22 August 2023

Not With a Bang But a Whimper

Has Constitutional Supremacy in Malta Drawn Its Guns on the Primacy of European Union Law?

The European Union’s smallest Member State saw a significant decree delivered on primacy last month. Yet, even domestically, this bomb exploded in the middle of a desert; little to no noise came of it nationally or at the EU level. On the face of it, this is undoubtedly a major legal development – the first of its kind since Malta’s EU accession in 2004. The flawed interpretation offered by the Court says much about the fundamental importance of constitutional reform and is not, as such, a sign of institutional anti-EU sentiment… yet. However, as the main (and practically only) media report on the case concluded, what happens next is anyone’s guess. Constitutional reform in Malta must be put squarely back on the table before it’s too late.

The bomb, in a nutshell

In a relatively concise ruling, and with significant procedural gymnastics used in its reasoning to contrive its conclusion, the case M. C. F. et vs TSG Interactive Gaming Europe Ltd handed down a never-before-seen blow to the primacy of EU law. Delivered on 21 July 2023 by Mr Justice Toni Abela and decided in the First Hall of the Civil Court, the case concerns the enforcement of a garnishee order against a Maltese gaming company (as, supposedly, per EU regulation). This follows a judgement obtained in Austria against the company, which plaintiffs sought to enforce. Enforcement was blocked by the court, which made use of recent (and extremely contentious) amendments to the Gaming Act just this year that put into place what can only be described as a ‘shield’ that effectively grants gaming companies a slew of immunities from legal action. The case remains unpublished on the Courts’ portal, likely as Aquilina explains because it is a decree, not a judgement; though this is arguably neither here nor there given that it’s a landmark decision of enormous constitutional significance that should draw far more attention than it is doing currently.

The Maltese judgement argues that enforcement should not take place, the central line of argumentation against this containing multiple strained references to constitutional supremacy though it is not immediately obvious why the link is made other than to assert the predominance of national law as derived from the Constitution. The Court almost goes out of its way to point fingers at the Constitution, specifically Article 6, and in its closing paragraphs, asserts that the Court’s ultimate “loyalty” is towards the Constitution against all other laws that are “inconsistent” with it (even, as specifically referenced, those that are supranational). Loyalty, in this context, seems to be deliberately chosen as a charged declaration of allegiance that stands out in the text. But it’s perhaps not entirely wrong to point its fingers straight at the Constitution.

Currently, the conclusion reached in terms of the specificities of the case is likely to be appealed though it’s not clear whether further efforts have been made in this regard.

Constitutional supremacy vs primacy of the EU?

Though the line of argumentation is fraught, the conclusion unequivocally asserts the Maltese Constitution’s supremacy, as articulated in Article 6, over the primacy of EU law. By way of a reminder, Article 6 states that:

Subject to the provisions of sub-articles (7) and (9) of article 47 and of article 66 of this Constitution, if any other law is inconsistent with this Constitution, this Constitution shall prevail and the other law shall, to the extent of the inconsistency, be void.

Not an easy ‘little problem’ to get one’s head around given Malta’s EU status even if similar assertions of supremacy exist across Europe (and beyond). Despite the self-evident tensions this created upon Maltese accession to the EU, to this day the Article has not been amended and remains (in its current form) an arguably redundant relic inhabited of its colonial past. It has been described as an “extant saving clause” that the Court ignores completely – a mere declaration of principle that is to be considered implicit. Article 6 continues to be plagued by semantic ‘null’ vs. ‘void’ controversy that, as Xuereb points out, distinguishes it from other continental examples, another souvenir of British constitutional influence. Thus, though pliable, its function is arguably more symbolic – an outdated assertion of sovereignty – than anything given its present form as well as its limited scope and function. And, as can be seen in this decree, it can easily be manipulated.

Subsequent addition of Article 65 to the Constitution of Malta established a dichotomy that has co-existed without much contestation since 2004. It continues to serve as a placeholder and reminder of the country’s obligations vis-à-vis the EU. The primacy of EU law emanates from the European Union Act 2003. The Act incorporates the acquis into Maltese law through the European Union Act’s Article 3. This stipulates that the Treaty and existing as well as future acts adopted by the EU are to be considered binding on Malta, becoming domestic law as per the conditions articulated in the Treaty. With this, any deviation, derogation, or incompatibility with the obligations the Act entrenches are considered without effect and unenforceable. As Sammut explains, similar to the procedure that established internal legal effect in the United Kingdom, which saw the enactment of the European Community Act 1972, the introduction of the European Union Act in Malta creates an international, Treaty-based obligation to comply with EU law – a breach of this would mean a violation of its Treaty obligation.

It would not be premature for an observer to ask whether this is another ‘Polish scenario’ or whether Brussels will commence legal action against Malta. The jury’s out on this at this point. It will likely be met with pregnant silence from all sides until a possible appeal is filed and concluded. Article 6 remains intact and with great potential to be weaponized.

A constitution in need of an update

There have been several instances when constitutional reform in Malta has come up and been placed in stark focus, even as recently as last year. Attempts have largely stalled. Apart from constitutional supremacy, there are several areas where this is desperately needed, particularly in the separation of powers.

Even though the distinction should be made between the legal and political realms, in this case, it’s impossible not to consider them in tandem in a country as politically polarized as Malta, where politics is proximate to the people and thus still very much the polarizing lifeblood of the nation. Separation of powers in Malta has long been a source of ire; it’s considered weak, with checks and balances described by the Venice Commission as entirely ‘missing’. The government describes the three branches of government (executive, legislative and judicial) as functioning separately but interdependently. There is interdependence and… interdependence. Still, it is critical to stay away from trite lines of argumentation that ignore the national context. Separation of powers, in a country with a relatively small population, is by no means a simple task and requires a hefty dose of realism. That doesn’t mean, however, that this argument should be used to thwart reform – impossible is a misnomer here.

The road ahead is long. In continuing to lack the fundamental constitutional reform needed, these remnants of colonial inheritance will continue to overwhelmingly empower the executive and will only lead to a recycling of the same problems already faced. Malta must choose to move forward, though. Without these boundaries drawn and a constitution that can withstand and facilitate Malta’s operability as a modern European state, it is only facilitating democratic degradation.

And it is not just the Constitution. Coupled with a deteriorating justice system, reform, alongside significant investment in the legal system, is the only way forward. The Labour government – a formerly Eurosceptic party (one of two main parties in Malta) voted in for the third time in a row with a landslide victory in 2022 – is taking steps to address these major flaws in the system. These are, however, not nearly as broad, hard-hitting or as deep as would be required to bring about real change. The problem is not new – it has been simmering (and sometimes bubbling over) for decades. Its foundations were laid years ago; the environment it has enabled speaks for itself. The problem is politically colourless and needs to be targeted wholesale: a broken justice system and an out-of-date Constitution are a lethal duo.

Not anti-EU, ‘merely’ pro-industry

The problem with being pro-industry in general is that nothing takes place in a vacuum – decisions have consequences especially if they are viewed with blinkers on. And while this is true of any government policy anywhere, the Maltese case should sound alarm bells because policies are being elaborated within what has been described as a rapidly deteriorating legal system such that is recognized and lamented by those who form part of it themselves. Blame may be placed on what some will argue is a ‘captured’ court. After all, in delivering a decree that supports the protections that the Government has sought to provide the gaming industry to ensure competitiveness, it seemingly steps in to preserve this policy line. However, no outcome has previously gone this far and describing the Maltese courts as captured would not do justice to what is happening on the ground. The courts are dysfunctional because they are severely under-resourced. Judicial appointments have been described as “the worst constitutional mess since independence”. The lack of efficiency, particularly in the civil and commercial areas, with clearance times being the longest in the EU, does not make for an environment that can make and preserve good legal practice, to say nothing of what it does to Malta’s competitiveness. Comparing the situation to other European examples does not help; it only conflates matters that would be best served by being taken at face value and considered carefully within their context. Issues are bottlenecking and the matter is potentially more explosive than ever before, with institutions unable to cope with modern realities (such as, for example, rapid population growth which is central to the country’s economic model). The development of its democratic structures is lagging and has made little to no progress on the rule of law front.

The outcome of the decree is a direct repercussion of an enabling legal space that does not provide sufficient checks and balances; it has more to say about the power, and hold, of the gaming industry domestically than a change in the relationship between Malta and the EU. So, plausibly, what this mostly communicates is that gaming is a major industry in Malta and a pro-gaming environment, one that gives Malta a competitive edge, will be preserved. This outcome would likely have come to pass under any government wanting to preserve this gaming cash cow. It seems that short-sighted pragmatism and realism will be seen to have seemingly won the day here rather than an activist anti-EU sentiment. And, though precedents are not part of Maltese law though they are not without weight. What if this happens again? It’s bound to, given the lack of constitutional reform.

The Maltese government has not challenged the centrality of EU law or the importance of its relationship with the EU. That doesn’t mean it cannot become standard practice, and this is a subtext that cannot be ignored. Doing nothing will only result in the Maltese democracy sleepwalking further away from progress and much-needed reform. In the wrong hands, it will very likely spell disaster. And it would’ve happened not with a bang but a whimper – largely under the EU’s radar.