Established in 1891, Fenech & Fenech Advocates is one of the oldest law firms in Malta. Over the years, the firm has grown from strength to strength: from a traditional, family-run law firm to one of the largest and most diverse full service law firms in Malta. Fenech & Fenech Advocates has a strong local and international practice covering a wide range of practice areas, including the full spectrum of corporate and commercial law activities, tax, financial services, company law, trusts and foundations, marine law, aviation law, ship registration, project finance, M&As, intellectual property law, iGaming (inclu. licensing), ICT law, amongst others.
The experience, credibility and reliability of Fenech & Fenech Advocates have been some of the reasons which led NEWCO to choose Fenech & Fenech Advocates as our legal partner in Malta, and it has been a successful partnership from day one.
In this interview, Tax Partner Rosanne Bonnici describes her experience with the Maltese legal system and the role it plays in the competitiveness of Malta’s international activities, and the importance of this sector for the country’s economic performance.
- The Maltese legal system is well known by its unique combination of civil and common law features. What operational implications does this hybrid system have for foreign investors in Malta?
Indeed, Malta is well known for its unique legal system which today comprises a synthesis of Civil Law, Common Law and EU Law.Traditionally Malta was a civil law jurisdiction having its main codified framework of laws (such as the Civil Code, the Code of Organization and Civil Procedure, the Criminal Code and the Commercial Code) being based on continental European systems and principles. Today codified civil law remains the backbone of Maltese Law, though the decades of Malta’s colonial status under British rule introduced doctrines of common law which are mirrored in local codified legislation in areas such as corporate and financial laws, tax law, administrative law and maritime law, thus influencing the legal framework and giving rise to the present hybrid system.
In addition, Malta’s accession to the European Union in 2004 brought about a modernization of the Laws of Malta with the updating of several existing legislation and the introduction of new laws and standards which allow Malta and, of course, business carried out from Malta, to compete steadily within international commerce.
This local legal and regulatory framework continues to develop in such a way as to take full advantage of internationally tried and tested doctrines, rules and procedures. In fact Malta is also known for its drive towards encouraging new areas of commerce by providing investment schemes, fiscal incentives and also by developing unique legislative tools and mechanisms that allow new industries to flourish, including in the fields of ICT, remote gaming, and financial services.
This system of laws has proven to be one of the key unique characteristics which continue to make Malta an attractive and respected jurisdiction.
For instance, firstly, from an operational point of view the system allows local and foreign investors to plan ahead and work in a sound legal environment which they (or their advisors) are already familiar with or can easily become accustomed to.
Secondly, even though Maltese is Malta’s official language, English is the second official language for Malta and the majority of the Maltese workforce is well versed in written and spoken English. In fact, most (if not all) laws are also published in the English language – thus making it easier for the laws to be understood and applied.
Thirdly, the system adopts measures and tools which are already commonly available and applied on an international level. Since the system is not one which is immersed solely in local custom or constrained by local unique procedures or rules, but rather adopts several internationally accepted rules and procedures (including amongst others on matters of governing law, jurisdiction, competition law and enforcement mechanisms), investors are therefore able to carefully determine their investment, to calculate, prepare for and limit their risks and to manage their operations with peace of mind.
- How does such a system guarantee its efficiency and international competitiveness?
This hybrid legal system is geared towards maximizing the potential of Malta’s highly service-based economy for local business and for international trade and commerce, in all areas ranging from banking and finance, corporate transactions, tourism, education, maritime trade and aviation and of course e-commerce and ICT.
The legal system allows for investors to operate within established legal and regulatory parameters, catering for streamlined procedures and fair judicial review.
Indeed Maltese Law transpose fundamental rules of law, including for instance the European Convention on Human Rights which was entrenched as part of the Laws of Malta 1987, and basic principles of natural justice that are enshrined in the Constitution of Malta and other laws which serve to protect investors by guaranteeing a fair, yet competitive, environment.
Concurrently, Maltese law incorporates an array of contemporary laws which interact to allow businesses to operate smoothly, efficiently and competitively including, for instance, laws on trusts and foundations, employment law, data protection, intellectual property and competition law.
Today Malta compromises an excellent geographically located hub for international commerce, grounded on a resilient economy having a skilled workforce coupled with a parliamentary democracy and a stable economic and political environment – and of course, the legislative framework.
Successive Maltese governments have continued to improve Malta’s international relations, not only politically, but also on a legislative level. Malta is a member of, or contributes towards, several respected international organizations, it has ratified numerous international Conventions and has signed numerous bi-lateral or multilateral agreements with foreign States which of course serve to facilitate cross-border commerce and enhance the framework within which investors do business in Malta.
Malta’s efforts to safeguard its reputation as a reliable and trustworthy jurisdiction, including by constantly updating its laws to reflect new realities, are evidenced by the encouraging positive economic results which continue to see growth in local and foreign investment.
- How efficient is this system in guaranteeing investors protection?
The Maltese legal system seeks to guarantee protection of investors on several levels.Firstly, investors are given clear parameters within which they can engage in commerce and take their investment forward.
Investors may participate in business and/or trade personally or they may use one or several of the many legal vehicles (such as partnerships, limited liability companies or other arrangements) with which to engage in business, each allowing for the investor’s investments and risks to be controlled and managed by said investor within the parameters established by clear legal rules.
Investors who do business with others are also protected by corporate law rules that safeguard the investor and which provide remedies in case of disputes.
In addition, business transactions may be carried out within a framework of laws that provide for basic rules of commerce, including for instance on obligations, contracts, financing instruments and means of security, amongst others.
General competition laws ensure that business is carried out in a competitive environment, and certain industries (such as telecoms, remote gaming and financial services) are also regulated by ex-ante or ex-post regulations which cater for that specific industry, often supervised by a regulatory authority established by law having regulatory and enforcement powers so as to ensure that the industry operates under fair rules and in a transparent manner.
Public procurement rules also ensure that fair competition and transparent mechanisms allow investors to compete on an equal level playing field in government related projects and contracts.
In addition, the Maltese legal system also includes an independent judicial system comprising several Tribunals and Courts (including a Constitutional Court and a Court of Appeal) which also allows for domestic or foreign arbitration and dispute resolution.
Court procedure rules also allow investors to protect any claims they have, including by means of precautionary interim measures (in Malta – or in other EU Member States) which may be applied for also before a formal dispute is brought before the Courts.
The system also provides for recourse to several levels of scrutiny, ranging from the office of the independent Ombudsman, to local authorities and regulators having investigatory and enforcement powers, and of course recourse, in certain circumstances, to foreign independent regulatory or judicial authorities such as the European Commission, the Court of Justice of the European Union (CJEU) and the European Court of Human Rights (ECHR).
Finally, Maltese law includes rules of private international law and EU Law which cater for the efficient recognition and enforcement of judgments of foreign countries in Malta, thus strengthening investor protection further.
- Malta has just completed one decade of accession to the European Union. Which changes resulting from this accession had more impact in your activity?
The shift in status from an offshore jurisdiction to an onshore jurisdiction, and Malta’s entry into the European Union in 2004, were among the principal factors that contributed to the growth of Malta’s international business and financial services sector. The local regulator, the Malta Financial Services Authority (the ‘MFSA’), has played a vital role in developing a robust yet flexible legal and regulatory framework, not only by aligning it with EU law, but also in designing domestic rules governing, for instance, professional investor funds.Accession to the EU has most likely been the single most important contributor to the exponential growth of the financial services sector over the last 10 years, with Malta now ranking as a domicile of choice, together with Luxembourg and Dublin, in relation to investment services operators, funds and fund managers, captives, among others. Clients are clearly attracted by the possibility of obtaining a licence to operate in Malta and to then passport same into the rest of the EU.
As always with a success story, there are numerous reasons for Malta’s success. EU membership has also brought with a general bettering of standards – Malta is regularly ‘top of the class’ insofar as transposition and implementation of EU law is concerned. Access to EU funding – both at the level of the government and of the business operators – has also been important to Malta’s growth in recent years. This, coupled with other elements such as the country’s relatively low labour costs, highly skilled workforce, language proficiency, attractive tax regime, convenient time zone and accessibility, all make for a very interesting proposition to our firm’s predominantly international clientele.
- Both the Maltese government and the service providers value the regulated and rigorous features of the Maltese jurisdiction. Does this in any way affect the operational efficiency of the system?
It is indeed the case that the Maltese government and service providers alike attribute great importance to proper regulation, to the need to attract quality business to the country. This has not, generally speaking, come at the price of efficiency. The MFSA, for instance, whilst taking its regulatory role very seriously, seeks to strike a balance in this regard and is an accessible regulator, something which is appreciated by firms such as ours and our clients, promoters of financial services operations, alike.Efforts are made, meanwhile, on an ongoing basis, at level of the administration generally to reduce bureaucracy to a bare minimum, with a view to making the life of a business operator locally as easy as possible – and this in line with the country’s pro business approach.
- How would you characterise your partnership with NEWCO Corporate Services?
I would characterize our partnership with NEWCO Corporate services as a meeting of minds, in that we have found in NEWCO a partner that attributes the same importance to standards and quality of service to clients as our firm does.It has therefore been a pleasure for our firm, and our teams across a range of specialisations that NEWCO is active in, be it igaming, ICT, intellectual property, financial services, to name just a few, to work together with NEWCO in providing legal support to its clients looking to exploit the various opportunities that Malta offers to the international client.
We look forward to many more years of co-operation with NEWCO!