LEBANON: An Introduction to Dispute Resolution

In recent times, Lebanon has suffered from a prolonged political deadlock and a severe financial crisis. Additionally, 2024 brought yet another major challenge to Lebanon and its institutions: war. This conflict added another layer of complexity to the already deepening financial collapse, leading to a sharp decline in critical sectors (eg, tourism, agriculture, manufacturing, trade) and damage to trade routes and supply chains.

In a positive turn of events, the war ended in December 2024 and Parliament elected a new President in January 2025, ending a two-year vacancy. Following that election, a new Prime Minister was appointed and was tasked with forming a government capable of implementing reforms and addressing the nation’s economic crisis. Amid these political developments, Lebanon is exploring opportunities to revive its economy.

While there is potential for progress in the future, Lebanon, in the last year, saw little change. As in 2023, the Parliament passed few new laws or reforms, leaving the country’s legal and judicial framework largely unchanged. With this context in mind, we provide a brief overview of the trends and legal developments in the country.

Cases Against Lebanese Banks and Possible Retaliatory Measures

Depositors continue to initiate legal actions, often turning to summary proceedings for expedited relief, seeking judgments for payments in foreign currency or international wire transfers.

While judges in summary proceedings previously ruled in favour of depositors, recent rulings by the Court of Cassation have adopted a different stance, thereby limiting depositors' options for asserting their rights to request a “prompt” transfer of funds overseas.

As a result, depositors have sought alternative actions, including:

• filing an action on the merits against the bank for similar relief;
• submitting an ex parte provisional seizure application against the bank to secure its assets in Lebanon (although provisional seizure must be followed by a merits action to maintain seizure); and
• initiating proceedings against Lebanese banks for cessation of payment, which could lead to insolvency and bankruptcy proceedings.

Insolvency Claims Brought Against Lebanese Banks

In an attempt to retrieve their funds, depositors are turning to the Insolvency Court seeking the insolvency of Lebanese banks. However, the Lebanese courts are cautious about declaring banks in cessation of payment, fearing it could trigger widespread insolvencies and further destabilise the national economy. This approach aligns with the Lebanese Central Bank's (BDL's) reluctance.

Nonetheless, bank insolvency remains a distinct possibility, given the appealability of the Insolvency Court’s decisions and potential shifts in BDL policies, particularly in light of the new political developments in Lebanon since January 2025.

Foreign Judgments Against Lebanese Banks

In light of the Lebanese courts’ reluctance, depositors filed lawsuits against Lebanese banks in foreign courts, namely in the United States, England and France, challenging the illegal capital controls imposed by Lebanese banks on their accounts. A recent example is the class action filed in the United States in April 2024 against the BDL, its former governor, several banks, and auditing firms, accusing them of participating in a fraudulent scheme that deceived depositors about the banks' financial stability.

While we are aware of two foreign judgments rendered against Lebanese banks, which were voluntarily executed by the banks, it remains unclear whether depositors will manage to enforce these foreign judgments in Lebanon, as doing so may risk destabilising the national economy.

Anticipated Capital Controls Laws

To date, the Lebanese legislature has not formally enacted foreign capital controls legislation. Several draft laws have been prepared seeking to impose temporary controls on banking operations and services. Some of these drafts have been submitted to the Plenary Session of the Lebanese Parliament, but none have been approved or passed into effective legislation.

If enacted, these laws could affect ongoing legal actions by depositors against Lebanese banks and/or significantly restrict their avenues for recourse.

New Draft Media Law

The Administration and Justice Committee in the Lebanese Parliament is nearing the end of its closed-door discussions on a new draft media law, which if approved, could impose significant restrictions on freedom of expression and press freedom in Lebanon. This proposed legislation, intended to replace the 1962 Publications Law and the 1994 Audiovisual Law, has been revised following input from UNESCO together with the Ministry of Information in 2023. The Committee is set to review the remaining articles, including UNESCO’s proposed amendments, before taking a final vote in the coming months.

Amendments to the Amounts Set Out in the LCCP

Amid Lebanon's financial, economic, and monetary crisis over the last five years, it became necessary to update legal and regulatory amounts in the Lebanese Code of Civil Procedure (LCCP) to reflect the new economic reality. Consequently, Decree-Law No 13909, issued on 12 September 2024, amended the LCCP to adjust all specified amounts to fifty times their original value.

New LAMC Arbitration Rules

The Lebanese Arbitration and Mediation Centre (LAMC) recently amended its arbitration rules. The new rules entered into force on 1 July 2024 (the “Rules”). The Rules aim to provide fast and effective procedures for settling disputes and enhance transparency for arbitral proceedings conducted under the auspices of the LAMC.

The Rules introduced new features, including but not limited to:

• multiple contracts whereby parties can make claims related to more than one contract in a single arbitration;
• expedited arbitration proceedings and emergency proceedings;
• consolidation;
• possibility for arbitral tribunals to grant interim measures;
• tribunal's power to determine the relevance, materiality and admissibility of evidence; and
• interpretation and correction of awards and additional awards.

In addition to these features, the Rules introduced new provisions aimed at promoting and enhancing the use of technology in arbitration proceedings (eg, the possibility to hold remote hearings, communicate electronically with the arbitral tribunal etc).

This recent amendment demonstrates Lebanon's efforts to position itself as an arbitration-friendly jurisdiction.

Suspension of Deadlines Law

Amidst the exceptional circumstances the country has been facing, the State and its citizens were unable to exercise their rights within the legal, judicial, and contractual timeframes. In response, recently enacted Law No 328 of 2024, dated 4 December 2024 (Law No 328), suspended legal, judicial and contractual deadlines, such as:

• all legal and contractual deadlines from 8 October 2023 until 31 March 2025; and
• all judicial deadlines before all Lebanese courts of various types and levels from 31 March 2022 to 30 June 2024.

Certain deadlines such as those subject to judges' discretionary power or those determined by the administration are exempt from this suspension.

Law No 328 also permits parties to agreements and contracts to mutually waive the effect of the suspension, provided the agreement is clear and explicit.

However, in a recent decision rendered on 16 January 2025, the Lebanese Constitutional Council annulled Article 1(2) of Law No 328, which related to the judicial deadlines.