MALTA Law and Practice Contributed by: Ann Fenech, Adrian Attard, Lara Saguna Axiaq and Martina Farrugia, Fenech & Fenech Advocates
It is known that there are Maltese persons, both natural and legal, presently subject to OFAC sanctions. However, as previously stat - ed, these sanctions are not directly enforceable in Malta and no legal proceedings are known to have been commenced in Maltese jurisdic - tion in this regard. That said, there are certainly known ongoing local criminal proceedings that have been instituted against Maltese economic operators for alleged breaches of UN and/or EU sanctions. 8.4 International Conflict(s) International conflicts such as the war in Ukraine and the more recent attacks of merchant vessels traversing towards the Red Sea inevitably tend to have a ripple effect on shipping and bring with them a myriad of legal and commercial conse - quences. For instance, given Malta’s geographi - cal position in the heart of the Mediterranean Sea, any conflict adversely affecting the passage of shipping through the Mediterranean region inevitably has commercial implications such as the soaring of shipping costs and a dip in the volume of ship calls. From a legal perspective, it is admittedly unusual to find Maltese case law touching upon these matters. The principal reason for this is because it is uncommon to find contracts of carriage or charterparties subject to Maltese jurisdiction and governed by Maltese law. However, the statutory definition of force majeure under Mal - tese law, and the judicial interpretation thereof, is wide enough to allow a party to rely on this defence whenever it becomes impossible to perform any contractual obligations due to any “irresistible force” which could not have been avoided, which was unforeseen, and which could not have been avoided by the exercise of reasonable due diligence. That said, this may only be availed of when performance is made
impossible and not simply made more onerous or more costly. Moreover, Article 1134 of the Civil Code dictates that no liability ensues for non- performance of obligations due to an irresistible force or a fortuitous event. As a direct ramification of the war in Ukraine, the EU has imposed sixteen sanction packag - es against Russia, all of which are applicable in Malta. Consequently, these restrictions have also meant that several parties found them - selves unable to perform pre-existing obligations as these would have otherwise fallen foul of the Russian sanctions. While arguably the non-per - formance of obligations due to such sanctions could also fall within the ambits of Maltese statu - tory provisions of force majeure – as Maltese law also provides that no liability ensues when a party is forbidden from performing an obligation due to an “irresistible force” – the matter has yet to be tested. However, in the recent decision in North by Northwest Gmbh v Vessel MSC Bilboa (Rik 2038/2023), the court hinted that a party can - not use sanctions as an excuse to avoid perfor - mance of their obligations when that party could resort to obtaining a derogation in terms of the relevant EU sanctions regulations, in order to comply. This would suggest that, where a dero - gation could be applied for, it should be pursued before a court would consider the performance of that obligation as being impossible. 9. Additional Maritime or Shipping Issues 9.1 Other Jurisdiction-Specific Shipping and Maritime Issues It should be noted that judges in Malta are not bound by the law of precedent. Thus, a judge is
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