June 13 2013
Effective and transparent dispute resolution methods are as imperative in Lebanon as they are in any other jurisdiction. Regardless of economic, political and social circumstances – from the financial crises to the knock-on effects of the Arab Spring – there is international consensus that disputes arising from cross-border commercial transactions are best settled by arbitration. This understanding is based on the fact that arbitration enables parties from different countries to resolve disputes in a neutral forum, isolated from what could best be described as a complex judicial maze of a foreign procedure.
It is well established that the ultimate aim of this mechanism, unlike most other forms of dispute resolution, is to arrive at a legally binding and enforceable decision in the form of an award. Accordingly, arbitration will be regarded as a viable alternative to national court proceedings only if the arbitral award can and will be enforced with the same or equivalent effect of a state court judgment. National legislation, ratification of international conventions and the stance on arbitration adopted by the local courts are all factors that play major roles in favouring the recognition and enforcement of arbitral awards.
The principal instrument governing the recognition and enforcement of awards in Lebanon is the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which Lebanon acceded on November 9 1998, albeit with a reservation of reciprocity.
In addition to the New York Convention, the provisions applicable to the recognition and enforcement of foreign(1) or international awards in Lebanon are found in the Lebanese Code of Civil Procedure.(2) Under the code, a clear distinction exists between domestic and international arbitration. The articles applicable to international arbitration are Articles 809 to 821.(3) According to Article 809 of the code, an arbitration is considered to be international when it involves the interest of international trade.
At the enforcement stage, a Lebanese judge will not review the merits of the case, but will decide whether the foreign or international arbitration award should be granted an exequatur. An exequatur, which seeks recognition of a foreign or international award in Lebanon, is generally obtained through ex parte proceedings. In such ex parte proceedings, the judge will verify only the existence of the award and whether it manifestly violates international public policy.(4) Once these conditions have been satisfied, the award is generally recognised and an exequatur is granted. However, a Lebanese judge may also verify whether the award covers matters that cannot be settled by arbitration under Lebanese law before granting an exequatur. These matters may include questions of employment contracts and social security, which fall directly under the exclusive jurisdiction of the state courts or the Labour Arbitration Board.
In support of a pro-arbitration enforcement regime, the code distinguishes between the recourse available to decisions that deny recognition or enforcement of an international award and those that allow it.
A decision denying recognition or enforcement of a foreign award rendered outside Lebanon, or of an international award, is subject to appeal.(5) However, appeal against a decision granting recognition or enforcement is limited to the following circumstances set out under Article 817 of the Code of Civil Procedure:
It is important to note that unlike those decisions granting exequatur for a foreign award rendered outside of Lebanon, a decision granting exequatur for an international award rendered in Lebanon itself is not subject to any recourse.(6) However, an application may be made to the court of appeal to set aside such an award on the grounds set out in Article 817 of the Code of Civil Procedure (cited above). This procedure necessarily involves the reversal of any decision granting exequatur. Nonetheless, the trend of the Lebanese courts is to ensure the enforceability of international arbitral awards by avoiding abusive appeals. Thus, as a general rule, the courts will protect the integrity of the arbitral process and grant an exequatur if such an award does not manifestly violate international public policy.(7)
For further information on this topic please contact Dalal Al-Houti or Zeina Obeid at Obeid Law Firm by telephone (+961 1 39 39 06), fax (+961 1 39 39 06 Ext 5) or email (email@example.com or firstname.lastname@example.org).
(1) That is, awards rendered outside of Lebanon.
(2) The arbitration provisions in the Code of Civil Procedure were enacted by Decree-Law 90/83, with amendments from Law 440/2002.
(3) Articles 793 to 808 of the Code of Civil Procedure apply to the recognition of awards in domestic arbitration.
(4) Article 814 of the Code of Civil Procedure, which also sets out the elements required to prove the existence of an award.
(5) Article 816 of the Code of Civil Procedure.
(6) Article 819 of the Code of Civil Procedure.
(7) Article 814 of the Code of Civil Procedure.
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