Criminal Court to choose administrator for Keith Schembri’s companies
It is the Criminal Court which will be choosing the administrator for Keith Schembri’s companies after a decision was delivered by the Constitutional Court yesterday morning.
Firms belonging to Schembri had their assets frozen on 21 September after a court issued an attachment order listing 91 people and companies, including Schembri and his business partners, as well as his accountants at Nexia BT, Brian Tonna and Karl Cini, on suspicion of money laundering offences.
Schembri had contested the order, arguing that his business had been paralysed. The asset freeze would have catastrophic effects on his business and, as a result, his employees and their families, he said.
His lawyers had asked the Criminal Court to allow the business to continue to operate, this however, under the oversight of a court-appointed administrator.
But the court had rejected this request, saying that the law was silent on such a matter. “This vacuum cannot be filled by this court. Rather it is a vacuum that is being discussed in draft legislation,” the Criminal Court had ruled.
On 2 October, Schembri filed constitutional proceedings arguing that the law did not provide him with an ordinary remedy to contest the order.
This constituted a breach of his right to a fair hearing under the European Convention on Human Rights and the Constitution, his lawyers argued.
Two weeks later, on 14 October, the First Hall of the Civil Court in its Constitutional jurisdiction upheld the request for an interim relief measure, granting Schembri and the State Advocate two days within which to name an administrator or administrators.
On 30 October, the State Advocate had appealed this decision on procedural grounds, arguing amongst other things, that a precautionary warrant is meant to stop someone from doing something and not to force them to do something.
Schembri had also not proven any real or imminent danger of irreparable damages, the State Advocate said.
The Constitutional Court disagreed with this, saying that in order to stop someone from doing something, there was the warrant of prohibitory injunction.
The State Advocate had also argued that the first court had placed the administrator under its authority, under the watchful eye of the Attorney General, but had completely excluded the Criminal Court, it said.
But the Constitutional court noted that the State Advocate had given no explanation as to how the appointment of an administrator would interfere with the police investigation, as had been alleged.
“The Court cannot base its decision on a simple sweeping statement by the appellants,” remarked the judges.
It was essential that an administrator be appointed to keep the companies out of danger of bankruptcy, said the court, noting that the investigation and seizure order was not an order to stop a company’s legitimate business.
The Constitutional Court judges said that it was true that the Criminal Court had denied the appellants request for the nomination of an administrator, the judges observed, but this was not because it wasn’t justified, but because the court had no legal power to do so.
It was obvious that the appellant companies had the right to ensure the preservation of their assets and not endanger their business, it said.
The judges said the First Hall of the Civil Court in its Constitutional jurisdiction was not the correct forum to give direction to an administrator.
The court therefore partially upheld the appeal and varied the 14 October decision in the sense that the administrator should be chosen by the Criminal Court after hearing the parties. That administrator would subsequently continue to take direction from the Criminal Court.
The rest of the appeal was rejected.
Lawyers Edward Gatt and Mark Vassallo appeared for Schembri.
Lawyers Fiorella Fenech Vella and Maurizio Cordina appeared for the State Advocate.