MALTA Law and Practice Contributed by: Ann Fenech, Adrian Attard, Lara Saguna Axiaq and Martina Farrugia, Fenech & Fenech Advocates
7.4 Arrest of Vessels Subject to Foreign Arbitration or Jurisdiction As previously explained, a vessel may be arrested in rem in Malta by means of a warrant of arrest issued on any of the grounds listed in Article 742B of the COCP if the vessel concerned is physically present within the territorial jurisdiction of the Maltese courts or as secu - rity of an in personam claim where the ship-owner is subject to the ordinary jurisdiction of the Maltese courts under Article 742 of the COCP. However, the matter is not straightforward, and much will depend on whether one is dealing with an arbitration clause or a jurisdiction clause. Regarding arbitration clauses, Article 742 (4) of the COCP provides that any person who is party to an arbitration agreement may demand a precautionary act (including a precautionary arrest warrant) to be issued; and, where the party has not brought forward their claim before an arbitrator, they shall have 20 days from the date of issuance of the precautionary act to commence the arbitration proceedings. With respect to a jurisdiction clause, however, the decision of the court will in turn depend on whether the clause points towards a jurisdiction established within the European Union (EU) or otherwise. If the jurisdiction clause refers a dispute to a court within an EU member state, then, pursuant to the provisions of Article 35 of Regulation 1215/2012 (the “Brussels I Recast Regulation”), a party may apply for a provi - sional arrest warrant, including protective measures in Malta, in order to secure their claim on the merits being pursued before the courts in another EU mem - ber state. If the jurisdiction clause directs disputes to a court outside the EU, jurisprudence is varied. Some case law suggests that the issuance of precautionary warrants to secure a claim, such as an arrest of a vessel, will only be valid if the Maltese courts would have notional jurisdiction in terms of Article 742 of the COCP. There is, however, other case law which suggests that an arrest in support of an action heard before a foreign court would not be permitted, even if the Maltese court has notional jurisdiction.
Nonetheless, and in all cases, it is commonly held (even when the merits are not to be heard in Mal - ta) that an arrest of a vessel in rem must satisfy the grounds of jurisdiction provided for under Article 742B of the COCP, together with the “relevant person test” requirement under Article 742D of the COCP. 7.5 Domestic Arbitration Institutes Malta does not have a domestic arbitration institute that specialises in maritime claims. Nonetheless, where parties opt for arbitration proceedings in Malta, which would be conducted in accordance with the rules found under the Arbitration Act, they can nomi - nate a panel of arbitrators who are specialised in mari - time disputes. This helps to ensure that the matter is handled with the necessary expertise. 7.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses Where proceedings are commenced in breach of a foreign jurisdiction or arbitration clause, a defendant may challenge those proceedings and request that a preliminary decision be given, limited to the point of jurisdiction. Where the court finds that the proceed - ings have been commenced wrongly, it will declare that it does not have jurisdiction to hear the matter and may order court costs to be paid by the plaintiff. The defendant would also retain a right to institute an action to recover any damages suffered. 8. Ship-Owners’ Income Tax Relief 8.1 Exemptions or Tax Reliefs on the Income of Ship-Owners’ Companies Maltese companies (as well as those established under the laws of any EU state) which own, operate, administer or manage a tonnage tax ship are exempt from: • income tax which would otherwise be payable on income arising from shipping activities; • any income, profits or gains derived from the sale or other transfer of a tonnage tax ship which had been acquired and sold while under the tonnage tax system, or from the disposal of any rights to
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