Insights

Introduction

On the 30 November 2022, the First Hall, Civil Court in its Constitutional jurisdiction (the “First Court”) in delivering a ruling in the case of Sebastian Dalli v. L-Avukat tal-Istat u l-Avukat Generali (Application no. 370/21) held that Malta’s freezing order laws are incompatible with EU rules, as national laws do not allow an individual to appeal from a judgement in which the court orders assets to be frozen.

Facts of the Case

In 2009, Dalli was charged with complicity in a drug trafficking case and was subjected to a freezing order, as per Article 22A of the Dangerous Drugs Ordinance, Chapter 101 of the Laws of Malta (the “Dangerous Drugs Ordinance”), which freezing order continued to remain in force for a further 13 years. Dalli referred his case to the Constitutional Court on the basis that his fundamental rights had been breached due to the longevity of enforcement of what was initially meant to be a temporary freezing order.

The First Court’s Findings

On the 22 March 2022, the First Court adjudged in Dalli’s favour and awarded him €27,952 in damages, whilst annulling and revoking the freezing order, on the grounds that Dalli’s right to a fair hearing under Article 39(1) and Article 6(1) of the Constitution of Malta (the “Constitution”) as well as his right to peaceful enjoyment of property under Article 1 of the First Protocol of the European Convention on Human Rights (the “European Convention”) had been breached.

The First Court, in its considerations, made reference to Article 22A(2)(b) of the Dangerous Drugs Ordinance which holds that once a freezing order is enforced, this is to remain in force until the final determination of the proceedings, and in the case of a conviction, until the sentence has been executed. Whilst noting that freezing orders in themselves do not violate an individual’s rights, the First Court further referred to Article 4 of the EU Directive 2014/42/EU on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union (the “Directive”), which reads that “Member States shall provide for the effective possibility for the person whose property is affected to challenge the freezing order before a court, in accordance with procedures provided for in national law”.

The First Court went a step further in noting that Maltese Law is not only incompatible with EU Law on the basis of no remedy being provided, but also that our law was written in such a manner which is more favourable to the prosecution on the grounds that Article 22A(8) of the Dangerous Drugs Ordinance allows the prosecution the possibility to appeal within 3 days, if the request made for the enforcement of a freezing order is denied.

On the 11 April 2022, the State Advocate and Advocate General proceeded to lodge an appeal on a number of grounds, including the fact that the First Court awarded Dalli damages in relation to a breach to his right to a fair hearing, a plea which had not originally been raised by the plaintiff in his application. Moreover, it was stated that the First Court had failed to consider the reasons why the freezing order had initially been enforced, and that the revocation and annulment of the freezing order was not within the First Court’s competence, but rather within the competence of the Criminal Court.

Constitutional Court’s Decision

The Constitutional Court reaffirmed the First Court’s decision with respect to the incompatibility of Article 22A with EU Law. In fact, the Constitutional Court held that the lengthy proceedings coupled with the lack of effective means to contest the freezing order resulted in a breach of Dalli’s rights. It went on to note that the freezing order imposed on Dalli was unnecessary and unjustified, in the sense that its enforcement was disproportionate to the ultimate scope of safeguarding the general public’s interest.

On the point raised in relation to the lack of competence of the First Court in revoking and annulling the freezing order, the Constitutional Court held that although in an ideal scenario it be the ordinary courts who decide on whether the freezing order is to remain in force or otherwise, the ordinary courts were unable to exercise this power as the State had failed to legislate to this effect. Furthermore, it was noted that the law does not impose limitations upon the Constitutional Court’s competence to revoke and annul a freezing order, but rather gives such court the power to provide the remedies which it deems proper in the circumstances presented.

Additionally, the Constitutional Court stated that the enforcement of the freezing order violated Article 37 of the Constitution due to the limitation imposed upon Dalli to make use of and dispose of his property as he wishes. The Constitutional Court noted that the importance of the procedural obligations under the European Convention must not be overlooked, and further made reference to Džinić vs. Croatia decided by the European Courts wherein it was noted that “…the seizure of property for legal proceedings normally related to the control of the use of property, falls within the ambit of the second paragraph of Article 1 of Protocol No.1 to the Convention”.

Moreover, the Constitutional Court questioned the State Attorney and Advocate General’s standing on several grounds, including the fact that experts were not appointed when they should have been duly appointed, requests were made when they had already been fulfilled, and lack of communication between the Police, the State Attorney and Advocate General.

It is significant to point out, however, that the Constitutional Court did not accept the First Court’s judgement in its entirety and in fact noted that Dalli’s right to a fair hearing had not actually been breached, and that the law on freezing orders did not present a breach in equality of arms between the parties.

The article was first published on The Malta Independent (25 January 2023)