Enforcement of Judgments 2019

Last Updated August 07, 2019

Lebanon

Law and Practice

Authors



ASAS LAW, AbdelSater AbuSamra & Associates was founded in 2005. It is a specialist law firm gathering a team of highly experienced lawyers admitted to practice in New York, The Hague and Beirut. ASAS-LAW provides a full range of legal services to leading international and national companies locally and across borders. It is the exclusive representative of ICC-FraudNet, the world's leading asset-recovery legal network working under the auspices of the International Chamber of Commerce. The firm is particularly renowned for handling complex transactions, M&A, financing and structuring, notably in energy, oil and gas, infrastructure and the industrial sectors. It has a high reputation in international and national arbitration, mediation and litigation. In addition to the lawyers from both civil and common law systems, the litigation and arbitration team includes engineers, financiers, accountants and other technicians, giving ASAS-LAW an edge in complex litigations. The firm takes pride in having the highest professional and ethical values.

The Lebanese system offers various ways to identify another party's asset position in Lebanon, with restrictions regarding bank accounts (as laid out in the Lebanese Banking Secrecy Law, dated 3 September 1956) enshrined in the Lebanese legal system.

Asset identification methods vary depending on the type of assets, as outlined below.

Identifying Real Estate Assets

Lebanon has a real estate register department or 'cadastre' divided by regions or departments where real estate properties are registered by the name of their owner. All rights pertaining to land or real estate properties are constituted by registration with the said register. The creation and set-up of the real estate register dates back to the beginning of the last century, which is relatively recent when compared to Lebanon's history that goes back a few thousand years. As such, a number of properties in some Lebanese regions are yet to be registered in the real estate register – these remain subject to a different legal system which is beyond the scope of this article.

The real estate register is public, meaning that any person may access the information therein and no one may claim to have no knowledge of the information entered in the real estate register.

The real estate registry has a computerised database accessible to the public. Indeed, in order to identify the assets owned by a particular person (or legal entity), a request is submitted to the General Directorate of Land Registry and Cadastre in Beirut. The request should contain the exact name of the target person or entity and specify the geographical area to be covered by the search.

The results will be issued within a few days in the form of a list showing the properties owned by the target person or entity in the requested area(s) along with the plot numbers and the number of shares owned in each plot without any further detail.

The stamps cost of this search varies depending on the area to be covered and goes up to approximately USD350 per target person. The challenge of an accurate search lies in determining the exact spelling of the name of the target person or entity.

Once the properties are identified, one may obtain additional information on each plot by enquiries with the relevant real estate registry department. The cost of this enquiry varies on a case-by-case basis, depending on the number of pages to be retrieved.

Moreover, a real estate certificate may be obtained for each property providing details concerning the property, including the names of co-owners (if any), the property description and records of the securities attached thereto such as seizure, mortgage, etc. The stamps cost for obtaining said certificate is approximately USD7.

Identifying Shares

Companies in Lebanon are registered at the relevant commercial registry where the company headquarter is located.

The data and information available in the registry is open to the public and any applicant submitting a request may access information and documents relating to a specific company.

Once the company is identified, one may file a request for a 'comprehensive certificate'; this document provides various information such as the name of the shareholders, the number of shares held by each shareholder, the name of the directors, the address of the company and a record of any attachment on the company.

The commercial registry has a website where some information is accessible to the public.

However, unlike the real estate registry, the commercial registry is a 'publication register' (not a 'constitutive register') in the sense that registration therein is not necessary for the creation of the ownership right itself. Also, unlike the real estate register, the commercial registry does not yet offer the possibility for an official search by target person, showing the various shares held by one person or entity in different companies in Lebanon.

However, and in addition to the commercial registry, information on companies and individuals holding interests in companies may be obtained from private search engines for a fee.

Bank Accounts

Bank accounts and banking information in Lebanon are protected by the Law on Banking Secrecy, dated 3 September 1956. Said law provides a two-level protection: (i) all banks operating in Lebanon are subject to 'professional secrecy' and (ii) monies deposited with banks in Lebanon are immune from seizure.

There are limited exceptions to this banking secrecy, which are strictly outlined in the Banking Secrecy Law and in the Law on Fighting Money Laundering and Terrorist Financing, dated 24 November 2015. Also, more recently, the Law for the Exchange of Information for Tax Purposes No 55, dated 27 October 2016 has authorised the communication of fiscal information under international mutual assistance conventions.

By virtue of the Banking Secrecy Law, banks and bank employees are expressly prohibited from disclosing any information regarding any bank account or information on any depositor in Lebanon. Any violation of the banking secrecy obligation is subject to criminal sanctions involving imprisonment.

It is in this context that banks systematically refrain from giving banking information, even when summoned by the Lebanese Administration or by a Lebanese court order.

However, the banking secrecy is lifted in the following cases as set out by the Banking Secrecy Law:

  • when there is a written authorisation by the concerned client, his/her heirs or legatees, authorising the disclosure of information; or
  • if the client is declared bankrupt; or
  • if there is a lawsuit involving banks and their clients concerning banking operations.

In the same vein, immunity from seizure may be overcome when authorised by the account holder.

The above-mentioned authorisations may also be agreed upon contractually. For example, some banks include in the account opening documentation a clause whereby the client grants the authorisation to have the account seized or the banking secrecy lifted, under specific conditions. The effect and efficiency of such contractual clauses vary on a case-by-case basis depending on the court looking into the matter and the approaches and arguments adopted by the parties’ defences.

In addition to the exceptions provided for by the Banking Secrecy Law, the Law No 44 on Fighting Money Laundering and Terrorist Financing (the AML Law) provides for cases where the banking secrecy may be lifted in events involving money-laundering.

In such cases, the Special Investigation Commission (SIC) established at the Banque du Liban (BDL, the Central Bank of Lebanon) is the authority empowered to receive and analyse suspicious transactions reports, to conduct financial investigations, to lift banking secrecy, to freeze accounts and/or transactions and forward information to concerned judicial authorities, in addition to other tasks.

The modalities and procedures for securing successful lifting of the banking secrecy by the SIC are intricate and sophisticated; they require the assistance of specialised asset recovery lawyers expert in banking asset tracing and are outside the scope of this article.

However, it is worth mentioning that the definition of 'money-laundering' has been expanded in 2015 and now includes money-laundering crimes as well as attempts and collusion/participation to such crimes. It encompasses assets, tangible and intangible, movable and immovable, including any legal documents or instruments evidencing title to, or interest in, such assets, resulting from committing, attempting to commit, or participating in the commission of any of the following offences whether in Lebanon or abroad:

  • the growing, manufacturing, or illicit trafficking of narcotic drugs and/or psychotropic substances according to the Lebanese laws;
  • the participation in illegal associations with the intention of committing crimes and misdemeanours;
  • terrorism, as per the provisions of Lebanese laws;
  • the financing of terrorism or terrorist acts and any other related activities (travel, organisations, training, recruiting, etc) or the financing of individuals or terrorist organisations, as per the provisions of Lebanese laws;
  • illicit arms trafficking;
  • kidnapping using weapons or by any other means;
  • insider trading, breach of confidentiality, hindering of auctions, and illegal speculation;
  • incitation to debauchery and offences against ethics and public decency by way of organised gangs;
  • corruption including bribery, trading in influence, embezzlement, abuse of functions, abuse of power, and illicit enrichment;
  • theft, breach of trust, and embezzlement;
  • fraud, including fraudulent bankruptcy;
  • the counterfeiting of public and private documents and instruments, including cheques and credit cards of all types and the counterfeiting of money, stamps and stamped papers;
  • smuggling, according to the provisions of the Customs Law;
  • the counterfeiting of goods and fraudulent trading in counterfeit goods;
  • air and maritime piracy;
  • trafficking of human beings and smuggling of migrants;
  • sexual exploitation, including of children;
  • environmental crimes;
  • extortion;
  • murder;
  • tax evasion, in accordance with the Lebanese laws.

According to Article 2 of the AML Law, acts with the following purposes are considered as money laundering:

  • concealing the real source of illicit funds, or giving, by any means, a false justification regarding the said source, with the knowledge of the illicit nature of these funds;
  • transferring or transporting funds, or substituting or investing funds in the purchase of movable or immovable assets or in carrying out financial transactions for the purpose of concealing or disguising the illicit source of such funds, or assisting a person involved in the commission of any of the above offences mentioned in Article 1 to avoid prosecution, with the knowledge of the illicit nature of these funds.

In light of the provisions of the Lebanese Code of Civil Procedure (LCCP), judgments in the Lebanese legal system may be classified under various classifications, as listed below.

  • The first classification depends on whether a dispute exists or not and includes two types of judgments. The 'contentious judgment' is the judgment rendered in a dispute between parties; the 'judgment rendered in a non-contentious matter' is the ex parte judgment rendered without dispute (Article 552 LCCP).
  • The second classification depends on whether all parties have participated to the proceedings and includes two types of judgments. The 'contradictory judgment' is one rendered at the outcome of proceedings where the defendant is represented; the 'judgment in absentia' is one rendered in proceedings where the defendant did not participate (Article 465 LCCP).
  • The third classification depends on the proceedings phase when the judgment is rendered and whether the judgment relates to a procedural issue or one of the essential claims. This classification encompasses the injunction/interlocutory judgment (decision avant-dire droit) and the provisional judgment (articles 553 to 555 LCCP) – which are both rendered during the proceedings – and the 'determinative judgment' which determines one of the claims or is rendered at the end of the proceedings.
  • The fourth classification depends on the level of the court having issued the judgment. The Lebanese judicial system generally comprises three levels of jurisdictions: first instance, appeal and cassation. In principle, a final judgment does not become enforceable if it is still subject to the ordinary review recourses, namely challenge through opposition with the same issuing court or appeal with the court of appeal. Once the judgment is no longer subject to review through the ordinary challenge recourse, it generally becomes enforceable even if it is still subject to challenge through cassation, third-party objection and re-trial (which are referred to as extraordinary challenge recourses).
  • Judgments may also be classified depending on the competence or jurisdiction of the judge rendering them. For the purpose of enforcement, it is helpful to keep in perspective the classification of judgments into three main categories: (i) judgments rendered by the 'judge of urgent matters', (ii) judgments rendered on the merits and (iii) judgments rendered by the 'executive bureau'.

Judgments Rendered by the 'Judge of Urgent Matters'

The judge of urgent matters (also referred to as summary judge) is the competent authority to look into requests for expedited measures in civil and commercial matters without looking into the merits of the case. Urgency is of the essence in these cases.

The summary judge has the power to order and take legal measures to stop 'obvious' aggressions on rights and prevent infringements on legitimate situations (Article 579 LCCP). These judgments are interlocutory judgments.

They relate to decisions that must (on the appearance of the facts) be taken without any delay and they are characterised by their expedited enforcement status. Indeed, Article 585 LCCP provides that decisions and judgments rendered by the judge of urgent matters are "immediately enforceable". In other terms, the decision/judgment issued by the judge of urgent matters is enforceable as of its issuance even if it is subject to challenge.

In addition, according to Article 585 LCCP, the judge of urgent matters may also order the enforcement of the decision/judgment “upon production of original document” – ie, upon mere production of the original copy of the judgment. These decisions may be enforced immediately when requested by the creditor without sending a prior notification to the aggrieved party and regardless of the objection and appeal recourses and delays.

The summary judge may render a decision that is both “immediately enforceable” and “upon mere production” of its original copy.

Moreover, the judge of urgent matters may, upon a request made by the winning party, order the other party to pay a penalty for any delay in complying with the decision.

Decisions rendered by the judge of urgent matters are subject to appeal by the aggrieved party before the courts of appeal, within eight days from the day of notification of the decision. Filing an appeal against such decision does not automatically suspend its enforcement especially where the decision is issued with “immediate enforceability” and upon mere production of its original copy as outlined here above. However, the appeals court may, upon request of the aggrieved party, suspend the enforcement of the appealed decision.

Judgments Rendered by the Judge Looking into the Merits

Judges looking into the merits of the case have the power to issue all types of judgments depending on the facts and phase of the proceedings. Judgments or decisions issued by courts looking into the merits of the case may be contentious or ex parte, they may be contradictory or in absentia, final judgments or provisional/interlocutory.

By definition, matters that may be decided by judgments are countless as they depend on the facts of each matter and the relief sought as well as other factors. The judgment may order a party to pay monies, damages, interests, costs. It may also order a party to return an asset, to exit the premises unlawfully occupied.

Judgments Rendered by the Executive Bureau

The executive bureau is the relevant court to enforce all judgments and decisions including foreign decisions and arbitral awards that were granted exequatur.

Moreover, the executive bureau is also the competent court where a creditor represented by a lawyer, holding an executory writ such as a contract, bond, official document or ordinary deed (and other documents listed under Article 847 LCCP), may make a submission requesting the direct enforcement of such writ.

Pursuant to Article 850 LCCP, the judge in charge of the executive bureau will notify the debtor a copy of the enforcement request along with the writ subject matter of the enforcement, and will invite the debtor to either voluntarily pay the amount within a period of ten days or submit an objection before the competent court.

The 'objection' is a lawsuit filed with the competent merits court, where the debtor may challenge the writ and/or its enforceability. The objection lawsuit filed by the debtor does not de facto halt the enforcement of the executory writ, however the court may decide to halt the enforcement or to suspend it against a guarantee pending the objection lawsuit outcome (Article 852 LCCP). The process may be lengthy as the objection lawsuit is usually subject to a three-degree proceeding (first instance court, appeal and cassation). Finally, it is worth noting that the debtor may, at any time, file an objection related to breaches of the enforcement proceedings’ rules per se.

In order to enforce domestic judgments, the winning party will file a request in this respect with the competent executive bureau.

The enforcement request should be filed by a lawyer and must include a signed true copy of the judgment subject matter of the enforcement stamped by the relevant court with the words “valid for enforcement” (Article 837 LCCP).

If the judgment subject matter of the enforcement was rendered with the mention “enforceable upon production of original document”, the enforcement proceedings will take place without prior warning to the debtor.

However, and absent such mention, the executive bureau will first order that an “execution summon/warning” be notified to the debtor warning the latter to implement/perform the judgment within a period of five days as of notification, failing which, a forced enforcement will take place and its assets as identified by the winning party will be seized.

If the debtor does not implement the judgment within the five-day period, the judge will issue a decision ordering the forced enforcement of the judgment according to its content. The actual enforcement and seizure process differs depending on whether the assets are movable or immovable assets.

Moveable assets are inventoried by the competent court clerk, and placed under the guardianship of a person named by the court (the judicial guard); also, if the movable assets are subject to registration (such as vehicles), seizure will be enforced by court inscription in the corresponding registry (for example, the vehicles’ registry). Immoveable assets (properties) are seized by virtue of court inscriptions at the real estate register.

Eventually the seized assets are sold in public auction under the authority of the court and the proceeds are used for realisation of the rights as per the judgment.

It is worth mentioning that the general statute of limitation to initiate enforcement of a judgment is ten years.

As mentioned above, once a judgment becomes enforceable, the 'winning party' may file a request before the executive bureau seeking an order to enforce the judgment whereby the debtor is warned to implement the judgment during a period of five days.

The order to send an “execution warning” may be rendered by the judge on the same day of filing the submission or few days thereafter. The decision ordering the enforcement of the judgment according to its content, is usually rendered following expiry of the five-day period. It should be noted that during summer recess (from 15 July to 15 September) the judicial process is slower.

The costs involved to enforce a judgment may be summarised as follows.

  • The court tax is 2.5% of the ordered/claimed amount; it is paid in two phases – one-quarter should be paid upon filing the enforcement request, and three-quarters upon collection.
  • The judges’ fund – this fee is equal to one-fifth of the court tax mentioned above.
  • Stamp duties – this fee is calculated based on the claimed amount; it equals 0.4% of the said amount.
  • Notification costs and sundries – these may vary depending on the complexity of the notification and whether notifications by “exceptional means” had to be ordered by the executive bureau if the debtor is not found at its known address. In general, straightforward notifications would cost around USD20 in addition to minor clerical expenses; whereas the notification by “exceptional means” would cost around USD500 as it entails publication in local newspapers and other proceedings.

There are no 'post-judgment procedures' per se for determining defendant’s assets. As long as the winning party or the creditor has not yet been fully paid and as long as the enforcement of the judgment is not time barred, the creditor may enforce and seize the defendant’s assets until full collection and compensation.

Following the request to enforce a judgment, the losing party has limited avenues to challenge its enforcement. The losing party may file an objection invoking matters related to the enforcement proceedings as such or, in very limited cases, an objection challenging the substance of the judgment to be enforced as summarised below.

Objection Relating to the Proceedings of Enforcement

The defendant may file an objection before the head of the executive bureau invoking issues related to errors in the proceedings of the enforcement itself. These issues may be related to errors contained in the warning sent by the executive bureau (such as misrepresentations of the judgment subject matter of the enforcement), or issues related to notifications and publications and their incompliance with the relevant rules and similar matters.

Objection Relating to the Substance of the Judgment

In principle, the final and enforceable judgment may not be re-opened. The judgment will be enforced unless subsequent facts affecting its enforcement have ensued. A straightforward example is the case when the defendant is able to prove that the judgment has already been implemented or that the winning party has waived its right to enforce it.

In very limited instances, the defendant may be able to halt or freeze the enforcement by filing a new lawsuit that would affect the enforcement. For example, the defendant may file a retrial lawsuit or seek the annulment of the enforced judgment.

The retrial is an extraordinary challenge recourse seeking the withdrawal of a final judgment that is no longer subject to review through the ordinary challenge recourses (Article 688 LCCP). The conditions for submitting a retrial request are limited. Pursuant to Article 690 LCCP, the retrial can only be requested in the following cases:

  • if a fraud/deceit emanated from the winning party or its representative which affected the issuance of the decision and which the losing party discovered after such issuance;
  • if the party requesting retrial has discovered, after the issuance of the judgment, decisive documents that were withheld by the winning party; 
  • if, after the issuance of the decision, it was admitted or decided that the documents based on which the judgment was made were forged;
  • if the judgment was based on an oath or a testimony or the statement of an expert or a translation that were found to be false or forged after the issuance of the judgment;
  • if the judgment was based on a previous judgment which was subsequently overturned, amended or reversed.

It is to be noted that filing for retrial does not suspend the enforcement proceedings unless the competent court orders otherwise.

Pursuant to Article 567 LCCP, a judgment is enforceable when it is rendered with the mention “immediately enforceable” or when it may no longer be challenged through objection or appeal or when it is established that an objection or an appeal were not filed during the legal period. In rare cases, judgments are unenforceable because they contain contradictory rulings or because the subject matter is no longer applicable or otherwise. These are exceptional cases and should be treated on a case-by-case basis.

There is no available centralised and computerised database or register listing all judgments rendered by all the courts in Lebanon.

However, each court in charge of a specific matter holds a paper-based registry listing all judgments issued by it, in chronological order and referring to the names of the disputed parties, the registration number of their files and the reference number of the judgment. This registry is usually handled and kept by the clerk assisting each court. It may be checked at court manually.

According to Article 1009 LCCP, all judgments rendered in the name of a sovereignty other than the Lebanese sovereignty, are deemed to constitute “foreign judgments”.

The enforcement of foreign judgments in Lebanon is governed by (i) articles 1009 to 1022 LCCP, in addition to (ii) international treaties and conventions ratified by the Lebanese State.

Lebanon has either ratified or signed several conventions and international treaties relating to enforcement of foreign judgments, for example:

  • The Judicial Convention between Lebanon and Italy, signed on 10 July 1970 and ratified by law dated 17 May 1972.
  • The Convention for the Mutual Judicial Assistance and Enforcement of Judgments and Extradition Between Lebanon and Tunisia, signed on 28 March 1964 and ratified by law dated 30 December 1968.
  • The Convention Concerning the Enforcement of Judgments Between Lebanon and Kuwait, signed on 25 July 1963 and ratified by law dated 13 March 1964.
  • The Judicial Agreement between Lebanon and Jordan, signed on 31 August 1953 and ratified by the law dated 6 April 1954.
  • The Judicial Agreement between Lebanon and Syria, signed on 25 February 1951 and ratified by law dated 27 October 1951.
  • The Arab Agreement for Judicial Cooperation, signed by members of the League of Arab States on 18 February 1953 – Lebanon signed but did not ratify.

For a judgment to be enforced in Lebanon, it must first be granted exequatur by the competent Lebanese court.

However, and even prior to obtaining exequatur, the foreign judgment may be used before the Lebanese courts as evidence or as a basis for conservatory measures such as putting inscriptions on real estate records, legal guardianship, provisional seizures and garnishment (attachment of property in the possession of a third person).

It is also worth noting that the Lebanese judge may, while reviewing a case, recognise the effects of a foreign judgment when invoked before him/her, so long as the conditions set by the LCCP for granting exequatur are met.

The LCCP has a specific approach to foreign judgments relating to capacity, personal status and foreign judgments rendered ex parte. Indeed, as per Article 1012 LCCP, these will produce effect in Lebanon de jure without the need for exequatur provided they are not subject to dispute. However, should these judgments entail adding or correcting or removing information related to personal status records, then a request for exequatur should be made prior to proceeding with their enforcement.

It is worth mentioning that criminal judgments are subject to the provisions of the Lebanese criminal procedure law and the international criminal law treaties and provisions. The present article does not address the enforcement of criminal judgments except with respect to the obligations of civil nature contained therein. (Article 1011 LCCP).

The LCCP did not expressly exclude a certain category of foreign judgments from enforcement; however, the law has set conditions that must be met so that the foreign judgment may be enforced. These are addressed in 3.4 Process of Enforcing Foreign Judgments below. As a general rule, foreign judgments that have not acquired “authority of a final and irrevocable judgment” (res judicata) and enforceability in the issuing foreign country may not be enforced in Lebanon. Lebanese courts would grant exequatur even to interim/temporary decisions and ex parte decisions that have become enforceable in the issuing foreign country.

As mentioned above, enforcing a foreign judgment in Lebanon, starts by granting it 'exequatur' by the relevant Lebanese court.

In order to be granted exequatur, the foreign judgment must comply with the following cumulative conditions set out by Article 1014 LCCP.

  • The foreign judgment must have been issued by competent judges in accordance with the law of the foreign issuing country, provided that their competence is not solely determined based on the nationality of the claimant. In the event that two foreign judgments are rendered by two different sovereignties concerning the same subject and the same parties, the exequatur will be granted to the judgment which complies with the Lebanese rules relating to international competence.
  • The foreign judgment must have already obtained 'authority of a final and irrevocable judgment’ (res judicata) and enforceability in the foreign country. However, exequatur may be granted to interim/ temporary decisions and ex parte decisions if they have become enforceable in the foreign country.
  • The condemned must have been notified of the lawsuit in the context of which the foreign judgment was rendered and its rights of defence must have been ensured.
  • The foreign judgment is rendered in the name of a state which laws permit the enforcement of Lebanese judgments on its territory after due examination or exequatur (the principle of reciprocity).
  • The foreign judgment does not contain anything contrary to public order.

The process of submitting the exequatur request is mainly described in articles 1013 and 1017 LCCP.

Put briefly, the exequatur request for a foreign judgment is submitted ex parte, to the President of the competent Civil Court of Appeal. The competent appeals court is determined based on the respondent’s domicile or residence, or the location of the assets to be seized. Alternatively, the President of the civil Court of Appeal of Beirut would be competent.

The exequatur request must be filed by a lawyer admitted to practice in Lebanon and the following documents should be submitted with the exequatur request:

  • a true copy of the foreign judgment fulfilling all validity conditions according to the issuing foreign country;
  • the documents proving that the foreign judgment has gained enforceability according to the issuing foreign country (res judicata);
  • a certified copy of the particulars of the claim filed against the party that did not attend the trial, and the act evidencing the notification of the trial papers if the award was rendered in absentia;
  • a certified and legalised translation of all above documents into Arabic in compliance with the Lebanese law;
  • an authentic power of attorney in the name of the lawyer filing the exequatur request.

It is to be noted that the foreign judgment and all documents forming part thereof, in addition to the Power of Attorney appointing the Lebanese lawyer must be legalised by the Lebanese consulate in the foreign country, and subsequently by the Lebanese Ministry of Foreign Affairs.

The President of the Civil Court of Appeal shall either accept or reject the request. In both events the decision may be challenged as shall be detailed further below.

Once the exequatur is obtained, the foreign judgment may be enforced in the same manner as domestic judgments. As mentioned above in 2.2Enforcement of Domestic Judgment, the typical forced enforcement measure that the creditor would seek is the “executory seizure” of the debtor’s assets placing them under court custody and eventually selling them in public auction under the authority of the court.

As mentioned above, prior to enforcement, a foreign judgment must first be granted exequatur. As detailed above, exaquatur and enforcement are separate proceedings made before different judicial courts. We will first outline the costs involved in the context of obtaining the exequatur then the costs involved in the context of enforcement and the approximate time each proceeding would typically entail.

Costs

Exequatur

Typically, exequatur proceedings entail court taxes, legalisation and translation costs.

According to articles 12 and 13-21 of the Law on Judicial Taxes, dated 10 October 1950, exequatur proceedings are subject to a flat rate tax.

In general, the exequatur court fees and expenses would be between a few hundred US dollars and USD1,000.

Enforcement

Enforcing foreign judgments is subject to the same costs applicable to enforcing domestic judgments, as outlined above in 2.3 Costs and Time Taken to Enforce Domestic Judgments.

Timeframe

In general, the first step of the exequatur is a straightforward procedure. After its due submission the file is usually transferred to the President of the Court of Appeal. Then, the President will issue a decision granting or rejecting the exequatur request; or possibly an interim decision requesting further information and documents.

The President’s decision denying exequatur is subject to challenge before the Court of Appeal within a 15-day period.

The decision granting the exequatur, is subject to appeal within 30 days from its notification to the debtor/defendant. However, in practice, and because the exequatur decision is granted ex parte, the creditor will start the enforcement proceedings prior to any notification to the debtor. Hence, in general, the debtor will be notified of the exequatur decision and the enforcement proceedings at the same time. This is when the debtor would generally appeal the said exequatur decision and attempt to halt enforcement of the foreign judgment. We address these separately as they will usually run in parallel before different courts.

The exequatur appeal proceedings before the court of appeal are subject to the general rules applicable to appeal. In general, the appeal decision is rendered within a few months; however, we have seen proceedings extending much longer. The appeal decision is itself subject to general rules of challenging appeal decisions (cassation, retrial and third-party objection). This would further extend the timeframe needed to enforce the foreign judgment.

As for enforcement, the seizure order could be obtained in one day; however, the attachment and foreclosure proceedings resulting in the actual realisation of the debt are much longer and depend on the particulars of the case. We have seen debtors pay the debt within the five-day period set by the executive bureau, and others challenging all possible proceedings; in which case, the enforcement proceedings could extend for several months and even years.

In general, the most efficient option to enforce a foreign judgment is to first obtain an ex parte provisional seizure on the identified assets. This has the advantage of surprising the debtor (as the decision is rendered without prior notification).

Pursuant to Article 1019 LCCP, during the consideration of the exequatur request by the relevant judicial authority, the parties may submit motives and defence arguments that would have occurred after the issuance of the foreign judgment.

As mentioned above, the exequatur decision may be challenged by the aggrieved party within 30 days from the date of its notification or from the date of notification of any of its enforcement proceeding (Article 1013 LCCP). In turn, the decision rendered by the court of appeal is subject to general rules of challenging appeal decisions (cassation, retrial and third-party objection).

Unless the judge issues the exequatur decision with “immediate enforceability”, the foreign judgment’s enforcement will proceed only after expiry of the objection period, and the enforcement will be halted if an objection was filed within the said objection period.

The Lebanese courts will refuse to review the foreign judgment on the merits, except in limited situations and if one of the following conditions is met (Article 1015 LCCP):

  • if it is established that the judgment was issued on the basis of documents considered or declared false after its issuance;
  • if, after the issuance of the judgment, conclusive documents were unveiled and which submission was prevented because of one of the parties;
  • if there is a contradiction in the enacting terms of the foreign judgment;
  • if it is established that the laws of the foreign country require the reconsideration of the merits of the Lebanese judgments before granting them exequatur.

Article 1016 LCCP provides that Lebanese courts must deny exequatur to the foreign judgment in the following cases:

  • if the same dispute between the same parties was subject to a final judgment rendered by the Lebanese courts;
  • if, prior to filing the foreign lawsuit, a lawsuit had been previously filed and still pending before the Lebanese courts for the same subject matter and between the same parties.

Arbitration in Lebanon is mainly governed by the arbitration chapter of the LCCP which is inspired from French arbitration laws (articles 726 to 821 as amended, notably by virtue of Law No 440, dated 29 July 2002). In addition to the liberal provisions of the LCCP, Lebanon is also party to various arbitration-related conventions and treaties.

Indeed, Lebanon is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, on the basis of reciprocity. As such, arbitration awards rendered in the territory of another state that is party to the Convention are recognised and enforced in Lebanon.

Lebanon has also ratified the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID) and has entered into various bilateral investment treaties comprising reciprocal arbitration-related provisions including notably ICSID-type arbitrations.

Lebanon is also a member of other arbitration-related conventions such as the Arab League Convention on enforcement of judgments of 1952 and the Amman Arab Convention on Commercial Arbitration.

Article 794 LCCP provides that the arbitral award has the 'authority of an adjudged matter' as of its issuance. This means that the arbitral award produces effects and may be used before the Lebanese courts, even prior to its actual enforcement. When it comes to enforcement and judicial execution in Lebanon, the arbitral award is first granted exequatur in ex parte proceedings. Thereafter, an application is made for the actual execution/enforcement of the 'exequatured' award.

Lebanese law distinguishes between international arbitration and domestic arbitration. The arbitration is international if it involves “the interests of international trade” (Article 809) – regardless of whether the seat of arbitration is in Lebanon or not and regardless of the place of signature of the contract. Lebanese court precedents consistently consider that an arbitration is deemed to be international whenever it involves movement of funds and goods across borders.

Lebanese law adopts a more flexible approach towards international arbitration (as compared to domestic arbitration). Key differences pertain to the validity and evidence of the arbitration agreement (or the arbitration clause) which are more liberal in international arbitration.

For example, Lebanese law does not require a signed written instrument for the valid existence of the international arbitration clause. On the contrary, Lebanese law requires a written document (ad validatem) for the existence and validity of domestic arbitration agreements. Also, when it comes to the annulment of arbitration awards, recourses challenging the international arbitration award are more restricted than those available for challenging domestic arbitration awards.

Lebanese Law recognises arbitration in commercial or civil matters between private contracting parties and/or the State. As for administrative contracts, Article 762 LCCP on domestic arbitration provides that the arbitration clause should be authorised by virtue of a decree issued by the Lebanese Council of Ministers.

Lebanese law excludes specific matters from arbitration. By virtue of articles 762 and 765 LCCP on domestic arbitration, all disputes which may be subject to 'compromise' may be resolved by arbitration if the parties so agree; therefore, disputes that may not be subject to 'compromise' are not arbitrable, and awards rendered in such disputes may not be enforced. Moreover, matters that are subject to the exclusive or imperative jurisdiction of the Lebanese courts are deemed to be excluded from arbitration.

Non-arbitrable matters generally include:

  • personal status and social status matters such as age, nationality, filiation, marriage, divorce – however, financial questions arising from personal status disputes are subject to compromise (Article 1037 of the Lebanese Code of Obligations and Contracts) and as such they are arbitrable solely in that aspect;
  • personal rights such as the right to human dignity, the right to physical integrity, the right to privacy and the right to food – however, disputes relating to financial compensation relating to these matters are arbitrable;
  • succession or inheritance rights, noting that arbitration over inheritance rights is possible if the value of such rights has been determined;
  • criminal matters per se are subject to the exclusive jurisdiction of Lebanese courts – however, it is possible to compromise and arbitrate, in relation to monetary interest arising from issues resulting from a crime;
  • matters of bankruptcy and insolvency are subject to the exclusive jurisdiction of state courts (Article 490 of the Lebanese Code of Commerce);
  • some employment-related matters may not be deferred to arbitration, particularly matters relating to labour accidents and social security disputes;
  • commercial representation contracts – Lebanese Law on commercial representation provides that these contracts are subject to the exclusive jurisdiction of Lebanese courts; however, the Lebanese courts have recently adopted a more lenient approach accepting arbitration in commercial representation under specific circumstances.

As mentioned above, enforcement of arbitration awards is a two-stage process: the first step is obtaining exequatur of the award in ex parte proceedings; once the exequatur is obtained, the domestic, foreign or international arbitral award may be enforced following similar procedural rules as applicable to domestic judgments.

Exequatur

The proceedings of exequatur are ex parte (Article 795 LCCP). Therefore, it is generally beneficial to file for exequatur (ex parte) and obtain in parallel an ex parte provisional seizure on the debtor’s assets. This has the advantage of obtaining exequatur without alerting the debtor and, as such, pre-empting the debtor’s disposal of their assets.

The original award (or a certified true copy if the award is rendered outside Lebanon) is deposited with the competent Court of First Instance either by one of the arbitrators or the interested party.

The competent court is either the court of the agreed seat of arbitration or otherwise the Beirut court (Article 793 read in conjunction with Article 770-2, and Article 815 LCCP).

It is to be noted that in civil and commercial matters, exequatur requests are filed before the Court of First Instance, while in administrative disputes, exequatur is granted by the President of the State Council (Article 795 LCCP).

The exequatur request should comprise the following documents (articles 793, 814 and 815 LCCP):

  • the arbitral award (or a certified true copy if the award is rendered outside Lebanon);
  • the arbitration agreement or a certified true copy thereof;
  • a certified translation of the above documents into Arabic.

For international arbitration awards, the Lebanese court looking into the exequatur request, will principally verify the existence of the award and it will verify that said award does not blatantly violate international public policy. As shall be more fully set out below in 4.6 Challenging Enforcement of Arbitral Awards, court decisions granting exequatur are not appealable except when it comes to exequatur of international arbitration awards held outside Lebanon. Even then, the appeal is strictly limited to specific grounds.

Enforcement/Execution of the Exequatured Arbitral Award

Once the exequatur obtained, the domestic, foreign or international arbitral award may be enforced through the Executive Bureau following the same rules applicable to execution/enforcement of judgments, as detailed in 2.2 Enforcement of Domestic Judgments above and 2.5 Challenging Enforcement of Domestic Judgments ('Objection Relating to the Proceedings of Enforcement') above.

At this stage, the defendant (or the losing party against whom the award is being enforced), would either comply with enforcement or it may file a recourse challenging the award itself and/or its enforcement through the available recourses, depending on whether the award is domestic, international or foreign (see 4.6 Challenging Enforcement of Arbitral Awards,below).

Exequatur

Typically, exequatur proceedings entail court taxes, legalisation and translation costs.

According to articles 12 and 13-21 of the Law on Judicial Taxes dated 10 October 1950, exequatur proceedings are subject to a flat tax. In general, the exequatur court fees and expenses would be between a few hundred US dollars and USD1,000, depending on the number of pages to be legalised and the cost of notifying the defendant.

The exequatur is in general a straightforward procedure. After its due submission the file is transferred to the Court of First Instance or the President of the State Council (in the context of administrative disputes). The court renders the decision within few weeks.

Enforcement/Execution with the Executive Bureau

Enforcing arbitral awards is subject to the same costs applicable to enforce judgments. As for the timeframe of the actual execution and enforcement of the exequatured award, this will vary depending on the challenges or appeals filed and is generally similar to the timeframe of enforcement of judgments (see above, 2.3 Costs and Time Taken to Enforce Domestic Judgments).

The options available to challenge enforcement of arbitral awards vary depending on the nature of the arbitral award – ie, whether it is rendered locally in a domestic arbitration, or whether it is an international arbitration held in Lebanon, or a foreign international arbitration which seat is outside Lebanon.

From a practical perspective, it is helpful to consider these challenges depending on the arbitral award enforcement stages (exequatur and actual enforcement).

Exequatur Decisions

As mentioned above, the exequatur decision is ex parte. If the court denies exequatur, the plaintiff/creditor may appeal it within 30 days from its notification (articles 806, 816 and 818 LCCP).

The court decision granting exequatur of domestic awards or international awards rendered in Lebanon is not subject to any recourse (articles 805 and 819 LCCP). However, a court decision granting exequatur to an international foreign award (ie, international arbitration award rendered outside Lebanon), is subject to appeal only on one of the following restricted grounds set out under Article 817 LCCP:

  • if the award is rendered without an arbitration agreement or on the basis of an agreement that is null or void or due to the expiry of the time limit set to render the award;
  • if the award is rendered by arbitrators not appointed in accordance with the law;
  • if the award exceeds the scope of the arbitrators’ mission.
  • if the award is rendered in violation of the parties’ rights of defence;
  • if the award violates a rule of international public policy.

Any appeal against the exequatur decision that is filed after the 30th day following its notification, shall be rejected (Article 818 LCCP).

Finally, it should be noted that court decisions granting exequatur of domestic awards and international arbitration awards rendered in Lebanon are not themselves subject to appeal; however, appealing the arbitral award or filing a lawsuit to set it aside entails de facto a challenge to exequatur and the judge looking into exequatur will cease looking into the matter (Article 805 LCCP).

Once the exequatur decision obtained, the creditor will start the enforcement proceedings. This is when the debtor would generally challenge the award and/or its enforcement (given that exequatur is granted ex parte). These challenges differ depending on whether the award is rendered in a domestic arbitration or an international arbitration.

Domestic Awards

The domestic arbitral award is not subject to the 'opposition recourse'. However, it may be challenged by appeal unless the parties had waived the right to appeal in the arbitration agreement.

The arbitral award rendered by amiable composition shall not be appealable unless the parties expressly reserved this right in the arbitration agreement.

Despite any agreement to the contrary and even where the parties have waived their right to appeal the award (or have not expressly reserved this right in amiable composition), the parties will still have the right to file for the annulment/setting aside of the arbitral award (Article 800 LCCP). The grounds for such lawsuit are limited to the following:

  • if the award is rendered in the absence of an arbitration agreement or on the basis of an agreement that is void or time-barred – note that lawsuits seeking annulment of arbitration clauses entered by the Government or the Lebanese Administration, for 'excess of power', remain within the exclusive jurisdiction of the Lebanese administrative courts;
  • if the award is rendered by arbitrators not appointed in accordance with the law;
  • if the award exceeds the scope of the arbitrators’ mission;
  • if the award is rendered in violation of the parties’ rights of defence;
  • if the award does not include all mandatory particulars related to the parties’ relief sought, the supporting grounds, the names of the arbitrators, the reasoning or motives of the award and its enacting terms (dispositive) and the date and signature of the arbitrators;
  • if the award violates a rule of public policy (public law and order – 'ordre public').

The request to set aside the arbitral award and the appeal against arbitral awards should be submitted to the Court of Appeal where the award was rendered within 30 days from notification of the exequatur decision (Article 802 LCCP).

The decision rendered by the Court of Appeal is not subject to opposition but is subject to cassation according to the cassation general rules; however, the arbitral award rendered by amiable composition shall not be subject to cassation except where the Court of Appeal has decided to set aside the award (Article 804 LCCP).

The arbitral award is subject to re-trial pursuant to the general rules applicable to re-trial of court judgments; see2.5 Challenging Enforcement of Domestic Judgments ('Objection Relating to the Substance of the Judgment') above. The re-trial objection is submitted to the relevant court of appeal and the latter’s decision is subject to cassation and third-party objection (Article 808 LCCP).

International and Foreign Arbitral Awards

International arbitral awards are subject to the annulment/setting-aside recourse. Article 819 LCCP provides that international awards rendered in Lebanon may be annulled/set aside on the same grounds applicable to the recourse against exequatur decisions of foreign arbitral awards, namely:

  • if the award is rendered without an arbitration agreement or on the basis of an agreement that is null or void or due to the expiry of the time limit set to render the award (as mentioned above, annulment of an arbitration clause entered by the Lebanese Government, for 'excess of power', remains within the exclusive jurisdiction of the Lebanese administrative courts);
  • if the award is rendered by arbitrators not appointed in accordance with the law;
  • if the award exceeds the scope of the arbitrators’ mission;
  • if the award is rendered in violation of the parties’ rights of defence;
  • if the award violates a rule of international public policy.

The request for setting aside the international award rendered in Lebanon is filed with the court of appeal where the award was rendered and shall not be admitted if filed after the 30th day from notification of the exequatur decision (Article 819 LCCP).

Finally, it is to be noted that, according to Lebanese court precedents, an international arbitral award rendered outside Lebanon and set aside at the seat of arbitration may still be recognised and granted exequatur in Lebanon. This is based on the premise that local courts have the discretion to independently assess the grounds for annulment when a request for recognition and exequatur of a foreign award is sought.

ASAS LAW, AbdelSater AbuSamra & Associates

170, Museum Street – KALOT Bldg.
Facing Military Hospital
Badaro, Beirut
Lebanon

+961 1 384 556

+961 1 396 303

asaslaw@asaslaw.com www.asaslaw.com
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ASAS LAW, AbdelSater AbuSamra & Associates was founded in 2005. It is a specialist law firm gathering a team of highly experienced lawyers admitted to practice in New York, The Hague and Beirut. ASAS-LAW provides a full range of legal services to leading international and national companies locally and across borders. It is the exclusive representative of ICC-FraudNet, the world's leading asset-recovery legal network working under the auspices of the International Chamber of Commerce. The firm is particularly renowned for handling complex transactions, M&A, financing and structuring, notably in energy, oil and gas, infrastructure and the industrial sectors. It has a high reputation in international and national arbitration, mediation and litigation. In addition to the lawyers from both civil and common law systems, the litigation and arbitration team includes engineers, financiers, accountants and other technicians, giving ASAS-LAW an edge in complex litigations. The firm takes pride in having the highest professional and ethical values.

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