Extraordinary G20 Virtual Leaders’ Summit

Tackling  the pandemic and its economic implications as the world faces a global fallout has brought the G20 countries together in an extraordinary way.

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, addressed the Extraordinary G20 Leaders’ Summit held virtually on March 26, 2020, upon the call of the Saudi Presidency.

Within the framework of the aid packages that various governments are announcing to their respective economies, one may wish to note the stress of the IMF, particularly on the coordination of monetary and fiscal policies. Such policies are already coordinated between the EU Member States through the Treaties’ provisions and various Regulations and Directives which form part of the EU’s economic governance.

Georgieva explained that the IMF is projecting a contraction of global output in 2020, and recovery in 2021, stating that “How deep the contraction and how fast the recovery depends on the speed of containment of the pandemic and on how strong and coordinated our monetary and fiscal policy actions are.”

Georgieva emphasised the crucial importance of “targeted fiscal support to vulnerable households and to large and small businesses, so they can stay afloat and get quickly back to work.  Otherwise it will take years to overcome the effects of widespread bankruptcies and layoffs.  Such support will accelerate the eventual recovery and put us in a better condition to tackle challenges such as debt overhangs and disrupted trade flows.”

The development aspect, which characterise both the International Monetary Fund and the World Trade Organisation, has also been stressed, namely the $1 trillion strong, financial capacity to be placed by the IMF for the defence of emerging markets and developing countries to deal with and overcome the trade, economic and financial crisis created by the COVID-19 pandemic.   These countries are the main focus of attention of the IMF, with the latter working in close collaboration with the World Bank and other financial institutions.

Given the high burden of debt of many low-income countries, the IMF intends to double its emergency financing capacity and boost global liquidity through a sizeable Special Drawing Right allocation. It is also expanding the use of swap type facilities at the Fund Support action of official bilateral creditors to ease the debt burden of the poorest IMF members.   

This development element echoes the opening remarks of King Salman of Saudi Arabia, which currently presides over the presidency of the G20, who observed that “On the trade front, the G20 must send a strong signal to restore confidence in the global economy by resuming, as soon as possible, the normal flow of goods and services, especially vital medical supplies. In addition, it is our responsibility to extend a helping hand to developing countries and least developed countries to enable them to build their capacities and improve their infrastructure to overcome this crisis and its repercussions.”

Rent Laws: Is there proportionality in the application of Chapter 69 of the Laws of Malta and Act X of 2009?

The Constitutional Court in the case (Rikors numru 22/19 GM) Joseph Grima, Georgina Grima, u Doreen Grima v L-Avukat Ġenerali u Lawrence Aquilina u Iris Aquilina has decided on two appeals, one filed by defendants Aquilina and the other appeal filed by the Attorney General (today the State’s Advocate) following a decision of the First Hall of the Civil Court dated 10 October 2019 (“the Decision”).

The Decision had found an infringement of article 37 of the Constitution of Malta and articles 14 and Protocol 1 of the European Convention for the Protection of fundamental human rights.   The plaintiffs in this case had requested the Court to declare and decide that Chapter 69 of the Laws of Malta which granted the defendants the right to renew the lease violated the fundamental human rights of the plaintiffs as envisaged in article 37 of the Constitution of Malta and the First article of the First Protocol of the European Convention (First Schedule of Chapter 319 of the Laws of Malta) and article 14 of the said Convention. The plaintiffs requested the Court to give them the remedies together with the eviction of the defendants and damages, arguing that Chapter 69 did not create the right balance between the landlord and the tenant, given that the rent paid by the defendants did not reflect the market prices of the leased property.  The Decision decided in favour of the plaintiffs and ordered the Attorney General to pay the amount of Eur35,000 by way of compensation for damages.

The Constitutional Court noted that through the entry into force of Act X of 2009, the landlords’ position has improved, for instance through gradual yearly increases and the limited rights with respect to the inheritance of the lease.   Yet, the Constitutional Court observed that there is still a wide discrepancy between the rent as contemplated in the law when compared to the rent that the same property can fetch in the open market.  The Court cited the case Cassar v Malta (Applikazzjoni numru 50570/13) and said that the rent payable in this case is ‘manifestly unreasonable”.

The Constitutional Court held that Chapter 69 of the Laws of Malta does not strike the right balance between the interests of the landlord and those of the tenant. This was also reiterated by the Court of first instance. The increase in rent as envisaged in Chapter 69 is still low when compared to the value of the property as valuated by the court expert.   Therefore, Chapter 69 and Act X of 2009 do not follow the proportionality principle.   The court noted that despite a line of case law on this matter, the House of Representatives has not yet legislated to establish  balance between the rights of the landlord and the social interest intended to protect tenants who do not have the financial means to pay the rent as per market value.  But the fact in itself that the tenant has a financial difficulty to pay an increase in rent does not mean that the landlord has to suffer this burden himself indefinitely.

The Court observed that the rent laws reflect a legitimate social purpose.  In this case, the defendant lives alone and is pensioner of over sixty-five years of age.   Furthermore, the defendant has always lived in this property. Although there is the element of uncertainty  when the landlords can take back the property, yet they know that  as a fact that there is no possibility that any other person is protected by the law to benefit from the lease after the property is vacated by the defendant.  The Constitutional Court also added that through the amendments of Act X of 2009, the tenant is obliged to pay for the internal expenses of the property as they may arise (Article 1531E of the Civil Code).

To this effect, the Constitutional Court rejected the appeal of appellant Aquilina, acceded partially to the Attorney General’s appeal and modified the decision of 10 October 2019, in the sense that it rejected the plaintiff’s claim that the special law  is infringing the fundamental rights under Article 37 of the Constitution and article 14 of the Convention; reduced the compensation to be paid to the plaintiffs from Eur15,000 from the amount of Eur35,000 which was awarded by the first court, which amount is to be paid by the Attorney General, with 15% interest.

Lease agreements, force majeure and fortuitous events

Not all lease agreements contain a force majeure provision. With respect to leases, force majeure is only referred to in “Sub-title I. Of the Letting of Things” of the Civil Code, article 1557, which refers to force majeure in one specific situation, namely  the repair of damages:   “The lessee shall in no case be responsible for the repair of damages caused by force majeure and without any fault of his own.”  In this case, the legislator’s aim is that the tenant has to ensure taking care of the tenement as a bonus pater familias and ergo effects the ordinary maintenance of the tenement, except for repairs which are due to force majeure.  

Therefore, in the absence of a definition of force majeure for the specificities of a lease agreement, one has to look at the general provisions of the Civil Code, Chapter 16 of the Laws of Malta, concerning torts and quasi-torts, namely article 1029:

“Any damage which is produced by a fortuitous event, or inconsequence of an irresistible force, shall, in the absence of an express provision of the law to the contrary, be borne by the party on whose person or property such damage occurs.”

Given the generality of this provision, Maltese jurisprudence has established a number of principles and indicators on what constitutes force majeure:

1.  John Abela Limited vs l-Avukat Dottor Leslie Cuschieri LL.D et noe  – in this case the Court held that the plea of casus or force majeure subsists if the fact “jitnissel minn forza magguri ma jista’ jiqfilha hadd.”   The court referred to other decisions, which decisions held that this plea does not subsist when  “…dak li jigri mill-fatt posittiv jew negattiv tal-bniedem u li fuq kollox, ikun imbassar minn qabel minn persuna ta’ dehen ordinarju jew, ghall-anqas, jista’ jigi evitat.”

1. In the case Michael Mizzi et  vs Tabib Joseph M. Paris et  dated 27 March 2009,  the Court of Appeal defined force majeure as:

“Skond il-Ligi, l-Artikolu 1029 tal-Kap. 16, kull hsara li tigri b`accident jew b`forza magguri, ibatiha, fin-nuqqas ta` disposizzjoni espressa tal-ligi li tghid il-kuntrarju, dak illi fuq il-persuna jew il-beni tieghu tigri l-hsara. F`kazijiet bhal dawn min jallega li dak li gara kien dovut minhabba forza magguri, jew casus ghandu l-obbligu li jippruvah u dana sal-grad ta` probabilita`.  Skond il-gurisprudenza tal-Qrati taghna l-“forza magguri” hija dik il-forza li ghaliha huwa impossibbli li wiehed jirrezisti, mentri l-“kaz fortuwitu” huwa dak meta avveniment ma setax ikun prevedut minn persuna ta` ordinarja diligenza. Il-kuncett tal-kaz fortuwitu jew forza magguri ma jsehhx meta ghall-hsara jkun ikkontribwixxa lfatt, posittiv jew negattiv, tal-bniedem. Ghalhekk skond ilprincipju tad-dritt, biex ikun hemm il-kaz fortuwitu mhux bizzejjed li jkun hemm avveniment insolitu, sproporzjonat, u li jkun prodott mill-forzi tan-natura, imma jehtieg li jkun inevitabili, b`mod li ma jistax jigi evitat bid-diligenza ordinarja tal-bonus pater familias. Din il-prevedibilita` trid tkun ta` probabilitajiet ragionevoli u mhux ta` possibilitajiet remotissimi u inverosimili. (Ara Vol. XXIV p.l.p. 172; Vol. p.l.p. 74; Vol. XLVIII p.l.p. 258)”.

1. In Joe Caruana vs Philip Chircop & Sons Ltd et decided on 24 April 2015 (Rik 587/03), the Court of Appeal held that “….il-kuncett tal-kaz fortuwitu jew forza magguri ma jsehhx meta ghall-hsara jkun ikkontribwixxa l-fatt, pozittiv jew negattiv, tal-bniedem. Skont il-principju tad-dritt, biex ikun hemm il-kaz fortuwitu mhux bizzejjed li jkun avveniment insolitu, sproporzjonat, u li jkun prodott mill-forzi tan-natura, imma jehtieg li jkun inevitabili, b’mod li ma jistax jigi evitat bid-diligenza ordinarja tal-“bonus pater familias”.

1. In the case Anthony Pirotta vs Direttur tad-Dipartiment tal-Muzewijiet decided on 3 October 2008, the Court of Appeal (Superior Jurisdiction) pronounced that in terms of Maltese jurisprudence: 

“ ‘il-forza magguri’ hija dik il-forza li ghaliha huwa impossibbli li wiehed jirrezisti, mentri ‘kaz fortuwitu’ huwa dak l-avveniment li ma setax ikun prevedut minn persuna ta’ ordinarja diligenza” (Delia v. Segretarju Permanent et, Appell (Inferjuri)19/05/2004 u Borg Falzon v. Darmanin, Appell Kumm. 7/06/1940), kif ukoll “il caso fortuito o la forza maggiore e’ l’evento non dipendente da azione o omissione volontaria o colposa, non prevedibile o almeno non evitabile” (Azzopardi v. Arcicovich et, Appell Civili,  14/11/1919, Vol. XXIV, PI, p.172). Biex ikun hemm il-kaz fortuwitu jrid ikun hemm event imprevedibbli u inevitabbli. It-test ghall-applikazzjoni tal-prevedibilita` o meno ta’ l-event huwa dak tad-diligenza tal-‘bonus pater familias’ fejn in-nuqqas taghha jirrizulta f’colpa (Kurunell Hugh v.Negte Busuttil, Appell Kummercjali, 16/11/1942). Jekk jirrizulta mill-fatti li kien hemm konkorrenza ta’ agir pozittiv jew negattiv tal-persuna allura l-event ma jibqax jinghad li kien kaz fortuwitu (App. Inf. Falzon vs Formosa 4/12/1991).” 

• In Michael u Maryanne konjugi Mizzi v. Tabib Joseph M. Paris u martu Mary Paris; Direttur tat-Toroq; u Direttur tax-Xoghlijiet u b’digriet tat-2 ta’ Settembru 2005, il-kawza tkompliet kontra l-Awtorita` dwar it-Trasport ta’ Malta minflok id-Direttur tat-Toroq  (Appell Civili Numru. 1324/1999/1), the Court of Appeal reiterated that:

“Skond  il-Ligi,  l-Artikolu 1029  tal-Kap. 16, kull hsara li tigri b’accident jew b’forza magguri, ibatiha, fin-nuqqas ta’ disposizzjoni espressa tal-ligi li tghid il-kuntrarju, dak illi fuq il-persuna jew il-beni tieghu tigri l-hsara. F’kazijiet  bhal dawn min  jallega  li dak  li gara kien dovut minhabba  forza magguri,  jew casus ghandu l-obbligu  li  jippruvah u dana sal-grad ta’ probabilita`.

 Skond  il-gurisprudenza  tal-Qrati  taghna  l-“forza magguri” hija  dik  il-forza  li  ghaliha  huwa  mpossibbli  li  wiehed jirrezisti,  mentri  l-“kaz  fortuwitu”  huwa  dak  meta avveniment  ma  setax  ikun  prevedut  minn  persuna  ta’ ordinarja  diligenza.  Il-kuncett  tal-kaz  fortuwitu  jew  forza magguri ma jsehhx meta ghall-hsara jkun ikkontribwixxa l-fatt, posittiv jew negattiv, tal-bniedem.  Ghalhekk skond il-principju  tad-dritt,  biex  ikun  hemm  il-kaz  fortuwitu  mhux bizzejjed li jkun hemm avveniment insolitu, sproporzjonat, u  li  jkun prodott mill-forzi  tan-natura,  imma  jehtieg  li  jkun inevitabili,  b’mod  li  ma  jistax  jigi  evitat  bid-diligenza ordinarja  tal-bonus pater familias. Din  il-prevedibilita`  trid tkun ta’ probabilitajiet ragionevoli u mhux ta’ possibilitajiet remotissimi  u  inverosimili.  (Ara Vol. XXIV p.I.p.172; Vol.p.I.p.74; Vol. XLVIII p.I. p.258)”;

Applicability

If one had to apply this to the COVID-19 pandemic , does the current pandemic qualify as force majeure?   Has the pandemic been foreseen and was it evitable?   One can perhaps say that the magnitude has been foreseen by the pertinent authorities, but was this evitable?   Is the pandemic irresistible?  Can anyone stop the virus if no medicine is yet available to counteract the virus?  Does the fact that many states have declared a lock-down on their populations – on grounds of public policy – render the pandemic a force majeure? 

Therefore, while the individual lease agreements, in all probability, do not define force majeure, and as a result do not stipulate what exactly happens in a case of force majeure, the tenant cannot easily decide not to pay the rent or to request a discount on his rent on the grounds of force majeure.  The two are separate issues.  Rather, force majeure, and if it is established that the pandemic constitutes a force majeure, may be a ground for an opt-out from a lease agreement.  But first one has to establish that here we are speaking of an irresistible force which is tantamount to force majeure.  And in this case, some lease agreements provide for the early termination of the lease agreement. But again, one has to look at  specific lease agreements.  

Therefore, as per Maltese jurisprudence, it has been established that for one to defend successfully a court case on the grounds of force majeure, the following elements have to be established:

1. That the event does not depend on a positive or negative fact of man, or better, that it is not dependent on an action or voluntary omission or on culpa;
2. That the event could not have been foreseen by a person of ordinary diligence, namely unforeseen;
3. That the event could not have been avoided through the exercise of the diligence of a bonus pater familias,  therefore the element of inevitability; and
4. That the event was irresistible.

Termination of lease agreements

Most lease agreements provide the grounds for the early termination of the lease.  Force majeure may be one these grounds, if it is established and proved on a balance of probabilities that the pandemic qualifies as force majeure.

One can also cite other grounds of termination, besides force majeure.  In fact, it is not unusual that lease agreements contain clauses which provide for the early termination of leases in the specific cases envisaged in the respective lease agreement.   Article 1566 to Article 1575 of the Civil Code also provide for situations with respect to the dissolution of a lease, including  where either of the parties fails to perform his obligation; in which case the party aggrieved by the non-performance may elect either to compel the other party to perform the obligation if this is possible, or to demand the dissolution of the lease agreement together with damages for non-performance, provided  that  in  the  case  of  urban,  residential  and commercial tenements where the tenant fails to pay the rent due punctually, the contract may be terminated only after that the lessor would have called upon the lessee by means of a judicial letter, and the lessee notwithstanding such notification, fails to pay the said rent within fifteen days from notification.

Conclusion

Therefore, for a tenant to terminate the lease, he has to prove force majeure or otherwise pursue other grounds of termination as per respective lease agreement or in terms of the grounds of termination provided in the Civil Code.   On the other hand it does not transpire that Maltese law provides for any waiver of rent or to a discount in the rent, unless there is a voluntary agreement between the landlord and the tenant.  Likewise, the newly enacted Private Residential Leases Act does not provide for instances of force majeure in a lease agreement, or for cases where the rent can be waived or reduced in cases of force majeure.

European Commission introduces ‘green lanes’ to facilitate freight transport

The outbreak of the Covid-19 pandemic has compelled the European Union (EU) Member States to introduce border restrictions, amongst them curbs on or measures which heavily impede the cross-border circulation of goods. Consequent traffic jams at intra-EU borders have led to drivers of freight transport (transport workers) facing waiting times of up to 24 hours at land border crossings disrupting supply chains in the process.

It is not surprising that the Commission has made it a priority to preserve the free circulation of goods within the EU; after all the free movement of goods is the linchpin of the European single market. For this reason, it had already proposed the creation of ‘green lanes’ to facilitate freight transport.  Earlier in March, it issued ‘Guidelines for border management measures to protect health and ensure the availability of goods and essential services’.[1]

On March 23, the Commission further issued a Communication on the implementation of such green lanes which are to be opened principally on existing Trans-European Transport Network (Ten-T) network crossings.[2] The TEN-T network is a project to develop a Europe-wide network of railway lines, roads, inland waterways, maritime shipping routes, ports, airports and railroad terminals. Any checks and health screening of transport workers passing through the designated green lanes at intra-EU border crossings should not exceed 15 minutes. For this purpose, the Communication has adopted a number of measures to streamline intra-EU freight transport stipulating that:

– At green lanes crossings transport workers may only be asked to produce their identification document, their driving licence, and a Certificate for International Transport Workers to be filled in by their employer (Annex 3 to the Communication);

– Health screening of transport workers should only be carried out on one side of the border to avoid time consumption on multiple tests carried out in different Member States;

– Checks on documents and cargo en route, such as road-side spot checks, should be minimised, and not exceed normal levels;

– Health screening should be undertaken in a manner which minimises delay. In principle, health screening should be based on electronic body temperature measurement or equally speedy but more effective methods;

– Driving restrictions, such as week-end bans, night bans, sectoral bans, etc., should be suspended so as to increase the fluidity of traffic.

These ‘green lane’ measures will only apply for the duration of the containment of the Covid-19 pandemic. The Commission has also made it clear that these measures are applicable to all goods and not only to essential or medical goods in as much as they are intended to ensure the free circulation of goods to preserve the functioning of the EU economy.

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[1] https://ec.europa.eu/home-affairs/sites/homeaffairs/files/what-we-do/policies/european-agenda-migration/20200316_covid-19-guidelines-for-border-management.pdf.

[2] https://ec.europa.eu/transport/sites/transport/files/legislation/2020-03-23-communication-green-lanes_en.pdf.

The EU’s Market Access Database – Providing tangible assistance to SMEs

As Europe confronts the Covid-19 pandemic and economic upheaval looms large, business continuity plans are essential like never before. So is making the best out of a slow-down by assessing a given modus operandi not only in the light of what needs to be adapted and adopted, but also to improve structures and performance once the economy begins to recuperate. This hiatus can be particularly beneficial to hard-hit small and medium-sized enterprises (SMEs).  

SMEs comprise the majority of all businesses in the EU providing about two-thirds of the total private sector employment in the EU and spurring the main source of job creation. Nevertheless, SMEs face a number of market access concerns and barriers on a daily basis, including tariff barriers; non-tariff barriers; problems arising from incorrect implementation of existing rules or inadequate enforcement; a dearth of entrepreneurial, managerial and marketing skills; insufficient accessibility to information and knowledge as well as difficulties in accessing financial resources to overcome a lack of capital.

The EU’s Market Access Database (https://madb.europa.eu/madb/indexPubli.htm) provides the necessary trade tools specifically to assist SMEs.  This toolbox includes the following initiatives:

1. The Enterprise Europe Network for SMEs

This support network boasts of 3,000 experts across 600 member organisations in more than 60 countries, which include chambers of commerce and industry, technology centres, and research institutes.

1. Intellectual Property Rights (IPR) SME Helpdesk

The rationale behind this Helpdesk is to both protect and enforce the SMEs IPR with particular regard to China, Latin America and Southeast Asia through the provision of free information and services. Offered via audio and video podcasts, helpline, case studies and factsheets, the Helpdesk’s assistance encompasses advice on IPR, including training. The Helpdesk’s IP Country Guides assist economic operators – through specific Helpdesks – to improve the understanding of the IPR landscape in China, Latin America and South-East Asia. 

1. Trade Defence SME Helpdesk 

This Helpdesk provides importers and exporters with assistance on trade defence instruments, namely anti-dumping duties and countervailing measures which are imposed with a view to safeguard free and fair trade in trading relations.

1. Your Europe Business Portal

This is a practical guide to doing business in Europe through the provision of services to business organisations who are looking for business opportunities both within the internal market and in third countries.  

• Access to Finance portal

Through this Portal, SMEs are guided to find finance supported by the EU (http://europa.eu/youeurope/business/funding-grants/access-to-finance/index  

The EU’s market access database is the right tool to assist SMEs all over the European Union to internationalise their activities and improve their market access as much as possible.  Furthermore, it also provides the tools to identify and eliminate any tariff or non-tariff barriers to trade which are erected vis-à-vis European companies, besides protecting European countries IP rights overseas, while also assisting SMEs to access the much needed finance for their investment and economic activities.

The EU’s Economic Response to COVID-19

As the looming economic crash induced by the COVID-19 becomes all the more imminent, the European Commission is stepping up its economic and fiscal measures to assist the EU Member States in combatting and mitigating the current economic shocks to the Internal Market.

The following timeline chronologically maps out the recent fundamental Communications issued by the Commission this month in this regard:

20 March 2020

The Commission issues a Communication ‘on the activation of the general escape clause of the Stability and Growth Pact’[1]   

Main Highlights:

• The Communication reaffirms that the COVID-19 crisis is an event falling outside the control of governments, hence rendering applicable the unusual event provision of the Stability and Growth Pact. This entails that the budgetary impact of the budgetary measures already being adopted by Member States should not be taken into consideration when the Commission assesses compliance with the said pact.

• The Commission observes that in terms of fiscal measures, more far-reaching flexibility under the Stability and Growth Pact is required.

• In such a situation of a severe economic downturn, the general escape clause allows the taking of budgetary measures by member states in order to deal with the situation within the ambits of the procedures of the Stability and Growth Pact.  It also enables the Commission and the Council to undertake the relevant policy coordination measures within the Pact, while departing from the generally applicable budgetary requirements.  

• The Commission concludes that the conditions to activate the general escape clause are met, and asks the council to endorse this conclusion. 

19 March 2020

The Commission adopts a ‘Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak’[2] (the “Temporary Framework”)

The Temporary Framework is intended to further support the economy of member states by enabling them to use full flexibility under the state aid rules. It should assist member states in ensuring sufficient liquidity to businesses and preserving the continuity of economic activity.  

Main Highlights:

• As the COVID-19 pandemic causes insufficient liquidity and significant damage across the whole economy of the EU, well-targeted public support becomes necessary to alleviate such repercussions.  The Commission observes that the main response will need to come from the member states’ national budgets. 

• The five temporary state aid measures as listed in the Temporary Framework are considered compatible to article 107 (3) (b) of the Treaty on the Functioning of the European Union (‘TFEU’) and should complement the measures in the Commission’s Communication of 13^h March 2020.

• The 5 temporary state aid measures listed in the Temporary Framework are the following:
• Aid in the form of direct grants, repayable advances or tax advantages;
• Aid in the form of guarantees on loans;
• Aid in the form of subsidised interest rates on loans;
• Aid in the form of guarantees on loans channelled through credit institutions or other financial institutions;
• Short-term export credit insurance

• State aid measures under the Temporary Framework should be necessary, appropriate and proportionate to remedy a serious disturbance in the member state’s economy.  Specific conditions listed in the Temporary Framework should also be fulfilled.

• The Temporary Framework should apply from 19 March 2020 to 31 December 2020, unless extended. 

13 March 2020

The Commission issues a Communication on the ‘Coordinated economic response to the COVID-19 Outbreak’[3]

Main Highlights:

• The Commission proposes to direct 37 billion Euro under the cohesion policy to the COVID-19 outbreak, as part of “Coronavirus Response Investment Initiative”. This is to be fully implemented in 2020 and should, amongst others, enable Member States to provide support to their healthcare systems, provide liquidity, and support national short time working schemes. 

• The Commission states that one billion Euro will be made available from the EU budget as a guarantee to the European Investment Fund to support working capital financing and help European SMEs and small mid-caps.

• The Commission exemplifies support measures which may be taken by member states in line with existing state aid rules.  Such measures include:
  • the implementation of measures across the board with respect to all companies such as wage subsidies;
  • the granting of direct financial support to consumers, for instance; for cancelled services.

• The Commission determines that fiscal support measures should be implemented to counter the negative socio-economic consequences of the COVID-19 pandemic.  The Commission is to propose to the Council the application of the full flexibility within the EU fiscal framework as it considers that in light of the current circumstances, the flexibility to cater for “unusual events outside the control of government” is applicable.

• The Commission also considers other aspects affected by COVID-19, including the supply of medical equipment, transport, tourism and employment.

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[1] https://ec.europa.eu/info/sites/info/files/economy-finance/2_en_act_part1_v3-adopted_text.pdf

[2] https://ec.europa.eu/competition/state_aid/what_is_new/sa_covid19_temporary-framework.pdf

[3] https://ec.europa.eu/info/sites/info/files/communication-coordinated-economic-response-covid19-march-2020_en.pdf

Controlling and Containing the Coronavirus Risk at the Work Place

The escalating pandemic of the Coronavirus (also referred to as COVID-19), has taken a heavy toll on the workplace environment.  As workers become perturbed about the risks they may be exposed to at the workplace, employers are striving to keep their businesses and companies afloat while adhering to all statutory obligations, particularly those obligations relevant to the Coronavirus pandemic.

In terms of article 6 of the Occupational Health and Safety Authority Act (Chapter 424 of the Laws of Malta), an employer is legally obliged “to ensure the health and safety at all times of all persons who may be affected by the work being carried out for such employer”. This all-encompassing article entails that the employer is not only required to ensure the health and safety of its workers but must also ensure the health and safety of all persons; including external service providers and customers who visit the workplace.  Chapter 424 applies to all work environments and to all sectors of work activity, except those activities carried out by members of a disciplined force such as the Armed Forces of Malta, having characteristics conflicting with the Act.   

Employers should identify, evaluate and assess the current risks associated with the COVID-19, taking more drastic measures where need be to reduce, and if possible, avoid the said risks as much as reasonably practicable.  Separate risk assessments may be required for certain categories of the workforce, including young persons and pregnant workers, as respectively laid down in subsidiary legislation 424.10 and 424.11. 

Work from home policies are on the rise as an effective means to control and mitigate risk exposure, while contingency and business continuity plans are being put into effect to keep businesses running.

On their part, workers have a reciprocal obligation to cooperate with their employer on the measures indicated to them by their employer[1].  Furthermore, in terms of article 7 of the above mentioned Act, every worker is not only duty bound to cooperate with the employer but is also required to safeguard his own health and safety as well as that of other persons who can be affected by reason of the work activity being carried out.  It follows that workers should adhere to given instructions and utilise any training and protective gear and equipment as may be provided to them by the employers.

The above is without prejudice to any instructions issued and/or still to be issued by the Maltese public health authorities and the Government of Malta particularly as regards the COVID-19 pandemic. 

GMX Law Firm

GAUCI-MAISTRE XYNOU Legal can assist you with further legal and judicial advice on matters pertaining to occupational health and safety, employment rights and obligations.

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[1] http://www.ohsa.org.mt/Portals/0/Docs/Guides/2020/Workplace%20Readiness%20COVID_19.pdf

Amendments to the Merchant Shipping (Shipping Organisations – Private Companies) Regulations

By virtue of the legal notice 31 of 2020 Merchant Shipping (Shipping Organisations – Private Companies) Regulations (the “Regulations”), amendments have been made to the respective domestic law regulating shipping organisations.

Please find hereunder a list with the amendments which are of significant importance:

1. In accordance with the said amendments, shipping companies are obliged to prepare and file financial statements starting from financial year 2020, which should be filed within the periods required for a company incorporated in terms of the Companies Act, Chapter 386 of the Laws of Malta (the “Companies Act”).  Should a shipping company proceed to file financial statements pertaining to previous years to the Registrar of Companies, the said financial statements will still be uploaded on the Malta Business Registry’s website, however they would be classified as unregistered documents. 
2. Shipping companies which are incorporated before the 21 February 2020, if the year-end is not December, they are requested to file the financial statements within the stipulated times from the year end. On the other hand, Merchant shipping companies which are incorporated after 21 February 2020 wherein the year end of such company is not December, the company is required to file a notice of accounting periods with the Malta Business Registry.
3. The amendments cater for small companies, and the exemptions applicable under Companies Act should also apply for Merchant Shipping Companies. The provisions of the Companies Act in relation to the content and timeframes should apply. Nevertheless, a company incorporated under the Merchant Shipping Act may be exempt from certain requirements in the event that the said shipping company falls within the threshold of a small exempt company in terms of the amendments and the Companies Act regulations. Small companies rules for parent companies should also apply.  
4. It is essential to note that the penalties, as have been amended, will be imposed and become applicable to shipping companies registered in terms of the Merchant Shipping Act, as from 1st  April 2020. e.g. failure of failing an annual return should incur a penalty of €2,500 one off fee and a daily fee of €50.  It is our understanding that the Malta Business Registry shall be strictly adhering to the imposition of fines moving forward.
5. Prior to the recent amendments, a shipping company incorporated in another jurisdiction which intended to be continued in Malta was required to go through a lengthy process. The foreign shipping company would have first been required to go through the process of continuation in accordance with the respective regulations in terms of the Companies Act, Following completion of such process, the directors of the company would have then proceeded to make the required amendments in order to be treated as a shipping organisation by electing for the company to be regulated by the Merchant Shipping Act by means of the appropriate declaration in the memorandum of association of the company.
6. However, through the introduction of these Amendments, foreign shipping companies have been provided with their own specific rules to cater for this scenario which provides for a smoother transition of foreign companies wishing to continue in Malta, or on the inverse, Malta shipping companies wishing to continue in another jurisdiction. Fees, which are to be imposed upon the continuation of such companies, whether inbound and outbound, and publication fees shall be applicable as from 1 April 2020.
7. Subject to the Amendments Merchant Shipping Companies may appoint a company secretary.   

The information provided does not, and is not intended to, constitute legal advice but it is provided for general informational purposes only.