Shareholders of the former National Bank have won their second human rights case in as many months, with a court finding that unlawful expropriation without compensation had taken place.

The case was instituted by some 30 shareholders who had refused to sign over their shares in the bank when the government took it over in 1973.

Last month, in a case instituted by another group of shareholders, a court decided that their human rights were breached when the Labour government led by former Prime Minister Dom Mintoff had forced them to hand over their shares after the National Bank of Malta faced a run on deposits.

In both cases the governemnt has the right to appeal.

Mr Justice Joseph R Micallef presiding over the First Hall of the Civil Court delivered today's judgment after a constitutional application was filed by the shareholders in 1992 against the Prime Minister, the Finance Minister and curators representing the Council for the Administration of the National Bank of Malta.

The court noted that this case differed from other cases because these shareholders had not transferred their shares in the National Bank to the government. When the council for the administration of the bank started to run the national bank, it was doing so in their name, as they had not transferred their shareholding.

The shareholders claimed that they had been forcibly deprived of their shares without compensation and that their right to freedom of association had been violated.

The shareholders said that although they had decided to retain their shares, the council, on the instructions of the prime minister and the finance minister, had transferred the assets and liabilities of the National Bank to newly formed Bank of Valletta. The shareholders' consent was not obtained, and, moreover, they were not compensated for the transfer of the National Bank's business to BOV.

'LEGAL RAPE'

The facts of the case went back to November 1973 when a large number of persons who had money deposited with the National Bank withdrew their funds. This led to a run on the bank which was public knowledge and which caused the government of the day to threaten to withdraw the funds deposited by parastatal companies.

A number of meetings were held between December 7 and 10, 1973 between the bank's administration and the government in which the bank's directors asked for time to seek assistance from foreign banks or from the Central Bank. But the prime minister gave the directors a short period of time in which to convince at least two-thirds of the bank's shareholders to transfer their shares to the government without compensation.

Some of the shareholders transferred their shares to the government on December 11, 1973 and on the following day the bank stopped trading and its licence was suspended. The directors were informed of the suspension by the police in the early hours of the morning.

Also on the 12th December 1973, the House of Representatives unanimously approved a law to provide temporary measures for the National Bank and Tagliaferro Bank. The law provided for the appointment of the bank's Council of Administration and it came into effect on that very same day.

The assets and liabilities of the National Bank were transferred to a new bank, Bank of Valletta, on March 22, 1974 after the government obtained the shares of more than two-thirds of the National Bank's shareholders, and the bank's licence was revoked in July of that year.

The shareholders said that they had been deprived of their property without compensation, some of the shareholders saying in their testimony before the court, that they had been the subject of a legal rape. Other shareholders told the court that the taking of their shares was part of a plan of the government of the day to acquire absolute dominance over the economic sector. They implied that this was part of a strategy orchestrated by the government to take over the bank.

JUDGEMENT

Mr Justice Micallef, that the shares held by the shareholders constituted their property and that the transfer of the National Bank's assets and liabilities had cost them enjoyment of their property. Despite the fact that the shares might have had no commercial value at the time the transfers were made, because of the bank's situation, still no one could deny that the bank had considerable assets.

The transfer of the shares remained compulsory even if it took place in the best interests of the bank's employees and clients. The law at the time did not provide for a system to calculate the compensation owing to the shareholders, nor did it provide them with access to the courts.

A 'SALVAGE OPERATION'

The fact that the take-over of the bank had been described at the time as a "salvage operation" did not relieve the government of its obligation to compensate the shareholders for the taking of their property without payment.

As a result the court concluded that the shareholders' right to enjoyment of property had been violated.

The court however did not concur with the shareholders that their right to freedom of association had been violated.

The case has been put off for a judgment on the amount of compensation to be awarded.

Lawyers Max Ganado, Ian Refalo and Evelyn Caruana Demajo were legal counsel.