On 1 July 2025, the Lebanese central bank, Banque du Liban (“BdL”), issued Basic Decision No. 13729 (the “Decision”), which purports to restrict the ability of all banks operating in Lebanon to pay funds from foreign currency accounts created prior to 17 November 2019, save in certain circumstances.
Article 1 of the Decision provides in material part that:
…all banks operating in Lebanon are requested to refrain from repaying, without BDL prior written approval, any amounts exceeding the ceilings specified in BDL regulatory texts, from the foreign-currency accounts constituted prior to 17 November 2019, whether held at the concerned bank or transferred thereto after that date.
The rationale for the measure – namely the banking crisis in Lebanon – is explained in the preamble to the Decision and has been written about in previous articles we have published:
- Claims against Lebanese banks in the UK courts – can I bring a claim?
- Lebanese Financial Crisis: English High Court rules in favour of depositor by ordering the Bank of Beirut to make an international transfer of c. US$7 million plus interest
As noted in previous articles, there have now been several successful claims against Lebanese banks in England, whereby depositors have succeeded in having their funds transferred abroad. Such claims have resulted in orders for specific performance, requiring the banks to make international transfers, which have been complied with. The purpose of the Decision is to try and restrict such transfers.
It is relevant to note that this is a BdL Decision, not legislation, and at no time since the financial crisis erupted in October 2019 have capital controls been enacted by the Lebanese government. Although draft legislation has been proposed and debated on several occasions since October 2019, it has not passed.
Previous BdL circulars have purported to impose restrictions, but courts (as discussed below) – have held that, in the absence of legislation, such measures have not interfered with otherwise enforceable legal obligations to make transfers – even if Lebanese banks have asserted otherwise.
It remains to be seen how the Decision will be interpreted by courts when deciding whether banks are obliged to make international transfers going forward. The following decisions of the English High Court, which pre-date the Decision and were decided applying Lebanese law, are relevant, insofar as any UK claims are concerned:
- In Khalifeh v Blom Bank SAL [2021] EWHC 3399 (QB), Mr Justice Foxton held as follows at [131-132]:
“…it is important to note that, at least on the evidence before me, the restrictions imposed on banks in relation to payments out of foreign currency accounts have not taken the form of legislative provisions which directly affected the contractual relationships between banks and their customers. Rather, banks have been subject to informal regulatory pressure in the form of circulars addressed to them by the BdL or the Association of Banks. The position is, in my view, well-summarised by a decision of the Judge of Summary Procedure sitting in Zahle (Decision no 5 dated 13 January 2020, Mohammad Ismail Abdelrahman v Banque Credit Libanais SAL) where the judge noted:
“The aforementioned circulars do not have any binding capacity towards the clients and it is not possible in any way to limit their right to carry out any banking operation that meets the accepted banking conditions within the laws and regulations … Any Capital Control by the Association of Banks needs legislation and this is not the case in Lebanon to date, noting that no circular was issued by the Central Bank of Lebanon represented by its Governor aiming to impose such restrictions … Such measures require exceptional powers to be granted to the [BdL] pursuant to a specific regulation.”
The result is that, whatever regulatory pressure it may be under, the Bank has sought to defend this claim before me in reliance on the pre-crisis provisions of Lebanese law, rather than by reference to any emergency legislation.”
- In Manoukian v Société Générale de Banque au Liban SAL [2022] EWHC 669 (QB) Mr Justice Picken held as follows at [24-25] (emphasis added):
“The Association of Lebanese Banks (the ‘ABL’) began developing a harmonised policy on international transfers, which was formally released on 17 November 2019 (the ‘ABL Circular’). The ABL Circular directed that transfers abroad were to be limited to urgent personal expenses and set out maximum recommended levels of transfers abroad. Whilst the ABL Circular did not have legal force, it was adopted by the banking sector to achieve a fair and consistent approach across the sector and protect the banks’ shrinking foreign currency liquidity. The publication of the ABL Circular, and the stationing of police officers near each bank branch to ensure employees’ safety, helped calm the immediate situation and bring the Lebanese bank employees’ strike to an end. Over the following months, the Banks each began to tighten their policies and transfer limits as it became plain that the crisis was not transient, and in accordance with subsequent BdL Circulars (BdL Circulars 150, 151, 153 and 155). Each of BdL Circulars 150, 151, 153 and 155 stipulates the amounts and specified purposes for which Banks are required to permit clients to transfer overseas, primarily in respect of Lebanese students abroad. The Banks’ case was that implicit in these Circulars is the acknowledgement that banks are not obliged to provide international transfer services in amounts or for reasons other than those stipulated”.
Mr Justice Picken went on to find that, notwithstanding arguments to the contrary, Société Générale de Banque au Liban SAL was obliged to comply with the claimant’s request for an international transfer.
- In Bitar v Bank of Beirut SAL [2022] EWHC 2163 (QB) Mr Justice Freedman cited and adopted [131] of the judgment of Mr Justice Foxton in Khalifeh v Blom Bank SAL (referred to above) and held as follows at [144]:
It follows from the discussion above that the Bank has failed to establish that there was a change in the custom. A circular of the ABL was not sufficient to end a custom or to create a new custom. There was no evidence of constant practice. There was no evidence of sufficient acceptance of it from customers of Lebanese banks or outside the banking community in Lebanon.
- In Bitar v Banque Libano-Française SAL [2023] EWHC 17 (KB), Mr Justice Kerr held as follows at [48] (emphasis added):
I accept Mr Raphael’s uncontradicted evidence, though not supported by any contemporary document, that he told Mrs Bitar the Bank would only make transfers to cover urgent expenses due to the difficult situation in Lebanon, the restrictions “imposed” by the BDL and the policy agreed by the ABL. However, the BDL and the ABL had not “imposed” these restrictions in any legal sense. I accept that he told Mrs Bitar that the Bank had to treat all its customers fairly.
UK judges will be guided by the decisions of Lebanese courts when interpreting the Decision. The approach of the courts to date when interpreting prior measures introduced by the BdL and Association of Lebanese Banks has been to find that, in the absence of legislative capital controls, such measures have not interfered with otherwise enforceable legal obligations to make international transfers, even if Lebanese banks have sought to argue otherwise.
Branch Austin McCormick is advising clients in relation to the Lebanese financial crisis. Joseph McCormick of Branch Austin McCormick brought the first claim to successfully establish jurisdiction against a Lebanese bank before the English courts, as well as other claims since.
To discuss bringing a claim or for further information on the issues raised in this article, please contact Joseph McCormick or Tatyana Talyanskaya at: