International Arbitration in Lebanon: Recognition and Enforcement of Arbitral Awards

This analysis focuses on the concluding phase of arbitration proceedings within Lebanon: the recognition and subsequent enforcement of arbitral awards, encompassing domestic, international, and foreign judgments.

Lebanon's arbitration framework is primarily governed by its Code of Civil Procedure (CCP), specifically codified through Legislative Decree No. 90/83. This legislative instrument contains crucial provisions pertaining to both domestic and international arbitration. Domestic arbitration in Lebanon typically adheres to more stringent requirements, whereas international arbitration benefits from greater procedural flexibility, particularly concerning the validity of the arbitration agreement and the permissible grounds for setting aside awards.

Furthermore, Lebanon is a signatory to the New York Convention of 1958, having ratified it on 9 November 1998. This international treaty provides the overarching legal regime for the enforcement of foreign arbitral awards within the Lebanese jurisdiction.

Legal Framework for Enforcement

The enforceability of arbitral awards in Lebanon is determined by the specific type of award and the corresponding legal provisions:

  • Domestic Awards: These are governed by Articles 762–808 of the Lebanese Code of Civil Procedure (CCP).
  • International Awards: These fall under Articles 809–821 of the Lebanese CCP. An award is considered international if the subject matter of the dispute involves more than one country—regardless of whether the arbitration was seated in Lebanon (Article 809 CCP).
  • Foreign Awards: The New York Convention, supplemented by Articles 792–795 and 809–815 of the CCP, governs the enforcement of these awards.

Recognition and Enforcement Procedures

Competent Authorities:

  • Domestic Awards: Applications are handled by the first instance court in the region of the agreed seat, or in Beirut if no seat was agreed.
  • International Awards: The President of the first instance court at the place where the award was rendered is the competent authority.
  • Foreign Awards: For civil and commercial matters, the President of the first instance court in Beirut is competent. For administrative matters, the Council of State handles applications.

Filing Requirements: A party seeking recognition and enforcement must submit:

  • The original award or a certified copy.
  • The original arbitration agreement or a certified copy.
  • Proof of legitimate interest.

Fees and Costs:

  • Judicial fees typically range from 25,000 to 50,000 Lebanese Pounds (LBP).
  • If execution targets assets within Lebanon, the Treasury is entitled to 2.5% of the award's value.
  • Additional stamp duties and legal contributions amount to approximately 1% of the recovered amount.

Proceedings: Recognition is granted through ex parte proceedings, meaning the application is heard without the presence of the opposing party at that initial stage. Parties must be legally represented if the dispute value exceeds 1 million LBP.

Grounds for Annulment or Appeal

Domestic and International Awards: An award may be annulled on the following grounds:

  • Absence of a valid arbitration agreement or expiration of the time limit for rendering the award.
  • Improper appointment of arbitrators.
  • The tribunal exceeded the scope of its mandate.
  • A breach of due process occurred.
  • The award lacks required elements (e.g., reasoning, arbitrators’ names, granted relief, signatures).
  • The award violates Lebanese or international public policy.

Foreign Awards: Recognition of a foreign award can only be challenged if:

  • There was no valid arbitration agreement.
  • The tribunal exceeded its authority.
  • Due process was not observed.
  • Arbitrators were improperly appointed.
  • The award violates international public policy.

Remedies:

  • No remedies exist against a decision granting recognition for domestic or international awards.
  • If recognition is denied, the decision can be appealed within 30 days.
  • The Court of Cassation may hear appeals of Court of Appeal decisions, but only on legal grounds, not on the merits of the case.

Enforcement Timeline and Execution Against Assets

Enforcement becomes effective 30 days after notifying the opposing party of the recognition order. During this 30-day period, the respondent may initiate annulment or appeal proceedings. Execution of the award is suspended if an appeal is lodged within the permitted timeframe.

Currency Devaluation and Enforcement Challenges

Lebanon’s severe economic crisis and the collapse of the Lebanese pound (LBP) have introduced significant uncertainties for award enforcement, particularly for awards denominated in foreign currencies.

  • Official vs. De Facto Exchange Rates: The official exchange rate is set by the Central Bank (e.g., 1,507 LBP per 1 USD), while the de facto (black market) exchange rate is substantially different (e.g., over 35,000 LBP per 1 USD).
  • Despite the existence of multiple exchange rates, Lebanese courts generally apply the official rate, which significantly disadvantages creditors seeking to enforce awards denominated in foreign currencies.

Mandatory Currency Rule: Under Lebanese law:

  • Debts must be paid in Lebanese pounds, even if the underlying contract specifies a foreign currency.
  • This rule is considered a matter of public policy, and courts are required to apply it.
  • For example, a 2020 decision by Judge Mariana Anani held that creditors could not demand payment in foreign currency, reaffirming that LBP is the only acceptable legal tender for enforcement proceedings in Lebanon.

Applicable Exchange Rate: Even if an award specifies payment in USD, courts often apply the official exchange rate of 1,507 LBP/USD, as mandated by Lebanon’s Code of Money and Credit. Although some recent rulings have applied alternative rates, there is currently no consistent judicial approach.

Final Remarks

Lebanon possesses a well-established legal framework for recognizing and enforcing arbitral awards. However, the nation’s ongoing financial crisis has created tangible obstacles for creditors, especially when seeking to enforce awards involving foreign currency. Until legislative reform or consistent case law provides clarity, award creditors should anticipate enforcement in Lebanese pounds at the official exchange rate, irrespective of the currency stipulated in the award.