Litigation & Arbitration |  Sep 07, 2021

An Analysis of the Essential Elements Required for the Issuing of a Warrant of Prohibitory Injunction

Authors: Joseph J Vella & Nina Fauser

On the 26th July 2021, the First Hall, Civil Court, presided by Hon. Judge Audrey Demicoli, in the case “Moon Pay Limited vs. the Malta Financial Services Authority” (‘MFSA’), delivered its final decree in relation to a request filed by the applicant company for the issuing of a warrant of prohibitory injunction, to prevent the MFSA from publishing a decision which it had taken against the applicant company. In its decision, the Court delved into certain requirements which must be satisfied in order for such a warrant to be issued, as well as the manner in which these requirements are to be interpreted.

A brief overview of a warrant of prohibitory injunction under Maltese law

As per Article 873(1) of the Code of Organisation and Civil Procedure, Chapter 12 of the Laws of Malta (‘COCP’), a warrant of prohibitory injunction, or a ‘mandat ta’ inibizzjoni’ in Maltese, is a precautionary act issued by the Court, in which a person is restrained from doing anything whatsoever which might be prejudicial to the person requesting the warrant.

Court’s reasoning and decision in the case “Moon Pay Limited vs. MFSA”

On the 9th July 2021, the applicant company “Moon Pay Ltd.” filed an application before the First Hall, Civil Court, requesting the issuing of a warrant of prohibitory injunction to prevent the MFSA from publishing a decision which it had taken against the applicant company in any manner, including on the website of the MFSA. On the basis of Article 875(2) of the COCP, the Court proceeded to issue the warrant on a provisional basis.

The MFSA opposed the issuing of the warrant, arguing that by virtue of such warrant, the MFSA would be hindered from fulfilling its legal obligations under Chapters 330 and 590 of the Laws of Malta, as well as claiming that the elements required for a warrant of prohibitory injunction to be issued were not satisfied in this case.

In its considerations, the Court referred to Article 873(2) of the COCP which stipulates that the Court shall not issue a warrant of prohibitory injunction unless it is satisfied that such warrant is necessary in order to preserve any right of the person requesting the warrant, and that prima facie, such person appears to possess such right. Thus, the Court noted that in order for a request for the issuing of a warrant of prohibitory injunction to be acceded to, the following three crucial elements must subsist:

  1. The Court must be satisfied that the warrant is necessary in order to safeguard the rights which the applicant is claiming to have;
  2. The Court shall examine whether it has been proved that the applicant, prima facie, appears to possess such rights; and
  3. The Court must be satisfied that what the applicant is requesting that the respondent be restrained from doing, may cause prejudice to the applicant in the event that the warrant is not granted.

In its considerations, the Court noted that the above-mentioned requirements have been examined and interpreted by our Courts on several occasions. Referring to the case “Camenzuli vs. Awtorita’ għat-Trasport f’Malta et.” decided in 2019, the Court noted that in terms of the second requirement indicated above, that of proving that the applicant has a prima facie right, it was established that this constitutes an objective, and not a subjective requirement, whilst also considering that the above-mentioned requirements are cumulative ones, meaning that in the event that one of these requirements is not satisfied, the Court must proceed to reject a request for the issuing of a warrant of prohibitory injunction.

The Court also referred to the case “Xerri vs. Maltco Lotteries Ltd.” decided in 2018, where it was noted that once the applicant’s prima facie right is recognised, the degree of prejudice required as a basis for granting such a warrant must constitute an ‘irreparable’ form of prejudice. Moreover, if the inconvenience or fault complained of can be eliminated, even through a decision after the case has been examined on its merits, this would mean that the third element mentioned above cannot be satisfied. In terms of pecuniary loss, that is, loss of future earnings, any prejudice in this regard is not considered ‘irreparable’, as noted in the case “Barbara et. vs. Barbara et.” decided in 2014.

In terms of the case in question, the Court proceeded to examine whether the three elements required for a warrant of prohibitory injunction to be issued were satisfied or not. With respect to the first requirement, the Court recognised that the applicant company was given several opportunities to defend itself and to appeal the decision issued by the MFSA, and noted that through the publication of the MFSA’s decision, there would be no breach of the applicant company’s right to a fair and impartial hearing, holding that the first requirement was not satisfied.

When analysing the second requirement, the Court referred to Article 16(8) of the Malta Financial Services Authority Act, Chapter 330 of the Laws of Malta, and Article 41(4) of the Virtual Financial Assets Act, Chapter 590 of the Laws of Malta, and noted that under Chapter 330, the MFSA was obliged to publish such decisions, whilst under Chapter 590, the MFSA had discretion in terms of deciding whether to publish such decisions or not. The Court concluded that the applicant company did not appear to have any prima facie rights and therefore, the second requirement was not satisfied.

Lastly, with respect to the third requirement, the Court noted that even if the applicant company were to suffer some form of prejudice through the publication of the MFSA’s decision, such prejudice could easily be remedied if an appeal were to be filed and decided in favour of the applicant company. Thus, the third requirement was not deemed to be satisfied.

In view of the above considerations, the Court decided to revoke its decree of 9th July 2021, deciding that the necessary elements required for the issuing of a warrant of prohibitory injunction were not satisfied, and thus, rejected the applicant’s requests.

Concluding remarks

As rightly noted by the Court in this case, a warrant of prohibitory injunction is deemed to constitute an exceptional and extraordinary form of legal remedy, and thus, a thorough examination of the above-mentioned three requirements must be carried out by the Court in order to establish whether the issuing of such a warrant is justified or not.

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