LEBANON RESORTING TO INTERNATIONAL ARBITRATION

     LEBANON RESORTING TO INTERNATIONAL ARBITRATION

Author: Arushi Sharma, NLU, Shimla

Abstract

Lebanese President Michel Aoun this year expressed that he would not mind resorting to arbitration if the country fails to reach at a fair agreement with Israel regarding maritime border demarcation. Arbitration is quite common in Lebanon, in fact, Lebanon is one of the friendliest countries in the Middle East for arbitration. In principle, all disputes can be submitted for arbitration in Lebanon. Arbitration proceedings fall within the ambit of Code of Civil Procedure and article 309 of the Code provides that arbitration is international if it involves the interests of international trade and of course, mutual consent of the parties to the agreement. The talks between Israel and Lebanon started in 14th October 2020.

Strained ties between Lebanon and Israel can be traced back to the year 1973 in April when Israel raided on Lebanon, which was seen as a retaliation for the Munich massacre at the Summer Olympics in 1972. On 17 October 2019, Lebanon experienced a major upheaval which led to closure of the banking sector for two weeks and the Beirut explosion of August 2020 was an addition to the ongoing financial crisis. This situation has opened doors for arbitration in this age of pandemic. Investors and the banking industry people are knowingly adding arbitration clauses in their agreements as it gives them an opportunity to choose the arbitrator and these proceedings maintain the confidentiality as well. In fact, some legislations regarding public-private partnerships and oil and gas investments further promote the use of arbitration as a primary source of dispute resolution against the state. Lebanese Arbitration Center of the Chamber of Commerce and Industry and Agriculture of Beirut and Mount Lebanon is the main governing body for domestic as well as international arbitration. [1]

Article 770 of the Civil Procedure provides that arbitrators may be challenged on the same grounds as the judges. Article 771 if the Code provides that the number of arbitrators should be an odd one or otherwise it would be considered invalid and article 768 provides that an arbitrator must be a natural person, having full capacity to exercise his/her civil rights and must not be insolvent. The Lebanese Law does not provide anything about the way these proceedings are to be conducted.  Article 779 provides that an arbitrator can hear witnesses without requiring him to give evidence under oath. [2]

Lebanon has been the host to a number of Arbitration Conferences which raises the Middle Eastern nation’s profile in the International Arbitration community. In industries like banking and finance, real estate, franchising, construction and telecommunications arbitration is the only mode of dispute resolution. Article 1037 of the Code provides the matters which may not be subject to this particular mode of dispute resolution:

  • marriage, child custody and inheritance
  • public policy issues
  • personal rights that are not in trade

The Code does not provide for the qualification of the arbitrators so, the parties have the liberty to pick anyone they want to. The rule of odd number of the arbitrators does not apply in case of international arbitration which is clearly provided in article 810. If a party has the right to challenge the arbitrators and does not do so within the stipulated time its right to challenge stands waived. Article 769(2) compels the arbitrators to disclose any information which might put a question mark on their impartiality in the future. Lebanese law remains strangely silent with respect to recourse against partial arbitral awards.

Arbitrators are also expected to conduct proceedings through to completion, unless there is a legitimate reason not to do so (Article 769(3) of the NCPC). Arbitrators are also expected to render the final award within the fixed timeframe and within the terms of their mandate as provided in article 817 of the Code. The Code operates as per the principle of ‘no one can create proof for himself/herself’. Witnesses are rarely questioned by the lawyers and only by the judges owing to the inquisitorial nature of the system. Arbitrators do not have coercive powers in Lebanon and same goes for compulsion, and they cannot order a witness to attend a hearing, for that they have to rely on the State Courts’ assistance and impose penalties (Article 779(3)). The arbitral tribunals have the discretion to issue any decision available under the law, but they cannot award punitive damages. Decisions in case of international arbitration can be challenged by way of application of annulment contrary to domestic arbitration where decisions can be challenged by way of appeal. But an order rendered outside Lebanon can be challenged by way of appeal even if it is international in nature. This application may be filed within 30 days of the issuance of the award or within the time frame of its recognition and not after that. [3]


Reference:

[1]Arbitration in Lebanon: an overview, available at: https://www.lexology.com/library/detail.aspx?g=14f86c4d-e2a0-4169-bb82-a952b4f02e04

[2]Arbitration in Lebanon, available at:

https://www.international-arbitration-attorney.com/arbitration-in-lebanon/#:~:text=Arbitration%20in%20Lebanon%201%20Historical%20Background%20Of%20Arbitration,Arbitration%20Awards%20in%20Lebanon.%20…%2010%20Costs.%20

[3]Law and Practice , available at : https://practiceguides.chambers.com/practice-guides/international-arbitration-2020/lebanon

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