Commercial Disputes

Commercial disputes are counterproductive in nature. A measured and equanimous approach is necessary to assess the appropriate level of escalation and to preserve the desired commercial outcome of a transaction.

Sometimes a commercial transaction is regulated by a clearly drafted contract, and a proper interpretation of the documentation is required prior to asserting contractual rights. In other instances, the behaviour of the parties in anticipation of the contract needs to be scrutinised to ascertain culpability.  

There is certainly no one-size-fits-all solution to resolving commercial disputes and a thorough understanding of the relationship of the parties, jurisprudential aspects of the dispute and related commercial objectives is critical when considering the available options to manage and resolve the dispute. 

As a trusted advisor, we help our clients take well-informed decisions to achieve the most commercially sound resolution to the dispute. From proceedings before the Courts of Malta to arbitration, mediation, conciliation and settlement negotiations, we are able to guide you through to an effective resolution that protects your most important business interests. 

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Court Upholds Right to Divide Roof in Co-ownership Case

In matters of co-ownership, individuals cannot be compelled to remain in such a state indefinitely and may request the partition of the property, provided this is easily divisible. This principle was underscored in the judgment delivered on the 30th January 2024 in the case William Gatt, Claire Gatt et al. vs George Mangion et al., presided over by Honorable Judge Dr. Joanne Vella Cuschieri, which judgment was subsequently confirmed by the Court of Appeal on the 30th January 2025. Case Background The plaintiffs sought judicial intervention to dissolve co-ownership of the roof of a block of apartments, which was held in common between four apartments, in equal, undivided shares. The plaintiffs presented an architect’s report demonstrating that the property was divisible without undue harm. Despite sending a formal legal letter and a judicial letter, the defendants consistently opposed any division. Consequently, the plaintiffs requested a court order to terminate the co-ownership and permit partition. Defendant's Arguments Inapplicability of Civil Code Provisions: The defendants argued that Article 4 of the Condominium Act (Chapter 398, Laws of Malta) excludes the application of the Civil Code to property held pro indiviso in condominium common areas. They also cited Article 7 of Chapter 398, which requires unanimous consent for division. Competence of the Court: They contended that disputes regarding condominiums must be resolved through arbitration under the Arbitration Act. Potential Prejudice: The defendants claimed that division would reduce usability and diminish the property’s value due to limited development potential. They also alleged disproportionate benefits and prejudice against smaller portions. Court’s Analysis and Decision The court had already dismissed the defendants’ preliminary pleas regarding the admissibility of the action, the requirement for unanimous consent, and the jurisdiction of the court to decide the case. The Court, in its partial judgment delivered on the 23rd of February 2021, affirmed its competence and allowed the case to proceed to the merits. In its judgment on the merits, the court focused on whether the property could be easily divisible or partitioned without difficulty. The Architect’s Report played a pivotal role, confirming that the property- in this case, the roof - was divisible without diminishing usability for any of the apartment owners. Under Article 496 of the Civil Code, no individual can be forced to remain in co-ownership, and partition can be demanded unless explicitly prohibited by a valid agreement or will. Notably: Agreements preventing partition are valid only for up to five years and can be renewed. Even where partition is prohibited, the court may allow it under "serious circumstances" as outlined in Article 497 of the Civil Code. The court affirmed that the law prioritizes enabling partition unless there are compelling reasons to maintain co-ownership. It dismissed the defendants’ concerns about reduced usability, stating that each party’s right to use their portion of the roof would remain intact post-partition. Regarding potential value reduction, the court emphasized cooperative development planning to enhance the property’s overall value. It advised the parties to collaborate in managing the airspace, benefiting all stakeholders. Final Judgment The court granted the plaintiffs’ request, ordering the property’s partition. It rejected the defendants’ arguments and claims, affirming the plaintiffs’ right to terminate co-ownership. This case demonstrates the fundamental principle enshrined in law that no individual can be compelled to remain a co-owner against their will. The plaintiffs were represented by Dr. Joseph Mizzi.  
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