Abstract
Following the latest resolution of the Excessive Court docket, through which particular efficiency was ordered towards two Lebanese banks in favour of our shopper, Vatche Manoukian, the Court docket has now handed down its totally reasoned judgment.
The judgment in favour of our shopper is groundbreaking in being the primary full deserves judgment in any jurisdiction on the worldwide switch rights of banking clients below Lebanese regulation. That situation is prone to be of very actual curiosity to all clients of Lebanese banks, however significantly those that can convey claims within the UK or EU below client laws.
The Excessive Court docket thought-about whether or not two Lebanese banks on this case had an obligation to impact the worldwide financial institution switch requested by our shopper, Mr Manoukian. The Court docket interpreted the phrases and circumstances of the 2 banks in accordance with Lebanese regulation, and thought of the affect of customized on the contracts with banks.
To find in favour of our shopper, the Court docket held that Mr Manoukian had a proper to a global switch, thus being entitled to an order for particular efficiency. That discovering was primarily based each on the phrases of the contracts but additionally the broader situation of Lebanese banking customized which is integrated into contracts below the Lebanese civil code.
Vatche Manoukian v Société Générale De Banque Au Liban S.A.L and Financial institution Audi S.A.L
Lebanon’s financial disaster stimulated Lebanese banks to introduce restrictions on clients, limiting their means to ship cash out of their accounts. Mr Vatche Manoukian, a twin nationwide of Lebanon and the UK, was one of many depositors impacted by the banks’ introduction of capital management.
In late 2020, we issued a declare towards Financial institution Audi S.A.L, Lebanon’s largest financial institution, and Société Générale De Banque Au Liban S.A.L (SGBL) on behalf of Mr Manoukian within the English Excessive Court docket primarily based on the court docket’s jurisdiction over client contracts entered into by UK residents. We primarily sought an order for particular efficiency requiring the 2 banks to execute the switch requested by Mr Manoukian.
Information and background
On the outset of the disaster, our shopper, Vatche Manoukian, made various written request for Financial institution Audi and SGBL, the place he held accounts, to execute worldwide transfers from these accounts in Lebanon to accounts held exterior of Lebanon.
Mr Manoukian’s foremost declare was that the 2 banks have been contractually obliged to impact the transfers which he had requested. His declare subsequently targeted on the Lebanese contracts and customs, which entitle depositors like Mr Manoukian to instruct banks to execute worldwide transfers in the midst of regular banking preparations.
The banks pleaded that there have been below no obligation to make the switch, whether or not contractually or as a matter of Lebanese customary regulation. Given Lebanon’s financial disaster, the 2 banks argued that they have been entitled to refuse to impact the transfers required by Mr Manoukian, invoking the unsure monetary local weather.
The proceedings came about towards the background of comparable claims towards Lebanese banks. Of explicit relevance was the declare introduced by Mr Bilal Khalifeh towards Blom Financial institution. In defending Mr Khalifeh’s declare, Financial institution Blom argued that it had discharged its debt to Mr Khalifeh by utilizing Article 822 of the Lebanese Code of Civil Process (“LCCP”) (additionally known as the ‘tender and deposit’ process). Underneath this process the debtor (on this case, the financial institution), will search to tender fee within the type of bankers’ cheques after which to deposit these cheques with a notary public in Lebanon.
Within the Khalifeh case, Mr Justice Foxton held that the Article 822 tender and deposit process was efficient in discharging Blom Financial institution’s debt to Mr Khalifeh. Nevertheless, a serious distinction between Mr Manoukian’s declare and Mr Khalifeh’s declare was that our shopper wished to acquire particular efficiency for the written worldwide switch requests he had made, whereas Mr Khalifeh as a substitute introduced a debt declare.
By the judgment, Mr Justice Picken dominated in our shopper’s favour, holding that Mr Manoukian does have the worldwide switch proper that he has asserted, and thus he was entitled to particular efficiency.
Points
The first points earlier than Mr Justice Picken included:
- Whether or not Mr Manoukian had a proper to a global switch below the contract with the banks, as interpreted by reference to Lebanese regulation and customized;
- The affect of the LCCP Article 822 (‘tender and deposit’) process on Mr Manoukian’s declare.
The switch proper situation (1)
Lebanese regulation ruled the contracts between Mr Manoukian and the 2 banks. Mr Justice Picken subsequently utilized Lebanese regulation in decoding the related clauses in relation to the difficulty of whether or not there was an obligation for the banks to impact the worldwide switch. Important Lebanese regulation proof was heard from the events’ appointed consultants.
(a) Normal rules of interpretation below Lebanese Regulation
In decoding the contracts on this case, Mr Justice Picken famous that the Lebanese basic rules of contractual interpretation are similar to these relevant below English regulation.
For instance, the court docket checked out Clause I/A/b/2 of SGBL’s Phrases and Circumstances, which acknowledged that the “account holder has the precise to request SGBL to make any switch to a different account”. In disagreeing with SGBL’s argument that this provision merely entitled the client to ask for a switch, Mr Justice Picken interpreted the clause on the idea of the rule towards surplusage, concluding that that “a proper to ask that there be a switch should entail a proper to that switch being made”.
Equally, the Court docket additionally utilized the precept {that a} contractual clause needs to be interpreted within the gentle of different contractual provisions. The truth that SGBL’s Phrases and Circumstances particularly set out the circumstances the place worldwide transfers could be refused was held to point that these are the solely exceptions, and that, by implication, in every other scenario not caught by the exception the client does certainly have a proper to a global switch.
After concluding that the contracts, accurately interpreted, present for a proper of worldwide switch, Mr Justice Picken thought-about if, and to what extent, customized impacts this interpretation.
(b) Customized as an support to interpretation below Lebanese Regulation
Article 371 of the Lebanese Code of Obligations and Contracts (LCOC) gives {that a} choose should apply established ‘customary provisions’ into the contract, even when these are usually not expressly integrated, except they’re contradicted by the phrases of the contract.
The banks in the end conceded that customized is integrated into the banks’ phrases and circumstances. Nevertheless, they argued that the precise to a global switch granted by customized is just not absolute, however moderately topic to limitations. The banks on this case contended that “the financial institution[s] had a authentic proper to not make the switch”. Our shopper’s case was that whereas the precise is just not absolute, the conditions through which a switch could be refused are restricted (specifically to insufficiency of funds and suspicion of cash laundering).
In assessing the professional proof, Mr Justice Picken most well-liked Mr Manoukian’s professional, Mr Najjar, whose place was that the duty to make the switch is just not topic to the unfastened exception of ‘authentic purpose’. Mr Justice Picken agreed with Mr Manoukian’s case that such a large exception would ‘water down’ down the idea of a global switch proper to such an extent that there could be no obligation in any respect.
Second, the Court docket checked out Lebanese court docket choices. Each consultants agreed, and Mr Justice Foxton confirmed in his judgment in Khalifeh, that there isn’t a doctrine of precedent below Lebanese regulation. The elemental query earlier than Mr Justice Picken was, subsequently, whether or not ‘various fixed rulings’ (as Mr Najjar referred to as them in his professional proof) can represent ‘jurisprudence’ within the sense of a coherent physique of regulation which could be handled as authority. Additional, if the reply was sure, Mr Justice Picken additionally needed to take into account whether or not ‘Pressing Matter Decide’ choices (i.e. instances the place judges grant pressing reduction in emergencies with out figuring out the deserves of the rights and obligations of the events) might fall below the definition of ‘jurisprudence’.
Mr Justice Picken answered ‘sure’ to each questions. He agreed with our shopper’s professional that though (in contrast to English regulation) Lebanese regulation doesn’t have a doctrine of precedent, various fixed rulings can be accorded substantial weight by judges in figuring out what the authorized place is on a given situation. Picken J additional agreed with Mr Najjar that ‘Pressing Issues Decide’ choices could be correctly categorized as jurisprudence and thus be given applicable weight in assessing customized. The primary purpose for this conclusion was that, though these abstract choices are merely involved with granting reduction, a choose can’t grant reduction with out trying into the difficulty of deserves, albeit with out making a binding ruling on it. It was, subsequently, applicable to contemplate these rulings in as far as they have been related for the difficulty of customized.
Mr Justice Picken checked out numerous ‘Pressing Matter Decide’ choices, and the way in which they’ve been interpreted by the Lebanese Court docket of Enchantment and concluded that the customized exists within the kind contended for in our shopper’s case. The fitting to a global switch is just not topic to a ‘authentic purpose’ exception, and banks’ phrases and circumstances needs to be interpreted accordingly.
The LCCP article 822 (tender and deposit) situation (2)
By the point of the top of the trial, the Banks had deserted their case that the LCCP Article 822 course of would serve to negate any prior binding obligation to impact a global switch. In that regard Mr Justice Picken famous “any tender and deposit would wish to match the item of the debtor’s obligation”. Given his discovering that the debtor’s obligation was to impact the worldwide switch as requested by Mr Manoukian, the one conclusion was that partaking the tender and deposit process “entails a mismatch”.
In different phrases, the LCCP Article 822 process could also be efficient in discharging a debt (because it was within the Khalifeh case), however it’s ineffective in discharging the banks’ obligation of effecting the worldwide transfers. The process was subsequently discovered to haven’t any bearing on the query of whether or not an order for particular efficiency needs to be granted, a query which Mr Justice Picken in the end answered in favour of our shopper.
Feedback
The choice is the primary full substantive deserves resolution holding that particular person clients of Lebanese banks have a proper to a global switch because of Lebanese banking customized (topic to their contracts with banks not excluding such a customized).
Every case will activate its explicit phrases and circumstances, however this case involved two of the largest banks in Lebanon and plenty of others will share the identical normal phrases and circumstances as Mr Manoukian.
The case additionally confirms that the LCCP Article 822 tender and deposit process is not any reply to a previous worldwide switch which has been made by a buyer.
Different clients of Lebanese banks who’ve jurisdiction to convey client claims in England and who’ve made worldwide switch requests of their Lebanese financial institution are possible to have the ability to depend on the findings of Mr Justice Picken in bringing their very own instances.
- Court docket: Excessive Court docket of Justice, Queen’s Bench Division
- Decide: Mr Justice Picken
- Date of Judgment: 25 March 2022