The 212-page ruling in the arbitration proceedings between Steward Healthcare and the Maltese government over the hospitals deal has been published by the government.

Last Monday, the government said that the international arbitration tribunal had rejected Steward Healthcare's claim that the government had unlawfully terminated the hospitals concession agreement, but also decided to award no damages to either side.

The arbitration stems from a concession agreement in 2015 under which the government granted Vitals Global Healthcare (VGH), and later Steward Health Care, control over St Luke's Hospital, Gozo General Hospital, and the Karin Grech Hospital.

Following a 2023 ruling by Malta's Court of Appeal that rescinded the concession in a case filed by then Opposition Leader Adrian Delia, Steward initiated arbitration proceedings under the ICC Rules, seeking compensation. The government counterclaimed.

The Government had received a copy of the ruling by the international arbitration tribunal rendered under the Rules of the International Chamber of Commerce (ICC) on Monday

"The tribunal upheld the Government's primary defence and rejected Steward Healthcare's contractual claim of circa €148 million," the government of Malta had said on Monday.

The government, in a document accompanying the ruling on Friday, said that before the Court of Appeal delivered its judgement in the Delia case, the Government's primary defence was that the contracts were null because they constituted State aid under EU law. "Consequently, Government argued that, in line with Maltese law, both parties should be restored to the position they were in before signing the contracts. This defence was raised before the Court of Appeal had delivered its judgement in the Delia case in October 2023. In addition to this primary defence, Government also raised contractual counterclaims against Steward," and said that these claims were eventually quantified at around €760 million. Once the Court of Appeal delivered its final judgement in the Delia case, Government said that it added a further line of defence that the contracts had been rescinded by the Court of Appeal because they breached the Government Lands Act.

Steward Healthcare, meanwhile, had requested the tribunal to declare, among other things, that the government was not entitled to terminate the Transaction Agreements by its notice of 21 March 2023, and breached the Concession Agreement by purporting to do so, that the government breached the Concession Agreement, Healthcare Services Agreement, and Labour Agreement; and, among other things. It asked the tribunal to order the government to pay to the Claimants as compensation for early contract termination the amount of €129,987,842, which in addition to other things, the government says that Steward's claim came to around €148 million.

The government says that the Tribunal upheld its primary claim that the contracts were rescinded by the Court of Appeal judgement because they did not comply with the Government Lands Act, and that under Maltese law, rescission requires that the parties return all benefits they received under the contracts. The Tribunal also accepted Government's position that claims in contract, including Steward's claim for a €100 million penalty termination payment and any damages, cannot be enforced if the contract has been rescinded and annulled, it said. "On this basis, i.e. accepting the Government's primary defence, the Tribunal rejected Steward's claims in contract, as well as Government's counterclaims in contract," the government said.

Read the ruling here

It is understood that the Tribunal then undertook an exercise for the restitution to pre-contractual positions.

According to the ICC award, the total benefits received by the Government of Malta stand at €889,434,091 while the benefits received by Steward Healthcare stand at €884,644,629, with a shortfall of €4.78 million owed to Steward Health Care.

Among other things, the ruling provides a breakdown of the benefits received by Parties.

In terms of the €889,434,091 in benefits received by the government, it states that the value of services provided to the government was €604,416,034. The value of investment in the hospital was listed as €41,480,000. The rest of the benefits to the Maltese government included €224,515,829 listed as The Labour Agreement Salary reimbursement (excluding 2023) and €9,075,359 for the same reimbursement but for 2023, €8,584,848 listed as other income and expenditure, and €1,362,021 in post-termination services provided by Claimants

Regarding the amount listed as the Claimant's investment in the hospitals, the ruling reads that "both Parties have relied on the GT (Grant Thornton) Report of 3 June 2021 to assess the investment in the Hospitals. Ultimately, the Respondent (government) has accepted to use that value, i.e., €41,480,000." It reads that the GT Report had been commissioned by the Health Ministry "to further verify the accuracy and reasonableness of the hard costs claimed to have been incurred by Steward Healthcare in the course of construction and improvement works carried out at the Sites."

In terms of the €884,644,629 in benefits received by Steward Healthcare, the highest amounts were in the form of €475,846,026 in terms of Healthcare Services Agreement payments and €274,541,058 in terms of the value of GoM Staff provided. The rest included €33,240,475 in Labour Agreement shortfall reimbursements, €48,868,130 in non-cash benefits, €41,484,224 in indirect tax liability, €5,511,533 regarding settlement agreement, €2,076,507 in beneficial interest rate savings, and €3,076,676 in other payroll amounts.

Costs

The report shows that the arbitration proceedings cost the Government of Malta around €11 million in total. This sum was mostly spent on the costs for legal representation and the costs of expert witnesses. The expenditure breakdown shows that the Government of Malta's costs were paid in euros (€) and in US dollars ($); in total, €10,220,262.75 and $919,933 (around €800,000) was spent by the Maltese government during these proceedings. Legal representation cost €7,930,536.09 plus another $157,433. Expert witnesses cost €2.2 million (€2,218,655.58). Additional hearing costs then amounted to €71,071.08, including VAT, and another $762,500 was filed as ICC advance on cost.

From the other end, Steward Healthcare and its parties paid around €7.4 million during these arbitration proceedings, mostly going towards legal representation also. Steward Healthcare paid an equal $762,500 to split ICC arbitration costs and just over €6.6 million on top of that in hearing costs, legal representation, expert witnesses, and additional hearing related costs.