Modification of Government Contracts under Judicial Review

In the judgement delivered on 5 July 2022 in the names of ‘356 Holdings Limited vs Assoċjazzjoni tal-Kunsilli Lokali et’, the First Hall Civil Court, presided by the Honourable Judge Anna Felice, upheld on a preliminary basis the validity of an action for judicial review, and confirmed inter alia that a decision by a public authority to modify and extend a concession contract awarded in 2001 amounted to an ‘administrative act’ in terms of Article 469A of the Code of Organisation and Civil Procedure. Furthermore, the Court reaffirmed the principle in the Supreme Travel case: a declaration of ineffectiveness before the Public Contracts Review Board can be filed within six months from when the interested party becomes aware of the conclusion of a contract.

The facts of the case were as follows:

  1. an agreement (the ‘Original LCA Concession’) was entered into between the Local Councils’ Association (the ‘Respondent Association’), 59 local councils (the ‘Respondent Local Councils’) and Faces Consultants Limited (the ‘Respondent Company’) in March 2001 whereby the Respondent Company was awarded a concession by the former to install and operate 250 bus shelters the consideration for which consisted in the right to advertise on the canopies;
  2. fifteen years later, in October 2016, Transport Malta published a ‘Request for Proposals for the Design, Supply, Installation and Maintenance of Advertising Bus Shelters in Malta and Gozo and Maintenance of Existing Advertising Bus Shelter Canopies’ (the ‘TM Concession’). The Claimant, who had submitted a proposal, was awarded the TM Concession.
  3. in June 2018, the Respondents entered into an Addendum to the Original LCA Concession (the ‘LCA Addendum’) concluded in 2001 to extend its duration and provide for the installation of additional bus shelters;
  4. furthermore, the Respondent Company filed two prohibitory injunctions in April 2019 (the ‘First Injunction’) and September 2019 (the ‘Second Injunction’) respectively to restrain Transport Malta from executing infrastructural works on two separate bus shelters. A redacted copy of the LCA Addendum omitting the identification details of the parties involved was presented in Court in the First Injunction. A full copy of the LCA Addendum was only submitted in Court by the Respondent Company in its Second Injunction.
  5. upon learning of these facts, the Claimant immediately proceeded to file the following:
    1. proceedings before the Public Contracts Review Board (the ‘Board’) for a declaration of ineffectiveness of the Original LCA Concession and/or the LCA Addendum. It is interesting to note that these proceedings were stayed by the Board at the request of the Respondent Company and the Respondent Association until a decision by this Court on its competence were delivered;
    2. a judicial protest in October 2019 to challenge the legality of the LCA Addendum on the basis that such Material Modifications therein contained could not have been agreed upon without implementing the proper concession procedure; and
    3. given that no reply was forthcoming from the Respondents, the Claimant filed this lawsuit (the ‘Article 469A Action’) whereby it requested the Court to undertake a judicial review in terms of Article 469A of the Code of Organisation and Civil Procedure (the ‘COCP’) (Chapter 12 of the Laws of Malta) and to declare that:
      1. the Respondents acted ultra vires and in breach of law insofar as the Original LCA Concession and/or the LCA Addendum are concerned; and/or
      2. the Original LCA Concession and/or the LCA Addendum are null and void.


  1. The Respondents raised a number of preliminary pleas, inter alia, that:
    1. the Original LCA Concession and the LCA Addendum did not satisfy the definition of ‘administrative act’ in terms of Article 469A;
    2. in accordance with sub-article 3, any action for judicial review must be filed within six months from the date when the Claimant became aware or could have become aware of the agreements, whichever is the earlier; and
    3. the Claimant could have obtained redress from the Public Contracts Review Board.
      (the preliminary pleas described in paragraph (a) to (c) above shall collectively be referred to as the ‘Preliminary Pleas’).

From the outset, it is important to note that according to Article 469A(2) of the COCP, ‘administrative act’ ‘includes the issuing by a public authority of any order, licence, permit, warrant, decision, or a refusal to any demand of a claimant, but does not include any measure intended for internal organisation or administration within the said authority’.

In delivering judgement on the preliminary pleas, the Court dismissed all of the arguments raised by the Respondents.  The Court did not, in fact, agree with the Respondents’ plea that the Original LCA Concession and the LCA Addendum did not amount to administrative acts. The law clearly refers to ‘any decision’ with ‘any’ being the operative term. The Court cited a judgement delivered on 27 October 2017 in the names of ‘Dragonara Gaming Limited vs Minister for Finance et’ (the ‘Dragonara Case’) whereby the Court of Appeal stated that the nature of a lawsuit stems from its substantive qualities, including the nature of the claim, the nature of the act complained of, and the nature of the remedy requested. The Court of Appeal went on to determine that the government ministry’s decision to select a preferred bidder and enter into contractual negotiations to award a concession with the same amounted to an ‘administrative act’ in terms of Article 469A.

The Court also examined the matter of pending proceedings before the Board. As already explained above, the Claimant was requesting a declaration of ineffectiveness of the Original LCA Concession and the LCA Addendum in terms of Regulation 113 of the Concession Contracts Regulations (the ‘Regulations’).[1] Furthermore, Regulation 52 of these Regulations expressly confers the Board with the competence to deal with matters and disputes concerning concessions. However, given that the Board had suspended the proceedings pending before it until such time as judgement was delivered by this Court, the same Court declared that the best interests of justice dictated that it continue to hear the case.

Nor did the Court agree with the Respondents that the Article 469A Action was not filed within the six month period stipulated in Article 469A(3). The Respondents failed to submit any proof of the Claimant’s knowledge of the Original LCA Concession and the LCA Addendum by, or before, April 2019. In any case, the Court agreed with the Claimant that it could only have filed the lawsuit when the full copy of the LCA Addendum was filed in the Second Injunction proceedings in September 2019.

In this respect, the Court also delved into the requirement to file any declaration of ineffectiveness at the very latest within six months from the conclusion of the contract and this in terms of Regulation 118 of the Regulations. In this case, the LCA Addendum was entered into in June 2018 but the Board proceedings for ineffectiveness were only filed in October 2019. However, no official notice was ever published and therefore it was impossible for the Claimant to become aware of the LCA Addendum through the mandated channels. Indeed, it was only by following the happenings in the Second Injunction that the Claimant got to know of the LCA Addendum and the parties thereto. The Court noted that interpreting Regulation 118 strictly would have meant that the Claimant had to file its declaration for ineffectiveness before the Board by December 2018. The Court opined that such an interpretation would however have been fallacious and unjust on the Claimant. In doing so, reference was made to ‘Supreme Travel Limited vs Awtorita għat-Trasport f’Malta et’ delivered on 31 August 2021 whereby the Court of Appeal applied the general principle of administrative law to the effect that any remedy provided by law must be real and effective and must be given a functional interpretation.

Any such peremptory six-month period to file a declaration of ineffectiveness under Regulation 118 of the Regulations must therefore be interpreted such that it starts to lapse from the day on which the interested party could have become aware of it.

In delivering judgement in partem, the Court dismissed all the Preliminary Pleas of the Respondents. Judgement on the merits is reserved for a later date.

This judgement upholds the administrative law principle that any remedy at law must be interpreted: (a) in the interests of justice and (b) such that it can be invoked by the interested party. Any non-functional interpretation will not be looked on favourably by the Courts of Malta. In this case, the Court struck down the argument once and for all that the timeframe for filing a declaration for ineffectiveness must be interpreted restrictively such that the six-month period only starts to lapse from the moment that the interested party becomes aware of the conclusion of the contract, and not before.

This article was first published in the Malta Independent. 

[1] Regulation 113 of the Concession Contracts Regulations, ‘an interested party or a tenderer may file an application before the Public Contracts Review Board to declare that a concession contract with an estimated value which meets or exceeds the threshold established under Schedule 3 is ineffective’.