Court provisionally upholds request by duty-free shop operators for issue of warrant against MIA

Mr Justice Gino Camilleri, sitting in the First Hall of the Civil Court, yesterday provisionally upheld an application filed by Leaders Ltd against Malta International Airport, plc.

In its application filed with urgency yesterday morning, Leaders requested the court to prohibit MIA from taking any action (excluding judicial proceedings) to impede the company and its employees from entering the shop Skincare and Cosmetics at the airport departure lounge. The court was also requested to prohibit respondent from impeding Leaders from continuing to operate the shop or from retaining possession of it.

Leaders claimed that it had operated this business since 1992, and that it had entered into an agreement with MIA as a service provider to operate the shop at the airport in June, 1998. The company had long experience in the sale of duty-free products, and, since 1992, had paid MIA Lm580,000 to make use of the shop. Both companies had always had good relations, and the business had been conducted in the most professional manner.

In yesterday's application Leaders added that the agreement with MIA was due to lapse yesterday, but that, although the 1998 agreement classified the relationship of Leaders as a service provider, the company was in effect renting the shop from MIA.

Applicant company added that it was operating its business from the shop and not providing a service. All the requisites for a rental contract were present, for MIA had granted to Leaders the enjoyment of a shop for a stipulated period and against payment.

The company submitted that it was running its own business, and that MIA was in no way involved in the business. Not only did the company receive no payment from MIA, but it had to pay a percentage of its gross sales to MIA on a monthly basis, and that the payment had to exceed a guaranteed minimum sum.

Leaders paid MIA for cleaning and other services, and it did not have to account to MIA on the running of its business.

In yesterday's application the company noted that MIA had entered into a new agreement with another company, Franks Travel Retail Ltd (FTR), which took effect on July 1. The latter company would be running the shop instead of Leaders.

In May MIA had informed Leaders that it had to renounce to possession of the shop by June 30, and that in default Leaders would be liable to payment of a daily penalty of Lm1,000. MIA, Leaders submitted, was not entitled to impose any penalty. Subsequently, the agreement between MIA and Leaders was extended up till July 19 for an agreement to be reached.

Leaders further submitted that, in terms of law, it enjoyed the right to be preferred in the award of a new lease, and this under the same terms and conditions as enjoyed by FTR Ltd. However, MIA failed to apply these provisions of the law, for it had not notified Leaders of the conditions that had been offered to FTR but had entered into a new agreement with the latter company.

When listing the facts that had given rise to this dispute, Leaders submitted that last December MIA had been informed in writing that Leaders was ready to enter into a new agreement at the airport. Leaders had accepted to pay Lm95,000, as requested by MIA, to continue to operate the shop for five more years. Subsequently, MIA had informed Leaders that offers had been submitted by third parties. When asked to make a new offer, Leaders had written to MIA in May, proposing to effect a minimum annual payment of Lm130,000 and to pay 20 per cent of profits to MIA.

In May Leaders was informed that the shop had been granted to FTR, a company that had been formed after Leaders had raised its offer to MIA. It further resulted that the shareholders of FTR included relatives of the shareholders of a company that held 40 per cent of the shares in MIA, and which ran the airport, including the grant of shops. It also resulted that FTR's offer was substantially less than that offered by Leaders.

Applicant company therefore submitted that the choice made by MIA in the grant of the shop was not based on commercial reasons.

Leaders concluded its application by declaring that it would sustain irremediable damage should its application for the issue of a warrant of prohibitory injunction be dismissed by the Courts.

Together with its application, Leaders also filed statements confirmed on oath by Nicholas Degiorgio, former chairman of MIA, and by directors and management of the applicant company, Joseph Borg, Robert Aquilina and Michael Aquilina Clews.

In his affidavit, Degiorgio declared that when the contract with Leaders was originally signed, MIA wished to exclude the provisions of the rent laws, and it was for this reason that Leaders was designated as an operator in the agreement.

Robert Aquilina declared that it resulted that the shop had been granted by MIA to FTR Ltd against payment of Lm95,000 per annum, which was Lm35,000 less than that offered by Leaders. He further submitted that one of the directors and shareholders of FTR was Paul Apap Bologna, whose mother and uncle were the owners, together with other persons, of Malta Mediterranean Link Consortium Ltd, which company decided on the financial direction and operations of MIA.

Dr Georg Sapiano and Dr Anthony Ellul signed the application.