Insolvency law reform expected in coming months

A complete overhaul of the insolvency law, with the input of the Malta Financial Services Authority, is expected in the coming months to facilitate companies who want a chance to recover or cease trading and disband the operation.

Addressing a business breakfast on the effects of the justice reform on Malta’s competitiveness, Justice Minister Owen Bonnici argued that insolvency was identified as one of the main challenges for businesses.

The reform will target commercial law.

Steps to improve the judicial system have been highlighted by the International Monetary Fund’s executive board in its latest report where it gave the Maltese economy a clean bill of health.

With a direct effect on the Maltese economy and the country’s competitiveness, the judicial reform aims at improving efficiency and increase consistency.

Chosen by the judiciary, 13 full-time court attorneys were appointed to increase efficiency by helping members of the judiciary in their research and draft judgements in civil and commercial cases.

The threshold for the Small Claims Tribunal will be raised from €3,494 to €5,000 and, from €11,646.87 to €15,000, for the Magistrates Court. The threshold was increased after the clearance of the small claims tribunal accelerated to the point that 23% more cases are being decided when compared to new cases that come in.

After launching a request for proposals for the setting up of an international arbitration centre – to close on 12 February – Malta is looking to tap into a market with growing demand.

Malta had an average of five international cases in a year, when compared to some 40 local cases a year.

During his intervention, honorary legal advisor to the Malta Chamber of Commerce Hugh Peralta highlighted the respect to the rule of law in a democratic society free of abuse of power.

“If we want to retain the country’s competitiveness, we must never lose sight over our legal and judicial system,” he said.

Peralta urged the minister to look into legal provisions that create discrepancies, as he spoke of lack on consistency when different judges deliver different judgements on identical matters.

Consistency, he added, meant that there was no room for “subjective views” by the members of the judiciary: “Self-discipline, respect and humility are key in solving this issue.”