Arbitration in Lebanon

Historical Background Of Arbitration In Lebanon

Arbitration in Lebanon is common, and Lebanon is considered to be one of the friendliest countries for arbitration in the Middle East. The Lebanese legislation on arbitration is modern, meaning that it recognizes all well-established principles in international arbitration. In many respects, it is similar to the French law of arbitration.

In principle, all disputes can be submitted to arbitration in Lebanon. Article 762 of the Lebanese Code of Civil Procedure (“CCP”) provides that “contracting parties may insert in their commercial and civil contracts a clause providing that all disputes that may arise from the validity, performance or the interpretation of their contracts will be settled by way of arbitration.”

However, there are some exceptions to this Article. In fact, there are some disputes that are a subject to the exclusive jurisdiction of State courts. These include:

1) Questions of personal status, social status and questions of capacity.
2) Non-negotiable personal rights such as the right to human dignity physical integrity, privacy and food-allowance.
3) Rights of succession.
4) Questions of public policy, which include all matters considered by law as guaranteeing social, economic and political interests.
5) Questions of insolvency (Article 490 of the Code of Commerce).
6) Questions of employment contracts and social security.
7) Contracts for commercial representation (Article 5 of Decree Law no .34 dated 5 august 1967; Court of Cassation decision of 17 July 1997).

In principle, Article 773 of the CCP provides that arbitrators should complete their mission within 6 months from the date of appointment of the last arbitrator unless otherwise specified by the parties. This period can be extended by an order from the President of the competent Court of First Instance, however.

Arbitration Proceedings in Lebanon

Arbitration proceedings in Lebanon are governed by the Lebanese Code of Civil Procedure, which are subject to Decree Law 90/83. The CCP devotes an entire chapter to arbitration, drawing a distinction between domestic arbitration (Articles 762 to 808) and international arbitration (Articles 809 to 821).

Article 809 provides that arbitration is deemed international “when it involves the interests of international trade.” This criterion is primarily economic.

In matters of international arbitration, the Republic of Lebanon acceded to the New York Convention on 9 November 1998. It has declared that it will apply the Convention, on the basis of reciprocity, to the recognition and enforcement of awards made in the territory of other contracting States. Lebanese Courts have, in fact, enforced a number foreign arbitral awards under the New York Convention.

Lebanon has also ratified the Washington Convention on 26 March 2003, which entered into force on 25 April 2003. It therefore may be a party to an investment-treaty arbitration under the ICSID, subject to the specific investment commitments that it has entered

Arbitration Agreements in Lebanon

Concerning domestic arbitration, Article 763 CCP provides that the written form of the arbitration agreement is required as a condition of validity (ad validatem). Article 766 CPP provides that in agreements to arbitrate entered into following the occurrence of a dispute, the written form is also required as a condition of proof (ad probationem).

For an international arbitration agreement there is no particular requirement in order to be valid other then the parties’ mutual consent. Article 814 CCP provides that the written form for an arbitration agreement is sufficient to obtain the enforcement of the award.

Arbitration agreements are governed by the principle of privity of contracts, thereby only binding the parties which signed the arbitration agreement. However, Lebanese courts have allowed arbitration agreements to bind non-signatories in the following 2 circumstances:

1) In a chain of contracts, which have the same objectives and which form an economic unity.
2) In some cases involving “group of companies” issues. Lebanese courts have, in some cases, extended the arbitration clause in the main contract to other contracts in the chain by reference to the economic unity of their operations.

Jurisdiction under the Arbitration Law of Lebanon

Article 785 of the CCP expressly recognizes the principle of Kompetenz-kompetenz. Therefore, if a party challenges the jurisdiction of an arbitral tribunal before a local court, under the arbitration law of Lebanon the latter must declare itself incompetent to make a determination. Based on Article 785 CCP, any request submitted to the Lebanese courts to determine an issue relating to an arbitral tribunal’s jurisdiction and competence must be dismissed.

Selection of Arbitrators

Article 770 of the CCP provides that arbitrators may be challenged on the same grounds as judges.

Article 771 of the CCP provides that in all cases there should be an odd number of arbitrators; otherwise, the arbitration will be considered invalid.

Article 768 CCP provides that an arbitrator must be a natural person, have full capacity to exercise his or her civil rights and must not be insolvent.

Interim Measures before Lebanese Courts

Article 789 CCP grants arbitral tribunals the power to order any interim or conservatory measure they consider necessary in light of the nature of the dispute in accordance with Article 589 of the CCP.

The Courts will grant provisional relief in support of arbitration when the arbitral tribunal is not yet constituted. In this case, an application for interim measures should be filed before the competent judge who will hold summary proceedings.

Confidentiality

In practice, arbitral proceedings are considered confidential as long as no legal proceedings before local courts are filled under the arbitration law of Lebanon.

Lebanese law does not deal specifically with the arbitral tribunal’s power to protect trade secrets and confidential information.

Evidence and Hearings

Lebanese law does not provide any express rules as to how the hearings are conducted.

Lebanon is a civil law country, with procedural rules that are similar to those in France. In international arbitration, the techniques of direct examination and cross-examination are commonly used. However, in domestic arbitration, the arbitral tribunal will apply the procedural rules applicable to the testimony of witnesses before local courts unless agreed otherwise by the parties and only when such provisions are not in conflict with the specific provisions set out in the Lebanese arbitration law. Articles 259, 260, 262, 263, 264 and 265 provide a number of restrictions on who can or cannot appear as a witness.

Article 779 CCP makes it clear that arbitrators can hear witnesses without requiring them to give evidence under oath.
Articles 316 and 320 CCP provide that an expert must execute his mission in an honest, trustworthy and impartial manner.

The common practice in domestic arbitrations is for the arbitral tribunal to appoint their own experts.

Arbitration Awards in Lebanon

Article 790 CCP provides that the arbitral award should contain:
1) The name of the arbitrator(s).
2) The date and place of the award.
3) The full names and denominations of the parties and their legal counsel.
4) A summary of the parties’ positions and the evidence provided in support of their respective positions; and
5) The reasons for the award and the dispositive part of the ruling.
Interim or partial awards are enforceable in Lebanon. Article 791 CCP allows dissenting opinions.

Costs

It is usually left to the arbitral tribunal’s discretion to decide whether the unsuccessful party will bear the entire costs. All elements of costs can be awarded, unlike before domestic courts where the shifting of costs is more limited.

– Jana Karam (trainee at Aceris Law LLC)