Shipping 2026

MALTA Law and Practice Contributed by: Ann Fenech, Adrian Attard, Lara Saguna Axiaq and Martina Farrugia, Fenech & Fenech Advocates

tionable whether Maltese shipping companies are afforded protections akin to those granted within the context of US Chapter 11 Bankruptcy proceedings, such as an automatic stay order. To the best of the authors’ knowledge, this question has never arisen before a Maltese court. Maltese entities may also apply for similar protec - tions under the provisions of the Pre-Insolvency Act. That said, the law provides that inter alia action in rem claims against ships as well as any warrants of arrest of a ship would be excluded from the stay order prohibiting the execution of other claims against the debtor. In this respect, it is prudent to note that a Maltese court will also not necessarily consider itself bound by any stay order issued by a foreign bank - ruptcy or insolvency court. This issue was touched upon in the B Ladybug case. After the arrest of the vessel, proceedings were commenced to have her sold judicially. The owners tried to interrupt the judicial sale proceedings, arguing that the beneficial owners of the vessel were subject to ongoing US bankruptcy proceedings where a stay order had been given, and thus the Maltese courts were obliged to suspend the ongoing judicial sale proceedings. The presiding judge disagreed, finding that Maltese courts should not be bound by the extraterritorial effects of such a stay. 5.12 Damages in the Event of Wrongful Arrest of a Vessel The grounds upon which an arrested party can legiti - mately claim damages and penalties from an arresting party due to a wrongful arrest are explicitly provided for in Article 836 (8) of the COCP. Should a court set aside an arrest, the owners would generally only be entitled to claim damages in the following four cir - cumstances: • where, following the arrest, the arresting party failed to commence proceedings on the merits within the statutory 20-day timeframe; • where the creditor failed to make a demand for payment from the debtor within the 15 days pre - ceding the arrest – this, however, does not apply when there is an urgent need for the issuance of the warrant;

• where the arresting creditor had knowledge of the ship-owner’s solvency and its clear financial ability to pay the claims; and • where the arrest was filed maliciously, frivolously or vexatiously. There is no statutory limit on the amounts of damages which a court may award; however, the ship-owner must prove a causal link, proving that the damages it suffered were a result of the wrongful arrest. The aforementioned four grounds also give rise to the owner’s right to claim statutory penalties from the arresting parties, which are limited to a sum of between EUR1,164.69 and EUR6,988.12. However, should the court conclude that the arrest was filed maliciously, the penalties to be imposed would be of no less than EUR11,600. It should be noted, how - ever, that traditionally the Maltese courts have been extremely reluctant to impose statutory penalties, and jurisprudence in this regard is quite consistent. However, a recent Court of Appeal decision delivered in December 2025 has cast uncertainty in this regard, widening the above scope for damages, and accept - ing in theory that the provisions of Article 836 (8)–(9) of the Code of Organisation and Civil Procedure do not exclude the right of the arrested party to sue for dam - ages under the general provisions of tort law found under Article 1031–1032 of the Civil Code. Therefore, if fault – defined as a lack of prudence, diligence and care expected of a reasonable man – can be proven, in theory damages can be claimed. 6. Passenger Claims 6.1 Laws and Conventions Applicable to the Resolution of Passenger Claims Malta is a party to the Athens Convention on the Carriage of Passengers and their Luggage by Sea, 1974, incorporated by means of the Merchant Ship - ping (Carriage of Passengers by Sea) Regulation, Subsidiary Legislation 234.52 of the Laws of Malta. The resolution of maritime passenger claims is also dealt with under the 1976 Convention on Limitation of Liability for Maritime Claims, as amended by the 1996 Protocol (the “1996 LLMC Protocol”), which

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