MALTA Law and Practice Contributed by: Ann Fenech, Adrian Attard, Lara Saguna Axiaq and Martina Farrugia, Fenech & Fenech Advocates
acquire a ship which, when delivered or completed, would qualify as a tonnage tax ship; and • the distribution of profits derived from shipping activities or from other transactions previously referred to. A tonnage tax ship is a ship of any net tonnage engaged in shipping activities. “Shipping activities” comprise the international carriage of goods or pas - sengers by sea, or the provision of other services to or by a ship as may be ancillary thereto or associated therewith, including the ownership, chartering or any other operation of a ship, as well as ship-management activities of a ship manager. A company which ben - efits from the tonnage tax system will be required to pay an annual fixed tonnage tax to the Registrar of Ships, which is calculated in accordance with the net tonnage and age of the vessel. 9. Implications of Non-Performance, IMO 2020, Trade Sanctions and International Conflict 9.1 Force Majeure and Frustration Force majeure is generally considered a defence for the non-performance or the delay of a contrac - tual obligation under the Civil Code, Chapter 12 of the Laws of Malta if certain criteria can be satisfied. Under Maltese law, a debtor will generally be exempt from liability for damages where they prove that the non-performance or late delivery, non-arrival, etc, was due to an extraneous cause not imputable to them. Moreover, a debtor will also not be liable for damages if they were prevented from fulfilling their obligation/s in consequence of an irresistible force or a fortuitous event. Malta has also incorporated the Convention on the Contract for International Carriage of Goods by Road (CMR) which makes similar provision for force majeure under Article 17 (2). Maltese courts interpret force majeure provisions strictly in order to ensure that they are not used unscrupulously by a party to evade responsibility. Recent case law has seen the COVID-19 pandemic recognised as a force majeure event qualifying under the definition of “epidemics” in the terms and condi - tions governing the parties. Nonetheless, the exist -
ence of COVID-19 or other such pandemic does not in itself create an automatic force majeure event, and therefore parties will not necessarily be able to claim protection or relief should their contracts be disrupted due to a similar pandemic. According to Maltese jurisprudence on the subject, force majeure has been described as an irresistible force; one that could not be avoided by the exercise of due diligence. Furthermore, Maltese courts have con - sistently held that force majeure cannot be invoked by a party which by its actions or inactions has con - tributed to the damage or loss. Therefore, in order for an event to be classified as force majeure, the event, or force of nature, must be inevitable, in that it could not have been avoided through the exercise of due diligence of a bonus pater familias (ie, of a reasonable person). This also entails that the event was not or should not have been foreseeable. Therefore, recent case law has indicated that colli - sions arising out of strong winds, within a micro-cli - mate could not be considered as force majeure as the weather was forecasted and was not unusual for the time of the year. Moreover, the event must be causative and directly impede the performance of the obligation. For the defence of force majeure to apply, the impos - sibility of performance must be absolute, and it will not be sufficient that the performance of the obligation has become more burdensome or is suddenly more expensive to fulfil. The burden of proving the impos - sibility of performance rests on the person alleging it. Given the requirement of “inevitability”, persons who entered into a contract after the occurrence of a force majeure event might have a hard time proving that the non-performance of their obligation was unavoidable. This has resulted in the inclusion of specific contract variations to account for events that remain disruptive but may no longer qualify as force majeure. 9.2 Enforcement of the IMO 2020 Rule Limiting the Sulphur Content of Fuel Oil Malta has transposed various EU Directives in line with the revised Annex VI to the International Conven - tion for the Prevention of Pollution from Ships, 1973
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