Author: GMX USER

5 Feb 2020

Withholding Tax on Assignments of Rights acquired under a Promise of Sale Agreement

The Commissioner for Revenue has published guidance relation to the 2020 budget measures introduced regarding the withholding tax due on the assignment of rights acquired under a promise of sale agreement (ċessjoni ta’ konvenju). This measure is retroactively applicable in relation to any assignments made from 1 January 2020 and the relative legislation will be made retroactive to that date.

The guidance states that the final withholding tax shall be withheld from the consideration paid for the assignment of rights acquired under the promise of sale. However, the withholding tax shall be calculated after taking into account the following allowable deductions:

  • Brokerage fees, if any, paid by the assignor to the extent that they result from documentary evidence and are supported by a receipt;
  • Where the assignor had acquired the rights in terms of a prior valid assignment, any sum paid by him to the previous assignor to the extent that it results from that assignment and is supported by a receipt.

Once the above mentioned allowable deductions are deducted on a pro rata basis, tax shall be withheld on the aforementioned consideration at 15% on the first €100,000 whilst 7% provisional tax shall be withheld on the remainder of the consideration. That part of the consideration in excess of €100,000 shall be deemed to be gains or profits derived from a trade, business, profession or vocation falling within the scope of Article 4(1)(a) of the Income Tax Act to be declared in the tax return.

The guidance further clarifies that in the event that a person enters into various promise of sale agreements in relation to different apartments within the same building, such individual is entitled to pay 15% final withholding tax on the first €100,000 of each cession of right on promise of sale, provided that the individual does not cede the promise of sale in favour of third parties and that the rights in relation to each promise of sale are being acquired by different people.

8 Jan 2020

MFSA publishes its Risk Culture and Risk Appetite Statements

The Malta Financial Services Authority today released its Risk Culture and Risk Appetite Statements as part of its drive to place risk management at the centre of its strategy. These Statements seek to ensure the better identification, evaluation, management, and communication of the Authority’s approach to risk.

The MFSA’s Risk Culture Statement provides guidance in relation to best practice and implementation of the MFSA’s Risk Culture change programme, whilst the MFSA’s Risk Appetite Statement sets boundaries of acceptable levels of risk in key areas of the Authority’s activities as a financial services supervisor.

“To better serve our role as the single regulator of financial services in Malta, we are working towards this transformation by incorporating a risk-based approach as we look to improve resiliency, enhance operational and supervisory effectiveness and address our strategic priorities. To transform our risk culture, we must ingrain a risk-focused mindset into the Authority’s activities,” stated the MFSA’s Chief Executive Officer, Joseph Cuschieri.

The MFSA’s Risk Appetite Statement documents the Authority’s overall low risk appetite for supervisory risk. It also states that the MFSA is willing to consider a certain degree of tolerance for uncertain outcomes to foster innovation and efficiencies within certain business models, or with a view to achieving the MFSA’s mission, vision, and strategic objectives.

“The MFSA’s Risk Appetite Statement is an important step towards a sounder and more transparent risk management strategy for our Authority,” said the MFSA’s Head of Risk, Franco Borg. “By clearly conveying the acceptable level of risks within our activities, management and employees have clearer signposts to guide their decisions, and external stakeholders can better understand the Authority’s actions in the context of the risks the Authority is facing.”

The Risk Culture and Risk Appetite Statement are available below.

Explanatory Note:

Risk Appetite:

The Malta Financial Services Authority’s risk appetite is defined as the amount of risk (volatility of expected results) the Authority is willing to accept in pursuit of its mission and in carrying out its function as a financial services supervisor.

Risk Culture:

The Malta Financial Services Authority’s Risk Culture describes the set of shared attitudes, values and behaviours that characterise how the Authority and its staff consider risk in their day-to-day activities. The MFSA aims to foster a positive risk culture.

7 Jan 2020

SAFEGUARDING AND PROTECTING THE RIGHT TO ADEQUATE ACCOMMODATION

The New Private Residential Leases Act of 2019

Scope

Act number XXVIII of 2019, the Private Residential Leases Act of 2019 (“the Act”), has been enacted primarily to ensure fairness, clarity and predictability in contractual relations between lessors and lessees and to safeguard and protect the right to adequate accommodation.

Applicability

This Act applies to private residential leases that are entered into or renewed after the entry into force of the Act, subject to the following:

  • Leases which were granted after 1 June 1995, and which are still applicable on the day of the entry into force of this Act should continue to be regulated exclusively by the provisions of the Civil Code, except in the cases specified under article 5 of the Civil Code.
  • The Act should not apply to tenements belonging to the Government of Malta, tenements let to any tourist exclusively for tourism purposes, tenements which are not let for a primary residential purpose and tenements let before 1 June 1995.
  • The Act does not apply to the letting of urban tenements where contracts of emphyteusis or sub-emphyteusis have been or are about to be converted into leases by virtue of law.

Registration

The Act sets the obligation to register private residential lease agreements, including their renewal, whether expressed or tacit. If the lease agreement is not registered, it is considered to be null and void.  The registration has to be effected within ten days of the commencement of the lease.  In cases of default, an administrative fee will be charged. 

Private residential leases which were entered into after the 1 June 1995, but before the coming into force of the Act, and which would still be in force on the 1 January 2021, whether in their original or renewed term, should be registered, provided that the obligation to register should also apply to any lease that is renewed beyond 1 January 2021.  The registration requires the declaration of any amount deposited by the lessee by way of security and the presentation of an inventory.

The Housing Authority is empowered to introduce and enforce minimum standards of habitability for tenements which are offered for letting.

Requisites of a lease agreement

The Act also includes the requisites that need to be included in the lease agreement, including the use of the tenement, the duration and whether the lease may be extended.  In the absence of any one of the essential requisites, the lease agreement will be deemed null and void.

Interestingly, the Act also outlines the forbidden clauses, which include clauses that stipulate the payment of a fixed amount separate from the rent, for the consumption of water, electricity or other utility services if such amount does not reflect the actual consumption of such utility services by the lessee calculated at the rate reflecting the primary residential use of the tenement and the total number of occupants residing therein.  

Private residential lease

A long private residential lease cannot be less than 1 year in duration, provided that this does not apply to short private residential leases or the letting of shared residential space.  A private residential lease should cease to have effect upon the expiration of its term, provided that the lessor gives notice to the lessee at least 3 months beforehand by registered letter. This is not applicable to short private residential leases, or letting of shared residential space.

A short private residential lease should cease to have effect by operation of article 1566 of the Civil Code.

Rent

The rent should be freely stipulated between the parties and the rent increases may only take place once every year. In the absence of any expressed agreement, the rent cannot be revised during the term of the lease, given that yearly increases may not exceed the annual variations recorded in the Property Price Index published by the National Statistics Office.

Shared residential space

The Act also provides for the letting of shared residential space, whereby any agreement entered into for the lease of a shared residential space should be of a 6 month-duration.

Monitoring and enforcement

Part III of the Act refers to monitoring and enforcement.  Housing Authority officers, and with the assistance of the Police Force (if required), should have the right to enter the private tenement, to verify whether the tenement is being occupied by any person, or to take any photographs after entering or request any legitimate information from any occupier of such tenement, provided that such access should enquire the prior issue of a warrant signed by a Magistrate.

Adjudicating Panel for private residential leases

The Act establishes an Adjudicating Panel for private residential leases with exclusive jurisdiction to decide disputes relating to private residential leases to which the Act applies, in so far as the claim does not exceed the value of Eur5,000 on matters identified in article 23(2) of the Act.   The Adjudicating Panel should only hear claims relative to registered contracts.

Every claim filed before the Adjudicating Panel should be made in writing.   The defendant will have ten days to file his reply.   The Adjudicating Panel should deliver judgement within the shortest time possible but not later than 5 working days from the date of the last submission by the parties, the witnesses or the experts, as the case may be. 

Appeal

Any aggrieved party by a decision of the Adjudicating Panel may appeal within twenty days from the date of the decision of the Adjudicating Panel on a point of law to the Court of Appeal.

GMX Law Firm

GAUCI-MAISTRE XYNOU Legal can assist you with further legal and judicial advice on matters pertaining to lease agreements, including the drafting of lease agreements.

6 Dec 2019

The Shipping Industry is increasingly embracing environmental sustainability

The plastic continent — and how to tackle it — may be hogging the headlines, but the shipping industry – frowned upon as a notorious polluter on a massive scale – is also being effectively reined in and compelled by law to go green. EU legislation and the International Maritime Organisation (IMO) are wielding their increasingly environmental sustainability vision and doing so in a holistic manner that is impacting shipping worldwide.

Indeed the targeted spheres are:

  • Sea transport of toxic waste
  • Dismantling of ships
  • Sulphur emissions

In all fairness, a more environmentally conscious shipping industry has long been taking shape.

Sea transport of toxic waste

Spearheaded by the United Nations Environment Programme (UNEP), the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal (Basel Convention), set the ball rolling to mitigate the risks of transporting toxic waste across the oceans in 1989. Despite expected resistance and taking three years to be enforced, the ratification of 186 countries provided a step in the right direction.

The Basel Convention was aimed at reducing the transfer of hazardous waste from developed to less developed countries, but not prohibiting them. Thus the Basel Convention relies on the ‘prior informed consent’ of the authorities of the respective importing countries to ensure that any hazardous waste is treated in an environmentally sound manner by the importing countries in question. While environmental issues began to gain traction, the Basel Convention could not guarantee a foolproof outcome, more so when 1-off cases were occasionally allowed to bypass the rules.

An attempt at more stringent control was adopted in 1995, when the Basel Convention introduced its ‘Ban Amendment’ to prohibit the export of all toxic waste from OECD to non-OECD countries. Yet, once again, insufficient ratification proved a stumbling block. Indeed, the Ban amendment will enter into force on December 5, 2019, since Croatia ratified it on September 6, 2019, being the last ratification required to meet the three-fourths (of the State Parties to the Basel Convention) ratification threshold.

The Basel Convention’s effectiveness in regulating ship recycling began to lose favour, since its code of practice was not comprehensive enough, particularly as the adverse impact of climate change started to dominate political agendas.

This goaded the EU to enforce the Basel Convention, the ‘Amendment Ban’ and the OECD Decision C (2001)107/FINAL, unilaterally in 2006 through its Regulation (EC) No 1013/2006 on shipments of waste, known as the European Waste Shipment Regulation (WSR). The WSR includes a ban on the export of hazardous wastes to non-OECD countries, as well as a ban on the export of waste for disposal. This stipulated that, since the dismantling of ships was now deemed as ‘hazardous waste’ and as long as the conditions adopted by the WSR are satisfied, no end-of-life ship leaving any EU port could be exported to a non-OED country to be scrapped. In fact, the concept of flag state was once again waived off. The outcome of this regulation did not prove successful so in order to strengthen Member States’ inspection systems, WSR was amended in 2014 through Regulation (EU) No 660/2014 of 15 May 2014.

Dismantling of Ships

The arduous and hazardous dismantling of old and decommissioned vessels is a nightmare on all fronts – health & safety, logistical and environmental. More so when carried out on beaches – a horrifying reality – especially in the Far East. The complexities involved also need to factor in the skewed size-age distribution of the world’s fleet, since smaller ships operating in domestic waters weather much better than large ocean-going vessels that tend to be scrapped at around 25 years of age.

Moving towards a circular economy, however, has been piling on the pressure for greener solutions that obviously recognize ship recycling as the best solution for ships ceasing operations.

In May 2009, the Hong Kong International Convention (Hong Kong Convention) for the Safe and Environmentally Sound Recycling of Ships brought 63 countries together to formulate guidelines that would mitigate the operational and environmental risks involved in the reprocessing and scrapping of ships in the world’s recycling locations. As a result, the Hong Kong Convention addressed human health issues vis-a-vis working conditions, particularly workers’ occupational and safety conditions at the ship recycling facilities (defined areas used for ship recycling). Basics such as providing workers with adequate protective equipment and training became mandatory, while a nearby hospital became another prerequisite.

The complexities in compiling these guidelines and subsequent compliance were further shackled (and continue to be shackled) by the entry into force criteria which were bound to:

  • a minimum number of ratifications; 
  • ratified states should represent 40% of world merchant shipping by gross tonnage;
  • a combined maximum annual ship recycling volume of the said states should amount to at least 3% of their combined merchant shipping tonnage during the preceding 10 years.

Four years on, the European Union entered the fray in the role of champion and reinforcement of the said Hong Kong Convention. Given its clout of 35% ownership of the global merchant fleet[1] and its mission to raise the standards bar, the EU adopted its Regulation on Ship Recycling at the end of 2013 allowing a 5-year grace period until full implementation; the regulation is effective from January 2019. From the very beginning of 2019, a new chapter regarding the recycling of vessels began to be written.

Touted as “the only legally binding and comprehensive instrument on ship recycling in force in the world today,” EU Regulation No. 1257/2013 stipulates that all EU-flagged vessels have to be dismantled according to strict guidelines in one of the approved European List shipyards. Although most of these yards are located within the EU, a few are situated in Turkey and the U.S.A. Significantly, the invitation is open for other shipyards to join the list as long as they meet the stringent requirements. As for the European List of Authorised Ship Recycling Facilities, this has been last updated on 17 June 2019 by the Commission’s Implementing Decision 2019/995 of that date. At the same time, the EU has come under fire for stalling a number of applications.

Nevertheless, even the most cynical of skeptics cannot dispute that the EU Regulations are a step in the right direction of sustainability, especially since no specific global rules on ship recycling exist. Putting lives and the planet at risk is no longer acceptable. Minimizing waste and repurposing valuable materials – primarily steel – point to another two linked priorities. These in turn both reduce the need for mining while creating a lucrative market buoyed by perpetual recycling.

Any detractors of the EU’s Ship Recycling Regulation were recently put in place by the criminal prosecution in Rotterdam of Seatrade in March 2018, after its directors were found to have breached existing EU regulations by indirectly selling ships to scrap yards in non-OECD countries. The implications of this case amply manifest that no ship owner (of any flag) can ‘mis-declare’ its intended destination when leaving European waters for recycling and hope to get away with violation of the rules. Even more significantly, resorting to reflag outside Europe to avoid pertinent regulation will fall under scrutiny to ascertain that bypassing the rules is not intended. 

Sulphur Emissions

No maritime environmental write-up would be complete without a reference to the 0.5% Sulphur Cap imposed by the IMO for ships operating outside Emission Control Areas, effective as from January 1, 2020.

The current Sulphur Cap stands at 3.5%, meaning that the new limit will result in a drastic reduction in the maritime industry carbon footprint. Regarding applicability, the 2020 cap will apply to all ships flying the flag of a state that has ratified MARPOL Annex VI and/or calling at a port or passing through the waters of a state that has ratified the MARPOL Convention. This will eventually include a great number of the world’s fleet.  The new regulations are already boosting the production of liquefied natural gas (LNG) and other compliant alternative bunkers. The option is, however, dependent on the availability of a worldwide network of LNG bunkering infrastructure.

Shipowners who will not opt for LNG and would still like to make use of Heavy Fuel Oil (HFO) should install scrubbers or exhaust gas cleaning systems onboard their vessels, which is a time-consuming exercise involving a hefty capital outlay and more structural modifications.

While environmentalists cheered the news of the revised sulphur cap, several stakeholders have expressed their doubts, primarily where the use of scrubbers is concerned. Detractors argue that shifting pollution from the sea to the air is a perfectly futile exercise. They argue that the onus lies on oil refineries and other alternative fuel providers to produce eco-gasses in the first place. Meanwhile, they advocate slow steaming.

Should slow-steaming become obligatory across the board, the maritime industry is in for a massive re-think.

What are the immediate implications?

Environmentally speaking, slower speed should reduce carbon dioxide emissions.  The biggest hurdle is to maintain market driven delivery dates. On the other hand, it is argued that the proposal would be counterproductive, since it would necessitate an increased number of vessels at sea to ensure current and future demand expectations.  It would even trigger an increased demand for more vessels to be built, therefore escalating the strain on the environment. Furthermore, charter markets will cease to operate smoothly, charter and spot rates will spike resulting in a starker imbalance between the gainers and losers in the maritime industry.     

Conclusion

Today’s realities are having the shipping industry increasingly embrace environmental sustainability and, like any other major or minor industry, its future economic viability depends on adopting eco-friendly policies.

Regarding the ever-controversial scrapping of ships, the EU Regulation No. 1257/2013 manifests a concerted effort to improve social and environmental conditions under which ships are dismantled. Yet, even as the EU showcases the busiest of its ‘green’ recycling yard in Ghent, Belgium, it should be kept in mind that none of the EU member states could handle the dismantling of large ocean-crossing vessels. As a result, the success of enforcing the EURegulation No. 1257/2013 depends on winning over non-EU geographically spread scrap yards that factors in the issues of which countries are willing to buy ships and which ones are not reaching full capacity any time soon. Failing to do so would only lead to reflagging and evasion though, once again, the Seatrade case shows that the EU means eco-business.

*The above article had been published on Marine Money Magazine – Legal Issue 2019.

[1] https://ec.europa.eu/environment/waste/ships/

6 Dec 2019

Does a condition in a contract have a binding effect on subsequent owners?

Mercury p.l.c. (C 27497) vs Persona Limited (C 48811) (Rik. Gur. Nru 103/14GM) dated 10 October 2019

The Facts

Tesborg Limited was the developer and owner of a block of forty nine apartments and eighteen basement garages. Mercury p.l.c. acquired the rights of Tesborg Limited through the merger of a number of business organisations, including Tesborg Limited.  

Through a public deed dated 29 December 1986, Tesborg Limited sold to St. Jude Medical Centre Limited the apartments numbered 33 and 42, Marina Court, Ta’ Xbiex. The contract of sale included a number of conditions, including that:

“9. The purchaser or its successors in title is bound to give first option to the company should purchaser or its successors in title decide to sell the aforesaid Flat (recte: flats).

“10. The purchaser binds itself to use the property being transferred for residential purposes or as offices only. No sign or placards shall be exhibited in or on the apartment transferred.

“11. The Company undertakes to impose on purchasers of garages the conditions, obligations and restrictions imposed on owners of apartments insofar as applicable.

“12. The purchaser binds itself to enforce on his successors in title all the conditions listed above”.

It resulted that St Jude Medical Centre Limited had from the start used the apartments as a clinic.

At first, Persona Limited leased the apartments and continued with the previous use, namely as a medical centre. On 21 December 2009, when Persona Limited leased the apartments from St. Jude Medical Centre Limited, a permit had been issued, which permit included the condition that “The premises shall be used as a doctors’ office, including any use falling within Class 5 of the Development Planning (Use Classes) Order 1994”.  This was due to the fact that the classification of the apartments was still that they were residential apartments.   

Through a contract dated 25 March 2011, St. Jude Medical Centre Limited sold the property to Persona Limited, subject also to the conditions included in its purchase agreement which Persona Limited acknowledged.  The Public Registry note also indicated that the apartments being purchased are  “as subject to and as enjoying the servitudes inherent in their position, otherwise free and unencumbered” and “subject to the terms and conditions mentioned in the deed of acquisition by the vendor”.  Mercury p.l.c. was advised about the sale of the property but Mercury p.l.c. chose not to exercise its right of first refusal, which right was included in the contract of 1986.   

Mercury p.l.c. requested the Court to declare that Persona Limited infringed the terms and conditions in the contract between Tesborg Limited and St. Jude Medical Centre Limited of 29 December 1986, which terms and conditions were acknowledged by Persona Limited and binding as per contract dated 25 March 2011 between St. Jude Medical Centre Limited and Persona Limited. Mercury p.l.c. also requested the Court to order Persona Limited to abide with the terms and conditions of the contract and to immediately desist from using  apartments 33 and 42 at Marina Court, Ta’ Xbiex, except as a residence or offices and to remove any advertisements or signs from the exterior walls of the apartments.   

Persona Limited replied that Mercury p.l.c. does not have any juridical interest, and that the alleged obligation is a personal obligation which does not affect Persona Limited given that Persona Limited did not negotiate with Mercury p.l.c. Persona Limited also noted that the pretension of Mercury p.l.c. and the obligations or conditions on which Persona Limited is basing its action (if these ever had any validity) do not bind Persona Limited vis-a-vis Mercury p.l.c. given that these were not registered according to law. Other pleas were also raised.

The Court’s Considerations

After having examined the provisions of Maltese and Italian law, including jurisprudence and the Napoleonic Code, the Court decided that as a general rule the person who acquires by a particular title is not bound vis a vis the original contract of which he was not a party; because in this case he should be deemed as a third party.   This effectively means that if the obligations are of a personal nature, and not real, Persona Limited is a third party with respect to the original contract and therefore should not be bound by same.  Persona Limited bound its buyer, who in turn bound Persona Limited, but this does not translate into a contractual relationship between Mercury p.l.c. and Persona Limited.  The Court reiterated that according to the principles outlined in the decision, Persona Limited is a third party to the original contract.  The Court noted that Mercury p.l.c. may have other remedies, though certainly not a direct action against Persona Limited.

The Court therefore concluded that the obligation contained in the contract dated 29 December 1986 does not bind Persona Limited.   

The GMX Commentary

With respect to the issue of servitude, the Court held that the law is clear and unequivocal, namely, that for the constitution of servitude, the servitude needs to be registered in terms of article 458 of the Civil Code. Therefore the Court held that the servitude in question is not included in the original contract of sale because the sale was described as free and unencumbered.  As a result, the concept of servitude should not apply.    

Consequently, the Court rejected Mercury p.l.c.’s requests that Persona Limited infringed the terms and conditions in the contract between Tesborg Limited and St. Jude Medical Centre Limited of 29 December 1986, that Persona Limited was not bound with the terms and conditions of the contract and that Persona Limited could continue to use apartments 33 and 42 at Marina Court, Ta’ Xbiex for its present use.

Yet the Court rejected Persona Limited ‘s preliminary plea, namely, that Mercury p.l.c. does not have any juridical interest, agreed with Persona Limited’s second and third preliminary pleas and abstained from taking cognisance of the fourth, fifth and sixth pleas of Persona Limited.

An appeal has been filed from this judgement.

5 Dec 2019

Better Legal Insights Through Technology

The legal profession has evolved at an unprecedented speed. Technology and new emerging tools harnessing artificial intelligence and data visualization all help legal professionals now uncover valuable insights. It is almost impossible to attend a conference today and not encounter multiple discussions about artificial intelligence (AI). Many in the legal profession have begun to assume—that AI is the future of law. While still in its infancy, artificial intelligence-powered tools are at a point where new insights are now possible.

Most of what is happening in the legal space related to AI is connected to machine learning. There is plenty of hype and confusion about these terms in the media, but for our purposes it is probably best to think of AI as a broad technology category whereby machines carry out “smart” tasks that we associate with human decision making. Machine learning is a subset of AI—a powerful application of AI technology in which we expose machines to lots of data and provide them with ways to learn on their own and become incrementally “smarter” over time.

Current discussions of AI in the legal context tend to be hyperbolic and focus on concepts like “robot lawyers.” This is unfortunate for at least a number of reasons. First of all, its potential may be overlooked and it also generates fear among highly skilled professionals that they might soon be at risk of being replaced by machines. While machines may indeed one day perform some of the tedious, mundane and repetitive tasks in preparation for any legal matters, we are a long way away—if ever—from replacing the extraordinary levels of nuanced judgement and expertise demonstrated daily by experienced legal counsel. This would do a real disservice to AI and legal technology as it would overshadow truly meaningful work in the area of machine learning. Solutions today are already improving the interaction between humans and computers, rapidly evolving a lawyer’s ability to answer questions and draw important legal insights from ever-growing data collections.

AI technology would best be described as powering a new era of ‘augmented intelligence’ for lawyers. Lawyers are still making key legal judgments but now have powerful tools to draw new legal insights. AI technology is making it possible for legal professionals to interact in a more natural, conversational way with computer systems. The language of law—which is very specialized and highly context sensitive—is being mapped into computer systems so that the mountains of legal data that we now have access to can be mined more effectively. AI’s promise is that we will get better results quicker and more efficiently, and at a lower cost.

An equally promising technology whose potential may be overlooked amid all this hype is data analytics. Data has always been the foundation of law. However convenience, accessibility, and the speed of digital mediums are all transforming this discipline from within. Data volumes continue to grow at exponential rates, and “big data” is an issue across just about every legal function. This is true whether you are talking about research or sketching out a legal strategy, assessing the merits of a case, or performing a multitude of tasks that a lawyer now confronts. Client expectations too now have changed and there are relentless demands to be more efficient and deliver more cost-effective services. Lawyers’ work today involves finding, sifting and synthesizing relevant information much quicker. This is a problem that must be addressed because the pressure from clients is not easing up.

Fortunately, there are effective solutions in the marketplace today that target these data-related challenges. Technology-focused companies have learned a lot about how to manage big sets of data. These providers are also investing heavily in the promise of language-based technologies that can scan, interpret, and synthesize the written document. These solutions are empowering the “data-driven lawyer,” for whom the big data phenomenon represents an opportunity, rather than an intractable problem.

Data-driven analytics is something lawyers and other workers should learn how to do and use. The prevalence of data-based applications in consumer technology is an important part of this story. For consumers, data is already all-encompassing. Ordinary people are already accustomed to and welcoming the convenience that insights derived from data brings to their lives.

Lawyers who have, for one reason or another, not implemented data-driven changes into their professional lives are at least witnessing that data makes their personal lives more convenient and fulfilling.

Here are some examples of how data is a game changer:

  • Data about traffic congestion is piped to mobile applications such as Google Maps.
  • When consumers use their mobile devices, algorithms crunch information about themselves as well as establish similar “buyer personas”, presenting then to users, all the choices matching what the algorithms think they want to see.
  • When seeking medical advise, health care providers can access data about patients, and use such data to support decisions about treatments and diagnoses.
  • When consumers use their credit card, they are too facilitating the expansion of a big database of their personal habits.

But how can lawyers use such data to engage in predictions about the future and advise clients on legal matters? The primary model has been through complementary forces of expertise and experience. As lawyers practiced and gained knowledge over the years, they relied on their personal experience and judgment for how these questions should be answered. Now another reference point is – data-driven decision making – and has become part of their repertoire. Data today is not only a set of static reference points on which a human can make decisions. It has become a dynamic asset that can be used to root out previously unseen relationships and conclusions. The data and legal analytics a lawyer has nowadays might be applied to the quantitative predictions they are asked to make about the future, particularly if the data exists in a consistent structure. Data that can fundamentally improve some common predictions lawyers are asked to make are litigation planning strategies, document reviews, sensing patterns in the way judges rule, obtaining detailed metrics on how successful witness experts have been admitted into court, as well as pricing and budgeting at the law firm. With the help of analytics law firms can also identify gaps in their own team and hire to fill those gaps in certain practice areas.

Underlying the rise of analytics is the maturation of artificial intelligence technologies like natural language processing and machine learning, which are deployed to add structure to complex legal data, which in turn can be used for comprehensive and quality statistical analysis. With advances in machine learning, attorneys, editors and other subject matter experts can help train computers to structure vast amounts of legal data, enabling machines to replicate human editorial activities at scale. With clean, structured data, companies can then create powerful new tools that identify important legal trends and help lawyers make better legal and business decisions. Building a data-driven legal practice is not going to happen overnight, but starting this roadmap is not as daunting as it may seem.

Here are five good starting points:

  1. The place to start with using data to enhance your practice is probably in comparatively mundane applications such as billing and management systems. They hold a gold mine of data about productivity, value, talent, results, and outcomes.
  2. The next step involves getting data structured in the right way and into an organized and structured format that is both secure and shareable among those with appropriate access permissions.
  3. Data hygiene is the following critical step. Data in legal organizations may also require some tidying up, but can be incredibly valuable when properly sanitized.
  4. There is no getting around the fact that leveraging analytics in a legal organization requires lawyers to work side-by-side with people who understand the data and data structures. But crossing that divide and building trust and subject-matter expertise across professional boundaries is a necessary mindset shift facing the legal industry today.
  5. Building a data-driven legal practice and culture is not something you assign to a task force, department, or an individual. It requires a buy-in from everyone from the top leadership down. None of this is easy and it all comes down to building behaviours and practices that support the idea that -this is how we do things from now on, and it is better than our prior practice.
  6. Creating a data-driven legal practice is a matter of competitive survival. And it is much more than simply the adoption of a new tool or product. It requires a shift in mind-set and a significant cultural change for the organization.

Conclusion

Technology is offering real utility and value to legal practitioners right now. Legal analytics and data power better decision-making in a number of legal practice areas such as patent and trademark law, copyright, securities, antitrust, and commercial litigation. By processing this enriched data, lawyers can draw conclusions about opposing counsel, case opinions, judges, litigation parties, and contract drafts in order to reveal legal insights that were not previously knowable. Legal analytics is also being used to help firms improve the ways they approach their business. It does so by providing factual data about the behaviour and performance of law firms and individual lawyers—including data points like win rates, cases with resolutions, etc. Analytics can also be used to track broad industry trends relevant to activities like strategic planning, business development, and marketing.

As these adoption rates for legal analytics tools rise, we are seeing the data-driven lawyer of tomorrow is increasingly a reality today. Whether legal professionals want to be more persuasive in court, do a better job identifying a reliable expert witness, or simply know more about their own firm and lawyers, they are discovering that legal analytics exposes an array of data points and insights that otherwise would have been the province of anecdotes and speculation. As technology continues to improve, our ability to extract and classify legal language will improve and the types of questions legal analytics can answer will continue to multiply. Questions that once seemed unanswerable are now answered with a quick dashboard lookup. Tomorrow’s data-driven lawyer will have the opportunity to benefit from all of these technologies. Conversely, the lawyer without access to these technologies will be at a significant competitive disadvantage.

3 Dec 2019

Malta re-elected to Council of the International Maritime Organization

International Maritime Organization (IMO) Council elections were held during the 31st Session of the IMO Assembly in London on 29 November 2019. Malta was re-elected in Category C of the Council of IMO for the 12th consecutive time. The states elected are to be Members of IMO’s Council for the period 2020-2021. The IMO regulates the maritime sector within the United Nations. In this election, which took place during the 31th edition of the General Assembly of this same organisation in London, Malta was elected from amongst 20 countries in the same category having special interest in the maritime sector. This prestigious achievement confirms that Malta, which has one of the largest registers of merchant ships in the world, has attained the respect of the international community within this sector.

Minister for Transport, Infrastructure and Capital Projects Ian Borg who addressed the IMO assembly said that the government is committed in continuing with Malta’s participation in the council to strengthen safety and efficiency in sea transport sector.

The newly elected Council will meet, following the conclusion of the 31st Assembly, for its 123rd session (on 5 December) and will elect its Chair and Vice-Chair for the next biennium.

2 Dec 2019

When does the principle of priority take off?

Baldo Limited v Kontrollur tal-Proprjetà Industrijali (39/2016) 4 Oct 2019

The facts

On the 25th of April 2016 Baldo Limited applied for three trademark registrations; all three relating to the word “Gringos”. Those applications were refused by the Comptroller of Industrial Property (Kontrollur tal-Proprjetà Industrijali) on the basis of their similarity to the trademarks “Gringosmarrakech” and “Grin_gos” for which applications had been filed by a third party on the 23rd of April 2016, according to the principle of priority. Significantly, trademark applications are filed electronically using an e-filing system which is available online twenty-four hours of every day.     

Baldo Limited appealed the decisions of the Comptroller before the Court of Appeal arguing that since the 23rd of April fell on a Saturday while the 25th of April on a Monday, the Comptroller could not apply the principle of priority to the trademark applications at issue. Given that the Comptroller is closed on Saturdays, the applications of the third party and of Baldo Limited itself were made on the same business day, Baldo Limited argued, neither should be able to claim priority.

The Court’s Considerations

In the first place the Court of Appeal dealt with the principle of priority. In that respect it considered that in terms of Article 35 (1) of the Trademarks Act (Chapter 416 of the Laws of Malta) the Comptroller must carry out a search of earlier trademarks when deciding whether to accept or refuse an application for registration of a trademark.[1] Article 7(1)(a) then defines “earlier trademark” as one with a date of application for registration earlier than the other trademark at issue.[2] It is therefore clear that it is the date of the application which determines priority.

Secondly, and consequently, the Court of Appeal dealt with the determination of the date of the application. It considered that according to Article 31(1) that date is the date on which the required elements are furnished to the Comptroller by the applicant.[3] These elements comprise:

  • a request for registration of a trademark;
  • the name and address of the applicant;
  • the name and address of the representative or attorney if one is appointed by the applicant;  
  • an indication of the classes of goods or services for which registration is sought.

The Court of Appeal reasoned that the law makes no further requirement for the applicant to physically file a printed application at the office of the Comptroller or that the office is open at the time of electronic filing. Furthermore, it argued that if an application was included in the electronic system of the Comptroller on any given day and time, even if on weekends, then it is self-evident that the Comptroller has received that application on that date and time and not at any later day or time when processing of the application starts.

That the applications of the third party had indeed been filed electronically on the 23rd of April 2016 and that they contained all the required elements was not disputed. As a result, the Court of Appeal dismissed the arguments presented by Baldo Limited to the effect that the Comptroller was wrong to treat the said third party applications as earlier trademarks. The appeal was thus rejected and the decision of the Comptroller was upheld.

The GMX Commentary

The decision re-affirms and clarifies some intricacies in the trademark filing system. The decision re-affirms that an application is deemed to have been filed as soon as it is entered into the online filing system irrespective of whether it is a weekday, the weekend or a public holiday. Furthermore, the decision is clear on that the Comptroller should not have to acknowledge receipt or even take any cognisance of the application; receipt is self-evident in the electronic filing system. For these reasons it seems that trademark applicants should opt for online filing rather than manual filing so as to reduce the risk of prior third party applications. While this was not the case here, the decision nonetheless reveals the vulnerability of first-to-file systems to trademark squatting. Despite there being remedies for this, it is much simpler to obtain a registration in the first place. When launching a new brand it is important not to disclose the brand, at least not before filing the relevant applications.

[1] Article 48 read in conjunction with Article 6(1) of the new Trademarks Act (Chapter 597 of the Laws of Malta)

[2] Article 6(2)(a) of the new Trademarks Act (Chapter 597 of the Laws of Malta)

[3] Article 44 of the new Trademarks Act (Chapter 597 of the Laws of Malta).

25 Nov 2019

Redemption of land belonging to the Government or to the Lands Authority under a title of revisable Perpetual emphyteusis Regulations, 2019 (the “Regulations”)

By virtue of Legal Notice 216 of 2019 the legislation provides for the redemption of land belonging to the Government/Lands Authority which is held under a revisable perpetual empytheusis. 

Any person who holds such property may request the Lands Authority to redeem that property any time.  Yet, the said redemption should not terminate the conditions of the original perpetual emphyteutical deed.

The eligibility criteria are the following:

  1. The applicant must be a citizen of the European Union;
  2. The applicant should be recognised by the Lands Authority as an emphyteuta of the property or have submitted an application to be recognised as such and is still awaiting such recognition.  The application process cannot start prior to recognition of the applicant by the Lands Authority; and
  3. Should prove that there are no arrears due to the Lands Authority of ground rent payment on the property for which the application is being submitted.

The emphyteuta of the property under a title of perpetual and revisable emphyteusis belonging to the Government or to the Lands Authority has the option to redeem the groundrent as provided in these Regulations, unless the deed itself provides differently as to how the redemption may be effected.

The Regulations stipulate also the criteria for the value of the redemption of the property and the documents required to be submitted with the application for redemption, together with a sworn statement that the entire content of the application is truthful and that no information has been omitted.   

Any redemption deed is subject to the Board of Governors’ approval and will be subject to such conditions imposed by the said Board of Governors.  The redemption should be effected by a public deed.

This legal notice contains also transitory provisions with respect to any request for redemption of perpetual and revisable ground rent of property belonging to the Government or to the Lands Authority before the entry into force of these Regulations, which requests will be examined and decided according to these Regulations.

20 Nov 2019

Court awards over €6,000 in damages for an accident at work

Josette Camilleri vs The Malta Union Club et[1]

The Facts

In a recently decided case ‘Josette Camilleri vs The Malta Union Club et’, the First Hall of the Civil Court (the “Court”) heard the pleadings regarding a workplace accident which left Josette Camilleri suffering from a permanent disability comprising various physical functional limitations.  At the time of the accident, Camilleri was employed as a waitress at a cafeteria establishment in the employ of Vira Gatt Butto (“Butto” or the “Employer”).   The bar was not owned by the Employer but had been conceded to the said Employer by a third party The Malta Union Club (the “Club”).  In instituting a case for damages, Camilleri opted to only sue the Club, arguing that the damages were caused by its negligence, lack of skill and failure to observe the regulations.  The accident consisted of Camilleri slipping over some water spilled on the floor. 


The Outcome

By means of a preliminary plea, the Club insisted that since it was not Camilleri’s employer, it follows that it was not the proper defendant to the case.  At the outset, following Butto being called into the suit, the Court’s first legal issue to be decided upon was whether the Club was the proper defendant. 

While the accident took place inside the Club’s property, the defendant Club had not, in any manner, been involved in the management and running of the bar.  This had been the exclusive responsibility of the Employer and on this basis the Court determined that in this respect, there was no cause of causality between the defendant Club and the ensuing accident. Furthermore, there were no structural defects in the building which could have led to Camilleri’s accident.  The Court held that the Club was not the legitimate defendant and that the Employer was the proper defendant as she was the person responsible for the running of the bar, and the recruitment of employees.

Following this determination, the Court moved on to analysing whether Butto had breached any statutory employers’ obligations.  Butto was deemed to have breached article 6 of Chapter 424 of the Laws of Malta for failing to have ensured the health and safety of its employee on the grounds of having an insufficient number of employees to deal with work exigencies.  The amount of €6,560.64 was awarded to the plaintiff by way of damages for loss of future earnings. No proof of any material damages had been submitted.  The case is subject to appeal.

The GMX Commentary

Failure to file a case against the proper defendant may risk having the case dismissed, requiring a party to start proceedings anew unless the proper defendant is called into the suit.  In this case the Court opted for the latter option, calling in the plaintiff’s employer into the suit.  In its deliberations it seems that the court focused primarily on (i) the involvement or otherwise of the third party in the running of the place where the accident took place; and (ii) whether there were any damages or structural defects in the building which could have led to the accident in question (given that the third party was the owner of the building).          

The court analysed the first above mentioned condition in light of the definition of ‘employer’ in the ‘Occupational Health and Safety Authority Act’ (Chapter 424 of the Laws of Malta).  In terms of the said definition, the role of an employer may not be strictly limited to the traditional concept of “any person for whom work or service is performed by a worker or who has an employment relationship with a worker” but may also be extended to include owners on behalf of whom work is being carried out and with respect to any defects in any tools, materials or equipment as may have been provided by them.

The Court also subsequently had to determine whether the employer had failed to ensure and safeguard the health and safety of the employee in terms of article 6 of Chapter 424 of the Laws of Malta.  The Court deliberated that a sole employee could not be expected to keep up with such a work place’s exigencies, concluding that a link of causality subsists between the spilled water on the floor and the failure in employing a sufficient number of employees. 

In light of this judgment, a careful consideration of the work tasks and the allocation of the same become all the more crucial.  Having overworked employees may entail a finding of responsibility due to a lack of preventive measures aimed towards reducing occupational health and safety risks.    

[1] Decided on 1st November 2019.