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August 6, 2025
Introduction
In Run Logistics Limited v Il-Kummissarju tal-Pulizija u l-Uffiċju għall-Irkupru tal-Assi, decided by Mr Justice Henri Mizzi in the Civil Court (Asset Recovery Section) (the “Court”) on 3rd June 2025, the Court went into a detailed analysis on the relevant provisions at law, and how they are to be interpreted, notably of the Proceeds of Crime Act (Chapter 621 of The Laws of Malta), when property pertaining to third parties is erroneously caught with an accused’s assets that are seized and frozen.
Facts of the case
Run Logistics Ltd. (C 94565) (the “Applicant”) held that five vehicles in particular were its own property despite having been seized and frozen by the Court of Magistrates (Malta) as a court of criminal inquiry by virtue of a prior order issued against an individual. Therefore, the Applicant, represented by its sole director and shareholder, by virtue of application no. 13/2024 filed on 29th October 2024, asked the Court to release these five vehicles from the effects of such order on the basis of Article 39(1) of the Proceeds of Crime Act.
By way of background, as a result of a decree of the above-mentioned Court of Magistrates, the Director of the Asset Recovery Bureau was ordered to identify any properties that may directly or indirectly be related to the accused, and this list of assets was presented on 5th April 2024. In this list, these five vehicles in question were included, together with their value as estimated by an independent surveyor nominated by the Asset Recovery Bureau, and it was stated that although these vehicles were registered on third parties, the accused was the point of contact. On this point, the Court referred to the logbooks and the Vehicle History Details, and noted that according to the Registration and Licensing of Motor Vehicles Regulations (S.L. 368.02), the owner of a vehicle as indicated on the certificate of registration issued according to Directive 1999/37/EC[1], must necessarily be a natural person, i.e. the person, whether as an individual or in representation of a company, partnership or cooperative society, in whose name a motor vehicle is registered and licensed.
Arguments of the parties
As the Court understood it, the Commissioner of Police and the Asset Recovery Bureau (the “Respondents”) held that Article 39 of the Proceeds of Crime Act (Chapter 621 of The Laws of Malta) is not applicable and cannot be invoked in the present proceedings, because according to Article 23A of the Criminal Code (Chapter 9 of The Laws of Malta), when a person is accused with an offence under the Dangerous Drugs Ordinance (Chapter 101 of The Laws of Malta) or under the Medical and Kindred Professions Ordinance (Chapter 31 of The Laws of Malta), then the applicable legal regime is that found under these two Ordinances, which provide no right to a third party to resort to this Court before the conclusion of the criminal proceedings and before the accused would have been found guilty.
The Respondents quoted Article 23A(1) of the Criminal Code, after the amendments introduced to it by Act VI of 2024. According to the Respondents, this meant that Article 39 of the Proceeds of Crime Act could not be invoked in this case since the accused was being accused of crimes under the Dangerous Drugs Ordinance, and therefore the freezing of his assets should be regulated exclusively by the Dangerous Drugs Ordinance, according to the cited Article 23A of the Criminal Code. The Respondents claimed, referring to the parliamentary debates before the promulgation of Act VI of 2024[2], that the legislator wanted to retain a distinction between the regime applicable to drug offences and the regime applicable to other offences, the reason being that in the case of drug offences, it is by far more difficult to quantify the proceeds of crime.
The Applicant did not agree with the Respondents’ very wide interpretation of the proviso, and in its Note of Submissions, the Applicant argued that the exclusion under Article 23A(1) of the Criminal Code applies only to “any person charged or accused of a relevant offence”, and not to a third party. The Applicant argued that it would make no sense that third parties are subject to such exclusion because this would then mean that they are deprived from any remedy whatsoever in the case that property of theirs was erroneously seized and frozen. The Applicant continued that Article 39 of the Proceeds of Crime Act does not regulate the freezing of assets of a person accused of a relevant offence, but creates a special remedy before the Court, intended to safeguard the rights of third parties whose property is erroneously frozen or confiscated.
Deliberations by the Court
The Court began by first considering the contrasting meanings put forward by the Applicant and the Respondents solely in the context of the above mentioned three chapters of Maltese legislation, to see whether there is one clear meaning, or else if alternative meanings are possible, and if that would be the case, which one should be chosen. The Court acknowledged that it is not that clear if the Proceeds of Crime Act is excluded in its entirety or if it should continue to apply subsidiarily, or if it should apply only with regard to those questions not expressly excluded or in those circumstances where no conflict would be created between the Proceeds of Crime Act on the one hand and the Dangerous Drugs Ordinance and Medical and Kindred Professions Ordinance on the other.
The Court considered that the meaning of “relevant offence” (i.e. the offence to which the Proceeds of Crime Act applies) does not exclude offences under the Dangerous Drugs Ordinance and Medical and Kindred Professions Ordinance. This is because Article 4 of the Proceeds of Crime Act provides:
“A “relevant offence” is any offence under any law, and not being an offence of an involuntary nature, liable to the punishment of imprisonment or detention for a maximum term of at least one (1) year unless otherwise provided for in another Part of this Act.”
It is to be noted that offences under the Dangerous Drugs Ordinance and Medical and Kindred Professions Ordinance are subject to more than one year imprisonment or detention, and therefore fall under this meaning of “relevant offence”.
Moreover, Articles 64 and 65 (the transitory provisions) of the Proceeds of Crime Act refer to the Schedule of this Act, where in Part One thereof, are indicated a number of other laws, including the Dangerous Drugs Ordinance and Medical and Kindred Professions Ordinance. Article 64 also provides:
“The enactments in Part One in the Schedule to this Act may be repealed or amended insofar as they make provision in respect of matters also provided for in this Act in the manner as provided in the Part Two of the said Schedule: Provided that nothing in this Act shall be interpreted as derogating, limiting or restricting any powers provided for under the laws listed in Part One of the Schedule”.
From this it can be deduced, the Court held, that the legislator did not want duplicate laws and therefore created a means by which to revoke or amend the dispositions in the special laws that are already listed in the Proceeds of Crime Act. One therefore can reach the conclusion that as long as the laws mentioned in Part One of the Schedule of this Act – including the Dangerous Drugs Ordinance and Medical and Kindred Professions Ordinance – do not conflict directly with the provisions of the Proceeds of Crime Act, then the provisions of the latter must remain applicable.
In a similar way, the diction of Article 5(3) of the Proceeds of Crime Act gives the impression that where the property constitutes proceeds of crime but is not subject to confiscation under a special law, the provisions of the Proceeds of Crime Act are to remain applicable. According to this Act, “confiscation” means taking or seizing a property by order of the competent authority that deprives the owner of his title, entirely or in part, for no compensation.
The Court also studied Article 23A(3) of the Criminal Code. From this, it is understood that the dispositions of the Proceeds of Crime Act are not totally exclusive but must apply only when there is no other specific provision on the proceeds of crime in the Dangerous Drugs Ordinance, the Medical and Kindred Professions Ordinance, or in Articles 23A-23D of the Criminal Code.
The Court then proceeded to go into the specifics of the case, and analysed carefully Article 39 of the Proceeds of Crime Act, in terms of which this application was filed. The Court acknowledged that this Article is open to interpretation, and argued that if the interpretation put forward by the Respondents had to be accepted, with the exception of the circumstances mention in Article 22C with reference to Article 22(3A)(d) of the Dangerous Drugs Ordinance, then third parties would have no opportunity to contest a Seizure and Freezing Order, or a Confiscation Order, under the Dangerous Drugs Ordinance and the Medical and Kindred Professions Ordinance. Such an interpretation would cause a problem, the Court stated in clear terms.
Consequently, the Court delved deeper into the matter and looked at Directive 2014/42/EU[3]. Article 8 thereof deals specifically with safeguards, and provides in particular, that Member States shall take the necessary measures to ensure that the persons affected by the measures provided for under this Directive have the right to an effective remedy and a fair trial in order to uphold their rights. Moreover, third parties shall be entitled to claim title of ownership or other property rights, including in the cases referred to in Article 6 thereof. Article 6 deals specifically with the circumstances in which confiscations from third parties is possible. The proviso to this Article provides that this “shall not prejudice the rights of bona fide third parties.”
The Court therefore argued that were it to accept the Respondents’ interpretation, this would be in breach of the Directive. In fact, the Court quoted extensively from C-505/20, Request for preliminary ruling, RR, European Court of Justice, 12th May 2022 to sustain its arguments.
The Court reiterated that, on the basis of various European Court of Human Rights judgements, a remedy to a third party such as the Applicant is required not only for the Maltese State to conform with its obligations under the Directive, but also to conform with the principles of human rights in terms of the Charter of Fundamental Rights of the European Union and the European Convention for the Protection of Human Rights and Fundamental Freedoms (the “Convention”). The Court also referred to, and quoted extensively from, Rosario Spiteri vs Il-Kummissarju tal-Pulizija et[4] to sustain its argument, in that before the amendments introduced by Act VI of 2024, this judgement had declared a breach of the human rights sanctioned by Article 6 and Article 1 of the Protocol of the Convention precisely because no remedy was provided under the Dangerous Drugs Ordinance to a third party who wanted to release his property which was allegedly erroneously seized and frozen, or to a third party who wanted to contest the confiscation of immovable property.
The Court also referred to Article 37 of the Constitution, which protects the deprivation of property without any compensation. It is true that the same provision provides an exception “by way of penalty for, or as a consequence of, breach of the law, whether under civil process or after conviction of a criminal offence”. However, the Court noted that two points must be considered in this regard:
- the seizing and freezing of the property happens before the accused is declared guilty;
- the law does not provide for the taking of possession or the acquisition of property on which third parties have a right, even when guilt of a criminal offence is declared.
The Court concluded by conducting a comparative law exercise by referring to English, Italian and EU law and jurisprudence.
Judgement
On the basis of the above, the Court proceeded to deliver judgement, by rejecting the preliminary plea of the Respondents, at costs, and accepted the Applicant’s interpretation of Article 39 of the Proceeds of Crime Act.
Disclaimer: Ganado Advocates is responsible for contributing to this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in ‘The Malta Independent’ on 06/08/2025.
[1] On the registration documents for vehicles.
[2] Fourteenth Legislature, Consideration of Bills Committee, Sitting No. 30, 16th January 2024.
[3] Of the European Parliament and of the Council of 3 April 2014 on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union.
[4] Court of Appeal, 26th September 2022.
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