During his last sitting in the Superior Courts of Malta on March 18, 2021, Mr Justice Joseph Zammit McKeon delivered his last judgments, among which was one concerning the enforceability of a foreign judgment in Malta.
Judgments delivered by courts and tribunals in non-EU countries are not automatically enforceable in Malta and require a specific procedure to be recognised as such. The judgment delivered by the First Hall, Civil Court in the names ‘Avukat Dottor Carl Grech et v HSBC Bank Malta plc’ delved into this matter further.
The foreign judgment brought before the Maltese court was that delivered by the Supreme Fifth Civil Court in Bahrain on April 30, 2019, whereby the court (in Bahrain) ordered that a specific letter of credit issued by Standard Chartered Bank for the amount of US$952,600 in favour of HSBC was declared null. The judgment delivered by the court in Bahrain was not appealed and thus, the plaintiff sought enforceability in Malta.
Respondent bank (HSBC) opposed the plaintiff’s request, whereby it stated that the court in Bahrain was not the competent court and had no jurisdiction to decide such a case against HSBC, since HSBC is not domiciled in Bahrain and was never present in Bahrain. Moreover, it raised a plea concerning the plaintiff’s (Standard Chartered Bank) juridical interest in the case since effectively it had nothing to gain from the judgment in question.
The respondent also argued that it could never have a fair hearing before the court in Bahrain and that the judgment delivered by the Bahrain court is contrary to local public policy or to the internal public law of Malta. This plea was tied to the way that the judiciary is appointed in Bahrain.
A Bahrain-practising lawyer testified during the proceedings of this case before Mr Justice Zammit McKeon and confirmed that the members of the judiciary in Bahrain are directly appointed by the monarchy and that due to the lack of members of the judiciary, at times, the state employs members of the judiciary from foreign countries for a definite period − a system which is completely alien to Malta.
HSBC’s representative testified that the legal advice he was given regarding the proceedings in Bahrain was not to participate in the foreign proceedings, to remain in default and to refrain from contacting a lawyer in Bahrain to assist the bank with the matter. Such advice was given to the bank in order to assert that it was not accepting the jurisdiction of the court of Bahrain, thus the bank chose to remain silent in the proceedings.
Silence in a cross-border claim before a non-EU court is not only an appropriate remedy to stop the judgment from being enforced in Malta, but it is the best remedy
Choosing to remain silent in proceedings is not a position often chosen by a respondent during proceedings in Malta. A party who is in default during proceedings is unable to present any evidence in the ongoing case against him, possibly, but not necessarily resulting in a higher chance of losing the case. Indeed, HSBC lost the case in Bahrain and the Bahrain-practising lawyer confirmed that no pleas concerning the Bahrain’s court jurisdiction were submitted by HSBC during the relative foreign proceedings, even though HSBC had the opportunity to do so.
Although the Bahrain court may have adjudged upon a plea to its jurisdiction by reason of domicile or residence, the Maltese court recognised that HSBC’s choice to remain in default was one based on legal strategy. The court confirmed that notification of the bank was not enough to result in acceptance of such foreign jurisdiction and that HSBC had not voluntarily submitted to the jurisdiction of the Bahrain court by remaining in default, doing everything in its power to avoid the possibility of accepting the Bahrain court’s jurisdiction.
Agreeing with the respondent, the Maltese court upheld HSBC’s first plea that the Bahrain court had no jurisdiction to decide the case since HSBC was not domiciled and neither was it represented in Bahrain. The secret was silence.
This results from the rule contained in Article 827 of the Code of Organisation and Civil Procedure, which provides that whenever a respondent in a cross-border claim refrains from participating in the proceedings before the foreign court in any way whatsoever, such judgment, even if it has become res judicata, cannot be enforced in Malta.
This stems from the fact that participation in the proceedings would result in the respondent submitting to that foreign court’s jurisdiction. Therefore, in the absence of this participation, it cannot be said that the respondent accepted such jurisdiction. Apart from being enshrined in the Code of Organisation and Civil Procedure, this rule is also widely accepted as a basic principle in cross-border claims. Thus, in cases with a cross-border element, such as ‘Avukat Dottor Carl Grech et v HSBC Bank Malta plc’, the key is silence.
The matter would have had to be dealt with in a completely different manner had the case concerned the enforcement of a judgment delivered by a court in an EU member state and concerned a ‘civil or commercial matter’. While Maltese rules apply with regard to countries outside the EU, similar situations to the above-mentioned case would be governed by EU regulations. Such regulations stipulate that judgments originating from member states are automatically enforceable in other EU member states.
Therefore, while the respondent’s silence would render him to be in default and thus be of prejudice to him, silence in a cross-border claim before a non-EU court is not only an appropriate remedy to stop the judgment from being enforced in Malta, but it is the best remedy. Indeed, silence in Bahrain is exactly what rendered the judgment unenforceable in Malta.
This judgment is still open to appeal.
Keith Borg is a partner at Azzopardi, Borg & Associates Advocates.