: ‘findings from this investigation indicate that LN 265/2003 is not being consistently applied […] and none of the licensed zoos included in the investigation appear to comply with all of their legal obligations’.134 In 2012 a follow up visit was conducted on two of the three analysed zoos. Tellingly, ‘no significant changes were observed’.135

4.1.1. The Reality of the Administration of Zoos A list of licensed zoos in Malta is publicly available on the Parliamentary Secretary for Agriculture, Fisheries, and Animal Rights’ website.136 However, although not officially acknowledged, there are actually several other sites that under LN 265/2003 qualify as zoos and are currently open to the public, but lack either a permit from the PA, or a licence from the VPRD, or both.

Such zoos are therefore operating illegally and are not subject to the inspections carried out by public officers nor are they subject to the requirements that the VPRD sets out in issuing a licence to a zoo.

133

The General Report (n 130) 16.

134

The Maltese Report (n 131) 30.

135

Ibid 36.

136

‘List of Licensed Zoos in Malta’ (Agriculture Department) <https://agriculture.gov.mt/en/ vrd/Documents/2017/animalWelfareSection/Lists%20of%20Zoo.pdf> accessed 8 May 2018.

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The Maltese Report describes the implementation of licensing requirements on zoos in Malta as ‘minimal’.137 The lack of ‘reporting and monitoring requirements’ and the lack of requirements ‘on the content of inspections or qualification of inspectors’ presented in Directive 1999/22/EC was pointed out by interviewed NGOs in the Interviews Report as one of the major defaults of Directive 1999/22/ EC.138 Moreover out of all the licensed zoos in Malta, only one claims to be a member of an international organization for animals.139 None are members of the world Association for Zoos and Aquariums (hereinafter WAZA)140 or the European Association of Zoos and Aquaria (hereinafter EAZA),141 even though it is a documented fact that these associations have had a beneficial effect on the standards of member zoos.142

4.1.2. The Reality of Biodiversity and Conservation including Public Education in Zoos Arguably, zoos have the potential to be great driving forces in the promotion of biodiversity,143 in particular with their contribution to public education and research. Although LN 265/2003 identifies the conservation of biodiversity to be the main aim of zoos, the reality is that efforts to promote biodiversity and conservation including public education are quite unsatisfactory.144 Few zoos in 137

The Maltese Report (n 131) 30.

138

Interviews Report (n 16) 10-11.

139

‘Mediterranean Bio Park Malta’, (Mediterraneo Park) 2 <http://www.mediterraneopark.com/ pdf/bookletWebMediterraneo.pdf> accessed 8 May 2018.

140 World Association for Zoos and Aquariums ‘Members’ (WAZA) <http://www.waza.org/en/ site/about-waza/members> accessed 10 May 2018.

141

European Association for Zoos and Aquaria, ‘Where are EAZA Members Located?’ (EAZA) <http://eaza.net#map_home> accessed 8 May 2018.

142

Whitham et al (n 85).

143

Rees (n 17).

144

The Maltese Report (n 131) 17, ‘The results indicate that the zoos’ overall commitment to the

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Malta actually partake in ex-situ conservation activities as expected under regulation 3 of LN 265/2003.145 Neither do they take part in conservation activities contributing to in situ conservation.146 The Maltese Report concludes that ‘Malta’s zoos are not contributing to the conservation of biodiversity and the protection of fauna’.147 This shortcoming demonstrates that they are failing to fulfil a substantive legal obligation required to operate a zoo under applicable law.

The Maltese Report states that the majority of species held in Maltese zoos are species of low conservation importance.148 It can be argued that since these animals are of low conservation importance, breeding and keeping them in zoos is an unnecessary exercise since there is no need for ex-situ conservation of that particular species,149and the zoo’s effort should go towards promoting the conservation of species that are endangered or at risk of becoming endangered,150 as well as the conservation of the actual natural habitat that is under threat due to human activities.151 Furthermore, there are no indications that Maltese zoos are placing importance on conservation of species that are endemic or indigenous to the Maltese territory.

The conservation of regional fauna, as well as flora, is key in ensuring that conservation is promoted for all types of biodiversity,152 conservation of biodiversity is low’.

145 Ibid 19 ‘The results indicate a minimal commitment by the selected zoos to ex situ conservation’; ibid 33 ‘None of the zoos appear to undertake scientific research, benefitting species conservation’.

146

Ibid ‘However, no evidence could be found to confirm that any of the zoos assessed in Malta are engaged in such programmes’.

147

Ibid 33.

148

Ibid 18 ‘These data indicate that the great majority of species exhibited in the zoos were of low conservation importance’.

149

Carrie Fries, Cloning Wild Life (NYU Press 2013) 141.

150

‘Protecting Species and Habitats’ in John E Fa et al, Zoo Conservation Biology (Cambridge University Press 2011).

151

Robert Vrijenhoek, ‘Natural Processes, Individuals, and Units of Conservation’, in Bryan G Norton et al (eds), Ethics on the Ark: Zoos, Animal Welfare, and Wildlife Conservation (Smithsonian Institution 1995) 74.

152

Gerald Dick and Markus Gusset, ‘Conservation Biology’, in Mark D Irwin et al (eds), Zoo-

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and not just ‘charismatic megafauna’.153 Public education is a legal obligation imposed on zoo operators by article 3 of Directive 1999/22/EC and regulation 3 of LN 265/2003.

Public education in Maltese zoos is minimal. The Maltese Report found that ‘educational value is generally poor’,154 that ‘on average 51% of species holdings completely lacked any form of species information signage’155 and that ‘signage for 11% of species holdings, over the three zoos, was incorrect […] while others displayed only minimal information about the species’.156 The Maltese Report stresses that ‘overall Maltese zoos must dramatically improve the quality of public education and in a way that does not compromise any animal’s welfare’.157 Additionally, several zoos purport to educate the public by having the animals demonstrating in shows. Many of these animals end up performing little more than ‘circus tricks’ that are not natural movements for the animals,158 thereby defeating the public education aspect of the demonstration159 and providing a ‘distorted view of an animal’s natural behaviour’.160 The demonstration of atypical behaviour quashes any educational value the public could gain from such demonstrations.161 The NGOs interviewed in the Interview Report suggested that all animal keeping (University of Chicago Press 2013).

153

David Hancocks, ‘Lions and Tigers and Bears, Oh No’ in Bryan G Norton et al (eds), Ethics on the Ark: Zoos, Animal Welfare, and Wildlife Conservation (Smithsonian Institution 1995) 35.

154

Maltese Report (n 131) 34.

155

Ibid 22.

156

Ibid.

157

Ibid 34.

158

Michael D Kreger et al, ‘Context, Ethics, and Environmental Enrichment in Zoos and Aquariums’ in David J Shepherdson et al, Second Nature: Environmental Enrichment for Captive Animals (Smithsonian Institution 1998) 62.

159

The Maltese Report (n 131) 20 ‘photographs on the website displayed animals performing unnatural behaviours’.

160

Ibid 34

161

Kreger et al (n 158) 61.

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performances be prohibited as ‘such performances are not in line with the objectives of conservation of wild animals’.162

4.1.3. The Reality of Animal Welfare in Zoos Although animal welfare is not specified in directive 1999/22/EC or LN 265/2003, animal keepers in Malta have a duty to look after the welfare of animals that they keep under article 8 of the AWA. Animal welfare considerations are critical in the operation of zoos.163 Among other factors, both the General Report and the Maltese Report considered the Five Freedoms in their analysis.164 The findings of the Maltese Report indicate that the various legal obligations relating to animal welfare, as well as the Five Freedoms, are not complied with.

The Maltese Report notes that ‘the majority of the enclosures did not adequately provide for the species-specific needs of the animals exhibited’165 and ‘natural behaviour was compromised or prevented’.166 Abnormal behaviours in captive animals ‘are those that are atypical of wild living individuals, whether absent or occurring only rarely’167 and the demonstration of such abnormal behaviour is a firm indicator of lack of animal welfare.168 The Maltese Report further states that ‘the health and welfare of many animals within the three zoos may well be compromised’.169 In 2008, a licensed zoo in Malta made it onto the People for the Ethical Treatment of Animals’ list of ‘Europe’s Cruellest Destinations’.170 For Cetacean Freedom (CETFREE), a coalition of 162

Interviews Report (n 16) 11.

163

Mark D Irwin, Principles of Animal Health in Mark D Irwin et al (eds), Zookeeping: An Introduction to the Science and Technology (The university of Chicago Press 2013).

164

The Maltese Report (n 131) 23.

165

Ibid 27.

166

Ibid 34.

167

Lucy P Birkett and Nicholas E Newton-Fisher, ‘How Abnormal is the Behaviour of Captive, Zoo-Living Chimpanzees’ [2011] 6(6) PLOS ONE e20101.

168

Maple and Perdue (n 83).

169

The Maltese Report (n 131) 35.

170

PETA ‘Europe’s Cruellest Destinations’ (PETA) <http://www.peta.org.uk/living/europes-cruellest-destinations/> accessed 8 May 2018.

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local animal rights NGOs has also intermittently denounced the poor conditions of captive marine mammals in Malta.171 In its analysis the Maltese Report found that various animals did not have access to proper food sources172 and water sources,173 conditions were cramped174 and unhygienic,175 bringing down the quality of animal welfare in such zoos, which is a vital component of zoo standards.176 On top of this, many animals in the Maltese zoos were observed as not having shelter from the weather and climate,177 or a form of shelter that could provide them with privacy 171

‘NGOs call for ban on marine mammal imports’ (Times of Malta, 16 October 2003) <http://www.timesofmalta.com/articles/view/20031016/local/ ngos-call-for-ban-on-marine-mammal-imports.138855> accessed 8 May 2018; Annalise Falzon ‘More dolphin exploiting tricks’ (MaltaToday, 13 June 2004) <http://archive.maltatoday.com.mt/2004/06/13/l1.html> accessed 8 May 2018; Malta Independent ‘Marine Mammals kept in stressful conditions, CETFREE claims’ (The Malta Independent, 3 September 2006) <http://www.independent.com.mt/articles/2006-09-03/ news/marine-mammals-kept-in-stressful-conditions-cetfree-claims-96232/> accessed 8 May 2018.

172

Maltese Report (n 131) 28 ‘67% of enclosures did not [...] provide an adequate quantity of food, or provide appropriate food’; ibid 35 ‘ food delivery […] failed to adequately provide for all the individual animals within the enclosure’

173 ibid 23 ‘Drinking water for some of the animals in all the zoos was observed to be dirty and unhygienic’; ibid 26 ‘on average 27% of enclosures did not provide’ clean drinking water; ibid 28 ‘on average 31% of enclosures did not provide the animals with access to clean drinking water’.

174

ibid 24 ‘For many animals in the three zoos, conditions were often cramped and did not adequately take into account the needs of the species’; ibid 25 ‘This situation is possibly exacerbated by the fact that animals were often unable to […] distance themselves from cage companions’; ibid 26 ‘on average 51% of the randomly-selected enclosures were of an inadequate size and complexity’; ibid 28 ‘100% of enclosures did not provide the opportunity to divide or separate the animals if necessary’; ibid 28 ‘64% of enclosures […] did not allow the animals to obtain sufficient distance from their cage companions’; ibid 28 ‘on average 47% of enclosures did not provide shelters to accommodate all animals at the same time’; ibid 28 ‘on average 36% of enclosures were not considered to be large enough for the species contained’; ibid 28 ‘on average 11% of enclosures were considered overcrowded’; ibid 35 ‘available shelter failed to adequately provide for all the individual animals within the enclosure’.

175

ibid ‘Poor levels of hygiene, including an unacceptable build-up of faeces […] were observed’; ibid 26 ‘on average 34% of enclosures were considered unhygienic’; ibid 28 ‘on average 38% of enclosures had an unacceptable build-up of excrement’.

176

Ron Kagan and Jake Veasey, Challenges of Zoo Animal Welfare in Devra G Kleiman et al (eds), Wild Mammals in Captivity: Principles and Techniques for Zoo Management (2nd edn, University of Chicago Press 2010).

177

Maltese Report (n 131) 24 ‘Few enclosures appeared to have sufficient shade to allow the animals to escape the extreme temperatures’; ibid 26 ‘on average 15% of enclosures subjected

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from onlookers178 or an area where they could rest.179 Most enclosures lacked environmental enrichment facilities required by certain species ‘to carry out natural behaviours’180 and animals were observed to be displaying unnatural behaviours probably caused by stress.181 Environmental enrichment is key in keeping species healthy182 and a lack of environmental enrichment causes poor health and displays of atypical behaviour in species.183 Furthermore the Maltese Report points out that many animals are in direct or very close contact with humans.184 ‘Concerns exist regarding the possible stress caused to animals as a result of direct the animals to extremes of temperature’; ibid 28 ‘67% of enclosures did not provide facilities to mitigate climatic extremes’.

178

ibid ‘enclosures in all three zoos were also lacking shelters to allow the animals to seek refuge and privacy from view’; ibid 25 ‘This situation is possibly exacerbated by the fact that the animals were often unable to seek shelter or privacy from view’; ibid 28 ‘74% of enclosures did not provide the animals with access to multiple privacy areas’; ibid 28 ‘on average 29% of enclosures allowed the public a 360˚ view of the enclosures (and therefore the species exhibited had very little privacy’.

179 ibid 26 ‘on average 68% of the randomly-selected enclosures failed to provide appropriate structures of facilities to allow the animals to rest properly’.

180

ibid 24; ibid 28 ‘90% of the enclosures did not include any behavioural or occupational enrichment items or techniques such as toys or feeding devices’; ibid 28 ‘74% of enclosures were not considered environmentally-varied’; ibid 28 ‘67% of enclosures did not provide facilities to […] allow all animals within access to species-specific furnishings at the same time’; ibid 28 ‘on average 31% of enclosures did not contain species-specific furnishings that could be moved around the enclosure, commonly recognised as a way of providing a more stimulating captive environment’; ibid 35 ‘Enclosures were found to lack static furnishings and environmental complexity to encourage natural animal behaviour […] and environmental enrichment items, devices and apparatus to physical and mentally stimulate the captive animals, were largely non-existent’.

181

ibid 25 ‘Numerous observations were recorded where the animals appeared agitated or displayed abnormal, repetitive behaviour associated with stress and poor welfare’; ibid 28 ‘on average 23% of enclosures contained animals that appeared to be disinterested by their surroundings (possible apathy)’.

182

Geoff Hosey, Vicky Melfi, and Sheila Pankhurst, ‘Behaviour’ in Geoff Hosey et al, Zoo Animals: Behaviour, Management, and Welfare (Oxford University Press 2013).

183 Hal Markowitz and Cheryl Aday, ‘Power for Captive Animals’ in David J Shepherdson et al (eds), Second Nature: Environmental Enrichment for Captive Animals (Smithsonian Institution 1998) 49.

184

The Maltese Report (n X) 28 ‘on average 43% of the enclosures allowed the public to come into close proximity with the animals’.

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public contact’,185 which can be very unhealthy for the species.186 The Maltese Report notes that in one enclosure ‘discarded food wrappers littered the floor’, which is a concern since ‘inappropriate foods may cause the animals harm’.187 Several animals were made to demonstrate unnatural tricks, which can cause trauma to the animal.188 Regarding one licensed zoo in Malta, former Whale and Dolphin Conservation campaigner Nicolas Entrup, remarked that ‘captive displays are not about conservation at all’.189 The Maltese Report concludes that:

Findings indicate that few of the enclosures analysed as part of this investigation provided the species contained with adequate living conditions and therefore most were not in compliance with the minimum requirements as specified by Article 3(3), LN 265/2003.190

4.1.4. The Reality of Public Health and Safety in Zoos Public health is a concern in zoos both due to the transmission of diseases as well as physical threats on humans due to the size and aggressiveness of certain animals.191 Although article 168 of the TFEU states that ‘a high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities’, there is a pronounced lack of safety measures in Maltese zoos.

185

ibid; ibid 26 ‘on average 15% of enclosures subjected the animals to possible undue stress due to proximity of the public’.

186

Janet F Baer, ‘A Veterinary Perspective of Potential Risk Factors in Environmental Enrichment’ in David J Shepherdson et al (eds), Second Nature: Environmental Enrichment for Captive Animals (Smithsonian Institution 1998).

187

Ibid.

188

Ibid 21 ‘it was accompanied by loud music and it consisted of the animals performing largely unnatural, circus-like and comical ‘anthropomorphic’ behaviour’.

189

‘Dolphins held in Captivity’ (WDC) <http://uk.whales.org/dolphins-held-in-captivity-malta> accessed 9 May 2018.

190

Maltese Report (n 131) 28.

191

R Eric Miller and Murray E Fowler, Fowler’s Zoo and Wild Animal Medicine Volume 7 Current Therapy (Elsevier Health Sciences 2011).

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One of the most concerning facts is that some zoos in Malta actively encourage direct contact between the public and animals on display, even when such animals are identified as high risk species which can have severe consequences on both the human and the animals involved.192 The Maltese Report states that although such direct contact was carried out ‘under the supervision of zoo staff’193 it was observed ‘that members of the public were ill prepared prior to contact with animals through the provision of information concerning the potential risks of physical injury or transmission of zoonoses and the need to respect the animals’.194 The Maltese Report voices concern that ‘the large numbers of public parking participants believed to take part in these activities would make any situation difficult to control’, and impresses that ‘all public contact with ‘Hazardous Animals’, and those species known to harbour zoonoses, should be prohibited’.195 Additionally it was observed that there was a significant lack of ‘signage warning the public about the potential risks involved’.196

4.2. Institutional Problems This section aims to identify the various institutional problems present in the Maltese system of zoos that give rise to the unsatisfactory conditions discussed above. These institutional problems have been categorised into 3 sections: i. Problems with compliance with legislation in zoos; ii. Problems with administration in zoos; iii. Problems with enforcement of legislation in zoos.

192

Rees (n 17).

193

Maltese Report (n 131) 17.

194

Ibid 32.

195

Ibid 33.

196

Ibid.

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4.2.1. Problems with Legislation of Zoos One of the main sources of problems with regard to zoos is the legislation that governs the area. Proper legislation is critical to keeping up standards within the zoos themselves.197 Simply glancing at LN 265/2003 reveals a major issue – LN 265/2003 transposes Directive 1999/22/EC almost verbatim and does not add anything to it. According to article 288 of the TFEU, ‘a Directive shall be binding as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods’ (emphasis added). Therefore, of its very nature, a Directive is somewhat general in its provisions – it describes the results that must be attained by Member States, but it does not specify the methods by which the Member State must reach these aims, leaving it up to the Government of the Member State to implement policies.

The Maltese Report notes that ‘national laws […] lack detailed provisions […] as well as clear strategies for dealing with animals in the event of a zoo closure. The Directive’s requirements themselves are relatively ambiguous and allow for inconsistencies in interpretation’.198 The Maltese Report further states that LN 265/2003 provides ‘no additional provisions, or written guidance to bring clarification to definitions, explanation of the ambiguous requirements, or instruction on its application and enforcement’199 and proposes that ‘the lack of additional provisions to LN 265/2003 may well contribute to the identified noncompliance’.200 The Maltese Report cites this as a ‘key oversight of the Government, particularly when there are legal means to implement more stringent regulations through the AWA’.201 Furthermore, although the VPRD does provide guidelines to zoos, it does so on a case by case basis, and such guidelines are 197 John B Stoner et al, ‘Introduction to Regulation of Zoos and Aquariums’ in Mark D Irwin et al (eds), Zookeeping: An Introduction to the Science and Technology (University of Chicago Press 2013).

198

Maltese Report (n 131) 9.

199

Ibid 30.

200

Ibid.

201

Ibid 31.

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published internally as opposed to being publicly available – ‘there does not appear to be any published written guidance’.202Although it is true that different zoos have different requirements, therefore requiring a bespoke set of guidelines,203 it would be beneficial to have a set of minimum requirements to which each zoo must adhere.204 Such guidelines would include minimum requirements regarding the obligations of zoos to promote conservation of biodiversity and public education, animal welfare, as well as public health and safety.

It must also be noted that certain issues that crop up due to zoos are not in fact legislated upon. The most prominent issues in this regard is public health and safety in zoos, for which there is a lack of specific legislation. This was noted in the Maltese Report, which states ‘there are no apparent measures to specifically protect the public (and zoo employees) despite the obvious potential risk of danger and LN 265/2003 makes no reference to public safety’205 and that ‘Maltese zoo legislation appears to be failing to take adequate preventative measures to protect the public against potential injury and disease’.206

4.2.2. Problems with the Administration of Zoos The daily management of affairs, i.e. the administration of zoos, comes with several problems of its own.207 As mentioned in the previous section, the lack of published minimum requirements for guidelines is an issue. With regard to the administration of zoos it means that there is no set baseline for conditions to which those responsible for a zoo can refer.208 It is important that the VPRD sets 202 Ibid 14 ‘There are no written requirements or guidance on educational activities undertaken by zoos’.

203

Rees (n 17).

204

Stoner et al (n 197).

205

The Maltese Report (n X) 16.

206

Ibid 33.

207

Joseph Barber et al, ‘Setting Standards for Evaluation of Captive Facilities’ in Devra G Kleiman et al (eds), Wild Mammals in Captivity: Principles and Techniques for Zoo Management (2nd edn, University of Chicago Press 2010).

208

Rees (n 17).

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out guidelines on a case by case basis due to the inherent differences between one zoo and another, however this evaluation may take time, and in the meantime a set of global requirements would come into play, rather than leaving a zoo in a ‘guidelines vacuum’.

A major problem that requires immediate action is the lack of infrastructure available to the VPRD as the competent authority monitoring zoos. Lack of staff and lack of resources are problems faced by numerous Government authorities which the VPRD is no stranger to, however certain exotic or wild animals that are kept in zoos come with their own set of complications.209 One of the foremost problems is the fact that, if the VPRD identifies a need to remove the animals from a zoo, it cannot do so because it does not have a place where it can keep them, in the appropriate welfare conditions, until they can be moved on. In December 2016 a Government source was quoted as saying, ‘it’s not like we can move them to government facilities; we’re talking about tigers not cattle’.210 When queried about this issue of illegal zoos in January 2015 the incumbent MEPA CEO Mr Johann Buttigieg made similar comments:

‘Where would we put the animals if we were to close down the zoo? We do not have a place for them.

We do not intend to close down an illegal zoo and open another’.211 When asked specifically about this problem, the CAW commented that ‘by asking the zoo to close its doors, the animals could end up suffering more’.212 It must be noted here that the decision to move 209

Maple et al (n 84).

210

Ivan Martin, ‘Tigers and Lions stuck in Montekristo Limbo’ (Times of Malta, 4 December 2016) <https://www.timesofmalta.com/articles/view/20161204/local/tigers-and-lions-stuck-inmontekristo-limbo.632789> accessed 9 May 2018.

211

John Cordina, ‘Proposed Laws may stop construction of illegal Zoos’ (The Malta Independent, 8 January 2015) <http://www.independent.com.mt/articles/2015-01-08/local-news/Proposed-law-may-stop-construction-of-illegal-zoos-6736128370> accessed 9 May 2018.

212

Helena Grech, ‘Animal Welfare Chief blasts MEPA for letting illegal Montekristo Zoo grow so large’ (The Malta Independent, 30 November 2015) <http://www.independent.com.mt/articles/2015-11-30/local-news/Animal-Welfare-chief-blasts-MEPA-for-letting-illegal-Montekristo-

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animals from a zoo is not a decision that is taken lightly, bearing in mind that the welfare of the animal may be threatened more by the act of moving such animals as opposed to leaving them in the zoo to which they have acclimatised. However this lack of infrastructure is still problematic.

Another concern that rises due to a lack of infrastructure is the disposal of animal manure.213 Although the disposal of animal manure is regulated by Regulation 1774/2002 there is no actual facility in Malta that can deal with and treat animal manure,214 although there are plans to set up one. This means that zoo owners must either keep the manure on their land, or find other, illegal, methods to get rid of it, such as dumping it on farms to be spread on fields as fertiliser, which can be dangerous to human health if the manure is not treated before it is spread,215or dumping it into the sewage system where it can cause blockages and other problems.

Another issue is the lack of cooperation with European and international organisations, as well as local NGOs. As noted above, at the time of writing, no zoo in Malta is a member of WAZA or EAZA, and only one zoo claims to be a member of an international organisation. This means that zoos in Malta are missing out on the resources available to them as members of such international organisations, which could, in particular, supplement and fill the lacunae in domestic legislation.216 The EAZA describes its mission as being ‘to facilitate cooperation within the European zoo and aquarium community towards the goals of education, research and conservation’.217 The EAZA carries out numerous programmes and zoo-grow-so-large-6736149306> accessed 9 May 2018.

213

Baer (n 186).

214

Caroline Muscat ‘Animal Farms still forced to dump waste illegally’ (Times of Malta, 23 April 2014) < http://www.timesofmalta.com/articles/view/20140423/local/Animal-farms-still-forcedto-dump-waste-illegally.516025> accessed 9 May 2018.

215

Rosenthal and Xanthen (n 57).

216

Bryan Norton, ‘Caring for Nature: A Broader Look at Animal Stewardship’ in Bryan G Norton et al (eds), Ethics on the Ark: Zoos, Animal Welfare, and Wildlife Conservation (Smithsonian Institution 1995).

217

EAZA ‘About Us’ (Eaza.net) <http://eaza.net/about-us/> accessed 9 May 2018.

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projects in research and conservation from which Maltese zoos can benefit and has issued an extensive list of documents setting out, inter alia, guidelines, standards, strategies, and codes of conduct to be followed by animal zoo owners. Furthermore, zoos in Malta are notoriously reluctant to cooperate with local and foreign NGOs. Although it is true that NGOs come with their own set of issues, the reality is that these NGOs can provide both zoo operators and the VPRD with experience and knowledge, particularly in ensuring that zoos comply with obligations incumbent on them. International organisations and NGOs can also serve as watchdogs, complementing the monitoring responsibilities of the VPRD.218 The trend of keeping problematic zoo issues under wraps and away from public eyes also means that there is a lack of public awareness of the issues facing zoos in Malta. After incidents that happened in November 2015 and April 2016 were young children were injured by wild animals in the same illegal zoo, it was apparent that many members of the public were not even aware of the presence of numerous zoos in Malta, much less the dire conditions that they are in. Public awareness and public interest forces the hand of the State to take action on a situation, which could otherwise be ignored.

In 2014, the AWA was amended to prohibit the use of animals in circuses, lauded as a major step forward for animal welfare in Malta.

The bill amending the AWA to ban animal circuses was backed by considerable public support as well as several NGOs, and is proof that when the public becomes aware of an issue it can lead to major changes and to reform.

The majority of the work to be done regarding zoos is left up to the VPRD. This means that ‘the regulation of zoos in Malta is under the control of, but also at the discretion of’219 the VPRD, which, as explained above, lacks the resources to implement its regulatory role.

Moreover, the lack of published and public guidelines is a result of a structure that allows everything to be handled internally. ‘Whilst advice might be given […] there is no guarantee of consistency 218

Rees (n 17).

219

The Maltese Report (n 131) 31.

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and transparency in application, or a legal obligation for the zoos to comply’.220 At the same time however zoos fall under at least three different enforcement jurisdictions: official veterinarians, animal offices, as well as environmental officers. Without a proper delineation of powers this state of affairs has resulted in a ‘too many cooks’ situation where rather than having regular monitoring and enforcement, the various officials involved are in fact not entirely sure of the limits of their authority, and prefer to err on the side of caution so as not to risk interfering with other offices’ competences.

4.2.3. Problems with Enforcement of Legislation on Zoos Even if the legislation governing an area is in an optimal state, its effectiveness can be rendered useless without proper enforcement.221 When, as is the situation with zoos in Malta, the legislation is not strong, enforcement becomes even more important, as a way to control inconsistencies.222 During interviews carried out with various professionals in the field, the number one complaint was the weak enforcement measures carried out on zoos in Malta. The various laws affecting Maltese zoos all include enforcement obligations.223 It is also pertinent to note that all members of the Police Force and local wardens are considered to be animal welfare officers.224 However, the simple fact that unlicensed and illegal zoos knowingly exist calls into question the effectiveness of the enforcement carried out and ‘is evidence of failures inherent in the system’.225 As highlighted earlier zoos in Malta are not complying with their obligations toward animal welfare, or their obligations on biodiversity and conservation as required under LN 265/2003. The Maltese Report considers this 220

Ibid 31.

221

Liping Fang et al, ‘Compliance Models for Enforcement of Environmental Laws and Regulations’ in A Dan Tarlock and John C Dernbach (eds), Environmental Laws and their Enforcement Volume II (EOLSS Publications 2009).

222

Miller and Fowler (n 191).

223

LN 265/2003 (n 6) regulations 4 and 5; AWA (n 10) article 44B; VSA (n 23) Part IX.

224

AWA (n 10) Article 2.

225

The Maltese Report (n 131) 31.

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an indicator that raises ‘doubts about the effective enforcement of LN 265/2003 and the ability of the competent authorities and animal welfare officers concerning the application of the law’.226 This raises the question of whether the authorities are carrying out inspections as obligated to under various laws.227 This is also noted in the Maltese Report, which states that ‘this suggests that the implementation of LN 265/2003, in particular the licensing and inspection of zoos […] is minimal and inconsistent with the claims of the competent authority’228 and that ‘these overall findings once again call into question the regularity and quality of the zoo inspections which are supposed to occur on an annual basis’.229 The erratic situation of Maltese zoos also casts doubt on the actual expertise of the people responsible for licensing and monitoring zoos and calls ‘into question […] the competency and knowledge of the zoo veterinarians, keepers and management, and their ability to guarantee adequate conditions and appropriate animals care’.230 The lack of enforcement and consequences arising out of non-compliance with the law has various ramifications.231 LN 265/2003 gives the VPRD the power to close down the zoo if it is not compliant with requirements, however even if this is not practical due to the lack of infrastructure, there are several fines that can be imposed both under LN 265/2003 and the AWA. In the case of one particular illegal zoo, several notices were sent by the VPRD to attempt to rectify the situation. Court proceedings are currently taking place against the same unlicensed zoo over animal welfare violations, such proceedings having been instigated by the Police. However it is important to note that even after several enforcement notices as well as a highly publicised raid was carried out, the zoo kept operating which resulted in the above mentioned incidents of wild animals injuring young children.

226

Ibid 34.

227

LN 265/2003 (n 6) regulation 4; the AWA (n 10) article 44B(1)(d); the VSA (n 23) various articles.

228

The Maltese Report (n 131) 30.

229

Ibid 37.

230

Ibid.

231

Fang et al (n 221).

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A major consequence of the lack of enforcement is that this situation makes a mockery of the permits issued by the PA and the ERA, as well as the zoo licence issued by the VPRD. If a zoo is allowed to run without the proper licences then the question is raised as to why an animal zoo owner should even bother with going through the process of applying for such a permit and a licence. Even if a zoo owner applies for them, if he is turned down there is no real barrier preventing him from going on with the development anyway – although it is illegal to operate a zoo without a licence under article 4 of Directive 1999/22/EC and regulation 4 of LN 256/2003, since unlicensed zoos are still operating then there are no perceived consequences, which is a critical factor for the law to be effective.

Additionally there is at least one case of a zoo that began operating without a licence, then applied for one in the middle of operations, which licence was granted without any ramifications. Although the move towards licensing is commendable, legal sanctioning should have been imposed on the zoo for initiating operation without the proper licenses. To ensure compliance, competent authorities cannot allow non-compliance to remain unpunished.232

5.

Conclusion

A question that may crop up when dealing with the issue of zoos is – why do zoos matter? Malta is a very small country facing numerous environmental problems, and some may argue that zoos do not merit so much attention. However the simple fact that zoos exist and that such zoos are visited regularly both by families as well as schools, means that, as existing structures, zoos must be monitored.

The fact that in 1999 the EU saw fit to enact Directive 1999/22/EC on the matter is a clear indication of this. Devastating consequences can result from non-compliance.233 A case in point would be the big cat attacks where two young children were injured that happened in 232

Michael Faure, ‘Effectiveness of Environmental Law: What does the Evidence tell us?’ [2012] 36(2) William & Mary Environmental Law and Policy Review.

233

Rosenthal and Xanten (n X) Safety Considerations.

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November 2015 and April 2016.

It is debatable whether zoos, as opposed to more free-range ‘wild parks’, should even exist. Nowadays the luxury of seeing animals close up can be satisfied through the use of the wide range of media available such as infinite high quality documentaries shown both on television and the Internet. Furthermore, although ‘zoos argue that their role is increasingly concerned with the preservation of species,’234 the argument that zoos can contribute to conservation, which is considered to be the strongest ‘pro’ argument in relation to zoos, loses its clout when looking at the available statistics. It is noticeable that basically no zoos in Malta contribute properly to the conservation of biodiversity or suitable public education. Moreover the current state of zoos, not just in Malta, but also globally, does not actually have a tangible effect on conservation efforts.235 However, the complete eradication of zoos in Malta does not seem to be a possibility entertained by relevant authorities. Keeping this in mind it is important that further research is carried out and that the proper infrastructure is put in place to ensure that existing zoos are compliant with proper standards.

234

Rees (n 17).

235

Jozef Keulartz, ‘Captivity for Conservation? Zoos at a Crossroads’ [2015] 28(2) Journal of Agricultural and Environmental Ethics 335–351 <https://link.springer.com/article/10.1007/s10806015-9537-z> accessed 8 May 2018.

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Company Law

The register of beneficial owners

Dr. Priscilla Mifsud Parker

Dr. Priscilla Mifsud Parker - Chetcuti Cauchi Advocates is an immigration and commercial firm with key strengths in corporate, tax and trust law, financial services and fintech, property and capital projects, residence and immigration, intellectual property and technology law. Dr. Priscilla Mifsud Parker is the firm’s corporate and fintech partner and specialises in trusts and estate planning, wealth and business structuring for high net worth and successful business families.

ID - DRITT

This article is intended to be of a general nature and is not intended to address the specific circumstances of any individual or entity. The authors shall not be responsible for any damage which may arise from reliance on information contained in this article. Specialist advice should also be sought before any action is taken on this basis.

1. Background

E

conomically, the EU is the world’s largest financial pillar, the largest global trading bloc and the principal trader of manufactured goods and services.1 A world-wide standard bearer in implementing the requirements of the Financial Action Task Force (FATF)2 it is fair to say that when the European Union upgrades its anti-money laundering (AML) regime, the financial world takes note and follows suit.

The topic of beneficial ownership was one of the key subjects of the 4th EU AML Directive.3 Within an environment tarnished by terrorist financing, threats of money laundering, terrorist financing and organised crime, there remain significant issues which need to be dealt with at EU and global level. Within the EU, this should be done, especially bearing in mind the principles of freedom of movement of capital and financial services.

1 02 Oct 2014, Policy Paper, EU position in World Trade, http://ec.europa.eu/trade/policy/euposition-in-world-trade/.

2

International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation Recommendations 2012 (the FATF Recommendations).

3

4AMLD / the Directive which came into force in 2015.

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1.1 EU Anti-Money Laundering Legislation Directive 91/308/EEC4 (‘1AMLD’), presented the first EU antimoney laundering framework way back in 1991. Predominantly aimed at drugs-related offences, it introduced obligations on credit and financial institutions to verify the identity of their customers and report concerns of money laundering. Additionally, it also created vital preventative measures for the attainment of customer identification and due diligence before entering or commencing any business relationship as well as measures related to record-keeping and central methods of reporting suspicious transactions.

Directive 2001/97/EC5 (‘2AMLD’), substituted 1AMLD in December 2001. 2AMLD broadened the scope of predicate offences and businesses covered, hence ensuring compliance with parallel FATF developments. Highlighted changes include the extension of the regime beyond credit and financial institutions to cover also legal and accounting professions. At around the same time, the US developed rules to target terrorist financing, following the September 11 attacks.

Directive 2005/60/EC6 (‘3AMLD’), replaced 2AMLD in October 2005 and introduced the concept of risk-based evaluations. For the very first time ever, a distinction was being carried out between standard due diligence and enhanced due diligence measures, all depending on the customer’s risk profile. Essentially 3AMLD entrenched the anti-terrorist financing regime as a central principle of pan-EU AML policy.

4

Council Directive of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering (91/308/EEC), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:31991L0308, (‘ 1AMLD’).

5

Directive 2001/97/EC of the European Parliament and of the Council of 4 December 2001 amending Council Directive 91/308/EEC on prevention of the use of the financial system for the purpose of money laundering, https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32001L0097 (‘2AMLD’).

6 Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32005L0060 (‘3AMLD’).

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Directive (EU) 2015/8497 (‘4AMLD’), entered into force on June 2015 and EU Member States had to implement it by 26 June 2017 into national law. 4AMLD recasts the 3AMLD and the corresponding Implementing Directive (Commission Directive 2006/70/EC) and it considered 40 new recommendations adopted by the Financial Action Task Force (FATF) on 16 February 2012 which the EU Member States had committed to. Of importance to our discussion is Article 30 4AMLD which mandates that EU member states must use a central register to hold information on beneficial ownership for corporate and other legal entities incorporated or based in their jurisdiction.

Directive (EU) 2018/8438 (‘5AMLD’), was published in the Official Journal of the European Union on 19 June 2018. 5AMLD presents several changes to the EU AML and Counter-Terrorist Financing regime set out by the 4AMLD. 5AMLD came into force on 20 July 2018 and Member States are required to transpose 5AMLD into their national laws within 18 months of that date, i.e. 10 January 2020.

The 5AMLD also maintains the distinction between register of ultimate beneficial owners (the ‘UBO-register’) for companies and other legal entities operating within the EU on the one side and trusts on the other.

The rationale behind this is that such public access to beneficial ownership information presents various benefits including: •

greater scrutiny of information by civil society, including the press or civil society organisations,

•

contribution to preserving trust in the integrity of

7

Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC, https://eur-lex.europa.eu/legal-content/EN/ TXT/?uri=celex%3A32015L0849, (‘4AMLD’).

8

Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/ EU, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32018L0843, (‘5AMLD’).

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business transactions and of the financial system, •

combating the misuse of corporate and other legal entities and legal arrangements for the purposes of money laundering or terrorist financing,

•

safeguarding reputational effects, given that anyone entering into transactions is and can be aware of the identity of the beneficial owners,

•

facilitating the timely and efficient availability of information for financial institutions as well as authorities, including authorities of third countries, involved in combating such offences,

•

helping investigations on money laundering, associated predicate offences and terrorist financing.9

1.2 Initiatives of the OECD and the FATF Together with the above, various leading economies have been trying to prevent the growing dangers of aggressive tax planning and the illicit flow of money worldwide.

Starting from 2003 and guided by the initiative of founding G7 members, the Financial Action Task Force on Money Laundering (FATF) issued the first international standards on beneficial ownership.

In 2012, the FATF strengthened its standards on beneficial ownership, to give more clarity about how countries should ensure information is available, and to deal with vulnerabilities such as bearer shares and nominees.

The revised standards also clearly distinguished between basic ownership information (about the immediate legal owners of a company or trust), and beneficial ownership information (about the 9

Ibid.

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persons who ultimately own or control it).10 In 2014, FATF issued its guidance on Transparency and Beneficial Ownership to further clarify what the FATF Standards require. 11 At their summit of November 2014, the G20 leaders adopted 10 high-level principles around beneficial ownership transparency, describing financial transparency as a highpriority issue. The G20 principles cover the following elements: •

The definition of a beneficial owner

•

Risk assessments relating to legal entities and arrangements

•

Beneficial ownership information of legal entities

•

Access to beneficial ownership information of legal entities

•

Beneficial ownership information of trusts

•

Access to beneficial ownership information of trusts

•

Roles and responsibilities of financial institutions and businesses and professions

•

Domestic and international cooperation

•

Beneficial ownership information and tax evasion

•

Bearer shares and nominees12

‘One of the main regulatory deficiencies that the Panama Papers13 10

February 2012, International Standards On Combating Money Laundering And The Financing Of Terrorism Proliferation, the FATF Recommendations http://www.fatf-gafi.org/media/ fatf/documents/recommendations/pdfs/FATF_Recommendations.pdf.

11 October 2014, Transparency and Beneficial Ownership P.4 http://www.fatf-gafi.org/media/ fatf/documents/reports/G20-Beneficial-Ownership-Sept-2016.pdf.

12

Lexis Nexia, The Hidden World of Beneficial Ownership Due Diligence Challenge for Too Long, https://www.lexisnexis.de/whitepaper/beneficial-ownership.pdf, p.6.

13

ICIJ (International Consortium of Investigative Journalists), An ICIJ Investigation the Panama Papers: Exposing the Rogue Offshore Finance Industry, https://www.icij.org/investigations/ panama-papers/.

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highlighted was the lack of inter-jurisdictional cooperation related to corporate tax transparency’.14 Even though previous attempts had been carried out to address this deficiency, such as through the introduction of the Common Reporting Standard (‘CRS’),15 creating a system for participating states to exchange data with other states had had strong domestic opposition.

Unfortunately, this is a typical approach in the implementation of intergovernmental agreements. Some states deem that such international initiatives infringe territorial sovereignty. Nevertheless, mostly due to the phenomenon of the Panama Papers Report, in recent years, widespread attention was given to the issue of tax evasion. As a result, national administrations started regarding international efforts and global recommendations as important and needing immediate attention.

1.3 UBO Register Rationale 4AMLD was due to be implemented in all EU member states by 26 June 2017. With the necessary domestic legislation not being in place, several countries did not make the implementation deadline in June 2017. Some Member States were late in transposing the directive, with some still in public consultation phase. Various have now implemented the directive but some are still in default.

In addition to increased focus on risk assessment and politically exposed persons, the main rationale behind the 4AMLD was to enable the determination of the natural persons behind corporate entities and structures. In a nutshell, the need was felt to get to the bottom of 14 Glynn Laura, Panama Papers and Ultimate Beneficial Ownership: One Year On, 26 July 2017, (https://www.finextra.com/blogposting/14330/panama-papers-and-ultimate-beneficial-ownership-one-year-on).

15

15 July 2014, Standard for Automatic Exchange of Financial Account Information in Tax Matters, OECD, http://www.oecd.org/tax/automatic-exchange/common-reporting-standard/common-reporting-standard-and-related-commentaries/.

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who the real owners/controllers of a company were.

In normal situations, deciphering such owners would be clear, given that many times the legal and beneficial owners would be one and the same. Having said that, sometimes there are other cases when the ownership may be so diluted that it would be hardly possible, if at all, to identify a specific beneficial owner. Other times, such UBOs would be shielded by fiduciary or service providers. Whilst appreciating that there are many legitimate complex corporate ownership structures in place, which structures are justifiable both commercially and operationally, yet there are also situations where this could lead to abuse.

In line with the spirit of Article 3 (6) 4AMLD, and the prevention of using the financial system for the purposes of money laundering or terrorist financing, determining the underlying beneficial owners has become an essential element of the equation. It stands beyond doubt that challenges in implementing this new register will undoubtedly arise. Yet the core objective of the Directive should still be upheld - to establish mechanisms to assist designated persons to conduct Customer Due Diligence (‘CDD’) procedures in relation to legal entities and to identify natural person controlling them, even if in doing so necessitates in-depth legal analysis of their ownership structures. To achieve the above, increased transparency in international business needs to be attained.

Article 30 of the 4AMLD provides that:

Member States shall ensure that corporate and other legal entities incorporated within their territory are required to obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held.16 Three years down the line, EU Directive 2018/84317 was published.

The 5AMLD provided further guidelines to Article 30. Article 30 16

Supra, 4AMLD, Article 30.

17

Supra, 5AMLD.

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now provides similar provisions applicable to trusts and structures assimilated to trusts. In such cases:

Information shall include the identity of: (a) the settlor(s); (b) the trustee(s); (c) the protector(s) (if any); (d) the beneficiaries or class of beneficiaries; (e) any other natural person exercising effective control of the trust.

Member States shall ensure that breaches of this Article are subject to effective, proportionate and dissuasive measures or sanctions.18 One could say that the 5AMLD is a response to the terrorist attacks across the EU and the offshore leaks investigated in the Panama papers. Barely a year following the implementation of the 4AMLD, the EU Parliament has adopted this new directive with the aim to add further layers to the European anti-money laundering framework.

The main aim of the 5AMLD was not merely to identify any money laundering risks, but also to prevent these risks concretising. ‘The prevention of money laundering and of terrorist financing cannot be effective unless the environment is hostile to criminals seeking shelter for their finances through non-transparent structures’.19 Therefore, Member States started introducing the registries with the aim of creating a transparent environment, where unlawful activities would find infertile ground to proliferate across the EU and beyond.

2. Implementation In the words of the First Vice-President Timmermans, VicePresident Dombrovskis and Commissioner Jourová:

We welcome the adoption by the European Parliament of the 5th Anti-Money Laundering Directive. These new rules will bring more transparency to improve the fight 18

Supra, 5AMLD, Article 31(1).

19

Consultation Paper, Council of the European Union, http://data.consilium.europa.eu/doc/ document/ST-8058-2018-INIT/en/pdf (p.8 section 4).

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against money laundering and terrorist financing across the European Union...

We are today marking an important step in fighting against financial crime. But our work is not over.

Fighting effectively against financial crime needs proper implementation of these rules and strong coordination amongst the different authorities.

We commit to helping all Member States put them in place and to monitor their implementation.

We want all EU Member States to uphold high standards in the fight against money laundering and terrorist financing across the EU.20 The UBO Register for Corporate Entities had to come into force in each member state within 18 months after the date of the 5AMLD’s entry into force. On June 19, 2018, the European Union’s Fifth AntiMoney Laundering Directive (5AMLD) was formally published in the European Union’s Office Journal, following its adoption by the European Parliament and Council earlier in the year.

Member States have 20 months-time for the implementation of the Registries for Trusts, whereas the interconnection of all national registers is expected to be operational as from 2021. Currently, several countries in the EU have already implemented the register for corporate entities, including Czech Republic, Denmark, France, Germany, Latvia, Malta, UK, Slovenia and Sweden.

Below is a snapshot of the implementation status of three Member States, with more detail being provided in the case of Malta’s implementation. This analysis should give a general comparative outline of how different states have treated such implementation as well as difficulties and issues that are being faced.

20 European Commission – Statement on the adoption by the European Parliament of the 5th Anti-Money Laundering Directive, http://europa.eu/rapid/press-release_STATEMENT-18-3429_en.htm.

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2.1 UK The UK BO registry is publicly available, and the information provided is accessible and free of charge. This approach however is rather exceptional, since in other countries the information is available only to a specific group of professionals, such as lawyers, tax advisors, auditors and bank representatives and to users ‘with a legitimate interest’ and ‘on the condition of online registration and the payment of a fee’.

The variation arises from the fact that the interpretation of the ‘legitimate interest’ presented in the directive was vested to local governments, with the Council Information Notice of April 2018 providing that ‘Member States should define legitimate interest, both as a general concept and as a criterion for accessing beneficial ownership information in their national law’.

2.2 Ireland Since November 2016, companies and other legal entities incorporated in Ireland have been required to create and maintain an internal beneficial ownership register. This was a first step towards a higher level of disclosure on a central register, which was to be established by June 2017.

The timing of the obligation for disclosure on a central register of beneficial ownership information was then extended to autumn 2017.

Once introduced, companies were given three months to submit the required information to such central register.

2.3 Malta One should point out that Malta was one of the countries to show a very ‘proactive’ approach in the implementation of the UBO register. This, when compared to other traditional ‘holding company’ 73

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jurisdictions such as Cyprus, the Netherlands and Luxembourg.

Admittedly, from a short-term perspective, Malta was at a disadvantage, since, in the interim, other competing jurisdictions have actively ‘acquired’ time in attracting additional investors based on this temporary ‘time-gain’. However, long term, Malta benefited from such a decision due to its early embracement of transparency and certainty.

In Malta, measures related to the UBO Register came into effect as of 1 January 2018 by virtue of LN 374 of 2017.21 The purpose of the regulations is to implement the relevant provisions on beneficial ownership information of 4AMLD as applicable to commercial partnerships formed and registered under the Companies Act.

2.3.1 Applicability Implementation necessitates an in-depth analysis of the ownership structure of the entities, on a case by case basis, to determine adequate information disclosure.

In the case of companies, partnerships, trusts, foundations and associations, formed in Malta as of 1 January 2018, the regulations were immediately applicable.

In the case of companies, partnerships, foundations and associations formed in Malta prior to 1 January 2018, a period of 6 months for compliance with the new regulations, was granted. Since trusts primarily need to generate tax consequences, such trusts do not have such compliance period.

In general, non-compliance and non-disclosure with such obligations may lead to a fine or, in certain circumstances, imprisonment.

21

Malta Companies Act (Register of Beneficial Owners) Regulations, 2017, LN 374 of 2017, Subsidiary Legislation 386.19, Article 7 (‘BO Regulations’) http://www.justiceservices.gov.mt/ DownloadDocument.aspx?app=lom&itemid=12749&l=1.

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2.3.2 The Register In general, the obligation to disclose the ultimate beneficial owner/s (physical person) of such entities lies on all legal entities in Malta, including companies, partnerships, foundations, trusts and associations.

Such disclosure should be made to the respective registries (collectively referred to as the ‘Register’). Such registries include: •

Companies: The Registrar of Companies;

•

Trusts: the Malta Financial Services Authority (MFSA); and

•

Associations / foundations: The Registrar for Legal Persons.

2.3.3 Accessibility In the case of beneficial owners of any company, foundation or association, accessibility to the information contained in the Register is open to: •

AML and anti-terrorist financing national competent authorities;

•

investigating or money laundering prosecuting national competent authorities;

•

the Financial Intelligence Analysis Unit (FIAU);

•

national tax authorities;

•

any other national competent authority within the meaning assigned to it under the Prevention of Money 75

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Laundering and funding of Terrorism Regulations, not already covered above; •

subject persons who are providing services in or from Malta for the purpose of carrying out customer due diligence; and

•

any person or organisation that upon written request can satisfactorily demonstrate and justify legitimate interest of the beneficial owners of the above entities. In such cases, the following information will be accessible:

1. nationality; 2. country of residence; 3. name; 4. month and year of birth; and 5. the nature and extent of their beneficial interest in the entity(ies).

In case of trusts, accessibility to such registers is only open to competent authorities and subject persons in their customer due diligence duties.

2.3.4 Beneficial Ownership The definition of a beneficial owner centres around that of an individual (s) who ultimately owns/controls a legal entity or arrangement whether through direct or indirect ownership, of a sufficient percentage of the shares or voting rights or ownership interest in that entity.

‘Sufficient percentage’ has different connotations, depending on the type of entity.

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In the case of companies, an indication of direct ownership lies in: •

a shareholding of 25% + 1 share OR

•

an ownership interest of >25% in the entity held by an individual.

In the case of companies, an indication of indirect ownership lies in: •

a shareholding of 25% + 1 share OR

•

an ownership interest of >25% in the entity held by another corporate entity, which corporate entity is under the control of the individual(s), or by multiple corporate entities which are under the control of the same individual(s).

In case of trusts, the beneficial owner consists of: •

the settlor;

•

the trustee(s);

•

the protector, where applicable;

•

the beneficiaries or the class of beneficiaries as may be applicable; and

•

any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means.

In case of other legal entities (including foundations and legal arrangements similar to trusts), the beneficial owner consists of the natural person(s) holding equivalent or similar positions to those referred in the trusts definition presented above.

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2.3.5 Exceptions The BO Regulations also stipulate that the following companies are exempt from the listed reporting obligations: •

entities listed on a regulated market subject to transparency requirements consistent with the EU laws; and

•

entities in which all registered shareholders are natural persons who are disclosed in the public records at the Registry.

2.3.6 Maltese Experience So Far The implementation of the UBO Registry in Malta started in 2018.

In December 2017 the Maltese government issued legal notice 374 and outlined the framework for the implementation of the Registry.

In the same month, the Maltese Financial Services Authority (‘MFSA’) announced the procedural rules for storing and recording the data about such Beneficial Owners. This announcement, albeit expected by practitioners, was initially not perceived well. Some argued that the Maltese government took too much of the ‘best student in class approach’ and adopted the directive to its extreme, hence even resulting in the undermining of the concept of asset protection for families.

From a technical aspect, even though the administrative procedures are quite clear, yet, this being the first year of implementation, there isn’t enough data to evaluate the success or otherwise of the framework. One of the main difficulties was the fact that there was no transitional stage in which service providers and practitioners would be able to operate and test the system. In practise, the guidelines were issued at a very short notice and all parties involved had to comply with this new norm immediately.

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2.4 General Exemptions In line with the 5AMLD22, the Maltese BO Regulations also permit exemptions under which the authorities would grant an exception not to list the names of certain Beneficial Owners. 23 A similar approach was taken in Germany and the UK with the exception, that for instance in Germany a company may first ask for the exception and then submit corporate information to the registry, while in Malta all information shall be fully submitted and then later an application for an exemption may be filed.

Even though the registries in the mentioned countries have been recently introduced, there were already some formal applications for exemptions. Contrary to sceptical opinion, the amount of such applications is relatively low, and companies embraced more of a compliance approach.

It shall be also noted that according to the 5th AMLD, ‘Member States shall ensure that these exemptions are granted upon a detailed evaluation of the exceptional nature of the circumstances. Rights to an administrative review of the exemption decision and to an effective judicial remedy shall be guaranteed. A Member State that has granted exemptions shall publish annual statistical data on the number of exemptions granted and reasons stated and report the data to the Commission’.24 Introducing such exemptions was done in the spirit of ensuring a proportionate and balanced approach to safeguard the right to private life and personal data protection. This mainly centred around the possibility of such information exposing beneficial owners to a disproportionate risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation.

It should also be possible for Member States to require online registration in order to identify any person who requests information 22

Supra, 5AMLD Article 30 (para.5).

23

Supra, BO Regulations, Article 7.

24

Supra, 5AMLD, Article 30 (para.9).

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from the register, as well as the payment of a fee for access to the information in the register.25

2.5 Access and Sharing of Information Implementation of the national registers was the first step in the implementation of the provisions of the 5AMLD. The next step is the union-wide access and share of information stage.

These registers shall on the later stage (after 2020) be interconnected via the European Central Platform, which was established by Article 22(1) of Directive (EU) 2017/1132 of the European Parliament and of the Council. Once the interconnection of Member States’ beneficial ownership registers is in place, both national and cross-border access to each Member State’s register should be granted based on the definition of legitimate interest of the Member State where the information relating to the beneficial ownership of the trust or similar legal arrangement has been registered in accordance with the provisions of this Directive, by virtue of a decision taken by the relevant authorities of that Member State.26 That would be the turning point in implementation of the ‘transparency’ regime and it shall be seen in combination with the interpretation of similar registries in other parts of the world. A hostile environment for criminals is emerging even in offshore territories, as can be seen through the Anti-Money Laundering Bill 2017-19, which was approved by the UK parliament.

This law also obliges the UK overseas territories to maintain such registry of Beneficial Owners. This would mean that traditional offshore jurisdictions (such as BVI) would now become at par with 25

Supra, 5AMLD, Recitals Section, Note 36.

26

Report on Proposal for a Directive of the European Parliament and the Council amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and amending Directive 2009/101/EC. - Outcome of the European Parliament’s first reading, (Strasbourg, 16 to 19 April 2018) Point 42 (http://data. consilium.europa.eu/doc/document/ST-8058-2018-INIT/en/pdf).

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European countries and would dilute their attractiveness for tax evasion schemes.

3. Objectives To identify the purpose of the UBO - register one must first explain the purpose of the Directive as a whole.

The purpose of the Directive is to prevent and combat money laundering and the financing of terrorism.

Money laundering can damage the integrity, stability and reputation of the financial sectors in Europe and with that threaten the internal market of the EU.27 Globalisation facilitated movement of persons, services and finance across borders. This also opened a window for ‘shady’ investors to use complicated schemes to launder money. Transparency and accessibility to information were the main drivers for the creation and implementation of such Registry. ‘The purpose of the UBO-register is to enhance the transparency of corporate structures and their beneficial owners in order to combat the misuse of legal entities’.28 The last two decades have witnessed companies expanding their reach and ‘forum shop’. Some countries, have, in past years offered possibilities for companies to receive favourable tax treatment through the socalled ‘rulings’, which were widely used by multinationals and other investors, to crystallise such favourable tax position.

After the publication of Panama Papers, certain information found therein was misinterpreted and perceived incorrectly by the public. Service providers were pushed to conduct more enhanced due diligence checks, which resulted into higher expenses for clients. Banks even took more conservative approaches in dealing with queries from high-risk jurisdictions and became even more risk 27

Pieter van Muijen, How do the CAHR and the UBO-register differ from one another in order to assess whether both registers should be implemented in Dutch legislation and how can their implementation be improved through the application of blockchain technology?, June 2017, http://arno.uvt.nl/show.cgi?fid=143903.

28

Supra, 4AMLD, Consideration 14.

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averse. The BO Registry, a system supervised by financial authorities, was envisaged to give enough comfort to banks and other service/ financial institutions to process transactions without delay and reduce costs which are associated with translations of documents and associated certifications.

Another benefiting party are foreign investors seeking transparency and security in their FDI decisions. When a foreign corporation decides to invest in a particular country, it should be able to assess information to assess if any local partner is of good repute or otherwise. Accessing this from a single source of information aids investors even at early stages of cooperation.

In a nutshell, the main goal of the EU-wide BO Registers is to build confidence and trust among investors, businesses and service providers.

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Constitutional Law

The right to a healthy environment as enshrined in our Constitution

Hon. Dr. Jose Herrera

Dr. Jose Herrera is a member of the Maltese government. He is a lawyer and has served as a Member of Parliament for 23 years. Hon. Herrera was appointed as Minister for the Environment, Sustainable Development and Climate Change in April 2016. He was previously appointed as Parliamentary Secretary for Competitiveness and Economic Growth in April 2014, and Parliamentary Secretary for Culture and Local Government in March 2013 by the Prime Minister of Malta, Dr. Joseph Muscat. Hon. Dr. Jose A. Herrera practiced his profession as a lawyer for 27 years, heading a legal office, specialising in Criminal Law. He involved himself early in politics. He was elected for the first time in Parliament in 1996, as a Labour Party candidate in the 1st District. He has been returned in every general election since then.

His first front bench role was as Labour’s spokesperson for the Central Bank, Financial Services and Maritime Affairs. He was a member of the Maltese and EU Joint Committee between 1996 and 1998, as well as a member of the Parliamentary Committee on Foreign Affairs and European Affairs. He was also a member of the Labour Party’s Executive Group, where he represented the Parliamentary Group. During the 2008-2013 legislature, Hon. Herrera served as a Shadow Minister for Justice and actively participated as a member of the Committee for the Ratification of Legislations. Throughout his political career, he has attended various international conferences, and was in the first group of Maltese Members of Parliament to take part in a preliminary session of the European Parliament, held in Strasbourg.

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I

n the aftermath of the crimes against humanity perpetrated during World War 2, including the Holocaust, the United Nations adopted a Universal Declaration of Human Rights (hereinafter the ‘Declaration’). This Charter is quite comprehensive and is reflected in various national written Constitutions which were promulgated at a later stage.

Also in the shadow of the horrors of World War 2, a number of European countries, that is Belgium, France, the Federal Republic of Germany (West Germany), Italy, Luxembourg, and the Netherlands1, came together in Rome in 1950 and adopted the European Convention on Human Rights (hereinafter the ‘Convention’). This Convention was then put into effect in 1953. Here again, however, we find no mention of the right to a healthy environment. As stated before, this was due to the realities of the moment, whereby this inherent right was not yet valorised, since the world back then was more concerned in pre-empting the resurgence of the total human crisis of the 30’s and 40’s.

Undoubtedly, the reason behind the fact that the environment was not mentioned in the Declaration and the Convention, is that these principles were enunciated well before environmental issues were given top precedence in the late 70’s. This notwithstanding, international pressure is gathering in directing an addendum to the Declaration, which would include the right to a healthy environment.

A case in point is the position taken by John H. Knox – the United Nations rapporteur on human rights on the environment on 5 March 2018.2 He has submitted to the United Nations, very recently, a request to recognise the human right to a clean environment. He stressed ‘a healthy environment is necessary for the full enjoyment of many other human rights, including the right to life.’ He did this while presenting a report entitled ‘Framework principles on human rights and the environment’.

1 Encyclopedia Britannica, Treaty of Rome <https://www.britannica.com/event/Treaty-ofRome>, accessed 12 December 2018.

2

UN Special Rapporteur on Human Rights and the Environment, ‘Knox Statement to Human Rights Council’ <http://srenvironment.org/2018/03/06/knox-statement-to-human-rightscouncil-2> accessed 12 December 2018.

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In recent years however, champions of environmental justice have been trying, more often than not successfully, to include the right to a healthy environment as a fundamental human right. For example: In the General Assembly of the Council of Europe debate of 30th September 2009, 32nd sitting, the Council debated the report of the Committee on the Environment, Agriculture and Local and regional Affairs prepared by rapporteur Mr. Mendes Bota.

Here the Assembly reaffirmed amongst other things its commitment to issues regarding the environment and considered it not only a fundamental right of citizens to live in a healthy environment but a duty of society as a whole and each individual in particular to pass on a healthy and viable environment to future generations.3 In this respect, it is also important to mention the Stockholm Declaration of 19724 since this was the first ever such declaration affirming the environment as a fundamental human right. As a point of interest, Principle 1 of the Stockholm Declaration established a foundation for linking human rights, health, and environmental protection, declaring that: Man has the fundamental right to freedom, equality and adequate conditions of life, in an environment of a quality that permits a life of dignity and well-being5.

It is important to note that in resolution 45/94 the UN General Assembly6 recalled the language of Stockholm, stating that all individuals are entitled to live in an environment adequate for their health and well-being. The resolution called for enhanced efforts towards ensuring a better and healthier environment.

3 Parliamentary Assembly, Recommendation 1885 (2008), Drafting an Additional Protocol to the European Convention on Human Rights concerning the Right to a Healthy Environment’ <http://assembly.coe.int/nw/xml/XRef/Xref-XML2HTML-EN.asp?fileid=17777&lang=en> accessed on 12 December 2018.

4

Sustainable Development 2015, ‘Stockholm Declaration’ <https://www.sustainabledevelopment2015.org/AdvocacyToolkit/index.php/earth-summit-history/historical-documents/91-stockholm-declaration> accessed on 12 December 2018.

5

World Health Organisation, Health and Human Rights Working Paper Series No 1, Human Rights, ‘Health & Environmental Protection: Linkages in Law & Practice’ <https://www.who. int/hhr/Series_1%20%20Sheltonpaper_rev1.pdf> accessed on 12 December 2018.

6

United Nations, General Assembly, A/RES/45/94, 68th plenary meeting, 14 December 1990 <https://www.un.org/documents/ga/res/45/a45r094.htm> accessed on 12 December 2018.

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We live in what has been coined as the Anthropocene Age7, whereby humans have totally enveloped the natural environment, thereby endangering biodiversity and increasing scarcity of and conflict over natural resources. All this has set the alarm off, and now the whole world is prioritising environmental issues. More than 100 States have already included the right to a healthy and sustainable environment in their national constitutions. Many more have recognised it in legislation or in regional agreements. The right is also understood to be inherent in other human rights, including rights to life, health and an adequate standard of living.8 Notwithstanding the fact that the aforementioned Convention omits to specifically mention the environment, the European Court of Human Rights (hereinafter the ‘Court’) on the contrary has been taking judicial cognizance of such a right, albeit indirectly. The Court has also persistently held that the Convention must be interpreted broadly and in the light of present-day circumstances. There is today abundant environmental jurisprudence. Interestingly we see that in this regard, it is the Court which is taking the lead. In the light of the above, it could be interesting to refer to a number of landmark cases and analyse them in breve.

A case in point is the case of Tatar vs Romania9. This case basically dealt with the right to private and family life. The applicants Romanian nationals, lived in a town in Romania called Baia Mare. A company called S.C. Transgold S.A., obtained a License in 1998 to exploit the Baia Mare goldmine. The company’s extraction process involved the use of sodium cyanide. On 30th January 2000, an environmental accident occurred on the site, whereby considerable amount of cyanide contaminated tailings water and ended up in 7

Smithsonian, ‘What is the Antrhopocene and Are We In It?’ <https://www.smithsonianmag. com/science-nature/what-is-the-anthropocene-and-are-we-in-it-164801414/> accessed on 17 November 2018.

8

Universal Rights Group Geneva, ‘It’s Time We All Recognise the Human Right to a Healthy Environment’ by Professor John H. Knox <https://www.universal-rights.org/blog/its-timewe-all-recognise-the-human-right-to-a-healthy-environment/> accessed on 13 November 2018.

9

Tatar v Romania, app no 67021/01 (ECHR, 27 January 2009).

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the environment. Part of this activity was located in the vicinity of the applicant’s home. The application was lodged with the European Court of Human Rights on the 17th July 2000 and was declared admissible on the 5th July 2007.

The Court observed that pollution could interfere with a person’s private and family life protected under Article 8 of the European Convention of Human Rights by harming his/her wellbeing. The Court also underlined four essential elements required in this regard. It underlined (1) that a State must regulate potential harmful activities, (2) the importance to strike a fair balance between different interests, (3) the right of information regarding hazards resulting from potentially harmful activities and, most important, (4) a right to redress from policies and decisions taken that may harm the environment, and therefore indirectly, the inherent rights of individuals.

Another case is Oneryildiz vs Turkey10. This case originated in an application against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms by two Turkish Nationals. The applicants submitted that the national authorities were responsible for the deaths of their close relatives and for the destruction of their property as a result of a methane explosion on the 28th April 1993 at a municipal rubbish tip in the slum quarter of Kazim Karabekir in Umraniye, Istanbul. The complaint before the Court was that the national authorities did not do all that could have been expected of them to prevent the deaths of the applicants’ close relatives in the accident. This case dealt with Article 2 of the Convention related to the Right to Life. The Court held that this fundamental human right imposes an obligation on the State to take practical measures when it comes to the licensing or setting up of dangerous activities to ensure the effective protection of citizens whose lives may be put at risk.

Another notable case is the Hatton and others vs the United Kingdom11. This case originated in an application against the United 10

Oneryildiz v Turkey, App no. 48939/99 (ECHR, 30 November 2004).

11

Hatton and others v the United Kingdom, app no. 36022/97 (ECHR, 8 July 2003).

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Kingdom of Great Britain and Northern Ireland lodged on 6th May 1997 with the European Commission of Human Rights under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedom by eight United Kingdom nationals.

The applicants were all members of the Heathrow Association for the control of aircraft noise which itself was a member of the Heathrow Airport Consultative Committee. The applicants alleged that Government policy on night flights at Heathrow airport gave rise to a violation of their rights under Article 8 of the Convention and that they were denied an effective domestic remedy for this complaint, contrary to Article 13 of the Convention. In this particular case, environmental considerations were embraced by the Court indirectly. Here the Court affirmed that additional night flights at Heathrow Airport did not violate the right to private and family life, since appropriate measures were taken to regulate and minimise the number of flights and to assess the environmental impacts. The Court reiterated that had this not been the case, the State would have failed in its duty leading to the infringement of the human right to private and family life.

A final case worth referring to is Taskin and others vs Turkey12.

This case concerned the granting of permits to operate a goldmine in Ovacik in the district of Bergama in Izmir. The applicants lived in Bergama and the surrounding villages. The applicants alleged that as a result of the Ovacik goldmines developments and operations, they had suffered and continue to suffer the effects of environmental damage; specifically, these included the movement of people and noise pollution caused by the use of machinery and explosives. The applicants alleged that both the national authorities’ decision to issue a permit to use a cyanidation operating process in a goldmine and the related decision making process had given rise to a violation of their rights guaranteed by Article 8 of the Convention for the Protection of Human Rights and Fundamental Freedom. Here, the Court was quite clear in its pronouncement in including environmental considerations. The Court held: 12

Taskin and others v Turkey, app no. 46117/99 (ECHR, 10 November 2004).

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‘Where a State must determine complex issues of environmental and economic policy, the decision making process must firstly involve appropriate investigations and studies in order to allow them to predict and evaluate in advance the effects of those activities which might damage the environment and infringe individual rights and to enable them to strike a fair balance between the various conflicting interests at stake’.

From all this, we see that the Court is regarding environmental issues as being complementary to the other inherent rights enshrined in the Convention. This surely is a step in the right direction.

However, I reiterate my view that it would be more reflective of today’s world, were the Convention to embrace the right in discussion directly as a human right. Such an affirmation would undoubtedly keep emphasising the importance of the environment.

Notwithstanding that as stated earlier, no global international agreement has explicitly recognised the right to a healthy environment, a different approach has been taken in various countries. As a state of fact, such a right is now recognised in many national and regional Constitutional instruments. Today, more than three quarters of the world’s national constitutions (149 out of 193) include explicit references to environmental rights and/or environmental responsibilities. This includes the majority of nations in Africa, Central and South America, Asia-Pacific, Europe, and the Middle East/Central Asia13.

This new amendment to our Constitution was introduced as an addenda to Article 9 in the Chapter dealing with the Declaration of Principles. It is opportune at this stage to quote the new provision which is numerated as Article 9(2):

‘The State shall protect and conserve the environment 13

David Suzuki Foundation, Paper #4: The Status of Constitutional Protection for the Environment in Other Nations by David R. Boyd <https://davidsuzuki.org/wp-content/uploads/2013/11/ status-constitutional-protection-environment-other-nations-SUMMARY.pdf> accessed on 6 September 2018.

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and its resources for the benefit of the present and future generations and shall take measures to address any form of environmental degradation in Malta, including that of air, water and land, and any sort of pollution problem and to promote, nurture and support the right of action in favour of the environment.’

It is also important to note that this amendment was carried unanimously by all the Members of the House of Representatives present and voting. The only criticism levelled by some Opposition representatives, was that this insertion was not made in that part of the Constitution dealing with Fundamental Rights and Freedoms of the Individual. The criticism levelled was in the sense that it is only in this Chapter that Human Rights are judicially enforceable. Though this is a fact, there are a number of considerations which have to be taken countering such arguments.

The first consideration taken in this regard is the impracticality of enforcing such a wholesome principle. It is undisputed that certain principles are of a more political nature than otherwise and create a moral obligation on the State to direct policies towards the attainment of that given principle. An example would be the right to work. Though the State of Malta, under the Constitution guarantees such a right, it would be impractical to pretend that our Courts could ever enforce such a right. On the other hand, the Government has always felt duty bound to create the right environment, making it conducive of creating work.

The same can be said with regards to the amendment in question.

This notwithstanding however, all Government members swear a note of loyalty to the Constitution and therefore now are morally and legally bound to uphold and implement the principles enacted in Article 9(2) of our Constitution.

Finally, it should be argued that the fact that Malta has followed other countries in enshrining the right to a healthy environment in the Constitution, is a bold move and sends a clear message, even abroad, that we mean business in this regard.

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Having said all this therefore, our Constitutional amendment was definitely a step in the right direction. From a juridical perspective however, the question arises whether amending our Constitution is enough. Undoubtedly, the answer is in the negative. Having taken this audacious step, we must now complement this amendment with further legislation to continue to strengthen the State of the Environment in our country. In this sense, there is other legislation in the pipeline.

Presently, the Ministry for the Environment and the Environment and Resources Authority, are working on a proposed bill aimed at creating Malta’s first ever Environmental Court. Malta lags behind in this regard, since most European States nowadays have or are in the process of having such Courts which concentrate on environmental issues. By 2009, there were over 350 in 41 different countries. By 2016, there were more than 1,200 in 44 countries. There are 28 environmental courts and tribunals in nine EU member states, with another 20 countries discussing or planning their own environmental courts or tribunals.14 In fact, in 2004, the European Union Forum of Judges for the Environment was created. This has its seat in Brussels.

The purpose of the Association is to promote in the ambit of Sustainable Development, the implementation of national European and International Environmental Law. The Association aims to attain this by fostering knowledge of environmental law among Judges, primarily by sharing experience on environmental jurisprudence.

All Member States, including Turkey – a non-Member State, have a representative on this Forum. Though Malta is duly represented, unlike most other Member States, we do not have a Judge presiding over an Environmental Court per se. It is high time therefore, that we tackle this lacuna, even in line with European philosophy.

In our system, the preferable way forward would be to have a twotier Court. Ideally, we should have a superior Court as one of our Civil Court’s divisions dealing with environmental suits, and perhaps also tackling appeals made from environmental regulatory authorities; 14 The Conversation, ‘Just like England and Wales, Scotland needs an Environmental Court’ <https://theconversation.com/just-like-england-and-wales-scotland-needs-an-environmentalcourt-86089> accessed 3 November 2018.

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thereby, compartmentalizing environmental causes and streamlining more effectively case law in such matters. There should also be a Magistrate’s Court dealing with Environmental cases of a criminal nature and given the right legal structures to be able to better crack down on environmental abuses. These reforms are pleasures yet to come, but hopefully before the end of this legislature, we would have these judicial structures in place.

Another legal area which needs to be strengthened is that with regards to citizens’ empowerment in environmental issues. This concept is very much in line with the European vision. The United Nations Economic Commission for Europe (UNECE) Convention on access to information, public participation in decision making and access to justice in environmental matters, was adopted on the 25th of June 1998 in the Danish city of Aarhus, at the 4th Ministerial Conference as part of the Environment for Europe process. This Convention, which entered into force on the 30th October 2001, is now referred to as the Aarhus Convention.

There are three underlying principles to this Convention. These are Access to Environmental information, Public Participation in Environmental decision making and Access to Justice. The underlying tone of this Treaty is basically that citizens must be able to go to Court, if Public Authorities do not respect and fulfil the requirements created

by EU environmental laws. The reason is that when these rights and requirements are not applied consistently across the EU, such an attitude can hinder progress in achieving the EU’s environmental objectives and prevent citizens from enjoying the full benefits of EU environmental law. In such a scenario, citizens will definitely feel more emancipated and far less frustrated in environmental issues and will therefore surely be prompted to contribute more for the protection of our national environment.

In most countries, access to Courts is restricted. A claimant needs to show that he or she has a direct juridical interest to be heard. In the Labour Party’s Electoral Manifesto of 2017, there is an interesting paragraph in the Chapter dealing with the Environment, that deals precisely with this concept and which would help us implement the 93

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scope of the Aarhus Convention in our country.

In this particular Chapter, we find that the Government should explore the possibility of widening the scope of the so called actio popolaris for Environmental matters. This means that citizens within well-defined areas, should be empowered to challenge executive and administrative decisions on environmental issues before the Courts without having to prove that they have a direct judicial interest in the cause. Undoubtedly, such an innovative approach has to be introduced in stages and in a prudent and cautious manner, and this in order to avoid a backlash of an inundation of an unsustainable amount of cases, many of which might prove to be frivolous in nature.

At this stage, the idea is to introduce this new approach in order to allow private individuals or NGOs to protect our natural capital in the most sensitive and ecological important areas. Taking all this into account, the idea is to give such legal rights in areas which will be declared Public Domain. The reason is that the territory so designated is that which is thereby being considered as more important from an environmental perspective.

Here citizens will be able to take Court action before the proposed Environmental Court in its superior jurisdiction to curtail any abuse or irrational and unreasonable decisions taken on such sites. Later on, when such a culture would have been absorbed within our legalistic mentality, such right of redress can be expanded to cover other areas and other issues.

In the most neutral hypothesis, in such litigation, plaintiffs will surely be given the right to recover the legal costs incurred in order to make it more amenable for them to seek such judicial redress.

In the best hypothesis on the other hand, successful litigants could also be awarded some form of additional compensation to instigate enthusiasm.

Every age, every epoch and every timeframe, brings with it its particular challenges and calamities. There was a time for example where workers’ emancipation and the removal of slavery was of 94

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paramount importance. There was another time where the debate on democracy and the issue of universal suffrage was making the headlines. And finally, a time only too recently, after the Second World War where the main topic was human dignity.

Our time, is the one when the all absorbing topic is the environment.

It is surely and undoubtedly correct to reiterate that recognising the right to a healthy environment as a fundamental human right, is the best way to affirm in an undeniable fashion humanity’s commitment to preserve at all costs our natural capital with all its fringes.

A lot of groundwork has been laid in this regard and many countries including Malta have now unilaterally taken it upon themselves to sanction this right in the framework of their supreme national legislation. It is high time that the main international Institutions, such as the United Nations and the European Union follow suit.

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The Rule of Law

Chief Justice Emeritus Vincent A. De Gaetano

Vincent A. De Gaetano - Chief Justice Emeritus, Malta; Judge and Section President Emeritus, European Court of Human Rights (ECtHR), Strasbourg.

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This is the text, with full references and additional comments added, of a keynote speech I delivered on Friday 7 December, 2018, at the Antoine de Paule Hall of San Anton Palace, Attard, Malta. The occasion was a conference organised by the Human Rights Programme of the faculty of Laws of the University of Malta in collaboration with the President’s Foundation for the Wellbeing of Society to mark the 70th anniversary of the Universal Declaration of Human Rights. The conference was held under the distinguished patronage of H.E. the President of Malta.

GħSL has kindly accepted to publish this speech as a matter of public record. Since the speech was delivered, the European Commission for Democracy through Law (Venice Commission) of the Council of Europe has, on 17 December 2018, published its Opinion “On Constitutional Arrangements and Separation of Powers and the Independence of the Judiciary and Law Enforcement” adopted at the Commission’s 117th Plenary Session (Venice 14-15 December, 2018). This Opinion covers many of the issues mentioned in my speech, and much more.

Finally, I wish to thank Ms Cyrilla Everett, B.A. (Maastricht), LL.M. (Lond.), trainee lawyer at the ECtHR, for her assistance in carrying out the research for this paper.

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F

irst of all, allow me to thank the organisers of this annual conference, and in particular Dr Ruth Farrugia1 for inviting me to give what has been billed as a keynote speech. I have to admit that I have a healthy dislike of keynote speeches – all the ones I have had to listen to in recent years, mainly in Strasbourg, but also in some other places – have generally been very theoretical, rambling and far too long for my taste. Fortunately, I have been allotted only 35 minutes in which to say what I have to say, so I have been deprived of the chance of boring you to death. As to the topic of my speech, I have, in a sense, been inspired by two totally unrelated events. The first event, which came second in chronological order, was the fact that a few weeks ago, I had to address students at a school in Lucknow, India2 – by videoconference from Strasbourg, I should add – on the significance of the concept of the Rule of Law. These were sixth-form students, so I had to keep things simple. The other event, which occurred first in chronological order, is the assassination of Daphne Caruana Galizia on the 16th of October of last year. Only a few months before this crime was committed, while addressing the participants of the 2017 Mini-European Assembly organised by the National Student Travel Foundation at the Palace in Valletta, I had quoted extensively from the 2016 Report of the UN Special Rapporteur on the Promotion and Protection of the Right to Freedom of Opinion and Expression, David Kaye.3 The first four sentences of that report still resonate in my mind:

A journalist investigates corruption at the highest levels of her Government and soon finds herself fighting fictional charges from the cell of a prison. A critic of a Government is assassinated while buying groceries. Another Government bans its main political opposition party as ‘extremist,’ sending its leaders to jail. A cartoonist faces prosecution under his country’s laws against sedition. A Government shuts down the 1

Dr Ruth Farrugia is a Senior Lecturer in the Faculty of Laws of the University of Malta, coordinator of the University of Malta Human Rights Programme and Director General of the President’s Foundation for the Wellbeing of Society.

2

City Montessori School, Lucknow, India.

3

Vincent A. De Gaetano, ‘Freedom of Speech and the Media: an absolute or derogable human right?’, Id-Dritt, Vol. XXVIII (2018), Għaqda Studenti tal-Liġi, pp. 523-542.

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Internet in advance of public protests, while another uses surveillance to target political opposition.4 These words seemed completely alien to me then – as when one is watching a film or a play which, even if based on real facts and events, are facts and events which take place elsewhere, but surely not in my street, not in my backyard, not in my village square. They no longer sound that alien to me today.

What happened in Baħrija in October 2017, as well as events preceding and others subsequent to Caruana Galizia’s assassination, have now galvanised the attention of Europe on the state of the Rule of Law in Malta. For this reason, I have decided to share with you some thoughts about the Rule of Law as it applies, or in relation, to Malta. The topic is, of course, extremely vast,5 so you will, I am sure, forgive me if I limit myself to those aspects of the Rule of Law where I can draw some parallels or examples from my own personal and professional experience. I have spent most of my adult life working in law: sixteen years in the Attorney General’s Office, mainly as a prosecutor; another sixteen years on the Bench in Malta (eight of them as Chief Justice); and now more than eight years as a judge in Strasbourg.

In spite of more than forty years working in law, I still have difficulty in defining the Rule of Law. Putting aside for the moment the philosophical discourse of the distinction between descriptive and essential definitions, one finds that the words ‘The Rule of Law’ are used in several important international instruments, but with no attempt made to try and explain or define the expression. In the Universal Declaration of Human Rights, whose 70th anniversary we are marking this year, we find in the Preamble that:

‘…it is essential, if man is not to be compelled to have 4

Ibid. pp. 525.

5

For a more detailed exposition, one may wish to see Tom Bingham, The Rule of Law (Allen Lane 2010) for a Common Law perspective; and for an exquisitely Maltese perspective, Kevin Aquilina, The Rule of Law à la Maltaise (University of Malta 2017). See also passim Robin Griffith-Jones and Mark Hill eds. Magna Carta, Religion and the Rule of Law (Cambridge University Press 2015).

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recourse, as a last resort, to rebellion against tyranny and oppression, that human rights should be protected by the rule of law.’

The juxtaposition of ‘human rights’ and ‘Rule of Law’ on the one hand, with ‘tyranny’ and ‘oppression’ on the other, begins to suggest that we are talking about something which has to do with good governance. Article 36 of the Statute of the Council of Europe specifies that every member of the Organisation must accept the principles of the Rule of Law and the enjoyment by all persons within its jurisdiction of human rights and fundamental freedoms. The Rule of Law is, therefore, a precondition to membership. Article 3 is to be read together with Article 1 of the Statute, which provides that members must collaborate ‘sincerely and effectively’ in the realisation of the aim of the Council of Europe as set out in Article 1(a) of that Statute, namely:

‘…to achieve a greater unity between its members for the purpose of safeguarding and realising the ideals and principles which are their common heritage and facilitating their social and economic progress.’

Here, we begin to see a wider perspective, namely that the Rule of Law somehow has a bearing on social and economic progress.

If a member State seriously violates – notice the adverb ‘seriously’, which is a convenient safety valve – the Rule of Law, then Article 8 of the Statute kicks in and that State may be suspended and eventually expelled from the Organisation.

6 Statute of the Council of Europe (ETS 1), signed in London on 5 May 1949, and which entered into force on 3 August 1949 - Article 3: ‘Every member of the Council of Europe must accept the principles of the rule of law and of the enjoyment by all persons within its jurisdiction of human rights and fundamental freedoms, and collaborate sincerely and effectively in the realisation of the aim of the Council as specified in Chapter I.’ Moreover, the third paragraph of the Preamble of the Statute reads as follows: ‘Reaffirming their devotion to the spiritual and moral values which are the common heritage of their peoples and the true source of individual freedom, political liberty and the rule of law, principles which form the basis of all genuine democracy…’.

See also Andrew Drzemczewski, ‘The Council of Europe and the Rule of Law: Introductory Remarks regarding the Rule of Law Checklist Established by the Venice Commission’ in Human Rights Law Journal [Vol. 37, No. 1-6], pp. 179-184, 179.

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Art. 8: Any member of the Council of Europe which has seriously violated Article 3 may be suspended from its rights of representation and requested by the Committee of Ministers to withdraw under Article 7.

If such member does not comply with this request, the Committee may decide that it has ceased to be a member of the Council as from such date as the Committee may determine. (emphasis added) In the history of the Council of Europe, there has been only one instance when pressure began to mount on a member State so much that it eventually quit: Greece, which was then run by a military junta, in December 1969, withdrew so as not to face expulsion. Today, of course, the geo-political reality is very different from what it was in 1969. Russia’s ‘annexation’7 of Crimea in 2014, has resulted in the Parliamentary Assembly of the Council of Europe suspending the voting rights of the Russian delegation to that Assembly and also excluding the Russian Federation from that Assembly’s main bodies.8 However, Russia remains a full member of the Council of Europe, even though it has retaliated by suspending, in 2017, its annual payment of €33 million to the Council of Europe, leading to a budgetary crisis not only for the Council of Europe, but also for the European Court of Human Rights.9 Other international instruments: we find cursory references to the Rule of Law in the Treaty of the European Union,10 but again no definition. Quite curiously, the Rule of Law is mentioned only in the preamble, and only once, of both the Charter of Fundamental Rights 7

Russia contests that there was any annexation in the customary international law sense of the word,

8

PACE Resolution 1990 (2014), §15. These sanctions were prolonged and slightly extended by PACE Resolution 2031 (2015).

9

See inter alia, PACE Report Doc. 14511, 12 March 2018 (Committee on Rules of Procedure, Immunities and Institutional Affairs) ‘Modification of the Assembly’s Rules of Procedure: the impact of the budgetary crises on the list of working languages of the Assembly’.

10

Consolidated Version of the Treaty on European Union [2012] OJ C326/13, in the preamble and in Articles 2 and 21.

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of the European Union11 and of the European Convention on Human Rights (ECHR).12 In the Charter we have:

Conscious of its spiritual and moral heritage, the Union is founded on the indivisible, universal values of human dignity, freedom, equality and solidarity; it is based on the principles of democracy and the rule of law.

It places the individual at the heart of its activities, by establishing the citizenship of the Union and by creating an area of freedom, security and justice.

On the other hand, in the preamble to the ECHR, we are told:

Being resolved, as the governments of European countries which are like-minded and have a common heritage of political traditions, ideals, freedom and the rule of law, to take the first steps for the collective enforcement of certain of the rights stated in the Universal Declaration …

So, the basic question still remains – what is meant by the Rule of Law, at least in a European context? Can history help us?

Not much, in my view. Although writers and philosophers have, at times attempted, most times unconsciously, to offer some tentative help, the social and political context in which these people were operating did not allow them to take a comprehensive view of the notion under examination. Still, they do shed some light. Let us take Cicero, for instance: Servi legum sumus ut liberi esse possimus – we are servants of the law in order that we may be free.13 However, we know that the law to which we are asked to submit, ostensibly in order to be free, may actually be a law which allows arbitrariness, or 11

Charter of Fundamental Rights of the European Union [2012] OJ C326/391.

12

Convention for the Protection of Human Rights and Fundamental Freedoms, ETS No.005, opened for signature on 4 November 1950 and which entered into force on 3 September 1953.

13

Pro Cluentio, LIII.146: ‘Legum ministri magistratus, legum interpretes iudices, legum denique idcirco omnes servi sumus ut liberi esse possimus.’

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which makes improper distinctions; indeed, it may be a law which violates fundamental human rights as we understand them today.

It may fall short of that ‘quality of law’ which was the basis for the finding of a violation in Unifaun Theatre Productions Limited and Others v. Malta.14 Many people in Malta who did not bother to read the judgment assumed that that judgment, which found a violation of Article 10 (Freedom of Expression) of the ECHR, said that the play could or should have been staged, or that it vindicated the actors’ or the producers’ right to have the play staged, or that it did not have anything obscene or censurable in it, or – more outlandishly – that this judgment somehow vindicated the total removal of any sort of censorship, if not indeed also the removal from the Criminal Code of the crime of vilification of religion. The judgment did nothing of the sort: it was based on the very narrow reasoning that the law upon which the staging of the production was banned was not properly drafted to allow persons affected by it to foresee the consequences of their actions, nor did it give them clear indications of, for instance, how to appeal from a decision of the Board of Censors. The reasoning of the Court is encapsulated in paragraph 87 of that judgment:

The various considerations above are sufficient for the Court to find that the law relied on by the respondent Government was not of a sufficient quality and that the interference was a result of a procedure which was not prescribed by law. (emphasis added) Let’s go back in history: St. Augustine saw much affinity between the concept of justice and the orderly functioning of a State – of course, in his time, the concept of Statehood as we know it today had not yet come into being, the city-states of Greece and the Roman Republic were things of the past, and the only political collectivities that were available in his part of the world were Empires or Kingdoms. In one of his discourses, Augustine says: Remota iustitia, quid sunt regna nisi magna latrocinia – if you remove justice, what are kingdoms [governments] if not organised brigandage?15 Here, we 14

ECtHR App. no. 37326/13, 15 May 2018.

15

De Civitate Dei Contra Paganos, Lib. IV.4: ‘Remota itaque iustitia quid sunt regna nisi magna

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have a hint that justice and good governance go hand-in-hand, and the germ of an idea that governance should be based on laws and that governmental power should be subject to control – and let us not forget that Augustine had such a strong sense of justice that for him, a law was no law unless it was just – mihi lex esse non videtur quae iusta non fuerit.16 Almost eight hundred years later, the Barons of England, meeting at a beautiful meadow which still exists to this very day, called Runnymede, near Windsor, to exact from King John terms intended to curb his absolute power, obtained from the Crown the following assurance: nulli vendemus, nulli negabimus aut differemus rectum vel iustitiam – to no one shall we sell, to no one deny or delay, right or justice.17 It is quite ironic that this right to justice, within a reasonable time, was challenged by the British Government itself in the famous case of Golder v the United Kingdom.18 You probably know the facts: Golder was a guest of Her Majesty at Parkhurst Prison on the Isle of Wight. As a result of some argument with prison guards, he felt that he had been defamed by one of the guards and wanted to sue him.

At that time, prison rules in England and Wales allowed prisoners to consult a lawyer only if they were awaiting trial; convicted prisoners, like Mr. Golder, could only communicate with a lawyer with the permission of the Home Secretary. In this case, the Home Secretary refused such permission.

Before the Court in Strasbourg, the British Government argued that Article 6 of the Convention only guarantees a fair hearing within a reasonable time, but not a right ‘of access to a court’ – it is like saying, yes, you are entitled to a fair hearing, you are entitled to have a subjectively and objectively impartial judge to deal with whatever you are arguing before him/her, but you have no right of action to secure that substantive right! The very inverse of ubi ius, ibi remedium. The latrocinia? quia et latrocinia quid sunt nisi parva regna?’

16

De Libero Arbitrio, Lib. I, 5:11.

17

This is, in fact, one of the shortest clauses – clause 41 – of that document, the Magna Carta of 1215. The complete text in English of the document can be found in Appendix C in Anthony Aldridge and Igor Judge, Magna Carta Uncovered (Hart Publishing 2014).

18

ECtHR [Plenary Court] App. no. 4451/70, 21 February 1975.

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ECtHR did not countenance such sophistry: by applying a teleological interpretation of Article 6 and invoking the concept of the Rule of Law mentioned in the preamble of the Convention, it held that Article 6 also guaranteed a right of access to a court. It held in particular that the reference to the Rule of Law in the preamble could not be regarded as a ‘more or less rhetorical reference’,19 devoid of relevance for those interpreting and applying the Convention. Golder was the first case in which the Strasbourg Court expressly refers to the Rule of Law. Since then, the Court has invoked the Rule of Law in countless other cases involving a variety of rights under the Convention, but it has never attempted to define the contents of the concept – that task has been left to others. Nevertheless, the Court has given certain guidelines, and this has generally been done by using the expression in the context of a particular situation or juxtaposing it with a situation implying an absence of the Rule of Law. As a former judge of the ECtHR, Elisabeth Steiner, has pointed out, broadly speaking, it can be said that in the espace juridique of the Convention, the Rule of Law requires not only that society is governed on the basis of laws, but also that these laws are the result of a democratic process. This requirement of a democratic process, however, goes beyond the mere notion of majority rule and denotes that decision-making should be a participatory process. Moreover, it has also indicated that the separation of powers must be practical and effective, and not merely theoretical or on paper: the separation of powers should ensure that power is not concentrated in the hands of one individual or a number of individuals and, more importantly, 19 Ibid. §34: ‘The ‘selective’ nature of the Convention cannot be put in question. It may also be accepted, as the Government have submitted, that the Preamble does not include the rule of law in the object and purpose of the Convention, but points to it as being one of the features of the common spiritual heritage of the member States of the Council of Europe. The Court however considers, like the Commission, that it would be a mistake to see in this reference a merely ‘more or less rhetorical reference’, devoid of relevance for those interpreting the Convention.

One reason why the signatory Governments decided to ‘take the first steps for the collective enforcement of certain of the Rights stated in the Universal Declaration’ was their profound belief in the rule of law. It seems both natural and in conformity with the principle of good faith (Article 31 para. 1 of the Vienna Convention) to bear in mind this widely proclaimed consideration when interpreting the terms of Article 6 para. 1 (art. 6-1) according to their context and in the light of the object and purpose of the Convention.’

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that those enacting the law are not the same as those deciding on its application in practice.20 Take, for instance, Baka v. Hungary, decided by the Grand Chamber on 23 June 2016.21 The case, as some of you may recall, involved the premature termination of Mr. Baka’s mandate as President of the Supreme Court of Hungary and his lack of access to a court to challenge the termination. The Court held that Baka’s access to court had been impeded, not by express legislative exclusion, but rather by the fact that the premature termination of his mandate had been written into the new Hungarian Constitution itself and was therefore not subject to any form of judicial review. It also found that Mr. Baka’s dismissal had been due to the criticism he had publicly expressed of government policy on judicial reform when he was President of the Supreme Court, underlining that the fear of sanction, such as losing judicial office, could have a ‘chilling effect’ on the exercise of freedom of expression and risked discouraging judges from making critical remarks about public institutions or policies. The Grand Chamber found a violation of both Article 6 and Article 10 of the Convention.

In this judgment, we have a wealth of information as to what can be construed as forming the substantive content of the Rule of Law, yet the ECtHR never expressly says ‘the Rule of law means…’ or ‘the Rule of Law implies…’ this or that – it simply refers to the concept in a particular situation or context. Let me, by way of an example, quote to you just one paragraph from the Baka judgment:

117: Indeed, the Court would emphasise that, in order for national legislation excluding access to a court to have any effect under Article 6 § 1 in a particular case, it should be compatible with the rule of law. This concept, which is expressly mentioned in the Preamble to the Convention and is inherent in all the Articles of the Convention, requires, inter alia, that any interference must in principle be based on an instrument of 20

Elisabeth Steiner, ‘The Rule of Law in the Jurisprudence of the European Court of Human Rights’ in Strengthening the Rule of Law in Europe: from a Common Concept to Mechanisms of Implementation, Schroeder, W. ed. (Hart Publishing 2016), pp. 135-154, 140.

21

ECtHR [GC] App. no. 20261/12, 23 June 2016.

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general application (see, mutatis mutandis, Vistiņš and Perepjolkins v. Latvia [GC], no. 71243/01, § 99, 25 October 2012; see also, mutatis mutandis, concerning legislative interferences and the rule of law, Stran Greek Refineries and Stratis Andreadis v. Greece, 9 December 1994, §§ 4750, Series A no. 301-B). The Venice Commission has also held in relation to the applicant’s case that laws which are directed against a specific person are contrary to the rule of law (see paragraph 59 above).

The Venice Commission22 has been working for many years now to give some substance to the notion of the Rule of Law. It has produced two documents in particular which are of relevance: a preliminary one in 2011,23 and a more substantial document in 2016.24 Both reports, incidentally, are considered by the Court in Strasbourg as being soft law. In its 2011 Report, the Commission proposed a functional nonexhaustive definition of the notion of the Rule of Law. It said:

….it seems that a consensus can now be found for the necessary elements of the rule of law as well as those of the Rechtsstaat which are not only formal but also substantial or material (materieller Rechtsstaatsbegriff).

These are: (1) Legality, including a transparent, accountable and democratic process for enacting law (2) Legal certainty (3) Prohibition of arbitrariness (4) Access to justice before independent and impartial courts, including judicial review of administrative acts (5) Respect for human rights (6) Non-discrimination and equality before the law.25 22

European Commission for Democracy through Law, known as the Venice Commission, was set up by Resolution (90) 6 of the Committee of Ministers of the Council of Europe. Its current Statute stems from Resolution (2003) 3, always of the Committee of Ministers.

23

Report ‘On the Rule of Law’, adopted by the Commission at its 86th Plenary Session (Venice 25-26 March 2011).

24

Rule of Law Checklist adopted by the Commission at its 106th Plenary Session (Venice 11-12 March 2016).

25

Report ‘On the Rule of Law’, adopted by the Commission at its 86th Plenary Session (Venice 25-26 March 2011), 41.

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I would add something else: for the Rule of Law to be effective there must be a genuine predisposition, an attitude, of those in any position of power to give practical effect to these functional aspects of the Rule of Law, in other words to go beyond merely paying lip service.

In its second Report, of 2016, the Commission elaborated extensively on these points, providing a sort of checklist or benchmarks against which every State can measure where it stands in terms of the Rule of Law. These six main substantial points have been expanded with many sub-divisions. I will try to summarise these six points and their various sub-divisions, and after each I will propose some pertinent or impertinent questions with a Maltese backdrop.

The first benchmark is that of legality. Does the law of the land define in a proper and effective way the powers of State authorities, provide for judicial review of acts by State authorities and ensure that everyone – from the Head of State downwards – is subject to the law?

In particular, is the Legislature’s power to make laws subject to review if it is alleged that a law is in breach of a fundamental human right? Is the process of enacting laws transparent, accountable, inclusive and democratic?

The first temptation is to say that we pass this test with flying colours, but do we really? It is true that since the amendment of Article 65(1) of the Constitution in 2003,26 it is today possible to challenge the validity of a law by means of an actio popularis (under Art. 116 of the Constitution27) not only on purely formal grounds (e.g. the 26

Article 65(1) of the Constitution was amended by Article 7 of Act V of 2003. Prior to this amendment sub-article (1) of Article 65 read as follows: ‘Subject to the provisions of this Constitution, Parliament may make laws for the peace, order and good government of Malta.’ After the said amendment it now reads: ‘Subject to the provisions of this Constitution, Parliament may make laws for the peace, order and good government of Malta in conformity with full respect for human rights, generally accepted principles of international law and Malta’s international and regional obligations in particular those assumed by the treaty of accession to the European Union signed in Athens on the 16th April, 2003.’

27 Article 116 of the Constitution: ‘A right of action for a declaration that any law is invalid on any grounds other than inconsistency with the provisions of articles 33 to 45 of this Constitution shall appertain to all persons without distinction and a person bringing such an action shall not be required to show any personal interest in support of his action.’

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parliamentary procedure was not followed), but more importantly on certain substantive grounds, such as, for instance, that the law is not in conformity with full respect for human rights, or with the European Convention on Human Rights, or with other treaties. The plaintiff, who incidentally need not even be a Maltese citizen, does not have to show any personal interest in support of the action. However, what if, for instance, I want to challenge the validity of appointments in the public service to the so-called ‘positions of trust’ which bypass entirely Article 110 of the Constitution?28 Here we are not talking of the validity of a law, but of the validity of an administrative practice, or malpractice – so Art. 116 of the Constitution is of no use. If I were to go for Article 469A of the Code of Organisation and Civil Procedure29 to seek judicial review, apart from the fact that these acts of appointment are exempted under the very definition of an ‘administrative act’30, I would be required to show juridical interest in proposing the action, which, unless I can prove that I was promised the particular appointment to the position of trust which was instead given to someone else, it would be impossible for me to make any headway. The fact that I am a concerned citizen, concerned not only about the suitability of the person appointed to be in the public service, but also about the use, or possibly misuse, of public funds, is unlikely to get me anywhere.

Another issue in connection with this benchmark is the increasing practice of legislating extensively by means of legal notices, which are not properly debated in Parliament – in fact, they are not debated at all. It is true that, by application of Article 11 of the Interpretation 28

Article 110(1) of the Constitution: ‘Subject to the provisions of this Constitution, power to make appointments to public offices and to remove and to exercise disciplinary control over persons holding or acting in any such offices shall vest in the Prime Minister, acting on the recommendation of the Public Service Commission…’.

29

Chapter 12 of the Laws of Malta.

30

Article 469A(2) of Chapter 12 provides: ‘In this article – ‘administrative act’ includes the issuing by a public authority of any order, licence, permit, warrant, decision, or a refusal to any demand of a claimant, but does not include any measure intended for internal organization or administration within the said authority.’ Although the English text of this provision uses the word ‘includes’, suggestive of a non-exhaustive definition, the Maltese text, which prevails in case of a discrepancy between the two texts, uses the word ‘tfisser’, that is ‘means’.

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Act31, an MP may, within a certain time, bring a motion to amend or annul that subsidiary legislation, but do Members of Parliament – all part-timers except for Ministers – have the resources to undertake such vetting of legal notices? In any case, even if subsidiary legislation is eventually annulled by resolution of the House, this does not affect (according to the Interpretation Act, at least) the validity of what may have already been done under that piece of legislation.

The second benchmark is legal certainty. Are laws, particularly laws which create criminal offences, easily accessible? Are court decisions which apply and, in some cases, interpret the law, accessible?

Are the laws drafted in such a way that the effects of those laws are foreseeable? Foreseeability means, as we have seen in connection with the Unifaun case32, not only that a law must be proclaimed in advance of implementation, but it must be formulated with sufficient precision and clarity to enable the citizens to regulate their conduct with it. Finally, are final judgments of the courts respected and effectively implemented?

This final point – the enforcement in good faith of final judgments – is important. A final judgment, whether of the ECtHR or of a Maltese court, cannot be nullified, directly or indirectly, by legislation made subsequent to the commencement of the litigation leading to that judgment. If A is litigating against B, the State cannot change the law pending the litigation so as to favour one side over the other, as that would violate the principle of the equality of arms33 and therefore, there would be a violation of Article 6. Multo magis, of course, if one of the litigants is the State itself.

The third benchmark: preventing abuse or misuse of powers. Are there effective safeguards – judicial, legal, administrative or mixed – against arbitrariness and abuse of power by public authorities?

In particular, are public authorities obliged to give reasons for their administrative decisions, particularly decisions involving the use 31

Chapter 249 of the Laws of Malta.

32

F.n. 15, above.

33

Arras and Others v. Italy ECtHR App. no. 17972/07, 14 February 2012, §§42-44; Stefanetti and Others v. Italy ECtHR App. no. 21838/10 et al., 15 April 2014, §§38-44.

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of public money, or does one have to extract these explanations by pincers or by a corkscrew?

Of course, on paper, things may look grand, with commissions and committees to administer this or that part or of the public powers – the participatory process I mentioned earlier – or to act as regulators, or to enquire into abuses. The impertinent or inconvenient questions I ask are: what resources, especially in terms of manpower, do these bodies really have? Who are they answerable to in final analysis? How can the public ensure that the people appointed to these bodies are really the best qualified for the post – because only if they are fully qualified and competent and objectively independent, can they act as a check on abuse or misuse of public powers. Let me take two entities – and I choose them because the people heading them are people I consider friends, fully competent, dedicated and in all respects above board. The first entity is the Office of the Commissioner for Mental Health,34 or, to use his official designation, Commissioner for the Promotion of Rights of Persons with Mental Disorders. If one looks at Article 6 of the Mental Health Act,35 one finds that the Commissioner is tasked with a bewildering variety of functions. I will refer only to sub-paragraphs (k), (l) and (m) of sub-article (1) of Article 6:

(k) [to] conduct regular inspections, at least annually, of all licensed facilities to ascertain that the rights of patients and all the provisions of this Act are being upheld. During such visits he shall have unrestricted access to all parts of the licensed facility and patient medical records as well as the right to interview any patient in such facility in private; (l) [to] report any case amounting to a breach of human rights within a licensed facility to the appropriate competent authority recommending the rectification of such a breach and take any other proportional action he deems appropriate; 34

The current Commissioner, and the first to be appointed under the Act which created the office, is Dr John Cachia.

35

Chapter 525 of the Laws of Malta.

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(m) [to] report to the appropriate competent authority any healthcare professional for breach of human rights or for contravening any provision of this Act and this without prejudice to any other proportional action that he may deem necessary to take; Now, if one looks at Article 5 of this Act,36 under which the Commissioner is appointed, one notes that this provision does not even indicate the minimum qualifications that the holder of the post is to have – one assumes that the person has to have at least a medical qualification, if not also some experience in psychiatry. He does not enjoy security of tenure, because he is appointed by the Prime Minister (not with the concurrence of, but simply after consulting, the Leader of the Opposition) ‘under such terms and conditions as the Prime Minister deems appropriate’. However, what is more worrying is his line-relationship to the Minister responsible for Health. Sub-article (2) of Article 5 says:

(2) The Commissioner shall exercise his functions under this Act in relation to particular cases in his own individual judgement but he shall nevertheless be accountable for his performance to the Minister.

What does ‘but shall nevertheless be accountable for his performance to the Minister’ mean? Here we are dealing with, among other things, the fundamental human rights of persons who the ECtHR has, in countless judgments, held to be particularly vulnerable37; they may not have a vote, but for that very reason they are more particularly vulnerable. All the licensed facilities in Malta housing and dealing with mentally-disordered persons are, as far as I am aware, run by the Government, which in turn places upon the State the obligation – the positive obligation in terms of the Convention and the Strasbourg 36 Article 5(1) of Cap. 525 reads: ‘There shall be established a Commissioner for the Promotion of Rights of Persons with Mental Disorders, hereinafter referred to as ‘the Commissioner’, to be appointed by the Prime Minister after consulting the Leader of the Opposition under such terms as he deems appropriate.’

37

See, for instance, Centre for Legal Resources on behalf of Valentin Câmpeanu v. Romania ECtHR [GC] App. no. 47848/08, 17 July 2014, §§130-135 and 140-141.

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Court’s case law – to not only ensure their safety and wellbeing, but also that they are provided with adequate treatment, and this especially in respect of those who are compulsorily detained (where Article 5 of the ECHR kicks in). Yet, the person specifically charged with ensuring that the Executive branch of Government does all this, is ‘accountable for his performance’ to the Minister who is responsible for the very hospital that he supervises, instead of to Parliament! I have never managed to find out why the legislator fudged this.

The other entity is the Permanent Commission against Corruption, today composed of a retired judge as Chairman – Judge Lawrence Quintano – with whom I had the pleasure to work for many years both in the A.G.’s Office and later on the Bench in Malta, and a retired Commissioner of Police, John Rizzo, with whom I also had the pleasure to work when I was in the A.G.’s Office and who always did his job fearlessly, but also scrupulously abided by the law. The third member of the Commission is a lawyer about whom I know nothing.

On paper, the Commission38 looks grand – it can even investigate on its own motion or initiative, that is to say without the necessity of a report being filed by anyone. It is trite knowledge, however, that its powers are limited but, more critically, that it has no resources whatsoever in terms of administrative or investigative manpower.

This has been signalled by the Group of States against Corruption in its Report of 2014:

The Permanent Commission against Corruption (PCAC), a specialised body dealing exclusively with the investigation of alleged or suspected corrupt practices within public administration, was established in 1988; however, its track record has not been as successful as hoped for to date. According to a national report released in July 2013, none of the 425 investigations conducted by the PCAC since its creation had resulted in criminal proceedings in court. GRECO has repeatedly noted that, for the PCAC to be a meaningful instrument in the fight 38

The Permanent Commission against Corruption (PCAC) is established in terms of the Permanent Commission Against Corruption Act, Cap. 326 of the Laws of Malta.

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against corruption, its role needed to be strengthened in terms of both powers and resources.39 The impertinent question I will ask is: are the two main political parties really interested in having a meaningful, independent and above all effective instrument in the fight against corruption, or are they content with paper tigers?

Fourth benchmark: equality before the law and non-discrimination.

The principle of non-discrimination requires the prohibition of any unjustified unequal treatment under the law and/or by the law, and that all persons have guaranteed equal and effective protection against discrimination on grounds such as race, colour, sex, language, religion, political or other opinion, national or social origin, birth or status. In particular, legislation must respect the principle of equality, that is, it must treat similar situations equally, and different situations differently.

Now, on the 8 of December 2015, Malta signed and ratified Protocol no. 12 to the European Convention on Human Rights. This Protocol came into effect with regard to Malta on the 1st of April 2016.

The protocol, as many of you know, enshrines the principle of nondiscrimination in the enjoyment not only of the substantive provisions of the Convention (as is the case with Article 14 of the ECHR), but of any right set forth in domestic law – in other words, it goes much further than Article 14, and of course much further than Article 45 of the Constitution. We are, at least according to the Gregorian calendar, almost at the end of 2018, and yet this protocol, unlike all the other substantive Protocols to the Convention that Malta has signed and ratified, has not yet been included in the First Schedule of the European Convention Act.40 What are we waiting for? Malta is bound by that Protocol now; but anyone alleging a breach of Article 1 of Protocol 1241 cannot go before the First Hall of the Civil Court in 39

Group of States Against Corruption (GRECO), 4th Evaluation Round – Evaluation Report, Malta – adopted by GRECO at its 66th Plenary Meeting (Strasbourg, 8-12 December 2014), §14.

40

The European Convention Act, Cap. 319 of the Laws of Malta.

41

Article 1 of Protocol 12 reads: ‘1. The enjoyment of any right set forth by law shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or

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Malta and the Constitutional Court because that article is not part of the definition of ‘Human Rights and Fundamental Freedoms’ for the purposes of Cap. 319.42 The person would have to have direct recourse to the Court in Strasbourg, with all the expense that that entails. To me, this is all quite bizarre.

Fifth – access to justice. Are there sufficient constitutional and other guarantees of judicial independence? Independence means that the judiciary is free from both external and internal (i.e. within the judicial system itself) pressure, and that judges are not subject to political influence or manipulation, in particular, but not exclusively, by the executive branch. This requirement is an integral part of the fundamental democratic principle of the separation of powers. Such manipulation can occur when the lay administration of the Courts of Justice interferes, directly or indirectly, in the proper administration of justice. When I was Chief Justice, I always emphasised the difference between the constitutional independence of the Judiciary – the independence as guaranteed by the Constitution – and its institutional independence – the independence that the Judiciary must have from the lay administration of the Courts, an administration which is completely subservient to the Minister responsible for Justice.

It was precisely to guarantee as much as possible this institutional independence that in 2008 a provision was inserted, on my suggestion, in the regulations laying down the functions and duties of the various court officials, including the Director General of the Courts43 to the effect that the Chief Justice could annul a decision of the Director General if the former was of the view that such a decision impinged upon the exercise of judicial functions:

12. Notwithstanding the foregoing provisions of these regulations, the Director General or any person authorised by him under these regulations, in the other opinion, national or social origin, association with a national minority, property, birth or other status. 2. No one shall be discriminated against by any public authority on any ground such as those mentioned in paragraph 1.’

42

Article 2 of Cap. 319.

43

Regulation 12 of the Civil Procedure (Regulation of Registries, Archives and Functions of Director General (Courts) and other Executive Officers) Regulations, S.L. 12.21.

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exercise of his functions thereunder, shall ensure that he does not interfere in any manner in the exercise of judicial functions by the members of the judiciary and, should this be the case, the Chief Justice shall, by written notice under his hand and in terms of this regulation, overrule any such decision of the Director General; and, in doing so, the Chief Justice may give such directions to the Director General or to any delegate thereof which might appear to the Chief Justice to be in the interests of the better administration of justice in the instant case.

Remember that this provision is just a regulation in subsidiary legislation; it can be deleted at the stroke of a pen.

Also – and this is something which is often not given enough attention – is the prosecution service, at every level of jurisdiction, sufficiently autonomous to be able to perform its task effectively, that is not just by paying lip service to the Rule of Law? Does the legal system ensure that trials are fair and transparent and, in the context of criminal trials, that the presumption of innocence is effectively guaranteed?

In this respect, perhaps I should try and debunk once and for all the myth that we in Malta have some sort of ‘judicial investigation’ which is functionally independent from the Executive. We have heard in recent months of people awaiting the outcome of this and that ‘magisterial inquiry’. In Malta, we have nothing comparable to the autonomous and functionally independent judicial investigations on the continent. A careful examination of Articles 546 to 569 of the Criminal Code44 would show that our inquiry relating to the ‘in genere’ – conducted indeed by a Magistrate – is intended primarily to describe and preserve the material traces of an offence. Only exceptionally will a magistrate order, in the proces-verbal, that a person be arraigned in court on a particular charge, and when he/ she does so, the magistrate’s decision may be countermanded by a member of the Executive – the Attorney General – Art. 569(6) of the 44

Chapter 9 of the Laws of Malta.

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Criminal Code.45 Also, the Attorney General is not bound to make public his reasons – he simply makes a report46 to the person who is vested with the Executive Authority in Malta – the President of Malta47 – and the latter is not bound to make public those reasons – so, no possibility of the victim or victims seeking judicial review of a decision not to prosecute, as you have in many jurisdictions in Europe, including England and Wales.48 Moreover, the inquiring magistrate is ‘functionally dependent’ on the Executive Police for the conduct of such an inquiry – magistrates not only do not have the time (with their enormous workload) to carry out complicated or complex investigations; but neither do they have the appropriate specialised training for that, nor independent resources.

Therefore, let’s stop kidding ourselves please. Malta must be the only country in the civilised world where, except where the executive police or the Attorney General sound the gong for a magistrate to 45

Criminal Code, Article 569:’…. (5) Where in the proces-verbal, the magistrate shall have ordered that a person be arraigned in court on any one or more charges, the magistrate shall order that a copy of the same process-verbal shall be transmitted by the registrar to the Commissioner of Police who, saving the provisions of sub-article (6), shall proceed accordingly. (6) Notwithstanding the provisions of sub-article (5), in case of doubt the Commissioner of Police may consult with the Attorney General who may direct that no proceedings are to be taken or that the proceedings to be taken are to be for a charge or for charges different from those specified by the magistrate in the process-verbal, without prejudice to the right of the Attorney General to direct otherwise whenever fresh evidence becomes available: Provided that where the Attorney General shall have directed that no proceedings are to be taken, he shall make a report to the President of Malta stating the reasons for his action.’

46

It is to be noted that this report is to be made only when the Attorney General directs that no charges whatsoever are to be brought. If, for instance, the A.G. directs that lesser charges than those indicated by the magistrate are to be brought, or, indeed, some really trivial charge instead of the charge or charges indicated by the magistrates, then the A.G. is not even bound to report to the President.

47

Article 78(1) of the Constitution: ‘The executive authority of Malta is vested in the President.’

48

See, for instance, Armani da Silva v. the United Kingdom ECtHR [GC] App. no. 5878/08, 30 March 2016 passim and in particular §§92-94. See also R v Christopher Killick [2011] EWCA Crim 1608. The Crown Prosecution Service in England and Wales has moreover a system of independent review of decisions not to prosecute: see <https://www.cps.gov.uk/sites/default/ files/documents/publications/VRR_leaflet.pdf> [last accessed 20/12/18]. The right to judicial review of a decision not to prosecute appears to have been slightly restricted by the relatively recent decision of Chaudhry, R (On the Application Of) v Director of Public Prosecutions [2016] EWHC 2447 (Admin) (11 October 2016).

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conduct an in genere inquiry, in all other cases before a magistrate can act he must inform the suspect of the report, information or complaint against him and allow him time to give his views on whether an inquiry is to be held (Art. 546(4A) of the Criminal Code).49 This is beyond bizarre.

Finally – the last benchmark – what practical and effective measures are in place to ensure that the Rule of Law is not undermined by corruption and conflict of interest by people in public office or by people administering public services? Corruption leads to arbitrariness and abuse of powers, it distorts a nation’s economy, creates unnecessary financial burdens on the citizens (particularly the most vulnerable), and can in due course lead to such general dissatisfaction that law and order will break down – which is exactly what the Universal Declaration of Human Rights seeks to avoid.

(Rev. 20/12/18)

49

Criminal Code, Article 546: ‘… (4A) Where a report, information or complaint is made to a Magistrate under this article by a person other than the Attorney General or a police officer the report, information or complaint shall contain a clear designation of the person suspected to have committed the offence (hereinafter in this article referred to as ‘the suspect’). The Magistrate shall order the report, information or complaint, as the case may be, to be served upon the suspect allowing him time to reply and upon the lapse of such time shall decide whether to hold the inquest. The Magistrate shall decide to hold the inquest only after having established that the necessary prerequisites for the holding of such an inquest exist. (4B) The decision of the Magistrate under sub-article (4A) shall be served on the person who made the report, information or complaint and upon the suspect.

Any one of them may, within two working days from the date of service of the decision, apply to the Criminal Court for a reversal of the decision of the Magistrate and the Criminal Court shall give its decision on the application with urgency. The above provisions were introduced by Article 12 of Act XVI of 2006. It is interesting to note that the original proposal submitted by the Minister responsible for justice in Bill no. 69 of 2006 was very simple, and read (Clause 8):(4A) Where a report, information or complaint is made to a Magistrate under this article by a person other than the Attorney General or a police officer the Magistrate shall hold the inquest only after having obtained the authority of the Chief Justice who shall give his authority after having established that the necessary prerequisites for the holding of such an inquest exist. This proposal would have required at most a few minutes’ work by the Chief Justice and, and if the prerequisites at law clearly emerged from the notitia criminis, the investigation would commence by the duty magistrate, without alerting the suspect and giving him or her time to dispose of any evidence. However, neither political party seems to have really wanted a judicial investigation other than one triggered by the Executive – via the police or the Attorney General – and so we are now lumped with the Byzantine procedure in sub-articles (4A) and (4B) of Article 546.

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Maltese Citizenship: A historical perspective from Independence to Present Day Dr. Jean Philippe Chetcuti

Dr Jean-Philippe Chetcuti - Chetcuti Cauchi Advocates is an immigration and commercial firm with key strengths in corporate, tax and trust law, financial services and fintech, property and capital projects, residence and immigration, intellectual property and technology law. Dr. Jean-Philippe Chetcuti is a private client lawyer to HNW individuals, international families and family businesses. He specialises in residency and citizenship law, international tax, trust and estate planning, family office structuring, family business governance and international asset protection.

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1. Introduction

H

umanity has, since time immemorial, felt a need to belong to and to form communities, whether based on race, creed, or a common geographical area of habitation. At the same time, humans have also, always given priority to distinguish some members of their community from others, in one shape of hierarchy or other.

As human society developed, and borders began to be constructed and formed, so did the relevant legal frameworks as to who would be considered part of the societies and communities formed and who would not. Law, as a reflection and product of the human societies shaping it, would also dictate principles on borders, migration, statehood and citizenship – this last being one of the keystones of international law and a fundamental element of modern societies and identity.

With the development of both international and national legal frameworks, as well as 20th century demands for state sovereignty, independent nation states have retained the power and competence to regulate their own internal affairs, including citizenship. Citizenship, therefore, remains, primarily, a national priority and competence.

It follows that citizenship and the legal framework regulating it differ from state to state, with each nation amending and forming their own legal framework on the matter as a reflection of their national priorities, history, and policy. Being a member of the European Union, does not change the fact that the area of citizenship remains within the sole discretion of each member state, in fact it is for each member state of the EU to lay down the conditions for the acquisition and loss of its nationality.1 Malta has amended its citizenship laws considerably from when it obtained independence in 1964 to the present day. Whereas, before gaining independence, citizenship was not regulated by the inhabitants of Malta themselves but by colonial powers, upon independence the 1

European Commission, PRESS RELEASE < http://europa.eu/rapid/press-release_MEMO-19527_en.htm>.

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Maltese government and House of Representatives established the foundations for Maltese citizenship law as known today.

The legal basis for individuals to be recognised as citizens of Malta was established upon independence, with the laws being reviewed and amended as time progressed.

Currently, there are two primary legal instruments regulating Maltese citizenship within the Maltese legal framework. The first is the Constitution of Malta ('Constitution')2, the foundation of Malta’s legal system, whilst the second is the Maltese Citizenship Act ('MCA')3. Whilst the Constitution sets the legal basis for the Maltese state to regulate on sovereign matters including citizenship, the MCA has undergone extensive amendments since the birth of the Maltese independent state in 1964. The Immigration Act4 further compliments the Constitution and the MCA in regulating matters pertaining to the entry and stay of foreign individuals past the Maltese border. The Maltese legal framework, including the aforementioned legal instruments, is subject to Malta’s international obligations and commitments as part of several international communities, including the United Nations and the European Union.

The legal framework forming the basis for holding and acquiring Maltese citizenship has been amended over time to provide various legal avenues to citizenship. One of the earliest methods to obtain Maltese citizenship was based on jus soli, meaning right of the soil, thus granting citizenship to individuals solely on the basis that they were born inside the Maltese territory.

The legal basis of jus sanguinis, meaning right of blood, was also incorporated, referring to the acquisition of Maltese citizenship through descent from Maltese parenthood. Further avenues developed through legal amendments, with naturalisation being permitted after a period of a legal residence in the country, as well as through registration by marriage or birth. One of the most recent 2

Constitution of Malta, Laws of Malta.

3

Malta Citizenship Act, Chapter 188 of the Laws of Malta, Act XXX of 1965 as amended.

4

Immigration Act, Chapter 217 of the Laws of Malta, Act IX of 1970 as amended.

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avenues to acquiring Maltese Citizenship is on the legal basis of jus pecuniae, through the introduction of Malta’s Individual Investor Programme ('IIP')5, which provides for the acquisition of citizenship through investment in Malta.

Developments in recent times mark a stark legal difference between the approach established by Maltese law in 1965 (a post warera society still very sceptical of foreigners), to our law as it stands today, developed within a globalised and connected society. Malta’s original citizenship law was established with what can be described as a traditional, ‘protectionist’ approach to immigration, whilst recent amendments witness a dramatic shift to a much more ‘accessible’ route for those who fulfil the financial and eligibility requirements of the programme.

This study will tackle the amendments made to Maltese Citizenship law from the acquisition of independence to its present day. Due consideration will be given to the historical events forming Maltese policy and society at the time, which in turn left a significant influence on the formation of the Maltese legal system. No legal framework can be analysed in isolation, without considering the priorities of the nation’s people, and the international trends which in turn influence them.

2. The Nature of Citizenship 2.1 Definitions Citizenship has maintained a unique nature in each legal framework. The concept of citizenship developed as a legal mark of one’s nationality and communal belonging, entangled with equivalent national rights and obligations. As far back as ancient Greek times, both rights and responsibilities were conferred on members of the Greek polis.

5

Individual Investor Programme of the Republic of Malta Regulations, 2014, L.N. 47 of 2014.

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The term ‘citizenship’ has been used interchangeably with the term ‘nationality’, particularly in representing the link between an individual and a state. What is notable in the context of the Maltese citizenship legal framework is that the term ‘nationality’ is seldom used. The term used is that of ‘citizenship’ or ‘cittadinanza’. There is no legal definition offered for either term within Maltese law, which is why an understanding of the international legal dimension is necessary, whilst keeping in mind the distinction between the concepts of nationality, citizenship, residence and domicile.

Each state has the sovereign right6 to ‘determine under its own laws, who its nationals are’. Each state has the right that its citizenship be recognised by all other States. This, however, is subject to criteria under international law, one of the most prominent of which is the presence of the ‘genuine connection’ to the State which was and is still being cited and insisted upon by critics of investor migration programmes.7

2.2 Genuine Link Possessing a ‘genuine connection’ to a particular society / community has been established as an accepted standard in international law for an individual to demonstrate his right to belong to that community.8 Such individual would have a sufficient link to a State to be able to acquire citizenship, a known uniform element for most citizenship law frameworks today. This element was discussed in the case Liechtenstein v Guatemala, also known as the Nottebohm case9. The ICJ ruling is regarded as one of the central cases to nationality law in legal theory. The case discussed the grant 6

As affirmed by the Convention on Certain Questions relating to the Conflict of Nationality Laws, The Hague, 12 April 1930.

7

Such reasoning arises from the Nottebohm judgement which stated that a state cannot claim that the rules it laid down are entitled to recognition by another unless it acted in conformity with this general aim of making the legal bond of nationality accord with the individual’s genuine connection with the state.

8

As per a law enacted by Sir Thomas Maitland.

9

Nottebohm (Liechtenstein v. Guatemala), International Court of Justice (ICJ), 1955.

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of nationality as perceived from an international law perspective. It was ruled that the grant of nationality is entitled to recognition by other nation States only if ‘[the State] has acted in conformity with this general aim of making the legal bond of nationality accord with the individual’s genuine connection with the State’. Nationality was thus defined:

According to the practice of States, to arbitral and judicial decisions and to the opinions of writers, nationality is a legal bond having as its basis a social fact of attachment, a genuine connection of existence, interests and sentiments, together with the existence of reciprocal rights and duties. It may be said to constitute the juridical expression of the fact that he individual upon whom it is conferred, either directly by the law or as a result of an act of the authorities, is in fact more closely connected with the population of the State conferring nationality than with that of any other State.

A true appreciation of the legal nature of citizenship and the relevant amendments made to Maltese citizenship law does not consist merely in an analysis of the relevant amendments to the law and legal developments in isolation, but rather through a study of the state’s and its people’s history, culture, priorities and social fabric. It is then that one may glean a truer, holistic perspective of acquiring citizenship under Maltese law through time.

3. Pre-Independence Era – the Maltese as subjects of the British Crown Malta ceded to British power in 1802, with full sovereignty conferred to the United Kingdom in 1814, through the Treaty of Paris, as endorsed by the Congress of Vienna. Between this time and 1935, affairs in Malta were regulated by British powers through proclamations.

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By default, the inhabitants of Malta and Gozo were, henceforth, referred to as ‘subjects of the British Crown’. Maltese citizens therefore had all protections as well as rights of subjects of the British Empire.

The Privy Council confirmed inhabitants of Malta as British Subjects in 1913.

At the time of British occupation in Malta, a central law which specifically regulated citizenship for Maltese inhabitants did not exist, particularly because Maltese people were considered to be subjects of the British Crown, and because naturalisation was largely regulated on mainland Britain through the British Parliament, rather than through Malta. What must also be considered, pertinent to Maltese history, was that Malta passed through a significant number of Constitutions between 1849 and 1964, due to the growing frustration of the Maltese population that not enough decision-making power was being granted to them as a ceded colony of the United Kingdom. Citizenship was thereby regulated in an extremely fragmented manner through either Proclamations or Orders, given directly by the United Kingdom and their interplay with various versions of the Constitution. This section will outline legal developments from 1817 to independence in 1964 pertaining to Constitutional and citizenship matters.

Proclamation IX of 1817 was the first of its kind to regulate citizenship through naturalisation and denization of aliens10. The proclamation set down standards for both avenues to citizenship of the United Kingdoms and the Colonies, further regulating their requisites, which included taking an oath of allegiance to the British Kingdom.

In 1908 the Naturalisation Ordinance was published and came into force in Malta,11 under the then Governor of Malta Sir Henry F. Grant.

This Ordinance allowed for successful applicants to be awarded with a certificate of naturalisation, which would in turn confer the rights, powers, and privileges of a natural-born subject to the certificate’s holder. This certificate had specific requisites and formalities and 10

Denization refers to the grant of some of the rights enjoyed by citizens.

11

re: Ordinance No II 1908, 28TH February.

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could be cancelled by the Governor without appeal.

In 1914, the British Nationality and Status of Aliens Act was incorporated into British law. Article 1 stated that persons born within His Majesty’s dominions and allegiance were deemed to be natural born British subjects.12 This built upon the growing corpus of British law dealing with nationality and citizenship matters of its people.

The 1921 Amery-Milner Constitution established a diarchy.

Political representation and power, albeit to a lesser rather than fuller degree, was given to the Maltese. This Constitution gave Maltese representatives decision powers over local matters and the Maltese Imperial Government maintained power over reserved matters, including the regulation of citizenship.

13

1947, witnessed an international event of influence, the Commonwealth Conference on Nationality and Citizenship.

Enforced in 194914, from then onwards British subjects were known as Citizens of the United Kingdom and the Colonies (CUKC), including inhabitants of Malta.

As commonwealth countries began to develop a national conscience, in 1961, three years before Malta would become an independent State, a unicameral legislature was announced.15 The Government of Malta would be given full legislative and executive powers. The government had the power to make laws in the form of Acts, whilst external and defence affairs were still the competence of the Imperial Government.

4. Maltese Independence The acquisition of Maltese independence was of the utmost 12

re: The British Nationality and Status of Aliens Act of 1914.

13

re: The Constitution of Malta.

14

As per the British Nationality Act.

15

This is so as the 1961 Constitution established a unicameral legislature.

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significance in Maltese legal history. Apart from gaining an independent standing in the international sphere, Malta established and developed its fully independent law-making institution, the House of Representatives of Malta, and its own legal structure.

Of the laws established relevant to the legal status of Maltese citizenship were: •

the Malta Independence Act of 196416,

•

the Malta Independence Order of 196417,

•

the Maltese Citizenship Act of 196518, and

•

the Constitution of Malta19.

These laws and the lawmakers of the time formed the nature of citizenship in Malta at a time of unprecedented global change.

4.1 Malta Independence Act and Malta Independence Order Through the Malta Independence Act, Malta was given full responsibility and power, at the same time relinquishing Her Majesty’s Government in the United Kingdom of any responsibility for the Maltese Government. The emergence of an independent state from a colony also required several laws to be changed, removing Malta from the scope of the term ‘colony’ in several laws of the empire.

A significant amendment was also passed concerning the British Nationality Act. Inhabitants of Malta gained their own international standing separate from the subjects of the British Crown, which they were no longer considered as. Further to this, through amendments to the Colonial Laws Validity Act of 1865, no act of the Parliament of 16

Malta Independence Act 1964, Chapter 86, Elizabeth II Laws.

17

Malta Independence Order 1964, Supplement to the Malta Government Gazette No 11,688, 1964.

18

supra.

19

supra.

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the United Kingdom passed by law on or after the appointed day was held to apply to Malta as part of its law.20 Article 3 of the Malta Independence Act provided for the retention of citizenship of the United Kingdom and its Colonies by certain citizens of Malta. At the time, dual citizenship was not permitted by national law, therefore, individuals who were deemed Maltese citizens could not accept citizenship of the UK and its Colonies without revoking the former. The Malta Independence Act further established legislative powers of the Maltese State, through the establishment of the Maltese Constitution.

For the first time in an Act passed by the British House of Representatives, reference was made to the ‘Constitution of Malta’ through Article 4 of the Order. The Order further established the House of Representatives of Malta, handing all legal power and responsibility to the Maltese.

Maltese citizens continued to be considered members of the Commonwealth, as they still do to this day and age, retaining a status of membership of the community of ex-colonies and retaining small but significant ties to the United Kingdom. The Order further provided for the form of application for registration as a citizen of Malta. Given the transition period between Malta as a colony and Malta as an independent state, provision had to be made for individuals interested in registering for Maltese Citizenship to ensure their legal status. The Malta Independence Order provided that the application would be made to the Minister responsible for matters relating to citizenship of Malta, specifying the name, address and national status of the applicant in addition to the grounds upon which the applicant is entitled to registration, with any supporting documents attached. This was being considered as adequate until a proper form for registration was specified. The first draft of the Constitution of Malta as an independent State was also annexed to the Malta Independence Order.

20

The Colonial Laws Validity Act of 1865.

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4.2 Constitution of Malta As an indispensable legal instrument to an independent State, the Constitution of Malta necessitated a section on citizenship. Chapter 0, the Constitution, was drafted, regulating procedure for persons entitled to be registered as citizens, persons naturalised or registered as resident before the appointed day21, acquisition of citizenship by birth or descent by persons born on or after the appointed day, and acquisition of citizenship by virtue of marriage to a citizen of Malta. The Constitution established the rights and duties of citizens of Malta, including their right and protection of work, right to life, right to vote, as well as protection from forced labour, inhumane treatment, and freedom of expression, amongst others, drawing from ideals of fundamental human rights whilst establishing itself as a newly democratic state.

Article 28 of the original version of the Maltese Constitution also established that any person who is a citizen of Malta, as well as of another State, upon the attainment of the age of majority shall cease to be a citizen of Malta upon becoming nineteen years old, unless he had renounced his other citizenship.

One could acquire Maltese citizenship by birth on Maltese territory, by naturalisation, or by marriage. Children born on Maltese territory were considered citizens through jus soli, however, children born abroad could only acquire Maltese citizenship if their father was a Maltese citizen at the time of their birth. Maltese mothers, at the time, could not transfer their citizenship to their children born abroad if the father of that child was foreign. The only exception would be if the mother of the child was unmarried at the time of birth. Furthermore, citizenship by marriage was only applicable if the husband was Maltese, and not if a Maltese woman married a foreigner.

The interpretation of the word ‘alien’, in the original Constitution, was established as a person who is not a Commonwealth citizen, a British protected person or a citizen of the Republic of Ireland. This 21

Appointed day refers to the day when Malta obtained independence. This is how this day is referred to in the Citizenship Act.

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clearly, showed a bias in the Constitution towards citizens of the Commonwealth. Whilst other foreigners required proof of at least six years of residence in Malta, Commonwealth citizens needed only to provide proof of five years, in order to be naturalised as citizens.

The MCA, Malta’s central law on citizenship, was enacted in 1965.

Several amendments, discussed in the next section, embellished and detailed Maltese Citizenship law from independence to present day.

5. Significant Modern Legal Developments 5.1 1989 amendments to Maltese Citizenship Law Major amendments to Maltese citizenship law were made in 1989, the first of their kind since Malta obtained independence from the United Kingdom. Notable here is the influence provoking these amendments, which was primarily international, both through changes brought about in international law and policy, as well as increasing frustration by the Maltese community of emigrants residing abroad.

The 1950s and 1960s saw a mass emigration from the Maltese Islands of workers seeking a better standard of living, to places such as Australia, Canada, and the United States. However, since dual citizenship was not allowed at the time of independence, a large portion of the Maltese population that had moved abroad were not allowed to claim their Maltese Citizenship. Historical events also had an impact on the extremely protectionist citizenship laws of the time, such as the conflict between the United Kingdom and Egypt concerning the Suez Canal in 1956. After this conflict, Maltese citizens, being subjects of the British Crown, were immediately exiled from their residence in Egypt, and subsequently also refused entry into the Maltese Islands, thus rendered refugees by their home state.

These individuals and their subsequent generations had lobbied for an opportunity to regain their citizenship for decades, with the pressure eventually resulting in legislative changes in 1989.

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Amendments were brought about by Acts XXIII, XXIV, and XXV of 1989. Due to international pressure and an increasing number of states permitting dual citizenship, one of the most prominent amendments was that of introducing dual citizenship for for people born in Malta who eventually emigrated to other countries. Whilst prior to 1989, individuals born in Malta were entitled to Maltese citizenship, amendments effected in 1989 resulted in persons born in Malta only being eligible for Maltese citizenship if at least one of his or her direct ascendants was a citizen of Malta or was born in Malta and emigrated, enjoying freedom of movement in Malta under Article 45(4) of the Constitution.

Further criteria were established. To qualify for citizenship by registration, the individual in question must have spent a minimum of six years residing in one country abroad prior to registration. It was also necessary, naturally, that their country of residence recognised and permitted dual citizenship.

An interesting legal consequence of these amendments concerned individuals who had to give up Maltese citizenship upon independence because of the restrictive provisions of citizenship laws in place at the time. The retrospective nature of the 1989 amendments ensured that such individuals would be deemed never to have lost their citizenship on the appointed day provided that the conditions elaborated on above were satisfied. Furthermore, the amendments also allowed children born of a Maltese emigrant father, by consequence, to also register for citizenship. In practice, it is arguable how effective such amendments truly were, seeing that proof of Maltese lineage was an essential requisite, and such proof in the form of documentation was sometimes difficult to obtain and present.

The legal amendments saw some significant legal theoretical shifts in the Maltese approach to regulating citizenship. The amendments saw a shift from the jus soli approach to one more based on jus sanguinis. The amendments also permitted for Maltese mothers to transmit their citizenship to their children born abroad.

Given that no law can be seen and observed in isolation, it is 131

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important to consider the international changes in policy and law that were taking place globally. Malta, being both a state with very strong ties to European nations by virtue of its history and location, as well as a democratic state priding itself on being up to par with international ideals, could not have avoided being affected by such international trends. One of the key international legal instruments provoking several amendments within the Maltese national legal framework was the Convention on the Elimination of Discrimination Against Women (CEDAW), adopted in 1979 by the United Nations General Assembly. It served as one of the most significant legal tools in the history of combatting gender discrimination worldwide. Given the increasing number of laws being passed globally to the effect of eliminating gender discrimination, Malta also followed suit.

Prior to the 1989 amendments, the law referred specifically to women being entitled to citizenship by marriage in what was Section 24 of the first Constitution. By using the word 'woman' specifically, it was clear that only wives of male citizens of Malta were eligible to apply for citizenship by registration, and not husbands of Maltese woman. The amendments passed by the House of Representatives in 1989 ensured that foreign husbands of citizens of Malta were granted the same rights as foreign wives of Maltese citizens. As a further consequence, children of Maltese mothers and foreign fathers were also applicable.

Another key amendment was that of reintroducing acquisition of citizenship by adoption, which was not possible between 1977 and 1989. A child could be considered eligible for citizenship by being adopted only if he or she was under the age of 10 years on the date of adoption.

These amendments were so significant and impactful, due to the fact that they applied retrospectively to allow applications by those who had been denied citizenship of their home country. Those acquiring citizenship were also not forced to take up residence in Malta, given that their home and families were established in another state. The 1989 amendments did not change the fact that only Maltese persons habitually resident in Malta had voting rights in 132

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national general elections. Voting could only take place in Malta, and not through Malta’s embassies or consulates abroad, and individuals who were not habitually resident in Malta were denied the right to vote in these elections despite being holders of Maltese citizenship.

A final, notable change was the elimination of the distinction made in the MCA between commonwealth citizens and other foreigners.

From the moment the amendments came into force, any person could be naturalised as a citizen of Malta if she or he has resided in Malta legally for at least five years.

5.2 2000 Amendments Following the landmark amendments in 1989, Acts III and IV of 2000 amending the Citizenship Act, built upon the progress made thus far with regards to the regulation of dual citizenship.

These amendments introduced the right to have not only dual but multiple citizenship and thus from February of 2000, a citizen of Malta could acquire and retain other citizenships together with his Maltese citizenship22. This thus signified a shift from 1989 where dual citizenship was the exception rather than the rule.

The focus of Act III of 2000 was primarily to amend the provisions on citizenship in the Constitution of Malta. The detailed provisions on citizenship which formed Chapter III of the Constitution were moved to the Maltese Citizenship Act. The MCA thus became a more thorough law, encompassing all relevant legal aspects of Maltese Citizenship and becoming even more central to the legal framework concerning Maltese citizenship – even more so than the Constitution, which to date only contains the general principles on citizenship in Articles 22 to 24.

The other key amendments of 2000, passed through Act IV of 2000, concerned changes made directly to the Malta Citizenship Act. Furthermore, another amendment made in 2000 affected children 22

Article 22(2) – Constitution of Malta.

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born between the 21st September 1964 and the 1st August of 1989.23 Children born within this bracket were entitled to be registered as citizens of Malta, without any residence requirements.

Additionally, for the first time, provisions were made to cater for the citizenship of foundlings. Until 2000, a newborn infant found abandoned in Malta was deemed to have been born in Malta but could not acquire Maltese Citizenship, as this would require the identity and nationality of his or her parents to be established (under the prior regime of jus sanguinis), which of course, was not always possible.

Through Act IV of 2000 amending the MCA, a newborn infant found abandoned in any place in Malta will be deemed to be a citizen of Malta until and unless his right to any other citizenship is established.

5.3 EU Accession Entry into the European Union presented a new European dimension to the Maltese Passport. Whilst Maltese citizenship law per se did not change, upon the entry of Malta into the European Union (EU) in 2004, Maltese citizenship acquired a new, European dimension. Upon Malta’s accession into the EU, it also ratified the EU legal acquis, integrating such acquis into its national legal framework. Under the Treaty on the Functioning of the European Union 24, holders of citizenship in any EU member state also have rights which pertain to holding European Citizenship. Such rights have been developed by European Union law, providing the holder of the EU Member State a passport with several rights exclusive to EU membership. Such rights include the right to move and reside freely within any member state of the European Union, as well as trade and offer cross-border services within the European Single Market. Further rights assumed also include extended human rights under the TFEU, political rights such as the right to vote and stand for election for local as well as European elections. For example, Malta 23

re: Act IV of 2000.

24

Treaty on the Functioning of the European Union ('TFEU'), also referred to as the Treaty of Rome.

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joined Schengen in 2007, however this does not affect citizenship.

Since, with a passport, Maltese citizens had access to all the Schengen countries already.

The nature of European citizenship is distinct, in that it is not regulated by a sovereign authority but is seen as an attachment to citizenship of any EU member state. The rights and responsibilities inherent to citizenship were formed through years of collaboration by member states in the European project. Maltese citizens thus also became subject to a number of responsibilities, passed down through EU directives and regulations. Through Malta’s accession into the EU in 2004, thus ensuring the status of European citizens for its people, Europe and its values became even more so ingrained into part of the Maltese identity in this manner, as part of a collective and exclusive community.

5.4 2007 Amendments 2007 was another significant year for Maltese citizenship law.

Through Act X of 2007, the Maltese Parliament made further changes to the law regulating acquisition of citizenship, with ripple effects which would be felt by several older generations born in Malta who were resident abroad.

Act X of 2007 made three salient changes to citizenship law. Firstly, dual citizenship was given further scope, after its introduction in 1989 and further relative amendments in 2000. Due to the increasing pressure by Maltese who emigrated in the 1950s and 60s, in addition to international policy changes and trends favouring dual citizenship, dual citizenship was extended to the descendant generations of those who emigrated from Malta and relocated to a foreign state.

Before these amendments came into force, such descendants of Maltese emigrants could only be considered for Maltese citizenship if one of their parents could prove birth in Malta. After 2007, those born outside Malta proving a link in the direct family line to an 135

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ascendant born in Malta of a parent likewise born in Malta, they would be eligible for Maltese Citizenship. This applied irrespective of whether the individual was born on or after the date of independence in Malta. Direct ascendants would need to apply for Maltese Citizenship themselves if they were still alive at the time, however, if any of these descendants died before the 1st August 2007, or if a parent subsequently dies within three years from this date, without successfully applying for Maltese citizenship, it would be presumed that the individual would have acquired citizenship for the purposes of this provision. Therefore, the line of Maltese citizenship throughout generations would not be considered as broken.

The second salient change concerned foreign spouses of a citizen of Malta deemed to have rendered exceptional services to Malta or to humanity. Both prior to the amendments, and as the law stands today, foreign spouses are only considerable for Maltese citizenship after five years of marriage to the Maltese Citizen. Through the amendments affected in 2007, the Prime Minister could, by means of a notice in the Government Gazette, make an exception and authorise the competent minister to grant a certificate of naturalisation to the spouse immediately if the spouse or the said Maltese citizen has rendered exceptional services to Malta or to humanity. This was the first introduction into Maltese Citizenship law of citizenship being awarded by merit, and was further detailed a decade later through Legal Notice 335 of 2017. Citizenship by merit is also awarded in other European jurisdictions, such as Austria25 and Belgium26.

Finally, building further on the principles established in the 1989 amendments, the third amendment to Maltese Citizenship Law in 2007 was implemented to eradicate the distinction made on the basis of gender between Maltese fathers and Maltese mothers in the past.

Prior to these amendments, individuals born outside of Malta prior to the appointed day were considered Maltese citizens automatically from the date of independence only if they were citizens of the United Kingdom and its Colonies, and if both their father and a paternal 25

Article 10(6) of the Austria Citizenship Act.

26

Article 19 of the Code of Belgian Nationality.

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grandparent were born in Malta. Those with a mother and a maternal grandparent both born in Malta could only acquire citizenship by satisfying a five-year residency requirement on the island. This was a clear and unjust distinction based solely on the parent’s gender, which impacted their children’s avenue to Maltese citizenship. The amendments made through Act X of 2007 eradicated this residency requirement, allowing persons with a parent born in Malta and one of that parent’s direct ascendants born in Malta to register and obtain Maltese Citizenship, regardless of their gender.

5.5 2013 Amendments Despite the changes made to Maltese Citizenship law throughout the years, arguably, none were as significant and controversial as the introduction of Malta’s Individual Investor Programme ('MIIP') in 2013. For the first time in Malta, non-EU citizens could acquire Maltese citizenship by making a significant investment in the Maltese economy.

The program, sparked heated discussion both in the national and European fora. As the program stood in 2013, prior to subsequent amendments, no residency requirement was imposed on prospective citizens of Malta through the IIP. The program’s harshest critics claimed that the omission of this necessity removed the need for a ‘genuine link’ to the State – an element which, while never expressed in international law as a requisite for acquiring citizenship, is accepted internationally as a requisite standard, whether through learning the State’s main language, integrating and respecting its culture, and residing there for a period of time.

On a European level, in an unprecedented move, the European Commission also intervened after a resolution passed by the European Parliament calling for this program to be heavily amended if not completely suspended. Negotiations and talks with the Maltese Government, both by European policy makers as well as local stakeholders, lead to subsequent amendments coming into force 137

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in 2014, with a one-year residency requirement imposed, as well as a capping of 1,800 applicants for the duration of the programme.

In a statement published by the European Commission, after the negotiations held with the Maltese authorities, the Commission stated:

The amendments include genuine links to Malta through the introduction of an effective residence status in Malta prior to the possibility to acquire Maltese naturalisation.

The 2014 amendments were passed through Legal Notice 47 of 2014, titled the Individual Investor Programme of the Republic of Malta Regulations, 2014. The law reaffirmed the financial as well as eligibility criteria for investors to qualify for Maltese citizenship by investment.

6. Individual Investor Programme 2014 6.1 Eligibility Whilst the program was envisaged with the intention of attracting high net-worth investors of talent and repute to the Maltese Islands, one of the main arguments contrary to the introduction of the program was the risk of facilitating entry of non-reputable individuals to Malta and Europe, merely based on the fact that they could satisfy the necessary investment. The law provides that each applicant will be subject to a rigorous due diligence procedure, verifying and auditing the individual’s background. To be accepted at the preliminary stage of the application, the law establishes the need for a clean criminal record and a police certificate from the country of origin as well as the applicant’s country of residence, if they have resided in one country for at least six months for the last ten years. Apart from this, the MIIP, as well known in the investment migration industry, has the ultimate objective to bring and attract added value to the country. The programme and the four-tier due diligence process have categorised 138

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Malta as gold standard within citizenship by investment programmes worldwide, with the due diligence process being used as a model for other countries looking at offering a similar route to citizenship.

The qualification requirements are listed in Article 4 of LN47 of 2014. The main applicant must, by law, be at least eighteen years of age, commit to proving residence in Malta as well as title, as well as to investing in Malta, and shall only qualify if he or she meets the application requirements as detailed in the law. The Regulations detail the eligibility criteria further to ensure that in principle, the highest quality of investors manage to pass the thorough auditing process established. The eligibility criteria provide: •

a due diligence process and background verification of the main applicant and each dependent over the age of twelve years as applicable;

•

the provision of a police certificate issued by the Malta police, as well as a police certificate issued by the competent authorities in the country of origin, and the country or countries where the applicant has resided for a period of more than six months during the last ten years, or, if it is proven to the satisfaction of Identity Malta that this is not possible, a sworn affidavit is also possible;

•

the applicant or any of his dependents are not or have not ever been indicted or appeared before the International Criminal Court;

•

the applicant or any of his dependents are not listed with the International Criminal Police Organisation (INTERPOL);

•

the applicant or any of his dependents are or may not be a potential threat to national security, public policy, or public health;

•

the applicant or any of his dependents do not have any pending charges or are guilty of any crimes related 139

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to crimes of terrorism, money laundering, funding of terrorism, crimes against humanity, war crimes, or crimes that infringe upon the Protection of Human Rights and Fundamental Freedoms as established be the European Convention on Human Rights; •

the applicant or any of his dependents do not have charges brought against them or have been found guilty of any criminal offences that disturb the good order of the family, with such offences including but not limited to paedophilia, defilement of minors, rape, violent indecent assault, inducing persons under age to prostitution and abduction;

•

the applicant or any of his dependents have never had, are guilty of, or are being interrogated and suspected due to criminal charges for any criminal offence other than an involuntary offence, punishable with more than one year of imprisonment.

To further ensure that the investors and their dependents are of good standing, repute, quality, and will not be a burden on Malta’s welfare state, they must also prove to the competent authorities that they are of good health, providing proof of global health insurance coverage and a commitment to retain such a policy indefinitely.

6.2 Application Process The relevant authority competent to deal with matters pertaining to the IIP program, apart from the Minister endowed by the State to intervene, is the Malta Individual Investor Programme Agency (MIIPA), operating from within Identity Malta. The authority is entrusted with processing applications, licensing accredited agents, and carrying out diligence checks of a four-tier nature.

The role of MIIPA is to ensure that all relevant information submitted by the applicant and his or her entrusted agent are true 140

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and correct, that a proper background verification is carried out with the assistance of the concessionaires, and that all required fees have been paid. The law establishes timeframes to ensure that reasonable expectations are established for applicants, and a clear indication of the financial and residence requirements.

6.3 Financial Criteria An applicant wishing to obtain Maltese Citizenship through the IIP must make the following investments: •

contribution of €650,000 to the National Development and Social Fund, to be used in the public interest, administered by a Board of Governors and audited by the Auditor General. Further contributions are required when adding dependents such as the spouse, dependent children and dependent parents;

•

investment in government stocks, bonds, debentures, or special purpose vehicles which may be identified from time to time by Identity Malta with a minimum value of €150,000 – to be kept for at least five years;

•

investment in property with a minimum value of €350,000 if purchased or a minimum annual rent of €16,000 – to be kept for at least five years.

6.4 2017 Amendments The most recent legislative amendments to the MCA occurred through Act XXIV of 2017. Legal notice 335 of 2017, now subsidiary legislation 188.04, established the most recent amendments to the Act. Titled the Grant of Citizenship for Exceptional Services Regulations, 2017, the amendment grants the competent Minister discretion to award citizenship to individuals providing ‘exceptional 141

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services to the Republic of Malta or to humanity, or on the basis of exceptional interest to the Republic of Malta’. The Regulations added further detail to the already existing avenue to citizenship through Article 10(9) of the MCA, established in 2015.

The Regulations establish eligibility qualifications as well as general requirements. These include the following: •

Proof of residence of at least eight months in the period preceding the date of application;

•

Proof of residential property in Malta;

•

Proof of the exceptional services rendered to the Republic of Malta or to humanity, or if the individual claims that his naturalisation is of exceptional interest to the Republic of Malta, provides an endorsement by the designated competent body listed in Schedule I of the Regulations; and

•

A recommendation by two people qualified to act as sponsors for persons that apply for Maltese Citizenship by naturalisation.

Furthermore, the law requires that documentary evidence is submitted which is certified by the competent body for the type of exceptional service rendered to the Republic of Malta or to humanity.

The designated competent bodies established thus far through Maltese law are the National Sports associations registered with Sport Malta (Sports), the Arts Council Malta or the Superintendence of Cultural Heritage (Arts and Culture), or a recognised tertiary educational institution or the National Council for Further and Higher Education or the Malta Council for Science and Technology (Science and Research). The competent body must provide a written report endorsing the individual and verifying that the individual is a recognised leading talent in a specific field or shows enough promise to so become.

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health institution attesting that the individual is in good health. Proof of purchase or lease of a residential property is also required in order to be considered for citizenship. However, this requirement may be waived by the competent Minister if the applicant is still a member of the household of his or her family. Identity Malta also reserves the competence to require any further documentation from time to time by legal notice.

As is the case in other recent citizenship amendments, the ideals enshrined in the law are set in such a way that individuals considered for citizenship due to their outstanding merit are persons of good standing and of excellent repute. They would still be subject to a due diligence procedure whereby their background would be verified and audited to ensure that no criminal history exists. Furthermore, their application would also require a Police conduct certificate from their country of origin and from any country they have been resident in for more than six months in the past ten years. If it is impossible for such a certificate to be obtained, the law also provides that a sworn affidavit may be submitted where the applicant would give his word of honour that he or she has a clean criminal record.

If the individual has ever appeared or is indicted before the International Criminal Court, is listed with INTERPOL, is or may be a potential threat to national security, public policy or public health, has any pending charges relating to crimes of terrorism, money laundering, funding of terrorism, crimes against humanity war crimes, or crimes infringing upon the Protection of Human Rights and Fundamental Freedoms, or was ever found guilty of any crime punishable for more than one year imprisonment, the individual is automatically rendered ineligible.

Furthermore, a sworn declaration before a commissioner for oaths, a lawyer or a notary public is further required to attest that the said information that the individual has provided is true and correct.

Such declaration must be an original or a certified copy. The standard application forms as well as the supplementary documentation must be submitted by the applicant in person to Identity Malta.

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The application is subject to the final decision by the Minister responsible for Citizenship matters, however, an evaluation board was also set up and given competence by LN 335 of 2017, consisting of a group of individuals appointed to evaluate the applications made and to prepare a reasoned opinion on each application to be referred to the competent Minister.

Subsidiary Legislation 188.04 built upon Article 10(9)(a) of the Maltese Citizenship Act, however, the wording of the law ensured significant repercussions. Prior to the amendment in 2017, only spouses of citizens of Malta who had carried out exceptional acts could be granted citizenship by a certificate of naturalisation as granted by the Prime Minister, and not the individual if not a citizen of Malta.

7. Conclusion Malta has consistently built upon citizenship laws established in the past, whilst keeping up with present times and international trends. Since obtaining independence from colonial power, Malta has established the grounds for citizenship on jus soli, jus sanguinis, naturalisation, registration, adoption and marriage, recently jus pecuniae. Today, one may acquire Maltese citizenship through naturalisation, registration, and through birth, subject to the conditions laid down in the Maltese Citizenship Act. The nature and face of Maltese citizenship, just like its people, has changed and evolved with time, from a post-war era, to a newly-formed independent and democratic state, to forming part of the European Union.

A legal analysis of the legal framework regulating citizenship also leaves further questions to be explored and discussed. A particular question which arises, especially in today’s day and age, is the ‘genuine link’ test and its role in modern citizenship law.

The nature of a country’s citizenship law, is a reflection of the society it emanates from. No law is simply just a law, but a product of its 144

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time, as well as the culture, priorities, and values of lawmakers. Malta may be a small State, but it has still positioned itself as progressive in terms of its legal framework.

The importance of having a legal status in a country, as well as the significance of ‘membership’ in a country, has never been more prominent. Citizenship can be considered as an individual’s most prized possession, particularly in advanced states where rights and responsibilities allocated to one’s legal status allow for free democratic societies to function and people to flourish.

145

Criminal Law

Il-ħelsien mill-arrest u l-“house arrest”

Dr Veronique Dalli

Dr. Veronique Dalli is the founder and managing partner of Dalli Advocates a mid sized multi disciplinary law firm specialized in assisting companies and individuals in business related matters with interdisciplinary services.

She was admitted to the Maltese bar in 2006, for the past 12 years she has defended her clients successfully both before the Constitutional Court and the Superior Courts in Malta as well as before the European Court of Human Rights in Strasbourg. Together with her team of professionals she actively assists foreign investors on all legal issues relating to the setting up of business operations in Malta and is an accredited agent on Citizenship by Investment Program in Malta. Dr Dalli obtained her first degree from the University of Malta in the year 2002 and furthered her studies to obtain a Diploma as Notary Public in the year 2003 and a Doctor of Laws in the year 2005. She now serves as a Tutor and Examiner for Master and Doctorate Dissertations at Faculty of Law, University of Malta.

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I

l-ħelsien mill-arrest huwa fi kliem sempliċi l-ħelsien temporanju mill-arrest ta’ persuna akkużata b’reat tul il-perijodu fejn tkun għaddejja minn proċeduri kriminali quddiem Qorti ta’ ġurisdizzjoni Kriminali. Persuna mixlija b’reat u li tkun qed tinżamm taħt arrest tista’ tagħmel talba biex tingħata l-benefiċċju tal-ħelsien mill-arrest dment li inter alia tagħti garanzija tajba li tidher għas-smigħ talkawża.1 Biex persuna tikkwalifika għall-ħelsien mill-arrest il-Qorti trid tkun mhux biss sodisfatta li l-persuna ser tidher għas-smigħ tal-kawża, iżda trid ukoll tassigura li l-ħelsien mhuwiex ser jippreġudika l-integrità tal-proċeduri. Barra minn hekk u f’ċertu ċirkostanzi, it-talba għallħelsien mill-arrest tista’ tiġi miċħuda biss għal dan l-iskop. Huwa importanti li jingħad li persuna ma tistax tiġi miżmuma taħt arrest sempliċiment bħala miżura punittiva, u cioè għaliex il-Qorti hija talfehma li l-akkużat huwa fil-fatt ħati tal-akkużi dedotti kontrieh.

Il-liġi nnfisha tissenjala diversi riskji li l-Qorti trid tqis qabel ma takkorda l-ħelsien. Wara li tqis iċ-ċirkostanzi kollha tal-każ, in-natura u l-gravità tar-reat, il-karattru, l-anteċedenti, assoċjazzjonijiet u rabtiet fil-komunità tal-imputat, kif ukoll kull ħaġ’oħra li tkun tidher li hi rilevanti, il-Qorti trid tkun sodisfatta illi m’hemmx periklu illi l-imputat jekk jiġi meħlus mill-arrest2:

(a) jonqos li jidher għall-ordni tal-awtorità imsemmija flobbligazzjoni tal-garanzija; jew (b) jinħeba jew jitlaq minn Malta; jew, (ċ) ma josservax xi kundizzjoni li l-Qorti jkun jidhrilha xieraq li timponi fid-digriet tagħha li bih jingħata l-ħelsien; jew, (d) jinterferixxi jew jipprova jinterferixxi max-xhieda jew b’xi mod ieħor jintralċja jew jipprova jintralċja l-kors talġustizzja fir-rigward tiegħu jew xi persuna oħra; jew, 1

Artikolu 574(1) tal-Kodiċi Kriminali.

2

Artikolu 575 tal-Kodiċi Kriminali.

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(e) jikkommetti xi reat ieħor.

Filwaqt li din il-lista ta’ riskji jew perikli hija eżawrjenti, l-aħħar paragrafu jagħti lill-Qort ampja diskrezzjoni biex tasal għad-deċiżjoni tagħha.

Madankollu huwa prinċipju assodat fil-iter Kriminali li persuna hija, fl-aħħar mill-aħħar, dejjem preżunta innoċenti: kwalsijasi imputazzjoni hija merament allegazzjoni u l-persuna akkużata tgawdi mid-dritt fundamentali tal-preżunzjoni tal-innoċenza kif dettat millArtikolu 39 tal-Kostituzzjoni ta’ Malta u fl-Artikolu 6 tal-Konvenzjoni Ewropea dwar id-Drittijiet tal-Bniedem. Dan id-dritt m’għandu qatt jittieħed leġġerment, speċjalment meta huwa prinċipju bażilari li l-libertà umana għandha dejjem tipprevali fuq kollox.

F’dan is-sens huwa mgħallem mill-każistika tal-Qorti Ewropea dwar id-Drittijiet tal-Bniedem li ‘no one should be dispossessed of his liberty in an arbitrary fashion’. Mill-Artikolu 5 tal-Konvenzjoni Ewropea jirriżulta li ‘although the right to liberty is not an absolute one, a person must be detained only on a basis of law and that the law relied upon must be consistent with recognised European standards’.3 Dan ifisser li persuna tista’ tinżamm b’arrest biss jekk jikkonkorru waħda jew iżjed miċ-ċirkostanzi li l-liġi domestika, jew il-Konvenzjoni nnfisha jistabbilixxu bħala raġunijiet tajba u serji biex il-prinċipju tallibertà jkun sagrifikat biż-żamma jew detenzjoni. Isegwi għalhekk li l-jedd ta’ persuna arrestata li tingħata l-ħelsien mill-arrest preventiv mhuwiex wieħed assolut, biss però biex dak il-jedd jittieħed irid ikun hemm raġuni jew raġunijiet tassew tajba, motivati u ddikjarati b’mod ċar mill-Qorti li quddiemha ssir talba bħal dik:

Although Article 5(3) does not guarantee an absolute right to release on bail, the possibility of demanding bail laid down there entails for the judicial authorities the obligation to ascertain whether by means of such a guarantee the same purpose can be achieved as is aimed 3

David John Harris, Colin Warbrick and Michael O’Boyle Law of the European Convention on Human Rights (Butterworths 1995).

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at by the detention on remand.4 Il-qofol kollu tal-ħelsien mill-arrest huwa għalhekk dak li jħares il-prinċipju tal-preżunzjoni tal-innoċenza tal-persuna mixlija5 u flistess waqt jagħmel tajjeb għall-possibbilità li l-każ kontra l-persuna miżmuma jieħu ż-żmien xieraq tiegħu mingħajr ma jxekkel aktar minn kemm meħtieġ il-jedd tal-istess persuna għal-libertà tagħha.

Minn dan kollu joħroġ li l-garanzija li l-Qorti tordna bħala kundizzjoni biex jingħata l-ħelsien mill-arrest m’għandhiex isservi bħala xi għamla ta‘ kumpens għad-dannu mwettaq bir-reat.6 Fuq kollox, l-ammont tal-garanzija għandu jkun raġonevoli, fis-sens li għandha sservi sewwa – imma mhux aktar milli meħtieġ – biex tiżgura li l-persuna mixlija ma tonqosx milli tidher għall-kawża tagħha u ma titħajjarx li tgħib jew taħrab. Għalhekk, fejn l-ammont tal-garanzija jisboq dan l-għan, jaf ikun hemm lok għall-ksur tad-dispożizzjonijiet relattivi tal-Konvenzjoni;7 Huwa prinċipju bażilari wkoll li hija l-prosekuzzjoni li għandha d-dmir tressaq dawk il-provi sabiex tikkonvinċi lill-Qorti li l-akkużat ma jistħoqlux jinħeles mill-arrest. Kif qalet tajjeb il-Qorti Ewropea Dwar Id-Drittijiet tal-Bniedem fil-kawża fl-ismijiet LLijkov vs Bulgaria,8 iridu jinġiebu provi konkreti li jegħlbu d-dritt fundamentali tal-libertà:

Where the law provides for a presumption of innocence in respect of factors relevant to the grounds for continued detention, the existence of the concrete facts outweighing the rule of respect for individual liberty must nevertheless be convincingly demonstrated.

Id-dmir tal-Qorti huwa li toħloq bilanċ bejn il-jedd tal-libertà u 4

Pieter van Dijk, Fried van Hoof, Arjen van Rijn, Leo Zwaak Theory and Practice of the European Convention on Human Rights (4th edn, Intersentia 2006).

5

Artikolu 39(5) tal-Kostituzzjoni u Artikolu 6(2) tal-Konvenzjoni.

6

QEDB 27.6.1968 fil-kawża fl-ismijiet Neumeister vs Awstrija (Applik. Nru. 1936/63).

7

Harris, O’Boyle & Warbrick op. Cit., para. 143.

8

Applikazzjoni numru 33977/96 deċiża fis-26 ta’ Lulju 2001.

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l-jedd tal-Istat li jassigura l-integrità tal-proċeduri. Il-Qorti Kriminali fil-kawża fl-ismijiet The Police vs Steven John Lewis Marsden mogħtija fl-14 ta’ Lulju 2006 kellha dan xi tgħid dwar dan:

The granting of, or the refusal to grant bail is a very important and delicate matter: it concerns both the fundamental right to liberty of an individual and the concomitant fundamental right to be presumed innocent until proven guilty and also the right and duty of the State to protect itself and its citizens primarily by ensuring the integrity of any criminal proceedings which it may deem appropriate to undertake against a person in pursuance of that right to protect itself and its citizens (paragraphs (a) to (d) of sub section (1 of Section 575). Bail proceedings cannot be dealt with by a Court, whether inferior or superior, in a cavalier manner, but must determine, albeit prima facie, all the relevant circumstances of the case, and must ultimately always be determined by the appropriate Court with the application of common sense and sound judgment on the part of the presiding magistrate or Judge.

Isegwi għalhekk li l-libertà hija r-regola u l-arrest preventiv jitqies eċċezzjoni.9 Il-preżunzjoni hija dejjem favur il-libertà tal-persuna, u għandha tkun il-prosekuzzjoni li tikkonvinċi lill-Qorti li jirrikorru l-estremi li jiġġustifikaw iċ-ċaħda mill-ħelsien. Għalhekk, persuna akkużata għandha dejjem id-dritt li tingħata l-ħelsien mill-arrest.

Biss però, in vista tad-dmir tal-Qorti li tissalvagwardja l-integrità talġustizzja, il-Qorti normalment timponi diversi kundizzjonijiet fuq l-akkużat, li normalment jinkludu r-rikuża f’ċertu ħinijiet, l-iffirmar – f’ċerti każi kuljum - ġewwa l-għassa tal-pulizija, restrizzjonijiet ta’ safar, u projbizzjoni milli l-akkużat ikellem u javviċina lix-xhieda:

wherever conditional bail would be a satisfactory solution, it is to be preferred to a custodial remand – a point particularly relevant where the risk of absconding is 9

Appell Kostituzzjonali Bartolo et vs Aġent Reġistratur tal-Qorti et 15.2.1991.

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the primary reason for continued detention. Permissible conditions of bail under Article 5(3) include a requirement to surrender travel documents and driving documents, the imposition of a residence requirement, and the provision of a sum of money as a surety or security.10 Stabbiliti dawn il-prinċipji, il-ġurisprudenza Maltija dwar il-ħelsien mill-arrest tevolvi kontinwament bis-saħħa tas-sentenzi tal-Qorti Kostituzzjonali u tal-Qorti Ewropea, bir-riżultat li saru wkoll diversi emendi fid-disposizzjonijiet fil-Kodiċi Kriminali matul iż-żminijiet wara li nstab li wħud mill-liġijiet kienu leżivi fil-konfront ta’ persuna akkużata b’reat. Żvilupp riċenti jirrigwardja l-kundizzjonijiet tal-ħelsien mill-arrest, b’mod partikulari l-kundizzjoni tal-hekk imsejjaħ house arrest (arrest domiċiljari), fejn persuna mixlija b’reat tingħata l-ħelsien mill-arrest biss però tinżamm detenuta fir-residenza tagħha. Il-Qrati Maltin kienu jqisu l-house arrest bħala kundizzjoni oħra marbuta mal-għoti tal-libertà, bħal ma hija pereżempju l-kundizzjoni tar-rinkażar, fejn l-akkużat ikun projbit milli joħroġ minn daru f’ċertu ħinijiet.

Il-kundizzjoni tal-house arrest, għad-differenza tar-rinkażar, tinibixxi lill-meħlus milli joħroġ minn daru f’kull ħin sakemm ma jingħatax l-awtorizzazzjoni speċifika mill-Qorti, jew għal raġuni oħra li tkun stabbilita a priori mill-Qorti (bħal pereżempju sabiex jiffirma ġewwa l-għassa tal-pulizija).

Wieħed għalhekk jistaqsi jekk il-house arrest għandux jitqies bħala sempliċi kundizzjoni għall-ħelsien mill-arrest, jew jekk effettivament jammontax għaċ-ċaħda tal-ħelsien. Fis-sentenza mogħtija mill-Qorti Ewropea tad-Drittijiet Fundamentali tal-Bniedem fl-ismijiet Mancini vs Italja11 il-Qorti ħasset li bejniethom kien hemm distinzjoni ċara:

the same cannot be said of replacing detention in prison with house arrest because this entails a change 10

Alison Macdonald, Andrew Ashworth and Ben Emmerson Human Rights and Criminal Justice (Sweet and Maxwell 1st edn, 2001).

11

Applikazzjoni 44955/98, deċiża fit-2 ta’ Awwissu 2001.

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in the nature of the place of detention from a public institution to a private home. Unlike house arrest, detention in prison requires integration of the individual into an overall organization, sharing of activities and resources with other inmates, and strict supervision of the authorities of the main aspects of his day-to-day life.

M’hemmx dubju li l-arrest domiċiljari huwa ben differenti millarrest ġewwa ħabs jew faċilità korrettiva, sija mill-aspett kwalitattiv u kif ukoll dak kwantitattiv. Fid-dar wieħed isib ċertu kumdità, serenità u mistrieħ li ċertament wieħed mhuwiex ser isib ġewwa ħabs. Wieħed ikollu aċċess sħiħ għat-telefonija, għall-internet, u mezzi oħra ta’ komunikazzjoni, u aċċess sħiħ għall-ħbieb u l-qraba li jkollhom il-jedd iżuruh mingħajr ebda restrizzjonijiet.

Jibqa’ però il-fatt li l-house arrest jillimita mhux bi ftit il-libertà tal-individwu billi effettivament irid jibqa’ maqful ġewwa daru tul ilperijodu kollu tal-proċeduri. Hekk tenniet il-Qorti Kriminali fil-kawża fl-ismijiet James Demanuele vs Avukat Ġenerali (20 ta’ Frar 2009):

għall-finijiet tal-Artikolu 5 tal-Konvenzjoni l-house arrest bħala kundizzjoni tal-bail jibqa’ forma ta’ arrest (għax hemm element ta’ restrizzjoni fuq il-libertà garantita bl-Artikolu 5(1).

U dan mingħajr il-‘privileġġi’ marbuta mad-detenzjoni ġewwa l-ħabs, u cioè il-jedd tal-persuna arrestata li jekk eventwalment tinstab ħatja, il-perijodu li wieħed ikun qatta’ ġewwa l-ħabs jitnaqqas mill-piena ta‘ priġunerija imposta fuqu. Jiġi għalhekk li l-house arrest jammonta għal perijodu żejjed taħt arrest – piena żejda.12 Infatti, b’arrest għall-finijiet tal-Artikolu 5 wieħed ma jifhimx biss u ta’ bilfors iż-żamma ta’ persuna f‘faċilità korrettiva jew ħabs. Kemm hu hekk, l-istess Artikolu 5(1) jaħseb għal suriet oħrajn ta‘ żamma ta’ persuni f’istituzzjonijiet u taħt ċirkostanzi li mhux tabilfors għandhom x’jaqsmu mat-twettiq ta’ reati jew proċedimenti kriminali, iżda li jġibu l-effett li persuna bħal dik titteħdilha l-libertà tagħha li tmur fejn trid, 12

Il-Pulizija vs Michael Caruana Turner Qorti Kriminali, 13 ta’ Lulju 2018.

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għalkollox jew f’biċċa.13 Fis-sentenza mogħtija mill-Prim’ Awla tal-Qorti Ċivili sede Kostituzzjonali fl-ismijiet Anthony [recte: Anthony John] Grech Sant vs L-Avukat Ġenerali14 ingħad is-segwenti rigward il-kunċett talhouse arrest:

Fil-fehma ta’ din il-Qorti, il-ħsieb kollu wara l-hekk imsejjaħ house arrest bħala kundizzjoni tal-bail huwa żbaljat, għax jew hemm, b’mod reali u konkret, wieħed jew aktar mill-perikli ravviżati fl-imsemmija paragrafi (a) sa (e) tal-Artikolu 575(1), u allura l-ħelsien mill-arrest m’għandux jingħata, jew m’hemmx, u allura l-imputat jew akkużat għandu jinħeles mill-arrest taħt garanzija u b’dawk il-kundizzjonijiet l-oħra li, kif ingħad, ikomplu jiggarantixxu b’mod raġonevoli li ma tavverax ruħha xi waħda mill-imsemmija ċirkostanzi. Il-house arrest, però, ma jista’ qatt jagħti l-garanziji li jagħti l-arrest preventiv proprju, speċjalment għal dak li jirrigwarda l-periklu fondat ta’ inkwinament tal-provi.

Il-Qorti Kriminali presjeduta mill-Imħallef Dr Consuelo Scerri Herrera riċentament abbraċjat dan l-insenjament fid-digriet flismijiet Il-Pulizija vs Michael Caruana Turner15 u qieset li una volta jkun hemm lok għall-ħelsien mill-arrest billi ma jkunx jissussisti l-perikolu ravviżat fl-Artikolu 575 tal-Kodiċi Kriminali, mela allura ma jkunx hemm lok lanqas li tiġi imposta l-kundizzjoni tal-house arrest.

Fi kliem ieħor, il-Qorti Kriminali qieset il-house arrest bħala kontinwazzjoni tal-arrest billi huwa ekwivalenti għall-arrest normali ġewwa ħabs jew faċilità korrettiva, minkejja d-differenzi kwalitattivi ta’ bejniethom. Id-detenzjoni domiċiljari għalhekk ma tibqax kundizzjoni tal-ħelsien mill-arrest iżda titqies bħala arrest fiha nnifisha billi qed iċċaħħad lill-akkużat mill-ħelsien effettiv minħabba 13

Maximilian Ciantar vs Avukat Ġenerali, Prim’ Awla (Sede Kostituzzjonali) deċiża fit-22 ta’ Lulju 2010.

14

Deċiża fil-11 ta’ Diċembru 2009.

15

Digriet mogħti fit-13 ta’ Lulju 2018.

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n-natura restrittiva tagħha. Għaldaqstant, il-Qrati illum għandhom, jekk iqisu li l-perikli jew ir-riskji ravviżati fil-liġi ma jissussistux, u għalhekk, jekk il-Qrati jqisu li hemm lok għal-libertà provviżorja, ilpersuna akkużata ma tistax tinżamm taħt house arrest.

Jidher ukoll imbagħad, illi, jekk il-Qorti tiċħad it-talba għallħelsien mill-arrest, ma tistax iżżomm lill-akkużat taħt house arrest lanqas, billi dan mhuwiex ekwivalenti għall-arrest preventiv propju, bl-assikurazzjonijiet li ġġib magħha ż-żamma t’ akkużat ġewwa ħabs jew faċilità korrettiva. Jidher għalhekk, li l-posizzjoni tal-Qrati illum hija li persuna m’għandha qatt tinżamm taħt house arrest, la bħala kundizzjoni tal-ħelsien (billi dan iwassal għal restrizzjonijiet sproporzjonati fuq il-libertà tal-bniedem) u lanqas bħala tip ta’ arrest preventiv (billi ma jagħtix dawk il-garanziji li jagħti l-arrest preventiv proprju).

Meqjus dan kollu, wieħed għandu jifhem li l-Konvenzjoni nnifisha tħalli li l-għoti ta’ ħelsien mill-arrest preventiv ikun suġġett għal kundizzjonijiet. Kemm hu hekk, l-Artikolu 5 jitkellem dwar ‘ċaħda’ tallibertà u mhux dwar restrizzjonijiet. Wieħed irid jifhem ukoll li tali kundizzjonijiet jistgħu jissarrfu f’tixlif ta’ ħelsien sħiħ għall-persuna li tkun hekk inħelset.

Wieħed għalhekk irid jaċċetta illi l-ħtiġijiet marbutin mat-twettiq u t-tħaris tar-regoli ta’ proċedimenti kriminali jitolbu li l-persuna hekk meħlusa ma titħalliex temmen li dak il-ħelsien hu l-istess bħalma kienet tgawdi qabel ma tressqet b’arrest. Irid jiġi aċċettat ukoll li wħud mill-kundizzjonijiet jistgħu jkunu ebsin u kontinwi.

Madankollu huwa mistenni ukoll li, b’ ħarsien tal-jedd tal-libertà u tal-preżunzjoni tal-innoċenza, ġaladarba persuna tingħata l-ħelsien mill-arrest preventiv, dak il-ħelsien għandu jkun wieħed effettiv u mhux biss formali jew saħansitra kimeriku.

Kif jikteb l-awtur Van Dijk16 il-libertà proviżorja ‘must not impose heavier burdens on the person in question than are required for securing the presence of the accused at the hearing’. Għaldaqstant, Qorti ma tistax, jekk tħoss li persuna tkun ħaqqha l-ħelsien mill-arrest, 16

Pieter van Dijk, Theory and Practice of the European Convention of Human Rights (4th edn).

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timponi fuq dik il-persuna kundizzjonijiet li bihom effettivament tagħmilha impossibbli għaliha li tgawdi minn dik il-libertà.

156

The Inquiring Magistrate

Judge Consuelo Scerri Herrera

Judge Consuelo Scerri Herrera acquired her Diploma of Notary Public from the University of Malta in 1988. In 1999, she obtained a diploma in Canonical Marriage and Jurisprudence in Procedure from the Ecclesiastical Tribunals of Malta. She has written many articles on various aspects of the law, including Human Rights, Criminal Law and Procedure which were published in different law journals and books. She was appointed Magistrate in May 1997 and spent a number of years dealing with cases of a criminal nature. In 2018, she was finally appointed Judge.

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1. Introduction

T

he Inquiring Magistrate only formed part of the Maltese Judiciary since 1812, when, by virtue of a Notification issued on the 24th July, 1812, the British Crown decided to shift certain powers that were then exercised by the Giudice Criminale della Gran Corte della Castellania and the Castellano to a newly created office of Magistrate. Today, however, the office of this Magistrate remains more or less the same with a few amendments that took place over the years as will be outlined in this paper.

Under the Municipal Code of the Knights of St. John, the Giudice Criminale della Gran Corte della Castellania and the Castellano carried out the same three main functions which are exercised by the sitting Magistrate today. Namely, he carried out criminal inquiries, presided over compilation of evidence for those cases which do not always fall within its competence, and thus prepare the case for trial before the Criminal Court, and he would also sit in judgment over those criminal cases which fall within its competence, whether original or extended. In the latter eventuality, the consent of the Attorney General together with the consent of the accused would be required for judgment to be pronounced by the Magistrate.

It is to be noted, however, that a number of cases that were dealt with by this Judge were different in nature to the ones that are investigated today, since back then certain sophisticated crimes, such as those of money laundering or other financial crimes, did not feature in any legislative act. He still, however, had the power to nominate experts to help him in the investigation and receive their reports once finalized. Such reports could not be impugned by the Defence unless the Prosecutor was in agreement. It could only be reviewed by other experts unspecified in number, though by custom, such number had to be odd.

This Judge carried out personally the accessi on site inspection on the crime scene:

e procurerà di usare tutte le possibili diligenze tanto 158

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per verificare il corpo del delitto, di qualche specie fosse, come rispetto alla scoperta dei delinquenti, e metterà tutto in chiaro.1

By Proclamation XXII dated 1st July, 1814, the powers of the inquiry entrusted to the Giudice Criminale della Gran Corte della Castellania were transferred to the Magistrate, who used to sit in the inferior courts of Magistrates of the Judicial Police. The Magistrate continues to exercise all three powers mentioned earlier on, however with a much lower competence, enough to say that criminals back then were brought before the Criminal Court with a jury for crimes that exceeded three months imprisonment in punishment.

This brings us to discuss one of the three functions that are exercised by the Magistrate today, namely the investigative function, in particular the holding of inquiries, the in genere. The magistrates have investigative powers, but certainly are not the default investigators. They cannot start an investigation ex officio, but can only do so once they receive a notizie criminis from the police or a private citizen. They are to take all immediate measures to preserve the crime scene by nominating the relevant experts, including the forensic ones. The aim for a criminal inquiry is not to find out who is to be prosecuted for the crime under investigation or to establish guilt, but to preserve all the evidence which would then be brought forward before a Court of Law once a person is arraigned in court and faces prosecution.

In fact, in the judgment in the names Repubblika ta’ Malta vs Jason Calleja2 , the following was held:

‘Stabbilit illi l-Maġistrat fl-inkjesti ma jaġixxix bħala Qorti Istruttorja, x’inhija allura l-funzjoni tiegħu?

M’hemmx dubju li l-ewwel konklużjoni hija illi fl-inkjesta huwa anqas ma għandu funzjoni ta’ Qorti ta’ Ġudikatura Kriminali. Ċertament huwa persuna intiża mil-liġi stess bħala ta’ importanza fondamentali fil-proċess tar-riċerka 1 2

Diritto Municipale di Malta, Libro Primo Cap Terzo, f.V.VI, p 28,29.

Delivered by the Court of Appeal on the 3rd July 1997.

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għall-verita’, iħda l-Maġistrat Inkwirenti m’għandux il-funzjoni li jistabilixxi l-ħtija jew l-innoċenza ta’ xi persuna, indizjata jew mhijiex. ….

In linea generali, il-Maġistrat Inkwirenti hu fdat lilu l-inkarigu li fil-każijiet previsti mill-istess Titolu, jinvestiga r-reat jew il-fatt rapportat lilu u/jew iżomm l-aċċess li l-liċi tipprevedi u fl-aħħar nett jirrediġi proċess verbali li l-liġi stess tirregola u tattribwilu valur probatorju. Dan kollu jifforma parti integrali mill-proċess ċenerali tar-riċerka tal-verita’ u jikkonsisti prinċipalment fil-ġbir u preġervazzjoni ta’ dawk il-provi kollha, diretti u indiretti, li l-Maġistrat Inkwirenti jirnexxilu jiddentifika bħala pertinenti għal grajja jew reat li jkun qed jinvestiga.

Bħala tali, u kuntrarjament għal dak li jiġri f’ċerti sistemi kontinentali, l-Maġistrat Inkwirenti mhux parti millpulizija u wisq inqas, mill-prosekuzzjoni; anzi jidher ċar li fis-sistema tagħna huwa previst biex f’numru ta’ każijiet serji li l-liġi stess tispeċifika, l-investigazzjoni ma ssirx biss, u l-provi ma jinġabrux u ma jiġux preżervati biss mill-Pulizija, iżda ukoll, anzi essenzjalment, minn persuni indipendenti mill-poter esekuttiv tal-Istat u li jiggarantixxu li r-riċerka tal-verita’ ma tkunx inkwinata minn xi interessi hlief dak suprem li kollox isir skond il-ħaqq u l-ġustizzja. Rwol dan, li Lord Tucker, fl-appell quddiem il-Privy Council in re Regina vs George Terreni, obiter, iddeskriva bhala ‘a good way of preserving evidence’.

The learned Judge went on to say that:

‘s’intendi erti deċiċjonijiet, il-Maġistrat Inkwirenti bilfors joħodhom, anzi, jista’ jiġi affermat li mingħajr tali ezerċizzju ta’ din il-funzjoni, fl-uffiċċju tiegħu f’diversi kaħijiet jisfa’ bla sens. Hekk, per eżempju, f’każijiet ta’ mewt rapportati lilu, huwa għandu jindaga ċ-ċirkostanzi 160

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li wasslu ghal dik il-mewt u jistabbilixxi hiex aktarx jew ċertament waħda aċċidentali u indipendenti minn kull ħtija doluża jew kolpuza ta’ terzi jew inkella hiex proprju ir-riżultat ta’ tali komportament ta’ terzi.

L-istess jingħad għal każijiet fejn jiġu rapportati lilu eventi li prima facie ikunu jippreżentaw sembjanzi ta’ reat. Hi ċertament l-funzjoni tal-Maġistrat Inkwirenti li jinvestiga, okkorrendo permezz ta’ esperti, ċ-ċirkostanzi kollha tal-każ u jipprova jasal għal konklużjoni dwar jekk verament sarx reat u jekk hemmx provi tali li jippuntaw lejn xi ħadd partikolari li jista’ jiġi investigat ulterjorment jew addirittura akkuzat. Ċertament m’hix il-funzjoni talMaġistrat Inkwirenti li jiddeċiedi li għar-reat investigat minnu huwa ċertament jew probabbilment responsabbli xi ħadd partikolari, għax kif ingħad huwa ma jaġixxix ta’ Qorti, la ta’ Istruttorja u inqas ta’ Ġudikatura.

Iżda hija ċertament il-funzjoni tiegħu li jiddeċiedi l-ewwel hemmx provi suffiċjenti li verament sar reat u t-tieni jekk a bażi tal-provi – indipendentement millapprezzament taghħom – hemmx biżżejjed biex jingħad li xi ħadd partikolari jista’ possibilment ikun passibbli għal proċeduri kriminali. Dan mhux biss jikkostitwixxi funzjoni tal-Maġistrat Inkwerenti, iżda, fil-fehma ta’ din il-Qorti huwa addirittura dover tiegħu’.

This was emphasised by the Sitting Judge in that same judgment.

This brings us to what exactly is the function of the Inquiring Magistrate and how his role is regulated. It is to be pointed out at the onset of this paper that there is no court for the inquiry relating to an in genere. The Inquiry is carried out by the Magistrate acting in his/her individual capacity. Thus, the inquiry is conducted by the Magistrate in persona. We have no accused person before the inquiring Magistrate, although we may have a suspect in an inquiry.

Since the Magistrate who conducts the inquiry has an investigating role, they cannot be summoned to give evidence in a ħourt of ħaw.

In the case in the names Nazzareno sive Reno Mercieca v. Onorevoli 161

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Prim Ministru bhala rappresentant tal-Gvern ta’ Malta u Avukat Ġenerali3, the Court held that:

‘Għalkemm fl-inkjesta dwar l-in genere il-Maġistrat jaġixxi aktar ta’ investigatur milli ta’ ġudikant, huwa jibqa’ awtorita` ġudizzjarja, u huwa proprju minħabba li huwa awtorita` ġudizzjarja li l-opinjoni prevalenti (ibbażata anke fuq diżpożizzjoni tal-Kodiċi Kriminali, kif ser naraw) kienet sa issa li huwa ma jistax jiġi prodott bħala xhud, sia mill-prosekuzzjoni kif ukoll mid-difiża biex jixhed fuq xi ħaġa li tkun tirriżulta mill-istess procès-verbal. Dan ma jfissirx, pero`, li l-procès-verbal li jinġieb mill-prosekuzzjoni bħala prova, u l-atti annessi miegħu, huma neċessarjament ammissibbli fit-totalita` tagħhom. Mhix inkonċepibbli sitwazzjoni fejn il-procèsverbal jew parti minnu, jew xi att 6 Paras. 15-114, 15-115, paġna 465. anness miegħu, jiġi, għal raġuni valida skond il-liġi, dikjarat inammissibbli jew mhux ammissibbli għal xi skop partikolari li għalih parti jew oħra tkun trid tipproduċih’.

The prerequisites for an investigation regarding the in genere are found in Article 546 of the Criminal Code, which provides the following:

‘(1) Saving the provisions of the next following sub articles, upon the receipt of any report, information or complaint in regard to any offence liable to the punishment of imprisonment exceeding three years, and if the subject-matter of the offence still exists, the state thereof, with each and every particular, shall be described, and the instrument, as well as the manner in which such instrument may have produced the effect, shall be indicated. For the purpose of any such investigation, an inquest on the spot shall be held’: Therefore, three conditions must concur simultaneously for the 3

Decided by the Constitutional Court on the 15th February 2005.

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inquiry relating to the in genere to be held: • There must be a report, information or complaint. The Magistrate cannot commence an inquiry relating to the in genere on his own initiative. In the vast majority of cases, the Magistrate acts upon a report by a police officer, but the law does not only mention a report, but also information and complaint.

• It must be an offence liable to punishment of imprisonment exceeding three years. Although this provision refers to an ‘offence’, Section 551 oF the Criminal Code provides that an inquest shall be held, for example, in cases of suspicious deaths (e.g. cases of suicide where there is no offence, but an inquest should still be held).

• The subject matter of the offence must still exist. The law is referring to something tangible (e.g. broken apertures or traces of blood). The offence in itself must be one that leaves material traces. Thus, for example, in the case of perjury, there is nothing to preserve even though its punishment exceeds three years, and therefore no inquiry can be held.

However, the law also provides that failure to investigate shall not prejudice proceedings. Where it results that the fact in respect of which an investigation was not held, even though it constituted an offence liable to the punishment already mentioned, that reason alone shall not prejudice the institution or continuation of criminal proceedings for that offence or the admissibility of any evidence of that offence in those proceedings4. This is to say that if an inquiry is not held, the probative value of that evidence is unaffected.

Act XXIII of 20055 further provided that the holding of an inquest 4

5

Article 546(1) of the Criminal Code of Malta.

Article 9 of Act XXIII of 2005 provided that Article 546 of the Code would be amended so

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may be dispensed with by the magistrate to whom the report, information or complaint is made, if the fact to be investigated is breaking and if the theft to which the breaking relates or may relate is in respect of things whose value does not exceed €23.29, although it may be still aggravated by other means, even if the fact is likely to constitute an offence liable to the punishment of imprisonment exceeding three years6.

However, the decision of a magistrate not to hold an inquest in this scenario shall not preclude the institution or continuation of criminal proceedings for an offence7 ,and neither would it exclude the investigation which the police can carry out on their own accord.

The officer so appointed and any photographer or other expert assisting him shall give evidence at the inquiry on the facts investigated and established by them and shall produce all photographs taken and all other articles or documents relevant to their investigation8.

The report, the information or the complaint may initially be given verbally before the Magistrate. However, it would have to be laid in writing before the Magistrate within the period of two working days from the day on which they were given verbally9: These time frames are not always adhered to and this means that the staff of the Magistrate conducting the inquiry would have to pursue such verbal requests thoroughly. However, the Magistrate will not be precluded from carrying on with the inquiry relating to the in genere if such time frame is not adhered to. What is important is the proper preservation of the traces of the offence. that, immediately after the words ‘in those proceedings’ there shall be added the following proviso:’Provided further that notwithstanding any other provision when an offence under investigation consists in theft of electricity or an offence under items (c), (e) and (f) of sub article (1) of Article 326 there shall be no inquest unless expressly requested by Enemalta.’.

6

Section 546 (2) of the Criminal Code.

7

Section 546 (2) of the Criminal Code.

8

Section 546 (3) of the Criminal Code.

9

Section 546 (4) of the Criminal Code introduced by Act XXIX of 1990.

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2. When can an individual make an application to the Magistrate to hold an inquiry ?

Act No. XVI of 2006, dated 8th August, 2006, introduced a novice situation into our legislative books, which although was excluded a priori in our legal system, the circumstance of a report being presented by an individual not being the Attorney General or a member of the Executive Police hardly ever came to the floor.

However, a prominent investigation that was initiated by a person who was not the Attorney General or the Executive Police regarded the investigation that took place on the Foundation of Tomorrows School , wherein a report was presented in the Court Registry by a Member of Parliament, who was then in opposition, asking for an investigation to be carried out on the working of this Foundation, because he alleged that there was corruption and bribery, and therefore requested that the documents be preserved. This request was subsequently entertained by the Court. That investigation was held by the Magistrate who happened to be on duty when the report was presented and the Executive Police had no role in it. In fact, they did not even assist the Magistrate in the collection of the evidence or the summoning of witnesses, which took place by means of the Court Martial. The then Commissioner of Police held that since the inquiry was not initiated on his demand, then the police had no role in the investigation.

Today, however, as will be explained in this article, the situation is a bit different with regards to the procedure that is to be followed in the entertainment of a report by an individual.

It is interesting to see what was being discussed in parliament when discussions were being held in June and July of the year 200610 regarding Legal Notice 69 of 2006 to amend the Criminal Code. Act XVI of 2006, which subsequently followed, eventually led to the introduction of Article 546 4A of the Criminal Code .

The then Honorable Minister of Justice and Vice Prime Minister, 10

Parliamentary sittings 79, 83, 86, 88 u 89 held in June and in 2006.

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Dr Tonio Borg, said the following:-

‘Għal snin twal ħadd ma kien jaħseb li huwa possibbli li l-maġistrat inkwerenti jagħmel inkjesta jekk mhux fuq it-talba ta’ l-Avukat Ġenerali jew tal-pulizija, u prova ta’ dan huwa l-fatt li qatt ma ġrat ħlief f’dawn l-aħħar forsi għaxar snin, u terġa’ ġrat rarament ukoll. Mela vantaġġ ta’ din l-emenda li forsi wieħed mhux qed jarah huwa li issa se jiġi stabbilit li huwa possibbli li ssir. Sal-lum il-Kodiċi kien silenzjuż dwaru, ma kien jgħid xejn, u ħafna kienu qed jiddubitaw li għax ma jgħid xejn ma tistax issir.

Issa qegħdin ngħidu li tista’ ssir. Qed ngħid dan għaliex kien hemm min ġie jistaqsi din għaliex għamiltha u li issa se jkollu dritt kulħadd li jagħmel inkjesta mhux fuq talba ta’ l-avukat ġenerali u tal-pulizija. Hawn min jgħid li m’għandux ikun hemm din il-fakulta’ għax wara kollox, jekk xi ħadd jidhirlu li sar reat u l-pulizija ma ħaditx ilpassi, hemm ir-rimedju wkoll taċ-challenge. Ġieli ġrat u ġieli l-pulizija kellha tieħu passi bilfors.

Li rridu noqogħdu attenti huwa li dan il-poter għandu jeżisti pero’ għandu jiġi regolat u qed nirregolawh b’żewġ metodi. Qegħdin nirregolawh għaliex issa ma tmurx quddiem maġistrat li trid int u li tikkalkola min imissu, imma dak li jitla’ bil-polza, u t-tieni qed ngħidu wkoll li l-inkjesta maġisterjali hija differenti mill-inkjesti li jsiru taħt l-Enquiries Act ta’ l-1977. Dak hemmhekk il-gvern jista’ jordna hu inkjesta dipartimentali, jista’ jorganizza inkjesta fuq kwalunkwe ħaġa biex hu jkun jaf eżattament x’ġara.

Kif ġieli jiġru bl-abbużi li jistgħu jsiru fis-sistema Taljana, jiġifieri li tibda inkjesta, ħadd ma jaf min qed jiġi indagat, lanqas il-persuna stess li qed tiġi indagata.

Għallinqas fl-Italja jagħtuk l-avviżi u l-garanzija li jinformawk li qed tiġi investigat. Ħalliha l-avviż ta’ garanzija sfortunatament fl-Italja żviluppat qisu att ta’ 166

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akkuża għaliex għandu avviż imma Malta jista’ jagħti l-każ, jekk ma tikkontrollahomx, li tiżviluppa f’persekuzzjoni u mhux f’investigazzjoni.

Issa meta tista’ ssir inkjesta? Dejjem? Le, mhux dejjem.

Mhux għax sempliċement ngħid, jien nemmen li qed isir reat. Mhux biżżejjed. U hemm żewġ kwalifiki għaliex trid issir inkjesta li huma regolati bl-artiklu 546 tal-Kodiċi Kriminali. Mela jrid ikun reat ‘liable to the punishment of imprisonment exceeding three years’, u jrid ikun ‘if the subject matter of the offence still exists’. Mela sar holdup, saret serqa f’dar, sar omiċidju, u l-Maġistrat imur l-iktar biex jiffriża l-pożizzjoni kif inhi fil-mument tar-reat, jiġbor l-affarijiet kollha li huma prova tar-reat u mbagħad jasal għall-konklużjoni tiegħu jekk għandhomx jittieħdu l-passi jew le.

Issa aħna kulma qed ngħidu huwa li dan biex isir, apparti l-affari tal-polza, il-Prim Imħallef irid ukoll jikkonferma li dawn iż-żewġ elementi jeżistu wkoll. U dan qed ngħiduh biex wieħed jevita l-abbuż għaliex li rapport jibda minn xi ħadd barra l-pulizija ma fiha xejn ħażin. (sottolinjar tal-Maġistrat Inkwirenti) Anzi jien stess qed ngħid iva, jista’ jkun hemm ċirkostanzi fejn jew għax il-persuna min hi jew iċ-ċirkostanzi kif inhuma tajjeb li ma tibdiex mill-pulizija. Hawn min ma jaqbilx miegħu, mela jgħid le, m’għandha tibda qatt jekk mhux mill-pulizija u l-Avukat Ġenerali. U għal żmien twil hekk kienet il-pożizzjoni, għax jien kemm ili Avukat qatt ma naf li qabel l-2000 qatt ġraw inkjesti ta’ dan it-tip.

Jiena ngħid li ma fiha xejn ħażin, għandu jkun hemm ċerti ċirskostanzi fejn dan għandu jkun permessibbli, pero’ qed nagħmlu dan id-double checking li tant hija ħaġa serja li għandu jkun hemm il-permess tal-Prim Imħallef.

Aħna mhux qed ngħidu l-permess tal-Ministru, 167

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jew inkella l-permess ta’ l-Avukat Generali, għalkemm l-Avukat Ġenerali fil-proċedimenti kriminali huwa awtonomu. Aħna qegħdin ngħidu l-prim imħallef - u m’għandniex imħallef ieħor għax prim imħallef wieħed hemm - li hu jagħti l-awtorizzazzjoni biex dan isir. U l-Maġistrat jintagħżel bil-polza ħalli ma jkunx hemm abbużi11.

Today, this situation has been codified with the introduction of the article ad hoc above mentioned, namely Article 546 4A in the Criminal Code, which brought the public closer to justice.

This article provides that when the report/information/complaint is made by a person other than the AG or police officer, the report/ information/complaint shall contain a clear designation of the person suspected to have committed the offence. The Magistrate shall cause the report to be served on the suspect and allow him time to reply, after which he may decide whether to hold the inquest. Here we have a different and added requisite to those existing from when a report is presented by the Attorney General or the Executive Police to start an inquiry, because the latter officials do not need to identify a suspect, and also, the Magistrate on duty who receives such report is not obliged to notify the Attorney General with its existence prior to 60 days from the submission of the said report.

Once a report, information or complaint is presented by an individual, a copy thereof shall be transmitted by the Magistrate to the Attorney General within 3 working days from when the Magistrate shall have received such report, information or complaint in writing12.

The decision not to hold an inquest shall likewise be notified to the AG within the period of 3 working days from such decision13.

11

Jingħad hawnhekk illi, meta kienet qed issir dina d-diskussjoni, il-liġi kienet tikkontempla li l-Maġistrat li jilqa’ r-rapport minn individwu u jiddeċiedi jekk għandux isir aċċess jew le, kellu jittella bil-polza wara illi l-Prim Imhallef jivverifika jekk hemmx każ ta’ ‘ín genere’. Aktar tard, il-liżi finali tbiddlet sabiex tirrifletti l-proċedura eżistenti llum.

12

Section 546 (5) of the Criminal Code.

13

Section 546 (4A) of the Criminal Code.

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The decision of the Magistrate under sub-article (4A) shall be served on the person who made the report, information or complaint and upon the suspect. Any one of them may, within two working days from the date of service of the decision, apply to the Criminal Court for a reversal of the decision of the Magistrate and the Criminal Court shall give its decision on the application with urgency14. Thus, unlike what happens in those other instances wherein the in genere started at the request of the Attorney General or the Executive Police, there is no right to appeal from the decision of the Magistrate as to whether he is to start the inquiry or not. This right of appeal is only available once the request to initiate the inquiry is presented by an ordinary individual in terms of Article 546 4A of the Criminal Code.

Article 546 4C provides further that in every case where an inquest is to be held under the provisions of sub-articles (4A) and (4B), the Magistrate who conducts the inquest shall be chosen by lot from among all the Magistrates. The idea is so that there will be no room for any forum-shopping for the magistrate to conduct the inquiry since the Magistrate is appointed by lot by the Chief Justice. Unlike what happens in the case of reports presented by the Attorney General or the Executive Police, wherein those reports are heard by the Magistrate on duty on the day such report is presented in the Court Registry.

The purpose why the Attorney General is kept informed of the report is so that he can keep track of the inquiry related to the in genere.

This provision has certainly come of use in the year 2017, when the Honorable Member of Parliament Dr Simon Busuttil, together with the Honorable European Member of Parliament David Casa, presented a number of applications before the inquiring Magistrate on duty, alleging corruption, bribery and money laundering by a number of officials. The most recent application was presented on the 20th April 2018, before Magistrate Dr Francesco Depasquale, and in his decree dated 21st May 2018, the Magistrate upheld the request 14

Section 546 (4B) of the Criminal Code.

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of the applicants and emphasized that it is the duty of the Inquiring Magistrate to hold an inquiry if the following three elements exist, namely that: 1. There is a report, kwerela or denunzja; 2. The punishment of the crimes being denounced carry a punishment of more than three years, and; 3. The subject matter of the crime still exists.

He concluded by saying that:-

‘la darba issa, fil-fehma tal-Maġistrat Inkwirenti, avveraw ruhom il- prerekwiżiti kollha meħtieġa, trid konsegwentement issir investigazzjoni u jkun propju flahhar ta’ tali investigazzjoni li jiġi determinat jekk ikunx hemm lok għal-proħeduri kriminali jew le.

Finalment, la darba d-denunzja ġiet imressqa minn Dr. Simon Busuttil bħala konsegwenza għandhom jiskattaw id-dispożizzionijiet ta’ l-Artikolu 546(4A)(4B) tal-Kap.9 tal-Liġijiet ta’ Malta u l-Maġistrat li għandu jikkonduċi l-investigazzioni dwar l-in genere jintgħazel bil-polza minn fost il-Maġistrati kollha.

A tenur ta’ l-Artikolu 546(4B) qed jiġi ordnat li din id-deċiżjoni tiġi notifikata lill-Onorevoli Kap ta’ l-Oppożizzjoni Dr. Simon Busuttil kif wkoll denunzjati.

Kull wiehed minnhom jista, fi żmien jumejn taxxoghol mid-data tan-notifika tad-deiżjoni, jagħmel rikors lil-Qorti Kriminali biex tiġi revokata din id-deċiżjoni talMagistrat sottoffirmat.

Din id-deżiżioni qed tigi notifikata wkoll lill-Avukat Generali’.

This same reasoning was confirmed in the decree given on the 26th 170

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July 2017 by Magistrate Dr Ian Farrugia on an application presented by the Honorable Member of Parliament Dr Simon Busuttil, together with the Honorable European Member of Parliament David Casa on the 14th April 2017 against Keith Schembri et. Here, the Magistrate held the following:

‘Id-denunzja saret fir-rigward ta’ fatti li jekk aċċertati fi hdan inkjesta dwar l-in genere, jistgħu jagħtu lok ghal azzjoni kriminali li bħala riżultat tagħha, fil-każ eventwali ta’ sejbien ta’ ħtija lil hinn minn kull dubju dettat mirraġuni, jistgħu jimportaw piena li tista tiżboq it-tlett snin priġunerija.

L-allegati fatti denunzjati potenzjalment jagħtu lok ghas-suġġett materjal tar-reat li jrid jiġi priżervat.

Ikun fl-aħħar tal-investigazzjoni dwar l-in genere li jkun jista jingħad jekk hemmx lok ghal azzjoni kriminali jew le. U f’każ pozittiv, fir-rigward ta’ liema reati tkun trid tiġi istitwita l-azzjoni penali u fil-konfront ta’ min.

Bis-saħħa tal-investigazzjoni dwar l-in genere tkun tista tiġi stabbilita il-verita ġudizzjarja tal-fatti.

Fil-fehma tal-Maġistrat sottoffirmat, il-prerekwiżiti meħtieġa sabiex issir investigazzjoni dwar l-in genere huma sodisfatti’

3. Instance when inquest can be held independently from the Magistrate on duty.

The law provides that in those cases when an offence takes place in the island of Gozo and the Magistrate who happens to be on duty is temporarily absent from Gozo (with the permission of the Minister responsible for justice), or is, through a lawful impediment, precluded from performing his duties, the inquest and all proceedings connected therewith may, with the consent of the AG be held by the Registrar 171

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who shall, for such purpose, have all the powers and duties conferred by this Title upon a Magistrate15. This exception, although found in the statute books, has not been used at all over the last fifty years.

This would happen in the past when the crossing between the island of Gozo and Malta was not frequent.

Likewise, where the offence to be investigated is theft, other than theft with violence against the person, the Magistrate may, instead of holding in person an inquest on the spot, direct a police officer not below the rank of inspector to establish the relevant facts16.

4. The Procès-Verbal A procès-verbal is to include the following documents: •

The report, information or complaint of the Attorney General, Executive Police or of the individual as per Section 546 (1) of the Criminal Code;

•

The material traces of the offence. For instance, the burnt car in a case of fire, or the weapon in a case of a crime committed with the use of an arms proper. At times, material traces may be exhibited formally so as to be left outside the courts;

•

The nomination of experts by the Magistrate, if required in as much detail as possible, outlining the specific task given to the expert according to his expertise;

•

The reports of such appointed experts, together with any documents exhibited before them;

•

The Magistrate’s conclusion17.

15

Section 547 (1).

16

Section 546 (3) of the Criminal Code.

17

Section 550 (5) of the Criminal Code.

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5. Appointments of experts The Magistrate may, where he deems it to be so expedient, empower the experts to receive documents18 and to examine witnesses on oath and to take down their depositions in writing, and the provisions of Article 650(5) and of Article 653(3) shall, mutatis mutandis, apply: Provided further, however, that the ‘in genere’ shall be examined only by persons of the competent profession, whenever it appears to be so expedient for reasons of decency: Provided further that, without prejudice to the provisions of Article 552(2), no expert shall be appointed solely for the purpose of examining witnesses on oath and taking down their depositions in writing and establishing the relevant facts. However, should this take place such appointment will not be nullified as was decided in the case in the names Ir-Repubblika ta’ Malta versus Carmel Saliba19’. The Court here held the following:

‘B’danakollu l-liġi ma kkominat ebda nullita’ marbuta man nuqqas tal-Maġistrat Inkwirenti. Ma hemm xejn x’jeskludi li l-Avukat Filletti jiġi prodott bħala xhud ordinarju sabiex jixhed dwar il-konstatazzjonijiet fattwali li huwa għamel meta aċċeda fuq il-post tal-inċident u biex jikkonferma lkorrettezza tad-dikjarazzjonijiet li sarulu u li pew rapportati minnu, naturalment safejn ikun jinħtieġ. Għalhekk m’hemm xejn li jostakola l-użu taddikjarazzjonijiet msemmija, kemm mill-Prosekuzzjoni u kemm mid-difiża għall-finijiet ta’ kontroll, ġaladarba x-xhieda kollha minnu mismugħa xehdu waqt ilkumpilazzjoni u sejrin jiġu prodotti sabiex jixhdu viva voce waqt il-ġuri.’

This was also the line of thought in the case in the names IrRepubblika ta’ Malta Vs Anthony Cachia20, which held that: 18

Section 548(1) of the Criminal Code.

19

Decided by the Criminal Court on the 2nd May 2013.

20

Decided by the Criminal Court on the 4th October 2013.

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‘il-Qorti eżaminat din id-dispożizzjoni sew u tinnota li l-Leġislatur ma ħoloq ebda nullita’ meta jsiru tali ħatriet mill-Maġistrat matul inkjesta’.

When the Magistrate starts the investigation, he will specifically state which experts he is appointing and why. In the case in the names Il-Pulizija (Spt. Kevin J. Farrugia) Vs Ludwig Micallef21:

‘Il-Magistrat ghandu jiehu hsieb illi fid-digriet tieghu n-nomina ta’ kull espert ikun delinejat u spe ifikat avolja ikun jaf perfettament il-qasam tal-professjoni ta’ l-espert’.

In other words, the reason for their appointment has to result from the decree of the Magistrate. Should it result that the appointed expert went ultra vires in his appointment, then there could be the possibility once that procès-verbal is presented in a criminal trial that the defence or prosecution may request that the report of such an appointed expert is withdrawn (‘sfilzat’) from the proceedings.

In fact in the case in the names Ir-Repubblika ta’ Malta v. Anthony Cachia22, a contrary approach was taken. In this case, the Inquiring magistrate had nominated Brigadier Maurice Calleja together with PS 154 Jesmond Cassar as an expert in the field of residue, whereas the Brigadier was nominated as an expert in the field of ballistics. Thus, the Court held that the appointment of PS 154 Cassar was specific in nature, being that of examining residue. However, it appeared that the work carried out by PS 154 related to the expertise of ballistics and did no examination regarding gunshot residue. The Court held that:

‘L-artikolu 548 tal-Kodiċi Kriminali jipprovdi: ‘Flaċċess għandhom jinġiebu l-periti li jinħtieġu’. U l-artikolu 650(5) – reż applikabbli bl-imsemmi artikolu 548) – jipprovdi: ‘Il-qorti, kull meta jkun hemm bżonn, tagħti lill-periti d-direzzjonijiet meħtieġa u ż-żmien li fih għandhom jagħmlu r-rapport tagħhom.’

21

Decided by the Criminal Court on the 1st March 2012.

22

Decided by the Criminal Court of Appeal ( Superior Jurisdiction) on the 26th June 2014.

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Fil-każ odjern, P.S. 154 Jesmond Cassar ingħata d-direzzjoni li jagħmel ix-xogħolrelatat ma’ gunshot residue. Dan m’għamlux. Kwindi ma jistax jitqies bħala espert nominat mill-Maġistrat Inkwirenti għall-finijiet tarrelazzjoni msemmija. B’danakollu, ir-relazzjoni hi xorta waħda ammissibbli, iżda bħala relazzjoni tal-Brigadier Maurice Calleja. Kwantu għal P.S. 154 Jesmond Cassar, huwa ammissibbli bħala xhud ordinarju u għalhekk jista’ jixhed liberament dwar il-konstatazzjonijiet kollha fattwali li huwa għamel f’dan il-każ’.

This train of thought was also confirmed in the case in the names Ir-Repubblika ta’ Malta v. Marco Pace.23 Similarly, in the case above mentioned in the names Il-Pulizija (Spt. Kevin J. Farrugia) Vs Ludwig Micallef, the Inquiring Magistrate had not given this specific task to the expert to hear witness on oath and thus, the Criminal Court felt that the Magistrate had given a decree which was poorly written. However, the Court did not uphold the request of the defense for the Court to order that the procès-verbal is withdrawn from the proceedings. The Court held in this regard that:

‘Il-Qorti pero jidrilha illi dan m’huwiex biżżejjed u l-awtorizzazjoni trid tkun espressa fin-nomina u jekk l-espert jgħaddi biex jisma’ x-xhieda allura f’dan il-każ ikun qed imur ultra vires u dik ix-xhieda għandha tigi sfilzata, sakemm pero din is-sitwazzjoni ma tiġix sanata b’xi att stess ta’ l-istess appellant’.

In this case, the acts of the proceedings were not sent to the office of the Attorney General within the prescribed time, and when the acts were transferred back to the Court, the defense had made a verbal stating that he is exempting the prosecution from bringing forward any witnesses that have already testified in the proceedings, and since the procès-verbal already formed part of the proceedings indirectly, he was also accepting such depositions.

23

Decided by the Criminal Court of Appeal (Superior Jurisdiction) on the 3rd October, 2013.

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No expert shall be appointed solely for the purpose of examining witnesses on oath and taking down their depositions in writing and establishing the relevant facts, where the offence to be investigated is one which carries a maximum term of imprisonment of seven years or more.24 Experts employed in the inquest for the purpose of collecting and examining any dactyloscopic data25 and samples for analyzing human DNA26 shall transmit to the Executive Police copies of the dactyloscopic data and DNA profiles, together with any other information related to the dactyloscopic data and DNA profile. The experts have to be competent in their profession27.

The fact that it has become custom that the Court of Trial confirms the experts nominated in an in genere does not mean that if such confirmation is not done than this would lead to the withdrawal of the reports of the appointed experts . The Court held in the case in the names Ir-Repubblika Vs Francis Grech28 held that:-

‘Sakemm ma jkunx hemm xi indikazzjoni mod ieħor, għandu jkun preżunt li l-Qorti Istruttorja jew li qed tiddeċiedi hija sodisfatta bil-ħatriet u m’hemmx għalfejn li dawn l-esperti jkunu kkonfermati jew, jekk ma jkunux ikkonfermati, xorta l-proċeduri huma integri’.

6. Format of the inquiry.

Every time there is an inquest, a procès-verbal has to be drawn up and must include the conclusions reached by the Magistrate. However, the law allows the possibility for the procès-verbal to be drawn up 24

Proviso to section 548 (1) of the Criminal Code.

25

‘Dactyloscopic data’ means fingerprint images, images of fingerprint latents, palm prints, palm print latents, writers’ palm prints and writers’ palm print latents.

26 ‘DNA profile’ means a letter or number code which represents a set of identification characteristics of the non-coding part of an analysed human DNA sample, that is the particular molecular structure at the various DNA locations (loci).

27

Second proviso to section 548 (1) of the Criminal Code.

28

Decided by the Criminal Court on the 19th September 2011.

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by the officer carrying out the investigation following a delegation of power by the Magistrate in the above-mentioned circumstance when such depositions are rarely carried out by a police officer not below the rank of an inspector in the police force.

The procès-verbal shall be signed by the Magistrate or officer holding the inquest29. If the experts employed shall express their opinion in a written report duly confirmed on oath, such report shall be annexed to the procès-verbal and shall be deemed to form part thereof30. The depositions of witnesses examined at the inquest shall also be annexed to the procès-verbal31. Such depositions shall be taken in the manner provided for the examination of witnesses by the court of criminal inquiry, and shall have the like effect32.

The procès-verbal has probative value in the trial of the cause. It is thus important to conclude a procès-verbal according to law since if not, this piece of evidence can be withdrawn upon a demand by one of the parties in a trial, and then there is the possibility that the evidence collected soon after the event took place is lost. The procèsverbal carries the same strength as other evidence and evidence to the contrary may still be brought by the parties. Evidence in a procèsverbal is still rebuttable at every stage.

Act XXIV of 2014 provided that if the procès-verbal is regularly drawn up, it shall be received as evidence in the trial of the cause, and the witnesses, experts or other persons who took part or gave evidence during the magisterial inquest shall not be produced to give evidence in the inquiry before the Court of Magistrates as Court of Criminal Inquiry during the compilation stage33. This amendment to the Criminal Code brought in a breath of fresh air as it was intended to reduce repetition of evidence being given by the same person. This, however, does not mean that the witness may not be called upon to 29

Section 549(1) of the Criminal Code.

30

Section 549(2) of the Criminal Code.

31

Section 549 (3) of the Criminal Code.

32

Section 549 (4) of the Criminal Code.

33

Section 550 (1) of the Criminal Code.

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give evidence viva voce and/or in cross examination at a later stage by the defense.

In fact, in the case in the names Repubblika ta’ Malta v Edwin Bartolo34,the court held that:

‘Huwa veru li l-Artikolu 646(4) tal-Kap 9 jipprovdi li l-proċessi verbali jistgħu jinġiebu bħala prova bħal ma jgħid l-Artikolu 550 tal-istess Kodiċi u li dan ta’ l-aħħar jiddisponi li proċess verbal jekk regolarment redatt, jikkostitwixxi prova u li ma jkunx meħtieġ li jigu eżaminati mill-gdid ix-xhieda, esperti u persuni ohra lli jkunu hadu parti fl-inkjesta. Pero dan l-artikolu qatt ma kien intenzjonat u ma jistgħax jiftiehem li jista jservi biex ix-xhieda mogħtija fl-inkjesta tissostitwixxi l-ħtiega suprema li del resto l-istess Kodiċi jimponi li x-xhieda tingħata viva voċe quddiem l-akkużat.

Fil-fehma ta’ din il-Qorti kull interpretazzjoni diversa, tkun assurda, kif del resto intqal fis-sentenza tal-Qorti Kriminali deċiża fit-tmintax ta’ Diċembru, 1942 fil-kawża fl-ismijiet Il-Maesta Tiegħu r-Re v Paul Borg, fejn intqal li għandhu jingħad li fil-prattika meta nstemgħu xhieda in konnessjoni ma proċess verbal, u ma kienx għad hemm akkuzat, dawn il-provi, meta nġiebu il-Qorti quddiem l-akkuzat, ġew dejjem ripetuti ħlief għal xi raġunijiet specjali meta ma setgħax isir xort’oħra. Għalhekk fil-fehma ta’ Qorti jirriżulta li taħt l-ebda ċirkostanzi m’għandha tissostitwiha.’

7. Minimum requirements of the inquiry It should include a short summary of the report, information or complaint, together with a list of the witnesses heard and evidence collected. There should be a final paragraph containing the findings 34

Decided by the Criminal Court of Appeal on the 19th July 1998.

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of the inquiring magistrate35 in the sense that he/she should outline if an offence was committed and whether proceedings should be instituted against a suspect.

8. Can there be an arraignment whilst the inquiry is still pending?

One straight answer would be yes, since this happens all the time.

In this eventuality, the Police would ask the Magistrate to conclude the ongoing inquiry relating to the in genere because a person is to be arraigned in court. Naturally, in such a situation, there will be no conclusion in the procès-verbal. Acts of the procès-verbal together with all the documents and reports that the Magistrate would have received until the request was made. However, naturally, the concluding paragraph wherein the Magistrate states that a particular crime has taken place and whether criminal proceedings should be instituted would not be there. However, there can be the eventuality that there is an arraignment and still the inquiry remains open.

This happens when the police believe that there may be further arraignments relating to the same crime under examination in the inquiry, as happened in the recent case of the arraignment of three suspects in relation to the murder of the journalist Daphne Caruana Galizia. An arraignment took place in December 2017 and the inquiry is still open today whilst this article was sent for publication.

9. Is there a time limit to conclude an inquiry?

The law provides that an inquiry should be concluded within sixty days from when the report, information or complaint is received by the Magistrate. However, the law also provides for a delay once a reason is given to the Attorney General by means of a report which shall be transmitted by the Magistrate to the Attorney General not 35

Section 550 (5) of the Criminal Code.

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later than three working days from the lapse of the sixty days36.

The law also states that at the end of every month subsequent to the first report sent to the Attorney General, the Magistrate shall draw up another report stating again the reason for the delay, and every such subsequent report shall be transmitted by the Magistrate to the Attorney General not later than three days from the lapse of the month37.

Reasons for the delay may be that the appointed experts have not yet presented their report, or that scientific examinations to be carried out on some samples seized from the scene of the crime are still pending.

The reason why the procès-verbal is sent to the Attorney General, is so that the Attorney General would be aware about what is going on in the inquiry and would be in a better position to advise the Executive Police on the ongoing investigation.

10. What happens once the procès-verbal is concluded and the Attorney General or the police are of the opinion that there are new witnesses to be heard or new examinations to be carried out?

Such requests can certainly be entertained and take place regularly.

What happens is that the Executive Police present an application to the Magistrate with his request, for instance, to hear other witnesses, or to carry out some comparisons on fingerprints taken from the scene of the crime and compare them with the fingerprints of a particular suspect.

Following this, the Magistrate would make a request to the Attorney General to send back the acts of the inquiry, and at the same time send a copy of the application presented by the Executive 36

Section 550A (1) of the Criminal Code.

37

Section 550A (2) of the Criminal Code.

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Police to the Attorney General so that he may take cognisance of such request. Then, the Attorney General would, in turn, send back the acts of the inquiry together with his reply to the request of the Executive Police.

Once the Magistrate has the reply of the Attorney General and has the acts of the procès-verbal, he/she can go on and give new fresh directions. Once this is all done, then again the Magistrate would make a decree outlining what he/she would have done following the relative request and sends back all the new acts together with the original inquiry back to the Attorney General.

11. Other ad hoc instances that call for an inquiry.

In cases of sudden or violent or suspicious death or of death whereof the cause is unknown, a report thereof shall be made by the Executive Police to a Magistrate; the Magistrate shall hold an inquest on the body for the purpose of ascertaining the cause of death and shall, for that object, take all such evidence as may be possible for him to procure; after taking all the evidence, the Magistrate shall draw up and sign a procès-verbal stating his/her finding as to the cause of death38.

Whenever a person dies while he is imprisoned or detained in any place of confinement contemplated in the Prisons Act, or while he is in Police custody, an inquest shall be held and a procès-verbal shall be drawn up.39 Likewise, whenever a person dies in Mount Carmel Hospital while he is kept there under an order of a court made pursuant to subarticle (3) of Article 525 or to Article 623(1) or for the purpose of his being examined by experts appointed by the court to report on the plea of insanity a procès-verbal stating his/her finding as to the cause 38

39

Section 551 (1) of the Criminal Code.

Section 551 (2) of the Criminal Code.

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of death shall also be drawn up40.

In these situations outlined above, the procedure to be follow is the following. The Magistrate will receive a report from the Executive Police and will hold an inquest on the cadaver to ascertain the cause of death and shall take all such evidence as may be possible for him/ her to obtain. This happens very often in sudden deaths that occur in hotels with elderly tourists or when a person is admitted in a hospital and dies within the first twenty-four hours of his/her admission and no death certificate is issued by the medical doctor. In these cases, the Magistrate generally appoints experts to carry out a nekro examination on the cadaver41 with the scope of identifying the cause of death. In so doing, the Magistrate may also entrust an appointed person to hear evidence on oath, to identify the body and to ascertain the cause of death.

A further authority given to the magistrate conducting the inquiry relating to the in genere is the authority to order the exhumation of a body for further examination. This is, however, done only in those instances where such disinterment can be effected without prejudice to the public health42

12. What are the Powers of the Magistrate holding the inquiry?

The Magistrate may do any one or all of the following whilst holding an inquiry: •

Order the arrest of any person who, during an inquest, is discovered to be potentially guilty, or against whom there is sufficient circumstantial evidence;

•

Order the seizure of any papers, effects, and other

40

Section 551 (3) of the Criminal Code.

41

Section 552 (1) of the Criminal Code.

42

Section 553 of the Criminal Code.

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objects generally, which he/she may think necessary for the discovery of the truth; •

Order any search in any house, building or enclosure, although belonging to any other person, if he has reason to believe that any of the above objects may be found therein43.

•

Order that any suspect be photographed or measured or that his fingerprints be taken or that any part of his body or clothing be examined by experts appointed by him for the purpose44.

Where the Magistrate is of the opinion that such photographs (negatives and prints), fingerprint impressions, records of measurements and any other thing obtained from the body or clothing as aforesaid are no longer required for the purpose of the inquiry relating to the in genere, he shall order their destruction or shall order that they be handed over to the person to whom they refer.

Similarly, the Magistrate shall have the same powers and privileges of a Magistrate presiding over the Court of Magistrates as a Court of Criminal Inquiry45.

13. Procedure to be followed in cases where material object no longer exists.

The Law provides that in those instances where the subject-matter of the offence no longer exists, or for some reason cannot be seen, or if the the offence is such that it cannot leave any permanent traces, or if the traces wherein any manner destroyed, then there shall be established in the inquiry, the actual state of the object, and, as far as possible, the state in which it was before it became the subject-matter 43

Section 554 (1) of the Criminal Code.

44

Section 554 (2) of the Criminal Code.

45

Section 554 (3) of the Criminal Code.

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of the offence. Any evidence on these points shall be taken down in writing and shall form part of the inquiry.

Provided that where the traces shall have been destroyed, there shall also be ascertained, as far as practicable, the mode and the cause of their disappearance, and all evidence, tending to prove that the offence was actually committed, shall also be collected.46

14. Formalities to be observed at inquiry into forgery of writings.

The law states that once a document is purported to be false, such document shall be numbered on every page, and there shall be a procès-verbal of the material state of such document and its production. The procès-verbal shall describe every cancellation, addition or interlineation contained in any such document, and any other circumstance which may lead to the alteration of the document47.

The document purported to be false together, with the procèsverbal, shall be signed and on every page counter-signed by the Inquiring Magistrate, by the Registrar, and also, where practicable, by the witness and experts employed in the inquiry48.

However, the Magistrate may, instead of drawing up a procèsverbal,choose a different route, and instead he/she may order that a photostatic copy of the document purported to be false be made by a person appointed for such purpose which copy shall be kept in the custody of the Registrar. The Registrar shall produce such copy whenever requested by any Court of Criminal Justice.49 The law also outlines the procedure to be followed in connection 46

Section 555 of the Criminal Code.

47

Section 556(1) of the Criminal Code.

48

Section 556(3) of the Criminal Code.

49

Section 556(4) of the Criminal Code.

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with the production of the document purported to be false. Namely, when the document purported to be false is deposited in any public officer or with a private person, the Inquiring Magistrate shall order such document to be produced in Court without delay50.

The person with whom the document is deposited is bound, under pain of arrest, to produce it, and in default of production, it shall be lawful to affect a search for the document and to detain such person until he produces the document, or until such document is seized, or until such time as the Court may think proper, regard being had to his disobedience and to the importance of the case.

15. Repertus In the discovery of any document51 relating to any offence, steps shall be taken to secure the existence and preservation thereof, and a procès-verbal, to be known as ‘repertus’’, shall be drawn up.

A ‘repertus’ is the report that encompasses the preservation of a particular document when the author of such document is not known.

This generally happens when an unknown substance is found and the police want to have such substance examined further to establish whether it is an illegal substance. In such a case, the examination is held ut sic with regards to the substance itself in order to establish the nature of the substance, its weights, its purity (once the substance is confirmed to be an illicit drug), its classification and whether it is scheduled.

16. Storage of Criminal Inquiries The record of any proceedings held with regards to an inquest shall be sent to the Attorney General within three working days, unless a 50

Section 557 (1) of the Criminal Code.

51

The expression ‘document’ includes any paper and any material object which may furnish information, explanation, or other evidence about the offence, or about the guilt or innocence of the accused.

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demand from the Executive Police is made earlier to the Magistrate to conclude52.

17. Confidentiality of the procès-verbal.

A procès-verbal and any depositions and documents filed therewith shall be open to inspection, and any copies thereof shall be given, only at the discretion of the Attorney General and on payment of such fees as may be prescribed by the Minister responsible for Justice as provided in Article 69553.

It is within the discretion of the Attorney General as to whether to give a copy of the procès-verbal. For instance, in the case of a stolen car that is retrieved though in a burnt state, at time,s the insurance company of the registered car owner asks for a copy of the procèsverbal so as to know whether there was any criminal act imputed to any person in a particular before it settles any pending claim. In such eventuality, the Attorney General is usually willing to pass on a copy.

However, in the case where a defense lawyer makes a request for a copy of a procès-verbal to help him prepare for a better defense for his client, such request is rejected.

However once the procès-verbal is exhibited in a criminal trial, then it may be open to inspection, and copies thereof may be given with the permission of the parties concerned upon the payment of the usual fee to the Courts of Justice.

18. Does the law provide for a recusal of an Inquiring Magistrate from holding an inquiry?

The law is silent on this matter since the relevant Article in the codified law, namely Section 368(1) of the Criminal Code, only speaks 52

Section 569 of the Criminal Code.

53

Section 518 of the Criminal Code.

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about abstentions or challenges that can be done against a Magistrate in causes that are pending before the Courts. This section provides the following:

‘No magistrate may be challenged or may abstain from taking cognizance of any cause, except immediately after the report or complaint and for any of the reasons set out in paragraphs (a),(b), (c)and(e)and, so far as applicable, article 734(d) of the Code of Organization and Civil Procedure or on the ground that he has given or is to give evidence as a witness in the cause, or on the ground that the cause is in respect of an offence committed to his prejudice or to the prejudice of his spouse or of any other person related to him by consanguinity or affinity in any of the degrees mentioned in paragraphs (a)and(b) of the said article’ The author the fact that the legislator here is speaking about a Judge or Magistrate sitting in a courtroom, hearing a case in a trial, and thus the secondary question arises if the above section also applies to the Magistrate holding an inquiry access or repertus.

A cursory look at sub-section 4 of section 368 provides an answer in the sense that:

‘None of the above reasons shall debar any magistrate from issuing any warrant or performing any act in connection with any inquiry relating to the ‘in genere’, or any inquest or ‘repertus ‘held in accordance with the provisions of this Code.

In other words, the law is categorical about this matter in that there is no codified provision which caters for the recusal of a Magistrate from holding an in genere.

This means that Section 734 of the Code of Organisation and Civil Procedure does not apply to in genere, since in these cases the Magistrate is not deciding on any Court case. His/Her duty is to 187

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make an inquiry, collect evidence and documents which could help him/her to identify a wrongdoer to be brought to Court . This is the reasoning that was held in the application that was presented in the Criminal Court of Appeal on the 3rd October 2017 by the Honourable Dr Simon Busuttil.

However, the author feels that in this circumstance, we are in a sui generis situation in that the Magistrate should make reference to Section 734 and use it as a guideline and see whether he/she should abstain.

In the case in the names Sandro Chetcuti u James Barbara vs L-Avukat Ġenerali u għal kull interess li jista’ jkollhom id-Direttur Ġenerali u Registratur tal-Qorti, id-Direttur u r-Registratur talQorti Ghawdex, George u Loreta konjugi Galea, u Joseph Galea54 the Court held the following:

‘Kif sewwa irriteniet l-ewwel Qorti, huwa prinċipju ormai paċifiku fil-ġurisprudenza tal-Qrati Maltin – ara d-diversi sentenzi msemmija fis-sentenza appellata – illi anki jekk skond id-disposizzjonijiet relattivi talKapitolu 12 ma hemmx lok ta’ rikuża – anzi jista’ jkun hemm addirittura divjet ta’ astensjoni – tista’ tinħoloq sitwazzjoni li tikkuntrasta mad-drittijiet fundamentali ta’ l-individwu kif garantiti lilu mill-Kostituzzjoni u millKonvenzjoni Ewropea dwar id-Drittijiet tal-Bniedem.

Huwa paċifiku wkoll fil-ġurisprudenza tal-Qorti Ewropea tad-Drittijiet tal-Bniedem illi, id-deċiżjoni jekk teżistix jew le imparzjalita` ai termini ta’ l-Artikolu 6(1) tal-Konvenzjoni, trid tigi bbażata fuq test soġġettiv, ċioe` fuq il-konvinzjoni personali tal-ġudikant partikolari f’każ speċifiku, u wkoll fuq test oġġettiv, u ċioe` jekk il-gudikant ikunx fil-każ partikolari joffri garanziji sufficijenti sabiex jeskludi kull dubbju leġittimu ta’ parzjalita`.

In addition, in the case in the names ‘Dun Marjanu Zammit vs 54

Decided by the Constitutional Court on the 12th July 2005.

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Avukat Ġenerali 55, the Court held that:

‘L-imparzjalita’ trid titqies kemm fuq test suġġettiv kif ukoll fuq test oġġettiv [Demicoli vs Malta para 40]. L-astensjoni u r-rikuza anke jekk skond iddisposizzjonijiet relattivi tal-Kap 12 ma hemmx lok għalihom [anzi jista’ jkun hemm divjet ta’ l-astensjoni] f’xi każijiet għandha ssir jekk ikun hemm kuntrast maddrittijiet fundamentali u kostituzzjonali ta’ l-individwu bil-konsegwenza li dawn għandhom jipprevalu fuq iddisposizzjonijiet l-oħra tal-liġi ordinarja….

Fil-kawża fejn il-Maġistrat sedenti kien iben avukat li kien assessur tal-Kurja fil-kawża, il-Maġistrat għandu jastjeni ghax dan jista jilledi d-drittijiet fundamentali.’

Likewise, in the application presented in the inquiry regarding the wilful murder of the journalist Daphne Caruana Galizia, the Magistrate was faced with a request for recusal and, in her decree dated 17th October 201756, made reference to the ‘objective test of impartiality’, quoted by the European Court of Human Rights in Strasbourg in the case Hauschildt v. Denmark57 which stated that:

‘Under the objective test, it must be determined whether, quite apart from the judge’s personal conduct, there are ascertainable facts which may raise doubts as to his impartiality. In this respect even appearances may be of a certain importance. What is at stake is the confidence which the courts in a democratic society must inspire in the public and, above all, as far as criminal proceedings are concerned, in the accused. Accordingly any judge in respect of whom there is a legitimate reason to fear a lack of impartiality must withdraw.58’ 55

Decided by the First Hall Civil Court ( in its Constitutional jurisdiction) on the 8th January 1997.

56

Delivered by Magistrate Consuelo Scerri Herrera.

57

Delivered by the ECHR on the 24th May, 1989.

58

Para. 48

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And that judgment also stated that:

‘This implies that in deciding whether in a given case there is a legitimate reason to fear that a particular judge lacks impartiality, the standpoint of the accused is important but not decisive. What is decisive is whether this fear can be held objectively justified.’

The Magistrate made reference to other cases decided in the Courts of Malta, particularly ‘Sant vs Kummissarju tal-Pulizija,59’‘ Cachia vs Onor. Prim Ministru et60’; ‘Bugeja et vs Onor. Prim Ministru noe et61’ and ‘Ghirxi vs Onor. Prim Ministru et62’ where it was held that:

‘Anke jekk skond id-disposizzjonijiet relattivi tal-Kap 12 ma hemmx lok għal rikuża - anzi jista’ jkun hemm divjiet ta’ astensjoni - iżda tista’ tinħoloq sitwazzjoni fejn ikun hemm kuntrast mad-drittijiet fundamentali u kostituzzjonali ta’ l-individwu bil-konsegwenza li dawn ta’ l-aħħar għandhom jipprevalu fuq id-disposizzjonijiet l-ohra tal-liġi ordinarja.’

The Magistrate concluded that she should recuse herself on the basis that justice must also be seen to be done and not just done.

Thus, the answer as to whether a Magistrate can abstain from holding an inquiry the answer is in the affirmative.

19. Conclusion of the magisterial inquiry.

If, in the procès-verbal, the Magistrate shall have ordered that charges are to be issued, the Magistrate shall order that a copy of 59

Decided by the Constitutional Court on the 2nd April 1990.

60

Decided by the Constitutional Court on the 10th October 1991.

61

Decided by the First Hall Civil Court in its Constitutional Jurisdiction on the 17th June 2014.

62

Decided by the First Hall Civil Court in its Constitutional Jurisdiction on the 1st November 1996.

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the same procès-verbal shall be transmitted by the Registrar to the Commissioner of Police, who shall proceed accordingly63. However, and this is very interesting, in case of doubt, the Commissioner of Police may consult with the Attorney General, who may in turn direct that no proceedings are to be taken, or that the proceedings to be taken are to be for a charge or for charges different from those specified by the Magistrate in the procès-verbal. This means that the last word with regards to prosecution is left in the hands of the Attorney General.

Likewise, if a person is brought to Court on the basis of the findings of an inquiry, the Attorney General may, at a later stage, also issue a nulle prosqui if he believes that there are no grounds for the accused person to stand trial64. This happened in the case where a medical doctor was brought before the Court and charged with involuntary murder of a young boy by the name of Daniel Massa and halfway through the proceedings, the Attorney General had issued a nulle prosequi and the proceedings stopped there despite the criminal inquiry having found prima facie evidence that somebody should be charged.

If, however, the Attorney General shall decide that no proceedings are to be taken, he shall make a report to the President of Malta stating the reasons for his decision65.

63

Section 569 (5) of the Criminal Code.

64

Section 569 (6) of the Criminal Code.

65

Proviso to Section 569 (6) of the Criminal Code.

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Is “White Collar Crime” a Crime?

A critical analysis into the criminalisation of white collar crime Charles Mercieca

Charles Mercieca is a practicing lawyer at the office of the Attorney General, within the Criminal Law & Prosecutions Unit.

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1. Introduction

W

hite collar crime features behaviours which often exist on the ‘gray zone of socially acceptable […] behaviour’1 and ‘actual criminal conduct’2. The scope of this essay is to critically examine the nature of what constitutes white collar crime and attempt to establish whether, indeed, white collar can be considered to be a crime akin to traditional blue collar crime such as homicide, bodily harm, rape and theft. In order to do this, the author examines the moral ambiguity of white collar crime and the elements which can be associated with moral ambiguity.

White collar crime exhibits a high degree of moral ambiguity which in turn, brings into question its legitimate criminalisation.3 This moral uncertainty can be evidenced from some contemporary white collar crime cases. For example, in 2002 the Arthur Anderson accounting firm was prosecuted and convicted of obstructing an investigation into the Enron debacle.4 After returning a guilty verdict, the jurors were asked about what had led them to conclude guilt.

Chief among the evidence which the jurors took into consideration was an email sent by the firm’s in-house lawyer, Nancy Temple. The email instructed one of Anderson’s partners to remove words from an internal memo which suggested that Anderson had concluded that Enron’s final disclosure was deceptive. Moreover, the email contained advice by the attorney which was intended to protect Arthur Anderson from prosecution.5 One of the jurors sustained that ‘[w]e wanted to find Andersen not guilty and find that they stood up to Enron. But it’s clear [that Temple] knew investigators were

1

United States v. Gypsum, 438 U.S. 422, 440-41 (1978).

2

United States v. Sawyer, 85 F.3d 713, 741-42 (1st Cir. 1996).

3

see Stuart P. Green, ‘Moral Ambiguity in White Collar Criminal Law’ [2004] 18(2) Notre Dame Journal of Law, Ethics & Public Policy 501.

4

Kurt Eichenwald, ‘Andersen Guilty in Effort to Block Inquiry on Enron’ (the New York Times, 16 July 2012) <https://www.nytimes.com/2002/06/16/business/andersen-guilty-in-effort-toblock-inquiry-on-enron.html> accessed 27 September 2018.

5

Ibid.

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coming and was telling [Andersen] to alter the evidence’6. However not everyone agreed with the jury’s interpretation. Indeed, it was opined7 that that the advice given by Ms. Temple in her capacity as Arthur Anderson’s attorney was ‘the kind of advice lawyers give clients all the time’8. It became incitingly obvious that the jurors did not in fact understand their responsibility and simply found guilt on the ‘the removal of a few words from a memorandum’.9 Indeed, this legal blunder was then partly remedied on appeal with a reversal of the jury’s verdict.10 However, this proved to be too late for Arthur Anderson as its reputation had already suffered an irreparable blow.

Another example of the moral ambiguity within white collar crime can be understood in the crime of tax evasion. In October 2003, the chief executive of one of Russia’s biggest oil companies, Mikhail Khodorkovsky was arrested and charged for tax evasion. International observers and journalists later argued that Khodorkovsky may not have been entirely clean however ‘in the chaotic Russian economy of the [1990s], when the state was privatizing its assets on a grand scale, no large business was ‘clean’ - and the larger the company, the greater the chance it committed violations.’11 Moreover, when considering the tax scheme then in force in Russia, ‘[t]ax evasion was the only strategy that allowed an entrepreneur to pay salaries and invest in his business.’12 The crime of tax evasion is a classic white collar crime which lacks essential moral components which make it a criminalisable offence. As shall be discussed further on, other malum prohibitum13 6

Tom Fowler, ‘Lawyers fear legal impact of Andersen: They ask if advice might be a crime,’ Houston Chronicle, June 25, 2002, at http://www.chron.com/cs/CDA/story.hts/business/1468838

7 Stephen Gillers, ‘The Flaw in the Andersen Verdict’ (the New York Times, 18 June 2002) <https://www.nytimes.com/2002/06/18/opinion/the-flaw-in-the-andersen-verdict.html> 27 September 2018.

8

Ibid.

9

Eichenwald (n 4).

10

Arthur Andersen LLP v. United States 544, 696 U.S. (2005)

11

Leon Aron, ‘Crime and Punishment for Capitalists’, (New York Times, 20 October 2003) < https://www.nytimes.com/2003/10/30/opinion/crime-and-punishment-for-capitalists.html> accessed 3 October 2018.

12

Ibid.

13

A malum prohibitum offence as opposed to a malum in se offence is an offence which is

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offences are difficult to rationalise under the criminal law as they lack components such as moral wrongfulness and harmfulness.

Thus, it may be argued that alternatives to criminal sanctions (such as administrative sanctions or non custodial sanctions) may be more efficient at dealing with this little known but pervasive branch of white collar crime.

In the first section of the essay, the author focuses on the first component of moral ambiguity. The section shall introduce the concept of moral wrongfulness and how it features in white collar offences. The component of moral wrongfulness in any criminalisable behaviour is the violation of a moral norm or an ‘affront to the victim’s value or dignity’.14 It constitutes the inexcusable and unjustifiable conduct which violates another’s right.15 This component is most important because it justifies and legitimises the criminalisation of any behaviour.

In the second section, the essay examines the component of harmfulness in white collar crime. This component is intimately tied with the component of moral wrongfulness. However, it relates to the harm caused by the criminalisable offence or the degree of harm the behaviour risks causing.16 The importance of sanctioning harmful behaviour is obvious. Thus, for example, the criminalisation of rape finds its legitimacy in the behaviour’s general moral wrongfulness and specific harmfulness to the victims’ wellbeing. On the other hand, it may be harder to identify the moral wrongfulness and harmfulness in criminalising money laundering.

In the third section, the author addresses the issue of identifying the victims and attributing responsibility for white collar crime.

White collar crime is classically described as a victimless crime. criminal only because the law prescribes it to be. A malum in se offence is an offence which is intrinsically wrong and thus criminal. Crimes such as rape, murder and bodily harm are considered to be malum in se.

14 Jean Hampton, ‘Correcting Harms versus Righting Wrongs: the Goal of Retribution’ (1992) 39 UCLA Law Review 1659, 1666.

15

Joel Feinberg, Harm to Others (New York: OUP, 1984) 34.

16

Stuart P Green, Lying, Cheating and Stealing A moral theory of White Collar Crime (Oxford University Press 2006) 34.

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It often features a victim or group of victims who are hard to identify (if at all) and who are sometimes unaware of their own victimisation.17 Furthermore, white collar crime exhibits the unique phenomenon of ‘diffusion of responsibility’18. As opposed to blue collar crime, where the offence can usually be directly traced back to a perpetrator, in white collar crime the responsibility for the offence may be shared by more than one person. For instance, in corporate organisations, the decision-making process ‘is shared among boards of directors, shareholders, top and mid-level managers, and groundlevel employees’19. These components are crucial to the legitimate criminalisation of any behaviour. Absent the components of moral wrongfulness, harmfulness, identification of victims and attribution of responsibility, the criminal law becomes impotent to sanction and control of white collar crime.

2. Defining White Collar Crime Before an analysis into the moral ambiguity of white collar crime is carried out, it is imperative to sharpen the scope of what the author means by white collar crime. This is important as holistically, white collar crime can encompass a range of delinquent behaviours.

Edward Sutherland - the father of white collar crime – thought of the group of offences as a crime exclusive to the higher echelons of society.20 However, defining the group of offences by the personal characteristics of the offender leads to a skewed legal definition.

By focusing on the nature of the crime rather than its personal characteristics,21 the definition is more robust and comprehensive.22 In 17 See Groot L, ‘Money Laundering, Drugs and Prostitution as Victimless Crimes’ in Unger B and Linde D, Research Handbook on Money Laundering (Edward Elgar Publishing 2013).

18

Hazel Croall, Understanding White Collar Crime (Open University Press: Philadelphia 2001)

8.

19

Green (n 3) 510.

20

Edwin H. Sutherland, White-Collar Criminality, 5 AM. SOC. REV. 1.

21

See also Gerald Cliff and Christian Desilets White Collar Crime: What It Is and Where It’s Going (2014) 18 (2) Notre Dame Journal of Law, Ethics & Public Policy 481, 482.

22

Herbert Edelhertz, The Nature, Impact and Prosecution of White-Collar’ Crime (National

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a study,23 white collar crime was identified as consisting of a behaviour which is almost invariably non-violent, business related, unethical and committed by people who ‘have not committed street crimes or drug crimes’.24 Furthermore, Edelhertz25 posits that white collar crime can be divided into four distinct categories; personal crimes (‘[c]rimes by persons operating on an individual, ad hoc basis, for personal gain in a non business context’26) abuses of trust, business crimes (‘[c]rimes incidental to and in furtherance of business operations, but not the central purpose of such business operations.’27) and con games. Armed with these rationales, it becomes evident that the two definitions which concern the merits of this essay are personal crimes and business crimes. Thus, for the purposes of this paper, white collar crime can be said to be non-violent behaviour which is committed by an individual or an organisation during the course of legitimate public or private activity with the purpose of procuring an economic gain, or a gain related to employment, business or market status which may not be immediately financial. This definition seeks to cluster together deviant activities such as tax evasion, obstruction of justice, insider trading, cartels and money laundering. On the other hand, it excludes white collar crime such as environmental crime, internet fraud, funding of terrorism, piracy, trademark claims and con games.

institute of Law enforcement and Criminal Justice 1970), 4.

23

Pamela H. Bucy, Elizabeth P. Formby, Marc S. Raspanti, Kathryn E. Rooney, ‘Why Do They Do It?: The Motives, Mores, and Character of White Collar Criminals’ (2012) 82(2) St John’s Law Review 401, 403.

24

Ibid.

25

Herbert Edelhertz, The Nature, Impact and Prosecution of White-Collar’ Crime (National institute of Law enforcement and Criminal Justice 1970) 483-484.

26

Herbert Edelhertz, The Nature, Impact and Prosecution of White-Collar’ Crime (National institute of Law enforcement and Criminal Justice 1970) 19.

27

Ibid 20.

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3. Moral Ambiguity in White Collar Crime: Moral Wrongfulness

In order for a behaviour to be considered a crime, the behaviour needs to consist of a certain degree of mens rea, actus reus, public character and be followed by a criminal penalty.28 Varying degrees of each component creates different crimes of varying degrees of legitimacy, coherence and authority. For example, sexual offences such as violent indecent assault or rape consist of a serious moral violation which dignifies punishment. These group of offences are called malum in se offences and are worthy of punishment slowly because of their intrinsically evil nature. At the other end of the spectrum, malum prohibitum conduct is only criminal because the law criminalises the behaviour.29 Thus, it suffers from a serious lack of legitimacy and authority. A simple yet effective example are the criminal copyright laws which prohibit the photocopying of authored work or the downloading of books. Society does not view such activities as morally wrong30 and by extension, legitimate and effective enforcement of the law is severely hampered.31 White collar crime is mostly malum prohibitum and for example, the crimes of insider trading, obstruction of justice and tax evasion do not carry the same moral substance as murder, bodily harm or burglary. It can be said that these offences do not carry the same degree of moral wrongfulness as in blue collar offences.

A moral wrong and, by extension, an act’s moral wrongfulness, has been defined by Stuart Green as a ‘violation of a moral norm that occurs when a criminal act is committed’32. The moral norms 28

Stuart P Green, Lying, Cheating and Stealing A moral theory of White Collar Crime (Oxford University Press 2006) 10

29

Green (n 16) 10.

30

Over 70% of people polled do not see it morally wrong to photocopy books or the unauthorised downloading of a book immoral, see Henry G Manne, Insider trading and the stock market (New York: Free Press), 1966.

31

Insider trading and the stock market (New York: Free Press, 1966) and Geraldine Szott Moohr, ‘The Crime of Copyright Infringement: An Inquiry Based on Morality Harm and Criminal Theory’ (2003) 83 Boston University Law Review 731, 767 – 68.

32

Ibid 39.

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violated by crimes such as murder, burglary and offences involving chastity are easy to discern. However, the moral norms violated by tax evaders, money launderers and corporate non-compliance are harder to determine. The author posits that the obscurity (or lack thereof) of moral wrongfulness in white collar crime can be attributed to the fact that white collar crime, being a malum prohibitum crime, it can appear to be morally neutral and lacks essential moral components.33 White collar crime has been described as devoid of the ‘behaviour deemed morally culpable by the general community’34. Moreover, white collar crime can be said to criminalise moral norms which are not openly shunned by society and can be said to exist in moral uncertainty.35 Aptly dubbed as ‘sticky norms’,36 these moral norms reflect a growing divide between what behaviour the law considers to be morally wrongful and the behaviour which society believes to be so.37 This was reflected in a study seeking to investigate social opinion about white collar crime.38 The study’s participants were asked to rank one hundred and forty different crimes in order of their seriousness (the first ranked being the most serious and so forth). It was observed that from a list of one hundred forty different crimes, white collar crime polled lowest in the seriousness scale with their mean rank placing at around eighty39 (even lower if one considered a previous study where white collar crime polled at around ninety)40. Tax evasion was one of the lowest 33

see more Robert P George, Making Men Moral: Civil Liberties and Public Morality (Oxford: Clarendon Press, 1993).

34

John C Coffee Jr, ‘Does Unlawful Mean Criminal? Reflections on the Disappearing Tort/ Crime Distinction in American Law’ (1991) 71 Boston University Law Review 193, 198.

35

Dan Kahan, ‘Gentle nudges vs hard shoves: Solving the sticky norms problem’ (2000) 67(3) University of Chicago Law Review 607.

36

Green (n 25) 25.

37

Herbert Packer, The Limits of the Criminal Sanction (Stanford: Stanford University Press 1968) 37.

38 Francis Cullen, Bruce Link, Craig Polanzi ‘The Seriousness of Crime Revisited Have Attitudes Toward White-Collar Crime Changed?’ (1982) 20(1) Criminology 83.

39

Ibid 84.

40

Peter Rossi, Emily Waite, Christine Bose, and Richard Berk ‘The Seriousness of Crimes Normative Structure and Individual Differences’ (1974) 39(2) American Sociological Review 224.

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ranked crimes and was noted that participants prescribed to the belief that ‘everybody does it’41. The same rational was reflected in more recent studies which presented how more than seventy percent of the people surveyed believed that nothing is wrong with making unauthorised copies of a book; and forty-nine percent believe that nothing is wrong with making unauthorised copies of a CD.42 From the data, it can be inferred that society has not yet come to judge white collar crime to be as serious as blue collar crime. Moreover, the scant component of moral wrongfulness in white collar crime leads to difficulties in legitimately treating business and financial crime, as crime.43 The difficulties in identifying the moral wrongfulness in white collar crime are also because of the denotation of the concept of ‘wrongfulness’. Joel Feinberg holds that an act’s ‘wrongfulness’ is when ‘one person wrongs another when his indefensible (unjustifiable and inexcusable) conduct violates the other’s right’44. It immediately becomes clear that it is difficult to think of the very process of money laundering or obstruction of justice in terms of Feinberg’s definition.

The best conceptualisation of the ‘wrongfulness’ of an act is in the harmless rape thought experiment.45 Gardner and Shute postulate that rape will still be abhorrent and wrongful even if no harm had to befall the victim. The same can be said for a harmless theft46 or a harmless forceful entry. In all three scenarios proprietary rights are irreparably violated. On the other hand, it is significantly more difficult to conceptualise harmful money laundering or harmful tax 41

Robert Manson and Lyle Calvin ‘A Study of Admitted Income Tax Evasion’ (1978) 13(1) Law and Society Review 81, 87.

42

Geraldine Szott Moohr, ‘the Crime of Copyright Infringement: An Inquiry Based on Morality Harm and Criminal Theory’ (2003) 83(4) Boston University Law Review 731, 767 – 68.

43

See Edwin Sutherland, ‘White Collar Criminality’ (1940) 5 American Sociological Review 1, 11 and John Conklin, ‘Illegal But Not Criminal’: Business Crime in America (Prentice Hall 1977) 17.

44

Joel Feinberg, Harm to Others (New York: OUP, 1984) 34.

45

John Gardner and Stephen Shute, ‘The wrongness of Rape’ in Jeremy Horder, Oxford Essays in Jurisprudence (Oxford: OUP, 2000) 195-200.

46 Andrew Simester and Bob Sullivan, ‘On the Nature and Rationale of Property Offences,’ in Anthony Duff and Stuart Green Defining Crimes: essays on the Special Part of the Criminal Law (Oxford: OUP, 2005) 168, 174, 175.

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evasion let alone wrongful.

4. Moral Ambiguity Harmfulness

in

white

collar

crime:

Harmfulness is a component which is intimately linked to crime.

The criminal justice system reserves the punitive criminal sanction as a last resort and only for the most harmful and wrongful forms of behaviour.47 It is then logical to say that if the harm caused by a behaviour is obscure or not immediately evident, it becomes difficult to rationalize the behaviour as crime.48 There exists substantial debate concerning whether the state is legitimate in criminalising behaviour which is not obviously harmful (malum prohibitum).49 In this sense, there exists uncertainty as to the harmfulness of white collar crime.

For example, this can be noted in the case of Arthur Andersen,50 where the actual harmfulness of Ms. Temple’s legal advice raises serious questions for consideration.

Stuart Green posits that the harmfulness of a behaviour is ‘the degree to which a criminal act causes or risks causing harm’51. It therefore manages to capture both inchoate and choate behaviours.

Furthermore, harm has been defined as ‘a disruption of or interference in a person’s wellbeing, including damage to that person’s body, psychological state, capacities to function, life plans or resources over which we take this person to have an entitlement’52. While bearing these traditional criteria for harm in mind, it becomes apparent that harm manifests itself differently in white collar crime. The nature of 47 Douglas Husak, ’The Criminal Law as Last Resort’ (2004) 24 Oxford Journal of Legal Studies 207.

48

Green (n 6) 501, 510.

49

Herman Bianchi, ‘Abolition: Assensus and Sanctuary,’ in Anthony Duff and David Garland, A reader on punishment (Oxford: OUP, 1994) 336-51.

50

Arthur Andersen LLP v United States 544, 696 U.S. (2005).

51

Green (n 25) 34.

52

Jean Hampton, ‘Correcting harms Versus Righting Wrongs: The Goal of Retribution’ (1992) 39 UCLA Law Review 1659, 1662.

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the harm, the quality of the harm and the realisation of the harm; all manifest themselves to varying degrees in white collar crime as opposed to blue collar crime.53 The nature of the harm caused by criminal behaviour is traditionally attributed to deliberate and violent predatory acts.54 Blue collar crime often involves a sudden and violent actus reus which can be easily identified and linked to the consumed offence. Conversely, the nature of the harm caused by white collar crime is characteristically nonviolent and incorporeal. A consequence of this is that the criminal damage is harder to quantify, commonly owing to the actus reus taking place over large stretches of time.55 Moreover, the actus reus in white collar crime involves complex and obscure behaviour which can be broken down into distinct components each exhibiting different degrees of guilt.56 The quality of the harm caused by white collar crime is also manifestly different than in blue collar crime. By quality, the author is alluding to the quantifiable size of the harm and its ease of identification. Street crime characteristically harms an identifiable victim who is usually solitary and suffers an immediately identifiable patrimonious loss. Therefore, the harm can be easily identified and remedied. On the other hand, ‘many white collar crimes involve small harms to a large number of victims, and are significant only in the aggregate’57. Despite this, it is important to bear in mind that the harm totalled by a continuing white collar crime can be considerable; often affecting jobs, life savings, a victim’s psyche58 and amounting to 53

Green (n 25) 35 – 37.

54

David Friedrichs, Trusted Criminals: White Collar Crime in Contemporary Society (4tth edn.

Wadsworth, Cengage Learning 2010) 53.

55

Hills (n 33) 181.

56

For a more detailed insight into complex corporate crime see Michael Tonry and Albert J Reiss Jr., ‘Beyond the Law: Crime in Complex Organisations’ (1993) 18 Crime and Justice 307.

57

Green (n 25) 36.

58

for a study examining the effect of white collar crime on the psychology of the victim see Neal Shover and Francis Cullen, ‘Studying and teaching white collar crime Populist and patrician perspectives’ (2008) 19(2) Journal of Criminal Justice Education 155.

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millions of dollars.59 The matter of identifying the harmful component of white collar crime is further marred by the legitimate structures which it takes place in. White collar offences are usually committed during the course of legitimate business, government offices and charitable foundations.60 This further obscures the quality of the harm which may only be ‘hover[ing] on the border of illegality’61.

The realisation of the harm refers to the legal designations of choate versus inchoate offences. The law in most cases clearly distinguishes between an attempted blue collar crime and a consummated blue collar crime. True to the distinction, the law normally sets harsher penalties for a completed offence as opposed to an attempted offence.

However, white collar criminal legislation often does not contemplate an inchoate form of the offence. Often merging together the complete and the incomplete forms of the offence under one penalty.62 This completely does away with the reduction in penalty provided by the law for an inchoate offence despite that white collar crime often only involves the risk of harm materialising.

5. The issues of identifying victims of white collar crime and attributing criminal responsibility.

White collar crime is often committed by intangible organisations and involves multiple offenders which affect a large number of victims who are often too diffused to identify.63 The offender and victim personas in a white collar offence create two of the most significant 59

for a more extensive overview on the quality of harm see Floyd Norris ‘The many lives made miserable by a low-down high roller’ (New York Times, 9 March 1997) <https://www.nytimes. com/1997/03/09/weekinreview/the-many-lives-made-miserable-by-a-low-down-high-roller. html> accessed 27 September 2018.

60

Stuart Green brings the example of traders who commit trades based off insider information, see ibid 37-39 and see Friedrichs (n 88) 54.

61

Hills (n 33) 155.

62

Anthony Duff, ‘Criminalizing Endangerment’ in Anthony Duff and Stuart Green Defining Crimes: Essays on the Special Part of the Criminal Law (Oxford: OUP, 2005) 43.

63

Green (n 6) 501.

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obstacles in rationalising white collar crime as a crime.64 The first obstacle is identifying the offender and attributing responsibility to the same. In criminal law, in order to attribute responsibility for a crime it is not enough to prove that a quantifiable harm indeed occurred but it is imperative to prove the direct or indirect intent to cause harm – the mens rea.65 However, before speaking of proving the mens rea it is essential to identify who is to be charged with criminal responsibility. Corporate organisations are usually composed of a multiplicity of natural persons each working at and responsible for a different tier of the organisation.66 Thus, the responsibility for and implementation of a decision may be shared among employees, managers, directors and shareholders.67 Moreover, accurately identifying the person who is responsible for the culpable act is crucial for the success of a criminal prosecution. This conundrum briefly reared its head during the Arthur Andersen trial, where the company was indicted for obstruction of justice due to the destruction of documents linked to Enron’s financial difficulties. The destruction of documents took place all around the globe in each Arthur Andersen office and by unsuspecting employees.68 The difficulty in attributing responsibility in such a situation was so palpable that the jury empaneled for the trial completely ignored the destroyed documents and determined guilt on an edited memorandum.69 This elusiveness of white collar crime responsibility has been dubbed as ‘diffusion of responsibility’70.

64

Ibid 508.

65

Green (n 25) 34.

66

Marshall Clinard and Peter Yeager ‘Corporate crimes - issues in research’ (1978) 16 Criminology 255-272; and Peter Yeager ‘Corporate Crime’ in Jurg Gerber and Eric Jensen, Encyclopaedia of White Collar Crime (Greenwood press 2007) 54-58.

67

Michael Tonry and Albert J Reiss Jr., ‘Beyond the Law: Crime in Complex Organisations’ (1993) 18 Crime and Justice 307.

68

Green (n 6) 501, 511.

69

see Kurt Eichenwald, ‘Andersen Guilty in Effort to Block Inquiry on Enron’ <https://www. nytimes.com/2002/06/16/business/andersen-guilty-in-effort-to-block-inquiry-on-enron.html> 27 September 2018; and Arthur Andersen LLP v United States 544, 696 U.S. (2005).

70

Hazel Croall, Understanding White Collar Crime (Open University Press: Philadelphia 2001) 8; also see Green (n 6) 501, 510.

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The prospects of a successful conviction heavily depend on who is indicted and if it can be proven that they had the requisite mens rea to commit the offence. 71 Traditional criminal law requires a high level of subjective mens rea however as laws and society developed the requirement of mens rea became significantly diluted, especially in the area of regulatory crime.72 The problem is further compounded when one tries to ascribe mens rea to corporations or legal persons.73 As previously examined, legal persons are not sentient beings, and so it is difficult to think of a corporation as ‘intending to defraud’ or ‘conspiring to fix product prices’. Despite this, the dilution of mens rea relatively alleviates the problem of proving intent on part of a corporation. Thus, the legal push towards strict liability in white collar crime may have its merits.74 The second obstacle is identifying the victims of white collar crime.

The principal issue in identifying victims of white collar crime is that for some white collar offences there are no victims.75 Offences such as money laundering or tax evasion do not victimise an individual or group of people76, rather the harm may be said to affect the public77 or foster distrust78. At the other extreme where white collar crime requires a victim base in order to subsist (fraud or embezzlement among others), the victims themselves may be unaware of their victimisation.79 Edwin Sutherland attributed the problem of the 71

Green (n 25) 33.

72

Norman Abrams, ‘Criminal Liability of Corporate Officers for Strict Liability offences – A comment on Dotterweich and Park’ (1981) 28 UCLA Law Review 463.

73

For more see generally Celia Wells, Corporations and Criminal Responsibility (2nd edn. Oxford: OUP, 2001).

74

For a development of strict liability in criminal law see generally Rollin Perkins, ‘Criminal Liability Without Fault: A Disquieting Trend’ (1983) 68 Iowa Law Review 1067.

75

Hills (n 33) 10.

76

There is substantial debate surrounding so called victimless crimes and whether they are deserving of criminal sanctions, see generally Loek Groot, ‘Money Laundering, Drugs and Prostitution as Victimless Crimes’ in Bridgette Unger and Daan van der Linde, Research Handbook on Money Laundering (Edward Elgar Publishing 2013) 57 – 67.

77

Donald J Newman, ‘White Collar crime’ (1958) 23 Law and Contemporary Problems, 745.

78

Green (n 6) 501, 509.

79

Hills (n 33) 181 and also see generally Michael Levi and Andrew Pithouse, Victims of white

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‘elusive victim’ to the fact that the effects of the crime ‘are diffused over a long period of time and perhaps over millions of people, with no person suffering much at a particular time’80.

The effects of white collar crime victimisation81 may be so wide and far reaching that it is contended that ‘all of us are victimized in many capacities by white collar crime’82. Every consumer, patient or taxpayer may inadvertently become a victim by purchasing cartelised goods, fraudulent medicine or government fraud.83 However, the innumerable victim base is offset by the often negligible harm suffered by each individual victim. A price-fixing scheme may involve millions of dollars of losses, but will only cost an individual customer a few dollars.84 This does not only create obstacles in identifying the victims, but also leads to a reduced level of white collar crime being reported due to the perceived individual lacklustre of the harm suffered.85 Another unique attribute of white collar crime is the process of ‘offender victimisation’.86 It is not uncommon for organisations and individuals who are charged with white collar offences to claim that they themselves are victims, thus rationalising their crime as a defence rather than an offence.87 Studies assessing the socially perceived Collar Crime: the Social and Media Construction of Business Fraud (Clarendon Press 2004).

80

Edwin H. Sutherland ‘Is ‘White Collar Crime’ Crime?’ (1944) 10(2) American Sociological Review, 132, 139.

81

For more on victimization in white collar crime, see Marilyn Mcshane and Frank Williams, ‘Radical Victimology: A Critique of the concept of victim in traditional Victimology’ (1992) 38(2) Crime and Delinquency 258.

82

Friedrichs (n 88) 53.

83

Ibid.

84 Ibid 54, and for a comprehensive overview of the quantification of the harm caused by price fixing schemes, see Peter Whelan, Cartel Criminalization and ‘Moral Wrongfulness’ (2013) 33(3) Oxford Journal of Legal Studies 535.

85

Donald Rebovich and Jenny Layne, The National Public Survey on White Collar Crime (National White Collar Crime Center 2000) 16.

86

Friedrichs (n 88) 55.

87

Diane Vaughan, ‘Crime between Organisation: Implications for Victimology’ in Gilbert Geis and Ezra Stotland, White Collar Crime Theory and Research (Beverly Hills CA: Sage 1980) 7779.

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harm of white collar crime88 recorded that with regards to tax evasion, ‘the government is often viewed as the victimizer by ‘overtaxing’ the public’89.

6. Conclusion

In summary, in the first section, the author addressed the issue of moral wrongfulness in white collar crime. More accurately, the author highlighted how moral wrongfulness of white collar crime is not the same as the moral wrongfulness of blue collar crime. It was determined that society does not view white collar crime as morally wrong as it does blue collar crime.90 The author then put forward three elements of harm which differ in white collar crime from blue collar crime. These consisted of the the nature of the harm, the quality of the harm and the realisation of the harm. It was determined that harm in white collar crime is often non-violent, incorporeal and consisting of substantial amounts of money acquired in small increments from a sizable victim base. Identifying victims of white collar crime and the respective victimiser was seen to be as a unique obstacle in white collar crime. Critically, it was concluded that the absence of a victim and multiplicity of victimizers inter alia pose a significant challenge in successfully prosecuting a white collar offence.

These nuances of white collar crime come to head when dealing with business practices which ‘tend to be viewed more as ‘violations’ rather than as genuine ‘crimes’’91. Thus, studying and regulating is becomes an even more arduous task.92 For this reason, it may be not 88

see Robert Manson and Lyle Calvin ‘A study of admitted income tax evasion’ (1978) 13(1) Law and Society Review 73; and Francis Cullen, Bruce Link, Craig Polanzi ‘The Seriousness of Crime Revisited: Have Attitudes Toward White-Collar Crime Changed?’ (1982) 20(1) Criminology 83.

89

Francis Cullen, Bruce Link, Craig Polanzi ‘The Seriousness of Crime Revisited: Have Attitudes Toward White-Collar Crime Changed?’ (1982) 20(1) Criminology 83, 98.

90

See Francis T. Cullen, Bruce G. Link, Craig W. Polanzi The Seriousness of Crime Revisited Have Attitudes Toward White-Collar Crime Changed? (1982) 20(1) Criminology 83.

91

Green (n 25) 29.

92

ibid.

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unreasonable to ask that if ‘aggressive business is part of our culture… why criminalise it, why prosecute it, why morally condemn it?’93.

93 Donald R Taft and Ralph W England, Jr Criminology (4th edition.: New York: Macmillan, 1964) 205.

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Development Planning Law

Determining a Planning permission: From Act I of 1992 to Act III of 2016 Dr. Robert Musumeci

Dr Robert Musumeci is an advocate and an architect. He is the holder of a Civil and Architectural Engineering degree (1998), a Masters Degree in Conservation Technology in Masonry Buildings (2004) as well as a Doctor of Laws degree (2016). He is currently reading a PhD at the University of Malta, the title of his research being ‘Judicial Interpretation of Maltese Development Planning Law – Eliciting the added value’.In addition, Dr Musumeci is also the founding partner of the architectural firm RMPERITI and has practiced as an architect for the past eighteen years before holding to the warrant of an advocate. He is a former chairperson of the Building Industry Consultative Council (BICC) and presently holds the post of advisor to the Government of Malta.Dr Musumeci was directly involved in the reforms which led to Malta Environment and Planning Authority’s demerger and the establishment of the new Lands Authority in 2016. Dr. Musumeci is currently involved in the setting up of the new Building and Construction Industry Authority and has published several academic articles, mostly related to planning legislation.

Furthermore, Dr Musumeci is also a visiting lecturer at the University of Malta.

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1.

Introduction

D

evelopment planning applications are determined according to a set of rules and statutory directions which decision makers are obliged to follow. Today, these rules are found in Article 72 of Act III of 2016.1 However, it is worth bearing in mind that Act III is a relatively recent piece of legislation, which came into force on the 4th April 2016. Prior to that, Article 72’s counterparts were introduced by virtue of the following Acts: •

Act I of 1992, which established the Development Planning Act, 1992;2

•

Act XXIII of 1997, which amended the Development Planning Act, 1992;3

•

Act XXI of 2001, which amended the Development Planning Act, 1992;4

•

Act X of 2010, which established the Environment and Development Planning Act;5

This paper explores the fundamental changes which have occurred to date since the enactment of Act I of 1992. In particular, the following standpoints shall be assessed: •

The substantive rules which decision makers are obliged to follow;

•

The rights which an applicant may claim in his favour at the point of determining a planning application;

•

The effect of illegalities on the outcome of planning

1

Development Planning Act 2016. Passed by the House of Representatives at Sitting No. 338 on the 9th December 2015.

2

Passed by the House of Representatives at Sitting No. 611 on the 15th January 1992.

3

Passed by the House of Representatives at Sitting No. 115 on the 30th July 1997.

4

Passed by the House of Representatives at Sitting No. 597 on the 17th September 2001.

5

Passed by the House of Representatives at Sitting No. 249 on the 30th June 2010.

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decisions; •

The procedural rules which decision makers are bound to follow;

•

The validity status of permissions;

•

The interaction between a permission and those who have an interest in the land.

2.

Act I of 19926 2.1. Arriving at a decision

Under Act I of 1992, in deciding a development planning application, the Planning Authority had to adhere with Article 33(1) which was worded as follows:

‘… the Authority shall have regard to development plans, to representations made in response to the publication of the proposal and to any other material consideration, including aesthetic, sanitary and other considerations.’

‘Development plans’ were to include ‘the structure plan, subject plans, local plans, action plans and development brief’7 whereas ‘material considerations’ were not statutorily defined. With regard to third party representations, the Act made it amply clear that such representations had to reach the Authority following the publication of the proposal in the press and the fixing of a notice on site.8 The term ‘shall have regard to’ followed by a list which presented no order of priority, strongly suggested that decision makers were obliged to give equal importance to plans, representations and 6

Development Planning Act 1992.

7

Development Planning Act 1992. Definitions.

8

Development Planning Act 1992, s 32(4).

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material considerations.9 In the opinion of the author, practicality dictated that applicable plans be identified and analysed prior to seeing whether the applicant’s proposal met the objectives of the said plan. If, on the other hand, the applicable plans were not given such importance, were ignored or misinterpreted, the final decision would be defective.

At the same time, the decision maker was to take stock of ‘any other material consideration, including aesthetic, sanitary and other considerations’, assuming that such considerations were pertinent.

Several planning textbooks10 define the term ‘material considerations’ by referring to the prominent case in the names Stringer v Minister of Housing and Local Government, whereby the court held that ‘any consideration which relates to the use and development of land is capable of being a planning consideration’.11 However, the given definition is vague and lacks clarity and precision. This is being said, due to the fact that one could easily allege that a particular matter qualified as a material consideration, but was not considered in the ultimate decision or that particular regard was paid to considerations which, after all, were not material to the matter at hand.

Moreover, third party representations had to be considered, if these had been validly registered. Whether a third-party individual had to prove that he had a juridical interest as applied by the courts of civil jurisdiction, remained an open question.

Ultimately, it appeared that it was within the discretion of the decision makers to proceed with a decision on their own accord.

In other words, it was up to decision makers to see where their priorities should lie, that is, whether on development plans, material considerations or third party representations.

9

Grandsen (E.C.) & Co. v Sec. of State [1986] JPL 519.

10

See for example Victor Moore and Michael Purdue, A practical approach to Planning Law (12th edn, Oxford University Press 2012) 196; See also Baeey Denyer-Green and Navjit Ubjhi, Development and Planning Law (3rd edn, Estates Gazette, London 1999) 91; Michael Purdue and Vincent Fraser, Planning Decisions Digest (2nd edn, Street & Maxwell, London 1992) 149.

11

Stringer v Minister of Housing and Local Government [1971] 1 WLR 1281.

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One of the obvious consequences with this approach was that the term ‘any other material considerations’ remained open to a subjective interpretation, whereas the examination of plans presented the decision maker with more of an objective test. Thus, there is little doubt that the development plan could ultimately be overruled at any time by ‘any material consideration’ or, for that matter, by third party representations with little effort.

The new approach to dealing with deciding planning applications must also be seen in the political context at the time. Act I of 1992 was aimed at overhauling the Maltese planning system, which had been left at a standstill since 1969.12 Prior to Act I, it was the Minister who decided whether to grant or refuse planning permission, whereas Article 33 shifted such role to an independent Authority entrusted with taking planning decisions without political interference.

To a certain extent, Article 33 of Act I was quite similar to that in existence in the United Kingdom until 1990, namely in the Town and Country Planning Act, 199013. In fact, Section 70(2) of the said Act provided that in dealing with applications for planning permissions, the local Planning Authority ‘shall have regard to the provisions of the development plan, so far as material to the application, and to any other material consideration.’ In 1990, Section 54A was added at the end of Part II of the 1990 Town and Country Planning Act, directed to increase the emphasis to be given to the development plans. In fact, Section 54A read as follows:

‘Where, in making any determination under the Planning Acts, regard is to be had to the development plan, the determination shall be made in accordance with the plan unless material considerations indicate otherwise’.

Incidentally, Section 54A was enacted some time prior to the promulgation of the first Development Planning Act in Malta and yet, Article 33(1) of Act I of 1992 was modelled on the repealed Section 12

Kevin Aquilina, Development Planning Legislation – The Maltese Experience (MP 1999).

13

Ibid.

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70(2). A possible explanation for this is that Act I was promulgated without the legislator having had time to digest the new Section 54A. Another possible explanation would be that the legislator saw both versions and preferred the old one.

In view of this, the effects of Article 33(1) could be better understood from the standpoint of Section 70(2) as interpreted by the English Courts.

Take, for example, the view taken by Lord Guest in Simpson v Edinburgh Corpn14 who said that the duty ‘to have regard to’ the development plan does not mean to ‘slavishly adhere’ to it and that planning permission which departs from policies in the plan could thus be granted.

Moreover, in Enfield L.B.C. v Sec State for Environment, the Court15 similarly held that the requirement ‘to have regard to’ the development plan does not make adherence to the plan mandatory.

As a matter of fact, a grant of permission by the Secretary of State was upheld on appeal, despite the proposed development being in clear breach of the development plan.

Grandsen (E.C.) & Co. v Sec. of State16 is another straightforward case wherein it was held that as long as a policy is properly considered, the decision does not have to adhere rigidly to it, but clear-cut reasons must be given for not doing so.

These UK judgments are in line with the opinion taken by the author, as explained earlier on, namely that Malta’s decision makers were to proceed with a decision by determining the weight that should be attached to the different criteria set out in the law, as they deemed fit without the need to give an explanation as required in Grandsen.

14

Simpson v Edinburgh Corpn. [1961] S.L.T. 17.

15

Enfield L.B.C. v Sec. of State for Environment and Westminster C.C. [1977] 35 P. & C.R. 259, DC. 16

Grandsen (E.C.) & Co. v Sec. of State [1986] JPL 519.

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Hence, it could be safely stated that the meaning of the phrase ‘having regard to’ was not intended to have the same definition as ‘the decision shall be consistent with’ or ‘the decision shall conform with’17 but lay somewhere on the scale that stretches from ‘recite them then ignore them’ to ‘adhere to them slavishly and rigidly’.18

2.2. Rights conferred to the Applicant by the Act The Planning Authority was also responsible to prepare subsidiary plans19 which could be subsequently reviewed ‘as frequently as may be necessary’20, however not less frequently than every two years.21 It is widely acknowledged that any planning system cannot do away with regular policy updates22, although it is often alleged that planning policies are continually changing to suit ‘greedy developers’.23 Whichever way one looks at the issue, planning policies may be perceived as an ‘interference with the right to property’24, restricting landowners the absolute right to exploit their property as they 17

Dennis H. Wood Assisted by: David Berney, ‘“Have Regard To”, “Shall Be Consistent With” and “Shall Conform With”: When Do They Apply and How Do You Apply Them?’ (February 2007) <http://www.woodbull.ca/docs/default-source/publications/have-regard-to-shall-beconsistent---paper> accessed 1st September 2018.

18

Concerned Citizens of King Township Inc. v. King (Township,) [2000] 42 O.M.B.R.3 (Div. Ct.).

19

Development Planning Act 1992, s 23 defines subsidiary plans as Subject plans, local plans and action plan which were intended to compliment the Structure plan.

20

Development Planning Act 1992, s 23.

21

Development Planning Act 1992, s 28(1).

22

Dr. Deborah Thomas, ‘The Importance of Development Plans/Land Use Policy for Development Control By Land Use Planning Consultant, Development Control Authority.’ (Prepared for the USAID/OAS Post-Georges Disaster Mitigation Project, Workshop for Building Inspectors, January 15 - 26, 2001) < http://www.oas.org/pgdm/document/bitc/papers/dthomas.htm > accessed 1st September 2018.

23

Astrid Vella, ‘Planning System Breakdown’ The Times of Malta (26 Jan. 2018) <https://www. timesofmalta.com/articles/view/20180126/opinion/Planning-system-breakdown-Astrid-Vella.668907> accessed 1st September 2018.

24 Article 1 of Protocol No. 1 protects individuals or legal persons from arbitrary interference by the State with their possessions. It nevertheless recognises the right of the State to control the use of or even deprive of property belonging to individuals or legal persons under the conditions set out in that provision.

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please. Nonetheless, there are considerable agreements in the ECtHR judgments, that the ‘control of use of property in accordance with the general interest, by enforcing such laws as they deem necessary’25 is compatible with the spirit of Article 1 of Protocol No. 1 to the European Convention on Human Rights. The present understanding is that individual states should be recognized as the ‘sole judges’, enjoying a wide margin of appreciation with respect to the law on which property restrictions are based,26 which laws include planning policies that are ‘evolutive’ by nature.27 The prevailing view taken by the ECtHR is that states should seek to achieve a ‘fair balance’ founded on ‘a reasonable relationship of proportionality between the means employed and the aim pursued’.28 The point is surely that states are entitled to enact planning policies and carry out subsequent updates provided it is of benefit to the general interest.

An important point to bear in mind is that changes in a development plan could take place after a planning application is validated but before it is decided. It is certainly possible that the changes therein are incompatible with the development proposal as originally planned. This raises the issue as to whether the relevant development plan that is to be considered is the one which was in vigore at the time of the decision or the one that was in vigore at the time when the application was validated. Unfortunately, Act I of 1992 offered no insight on this issue.

2.3. Dealing with illegalities The ‘owner’ or ‘occupier’ of a land risked facing enforcement action had any development, which required planning permission, been carried out on land without a valid permit or in breach of the 25

Galtieri vs Italy (dec.), No. 72864/01, 24 January 2006.

26

Fredin vs Sweden, No. 20/1993/415/494, 25 January 1994.

27

Fägerskiöld vs Sweden (dec.), No. 37664/04, 26 February 2008.

28

Depalle vs France (dec.), No. 34044/02, 29 March 2010.

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conditions subject to which a permit was issued.29 Nevertheless, planning permission could still be issued for development which had taken place without prior authorization or after a permission ceased to be valid or operative. In such cases, the applicant was obliged to desist ‘forthwith’ from carrying out further unauthorized works if so required by the Authority.30

2.4. Rules of Procedure Under Act I of 1992, the Planning Authority, or the Development Control Commission,31 had to ultimately decide whether to grant or refuse permission. As a rule, both the Authority and the Commission could regulate their own procedures32 and unlike the Planning Appeals Board33, there was no obligation on the Authority or the Commission, at least on paper, to hold its meetings in public, although it is a wellknown fact that such meetings were always, in fact, held in public. The Authority was further obliged to clearly state the reasons for refusing an application or for imposing conditions annexed to a permit.34 By contrast, there was no similar requirement to explain the reasons which led to approving an application.35 This technically meant that the Commission was not obliged to provide an explanation when it overturned a negative recommendation and issued a permission. This is very ironic since overturning a studied recommendation should always be supported by a justification for the decision taken.

29

Development Planning Act 1992, s 52.

30

Development Planning Act 1992, s 34(1)(a).

31

The Planning Authority Board focused on the determination of major projects whereas the seven-member Development Control Commission, constituted by way of Article 13(1) of the Development Planning Act 1992, were assigned the remaining case load which was delegated to it by the Planning Authority Board under those same terms established by the Board.

32

Development Planning Act 1992, First Schedule para. 8.

33

Development Planning Act 1992, Third Schedule para. 9.

34

Development Planning Act 1992, s 33(2).

35

Development Planning Act 1992, s 33(2).

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2.5. Validity Time frames A development permission could be granted for ‘a limited period or in perpetuity’.36 In any event, for a permission to remain operative, it was necessary for it to be ‘acted upon’ within twelve months of issue.37 Once a permission was no longer operative, any works carried out from that point onwards were deemed to have been undertaken illegally. Interestingly, once a permission was not ‘acted upon’ and therefore rendered inoperative, applicants could not renew their permission for further periods and a new application was required.

A potential problem, however, was with the definition of the term ‘acted upon’ since no satisfactory explanation was given as to the degree of input required by the developer to claim that the permission was indeed ‘acted upon’. Whether the term ‘acted upon’ implied that the site had to be committed with physical works remained an open question.

The difficulties presented by the choice of words in this particular clause extended to the notion of due diligence since the law besides imposing a twelve-month time-frame within which a permission had to be acted upon, also stated that this had to be done with ‘due diligence’.38 Again, the implications of this term were by no means clear. Take for example a situation where a permission was acted upon within the twelve-month time frame, but the imposed conditions were not adhered to? Would that have automatically implied that works done were not pursued with due diligence and hence permission ceased to be operative? Interestingly, the Planning Appeals Board had held to the principle that the notion of due diligence was equivalent to acting as a bonus paterfamilias as envisaged in the Maltese Civil Code.

36

Development Planning Act 1992, s 33(3).

37

Ibid.

38

Op.cit.

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2.6. Ownership of Possessions Development permissions were deemed to ‘ensure for the benefit of the land and for all persons for the time being interested therein’39 except as otherwise provided in the permission. It is a known fact, however, that the Authority granted planning permissions for the benefit of a named person or persons which seems to be in contrast with the notion that permissions ensure for the benefit for all persons that could potentially have an interest on the land. A classic example is when a permit for a dwelling was granted to an applicant on account of his being a fulltime farmer, in which case, a condition was normally included to limit the use to such farmer and his family. Such restrictions were obviously imposed to deter property speculation, particularly outside the development zone.

3.

Act XXIII of 1997 3.1. Arriving at a decision

Four years following its promulgation, Act I of 1992 was amended by virtue of Act XXIII of 1997. As a result, Article 33 was slightly modified so as to add that regard had to also be given to ‘policies emanating from existing structure plan and from any subsidiary plans’.40 That meant that from that moment on, decision makers had to take stock of important details which, very often, were not included in the more generic subsidiary plans.

Furthermore, the Authority had to still have regard to those material considerations which the Authority deemed ‘relevant’.41 Unfortunately no light was shed on whether, as held in Stringer,42 material considerations had to have a connection with ‘the use and development of land’ and the question as to what constituted 39

Development Planning Act 1992, s 33(4).

40

Development Planning Act 1992 as amended by Act XXIII of 1997, s 33(1)(a).

41

Development Planning Act 1992 as amended by Act XXIII of 1997, s 33(1)(d).

42

Stringer vs Minister of Housing and Local Government [1971] 1 WLR 1281.

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‘material considerations’ thus remained unaddressed. Although it is possible to argue that such flexibility could be susceptible to unwarranted procedures, it is equally acknowledged that in allowing such approach, decision makers could, in reality, be more responsive to the particular circumstances in issue.

Another novelty was the fact that ‘any person’ was entitled to file representations objecting to a proposed development, provided that such objection was in writing and based on reasoned justifications.43 The term ‘any person’ suggested that third party individuals were no longer required to prove a juridical interest, namely an interest which is personal, actual and immediate, to participate in the planning process. Moreover, it became understood that the system was only open to third parties who had a reason to object, though it was not clear whether such reason had to be based on a particular premise.

3.2. Rights conferred to the applicant by the Act A new proviso was added to Article 33(1), stating that legislated policies and conditions could not be applied retroactively so as to adversely affect the acquired rights arising from a valid development permit. This gave rise to the principle that a valid development permission amounted to a vested right, whereby landowners expect to be accorded legal protection against subsequent changes in policies.

The understanding, however, is that a development permission does not accrue into acquired right once it ceases to be operative.

This raises the question whether in fact a planning permission, once completed, would translate itself to a vested right.

3.3. Dealing with illegalities Under Act XXIII of 1997, in principle, it was still possible to file 43

Development Planning Act 1992 as amended by Act XXIII of 1997, s 32(5).

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a planning application for the regularization of illegal works.44 On a separate note, it is worth bearing in mind that a year before the promulgation of the Act under review, the Authority had issued circular PA2/96 stating that requests for new development could only be ‘considered’ for determination provided the illegalities were removed from site45 or requested to be sanctioned as part of the application.46 The legislator stopped short of carrying forward these Circular provisions in the amending Act.

3.4. Rules of procedure The Authority was still obliged to state clearly the reasons for refusing an application and attaching conditions to a permit. Yet again, there was no similar obligation where permission was granted by the Authority.

3.5. Validity time frames When compared with the previous piece of legislation, an important observation that can be made, at this point, is that a development planning permit was no longer valid for perpetuity if ‘acted upon, with due diligence’, whatever these terms implied.

Instead, the default validity period with the new Act was set at three years from the date of issue,47 at the end of which period, the validity 44

Development Planning Act 1992, as amended by Act XXIII of 1997, s 34(1).

45

Paragraph 3.1 of Planning Authority Circular 2/96 (issued on 29th February 1996) stated as follows: When existing development on a site is wholly or partly illegal (that is, it is not covered by a development permit), the DCC will not consider a development permit application relating to new development on that site, unless the illegal development is regularised.

46

Paragraph 3.2 of Circular 2/96 (issued on 29th February 1996) stated as follows: The illegal development may either be regularised through a specific application solely for that purpose or through an application which includes it as well as new development. However, in the latter case, it must be made clear in the application what development is covered (both in the description on the application form and in the drawings and plans), in order that the Planning Authority is sure that the unauthorised development does form part of the application.

47

Development Planning Act 1992, as amended by Act XXIII of 1997, s 33(3).

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status would have needed to be assessed according to whether or not the site had been committed in accordance with the permission granted.

In one scenario, namely when the site was not committed in accordance with the permit, a new separate planning application was needed to resume works on site. The new application would need to be assessed ‘according to the policies in force at the time of the said new application’.48 In other words, the consequences of the applicant choosing not to follow the provisions of a permit were clear – the applicant would have lost all rights on the previous permit and risked having his subsequent applications assessed according to new policies which could no longer allow the previously approved development, regardless of whether the transgressions were minor or not.

In the other scenario,49 that is when the site was committed according to permits, the validity of the permit was extended ipso jure to four years. At the end of the fourth year, it was possible for the applicant to have his permit extended to ‘further period or periods’ as the Authority deemed reasonable upon a request.

Having said that, it was not clear whether decision makers had to assess the degree of commitment, that is, whether commitment had reached an extent where applying the new plans and policies would have not made construction sense.

3.6. Ownership of permissions In 1997 a provision was introduced, stating that ‘the permit shall automatically pass on to new owners upon the notification of the transfer of ownership by simple letter to the Planning Authority.’50 However, this provision did not revoke the notion that a permit would still ‘ensure for the benefit of the land and for all persons that 48

Development Planning Act 1992, as amended by Act XXIII of 1997, s 33(3)(a).

49

Development Planning Act 1992, as amended by Act XXIII of 1997, s 33(3)(b).

50

Development Planning Act 1992, as amended by Act XXIII of 1997, s 33(4).

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could have an interest on the land’.Therefore, a landowner, not being the applicant, could on the one hand, make use of a permit which was applied for by a third party, though the law added a requirement that such a person must notify the Authority in writing. In view of the aforesaid, the added requirement of a written notification appeared pointless.

4.

Act XXI of 2001 4.1. Arriving at a decision

Act XXI of 2001 introduced significant changes. One of the most meaningful changes in direction concerned the ranking of development plans and planning policies in relation to material considerations and representations, insofar as decision making was concerned. Up until then, a decision on a planning application was reached after the Authority had regard to development plans, policies, representations made in response to the publication of the proposal and material considerations. This meant that plans and policies were only one of a number of considerations which had to be taken into account.

This situation, however, changed subsequent to Act XXI amendments, as will be discussed shortly. The most notable change being the substitution of the expression ‘shall have regard to’ with the term ‘shall apply’ with regard to planning policies and development plans as envisaged in Article 33(1). This notwithstanding that decision makers were still obliged to have regard to material considerations and representations when deciding planning applications.51 Decision makers were also required, consequently to this Act, to apply the height limitations shown in the Temporary Provisions Schemes or in local plans, unless such height could be modified by some other policy ‘which [dealt] with the maximum building height’.52 51

Development Planning Act 1992, as amended by Act XXI of 2001, s 33(1)(b).

52

Development Planning Act 1992, as amended by Act XXI of 2001, s 33(1)(a)(i).

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The salient point in this set of amendments was that development plans and policies were to enjoy the force of law, even though it was equally clear that material considerations could not be underestimated. This strongly suggested that decision makers had to identify which policies were applicable, take note of all relevant material aspects, note the least third party representations, and ensure that the material aspects are reflected within the boundaries set up by the relative plans and policies. This is not the same as saying that material considerations could, from then on, be disregarded though, as will be seen in the next Chapter, this view was not always taken on board by the Maltese Courts.

On paper, the approach adopted in the Act under examination should have offered a degree of certainty since citizens should have been put in a better position to envisage what type of development would be likely acceptable. The practical reality, however, remained that citizens were expected to follow policies which in reality could become outdated by the time their decision was taken and thus, in itself, this situation could have been better addressed had Article 33(1) remained in place since plans and policies could be overruled.

It should also be noted that the Maltese legislator did not follow the position adopted in section 54A of the Town and Planning Act 199053 which placed a rebuttable presumption in favour of the development plan unless material considerations indicate otherwise.54 It seems clear that Article 33(1), as amended, contained no such qualification.

4.2. Rights conferred to the applicant by the Act The idea that legislated policies and conditions cannot be applied retroactively so as to adversely affect the acquired rights arising from 53

‘54A: Where, in making any determination under the Planning Acts, regard is to be had to the development plan, the determination shall be made in accordance with the plan unless material considerations indicate otherwise.’

54

St Albans DC vs Secretary of State for the Environment [1993] JPL 374.

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a valid development permit was retained.55 Otherwise, no particular new rights which could potentially be claimed by an applicant were introduced by way of this Act.

4.3. Dealing with illegalities A new procedure was introduced whereby any person could claim that such notice was not applicable to his case.56 However, this was not tantamount to saying that the illegal development was regularised.57 The obvious consequence was that a compliance certificate58 could still not be obtained and many of these buildings remained without the provision of water and electricity supply. One of the prime failings in such a situation was that a considerable amount of building stock was allowed to stay, as no enforcement action was taken, without the possibility of being inhabited.

4.4. Rules of procedure Whereas in previous legislations, it appeared that the Authority could do away with giving ‘any’59 reason upon a refusal or imposition of particular conditions, Act XXI provides that reasons should be specific and based on existing development plans and planning policies. A contrario senso, followed that an application could not be refused on the basis of material considerations or representations, for all that mattered.

Yet again, there was no similar obligation to provide an explanation 55

Development Planning Act 1992, as amended by Act XXI of 2001, proviso to s 33(1)(a)(ii).

56

Development Planning Act 1992, as amended by Act XXI of 2001, s 55B(1).

57

Development Planning Act 1992, as amended by Act XXI of 2001, s 55B(4).

58 Compliance certificates were introduced by virtue of Article 61 of Act I of 1992, providing that all new development was to be provided with a service consisting of water or electricity only after applicant obtains a compliance certificate stating that the development was carried out in accordance with the development permission.

59

Development Planning Act 1992, as amended by Act XXI of 2001, proviso to s 33(2).

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when the Authority decided to overturn a negative recommendation and issue permission. As held earlier, such a situation was, to say the least, illogical since overturning a studied recommendation should always be supported by a justification for the decision taken in the name of good administrative behaviour.

4.5. Validity time frames By virtue of Act XXI of 2001, the notion that development permissions could be granted for a limited period or in perpetuity was reinstated in Article 33(3) after having been removed by virtue of Act XXIII of 1997.60 Nevertheless, all permissions ceased to be operative if the approved works were not completed within five years of issue61 although the Authority could impose tighter time frames, provided it stated the reasons justifying such requirement.62 The default period, now five years, could be extended ‘to such further period or periods as it may consider reasonable’63 following a renewal application. Unlike the previous Article 33(3), there was no requirement to assess whether the site had been committed in accordance with the permit or not, prior to deciding whether the permit should be renewed at the end of the five year period. What is certain is that the Authority could renew the permit for any other period as it held reasonable. It appears that the legislator wanted to award more discretion to decision makers in renewing valid permissions, rather than have them bound by the principle of site commitment.

4.6. Ownership of permissions Act XXI held to the notion that a permit ensured for the benefit of the land and for all persons that could have an interest on the land.

60

Development Planning Act 1992, as amended by Act XXI of 2001, s 33(3).

61

Ibid.

62

Development Planning Act 1992, as amended by Act XXI of 2001, s 33(3A).

63

Development Planning Act 1992, as amended by Act XXI of 2001, s 33(3).

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As held earlier, this suggested that a landowner, though not being the applicant, could still make use of a permit which was applied for by a third party due to him having an obvious interest in the land.

As opined previously, there was hardly any point in stating that a permit automatically passed on to new owners upon the notification of the transfer of ownership by a letter to the Planning Authority.

Notwithstanding, Act XXI held to the same idea, further requiring that the letter which was to be sent to the Authority had to be sent by registered post.64

5.

Act X OF 2010

The Development Planning Act, that is ACT I of 1992 as amended, was abrogated on the 31st December 2010 by way of Legal Notice 512 of 2010 and was substituted on that same day by Act X of 2010, namely the Environment and Development Planning Act.

5.1. Arriving at a decision At this juncture, development planning applications had to be determined according to Article 69 of Chapter 504 of the Laws of Malta. In essence, Article 69 echoed Article 33 as amended in 2001 since decision makers were required to ‘apply’ plans and policies65 and ‘have regard to’ material considerations and representations made following the publication of the proposal in the press.66 Once again, decision makers were required to apply the height limitations shown in the Temporary Provisions Schemes or in local plans, unless such height could be modified by some other policy ‘which deals with the maximum building height’.67 Another provision stating that ‘commitment from nearby buildings could not be used as a material 64

Development Planning Act 1992, as amended by Act XXI of 2001, s 33(4).

65

Environment and Development Planning Act, s 69 (1)(a)(ii).

66

Environment and Development Planning Act, s 69 (2).

67

Environment and Development Planning Act, Proviso to s 69 (1)(a)(ii).

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consideration to justify heights which were over and above the height limitations set out in the plan’ was also included.68 A possible explanation to this was that Parliament sought to place further emphasis on the importance of the Local Plans after the Maltese courts had taken the view that height limitations could be overruled where commitment was shown to exist despite it being clear that height limitations could not be modified if not by policy.

It should also be noted that environmental considerations were included in the list of material considerations of which the Authority ought to have regard to. It may well be the case that this move was as a clear attempt to shift emphasis on environmental sustainability.

5.2. Rights conferred to the applicant by the Act As with previous legislation, applicants were protected from the retroactive application of legislation which could negatively affect their acquired rights arising from valid development permissions.

Another important development concerned policies which were under review. Following the introduction of Legal Notice 158 of 201369 the applicant (or his architect) could request the Authority to suspend the application for a maximum period of one year, when the Parliamentary Secretary communicated to the Authority that a particular policy was under review in the hope that the eventual revisions would work in his favour. Certainly, the idea behind this Legal Notice was directed in favour of those applicants who, having a pending application, knew that they could not have a favourable decision until a particular policy was changed. This provision could be construed as a move to favour developers, providing breathing space within which one could work around the restrictions imposed

by Article 33.

68

Environment and Development Planning Act, Proviso to s 69 (2)(a).

69

The Development Planning (Procedure for Applications and their Determination) (Amendment) Regulations, 2013, s 9 (2)(b).

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5.3. Dealing with illegalities Sanctioning applications were now regulated by Legal Notice 154 of 2010.70 Reading Regulation 14(1) of the said Legal Notice, one is reminded of paragraph 3.1 of the previously mentioned Circular 2/9671 whereby applicants had to remove all illegalities prior to submitting a sanctioning application, unless these were not included for sanctioning in that same application, however, it was by no means clear how, in the same Legal Notice,72 an application containing illegalities not ‘indicated for sanctioning’ could still be approved subject to the removal of the illegal development within a six month time frame from the issue of permission.

With Act X, it was no longer possible for the Authority to entertain all types of sanctioning applications. In fact, the type of development listed in Schedule 6 of the said Act, that is all irregular development located in protected areas or outside the development zones73 which took place after May 2008,74 as well as all illegal interventions in scheduled property, regardless when undertaken75, were excluded from the possibility of being sanctioned. Nonetheless, one could still submit the sanctioning application, well knowing a priori that such application would be dismissed.

The downside with this approach was that there was no point in removing a building which in reality could be permitted by policy.

If so, the result of a such a situation would only amount to added construction waste to the detriment of the environment and the 70

The Development Planning (Procedure for Applications and their Determination) Regulations.

71 ‘When existing development on a site is wholly or partly illegal (that is, it is not covered by a development permit), the DCC will not consider a development permit application relating to new development on that site, unless the illegal development is regularised.’

72

The Development Planning (Procedure for Applications and their Determination) Regulations, s 14(5).

73

This provision, however, did not apply registered livestock farms located outside development zones.

74

Environment and Development Planning Act, s 70.

75

Ibid.

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wasteful use of new building resources since the building could be rebuilt once the new application was approved.

Article 70 provided another drawback whereby no distinction was made between small and large scale interventions. Take, for example, the case of a small room which was later discovered to have been built out of the permitted alignment. It made no sense to have such room demolished when the changes were minimal and could have been tolerated by policy.

Act X of 2010 also introduced the possibility for owners of certain type of illegalities listed under Category A76 or Category B77 of the Eight Schedule of the Act to obtain a concession, on the basis of which, one could subsequently obtain a compliance certificate78 and also claim immunity from a pending enforcement notice.79 Nevertheless, the Act made it very clear that these concessions were not tantamount to regularising the illegal development.80 At the same time, Regulation 14(1) of Legal Notice 154 of 2010 held that Category B illegalities were not to be construed as illegal development in the processing of a planning application. The understanding was that Category B illegalities were not to be indicated in application drawings forming part of new applications for development, as a result of which plans ended up being approved with parts of the property not shown. As a consequence, this had the possibility of presenting problems during the drawing up of contracts dealing with the transfer of property since the attached plans to the contract showed incomplete information.

76

Under Category A were all unauthorised interventions carried out within the Temporary Provisions Scheme or the Local Plan development boundary, other than developments consisting in a change of use or not built according to the official road or building alignments, which were carried out prior to 1st January1993.

77

Category B developments consisted of specific interventions which typically fell short of sanitary requirements and thus could not be sanctioned.

78

Environment and Development Planning Act, s 92 (2).

79

Environment and Development Planning Act, s 91(1).

80

Environment and Development Planning Act, s 92 (2).

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5.4. Rules of procedure Under the new legislation, the Authority remained obliged to give specific reasons when refusing an application or when imposing particular conditions. The reasons had to be specific and based on ‘existing plans, policies and regulations or other material considerations’.81 Moreover, the Commission was now obliged to ‘register in the relevant file the specific environmental and planning reasons adduced by the Authority votes against a recommendation’ once it decided to overrule the Director’s recommendation.82 This implied that the Authority’s duty to state reasons was no longer limited to when imposing conditions or refusing an application, addressing the author’s concerns mentioned previously.

Furthermore, Act X of 2010 introduced a number of key changes in the procedures which had to be adopted by both the Authority and the Commission. It was made clear that although a sitting member of the Authority could request that the deliberations be held in private, the final vote had to be taken in public and no secret vote was allowed.83 In what could be interpreted as a bold move to increase efficiency in the application process, the Commission was further obliged to determine a planning application during the first sitting, unless the Commission was intent on overturning the Directorate’s recommendation. In that case, the Commission could request any further information, including updating of the plans, provided that the substance of the application remained unchanged. In any case, the application would have had to be determined in the following sitting which was to be held within thirty days.84 Considering that applications could, in the past, take years to be decided, the introduction of the thirty-day time frame between one sitting and the next was a step in the right direction. The flaw 81

Environment and Development Planning Act, Proviso to s 69 (3).

82

Environment and Development Planning Act, Schedule 1 clause 10.

83

Ibid.

84

The Development Planning (Procedure for Applications and their Determination) Regulations, s 5(4).

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with this approach was that a decision would need to be given in the second sitting, even if the requested information failed to reach the Commission due to reasons beyond the applicant’s control.

5.5. Validity time frames The provisions of Article 33(3) of the previous Development Planning Act were carried forward in their totality. Namely, development permissions could be granted for a limited period or in perpetuity, but all permissions ceased to be operative if the approved works were not completed within five years of issue,85 though the Authority remained entitled to impose tighter time frames, when it could give a justification.86 Should works not have been completed within the five year period, applicants could be granted extensions ‘to such further period or periods as it may consider reasonable’ following a renewal application.87 Once more, there was no indication of any criteria upon which the Authority should decide whether the permission was to be extended or not.

5.6. Ownership of permissions Act X held to the notion that permission would ensure for the benefit of the land and for all persons for the time being interested therein, providing for the first time that the permission automatically passed on to new owners once the property changed hands.

6.

Act VII of 2016

During the run up to the Malta general elections of 2013, the then Labour Opposition had pledged its intent on undertaking a 85

Environment and Development Planning Act, s 69 (4).

86

Ibid.

87

Ibid.

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major overhaul in the planning system.88 The core idea was to divest the Malta Environment and Planning Authority89 of its regulatory functions and set up two independent authorities instead – the Awtorita` għall- Ambjent u r-Riżorsi90 and the Awtorita` għallIppjanar u l-Izvilupp Sostenibbli.91 After a Labour administration was elected in March 2013, the planning portfolio was taken over by the Parliamentary Secretariat for Planning and Simplification Processes within the Office of the Prime Minister. Notably, the remit of the Secretariat included the setting up of the new Authority for Planning and Sustainable Land Use. On the other hand, the Ministry for Sustainable Development, the Environment and Climate Change was entrusted with the establishment of the new Authority for the Environment and Resources.

In March 2014, the Parliamentary Secretariat for Planning and Simplification Processes published a consultation document entitled ‘For an Efficient Planning System’,92 paving the way forward for the setting up of a new Development Planning Authority which would be responsible for development planning together with building and sanitary regulations.

This consultation document contained several proposals, of which the following were directly relevant to the theme under discussion, indicating clearly that government was intent on moving away from the plan led approach: •

The way how applications would be determined had to be redefined in line with the ‘balancing act principle’;93

88

Partit Laburista, Malta Taghna Lkoll, Manifest Elettorali (2012) <http://3c3dbeaf6f6c49f4b9f4-a655c0f6dcd98e765a68760c407565ae.r86.cf3.rackcdn.com/082d10b0fed6c04d78ced4e7836e1dc11067452380.pdf> accessed 1st September 2018.

89

(the MEPA).

90

Authority for the Environment and Resources.

91

Authority for Planning and Sustainable Land Use.

92

Parliamentary Secretariat for Planning and Simplification Processes, For an Efficient Planning System – A consultation Document (Auberge de Castille, Malta, 2014).

93

Ibid., p. 26 para. 27.

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•

In determining planning permissions, decision makers were to have regard to plans, policies, regulations, material considerations, public expression by the Minister on policy matters that is formally communicated to the Authority and published by the Authority together with public representations. In other words, the term ‘shall apply’ insofar as plans and policies were concerned, was being done away with;

•

Existing commitments including height of buildings were to be considered as a material consideration;94

•

No weight was to be afforded to draft policies;95

•

Valid police or trading licenses issued before 1992 were to be considered as vested rights;96

•

The Sixth Schedule was to be deleted;97

The consultation document was followed by the publication of a Bill entitled Development Planning Act, 2015 (hereinafter, referred to as ‘Bill’), which was discussed in Parliament in July 2015. Subsequently, the Development Planning Act, 2016 was passed by the House of Representatives at Sitting No. 338 of the 9th December 2015 and took effect on the 4th April 2016.

94

Ibid., p.26 para. 30.

95

Ibid., p. 26 para. 29.

96

Ibid., p. 26 para. 27.

97

Ibid., p. 26 para. 32.

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6.1. Arriving at a decision Notwithstanding the introduction of a specific provision stating which policies should prevail over others in case of conflict,98 Article 72 of the Bill made it clear that government had intended on moving away from the plan led approach and revert to the situation prior to Act XXII of 2001.

According to the proposed Article 72, decision makers were directed to have equal regard to plans, policies, regulations made under the Act, material considerations and representations. Notably, Article 72 omitted any reference to public expressions by the Minister on policy matters, as had been previously suggested in the consultation document.

‘Surrounding commitments’ were expressly singled out as ‘material considerations’ which decision makers ought to assess.99 This, in stark contrast with the idea held in the Environment and Development Planning Act which states that:

‘the height limitation could only be modified by applying a policy which deals with the maximum building height which may be permitted on a site’.100 A more complete explanation of Article 72 is that the requirement ‘to have regard to’ plans and policies did not make adherence to the plans and policies mandatory.

Following the publication of the Bill, various non-government organisations drew attention to Article 72. The General Retail and Traders Union101 openly questioned the fact that plans and policies were ‘no longer binding’. From the Union’s perspective, the applicant’s 98

Bill entitled Development Planning Act, 2015, s.52.

99

Bill entitled Development Planning Act, 2015, s 72(2)(d).

100

Environment and Development Planning Act, Proviso to s 69 (1)(a)(ii).

101

Reactions to Bill entitled Development Planning Act, 2015 from the General Retailers Traders Union (GRTU) (2015) <http://environment.gov.mt/en/decc/Documents/environment/ MEPA%20online%20submissions%202015%20-%20final.pdf> accessed 1st September 2018.

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position was seen to be weakened since planning applications could be simply rejected on account of material considerations. This view was supported by the Malta Developers Association102 who asked whether material considerations could adversely affect the benefits emanating from a plan or policy.

Din l-Art Helwa103 argued that the expression ‘have regard to’ plans and policies, as opposed to ‘shall apply’, had serious implications since it was ‘too vague and subjective’. Furthermore, Din l-Art Helwa questioned the decision to remove the proviso whereby height limitations could not be modified by decision makers, describing it as ‘a loophole with which developments which are higher than the height limitation will be permitted’.

Moreover, the Kummissjoni Interdjoċesana Ambjent104 argued against the idea that surrounding commitment could ‘justify a development which would otherwise be undesirable’ by policy. In a similar vein, Vella Lenicker105 was concerned that illegal commitment could be used to justify a proposal which went against policy.

In Parliament, the Honourable Michael Falzon106, however, held to the idea that planning decisions should be based on a context driven approach. Thus, it was important for decision makers to take stock of the surrounding commitment, rather than adhering blindly to policy requirements. On the other hand, Opposition spokesman 102

Reactions to Bill entitled Development Planning Act, 2015 from the Malta Developers Association (MDA) (2015) <http://environment.gov.mt/en/decc/Documents/environment/ MEPA%20online%20submissions%202015%20-%20final.pdf> accessed 1st September 2018.

103

Reactions to Bill entitled Development Planning Act, 2015 from Din l-Art Helwa (DLH) (2015) <http://environment.gov.mt/en/decc/Documents/environment/MEPA%20online%20 submissions%202015%20-%20final.pdf> accessed 1st September 2018.

104

Reactions to Bill entitled Development Planning Act, 2015 from Kummissjoni Interdjocesana Ambjent (2015) <http://environment.gov.mt/en/decc/Documents/environment/MEPA%20 online%20submissions%202015%20-%20final.pdf> accessed 1st September 2018.

105

Reactions to Bill entitled Development Planning Act, 2015 from Perit Simone Vella Lenicker (2015) <http://environment.gov.mt/en/decc/Documents/environment/MEPA%20online%20 submissions%202015%20-%20final.pdf> accessed 1st September 2018.

106

Sitting No. 336 held on 2nd December 2015. House of Representatives, Malta.

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Ryan Callus107 contended that a development proposal could now be accepted despite it being against planning policy or rejected due to the absence of surrounding commitment. This, according to Callus, went against the interest of good planning. Nevertheless, the Opposition ended up voting in favour of Article 72 as proposed by government after Falzon accepted Callus’ suggestions to insert the word “legal” before the word “surrounding” in sub-paragraph (2)(d) of Article 72 so as not to give a ‘dritt għal commitment illegali’.108

6.2. Rights conferred to the applicant by the Act As with all legislation since 1997, applicants were protected from the retroactive application of legislation which could negatively affect their acquired rights arising from valid development permissions.109 Nevertheless, Act VII of 2016 brought some novelty on board.

Act VII of 2016 acknowledged the long-held principle whereby all development carried out before 1967 is to be considered legal.110 Likewise, all uses which subsisted continuously from a period when such use was not considered illegal did not require a permission from then on.111 A case in point is a professional office set up prior to 1992, which, at the time, did not require planning permission.

However, the term ‘subsisted continuously’ could pose particular problems in cases where the premises were temporarily unoccupied, say, for refurbishing works. In addition, the reclamation of land for agriculture by the deposit of material prior to 1994, from then on, did not constitute an illegality.112 Another novelty with the Development Planning Act, 2016 was 107

Sitting No. 336 held on 2nd December 2015. House of Representatives, Malta.

108

A right on illegal commitment.

109

Development Planning Act 1992, Proviso to s 72(2)(b).

110

Development Planning Act 1992, s 95(2).

111

Development Planning Act 1992, s 70(2)(e).

112

Development Planning Act 1992, s 70(2)(b)(ii).

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that subsidiary plans and policies could not be applied retroactively so as to adversely affect vested rights arising from valid policies or trading licenses issued prior to 1994.113 Today, the only difficulty that arises with this provision is that following the introduction of Legal Notice of 420 of 2016114, all major commercial activities became exempted from the need of a trading license115 as a result of which trading licenses became obsolete. Consequently, it is by no means clear whether an applicant, who until 2016 was in possession of a trading license, could claim to be in possession of a valid license for the purpose of Article 72(2) of the Development Planning Act, 2016.

6.3. Dealing with illegalities As anticipated in the Bill, the Sixth Schedule, previously introduced by way of Act X of 2010, was removed. As a result, it was possible to request the sanctioning of illegal interventions in scheduled areas and outside development zones.

Vella Lenicker116 contended that the removal of the Sixth Schedule implied that ‘the “no tolerance” policy previously adopted no longer applie[d]’. In a similar vein, Front Ħarsien ODZ maintained that the new Planning Authority should be prohibited from approving the ‘legalisation of ODZ development carried out after 2008 and of any development carried out on scheduled zones irrespective of when it was carried out.’117

Din l-Art Ħelwa described the removal of the said schedule as a 113

Development Planning Act 1992, s 72(2).

114

Trading Licences Regulations, 2016.

115

Regulation 5(2) of Legal Notice 420 of 2016.

116

Reactions to Bill entitled Development Planning Act, 2015 from Perit Simone Vella Lenicker (2015) <http://environment.gov.mt/en/decc/Documents/environment/MEPA%20online%20 submissions%202015%20-%20final.pdf> accessed 1st September 2018.

117

Reactions to Bill entitled Development Planning Act, 2015 from Front Harsien ODZ (2015) <http://environment.gov.mt/en/decc/Documents/environment/MEPA%20online%20submissions%202015%20-%20final.pdf> accessed 1st September 2018.

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‘retrograde step’,118 however conceding that amendments may have been required. Nevertheless, no explanation was given as to how this Schedule could have been possibly amended without removing it altogether.

While it may be well true that the Sixth Schedule served as a deterrent, serious questions remained due to the fact that no distinction was made between minor and major unauthorised interventions or works which could be sanctioned in principle and those which were not. Furthermore, it bears to point out that the Sixth Schedule was introduced in a time when the Daily Penalty Regulations,119 which likewise serve as a deterrent, were not yet in force.

On a separate note, concession certificates120 on the basis of which, one could subsequently obtain a compliance certificate121 and claim immunity from a pending enforcement notice,122 were completely done away with. One problem with concession certificates was that holders thereof, were generally misled to think that in fact they had a planning permission. This is especially so, when home bank loans were issued on the basis of such certificates. Article 101 (1) was introduced to make up for the loss, whereby the Minister could make regulations ‘to regularise development’. In fact, Legal Notice 285 of 2016123 was eventually introduced, giving landowners the possibility to regularise their irregular development instead of simply obtaining a concession with a very limited scope. These regulations were applicable to development, of which the footprint appeared in the scheme boundaries124 as shown in the Authority’s aerial photographs 118

Reactions to Bill entitled Development Planning Act, 2015 from Din l-Art Helwa (DLH) (2015) <http://environment.gov.mt/en/decc/Documents/environment/MEPA%20online%20 submissions%202015%20-%20final.pdf> accessed 1st September 2018.

119

Daily Penalty Regulations.

120

Environment and Development Planning Act, Schedule 8.

121

Environment and Development Planning Act, s 92 (2).

122

Environment and Development Planning Act, s 91(1).

123

Regularisation of Existing Development Regulations, 2016.

124

Regularisation of Existing Development Regulations, 2016, s 3(a).

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of the year 2016125 as well as all irregular development already covered by a Category B concession and located in a Development Zone.126 According to these same regulations, permission could only be granted if it was shown that the unauthorised development was not tantamount to an injury to amenity and the premises were used as a dwelling, office, retail shop or its use was in conformity with current planning policies and regulations.127

6.4. Rules of procedure Once more, the Authority was obliged to give specific reasons when refusing an application or imposing particular conditions, based on ‘existing plans, policies and regulations or other material considerations’.128 As with the Environment and Development Planning Act, specific planning reasons were also to be given when the Board decided to overturn a recommendation.129 Yet, unlike with the Environment and Development Planning Act, there was no indication whether such reasons had to be based on environmental and planning grounds.130 A further provision was made to state that a recommendation could be overturned only after the majority of Board members were in a position to express a provisional opinion to substantiate their intent in overturning the recommendation. Such an opinion had to be communicated to the architect, the applicant, the statutory consultees, as well as the registered interested parties prior to the next sitting, which has to be held within six weeks.131 Nevertheless, the obligation previously found in Environment and 125

Regularisation of Existing Development Regulations, 2016, s 4(6).

126

Regularisation of Existing Development Regulations, 2016, s 3(b).

127

Regularisation of Existing Development Regulations, 2016, s 4(5).

128

Development Planning Act 2016, Proviso to s 72(1).

129

Development Planning Act 2016, Schedule 2 clause 10.

130

Environment and Development Planning Act, Schedule 1 clause 10.

131

Development Planning (Procedure for Applications and their Determination) Regulations, s 4(a).

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Development Planning Act,132 whereby the deferred application had to be determined in the second sitting was removed. Although this move could at face value imply that the Authority was retracting on its efficiency, it should be pointed out that applicants are often not in a position to adhere to the Commission’s request within six weeks. This is especially so when applicants are required to obtain information from Government Departments. In this way, applicants could request further deferrals instead of having their application dismissed due to lack of information.

Furthermore, the Planning Board was now authorised to amend the proposal during the pendency of proceedings, prior to the decision ‘so as to better reflect the principle of the development’.133 This was possible as long as the proposal did not depart from the scope of the development or negatively affect the vested rights of the applicant.134 Moreover, the notion introduced by way of Legal Notice 158 of 2013 whereby the applicant (or his architect) could request the Authority to suspend the application for a maximum period of one year when the Minister communicated to the Authority that a particular policy was under review, hoping that the eventual revisions would work to his favour, was carried forward.135 Furthermore, as with previous legislation, the final vote still had to be taken in public and no secret vote was allowed.136

6.5. Validity time frames The provisions of Section 69(4) of the Environment and Development Planning Act were essentially carried forward in Article 132

Development Planning Act 2016, Schedule 2 clause 9.

133

Development Planning (Procedure for Applications and their Determination) Regulations, s 13(6).

134

Ibid..

135

Development Planning (Procedure for Applications and their Determination) Regulations, s 13(2)(b).

136

Ibid..

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72(4) of the new Planning Act. Once again, development permissions could be granted for a limited period or in perpetuity. Whereas Article 72(4) stipulated no time frame within which applications for permissions ceased to be operative, Article 71(1) provided that outline development permissions137 cannot be valid for a period that exceeds five years. Within this latter statutory period, the full development permit application had to be submitted, failure of which rendered the outline development permit null.138 With the 2016 Planning Act, it is still possible to renew full development permissions should works not be completed within the stipulated time frames. Unlike what is provided in Article 69(4), the new Planning Act, provides criteria upon which the Authority should decide whether to extend a full development permission ‘to such further period or periods as it may consider reasonable’.139 Namely, the Authority has to first assess whether the application for renewal was submitted while the previous permission was still operative. Subsequently, the Authority has to decide whether there had been a change in the plans and policies, in which case account has to be given to the new policies unless it is shown that ‘the site subject to the application is already committed by the original development permission in relation to these plans and policies’.140 It is an open question whether this means that the original development permission can only be renewed if the site is committed to an extent that it is not feasible to apply the new policies. Moreover, it is not known whether a request for renewing a valid permission should still be entertained if the committed parts are not strictly compliant with the drawings and/or conditions of permission.

In addition, a new proviso was included in the Act, stating that if 137 Outline development permissions are defined in Article 71(2) of the Development Planning Act, 2016 as permissions which give approval in principle to the proposed development subject to reserved matters which subsequently need to be included in a full development permit application.

138

Development Planning Act 1992, s 71(2)(a).

139

Development Planning Act 1992, proviso to s 72(4).

140

Ibid..

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‘the applicant fails to submit the commencement notice141 relative to the permission, such development permission shall be considered as never having been utilised.’142 In the opinion of the author, it should be clear that the submission of a commencement notice, which legally implies that the permission is being made use of, should not be construed as the site having been necessarily committed ‘in relation to the plans and policies’.143

6.6. Ownership of permissions The notion that a permission would ensure for the benefit of the land and for all persons for the time being interested therein was repealed. Act VII of 2016 however held on to the principle that a planning permission automatically passes on to new owners once the land in question is transferred.144 This meant that the idea that a permission was site specific was done away with, which resulted in the anomalous situation whereby a planning permission obtained by an applicant, who was not the owner could not technically pass on the said permission to anybody, not even the owner.

7.

Conclusions

From the above it was shown that a number of provisions have changed in a sporadic fashion over the years with the situation, at times, reverting to one which was earlier in place. A classic example being Article 72(1) of the current Development Planning Act, which 141

“commencement notice” is defined in the Development Planning Act, 2016, as a notice submitted by the perit on behalf of the applicant to the Authority within the period of five days in advance to the date of commencement of works or utilization of permission, to notify the Authority with the date of commencement of works or utilization of permission, including the name of the licensed builder, the perit and the site manager as defined in the site management regulations, indicating their contact details where they can be reached at any time.

142

Development Planning Act 1992, proviso to s 72(4).

143

Ibid..

144

Development Planning Act 2016, s 72(5).

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was reworded very similarly to Article 33 as held until 2001. Other provisions have been struck off completely from the statute. A case in point is Schedule 6 of the Environment Development Planning Act, which was completely done away with in the current Planning Act. A few of the provisions not found in the original Development Planning Act were entrenched at a later stage and are still found in the current Planning Act. One such example is the notion introduced in 1997, where applicants are protected from the retroactive application of legislation which could negatively affect their acquired arising from valid development permissions.

On the other hand, a number of provisions found in current legislation are unprecedented. One such case is Article 72(4) of the current Planning Act, which links commencement notices with the utilisation of a full development permission.

Notwithstanding the various amendments which took place over the years with a view to address emerging anomalies, this Chapter has shown that a number of legal gaps, due to lack of clarity or as a result of the legislation not expressly addressing a particular issue, still exist.

In particular, the following gaps145 are identified: •

Whether an application gives rise to a vested right which cannot be impaired or taken away through retroactive legislation;

•

Whether in the absence of specific transitory provisions in the law, the Authority is bound to apply the new law when an application is already pending;

•

Whether a planning permission pending a third party appeal constitutes a vested right in favour of applicant, though proceedings are still ‘open’;

•

Whether the Authority could impose sanctions which

145 The above gaps are the subject of a PhD research entitled ‘Judicial Interpretation of Maltese Development Planning Law – Eliciting the added value’ currently being conducted by the author

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could not be reasonably foreseen at the time when an illegality was committed; •

Whether a planning permission can be said to confer a vested right given that no right seems to ensue when a planning permission is no longer valid, irrespective of the fact that works are completed;

•

Whether ‘planning rights’ are lost once a building perishes;

•

The extent of ‘commitment’ in assessing whether a valid full development could be renewed;

•

Whether landowners are still protected against retroactive legislation when an approved development is not carried out in strict conformity with planning permission;

•

Whether it is correct to hold that prior to the promulgation of Act XXI of 2001, decision makers had a discretion to give priority to plans, material considerations and representations as they deemed fit;

•

Whether it was correct to hold that after the promulgation of Act XXI of 2001 up until the introduction of Act X of 2010, decision makers had to decide according to plan and policies, regardless of material considerations and representations;

•

Whether it is correct to hold that according to Article 72 of Act X of 2010, decision makers have a discretion to give priority to plans and policies, material considerations and representations as they deemed fit;

•

Which criteria should decision makers use in order to assess whether a consideration is deemed material and relevant in a given set of circumstances.

246

European Union Law

The Malta Armed Forces Act 1970 set against Maltese neutrality and developments within the European Union frameworks Dr. Mark Ellul

Dr Mark Ellul is a trainee associate practising immigration and tax law within the International Practice Department at Fenech & Fenech Advocates. Mark was admitted to the Maltese bar in March 2019, after graduating with a Bachelor of Laws (Honours) and a Master of Advocacy from the University of Malta. His interests lie in matters associated with the security and defence of the European Union. He will be undergoing a programme of studies entitled Master in International Security Studies at Charles University in Prague coming September 2019. During his time at the University of Malta, Mark was involved in several voluntary organisations namely the Erasmus Student Network Malta as the National Coordinator for SocialErasmus, Let’s Do It! Malta as Embassy Liaison Officer and more recently in the Malta Model United Nations Society as Financial Officer. He also underwent training with the Legal Clinic at the University of Malta providing pro bono legal consultation.

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1. Introduction

A

ccession to the EU in 2004 was a defining moment for Malta since its independence in 1964, becoming a Republic in 1979, and passing an amendment in 1987 declaring Malta to be a neutral State actively pursuing peace, security, and social progress among all nations, by adhering to a policy of non-alignment and refusing to participate in any military alliance.1 Bringing alterations to its legislative and policy framework to conform to EU law and reflecting values and beliefs in the TEU, the Maltese State reassured its public that neutrality and non-alignment would be safeguarded while revising its foreign policy.2 Ample literature is found on the general subject of neutrality, foreign policy, and the armed forces in the EU. In contrast, domestically, there is a paucity of legal research on the relationship that the Malta Armed Forces Act and the neutrality clause share under domestic law and under the Common Foreign Security Policy3 and the Common Security Defence Policy.4 This paper therefore explores the interplay of domestic legal obligations with their Union counterparts relative to the AFM. Even though the notion of the EU ever heading towards its Member States’ integration of their forces and collective defence is acknowledged, commentary on this has been excluded, as examining this in depth is beyond the purview and purposes of this article.5 This study therefore seeks to: 1

J. Cremona, The Maltese Constitution and Constitutional History Since 1813 (2nd edn, Publishers Enterprises Group (PEG) Ltd 1997) 79. Neutrality taking effect through promulgation of Act IV of 1987 although having already been declared in a Letter dated 25 June 1981 to the United Nations.

2

Roderick Pace, Malta : A Lilliputian State’s Struggle for Security and Peace (2013).

3

Hereinafter referred to as the ‘CFSP’.

4

Hereinafter referred to as the ‘CSDP’.

5

For further information, refer to the dissertation written by Jamie Fenech, ‘A European Army: The Difficulties in Setting up Eurocorps and the Establishment of a European Army’ (2012).

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(1) Find out what obligations exist at EU level, which will be compared to domestic obligations, determining whether these are constitutionally set in statutory law or as government policy.

(2) Identify the current framework (if any) regulating the AFM’s commitments abroad involving crisis management operations and contrasting it with other identified EU Member States’ frameworks.

(3) Analyse EU Member States’ legislation and policy selected on the common identifiers - ‘neutral’, ‘military neutrality’, ‘military non-alignment’ and ‘crisis management operations’.6 Through these points, the following may be addressed with more legal certainty: (1) Whether the functions of the AFM vis-à-vis crisis management are provided in the law or whether these are shaped through policy.

(2) Whether dedicated legislation on crisis management such as in Finland or Austria should be considered to be incorporated within the main Act or by way of subsidiary legislation.

(3) Whether a constitutional amendment relative to the neutrality clause regarding crisis management such as that carried out by Austria and Ireland adequately reflect the status quo.

6 General Secretariat of the Council, ‘Foreign Policy Key Terms in 24 Languages’ 28. The definition is ‘Military or civilian operation conducted in response to a regional crisis situation for a limited period of time’.

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2. Maltese neutrality, non-alignment, and the AFM 2.1 ‘…refusing to participate in any military alliance…’

The Constitution provides for the refusal to participate in any military alliance,7 and it takes a non-aligned policy (said to be a political not a legal principle).8 The general meaning of ‘military alliance’ is wide enough to allow more than one. Such a general principle, without accompanying text, risks ambiguity and may reach a point of redundancy under examination.9 For instance, a basic dictionary search yields the following: ‘military’ means ‘relating to or characteristic of soldiers or armed forces’, ‘alliance’ means ‘a state of being joined or associated’ and ‘alignment’ means ‘come[ing] together in alliance’.10 The provision does not suggest how the association is to be made.

Refusing to participate in military alliances is applicable continuously whatever the circumstance – whether the State is at peace or at war. This clause does not leave any room for manoeuvring the development of the armed forces if a strict interpretation is applied.

It may conflict with any addition of terms as ‘military’ and ‘alliance’ and similar wording under the EU frameworks. If the EU decides to move towards a coalition of States to engage in an operation of which the focus is military crisis management – where does the ‘military alliance’ (if at all) start and finish?

The argument is whether the clause may be redrafted whilst 7

Constitution of Malta, sub-section 1(3).

8

Cremona (n 6)79.

9

Michael Zander, The Law-Making Process (1st edn, Cambridge University Press 2004) 192– 193. This reason may hold merit ‘Although it sounds like a good idea in theory, it is very different in practice. If the clause is to cover the scope of the whole Bill, it must necessarily be drafted in very general terms. Yet its very generality will render it redundant ... general purpose of a Bill will be apparent on the reading of its clauses: the problems of interpretation do not arise from the main body of cases that fall within the scope of a Bill, but from the cases that are on the borderline, requiring a consideration of the details of the legislation…’

10

For the definitions of ‘military’, ‘alliance’ and ‘alignment’ the Oxford Dictionaries website was used <https://en.oxforddictionaries.com> accessed 17 August 2018.

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keeping to its legislative past and provide for EU developments.

This discussion, together with a comparative analysis of law and policy relative to other neutral and militarily non-aligned EU States, attempts to provide such insight.

If refusing to participate in a military alliance is to remain, it may then be considered that reference is to be made to the EU’s CFSP and CSDP Frameworks.

2.2 Malta-EU Accession The Government at the time reassured the European Commission that its policy was to be in favour of the CFSP.11 This was in regard to the EC expressing doubt about the neutrality and non-alignment clause potentially hindering future CFSP agreements.12 In 1993, the EC had set out how Malta was to participate within the EU frameworks in the accession negotiations. The Government agreed to changes to the effect of permitting joint action and cooperation under Title V of the then Maastricht Treaty.13 An abridged version of the memorandum by the Maltese Government reads as follows:

…Government of Malta has continually underlined its commitment to fulfil all the obligations and responsibilities resulting both from the original three Treaties, as amended and strengthened by the Single European Act, and those resulting from the EU Treaty signed at Maastricht on 7 February 1992.14 Regarding the issue raised on Malta’s neutrality the memorandum 11

Hereinafter referred to as the ‘EC’.

12

Roderick Pace, ‘Malta and EU Membership: Adaptation, Change and Modernisation’ (2003) 8 Institute of International Economic Relations 119.

13

‘The Challenge of Enlargement: Commission Opinion on Malta’s Application for Membership’ 7–8.

14

ibid.

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states:

The Maltese Government believes it to be in Malta’s interest to subscribe to the EU’s common foreign and security policy, including the eventual outline of a common defence policy which might in time lead to a common defence.15(emphasis added by author) Continuing Maltese participation in the Community institutions:

The Maltese Government understands that Malta’s application could appear to raise prematurely the issue of institutional development for the Community.

The Maltese Government agrees with the Commission that all questions concerning Malta’s ‘participation in the Community institutions’ would be able to be ‘resolved in an appropriate manner in accession negotiations’.

The Maltese Government therefore looks forward to the Commission’s proposals in its opinion on Malta’s application.16 Some points of observation may be made from these excerpts.

Malta emphasised that it would satisfy all obligations, expressly noting its interest in the CFSP and even referring to the common defence policy. Whilst acknowledging the concerns expressed by the EC, it diplomatically side-lined the issue by referring it to an indefinite act addressing same during the accession negotiations.

A Maltese declaration is presented in the Treaty of Accession of 2003 and whilst not legally binding, it carries political weight with Member State affirmation. This similarly followed the Irish declaration on neutrality, albeit, its Maltese counterpart did not refer to legal amendments.17

Malta affirms its commitment to the common foreign 15

ibid.

16

ibid.

17

This will be revisited when examining the paradox that is the Irish neutrality statement.

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and security policy of the EU as set out in the Treaty on EU…Malta confirms that its participation in the EU’s common foreign and security policy does not prejudice its neutrality. The Treaty on EU specifies that any decision by the Union to move to a common defence would have to be taken by unanimous decision of the European Council adopted by the Member States in accordance with their respective constitutional requirements.18 Additionally, the first setback to this memorandum in 2004 saw Malta being denied entry to the Berlin Plus agreement which allowed the EU to use the North Atlantic Treaty Organisation’s19 resources in EU led missions. Malta had no link to NATO at the time as it had ended its activities within the NATO Partnership for Peace Programme.20 The accession led to a permanent representation of Malta to the EU communities. At the domestic level, a Foreign Affairs and European Committee was set up with Parliamentary members, as well as a Defence Matters Directorate to oversee the defence function of the Office of the Prime Minister (OPM). In 2006, the AFM created a common foreign and defence policy branch. This liaises with the Defence Matters Directorate and the Maltese military attaché at the EU permanent military representation.

2.3 Armed Forces of Malta – creation of an army One of the reasons for the creation of the AFM was to stem unemployment arising out of the withdrawal of British armed forces and to serve as the proper creation of a ‘standing army’ which doubled as an ‘all-purpose military force’.21 The army was set up in light of the 18

‘Negotiations on Accession by the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia to the EU Draft Legislative Acts and Other Instruments’ 496.

19

Hereinafter referred to as ‘NATO’.

20

Hereinafter referred to as ‘PfP.

21

Edward Warrington, ‘‘Standing to Arms in Lilliput’- the Armed Forces, External Relations

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state of affairs which reflected Malta’s then uncertain present and future.22 With a relatively inexistent military at the time of creating the neutrality clause, being concerned of future ramifications for the armed forces may have not been on the agenda. The mix of domestic politics and unemployment were then more important than the military capabilities and role of the armed forces.23 Malta had to decide whether to apply for EU membership and participate in its security and defence policies, or to retain a stricto senso approach to neutrality.24 In 1995, the Maltese Parliament passed a motion ratifying Malta’s membership in the Partnership for Peace Programme and the AFM personnel trained as peacekeepers becoming an important asset within the Government’s foreign policy between 1994 to 1996.25 Any armed force as small as that of Malta faces a challenge in safeguarding its territorial integrity and projecting its interests beyond its jurisdiction.26 Although a small State cannot in practice defend itself unaided, ‘an efficient military force, even small, can help it secure alliances with well-disposed large powers while remaining a potent symbol of sovereignty and resolve’.27 Malta’s engagement within the EU frameworks led to such an outcome.28 Through its accession, it is ‘these larger goals and political contexts exert[ing] a determining influence on the armed forces’ role and military capability’ which have led to successively progressive developments since 2004.29 What is important for the State is to find a balance between its own foreign and Domestic Politics in a Micro-State: Malta, 1965-1997: SUMMARY’ (1998) 18 Public Administration & Development (1986-1998) 188 <http://search.proquest.com.ejournals.um.edu.mt/ docview/194658969/abstract/60F96E266C4E42E1PQ/1> accessed 4 January 2017.

22

ibid 186.

23

ibid 194.

24

ibid 186.

25

ibid 192.

26

ibid 185.

27

ibid 197.

28

Stephen C Calleya, Looking Ahead: Malta’s Foreign Policy Agenda (Luqa : Agenda 2002) 217.

29

Warrington (n 23) 195.

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policy and that of the EU.30 With respect to its armed forces, sound domestic regulation aligned with its EU counterparts is necessary.

2.4 Chapter 220 Malta Armed Forces Act The legal history surrounding the AFM traces its origin back to 1973. The title of the AFM was initially the ‘Malta Land Force’ set through an Act of Parliament in 1970, which was later amended in 1973 and renamed as ‘Malta Armed Forces Act’ now found under Chapter 220 of the Laws of Malta.

The Act functions as primary legislation providing for the President as Head of State, to raise and maintain an armed force through voluntary enlistment in Malta.31 It extends this power by delegating command and authority to the Government. A further nine subsidiary legislations regulate the AFM.32 The AFM has primary and secondary defence roles; one of which is the primary role of ‘contributing towards international peace and stability by participating [in] overseas crisis management operations’.33 Searching for a further mention of this is absent within the main Act, in subsidiary legislation and in the ‘Guiding Principles’ or in the ‘Strategic Objectives’ on the Ministry for Foreign Affairs’ online presence. The closest document referring to the AFM and deployment outside of Malta is that of the PfP 2008 draft.34 The army is partitioned into regular, territorial, and reserve forces.

Saving the latter, that is, the territorial force being liable to serve 30

Calleya (n 30) 218.

31

The Malta Armed Forces Act, Chapter 220 of the Laws of Malta, section 4(1).

32 ‘MJCL - Laws of Malta’ <http://www.justiceservices.gov.mt/LOM.aspx?pageid=27&mode=chrono&gotoID=220> accessed 12 February 2017.

33 ‘Defence Role’ <http://afm.gov.mt/en/forcestructure/defencerole/Pages/defence-role.aspx> accessed 13 April 2017.

34

Parlament ta’ Malta, ‘Paper Laid No: 922 - Draft Document - Individual Partnership Programme of Malta for Partnership for Peace (PfP) for 2008-2009’ <http://www.parlament.mt/ paperslaiddetails?id=956&legcat=7> accessed 8 April 2017.

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in Maltese territorial jurisdiction and the ‘on reserve’, the regular force is the corps, which associates itself with crisis management operations. Its personnel are liable to a ‘universal service’.35 This assumes performance beyond Maltese jurisdiction which is further assumed to conform to the neutrality clause. With the present Act, the regular force will be under an obligation to take part in the CFSP whilst the territorial force will not, being subject to serving within Maltese territorial jurisdiction only.36

3. Neutrality and developments within the EU’s CFSP and CSDP Frameworks 3.1 A reprise The international scene is staged so that ‘small States do what they must while large States do what they will’.37 Two options were available; either joining an alliance or declaring neutrality.38 This is how weak States at the periphery of influence and control tried to survive in the event of conflict between superpowers.

The current state of affairs registers a change from the traditional notions of war and peace, security and State sovereignty. The neutral States’ approach to this, has also taken a new ‘post-neutrality’ politicolegal context.39 For EU neutral and/or militarily non-aligned Member States who formally give direct and express reference to the EU CFSP and CSDP, it may now be an interim period of reflection before fully 35

The Malta Armed Forces Act (n 33).

36

The Malta Armed Forces Act (n33) section 21.

37

Christine Agius and others, ‘Varieties of Neutrality: Norm Revision and Decline’ (2011) 46 Cooperation and Conflict 285, 287.

38 Jessica L Beyer and Stephanie C Hofmann, ‘Varieties of Neutrality’ (2011) 46 Cooperation and Conflict <http://journals.sagepub.com/doi/abszz/10.1177/0010836711416956> accessed 2 January 2017. 287 39

Christine Agius and others, ‘Neutrality: A Really Dead Concept?’ A Reprise’ (2011) 46 Cooperation and Conflict 265 <http://journals.sagepub.com.ejournals.um.edu.mt/doi/ abs/10.1177/0010836711416955> accessed 2 January 2017.

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committing to the relevant security initiatives and operations.40

3.2 Political neutrality Neutrality comes in various shapes and sizes; from interim or perpetual, constitutionally codified or treaty set, militarily nonaligned to refusing participation in military alliances. The term’s lack of specificity is clear.41 It has separate and distinct meanings both legally and politically. Political neutrality includes status and practice which State exercise through policy allowing more flexibility than its legal counterpart. This may reflect a position Malta may have been taking.42 As active foreign policy, political neutrality is still relevant to States claiming some form of ‘neutrality’.43 Being increasingly matched to a mediator in conflict resolution,44 EU neutral States have shown a unique specificity of contributing in conflict management and resolution.45 These States’ positions in the CFSP is manifest in their active participation within the crisis management operations.46 Their development of neutrality and/or military non-alignment may be explained through examining the period in and the reason of adopting such stances. For Finland and Austria, neutrality was affected through an external imposition and set in a broad manner.

In Sweden and Ireland, it emerged voluntarily and was defined narrowly. Finland had to undergo a Treaty of Friendship, Cooperation and Mutual Assistance in effect from 1948 to 1992 and Austria had to have permanent neutrality for the Soviet Union to acquiesce to its 40

ibid 266.

41

ibid 268.

42

ibid 269.

43

ibid 271.

44

ibid 274.

45

ibid 272.

46

Beyer and Hofmann (n 40).285.

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independence.47 Once the threat of being overwhelmed by the superpowers’ conflict either diminished or became insignificant, coerced States could move away from neutrality more than those which did so voluntarily.48 However, these States have not abandoned their behaviour built on the norm of neutrality,49 for it influenced the policy making of the small States concerned, from being state-centric to internationally.

An approach which contributes to better explaining a neutral States’ position such as that of Malta, is through the domestic scene which includes a public of the State and identity, coupled with external changes, aid in understanding when and how to alter neutrality as a foreign policy. Neutrality has, regardless of the reason for its adoption, been kept as a simple security strategy.50

3.3 Legal neutrality and its implementation The norm of neutrality is adopted in State practice as a de facto or de jure rule. For instance, in Malta, it is a de jure rule entrenched in section 1(3) of the Constitution51, much like in the case of Austria. For Sweden and Ireland, however, it is a de facto one.52 Neutrality, more so if mentioned within the Constitution, is not easy to define legally. To illustrate this difficulty, it would help if the reader imagines a spectrum of factors of neutrality from one point to

47 Beyer and Hofmann (n 40) 288 These were to be eventually revised for compatibility with the CFSP and the NATO Partnership for Peace Programme.

48

Claiming neutrality by a voluntary manner and retracting from it is harder to achieve.

49

Beyer and Hofmann (n 40).

50

Beyer and Hofmann (n 40) 289.

51

Constitution of Malta section 1(3); A symbiosis of ‘regulative (policy-guiding norm)’ and ‘constitutive (in the Constitution and/or part of conceptualizing national identity)’ in Bayer and Hofmann (n 40) 291.

52

ibid.

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the other.53 Malta’s position cannot be quite compared to other neutral and/ or militarily non-aligned EU Member States as while it has not experienced foreign influence as Austria and Finland did which were forced into anchoring neutrality in their Constitution, it did so voluntarily much like Sweden and Ireland did. Malta, therefore, adopted a voluntary constitutive approach to entrenching neutrality in its Constitution.

Since the 1990’s, the Maltese Government appears to have started distancing itself from the constitutive norm of neutrality toward being regulative even though the foundation remains constitutive. The public has not been negatively affected by neutrality and it seems that the public perceives it as part of Malta’s success as a State. If, however, the Government’s choice and original motivation for adopting neutrality is still present, this may have been undergoing change since adopting the EU’s foreign, security, and defence policies.54 Austria seems to share most similarities with Malta, being a de jure neutral set in its federal Constitution and making direct reference to the EU CFSP. Finland practised de facto neutrality at least until its accession in the EU. In 2006, it introduced an Act on military crisis management whereby Parliament and Government are regulated in their decisions.

3.4 EU and neutrality Changes in international organisations likewise determine the impact of neutrality. With the EU increasing its foreign policy scope and effectiveness, these need not necessarily be in dissonance with neutrality as interpreted by its Member States. Nevertheless, the neutral States in question may eventually not be able to ‘independently’ interpret it. A certain ‘interdependence’ would inevitably follow with 53

ibid.

54

Beyer and Hofmann (n 40) 292.

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a further consolidation of the EU Frameworks.

States with a de facto neutrality having more of a customary rather than fixed character, would have a more flexible approach in their interpretation of neutrality, when compared to States which have a de jure neutrality, and hence, having a much more complex path in considering the CFSP and CSDP.55 Conversely, although States which apply a de facto neutrality may entertain such flexibility in theory, they may ultimately not be able to exercise it, whereas those which apply de jure neutrality would have set fixed parameters and restrictions.

Neutrality in its widest sense has taken on a generic inclination.

Separating it into ‘form’ being the term as is and ‘content’ being what is attached to it, the identified neutral and/or militarily nonaligned EU Member States come up with their own ‘content’ from their backgrounds. These Member States viewed neutrality as the best move to take on the myriad of challenges each faced, unique to their geo-historical and socio-economic setting. Once the post Second World War setting became stable and definite and accession to the then EC was a matter of when and how, the re-formulation of neutrality and its contents became reality.

3.5 Changes brought through the Maastricht Treaty The three neutral and/or militarily non-aligned Member States to accede to the Maastricht Treaty were confronted with concerns by the EC even after revising their neutrality ‘content’. Austria in 1991 had to re-define its neutrality through a constitutional amendment.

For Finland in 1992, the basis of their neutrality was set in being militarily non-alignment after terminating the ‘Treaty of Friendship, Cooperation and Mutual Assistance’. For Sweden in 1994, neutrality was set to be interpreted as Swedish foreign and security policy with a European identity. Upon entering the EC, these States further redefined and keep redefining for further compatibility with the EU CFSP and CSDP. 55

Bayer and Hofmann (n 41) 293.

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The EC’s concerns regarding Maltese accession back in 1993 found that even if the State’s goal was to take part in the policies, the issue of having to amend the neutrality clause to participate fully still remained, as the non-aligned status and refusal to participate in any military alliance could lead to incompatibility with the then Title V of the Maastricht Treaty in joint action and defence cooperation.

All this provides an explanation on how neutrality changed from being ‘consequentially’ adaptive to being adapted for ‘appropriateness’.

The EU security and defence policies as well as economic incentives, led to re-setting the neutral and/or militarily non-aligned States’ status to favour solidarity in all its forms over previous values of neutrality, which shaped the national foreign policy preferences of each neutral and/or militarily non-aligned State.

4. Developments within the EU Frameworks 4.1 Starting point The first move towards forming an organisation of States with shared interests in security and defence was the 1948 Brussels Treaty, composed of five States with the United States of America, which provided collective self-defence between its signatories. In 1954, two more States joined to form the Western European Union56 with further specified aims to assist each other in acts of aggressions and to promote unity in progressive integration of Europe.57 Its Article V made express mention of military aid in the event of an armed attack on Europe. It also initially included the Petersberg Tasks, now set in Article 43 of the TEU.58 The EU’s conflict prevention and crisis management capabilities were created in the late 1990’s by the Amsterdam Treaty codification 56

Hereinafter referred to as the ‘WEU’.

57

‘Western EU - Union de l’Europe Occidentale’ <http://www.weu.int/> accessed 24 March 2017.

58

Consolidated Version of the Treaty of the European Union [2012] OJ C326/01, Article 43.

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of the new structures and tasks for the then EC’s European Security and Defence Policy. Although not forming a common defence policy, this increased the range of peacekeeping and humanitarian aid by introducing the Petersberg Tasks in the TEU. Through the Cologne European Council conference in 1999, an agreement effectively provided the European Council the ability to decide on conflict prevention and crisis management. In 2003, the EU and NATO signed the Berlin Plus agreement making possible EU-led crisis management operations by allowing the use of NATO’s resources and capabilities.

After this, the next legal agreement was the Treaty of Lisbon in 2009 introducing the solidarity and mutual assistance clauses and further revisions to the Petersberg Tasks. Further obligations included Member States making military facilities available to the EU for implementation of the CSDP.59 This, however, has not led to the notion of a standing army but the availability of ad hoc forces through Member State contributions.60 Whereas the European Council guides the CFSP, the Foreign Affairs Council implements the foreign and security policy based on European Council guidelines. The Foreign Affairs Council has the power to conduct civil and military crisis management actions amongst other measures. The Committee of Permanent Representatives set up under Article 240 of the TEU is the highest Council preparatory body and serves as the antechamber to every file and decision on the agenda of the Council of Ministers and the European Council.61 Most importantly are the political and military bodies set up which overlook the CFSP and CSDP operations.62 The EU Military Committee63set up by a legislative decision of the Council (Council Decision of 22 January 2001) is the highest military body within 59

Duncan Vella, ‘Malta and the European Union’s Common Security and Defence Policy: Challenges and Opportunities’ 26–29.

60

Anonymous, ‘EUROPA - Foreign &amp; Security Policy’ (EU website, the official EU website - European Commission, 16 June 2016) <https://europa.eu/european-union/topics/foreign-security-policy_en> accessed 24 March 2017.

61

Consolidated Version of the Treaty of the European Union (n 59) Article 240.

62

EU military committee and military staff.

63

Hereinafter referred to as ‘EMUC’.

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the EU. The EUMC is composed of the Chiefs of Defence64 of the Member States. In Malta’s case, the CHOD is the Commander of the AFM, however, since the Committee meets on a weekly basis, all CHODs are represented by their Military Representatives (MilReps).

The EUMC provides the Political and Security Committee (PSC) with advice and recommendations on all military matters within the EU, including oversight of all EU military crisis management operations Although the CFSP has increased in importance over the years, it still recognises the national foreign policies regarding defence and security measures.65 However, lacking constitutional and political unity and no official standing army may make the policies ineffective.66 Notwithstanding this, it must still be recognised that the EU and its Member States came closer through the insertion of the Petersberg Tasks into the Frameworks.

4.2 Treaty of Lisbon Setting out the legal bases for the CFSP and CSDP Frameworks which contemplates EU military structures and operations, Declaration 13 of the Treaty provides that its activities ‘do not affect the responsibilities of the Member States as they currently exist’ and ‘do not prejudice the specific character…and the defence policy of the Member States.’ Protocol 10 Article 2(c) mentions measures which are to be taken to increase ‘the availability, interoperability, flexibility and the employability’ of the Member State forces through having common objectives regarding their forces’ commitment. Protocol 11 amalgamates the EU’s and the WEU’s interests for increased cooperation.67 64

Hereinafter referred to as ‘CHOD’.

65

Vella (n 64) 36. The neo-functionalist school of thought supposes that in the future national policies will be overtaken by the common European foreign policy.

66

ibid 37.

67

Protocol 11 to the TEU <https://eurlex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506fd71826e6da6.0023.02/DOC_3&format=PDF> accessed on 19 March 2019.

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4.3 Mutual defence clause The mutual defence clause has its beginnings in the WEU military alliance when it was separate from the EC through the Amsterdam Treaty. Neutral States’ resistance to its merger into the TEU was to keep what was left of ‘military non-alignment’.

The proposals of the neutral and/or militarily non-aligned Member States were, with respect to the Petersberg Tasks covering security, defence, and protection of Member States’ interests, while promoting a ‘crisis management’ focused use of the CFSP as part of the EU’s project of peace. These were accepted and the 1999 Amsterdam Treaty subsequently came into effect. As quickly as these proposals came into being, they were also quickly repealed when the Nice Treaty started the gradual transfer of WEU infrastructure into the TEU. The mutual defence clause was set as an opt-in even after its omission by the Working Group for the CSDP provisions in 2002.

Shortly after the constitutional draft in 2003, the term ‘militarily’ surfaced, and the mutual defence clause was moved from the Protocol to the draft Constitution text. The four neutral and/or militarily non-aligned Member States indicated that such a move would go against their security and defence policies and/or constitutional requirements.

Instead, they suggested inserting a phrase saying ‘may request’ so that the Member States ‘may’ and not ‘shall’ respond.68 The ‘Irish clause’ was also added and reads ‘this shall not prejudice the specific character of the security and defence policy of certain Member States’.69 However, this does not exclude Member States from the obligation to give aid. The ‘Irish clause’ does not mean that neutrality is safeguarded. Taking on the Irish example, when presenting the national declaration in 2009, Ireland wedded the two clauses into 68

Christine Agius and Karen Devine, ‘Neutrality and the Development of the European Union’s Common Security and Defence Policy: Compatible or Competing?’ (2011) 46 Cooperation and Conflict 334, 354.

69

ibid.

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one; an automatic obligation - mutual defence clause with the nonautomatic solidarity clause. The former gives an obligation to States to give aid through all the means in their power whilst the latter provides that the Member States do so at the request of its political authorities.70 Legal interpretation indicates that the automatic obligation is non-congruent with the duties and obligations stemming from neutrality in The Hague Conventions. Contrasting the wording of the TEU with its equivalent in the Washington Treaty, the former provides that every State may determine for itself what kind of aid is to be provided, whereas the mutual defence clause obliges Member States to aid and assist.71 It leaves no legal uncertainty that the neutral and/or militarily non-aligned Member States are indeed under an obligation to aid and assist, in the case of a terrorist attack or an armed aggression.

Ratifying the TEU and recognising Articles 41(1) and 42(7), neutral member states became part of the EU’s external policies and its collective defence.72

4.4 Solidarity clause and post-Lisbon developments The EU started to take on a foreign policy which set it on course as a global actor. With this, the neutral States began using the terminology referring to the EU and their place in it as being ‘in a wider perspective and not just nationally’.73 This specifically related to EU crisis management operations. Neutral and/or militarily non-aligned Member States redefined their ‘form’ and ‘content’ of neutrality. It may be the case that strict anti-military and neutral views have indeed been, at least at this current stage, watered down.

A number of reasons are provided to explain such a shift; neutral and/ 70

ibid.

71

ibid 355.

72

Consolidated Version of the Treaty of the European Union (n 59) Article 41(1) and 42(7).

73

Agius (n 69) 358.

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or militarily non-aligned Member States realise that without diverse options including a possible military power, ‘diplomatic activity or economic activity’ is not enough. Having a uniform and transparent EU armaments policy under the European Defence Agency is better than having one on their own and being incorporated into a regional platform instead of taking on their relations independently.74 Incorporating the provisions in the Lisbon Treaty and their implementation in Member States effectively raises the question of what legal obligations such Member States have committed to. It has been considered that neutral and/or militarily non-aligned Member States will, at least in the imminent future, not consider changing direction on any neutrality policy.75 Notwithstanding this, it is deemed that in the case of Malta a proper review is to be done to better reflect the EU’s CFSP and its own.

4.5 Bratislava and beyond The global strategy for the EU’s foreign and security policy in 2016 emphasises that Member States are to shoulder commitments to mutual assistance and solidarity as enshrined in the Treaties.76 In this regard, ‘full spectrum defence capabilities’ are required to respond to external crisis.77 Although Member States retain sovereignty over their defence decision, in acquiring and maintaining these capabilities, a common response necessitates further cooperation.78 Further emphasis is given on EU-NATO relations which are set to deepen but not prejudice the neutral and/or militarily non-aligned 74

Agius (n 69) 359.

75

Agius (n 69) 360.

76

‘Shared Vision, Common Action: A Stronger Europe - EU Global Strategy - European Commission’ (EU Global Strategy) 9 </globalstrategy/en/shared-vision-common-action-stronger-europe> accessed 5 February 2017.

77

‘Europe’s combined defence resources…provide Europe with considerable strategic autonomy across the full spectrum of defence, including territorial defence, expeditionary warfare, global crisis management and disaster relief in <‘Envisioning European defence: Five Futures (Chaillot Paper No 137)> accessed 5 November 2017.

78

ibid 10–11.

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Member States’ security and defence policies.79 All this points to ‘full spectrum land, air, space and maritime capabilities’.80 The EU Global Strategy on Foreign and Security Policy introduced the concept of an ‘integrated approach to conflicts and crises’. What this means and implies remains to be clarified. The four layers of the integrated approach are multi-dimensional, multi-phased, multilevel, and multi-lateral respectively being the recourse to ‘all available policies and instruments aimed at conflict prevention, management and resolution’. The EU is to be ready to intervene ‘at all stages of the conflict cycle’.81 In 2013, the EU presented a ‘comprehensive approach’ which drew on the United Nations’82work on institutional coherence. The EU Global Strategy reaffirmed the relevance of this comprehensive approach, but also stated that its scope needed to be expanded further through an ‘integrated approach’.83 This is more strategic in the sense that it goes beyond the operational aspects of crisis response to further integrate the political, economic, and security dimensions of the EU in a more coherent sequential manner spanning conflict prevention, crisis management and peace-building. The integrated approach is sometimes presented as being more ‘vertical’ for it aims to place various components of the EU response under a single authority, whereas the comprehensive approach was more ‘horizontal – mobilising and synchronising a wide range of instruments’.84 The terms ‘conflict management’ and ‘post-conflict stabilisation’ are to be reworded to include a more politically and operationally coherent EU response - based on inclusiveness as it brings closer and connects all the EU levels. The debate regarding what an 79

ibid 20.

80

ibid 45.

81

‘The EU: From Comprehensive Vision to Integrated Action’ 1 <http://www.iss.europa.eu/ publications/detail/article/the-eu-from-comprehensive-vision-to-integrated-action/> accessed 5 March 2017.

82

Hereinafter referred to as the ‘UN’.

83

The EU: From Comprehensive Vision to Integrated Action (n 82) 2.

84

The EU: From Comprehensive Vision to Integrated Action’ (n 82) 3.

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integrated approach means, is likely to reveal divergences among the various EU entities and Member States.85 On 7 June 2017, the European Commission submitted the Reflection Paper on the Future of European Defence outlining three scenarios which the Member States were to take ranging from the status quo to a more ambitious common defence and security through activating the progressive framing of a common Union defence policy based on Article 42 of the TEU.86

4.6 Closest thing to a standing army The Battlegroups87 has or can be seen as the closest to an armed force or an army within the EU. Its beginning stems from St Malo where a Franco-British effort called on the EU to develop a ‘capacity for autonomous action, backed up by credible military forces, the means to decide to use them and a readiness to do so, in order to respond to international crisis’.88 The concept at the time was given high political support seen as being closely associated with the ‘permanent structure cooperation’ allowing Member States to make more binding commitments to each other in defence matters.89 Criticised for never having been deployed, the fact remains that it is an autonomous EU-managed rapid crisis response instrument that is specifically tailored to the Union’s approach to crisis management.90 There have been ‘near deployments’ of the BG, however, the EU and its Member States decided to pursue other options, reason being political disagreement between Member States over the rationale for 85

The EU: From Comprehensive Vision to Integrated Action’ (n 82) 4.

86

Reflection paper on the future of European defence<https://ec.europa.eu/commission/publications/reflection-paper-future-european-defence_en> accessed 5 November 2017.

87

Hereinafter referred to as ‘BG’.

88

‘EU Battlegroups – Ready to Go?’ 1 <http://www.iss.europa.eu/publications/detail/article/eubattlegroups-ready-to-go/> accessed 5 March 2017.

89

ibid 2.

90

‘Adapting the Battlegroups’ 1 <http://www.iss.europa.eu/publications/detail/article/adapting-the-battlegroups/> accessed 14 February 2017.

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deployment or reluctance to use a rapid reaction instrument for preplanned military operations.91 The concept’s core element of an infantry battalion remains somewhat of a constraint. Making the EU BG more flexible would allow for a broader spectrum of tasks. These could be attached to an existing EU civil-military mission or an UN-led operation.92 Whilst being developed to be mutually reinforcing with the NATO Response Force (NRF) it differed, as unlike NRF, it is limited to deployment in respect to a UN request for peace enforcement and intended to be used alongside civilian assets.93 Its use should be seen against the wide background on the specific crisis with appropriate rapid response tools being either ‘entirely civilian, a combination of civilian and military elements or purely military’.94 The BG must remain adequately flexible to incorporate Member States that are willing to take part. A better definition of the requirements and planning ensure the Member States know what they are entering into.95

4.7. Permanent Structured Cooperation (PeSCo)96 Since the publication of this paper in April 2017, there has been greater cooperation and coordination of initiatives under the CSDP with the EU establishing the Permanent Structured Cooperation, from a set of previously dormant provisions inserted into the TEU.97 91

ibid.

92

ibid 2.

93

‘EU Battlegroups – Ready to Go?’ (n 79) 2.

94

ibid 3.

95

ibid 2.

96

PeSCo is but one of several recent EU defence initiatives. See <https://www.consilium.europa.eu/en/policies/defence-security/> for further information, accessed 19 March 2019.

97

This paper was first submitted to the University of Malta in partial fulfilment of the Bachelor of Laws (Honours) in late April 2017.

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Article 42(6) of such a set of provisions states that:

42.6 Those Member States whose military capabilities fulfil higher criteria and which have made more binding commitments to one another in this area with a view to the most demanding missions shall establish permanent structured cooperation within the Union framework.

Such cooperation shall be governed by Article 46. It shall not affect the provisions of Article 42.98 Therefore, PeSCo serves as a platform for Member States wishing to commit further by increasing defence spending, jointly developing military capabilities and making military assets available to operations.

As such it is a vehicle to strengthen the common defence policy.

The first wave of PeSCo in December 2017 saw 25 Member States deciding to participate. Four of the five neutral and/or militarily nonaligned Member States have joined albeit on a selective opt-in basis - Malta has decided not to. The Maltese Government has stated that joining PeSCo may violate Malta’s neutrality and it has adopted a ‘wait and see’ policy for an unspoken fear of the eventuality that it may lead to the creation of an ‘EU army’. Such a policy overlooks four points being that; PeSCo is voluntary and does not alter the TEU provisions on security and cooperation meaning, it does not impinge on the effectiveness of using state sovereignty to counter such eventuality, PeSCo decisions are also taken by unanimity and finally each Member State decides itself on utilising its armed force in national, EU, NATO, UN and in other considerations.99

98

ibid n 59.

99

Niklas Nováky, The EU’s Permanent Structured Cooperation in defence: Keeping Sleeping Beauty from snoozing, European View, Vol 17, Issue 1, 99 < https://doi. org/10.1177%2F1781685818764813> accessed 19 August 2018.

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5. Neutral and/or militarily non-aligned EU Member States’ legislation and policy The four Member States being Austria, Finland, Ireland, and Sweden contribute towards EU military activities under the guise of ‘crisis management’. How high-profile crisis management missions may turn out within the CSFP’s future developments remains to be seen. On a legislative and governmental policy level, the neutral and/ or militarily non-aligned military crisis management features have been straightforwardly identified in certain Member States whilst in others have remained abstract at best. In the upcoming text, an overview of this is laid out.

5.1 Austria In 1955, permanent neutrality was declared by an Act of Parliament entitled ‘Neutrality Act’, with no possibility of accession to any military alliance in the future.100 However, it is a legislation which can be changed at any time through parliamentary procedure as it is set in domestic law as a sovereign Act of Austrian legislation and not a treaty obligation. Yet in respect of such, Austria’s neutrality has been based on domestic law and on international public law as not only is there an Act of Parliament but also diplomatic relations communicating neutrality to other States.

The 1955 Act was construed during the West and East conflict resulting in a sensitive foreign policy. After the Cold War, Austria held the legal view that UN Charter obligations take precedence over its status of neutrality. In 1975 ‘comprehensive national defence’ was added as constitutional law, with an active foreign and security policy.101 Further still, the Commission’s opinion on Austrian accession in 1991 was not without its hurdles, as the question arose 100

https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10000267&FassungVom=2222-02-02 accessed 14 February 2017.

101

‘BACHORA-Final.pdf’ <http://cenaa.org/analysis/wp-content/uploads/2013/02/BACHORA-final.pdf> accessed 14 February 2017.

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whether Austria would be able to enter into such an obligation if it also wanted to maintain its legal status of permanent neutrality and policy. Even on a qualified majority voting (which was later to develop), the then Community still required a minimum basis of legal certainty.102 An application for accession had to ensure that its domestic law including the Constitution would be compatible with European law.103 This could be solved through redefining its neutral status or through including a derogation in its accession from the then Article 224 EC Treaty.104 In 1995, two thirds of the Austrian electorate voted in favour of acceding to the EU. The then Article 23F (now 23J) was added to the Constitution so that the CFSP would not be impeded by the 1955 Neutrality Act.105 By 1997, a new Act - the ‘Federal Constitutional Act on Cooperation and Solidarity in Dispatching Units and Individuals Abroad’ was drawn up, replacing the 1965 ‘Act on Dispatching’ and this represented a new constitutional basis for Austrian participation in crisis management.106 In 1998, after ratifying the Amsterdam Treaty, the Constitution was amended again to reflect its unreserved participation in the CFSP, which brought it to ‘a non-allied State rather than a neutral State’.107 Through inserting a provision in the Constitution, Austria regulates its relationship with the EU clearly and succinctly. It mentions directly its participation in the CFSP through Title V 102

‘Publishable_en.pdf’ 11 <http://www.cvce.eu/content/publication/2002/2/8/e22a3d78-7ef146e1-8dbb-f4db7c584fc4/publishable_en.pdf> accessed 14 February 2017.

103

ibid 12.

104

ibid.

105

https://www.parlament.gv.at/ENGL/PERK/HIS/REP2/1955/index.shtml accessed 15 March 2019

106

http://www.bundesheer.at/english/td_international/artikel.php?id=40 accessed 15 March

2019 107

‘Parlamentarische Materialien’ <https://www.parlament.gv.at/PAKT/VHG/XXI/I/I_00939/ fnameorig_000000.html> accessed 6 January 2017.

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Chapter 1 and 2 of the TEU.108 It also reserves the right to still vote on missions relating to military advice and assistance tasks, conflict prevention and peace-keeping tasks, on tasks of combat forces in crisis management, including peace-making and post-conflict stabilisation and any other decisions under Article 42 para 2 which concern the progressive framing of a common defence policy. If a decision is taken to send units or individual persons abroad this is to be taken under the conduct of procedure governing the deployment of units or individual persons to other countries.109

5.2 Finland Finland has no reference to neutrality and military non-alignment in its Constitution. In fact, it has been some time since neutrality has been discussed.110 It has slowly phased out, whilst military nonalignment has been kept as a broad foreign policy. In the same vein, what will be discussed is Section 58 of the Constitution, which provides that:

Decisions on Finland’s participation in military crisis management are made as specifically provided by an Act. (1112/2011, entry into force 1.3.2012)111 The Act being referred to is the ‘Act on Military Crisis Management’ being a dedicated Act regulating Finland’s participation ‘in international crisis management, on training and exercises in crisis 108 ‘RIS - ERV_1930_1 - Austrian Laws’ <https://www.ris.bka.gv.at/Dokument.wxe?Abfrage=Erv&Dokumentnummer=ERV_1930_1> accessed 6 January 2017.

109

‘RIS - Gesamte Rechtsvorschrift Für Kooperation Und Solidarität Bei Der Entsendung von Einheiten - Bundesrecht Konsolidiert, Fassung Vom 06.01.2017’ <https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10001504> accessed 6 January 2017.

110

The 2016 Government Report on its Foreign and Security Policy does not make mention of both.

111

‘The Constitution of Finland’ <http://www.finlex.fi/en/laki/kaannokset/1999/en19990731. pdf> accessed 7 January 2017.

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management and on the status of crisis management personnel’.112 Finland can participate in United Nations Security Council113approved international crisis management operations to restore peace, security or to support humanitarian assistance operations or protect civil populations.114 The parties which can implement this are the UN, Organisation for Security and Cooperation in Europe, the EU or some other international organisation or group of countries.115 However actual participation is taken by the President on Government proposal.116 This proposal came after preparatory work carried out by a joint meeting by the President and the cabinet committee on foreign and security policy and the defence ministry.117 Before submitting this proposal however, the Government must table it in Parliament, consulting its Foreign Affairs Committee.118

5.3 Ireland Ireland does not constitutionally feature the terms ‘neutrality’ or ‘military non-alignment’. These do not have any constitutional or legal basis but a policy of military neutrality refusing to participate in any military alliance - a policy which has been adopted by consecutive Irish Governments. Although its policy-declared neutrality is still active, it is recognised that this form of neutrality is ‘immaterial for threats that are generic and transnational in nature’.119 In 1955 Ireland joined the UN and started participating in operations which were at peace 112

‘FINLEX ® - Säädökset alkuperäisinä: Laki sotilaallisesta kriisinhallinnasta 211/2006’ <http:// www.finlex.fi/fi/laki/alkup/2006/20060211> accessed 7 January 2017 section 1(1).

113

Hereinafter referred to as the ‘UNSC’.

114

ibid section 1(2).

115

ibid section 1(3).

116

ibid section 2(1).

117

ibid section 2(2).

118

ibid section 3(1).

119

‘grnPaperE.pdf’ 8 <http://www.defence.ie/WebSite.nsf/grnPaperE> accessed 18 January 2017.

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with its settled traditional policy of neutrality.120 In 2000, the Irish White Paper on Defence allowed military personnel to participate in any EU military action related to supporting the Petersberg Tasks.121 In the Bunreacht na hÉireann (Constitution of Ireland) there is reference to not adopting a European Council decision in establishing a common defence in virtue of Article 42 of the TEU.122 This was after the 2002 Nice Treaty amendment which set a constitutional prohibition on participating only to be reconsidered through a referendum. There is also reference to ‘promoting peace, shared values and the well-being of their peoples’, similar to the principles set in the Maltese Constitution.123 In dispatching units to overseas peace support operations, three criteria collectively known as the ‘triple lock mechanism’ must be satisfied. The operation must be approved by a UNSC or General Assembly Resolution, which must pass through the Government executive as a formal decision and be given approval by the Dáil Éireann (House of Representatives). This was set up by the Defence (Amendment) (No.2) Act of 1960, with updates in 1993 to allow participation in UN Chapter VII missions, and in 2006 to include any peace related development taken by a regional organisation under the ‘auspices’ of the UN. The triple lock is formally set in Ireland’s national declaration to the Lisbon Treaty. It therefore also takes into consideration those operations under the CSDP.124 The guarantees obtained from the triple lock mechanism look as if Irish military neutrality conforms with the EU Frameworks.125 120

Joseph (2010) Pisani, ‘Malta’s Neutrality Concept: A Vision for the 21st Century’ (2010) 30.

121

‘Whiteppr.pdf’ <http://www.defence.ie/website.nsf/72804bb4760386f380256c610055a16b/93191a155924dad5802570c8005065d3/$FILE/whiteppr.pdf> accessed 14 February 2017.

122

‘Bhunreacht_na_hEireann_web.pdf’ section 29(9) <https://www.constitution.ie/Documents/Bhunreacht_na_hEireann_web.pdf> accessed 18 January 2017.

123

ibid section 29(4).

124

‘IIEA, Lisbon: The Guarantees Explained’ (Institute of International and European Affairs 2009) 10 <www.iiea.com/documents/lisbon-the-irish-guarantees-explained> accessed 19 January 2017.

125

Pisani (n 115) 35.

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5.4 Sweden Neutrality does not feature in the Swedish Constitution or in any international agreement. Its Defence Commission sets the policy which is then endorsed by the Swedish Government. Its ‘interim’ policy is that of ‘military non-alignment’. Article 42(2) of the TEU126 and Article 222 of the TFEU127 have also been ratified and Sweden shows strong support of the CFSP and CSDP. The policy of military non-alignment remains a basis for all Swedish cooperation, however, it is not considered a restriction on participating in military crisis management operations if it is compatible with international law. It is interesting to note that most of the official Government documents consulted are stating neutrality’s use in the past, hinting that it no longer wants to be associated with the conventional non-aligned position traditionally adopted in the past and is moving towards ‘increased solidarity and assumption of responsibility for Europe’s security’.128 In a report published on 2016, the inquiry tasked with examining the current and future defence and security cooperation did not discuss military non-alignment as this ‘was not part of the Inquiry’s mandate’.129

5.5 Malta Malta adopted neutrality through the declaration to the UN in 1981 with an Act IV in 1987 later establishing neutrality. By inserting neutrality in the Constitution, this was entrenched and can only be 126

Consolidated Version of the Treaty of the European Union (n 59) Article 42(2).

127

Consolidated Version of the Treaty of the Functioning of the European Union [2012] OJ C326/47, Article 222.

128

‘International-Defence-Cooperation---Efficiency-Solidarity-Sovereignty.pdf’ 76–78 <http:// www.Government.se/contentassets/5c39a5fe2c2745f18c8e42322af4fbc4/international-defence-cooperation---efficiency-solidarity-sovereignty> accessed 7 January 2017.

129

‘Summary.pdf’ 1 <http://www.Government.se/4a58e0/contentassets/989ee3fb59c545288713515805e82279/summary.pdf> accessed 7 January 2017.

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altered through parliamentary procedure.130 In 2003, Malta expressed its dedication to neutrality again in the Treaty of Accession to the EU. No reference is made to crisis management operations except for the following.

On the Ministry of Foreign Affairs online presence:

Malta will promote the reinforcement of the capacity of the UN in the area of peace-keeping and peacebuilding particularly the civilian role of peace activities for example in deploying police forces and humanitarian assistance.131 On the Armed Forces of Malta’s online presence:

Contribute towards international peace and stability by participating [in] overseas crisis management operations.132 Chapter 220 of the Laws of Malta, ‘The Armed Forces of Malta Act’, has no express provision relating to crisis management.133 The variety in the five neutral and/or militarily non-aligned States is a testament to their unique positions historically and geographically. That being said, they share the common factor of having ratified the TEU and TFEU. This research was aimed at seeing the AFM’s interaction with the CFSP and CSDP within the TFEU Part V Title VII Article 222 ‘solidarity clause’ and the TEU Title V Section 2 Article 42 respectively. As aforementioned, there is no legal reference to these. From examining the other EU neutral and/or militarily nonaligned Member States, the findings positively indicate Malta does lack a basic legal structure of regulating the sending of units abroad on military crisis management operations.

130

Constitution of Malta section 66.

131

‘Promote Respect of the International Rule of Law’ <https://foreignaffairs.gov.mt/mt/Pages/ Strategic%20Objectives/Promote-respect.aspx> accessed 19 March 2019.

132

‘Defence Role’ (n 35).

133

Refer to the 3.3-3.4 for more information.

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5.6 Legal incompatibility of Maltese neutrality and the AFM The following is an extracted table and rearranged by replacing the numbering of the article/provision with the latest 2016 Consolidated version. Sections which the Maltese Constitution and foreign policy do not subscribe to have been omitted: (PLEASE TURN OVER)

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Element of neutrality

Status

Non-involvement in war/other countries’ wars

Incompatible/ Competing

Self-defence only

Competing

Primacy of the UN/UN peace-keeping only

Incompatible

Anti-militarism

Incompatible

Impartiality/Anti-big power politics/ independent decisions amid ‘big power’ pressure

Incompatible

Non-aggression/Peace-promotion

Competing

Non-membership of a military alliance

Incompatible

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Lisbon Treaty Article/Provision Art. 42.7 requires a response ‘by all means in their power’ to Member States suffering armed aggression / Art. 43 permits civilian and military EU action that neutrals may be associated with.

Art. 42.2 provides capacity for pre-emptive action

Under Art 42.1 EU peace-keeping missions do not require a UN mandate (neutrals’ proposals for this were rejected) Art.42.1 States ‘in accordance with…’

Art. 42.3 commits Member States to improvements to military capabilities that are said to require increased spending and a common arms policy within the European Defence Agency Art. 45

Art. 10 and Art. 280(2) lift the ban on the use of enhanced cooperation in the field of ESDP; Art 42.6 provides for permanent structured cooperation to enable larger States to execute ‘most demanding’ military acts; combined with Art. 15B/Art. 201A Constructive Abstention, unanimity is in practice a non sequitur. Art. 280B/Art 11(2-3)/Art. 16.b eliminate abstaining States’ independence in action.

Neutrals’ Convention representatives’ proposed clauses to limit EU military action/repudiate war were rejected.

Art. 42.7 transfers the WEU mutual defence clause to the EU, completing the WEU-EU merger (as a result the WEU was officially terminated in March 2010); thus the EU has subsumed a military alliance.

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The Maltese neutrality clause identifies itself with ‘nonmembership of a military alliance’ – ‘refusing to participate in any military alliance’, ‘Impartiality/Anti-big power politics/independent decisions amid ‘big power’ pressure’ – ‘adhering to a policy of nonalignment’ and ‘Non-aggression/Peace-promotion’ – ‘pursuing peace’.

The most striking is that of ‘non-membership of a military alliance’ considered incompatible with Article 42.7 as it ‘transfer[red] the Western EU mutual defence clause to the EU’134 back in the Lisbon Treaty initial ratifications. The other feature which is presumed incompatible, is that of adhering to a policy of non-alignment where enhanced cooperation leads to a unified stance-aligned body.

If the AFM’s use had to be interpreted with the neutrality clause as a starting point, then the wording may leave room for complications regarding if and how they are employed. If the armed forces’ usage is to be interpreted or governed by the CFSP provisions, then their usage is broadly set.

5.7 Implications on legal incompatibility The current constitutionally enshrined neutrality clause would dictate the policy regarding the AFM’s commitments abroad – that is if the concept of Member State sovereignty regarding the collective defence and mutual assistance clauses is considered. When Malta ratified the Lisbon Treaty, it legally approved the TEU and TFEU clauses mentioned without introducing or amending legislation regarding the AFM’s usage. Whilst other EU neutral and/or militarily non-aligned Member States did this and still withheld the extent of the use of their armed forces through a legal framework, Malta did not and currently relies on a sole provision which in its current form may raise lacunae when faced with the CFSP and CSDP. The other implication is that the neutrality clause is interpreted flexibly, and the AFM’s use is regulated through the institutionalised 134

ibid 39.

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domestic policy stemming from the CFSP and CSDP. From this observation, the ideal scenario would be to reach a form of symbiosis between the two - that is, to update the neutrality clause mirroring the provision set out in the Austrian Constitution.

This alteration would keep the spirit of the State’s beliefs and values whilst remaining in line with the provisions of the CFSP and CSDP and regulating by law the AFM’s commitments abroad. This would put the idea of ‘shared sovereignty’ on an unambiguous plane. Such a move would introduce other considerations such as increased parliamentary checks on the executive.135 This observation runs in line with the remark made in the Review of the Constitution paper back in 2014 stating:

Article 1(3) of the Constitution on neutrality and nonalignment, as currently worded, is anachronistic and out-dated given the collapse of the Superpower duopoly in world affairs. It is for consideration that if Malta is to retain its neutrality the clause should be amended to reflect present realities, while still retaining Malta’s position as a neutral country within the EU supporting the EU’s Common and Foreign Security Policy.136 The claim that it refuses to participate in any military alliance is inherently textually incompatible with the CFSP, regardless of the way it is interpreted and regardless of other alliances which take an amended or omitted form of ‘military’.

6. Conclusion This paper has attempted to provide further literature on the AFM and its obligations towards the neutrality clause and the EU 135

Michael Frendo and Martin Scicluna, ‘A Review of the Constitution of Malta at Fifty: Rectification or Redesign?’ 16.

136

ibid 11.

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frameworks, specifically in its commitments abroad relating to crisis management. It has presented the status quo and attempted to provide insight for interested parties. Throughout compilation, it has been noted that there is no exact reference set in law on the relationship between the neutrality clause, the EU Frameworks and the AFM. Moreover, what results is a set of provisions at national and EU level which do not enable a straightforward interpretation.

Neutral and/or militarily non-aligned EU Member States have adapted and set legislative framework regulating their armed forces’ involvement abroad, combining their domestic foreign policies and that of the EU. This does not seem be the case for Malta. This is not to say that Malta is not in conformity, but the implication is that pertinent legislation is simply not there.

The rationale for the points raised in the introduction remain in principle unchanged and have been met either in the negative or inconclusive.

It has been determined that although the AFM is regulated through an Act, the Act itself does not mention the AFM’s commitments abroad, which contrasts with other EU neutral and or militarily nonaligned Member States.

On 24th April 2017, the Ministry for Home Affairs and National Security announced a ten-year strategy plan which will, among others, provide for army operations abroad and a revision of the legislation regulating the AFM.137 Such an update, is forthcoming as amending the AFM’s regulations would at the very least aid in the exercise of bringing lagging provisions to the fore.138 If measures were to be taken for this area of law to be revised, it would be productive to commission research on these Member States’ legislative framework and policy especially for Austria and 137

<http://www.tvm.com.mt/mt/news/titjib-fil-kundizzjonijiet-tas-suldati-u-taqsima-gdida-fil-pjan-strategiku-ghall-afm/?src=hm> accessed 25th April 2017.

138 Press Brief in <https://homeaffairs.gov.mt/en/media/Policies-Documents/Documents/ The%20Armed%20Forces%20of%20Malta%20Strategy%20Paper%202016-2026.pdf> accessed 5 November 2017.

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Finland. Future research may propose starting the drafting of either a dedicated Act on crisis management (as Finland) or more generally an Act governing the dispatch of units and personnel abroad (as Austria).

Finally, to conclude on the subject of the army briefly mentioned in the introduction, if the notion of a collective EU army materializes, an Act which regulates the forces’ participation and use in any alliance by whatever heading it presents itself, is something to consider.

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How is the service of judicial and extrajudicial documents in civil or commercial matters done in Member States?

Judge Consuelo Scerri Herrera

Judge Consuelo Scerri Herrera acquired her Diploma of Notary Public from the University of Malta in 1988. In 1999, she obtained a diploma in Canonical Marriage and Jurisprudence in Procedure from the Ecclesiastical Tribunals of Malta. She has written many articles on various aspects of the law, including Human Rights, Criminal Law and Procedure which were published in different law journals and books. She was appointed Magistrate in May 1997 and spent a number of years dealing with cases of a criminal nature. In 2018, she was finally appointed Judge.

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1. Introduction

I

t appears that today, a number of Courts in the European Union are handling civil and commercial cases where the need is felt that documents or evidence may be needed from other member states, . being a different Member State from where the case is being heard. Problems started to arise as to how should judicial acts be notified to such persons, whether legal or natural, registered in a different Member State.

Council Regulation 1393/2007 is the European Union Regulation which provides for the service of judicial and extrajudicial acts in the Member States with the exception of Denmark.1 It does not regulate the service per se but regulates the direct cross-border transmission of judicial and extrajudicial documents. The scope of this regulation is so that a judicial document can be diffused from one Member State to another in an expedited manner and without recourse to the use of consular or diplomatic channels. This is done primarily to reinforce the proper functioning of the internal market. The Regulation provides for improvement of cross-border service, lower costs, shorter period of service, solving of language problems and balancing the rights of the parties. There is no doubt that the progressively common synergy between the various hegemony of Member States, encouraged the introduction of this Regulation. The Regulation was designed to cut down the existing delays which were pending in a number of instances, where a person was trying to notify, with judicial proceedings, another person residing in a different Member State.

This Regulation, however does not apply to ‘revenue, customs or administrative matters or to liability of the State for actions or omissions in the exercise of state authority.2’ This Regulation came into force on the 13th November 2008 and abrogated the previous Service Regulation EC 1348/2000. Inter alia it accommodates a 1

In accordance with Article 1 and 2 of the protocol on the position of Denmark annexed to the treaty on European Union and to the Treaty establishing the European Community. Denmark does not take part in the adoption of this Regulation and is not bound by it or to its application.

2

Article 1 of the EC regulation 1393/2007.

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channel for the service of documents via appointed ‘transmitting agencies’ and ‘receiving agencies’ without the expediency to refer to consular avenues, diplomatic avenues and other mechanisms of service. In fact, the Regulation provides standard forms in various official languages of the European Union that should be sent by the transmitting state together with the document to the receiving state, in accordance to their national law. Although, as will be explained later on, the sender may also in certain circumstance refuse notification.

Prior to the introduction of this Regulation, service of documents in civil and commercial proceedings was done under the Hague Service Convention or by means of rogatory requests. The latter took place when a court in one Member State made a formal request to the authorities of another state, directed to notify the document to a defendant who was domiciled in another country. This formal document generally necessitated conveyance from the transmitting court to the Ministry of Foreign affairs in the state of origin, who would then proceed to forward such document possibly through various embassies to the Ministry of Foreign affairs in the receiving state. The Ministry of Foreign Affairs would then presumably pass the documents to the judicial authorities in that state, who would then go about the service notification according to the national law of that same state. Undoubtedly, this Regulation has provided for a less complex manner for service. Some Member States such as Spain, Slovenia, Portugal and the Netherlands have a decentralised system with many transmitting and receiving agencies whereas other States like Malta, Italy, Latvia and France have a single centralised agency. Today, therefore the adopted system in Member States is that the transmitting agency in one Member State sends the judicial or extrajudicial documents to the receiving agency who is in turn responsible for service according to the national laws of that same state. However, as will be elucidated further on, this Regulation also permits that notification takes place by ordinary mail once a receipt of such document is forthcoming.

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2. Service of documents From the very onset, it is of paramount importance for the writer to explain what is understood by the term ‘service of documents’, to be able to understand and give credit to this Regulation. This term means the delivery of court documents to a natural or physical person who is found outside the Member State where the court proceedings are being heard. In Malta, for example, this is done according to the Code of Organisation and Civil Procedure. In fact, in Malta, a number of specific rules relating to notification of acts were inserted in our national law to create a standard procedure so that all parties received their documents in a uniform way. These rules create certainty for the Courts, in that the Court is ascertained that the expedited documents reach the addressee. When we speak about documents we are including all documents that are registered in Court that have to be served to the defendant, namely protests, judicial letters, applications, writ of summons, appeals, replies, precautionary and executive warrants and all other orders given by a Court whether it is presided over by a Magistrate or a Judge. Although the Regulation does not mention specifically what constitutes the term ‘documents’, from case law this has been interpreted to also include extrajudicial documents.

In the case delivered by the European Court by the First Chamber in the names Tecom Mican SL and José Arias Domínguez 3 the Court held that the concept of ‘extra-judicial documents shall be given a broad definition and cannot be limited to documents that are concerned to legal proceedings alone; it may include documents drawn up by notaries’4. Similarly, the same interpretation was given in the case of Roda Golf & Beach Resort5 . In the latter case, Roda Golf, a company registered under Spanish law, asked the clerk of the transmitting court, in terms of Regulation No 1348/2000, to 3 Decided by the European Court Number C – 473/04.

4

on a Preliminary ruling on the 9th February, 2006 Case

Para 33 of the judgment of Tecom Mican SL and José Arias Domínguez.

5

Decided by the European Court on a reference for a preliminary ruling from the Juzgado de Primera Instancia e Instrucción nº 5 de San Javie 25th June, 2009 Case Number C – 14/08.

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send to the competent receiving agencies in England and Northern Ireland and of Ireland, sixteen letters which were addressed to third parties located in those two Member States. The letters were issued for the purpose of a unilateral termination of the contracts, for the sale of immovable property which had been wound up between that company and those third parties. The letters per se did not disclose any connection with legal proceedings which were sub judice.

Roda Golf had issued an instrument of notification and request, so that it may serve that instrument through the intermediary of the court clerk, the competent authority according to the information communicated by the Kingdom of Spain in accordance with Article 23 of the Regulation.

The clerk of the transmitting court objected to forwarding the instrument in contention, in the main proceedings on the premise that its service would not take place in the course of legal proceedings and therefore did not fall within the scope of Regulation No 1348/2000.

Roda Golf brought an appeal against that decision before the referring court. It claimed, in particular, that extrajudicial documents may, in accordance with Regulation No 1348/2000, be served in the absence of legal proceedings and the Court held that ‘the service of a notarial act, in the absence of legal proceedings, such as that at issue in the main proceedings, falls within the scope of Council Regulation (EC) No 1348/2000 of 29 May 2002 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters’.

The current regulation (which abrogated this latter regulation) embraces the same definition to extrajudicial documents.

Once a document is presented in Court, it is the Court which is responsible for the serving of the document. The plaintiff filing the document has to file the document pinpointing the person to be notified and consequently make available the address of the addressee. If there is more than one party to be notified, then the person filing the documents has to ensure that there is more than one copy available for all the addressees independently from each other.

So, the natural question to be asked is whether the Service Regulation in question applies when the address of the person is 290

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not known. This matter was handled in the case delivered by the European Court in G/Cornelilus de Visser 6which resembled an earlier case of Mike Undo Lindner7. The Cornelius de Viser case dealt with the issue of trying to notify a person in a Member State when his address was not known. Mention has to be given to the factual background to this case in that a person in Germany posed for naked photographs and subsequently sued the editor of a website who put the photos online perfidiously. She had never agreed to this and when she found out, she took action against the editor of the website who could not be found despite several attempts to locate him. The plaintiff thus brought her action before a German court, and asked for the notification to take place by means of publication (in other words according to the German Law where a notice of the service is put up on a board held by the Court in question). The German Court was divided on the one hand between the rights of the defence and on the other the right to bring an effective action before the courts and thus raised several questions to the Court of Justice of the European Union (CJEU) to determine whether it had to apply the Brussels 1 Regulation, even though there was no evidence that the defendant was actually domiciled in a Member State.

Generally, on lack of proof that there is a possible domicile in a third-party state, the CJEU gives priority to the pertinence of the Brussels 1 Regulation though subject to one condition. The Brussels 1 Regulations apply in a situation where the defendant is probably a citizen of the European Union but is found in an unknown place, provided the Court who is taking cognisance of the case does not have any strong indicators leading it to conclude that the defendant would be domiciled in a country outside the European Union. Should such indicators subsist, the national court must enforce its own law pursuant to Article 4.1 of the Brussels regulation. Therefore, it held that the service Regulation is not applicable where the address of the person is not known. It concluded that national courts are warranted to give a ruling against a defendant on which the writ of summons was served by way of a mere publication due to the impossibility to locate 6

Decided by the European Court on 17 November, 2011 Case Number C – 327/10.

7

Decided by the European Court on 5 May, 2012 Case Number C – 292/10.

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it, therefore the judgement would be given by default. It iterated that this is so ‘provided the court seized of the matter has first satisfied itself that all investigations required by the principles of diligence and good faith have been undertaken to trace the defendant.’

This regulation provides an obligation on each member state to nominate a central body who is responsible for: ‘a. supplying information to the transmitting agency;

b. seeking solutions to any difficulties which may arise during transmission of document for service and c. Forwarding in exceptional cases, at the request of a transmitting agency, a request for service to the competent receiving agency.8’ However, a Federal state where several legal systems apply or in a state that has autonomous territorial units, such state may choose more than one central body.

The Regulation provides that every Member State has to provide for a transmitting agency and a receiving agency or one agency to perform both, and all judicial documents shall be passed on as soon as possible between the agencies designated9. Should transmission take place according to this procedure, then the document to be transmitted would have to be accompanied by a request according to the standard form set out in Annex 1 in the same Regulation.

Naturally, the form is to be completed in the official language of the place where the service is to be effected or in any other language which that Member State has indicated it can accept. The applicant will have to bear the costs of such translation once needed. Once the document reaches the destination of the receiving state, the receiving state has an obligation to send a receipt within seven days to the transmitting agency by the swiftest means using the same standard form found in Annex 1. The receiving state has a time frame of one 8

Article 3 of the Regulation.

9

Article 2 of the Regulation.

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month within which to affect service of all documents it has received.

If service cannot be met, then the receiving state has to return all such documents it received together with the notice for return. In the Alpha case10 decided by the European Court, the Court held that the receiving agency is obliged to enclose the standard form set upon in Annex II of the Regulation and this without delay to the addressee.

However, if such form is not sent, service would not be considered as invalid.

3. Right to refuse service The receiving state has to inform the addressee according to the form set out in Annex II, that he has a right to refuse service in which case he would have to return the document to the transmitting state within one week if a) it is not written in or b) if not accompanied by a translation in a language which the addressee understands or in the official language of the Member State, wherein the party addressed is living or c) if there are several languages in that Member State, the official language or one of the official languages of the place where service is to be affected, is not honoured. However, to strengthen the success of this Regulation, the possibility of refusing a document should be restricted to exceptional occurrences.

Reference here must be made to the European Court judgement of Gotz Leffler vs Berliln Chemie Ag 11. In this case, the Court held that refusal by the addressee to accept a judicial or extrajudicial document because of the language in which it is drafted, does not result in the nullity of the document. In fact, it said that it is possible for the sender to rectify the fault by sending a translation requested. In this case Mr Leffler had applied to the Courts of Holland to obtain interim relief against the company Berlin Chemie AG, a company that was governed by the law of Germany, so that he may take back possession of goods that were taken from him by means of a warrant of seizure 10

Decided by the European Court of Justice on the 16th September, 2015 Case Number C – 519/15.

11

Decided by the European Court of Justice on the 8th November, 2005 Case Number C – 443/03.

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and thus, his action was also aimed at obtaining a prohibition for further seizure. His claims were dismissed, though he filed an appeal to a higher Court which summoned the Berlin Chemie company to appear before it. The latter company did not make an appearance on the basis of its refusal to accept the summons because it was in Germany. Mr Leffler asked the higher court to give judgment in default against the said company. His plea was not upheld on the premise that the language rule laid down by the regulation had not been complied with, and thus the summoning of the German company had no legal effect. Mr Leffler, still not satisfied, filed an appeal on a point of law to the Supreme Court of the Netherlands which in turn referred the matter to the European Court of Justice for a preliminary ruling. The European Court of Justice primarily held that the consequences of refusal of the document must be determined by a distinct interpretation of the Regulation and not by the domestic law of the Member State. It further held that when the addressee rejects the document on the basis that it is not in an official language of the Member State addressed or in the language of the Member State of transmission, which the addressee comprehends, it is possible for the sender to rectify the matter by sending a translation for the document as soon as possible and this in line with the procedure laid down by the regulation. In this tone, within a period of one month from receipt by the transmitting agency of the information relating to the refusal, may be regarded as applicable and convenient, though this time frame may be determined by the domestic court according to the occurrence.

The Court concluded that if a document has been rejected on the assumption that it is not in line with the language rule and the defendant did not make an appearance, judgement should not be given until it is confirmed that the document in question has been matched by the sending of a translation and that this happened in a satisfactory time for the defendant to make an appearance.

In another decision delivered by the European Court, Ingenieurbüro Michael Weiss und Partner GbR v Industrie- und Handelskammer

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Berlin12, the matter of language problem rose again together with the question as to whether the right to refuse judicial acts also extends to a right to refuse annexes of documentary evidence. The Court held that the regulation should be interpreted as meaning that the addressee of a document instituting the proceedings which is to be notified on the defendant, does not have the right ut sic to accept the document, provided that ‘it gives the chance to the addresses to a affirm his rights in legal proceedings in the Member State of transmission, where annexes are attached to the document consisting of documentary evidence which is not the language of the Member State addressed or in a language of the Member State of transmission which the addressee understands but which has a purely evidential function and is not necessary for understanding the subject matter of the claim or the cause’. The Court held that it is up to the domestic court to decide whether the content of the document instituting the proceedings is sufficient to enable the defendant to affirm his rights or whether it is necessary for the party instituting the proceedings to rectify the fact that a necessary annex has not been translated.

It also said however that the fact that the addressee of a document served has agreed in a contract contracted with the applicant, that the correspondence was to be carried out in the language of the Member State of transmission, does not give rise to a presumption of knowledge of that language but it is evidence which the court may take into consideration in determining whether the address comprehends the language of that transmitting state, and thus in such circumstance, the right to refuse may not always be invoked. It also concluded that the right to refuse does not apply to annexes of documentary evidence.

In the case decided by the European Court in the name Kyrian13, the Court held that since the notification of the enforcement instrument to the debtor constitutes one of the enforcement measures referred to in Article 12, it is the courts of the Member State of the requested authority which are competent to analyse whether the document is 12

Decided by the European Court of Justice on the 8th May, 2005 Case Number C – 14/07.

13

Decided by the European Court on a Preliminary ruling given by Hof Van Cassatie on the 14th January, 2010 Case Number C – 233/08.

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properly notified, in accordance with their national law, namely the language to be used. In this regard, the Court found that, although the Directive lays down no rules forbidding notification in a language not understood by the addressee or a language other than the official language of the Member State of the requested authority, the Directive could not achieve its goal – it must have respect for the legitimate interests of the addressees of the notifications. It made emphasis on the function of notification to make it possible for the addressee to understand the subject-matter and the cause of the notified measure and to assert his rights. The Court concluded that in order for the addressee of a document allowing enforcement to be placed in a position to enforce his rights, he must a priori receive the notification of that instrument in an official language of the Member State of the requested authority. It is for the domestic court to confirm compliance with that right, while ensuring the full effectiveness of European Union law.

Likewise, this same subject was debated in a very recent judgement delivered by the European Court in the name Henderson vs Novo Banco SA14 . The Court held that service to the address is valid as long as it was on an adult inside the habitual residence of the addressee.

4. Service that is affected to a person who is different from the addressee.

It is only logical to ask what happens if the document is refused by its addressee. Are there any consequences to be suffered by such the addressee for such refusal? The Regulation does not provide for the consequences and leaves such matters in the hands of the national Court to deal with. In Malta for example where a person to whom a judicial document is addressed refuses to receive it personally from an officer of the Court, the Court may upon application of the interested party after hearing the officer and considering all the circumstances 14 Decided by the European Court of Justice on a preliminary ruling given by the Tribunal da Relação de Évora (Court of Appeal of Évora, Portugal on the 2nd March, 2017 Case Number C – 354/15.

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that surround the incident, may give a decree that service shall have been affected all the same, despite the refusal of the addressee and this with effect from the day that such refusal was registered and such decree shall be considered as evidence of proof of service for all intents and purposes. Additionally, if a person avoids, obstructs or refuses service knowingly from an officer, he shall be guilty of contempt of court and shall be liable on conviction to a) reprimand, b) expulsion from the court, c) arrest for a period of twenty-four hours in a place within the building in which the court presides or d) to the payment of a fine ammenda or multa.

Another similar question that may arise and is not dealt within the Regulation is what does happen if the postal service delivers a document coming from a different Member State to the address of the addressee where acknowledgement of receipt is required (article 14 of the Regulation) and such document is delivered to another person, perhaps living in the same address indicted or is left with a person who is not the sender himself? This matter is left untouched in the Regulation, though it is the opinion of the writer that such a matter would be dealt with, with the national courts of the transmitting state as to whether such a notification is valid or not. In Malta for instance the postman delivers mail to any person found at the address indicated in the given address irrespective of who the sender is. There is a presumption that once a person is found in that same premises indicated in the act and accepts such a document even though not addressed to him, would in fact be authorised to do so. If such a person was not authorised to receive the document, then he should not have accepted. Therefore, once he did accept it, he assumed the obligation to pass on the same document to its sender. If, however the actual sender was never given that at then he would have to contest that notification in Court in a spate case instituted by his good self against the person who had sent such a document.

5. Certificate of completion The regulation provides further that every judicial document to be 297

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sent, shall be accompanied by a certificate of completion indicating that all the formalities have been abided by and is according to the Annex I and addressed to the transmitting agency. Once again, these would also be accompanied by a translation into one of the official languages of the Member State of origin or in any other language which the Member State would be ready to accept. The person who receives the document signs for the delivery in terms of the law.15 In Malta the original documents sent have a ‘pink card’ attached to them and once returned to the courts after service, there will be a black stamp if the party was notified and it will indicate whom the act was left with and a red stamp if the party was not notified.

6. Costs for service The service of judicial documents coming from a Member State shall not give rise to any payment or reimbursement of taxes or costs for services rendered by the Member State addressed. Though, the applicant shall pay or reimburse the costs covered by recourse to a judicial officer or to the use of a particular method of service by exception16. It is of paramount importance however that costs must be proportionate and non-discriminatory. In Malta, through a legal Notice17 , the receiving agency has set a fixed fee18 of fifty euros (€50) for each and every document to be served. The fee must be paid in advance prior to service and these shall be made by bank transfer to the Office of the Attorney General in an account held by the Central Bank of Malta19.

15

Regulation 33 of the Postal General Services Regulations 2005.

16

Article 11(2) of the Regulation.

17

Legal Notice 138 of 2014.

18

Article 11 of Regulation 1393/2007.

19

Bank Account name AG receipt of Service Documents Account number 40127EUR-CMG5000-Y.

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7. Other methods of transmission When transmission of documents takes place between agencies as contemplated in article 6 of the Regulation, this shall take place as soon as possible in any event within seven days. A receipt would have to be sent to the transmitting agency ‘by the swiftest possible means of transmission using the standard form in Annex 120’ Once received, the receiving agency would have to serve the document according to the national laws of that Member State or by a particular method requested by the transmitting agency unless it goes against the national laws of the transmitting Member State. The execution has to take place within a period of one month, otherwise the transmitting Member State has to be informed by means of a certificate set out in Annex 1 of the Regulation21 . In these instances, the date of service of a document sent by transmission between agencies shall be the date on which it is served in accordance with the law of the receiving Member State. Once notified, the receiving agency will send a certificate of completion with all formalities being observed according to Annex 1.

Despite the fact that the Regulation provides for this system of transmission between Member States via its agencies, it does not exclude the possibility of using consular or diplomatic channels to forward judicial documents for the purpose of service to those agencies that are so designated according to Article 12 of this same regulation. However, each Member State is not obliged to transmit service via the diplomatic or consular channel, since service may also be affected by direct postal service22. But, documents must be sent by a transmitting agency. Transmission can likewise take place via direct service23, wherein service of judicial documents can take place directly through the judicial offices, officials or other competent persons of the Member State where such direct service is permitted under the law of that Member State.

20

Article 6 of the Regulation.

21

Article 7(2) (a) of the Regulation.

22

Article 14 of the Regulation.

23

Article 15 of the Regulation.

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Thus, to conclude on this question regarding different methods of transmission, the writer outlines that there are five transmission methods: -

Direct transmission between the agencies.

-

Direct service by postal service.

-

Direct service.

-

Transmission by Consular or Diplomatic Channels.

-

Service by Diplomatic or Consular agents.

8. Notification of documents One may rightly ask, is there a difference in the hierarchy between the methods of service employed, and do they have the same effect in view of the different methods that are available? This same question was brought up before the European Court in the case in the names Plumex v Young Sports NV 24. The Court held that the Council Regulation 1348/2000 does not establish any pecking order between the methods of transmission and service through agencies under Article 4 to 11 and the method of service by post under Article 14 thereof. Thus, it is possible to serve a judicial document by any one or other or both of those methods. It held that primarily, neither the recital in the preamble to the Regulation nor its provisions indicate that a method of transmission and service used in accordance to the regulation would rank below the method of service through agencies.

Furthermore, in the spirit of the regulation which is intended to secure that judicial documents are notified competently whilst at the same time looking after the rights of the persons who are to be notified. Therefore, the Court held that the sender can choose which is the most suitable or appropriate measure in the light of the particular occurrence. However, it is the opinion of the author that 24

Decided by the European Court on a Preliminary ruling given by Hof Van Cassatie on the 11th November, 2015 Case Number C – 233/14.

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the first service if not contested is the effective one when considering time frames.

In the case delivered by the European Union in the name Tecom Mican25, the Court held that service based on the Regulation remains valid even where an earlier transmission has already been affected by other means.

In Malta, the receiving authority checks the address provided if the service fails, however in so doing it would require the identity card number of the physical person to be notified, since this is unique to every individual and then it would be in a position perhaps to provide an alternative residence if such person was not notified. In the case of legal persons, the requested authority would have to provide the address of the company to be notified through an online system operated by the Registry of Companies within the Malta Financial Services Authorities (MFSA). Should the address given by the sending authority differ from the one shown on such registry, then the authority would make another attempt to notify such company. In the event that both the physical and legal persons are not notified due to the fact that there was nobody present at the indicated address, then the requested authority may file a request before the court asking for the document to be served after working hours provided for by law. An interesting question that arises is whether the transmitting authority has access to such registers held nationally. The reply as a general rule is no. In Malta, the database regarding details of natural persons is not made available to the general public or foreign authorities, whereas information with regards to physical persons is made available free of charge through an online system under the registry of the Malta Financial Services Authority. Specific information regarding details of shareholders, directors or judicial representatives would be made available against a payment through the same website.

In Malta, notification of documents takes place either by direct postal service or by court marshals. Judicial documents which do not 25

Decided by the European Court on a Preliminary ruling on the 9th February 2006 Case Number C – 473/04.

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form part of a court case are served by registered post where a ‘pink card’ is drawn up and indicates the signature of the receiver as proof of service or if the documents are not delivered, then on the same card there would be the word ’unclaimed’ . The ‘pink card’ would in turn be attached to the original document as proof of service. However, on the other hand document which form part of legal proceedings are all filed through the registry of the Law Courts and served through the Court Marshall who is in charge of delivering the said document in person to the address indicated on the same judicial document, or by leaving a copy at the place of residence of the natural person or with someone in his service or a family member provided such person is over the age of fourteen or at his place of work. In case of notification to a company, then this would take place at the registered office, place of business or principal office with a person in charge or such person who has the judicial representation of the said company.

The Regulation does not provide for electronic service of documents and thus it is understood that notification cannot take place in this manner.

9. Conclusion So far, the Court of Justice of the European Union has had surprisingly few chances to define and interpret issues concerning the applicability of this Regulation. From an optimistic viewpoint, the writer may conclude that this is an indication that the system is functioning smoothly. From a pessimistic stand point, this could be that the regulation is not used enough or that a number of controversial issues have been overlooked. Thus, the application of this regulation in Member States is either disregarded or is far from being uniform in its application. The writer is sure that there will be many numerous controversial questions concerning the applicability of such a regulation especially in view of the fact that there are ground-breaking conceptual differences between the national laws of individual Member States concerning notification of Acts and consequently the acceptance of documents that are inserted in 302

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judicial proceedings having their origin from different Member States.

There is no doubt however that the Service regulation is a very useful pragmatic tool for cross-border service of documents and has many advantages attached to its use as where witnessed above. Though, bravely the author outlines that there are still problems regarding the cross-border service where time, language and costs are concerned, undoubtedly, the effective service of documents as outlined in this regulation is essential to the proper administration of justice.

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Financial Law

The Basel Accords as Transnational Regulatory Law Dr. George Bugeja

George Bugeja is a Senior Associate, working in the Corporate Finance Department, at GANADO Advocates. He graduated with a Doctor of Laws degree from the University of Malta in 2010, and completed his Master of Laws degree at University College London in 2011. In 2018 he completed his Doctor of Philosophy in Law (Ph.D.) degree from King’s College London, having written a thesis entitled “The Basel Accords as a Transnational Regulatory Law: A Focus on Regulatory Consistency and Domestic Embeddedness.

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This research paper contains extracts from a dissertation submitted in the fulfilment of the degree of Doctor of Philosophy (PhD) in Law from King’s College London which was carried out following the award of a scholarship by the Malta Government Scholarship Scheme. The research work disclosed in this publication is partially funded by the Malta Government Scholarship Scheme grant.

1. Introduction

T

he Basel Accords seek to regulate actions and actors which transcend national frontiers, and can therefore be classified as one of the typical examples of ‘transnational law’ (or more specifically ‘transnational regulation’)1. In light of increased globalisation, actors from different states have come together to regulate the banking industry, and these international standards have now been adopted by most states around the world. Following the financial crisis, the Basel Accords have been even more focused towards the adoption of a macroprudential approach to regulation (particularly when seeking to focus on the reduction of systemic risks across the globe), thus rendering the Basel Accords, and their implementation, enforcement and supervision even ‘more transnational’ in nature2.

It is here argued that the Basel Accords are yet to ‘settle’, with this resulting from the stated aims of the Basel Accords changing along the years, and with states adopting different approaches to the Basel Accords. Thus, whilst the Basel Accords are generally considered to 1 Eleni Tsingou, ‘Transnational Governance Networks in the Regulation of Finance’ in Morten Ougaard and Anna Leander (eds), Business and Global Governance (Routledge, 2010) 139; Emilios Avgouleas, The Reform of ‘Too-Big-To-Fail’ Bank – A New Regulatory Model for the Institutional Separation of ‘Casino’ from ‘Utility’ Banking (February 2010) 11 <http://ssrn.com/ abstract=1552970> accessed 8 December 2014.

2

Andrew Baker, ‘Macroprudential Regulation’ in Daniel Mügge (ed), Europe and the Governance of Global Finance (Oxford University Press, 2014) 174 – 176.

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be the main regulatory standard for banks across the world, they are still subject to differences across the different jurisdictions, giving rise to regulatory arbitrage opportunities which limit the effectiveness of the Basel Accords.

2. Background to the Basel Accords The main rationale behind capital adequacy regulation is that higher capital ratios lead to safer banks3. Capital adequacy methodologies have long been considered as necessary regulatory tools to ensure that both abnormal claims on bank deposits as well as unexpected losses could be catered for. Capital thus serves as a buffer against abnormal claims or unexpected losses, whilst also keeping the public’s confidence in banks high (with this being particularly important since banks can never immediately repay all deposits held with them to their customers, in light of the maturity transformation function which they carry out, making them particularly exposed to bank runs on a loss of confidence by the public)4.

It has also been argued that, in the absence of regulatory requirements, banks would tend to combine low capital ratios with a strategy of excessive risk-taking5. Padoa-Schioppa thus argues that regulation is essential in order to ensure the maintenance of minimum capital requirements, whilst serving as a threshold which 3 One should point out that the reasoning of having higher capital ratios as a safeguard does not necessarily apply just to banks. All undertakings would be considered to be much safer if certain capital ratios were to be adhered to. However, regulatory focus was put particularly on banks, mainly in light of the possibility of banks leveraging themselves through deposits taken from the public, and also in light of the systemic risks which banks pose; Padoa-Schioppa Tommaso, Regulating finance: Balancing freedom and risk (OUP Catalogue, 2004) 7 – 9.

4

Wood Philip R., Regulation of International Finance in ‘The Law and Practice of International Finance Series’ (Sweet and Maxwell, Vol. 7, 2007) 27.

5

Padoa-Schioppa (n 3) 7 – 9; See also: Tarullo Daniel K, Banking on Basel: the future of international financial regulation (Peterson Institute for International Economics, 2008) 17. It has been argued that banks in weak positions have much to gain from increased risk-taking, since if a risk does not pay off, the most shareholders can lose is the capital they would have invested, whilst if the risk does pay off, the weak position would have been reverted, whilst shareholders would stand to benefit from the returns achieved from such risks, particularly since depositors would only be paid pre-stipulated interest rates.

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may lead to supervisory intrusion in the event of the deterioration of a bank’s capital position. This being particularly important since scattered and uninformed depositors cannot induce more prudent management behaviour should there be the need6.

Capital adequacy is seen as one of the main safeguards of depositors’ funds and of the banking system in general, coupled with other protections such as depositor insurance (also known as ‘depositor guarantee schemes’), and having central banks acting as lenders of last resort. The attraction of requiring specific amounts of capital to be kept by banks (as against the use of other safeguards of depositors’ funds) arises from the fact that this is not reliant on other banks or on the State since capital must be provided by the bank itself (or through arrangements it makes)7. Furthermore, capital adequacy acts as an ex-ante preventive measure, rather than an ex-post solution to a problem which would have already occurred.

The development of the Basel Accords as a transnational system of regulation (through Basel I) was a response to the globalisation of banking, and particularly as a result of the increased provision of services across borders. The main cause for concern in the 1980s was that Japanese banks started to provide their services in the US and in the UK, and with Japanese banks being subject to less stringent regulations and having much lower capital than banks established (and regulated) in these jurisdictions8. Japanese banks were increasing their market share, since they were not subject to the same regulatory constraints which local banks faced. The capital adequacy constraints which had been introduced in the US and in the UK, on banks taking deposits from the public (and which sought to minimise risks to the financial system), were thus being avoided9. As a result, banks established and operating in these jurisdictions could not compete with Japanese banks as the latter had a competitive advantage in light 6

Padoa-Schioppa (n 3) 7 – 9.

7

See also: Tarullo (n 5) 20 – 21.

8 Barth James R., Caprio Gerard, and Levine Ross, Rethinking Bank Regulation: Till Angels Govern (Cambridge University Press, 2006) 64 – 65.

9

Barth (n 8) 64 – 65.

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of the less stringent regulations to which they were subject10.

The developments in capital adequacy regulation in the US were gradual, and whilst regulatory monitoring of capital was present from the early years of the 20th century, this had not been set out as an explicit capital requirement. In the late 1930s the Federal Deposit Insurance Corporation (‘FDIC’) shifted its emphasis to having a ratio of capital to total assets (as against having a ratio of capital to deposits as has had been in place from before the 1930s)11. Formal minimum capital requirements were however only imposed in the US in the 1980s, as the US Congress passed legislation in 1983 that required federal banking agencies to establish minimum capital levels of banks and bank holding companies, and the FDIC issued final regulations on risk-based capital requirements in 198512.

Though other Basel Committee on Banking Supervision (‘BCBS’) countries historically placed less emphasis on capital requirements than the US, as competitive pressures and other developments on banks in the rest of the world paralleled the effects on US banks, supervisors in other countries forming part of the BCBS also started to resort to capital adequacy regulation towards the end of the 1970s and at the start of the 1980.13 The EEC Banking Coordination Directive of 197714 provided, inter alia, for the establishment of capital ratios for ‘observational purposes’, and by 1985, nine of the European countries with representation on the BCBS had already adopted some form of risk weighting in the capital ratios they established (whether 10

This also happened following the Latin American debt crisis of the 1980s, when various bank supervisors became concerned about the deterioration in the capital base of most of the main international banks. American regulators were therefore under pressure to either close the doors to foreign international banks or alternatively lower the capital standards to the main western American banks in order to be able to compete with foreign banks. These developments also took place following the dismantling of the Bretton Woods system and the Herstatt Bank failure in the early 1970s. See also: Padoa-Schioppa (n 3) 7 – 9; Tarullo (n 5) 32 – 35.

11

Tarullo (n 5) 32 – 35.

12

ibid 36 – 39.

13

ibid 40 – 41.

14

First Council Directive 77/780/EEC the coordination of the laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions [1977] OJ L 322/30.

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as mandatory requirements or as supervisory guidelines), with Italy being the only jurisdiction which had no specified capital ratios by the time15. Similarly, Japan also established ratios for supervisory guidance in 198616.

Following pressure which had been applied by the US and the UK, the BCBS agreed to Basel I in 1988, and was adopted by all members by 199217. Basel II18 was agreed to in 2004, as this sought to deal with the evolving nature of banks and the one-size-fits-all approach which had been adopted by Basel I19. Basel II was however never fully implemented as the financial crisis of 2008 led the BCBS to focus on agreeing to Basel III in 201020. Though Basel III was established in 2019, as the target-date by when it should be adopted, over the past months there have also been discussions about possible amendments to Basel III, with these amendments also being, at times, referred to as Basel IV. Most of the standards adopted throughout the Basel regime along the years followed the US model, though negotiations between different states have characterised the texts of the Basel Accords.

Notwithstanding these various negotiations, there has been no proper consideration in order to determine whether the international standards which have been adopted have the same meaning and, whether they can yield the same results in different jurisdictions, as this seems to have been an underlying assumption which all relevant actors took for granted throughout the years.

15

Tarullo (n 5) 41.

16

ibid 41.

17

ibid 45 – 55.

18

Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards: A revised framework (Comprehensive Version, June 2006) <http:// www.bis.org/publ/bcbs128.pdf> accessed 21 September 2014 (Basel II).

19

Wood (n 4) 624.

Basel Committee on Banking Supervision, Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems (December 2010 (rev June 2011)) (Basel III, 2010); and Basel Committee on Banking Supervision, Basel III: The Liquidity Coverage Ratio and Liquidity Risk Monitoring Tools (January 2013) (Basel III, 2013; and with: (a) Basel III, 2010; (b) those elements of Basel II which have not been superseded; and (c) further texts which have since been adopted in relation to Basel III; collectively referred to as ‘Basel III’).

20

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3. Applicability of the Basel Accords Though the Basel Accords are now considered to be the main regulatory standard for most banks in most jurisdictions, there is no common definition as to which entities apply these international standards. Whilst some jurisdictions have extended the Basel Accords to all banks (and investment firms), others have only applied these international standards to ‘internationally-active banks’, as required by the Basel Accords.

Basel I identified its scope of application as setting standards of regulation for ‘banks undertaking international business’21. It also continued by specifying that ‘the agreed framework is designed to establish minimum levels of capital for internationally active banks...’22. One of its main objectives therefore was that of reaching a ‘high degree of consistency in its application to banks in different countries with a view to diminishing an existing source of competitive inequality among international banks’ 23.

Similarly Basel II also referred solely to ‘internationally active banks’:24

The fundamental objective of the Committee’s work to revise the 1988 Accord has been to develop a framework that would further strengthen the soundness and stability of the international banking system while maintaining sufficient consistency that capital adequacy regulation will not be a significant source of competitive inequality among internationally active banks.

Thus, though Basel II introduced much more detailed rules than Basel I, its scope of application was still specifically focused, stating 21

Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards (July 1988) 2 para. 4 <http://www.bis.org/publ/bcbs04a.pdf > accessed 21 September 2014 (Basel I).

22

See also: Basel I (n 21) 2 para. 7.

23

Basel I (n 21) 1 para. 3.

24

Basel II (n 18) 2 para. 4.

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that ‘[t]his Framework will be applied on a consolidated basis to internationally active banks...’25.

This ‘Scope of Application’ remained unchanged by Basel III, which simply stated that the scope of application as set out in the Basel II framework will continue to be followed26.

It is clear that throughout the different texts of the Basel Accords, the main focus has always been that of applying common regulatory standards to banks operating across borders, also referred to as ‘internationally-active banks’. Regulatory convergence between internationally-active banks was therefore considered as necessary in order to ensure a level playing field between these banks27.

Though the Basel Accords refer to ‘internationally-active banks’, this term is not defined in the Basel Accords, notwithstanding that the Accords refer to ‘banks’ and ‘internationally-active banks’ on numerous occasions throughout the different texts and in their scope of application. This gives rise to definitional issues, as different states adopt differing definitions of a ‘bank’ (with differences also arising within the EU, on there being incongruences between national law definitions and those adopted in EU legislative texts).28 Furthermore, the Basel Accords neither provide definitions as to what makes a bank ‘internationally-active’ or otherwise.

What constitutes a ‘bank’ and what makes a bank ‘internationallyactive’ for the purposes of the Basel Accords therefore remains unclear. Furthermore, apart from the varying definition of ‘banks’ across different jurisdictions, the entities to which capital adequacy 25

ibid 7 para. 20.

26

Basel III, 2010 (n 20) 11 para. 47.

27

Basel I (n 21) 1 para. 3; Basel II (n 18) 7 para. 20; Barth and others (n 8) 28 – 40;

28

See: European Banking Authority, Report to the European Commission on the perimeter of credit institutions established in the Member States (27 November 2014) 4 para. 11 <https:// www.eba.europa.eu/documents/10180/534414/2014+11+27+-+EBA+Report+-+Credit+institutions.pdf> accessed 4 December 2014; European Banking Authority, Opinion of the European Banking Authority on Matters Relating to the Perimeter of Credit Institutions (EBA/ Op/2014/12, 27 November 2014) <https://www.eba.europa.eu/documents/10180/657547/ EBA-Op-2014-12+%28Opinion+on+perimeter+of+credit+institution%29.pdf> accessed 4 December 2014.

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regulation (following on the Basel Accords) has been applied to, in different jurisdictions has also varied significantly. Given that the Basel Accords still refer to ‘internationally-active banks’ the BCBS seemingly ignore the activities of entities which are not classified as ‘banks’ (notwithstanding that they may provide similar activities); whilst neither are they concerned about banks which do not have an ‘international’ element (even though major jurisdictions have applied the capital adequacy regulations as deriving from the Basel Accords to all banks, whether internationally-active or otherwise).

Capital adequacy rules have historically been considered to be essential in light of the intrinsic nature of banking, whereby banks ‘create’ money by acting as an intermediary between those who require safe-keeping of their money, and those who need to borrow money (also referred to as ‘maturity transformation’)29.

This means that banks are never liquid enough to be able to satisfy all their depositors on demand, due to loans which a bank would have granted30. Furthermore, banks may also be negatively affected by the failure or troubles of other banks in light of the widespread interconnectedness of the banking system, thereby also giving rise to systemic risk31. This makes banks subject to bank runs should there be a loss of confidence in the said bank or in the banking system.

Nevertheless, there has been no effort by the promoters of the Basel Accords to consider whether all entities which undertake liquidity and maturity transformation (such as shadow banks), and which may as a result also give rise to systemic risks, should be subject to the Basel Accords or otherwise.

4. The Changing Objectives of the Basel Accords One must therefore take a closer look at the objectives of the Basel Accords, particularly in light of varying reasons for regulation which 29

14.

Prasad Krishnamurthy, Regulating Capital (Harvard Business Law Review, Vol. 4, 2014) 13 –

30

ibid.

31

ibid 14.

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have been given on adoption of these standards on a national level.

The historical reason for the implementation of the Basel Accords has been attributed to the need for a level playing field amongst banks in different jurisdictions, thus ensuring that international banks competing with each other are subject to similar regulatory frameworks. This can also be seen from the text of Basel I, which stated: ‘This report represents the outcome of the Committee’s work over several years to secure international convergence of supervisory regulations governing the capital adequacy of international banks’32.

Following the recent global financial crisis the main objective of the Basel Accords has been changing, however, with priority being given to objectives other than that of having ‘regulatory convergence’ between states. Basel I had listed two ‘fundamental objectives’ which ‘lie at the heart of the Committee’s work’, in seeking to obtain regulatory convergence:33

Two fundamental objectives lie at the heart of the Committee’s work on regulatory convergence. These are, firstly, that the new framework should serve to strengthen the soundness and stability of the international banking system; and secondly that the framework should be in fair and have a high degree of consistency in its application to banks in different countries with a view to diminishing an existing source of competitive inequality among international banks...

Therefore, in Basel I, regulatory convergence had been set as the main aim of the Basel Accords, with this having been sought through the attainment of two ‘fundamental’ objectives. The two objectives which were considered necessary to reach regulatory convergence, were: strengthening the soundness and stability of the international banking system; and having a higher degree of consistency of the regulatory framework.

However, following the recent global financial crisis there has 32

Basel I (n 21) 1 para. 1.

33

ibid 1 para. 3.

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been a shift in emphasis from ‘regulatory convergence’ towards seeking to reduce systemic risks by placing a greater emphasis on the soundness of banking systems (which in Basel I was only considered as a ‘fundamental objective’ in achieving the main goal of regulatory convergence). The title of the Basel documents itself is evidence of this. Whereas each of the Basel I and Basel II texts were given the title of ‘International Convergence of Capital Measurement and Capital Standards’, the main Basel III documents (which amended (but did not replace) the Basel II text) were entitled: ‘A Global Regulatory Framework for More Resilient Banks and Banking Systems’ and ‘The Liquidity Coverage Ratio and Liquidity Risk Monitoring Tools’ respectively.

Regulatory capital in Basel III is therefore now seen as a means through which systemic risks may be contained, rather than being used to ensure that similar standards apply between different states and thereby reducing competitive advantages which certain states would otherwise have over others34. The aim of countering systemic risks also appears to contrast with the position adopted prior to the recent global financial crisis – where the former Federal Reserve Chairman Alan Greenspan had stated that the containment and elimination of systemic risks should be a function of central banks, and should not be catered for through the imposition of capital adequacy measures on banks35. Moreover, the Basel Accords now also seek to minimise systemic risk at a national level (rather than just focusing on systemic risks arising out of the international banking system), such that the Basel Accords have been seen as a system through which banks are strengthened in order to seek to ensure that claims on public funds (through depositor insurance/ guarantee schemes) are not resorted to.

The shift in scope away from regulatory convergence seemed to already be present in Basel II – when referring to the ways in which supervisory authorities should have adopted Basel II, it was specifically 34

See: Hal S. Scott, Reducing Systemic Risk through the Reform of Capital Regulation (Journal of International Economic Law, Vol. 13(3), OUP, 2010) 763 – 764.

35

Tarullo (n 5) 22.

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stated that on implementation of the Basel Accords national supervisors needed to carefully consider the benefits which Basel II would have had at national level and therefore develop a timetable and approach to implementation based on national considerations36.

This also shows a shift away from the objective of regulatory convergence, towards a system where the resilience and soundness of banks (through the adoption of stronger risk management practices) seeks to take precedence.

As early as 2003, the Vice Chairman of the Federal Reserve Board had already stated, on discussing Basel II, that ‘[m]any have forgotten that the first accord had its origins in complaints that globalization of banking had distorted competitive balance...’.37 He continued by stating: ‘[w]e should not lose sight of the continuing imperative, both economic and political, to ensure that a revised accord is perceived by all to maintain a level playing field for banks operating not only across national borders but also domestically’38.

In setting out its objectives, Basel II already implied that ‘sufficient consistency’ amongst the laws and regulations of different jurisdictions will suffice, as long as the soundness and stability of the international banking system is catered for. In this respect Basel II stated39: ‘The fundamental objective of the Committee’s work to revise the 1988 Accord has been to develop a framework that would further strengthen the soundness and stability of the international banking system while maintaining sufficient consistency that capital adequacy regulation will not be a significant source of competitive inequality among internationally active banks.’

The Basel III reforms’ main objectives, following the recent global financial crisis, continued to build on Basel II, by having their main 36

Basel II (n 18) 1 para. 3.

37

Ferguson (n 51).

38

ibid.

39

Basel II (n 18) 2 para. 4.

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objectives strictly focused on the reduction of systemic risks, by stating that ‘[t]he objective of the reforms is to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spillover from the financial sector to the real economy’40. It has also been stated that a number of reforms in Basel III were introduced in order to ‘address the market failures revealed by the crisis’41.

Therefore, whilst international regulatory convergence was the main reason for the promulgation of the Basel Accords, there has been, in recent years, a marked shift, away from the original objective of international regulatory convergence, towards the protection from systemic risks and the ‘soundness and stability of the international banking system’. This shift in scope away from regulatory convergence, and similarly the lack of competitive equity between different financial instruments has however increased regulatory arbitrage opportunities available, which may in turn even defeat the purpose of reducing systemic risks.

5. Implementation of the Basel Accords in National Laws Whilst the Basel Accords fail to provide clarity regarding the granular activities which should be regulated, the scope of their application specifically refers to the regulation of ‘internationallyactive banks’. However, different jurisdictions have different interpretations as to what constitutes a ‘bank’. Furthermore some jurisdictions have sought to extend the applicability of the Basel Accords to institutions other than ‘internationally-active banks’. This Section therefore considers the entities to which the Basel Accords have been extended across the different jurisdictions.

It can be argued that, whilst the applicability of the Basel Accords 40

Basel III, 2010 (n 20) 1 para. 1.

41

ibid 2 para. 6.

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to internationally-active banks was essential in order to ensure that lighter-regulated banks did not impact banks in other jurisdictions, the importance of the Basel Accords arises since the Basel Accords have been applied to a much wider list of institutions than originally envisaged, and have become a global standard of how banks are regulated (irrespective of the size of the particular bank, the activities which it carries out, and whether it operates internationally or otherwise). Therefore a transnational regulatory law which was meant to apply to a very specific type of entity has thrived in the absence of other regulation being put in place, notwithstanding that no proper economic analysis was carried out in order to ascertain whether the Basel Accords could provide an adequate framework for the regulation of all banks (and other entities such as investment firms).

It is thus also somewhat ironic that whilst the Basel Accords regulate ‘internationally-active banks’, the BCBS has had to issue further standards which specifically apply to ‘globally systemic important banks’ (at times also referred to as ‘G-SIBs’).42

5.1 European Union Article 1 of the CRR specifically states that the scope of application of the regulations established by the CRR is to ‘institutions’. An ‘institution’ has been defined in Article 4 of the CRR as being ‘a credit institution or an investment firm’43. Therefore, in the EU, the transposition of the Basel requirements to national legislation refers to all credit institutions (banks), with this being extended also to

42

BCBS, Global Systemically Important Banks: Updated Assessment Methodology and the Higher Loss Absorbency Requirement (BIS, July 2013) <https://www.bis.org/publ/bcbs255. pdf> accessed 14 December 2014; Further updates to the standards which apply to G-SIBs are also found in standards set by the BCBS in December 2017. See: BCBS, Basel III: Finalising Post-Crisis Reforms (BIS, December 2017) <https://www.bis.org/bcbs/publ/d424.pdf> accessed 17 January 2018 (Basel IV).

43

See also: Richard Herring, Implementing Basel II: Is the Game Worth the Candle? (Financial Markets, Institutions & Instruments, Vol. 14, No. 5, Blackwell Publishing Inc, 2005) 276.

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investment firms44. The position adopted by the EU has remained consistent throughout the years, with Council Directive 93/6/EEC45 and the EU Directive 2006/49/EC46 (which had adopted the Basel I and the Basel II Accords respectively) also having been applicable to all credit institutions and investment firms without distinction.

The EU therefore does not distinguish between banks and investment firms on considering the applicability of the Basel Accords, and it neither distinguishes as to whether these entities are internationally-active or otherwise, and it merely applies this regime to all banks and investment firms irrespective of their focus, activities, size or the potential systemic risk they may pose to the economy at large. The rationale for this has been stated as follows47: ‘… while the Basel capital adequacy agreements apply to ‘internationally active banks’, in the EU it has always applied to all banks (more than 8.300) as well as investment firms. This wide scope is necessary in the EU where banks authorised in one Member State can provide their services across the EU’s single market and as such are more than likely to engage in cross-border services.

Also, applying the internationally agreed rules only to a subset of European banks would create competitive distortions and potential for regulatory arbitrage.’

Whilst the need to cater for ‘competitive distortions and potential for regulatory arbitrage’ was the reason for extending the Basel Accords’ implementing laws to all credit institutions and investment firms, this same approach has not been adopted on the rise of shadow banking, over the last decade.

44

Rainer Masera, CRR/CRD IV: the Trees and the Forest (April 2014) 10 <http://papers.ssrn. com/sol3/papers.cfm?abstract_id=2418215&download=yes> accessed 14 December 2014.

45

Council Directive 93/6/EEC on the capital adequacy of investments firms and credit institutions [1993] OJ L 141.

46

Directive 2006/49/EC of the European Parliament and of the Council on the capital adequacy of investment firms and credit institutions (recast) [2006] OJ L 177.

47

ibid.

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It is also ironic that though the EU has always applied the Basel Accords to all banks and investment firms, the European Parliament has in November 2016, and on resolving the finalisation of Basel III, recalled ‘the importance of the principle of proportionality, to be assessed not only in relation to the size of the institutions which are regulated, but also understood as a fair balance between the costs and benefits of regulation for each group of stakeholders’48. This is ambiguous in light of the fact that though the Basel Accords only apply to ‘internationally-active banks’ and not to all banks, it has been the EU itself which has imposed the requirements of the Basel Accords on all banks and investment firms without distinction.

In its resolution the European Parliament however also called on the Commission to prioritise work on;

a ‘small banking box’ for the least risky banking models, and to extend this work to an assessment of the feasibility of a future regulatory framework consisting of less complex and more appropriate and proportional prudential rules specifically adapted to different types of banking model49.

It will be interesting to see how this resolution will develop in the near future given that in the EU the argument of ‘competitive equity’ has always been used in order to favour the application of the Basel Accords to all banks and investment firms, irrespective of their size or nature50.

48

European Parliament, European Parliament Resolution of 23 November 2016 on the Finalisation of Basel III (2016/2959(RSP) Resolution 9 <http://www.europarl.europa.eu/sides/getDoc. do?pubRef=-//EP//NONSGML+TA+P8-TA-2016-0439+0+DOC+PDF+V0//EN> accessed 20 April 2017.

49

ibid Resolution 19. It however seems that the need to cater for smaller entities will only be used in order to allow for a reduction in certain capital requirements when the counter parties of a bank consist of small and medium sized enterprises pursuant to Article 501 of the CRR, with CRR II proposing to extend the applicability of Article 501 further.

50

Proposals which have been put forward in December 2017 suggest that a new framework should be created in order to distinguish larger investment firms from smaller investment firms, whereby larger investment firms would continue to be subject to the CRR and CRD IV, whilst smaller investment firms would no longer be subject to the same regime, but would become subject to a new bespoke regime. See: European Commission, Proposal for a Regulation of the European Parliament and of the Council on the Prudential Requirements of Investment

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5.2 United States In the US, the laws implementing the Basel regime have been much more restricted than in the EU, with the applicability of the implementing laws being limited to ‘internationally-active banks’, with this only being extended, to some extent, on providing for the introduction of Basel III51.

Prior to the adoption of Basel III, US regulators limited the application of the Basel II standards, only to ‘core banks’52 (with the US adopting only the Advanced Internal Ratings-Based (‘IRB’) approach for these banks, without making reference to the Standardised approach or the Foundation IRB approach)53. All other banks in the US remained subject to the general US risk-based capital rules, based on Basel I, unless they elected to seek to obtain authorisation, to adopt the Advanced IRB approaches, based on the Basel II standards54. The US argued that this did not prejudice international convergence of the Basel Accords, and that those banks which were not ‘internationallyFirms and Amending Regulations (EU) No 575/2013, (EU) No 600/2014 and (EU) No 1093/2010 (COM (2017) 790 final, 2017/0359 (COD), Brussels, 20 December 2017); European Commission, Proposal for a Directive of the European Parliament and of the Council on the Prudential Supervision of Investment Firms and Amending Directives 2013/36/EU and 2014/65/EU (COM (2017) 791 final, 2017/0358 (COD), Brussels, 20 December 2017).

51

See also: Roger W. Ferguson, Jr., Concerns and Considerations for the Practical Implementation of the New Basel Accord (Remarks at the ICBI Risk Management 2003 Conference, Geneva, Switzerland, 2 December 2003) <http://www.federalreserve.gov/boarddocs/speeches/2003/20031202/default.htm> accessed 21 November 2014.

52

The definition of ‘core banks’ referred to: (a) any depository institution meeting either of the following two criteria: (i) consolidated total assets of USD 250 billion or more, or (ii) c o n solidated total on-balance sheet foreign exposure of USD 10 billion or more; or (b) any US-chartered bank holding company (BHC) meeting any of the following three criteria: (i) consolidated total assets (excluding assets held by an insurance underwriting subsidiary) of USD 250 billion or more, (ii) consolidated total on-balance sheet foreign exposure of USD 10 billion or more, (iii) having a subsidiary depository institution that was a core bank or opt-in bank. Furthermore, a depository institution established as a subsidiary of a core-bank or of a bank which elected to adopt the Advanced Internal-Ratings Based Approach would also be considered as a ‘core-bank’.

See: Basel Committee on Banking Supervision, Basel III Regulatory Consistency Assessment (Level 2) – Preliminary Report: United States of America (October 2012) 8, 18 <http://www.bis. org/bcbs/implementation/l2_us.pdf> accessed 12 December 2014 (US Regulatory Consistency Assessment); Richard J Herring, The Rocky Road to Implementation of Basel II in the United States (2007) 9 <http://fic.wharton.upenn.edu/fic/papers/07/0731.pdf> accessed 17 December 2014; Ferguson (n 51); Herring (n 43) 276.

53

US Regulatory Consistency Assessment (n 52); Herring (n 52) 9.

54

US Regulatory Consistency Assessment (n 52) 8, 18; Herring (n 52) 9.

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active’ were already sufficiently regulated by the laws of the US55.

Though the Basel regime did not define, or in any way outline the monetary thresholds which would define banks as being ‘internationally-active’, the thresholds for a bank to be considered as a ‘core bank’ were established internally in the US, and were defended by the US regulators in light of the high-percentage of banking activity which was covered by the banks which fell within the said thresholds56. This results-based approach was therefore used to justify the monetary thresholds established, and though this has not caused issues with assessors from the BCBS (in its assessment of implementation of Basel in the US57), it is conceivable to argue that these same monetary thresholds may have different outcomes (in the percentage of banking activity regulated), if they were to be transplanted in other jurisdictions.

On implementing the more recent Basel III, the US opted to extend the scope as to which entities the Basel Accords would apply.

The Basel III Final Rule on capital standards, issued in July 2013, established that the Basel III provisions, as implemented in the US, would apply to all depository institutions in the US (other than for small banks with less than USD 500 million in assets), as well as to systemically important non-bank financial companies58. Since the US had previously only implemented the Advanced IRB approach, the new amendments specified that not all entities would be applying this approach, and banks which do not qualify under the Advanced IRB approach would adopt a method for calculation of capital built on the Standardised approach (with this method of calculation being established by US regulators, and not following the requirements 55

See: Roger W. Ferguson, Jr., Basel II: A Realist’s Perspective (Remarks at the Risk Management Association’s Conference on Capital Management, Washington D.C., 9 April 2003) (Ferguson RMA Conference); Roger W. Ferguson, Jr., Basel II: Scope of Application in the United States (Remarks before the Institute of International Bankers, New York, 10 June 2003) (Ferguson IIB Remarks); Ferguson (n 51).

56

Ferguson IIB Remarks (n 55).

57

US Regulatory Consistency Assessment (n 52).

58

Rainer Masera, US Basel III Final Rule on Banks’ Capital Requirements: a Different-Size-FitsAll Approach (PSL Quarterly Review, Vol. 66, No. 267, 2013) 388 <http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=2456196> accessed 14 December 2014.

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set out by the Basel Accords)59. The Standardised approach will also, however, act as a ‘capital-floor’, with the capital requirements being increased according to an entity’s size and complexity60. Banks adopting the Advanced IRB approach are thus required to calculate their capital on the basis of both the Standardised approach and the Advanced IRB system, and they are then to use the most prudent approach for compliance purposes61.

The Basel III amendments in the US will therefore not apply to small banks with total consolidated assets of less than USD 500 million, to non-covered savings and loan holding companies, and to holding companies of industrial loan companies (unless these are considered to be systemically important entities)62. These entities will continue to adopt regulatory capital requirements based upon the Basel I standards63. One should also note that community banks (which include commercial banks and savings and loan associations and which have total consolidated assets of less than USD 15 billion (calculated as at December 2009) will be subject to a less stringent regulatory framework, whilst being subject to certain grandfathering provisions with respect to the calculation of regulatory capital64.Moreover, in the US, the liquidity coverage ratio will only apply to ‘internationally active banking organisations’ (which are defined by referring to the same thresholds used on implementing Basel II, and with the liquidity coverage ratio therefore applying only to banks having total consolidated assets of USD 250 billion or more, or having on-balance sheet foreign exposures amounting to USD 10 billion or more), and to systemically important non-bank financial institutions65. A less stringent liquidity coverage ratio will 59

ibid 388 – 389.

60

ibid.

61

ibid 388 – 390.

62

ibid (n 58) 389; Céline Choulet, Dodd-Frank Act: the US vision on financial regulation (BNP Paribas, May-June 2011) 4 <http://cib.bnpparibas.com/01/MyDocuments/C1105-06_A2.pdf > accessed 10 December 2014.

63

Masera (n 58) 389.

64

ibid 390; Choulet (n 62) 4.

65

CIT Group Inc., CIT Bank, CIT Annual Report 2013: Building Long-Term Value (3 April

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apply to bank holding companies that have more than USD 50 billion in total assets provided that they do not meet the aforementioned thresholds66.

Non-bank financial companies will only be subject to the rules implementing Basel III, if these are considered as being ‘systemically important’67. Rules have been established, setting out a three-stage process through which non-bank financial companies are evaluated in order to determine whether they should be classified as ‘systemically important’ or otherwise, depending on the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities carried out by the said entity68. However, one of the initial conditions in order for a non-bank financial company to be classified as ‘systemically important’, is that it needs to at least have total consolidated assets amounting to USD 50 billion (apart from other thresholds which would also need to be met)69.

5.3 Other Jurisdictional Inconsistencies in the Application of the Basel Accords The position adopted by most jurisdictions (other than the EU and the US, which have been analysed in detail above) has been that they have applied the Basel Accords, on a national level, to all banks

2014) 12 <http://ir.cit.com/Cache/1001185620.PDF?Y=&O=PDF&D=&fid=1001185620&T=&iid=102820> accessed 10 December 2014 (CIT Annual Report 2013).

66

CIT Annual Report 2013 (n 65) 12.

67

Masera (n 58) 388.

68

See also: Financial Stability Oversight Council, ‘Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies’ (Office of the Federal Register of the National Archives and Records Administration, United States, 4 November 2012) <https://www. federalregister.gov/articles/2012/04/11/2012-8627/authority-to-require-supervision-and-regulation-of-certain-nonbank-financial-companies> accessed 18th December 2014; Financial Stability Oversight Council, ‘Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies’ <http://www.treasury.gov/initiatives/fsoc/Documents/Nonbank%20 Designations%20-%20Final%20Rule%20and%20Guidance.pdf> accessed 18 December 2014; Chadbourne & Parke LLP, How Can a Nonbank be Determined ‘Systemically Important’? Fed Finalizes Key Rules (9 April 2013) <http://hb.betterregulation.com/external/How%20Can%20 a%20Nonbank%20be%20Determined%20Systemically%20Important%20Fed%20Finalizes%20 Key%20Rules%20-%2009%20Apr%2013.pdf> accessed 18 December 2014.

69

Masera (n 58) 388.

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found in that jurisdiction, without making any distinction between banks which are ‘internationally-active’ or otherwise. The extension of the Basel Accords to investment firms however varies from one jurisdiction to another. A few examples from the laws of different jurisdictions which implement the Basel Accords will be considered below.

In Canada, the Canadian Capital Adequacy Requirements Guideline was made applicable to all banks incorporated in Canada, as well as to trust and loan companies, irrespective of whether these entities are internationally-active, or otherwise70. Similarly, in Australia, the Prudential Standards implementing the Basel Accords apply to all ‘authorised deposit-taking institutions’ incorporated in Australia (meaning that these standards apply also to small and medium-sized commercial banking institutions which might not be internationallyactive)71. The term ‘authorised deposit-taking institutions’ includes banks (both domestically owned as well as subsidiaries of overseas banks), branches of overseas banks, credit unions, building societies, providers of purchased payment facilities, and specialist credit card providers72.

In the People’s Republic of China, the relevant capital rules apply to all registered commercial banks – including small and mediumsized commercial banks which are not ‘internationally-active’73. These rules do not apply, however, to ‘policy banks’, which are non-deposit taking, state-guaranteed investment entities74.

70 Basel Committee on Banking Supervision, Regulatory Consistency Assessment Programme (RCAP): Assessment of Basel III Regulations – Canada (July 2014) 4 <http://www.bis.org/bcbs/ implementation/l2_ca.pdf> accessed 12 December 2014 (Canada Regulatory Consistency Assessment).

71

Basel Committee on Banking Supervision, Regulatory Consistency Assessment Programme (RCAP): Assessment of Basel III Regulations – Australia (March 2014) 3 – 4 <http://www.bis. org/bcbs/implementation/l2_au.pdf> accessed 12 December 2014 (Australia Regulatory Consistency Assessment).

72

ibid; See also: <http://www.apra.gov.au/adi/pages/adilist.aspx> accessed 13 December 2014.

73

Basel Committee on Banking Supervision, Regulatory Consistency Assessment Programme (RCAP): Assessment of Basel III Regulations – China (September 2013) 6 <http://www.bis.org/ bcbs/implementation/l2_cn.pdf> accessed 12 December 2014 (China Regulatory Consistency Assessment).

74

ibid.

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The Capital Regulations of Brazil apply to all ‘financial institutions’, whether these are considered to be ‘internationally-active’ or otherwise75. The term ‘financial institutions’ is very widely defined

by Article 17 of the Brazilian Banking Law (Law 4595/1964), and refers to ‘public or private corporate persons that have as their major or accessory activity the gathering, intermediation or investment of their own or third party financial resources in national or foreign currency, and custody services of assets belonging to third parties’76.

The applicability of the regulations implementing the Basel Accords are therefore similar to those found in the EU given that they are extended to institutions which also assist in the investment of their own or of third party financial resources.

In Switzerland, the main legislative text for the regulation of capital standards and implementation of the Basel Accords is the Capital Adequacy Ordinance77. This Ordinance makes the capital adequacy rules applicable to both ‘banks’, as well as ‘securities dealers’78.

On the other hand, in Japan, only ‘internationally-active banks’ are obliged to comply with the rules implementing the Basel Accords79. A 75

Basel Committee on Banking Supervision, Regulatory Consistency Assessment Programme (RCAP): Assessment of Basel III Regulations in Brazil (December 2013) 59 <http://www.bis.org/ bcbs/implementation/l2_br.pdf> accessed 12 December 2014 (Brazil Regulatory Consistency Assessment).

76

The definition continues by extending the applicability of the definition of ‘financial institutions’ also to natural persons who carry out the functions of financial institutions; Article 17, Law No. 4,595 dated December 31, 1964 <http://www.bcb.gov.br/?LAW4595> accessed 13 December 2014; See also: International Monetary Fund, Brazil: Detailed Assessment of Observance of Basel Core Principles for Effective Banking Supervision (IMF Country Report No. 12/207, July 2012) 22 <http://www.imf.org/external/pubs//ft/scr/2012/cr12207.pdf> accessed 13 December 2014 (IMF Brazil Report).

77

Basel Committee on Banking Supervision, Regulatory Consistency Assessment Programme (RCAP): Assessment of Basel III Regulations – Switzerland (June 2013) 5 <http://www.bis.org/ bcbs/implementation/l2_ch.pdf> accessed 12 December 2014 (Switzerland Regulatory Consistency Assessment).

78

Article 3, Capital Adequacy Ordinance <http://www.admin.ch/opc/fr/classified-compilation/20121146/index.html> accessed 13 December 2014; KPMG, ‘Capital Adequacy Ordinance CAO 952.03’ <https://www.kpmg.com/CH/en/Library/Legislative-Texts/Documents/pub20122-circular-cao-92503-en.pdf> accessed 13 December 2013; See also: Swiss National Bank, ‘Capital Adequacy Reporting Form in the Context of Basel III’ <http://www.snb.ch/en/emi/basel3> accessed 13 December 2014.

79 Hyoung-kyu Chey, International Harmonization of Financial Regulation?: The politics of global diffusion of the Basel Capital Accord (Routledge, 2014) 72; International Monetary Fund,

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separate regime was however established for ‘domestic banks’, with much less capital requirements being required (having a minimum capital adequacy ratio of 4 per cent, with various reserves being included in the regulatory capital)80. One should also note that in Japan banks are considered to be ‘internationally-active’ only if they have overseas subsidiaries or branches, notwithstanding that ‘domestic banks’ might be active in foreign markets without having established subsidiaries or branches outside of Japan81. The definition of ‘internationally-active’ is therefore substantially different from that which had been adopted in the US (which referred to specific financial thresholds as discussed above). Furthermore, though the US has now limited the difference in applicability between internationally active banks and other banks, Japan has opted to retain its distinction between ‘internationally-active banks’ and other banks.

6. The Basel Accords and the Theory of Recursivity When considering transnational regulatory laws, such as the Basel Accords, one must also consider the settling process and the ways through which these transnational instruments are adopted in different jurisdictions. Transnational legal orders such as the Basel Accords are subject to iterative cycles of change, of settling and unsettling, and of alignment and misalignment, up till the point when there is settling and concordance in and amongst each of the transnational, national and local spheres82. The settling process may Japan: Basel Core Principles for Effective Banking Supervision – Detailed Assessment of Compliance (IMF Country Report No. 12/231, August 2012) 52 – 55 <http://www.imf.org/external/ pubs/ft/scr/2012/cr12231.pdf> accessed 13 December 2014 (IMF Japan Report).

80

ibid; See also: Toshikazu Sakai, The Implementation of the Basel III Guidelines in Japan (Banking, Finance and Capital Markets Law Commission, 52nd Annual AIJA Congress, Prague, Bingham Sakai Mimura Aizawa, 2014) <http://prague.aija.org/wp-content/uploads/2014/04/ Presentation_Toshikazu-Sakai.pdf> accessed 13 December 2014; Basel Committee on Banking Supervision, Basel III Regulatory Consistency Assessment (Level 2) – Japan (October 2012) 16 <http://www.bis.org/bcbs/implementation/l2_jp.pdf> accessed 12 December 2014 (Japan Regulatory Consistency Assessment).

81

Hyoung-kyu Chey (n 79) 72; IMF Japan Report (n 79) 52 – 55; Japan Regulatory Consistency Assessment (n 80) p. 13.

82

Terence C. Halliday and Gregory Shaffer, ‘Researching Transnational Legal Orders’ in Terence C. Halliday and Gregory Shaffer (eds.) Transnational Legal Orders (Cambridge University

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however vary from one jurisdiction to another and may also vary according to the particular transnational instrument which would be in the process of being adopted.

Halliday and Shaffer have considered the recursive process through which ‘legal norms are developed, conveyed and settled transnationally, integrating both bottom-up and top-down analyses’83.

Halliday and Carruthers have shown how globalisation has led to the following cycles84: recursive cycles of lawmaking at the national level; iterative cycles of norm making at the global level; and cycles at the intersection of the processes which take place at the national and at the global level, where the national experiences influence global norm making, and where global norms influence or constrain national lawmaking. This paper adopts the recursivity theory in order to analyse the settling (or otherwise) of the Basel Accords across different jurisdictions.

6.1 Identifying the Actors in the Basel Accords’ Recursive Process When considering transnational regulatory laws such as the Basel Accords, particular importance needs to be given to the ‘actors’ which are establishing the transnational regulatory law, and which need to help in its settling process. Though actors include states, international professional associations, epistemic communities, transnational advocacy networks, social movements, transnational economic interest groups, non-governmental organisations, and possibly also Press, 2015) 513. See also: Gregory Shaffer, Transnational Legal Process and State Change (Journal of the American Bar Foundation, Law & Social Inquiry, Vol 37 Issue 2) p. 238 – 239 <http:// onlinelibrary.wiley.com/doi/10.1111/j.1747-4469.2011.01265.x/full> accessed 12 December 2016.

83 Terence C. Halliday and Gregory Shaffer, ‘Introduction’ in Terence C. Halliday and Gregory Shaffer (eds.) Transnational Legal Orders (Cambridge University Press, 2015) p. 3.

84

Terence C Halliday and Bruce G Carruthers, The Recursivity of Law: Global Norm Making and National Lawmaking in the Globalization of Corporate Insolvency Regimes (American Journal of Sociology, Vol 112 No 4, January 2007) 1135, 1136, 1187 <http://www.jstor.org/ stable/10.1086/507855?seq=1#page_scan_tab_contents> accessed 12 December 2016; Terence C Halliday, Recursivity of Global Normmaking: A Sociolegal Agenda (Annual Review of Law and Social Science, 2009, Vol 5) 263 <http://www.annualreviews.org/doi/pdf/10.1146/annurev. lawsocsci.093008.131606> accessed 12 December 2016.

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religious groups85, the three main actors which are involved in the Basel Accords’ recursive process, are the national regulators which come together to form an ‘international community’, individual nation states (acting alone), and the industry.

This paper argues that a transnational regulatory law such as the Basel Accords will only be successful, effective and considered to be legitimate, if each of these three actors would have bought-in to what the particular transnational regulatory law would be trying to achieve.

Verdier has noted how these three actors (referred to by Verdier as ‘regulators, banks, and politicians’) have been in a ‘protracted war’ on the implementation of the Basel Accords (with Verdier’s main focus being on Basel II)86.

Of particular interest, however, is the role of nation states. When considering ‘law’ generally, and before the rise in importance which is being given to transnational law and transnational regulation, the state had been considered as the sole source of law. On the other hand, however, on considering transnational law and transnational regulatory law, the role of the state changes from being the sole source of law, to being one of the main actors, and with states also acting out of self-interest87. Raustiala has therefore argued that one needs to go beyond the considerations provided by Goldsmith and Posner (through their rational choice theory) as one needs to drop the ‘state-as-unitary-actor assumption’ in favour of ‘a more realistic and complex understanding of the state and its component parts’88.

Whilst ‘[n]ation-states remain central’89 to transnational legal 85

Halliday (n 84) p. 266.

86

Pierre-Hugues Verdier, ‘US Implementation of Basel II: Lessons for Informal International Lawmaking’ in Joost Pauwelyn, Ramses Wessel & Jan Wouters (eds), Informal International Lawmaking (OUP, 2012) 8 <https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=1879391> accessed 1 February 2017.

87

See also: Peer Zumbansen, The Ins and Outs of Transnational Private Regulatory Governance: Legitimacy, Accountability, Effectiveness and a New Concept of ‘Context’ (German Law Journal, Vol 13, No 2, 2012) 1280 – 1281.

88 Kai Raustiala, Refining the Limits of International Law (Georgia Journal of International and Comparative Law, Vol 34, 2006) p. 9 – 12.

89

Halliday and Shaffer (n 83) p. 6.

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orders, ‘they do not define the territorial boundaries of legal ordering’90, and therefore states find themselves needing to consider also the interests of the international community, the industry, and of other states which also consider their self-interest in the formulation of a particular transnational legal order. Nation states, however remain ‘central to lawmaking, law recognition, and law enforcement’91, notwithstanding its ‘fragmentation and disaggregation…in its constituent branches and agencies’92. Halliday has also noted that ‘[s] tates are primary actors in global norm-making’ when considering the recursivity process93. Thus, Halliday and Shaffer both consider that there is a ‘remarkable decentring of the state and its reconsideration as a crucial legal-political actor in a regulatory space marked by an interaction in between different levels of norm-making’94.

Furthermore, the interests within a state cannot automatically be considered to be monist, but there may be various conflicting interests within a state itself. Lyngen explains that different public officials might have varying goals notwithstanding that they emanate from the same state, with the following being some of the goals which different public officials might have: promotion of investor confidence, financial stability, international competitiveness of the particular state’s financial sector, and pleasing of the different constituents (which might also include financial sector and consumer interest groups)95.

When considering ‘states’ and the various interests which arise therefrom, this paper considers the interests of ‘states’ as consisting of the prevailing view which results in the state of affairs of the state at a particular moment in time. It is therefore here assumed that if a 90

ibid.

91

ibid 13.

92

ibid 23.

93

Halliday (n 84) p. 266.

94

Peer Zumbansen, Where the Wild Things Are: Journeys to Transnational Legal Orders, and Back (King’s College London Dickson Poon School of Law, Legal Studies Research Paper Series: Paper No 2016-11) 20 <https://ssrn.com/abstract=2723990> accessed 12 December 2016.

95

Narissa Lyngen, Basel III: Dynamics of State Implementation (Harvard International Law Journal, Vol 53, No 2, Summer 2012) p. 521 – 522.

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jurisdiction would only have adopted the Basel Accords ‘cosmetically’, or ‘partially’, then the prevailing interests in that current state would have led to such limited adoption. In accordance with the recursivity model, this prevailing view would have only come as a result of various iterative cycles within the nation state itself, and may also be subject to change from time to time96. As will be discussed in further detail in the next Section, each actor acts out of self-interest, leading to the Basel Accords to continue to be in a continuous recursive process, without there yet being proper ‘settling’.

6.2 Actors Acting out of Self-Interest Lyngen argues that regulatory coordination through transnational regulatory networks, as in the case of the Basel Accords will have a ‘distributive effect, with some states gaining at the expense of others’97. She notes that as a result of the differences in the financial sectors of different jurisdictions, implementation of the Basel Accords in different states will give rise to ‘distinct costs of implementation for each state and implications for the international competitiveness and profitability of that state’s regulated sector’98. Thus, whilst certain states stand to benefit from a global regulatory standard, others will face ‘a disproportionate amount of the costs’, and states which may have had a competitive advantage over other states may stand to lose such competitive advantage99.

As a result, Lyngen argues that the regulatory discretion afforded in the Basel Accords, though required in light of differences in the domestic regulated sectors, and also required in order to encourage adoption of the Basel Accords, ‘creates opportunities for regulators to establish rules that favor their state’s institutions’100. This distributive 96

See also: Halliday and Carruthers (n 84) p. 1191 – 1192.

97

Lyngen (n 95) p. 522.

98

ibid.

99

ibid.

100

Ibid 528.

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effect has also been highlighted by Brummer when considering the elements of soft law in international financial regulation101.

Brummer thus notes how ‘[o]ne rule may have, in short, significant positive effects in one country, whereas in another, the implications may be far from beneficial’, whilst going on to list ‘capital adequacy’ as the ‘possible canonical example’ of this102. He also argues that coordination in transnational law and regulation is only likely to arise where members have high incentives to cooperate and where adjustment costs are small103.

Zumbansen has also noted how one can clearly see parallels between the ‘interests’ at stake (in both national and international contexts), and the loss of coherence, unity and universality of the Rule of Law within a globalised framework104. He therefore argues that when considering transnational law as a methodological approach one should ‘start asking (again) the hard question as to who does what how and in whose interests’105.

This paper argues that each of the different actors, as identified above, act out of self-interest, and it is therefore essential in order for there to be concordance in the way in which the Basel Accords are adopted, implemented, and enforced for the interests of each of the actors to be taken into consideration, therefore also resulting in the BCBS also being considered as ‘legitimate’ in the eyes of each of these actors. This is also in accordance with the analysis made

by Block-Lieb and Halliday who argue that concordance within a transnational legal order takes place more quickly when ‘it sequences from the ‘bottom up’ or with the ‘bottom’ fully engaged in reform efforts occurring at the ‘top’ transnational or international circles’106.

Chris Brummer, Why Soft Law Dominates International Finance – And Not Trade (Journal of International Economic Law, Vol 13 No 3, Oxford University Press, 2010) 635.

101

102

Ibid.

103

Chris Brummer, How International Financial Law Works (and How it Doesn’t) (The Georgetown Law Journal, Vol 99, 2011) 303.

104

Zumbansen (n 94) 36.

105

ibid 40.

106

Susan Block-Lieb and Terence C. Halliday, ‘Settling and Concordance: Two Cases in Global Commercial Law’ in Terence C. Halliday and Gregory Shaffer (eds.) Transnational Legal Orders

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Shaffer has also noted how self-interest can lead to the acceptance or rejection of transnational legal norms, and that as a result of self-interest transnational legal norms may be used or changed for purposes that were not contemplated by the promoters of those transnational norms107.

This paper also endorses Brummer’s view that as financing entities act out of self-interest, they increasingly move from one jurisdiction to another in order to arbitrage strict regulations across different jurisdictions. Brummer also notes how regulators compete with one another to attract capital, with this possibly even leading to dismantling of efficient regulations in hope of attracting firms108. He thus criticizes the use of soft law for international financial regulation, as he says that ‘[a]ssuming countries follow policies that promote the interests of their domestic firms, soft law should provide little utility as a means of making credible commitments’109. He continues by stating that when ‘collaboration results in a win for some parties and a loss for others, international legal theory predicts that parties will defect from their commitments because they are informal’110. It is therefore here argued that a soft-law approach cannot work in a situation where the different actors act out of self-interest and where the interests of these actors vary (such as in the case of regulations which are just perceived as imposing costs on the industry).

As a result of the recursive process, when states resist or reject the insertion of global norms in their domestic regimes, they compel the global norm-makers to alter the transnational norms (unless the global norms agreed to are to be retained but without having the desired effect and without being able to reach their stated aims), particularly since transnational norms are most effective when they are adopted consistently across jurisdictions111.

(Cambridge University Press, 2015) 101.

107

Shaffer (n 82) 256.

108

Brummer (n 103) 267 – 268.

109

ibid 271.

110

ibid.

111

Halliday (n 84) 273.

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6.3 Settlement and Institutionalisation of the Basel Accords A transnational legal order becomes institutionalised when ‘legal norms and practices converge to guide actors over what norms apply in given situations’, and the ‘ultimate test of successful institutionalization…occurs when actors behave according to a set of legal norms that they simply take for granted as being appropriate in a particular situation’112. Settling is considered to take place at three different levels: transnational settling; national settling; and local settling113. However, settling at one level may not necessarily be in concordance with the way in which legal norms might have settled at a different level, and settled legal norms at the transnational level may vary substantially from legal norms which would have been settled at the national or at the local level114.

Block-Lieb and Halliday consider ‘legal meaning’ to be stabilised and ‘legal norms’ to be ‘settled’ ‘when the affected actors can predict each other’s conduct and advice pertaining to the legal norms’115, and that this takes place when there is a combination of one or more of the following116:

(1) stakeholders know which norms apply to them in given situations and accept the scope of those norms; and (2) the meanings and reach of the norms become stabilized for the great majority of those engaged with them for most relevant behaviour most of the time’.

They also argue that settling and concordance is less likely to occur when, inter alia, ‘actors developing the norms do not represent the interests of all powerful stakeholders’, as well as when ‘the norms are so ambiguous, inconsistent, or excessively complicated that their 112

Halliday and Shaffer (n 83) 42.

113

ibid 43 – 44.

114

ibid 44; Block-Lieb and Halliday (n 106) p. 94.

115

Block-Lieb and Halliday (n 106) p. 90.

116

ibid,

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meanings fail to guide action with any determinacy’.117 As will be discussed in further detail below, both of these elements are evident when considering the Basel Accords. When considering the status of the Basel Accords, one can argue that though the Basel Accords were first established in 1988 there is yet to be proper settling of these international standards. Basel III, agreed to in December 2010 can be considered to be the ‘third iteration’ of the Basel Accords118. It has however been noted that implementation of the Basel Accords in different nation states ‘has always been contentious, with variations in state-level adoption’119.

It is therefore here argued that this has been due to ambiguity of terms in the agreed texts of the Basel Accords; the self-interest of the different actors leading to lack of legitimacy of the Basel Accords and incentives to use regulatory arbitrage; as well as the domestic embedded problems and differences arising from the national laws within which the Basel Accords operate. This can also be seen from the continuous revisions of the Basel Accords (and the long periods within which nation states are to comply with the agreed texts), together with the limited impact which the Basel Accords had on the 2008 financial crisis. Helleiner has also noted how members of the G20 and of the FSB are ‘facing a growing number of questions’ as to whether the standards adopted by the Basel III will be implemented or otherwise, and that ‘[m]any commitments made under Basel III are also controversial in Europe and the United States, and it is far from clear whether they will be introduced in full by the final deadline of 2019’120. He has also noted how developing countries ‘refused to implement’ Basel II, ‘implementing them partially or engaged only in ‘mock compliance’’, and that the implementation challenges facing Basel III are ‘even more severe’121.

117

ibid.

118

Lyngen (n 95) p. 519.

119

ibid.

120

Eric Helleiner, ‘Regulating the Regulators: The Emergence and Limits of the Transnational Financial Legal Order’ in Terence C. Halliday and Gregory Shaffer (eds.) Transnational Legal Orders (Cambridge University Press, 2015) 249.

121

ibid 250.

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7. Conclusion This paper has argued that though the Basel Accords are today considered to be the main international standards which regulate banks, there is yet to be proper settling of these international standards. As the Basel Accords were stretched beyond their original scope, they have never been updated in order to specify to which entities the Basel Accords should apply, or clarify what their main aims are.

Furthermore, this has resulted in two out of the three main actors (states acting individually, and the industry) acting out of self-interest on implementing, adopting, enforcing, and seeking to comply with the Basel Accords, with this giving rise to regulatory opportunities which continue to limit the effectiveness of the Basel Accords.

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