Arbitration ruling on Steward-Malta case published

The Maltese Government has published the ruling delivered by an arbitration tribunal in the case between Steward Healthcare and Malta.

The arbitration was held under the rules of the International Chamber of Commerce, and found that the Government essentially received its money’s worth for close to €900 million spent on the concession.

The 212-page document delves into the claims and counterclaims of the parties while upholding the Maltese Court’s annulment of the concession.

The document can be found here. A Q&A released by the Government can be found here.

The Maltese Government has been ordered to pay its own legal costs. These include:

• $762,500 for the cost of arbitration
• €71,071,08 for the cost of hearings
• €7.93 million + $157,433 for legal representation, including €6.35 million to Clyde & Co., €1.35 million to Ganado Advocates, €267,420 to LRS Law Firm and $157,433 to Alston & Bird.
• €2.2 million for expert witnesses

A major point of contention lay in the value of the healthcare services provided by Steward Healthcare, which was taken to be €604.4 million, purely based on the amount paid by Government for such services.

Although the Government argued that the value of these services should be discounted by as much as 40 or 80 per cent because of “partially deficient” performance, the Tribunal pointed out that Government never raised the case during the lifetime of the concession.

“Furthermore, the Tribunal’s attention has not been drawn to any particular healthcare issues that would justify a reduction in the value of these services,” it said.

Steward Healthcare’s failure to meet milestones related to the renovation and upgrading of St Luke’s Hospital, Karin Grech Hospital and Gozo General Hospital, the Tribunal found, had no bearing on the total value of services delivered to Government. This was because the funding for such upgrades was to come from outside investment, which never materialised.

“This appears to be an issue and source of considerable confusion in the minds of the GoM and its representatives, and where, in the Tribunal’s view, the Delia Judgments have reached questionable conclusions on this matter,” reads the ruling.

The Tribunal quoted at length from the report by the National Audit Office, noting that the lack of investment by the original concessionaire, VGH, as well as Steward Healthcare, was the result of their inability to secure outside funding. However, instead of taking action, “the Government’s representatives provided waiver after waiver with respect to the requirement to secure financing, thereby perpetuating the failure that this concession came to represent. In effect, the origin of this situation can readily by traced to the grossly erroneous selection of the VGH as the concessionaire, whose lack of financing and technical expertise was evident at the selection stage of the concession.”

Ultimately, the Tribunal found that there was “no clear winner” in the proceedings.