The Financial Services Tribunal was asked to decide on two grounds of appeal and not just one. This was held in Corporate & Commercial FX Services Ltd vs the Malta Financial Services Authority on 10 January 2024. The Court of Appeal presided over by Mr Justice Lawrence Mintoff delivered this judgement.
The Appellant company, Corporate & Commercial FX Services Ltd, appealed from a decision delivered by the Financial Services Tribunal of 8 February 2023. The Company had appealed from a decision taken by the Malta Financial Services Authority in June 2020 to cancel its licence. The MFSA had sent a letter to Corporate & Commercial FX Services Ltd (CCFX) informing the company that the licence is being withdrawn and asked the company to return the funds to its clients.
The Financial Services Tribunal had decided the appeal from the MFSA. In its decision, the Tribunal pointed out that CCFX had written to the MFSA that it was voluntarily withdrawing its licence. The bone of contention was that the MFSA did not need to cancel its licence, once it was withdrawn. MFSA argued that a licenced entity cannot simply withdrawn its licence in terms of the Financial Institutions Act.
This all started when the MFSA had sent a “minded letter” to CCFX in April 2020 pointing out certain concerns it had on its governance and structure, its financial statement and statutory returns and its responsibility of officers. Following this letter CCFX informed MFSA that in terms of Article 6(1)(a) of Financial Institutions Act it was withdrawing the licence. However, MFSA stuck to its guns and withdrew the licence irrespective of CCFX’s voluntary withdrawal.
The Tribunal in its decision held that a licensed entity may withdraw its licence voluntarily, however, MFSA may also suspend, cancel or limit the licence. Therefore, an entity cannot withdraw the licence unilaterally. The law dictates that once an entity is licensed, it must work within a regulatory framework and must also conclude its licence according determined norms. A licensed entity cannot just leave unilaterally as it wishes and should not take place following an enforcement procedure. This principle was outlined in a judgment Allinvest Company Limited et vs A et decided by the First Hall of the Civil Court on 30 March 2017.
The Tribunal further ruled that the MFSA had a right to continue to regulate CCFX irrespective of the fact that it wanted to surrender its licence. It then turned down the appeal.
CCFX appealed on the ground that the Tribunal did not decide on the merits of the case.
The Court of Appeal first dealt with whether this point was a point of law as required in Article 21(14) of the Malta Financial Services Act, since only points of law are allowed to be grounds of appeal.
The Court held that the Tribunal did not limit itself on Article 6(1)(a) of the Financial Institutions Act and decided that the licence was withdrawn in terms of paragraphs (d) and (i). The Tribunal held that MFSA could have proceeded with on paragraph (a), but held that the licence was to be withdrawn anyway.
The Court analysed the appeal application to the Tribunal and found that Tribunal decided only on the third ground of appeal and did not decide on the first two grounds of appeal. Therefore, the Court of Appeal asked the Tribunal to decide on the first two grounds of appeal.
Av. Malcolm Mifsud
Partner
Mifsud & Mifsud Advocates
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