Tom Snelling, Alex Cheah and Raïan Kanso examine the recent High Court judgment in Bitar v Bank of Beirut SAL

By Tom Snelling & Alex Cheah & Raïan Kanso

Partner Tom Snelling, Associate Alex Cheah and Paralegal Raïan Kanso examine the recent High Court judgment in Bitar v Bank of Beirut SAL, the third decision relating to UK-domiciled individuals seeking to force the transfer of their foreign currency deposits from a Beirut bank after the Lebanese financial crisis.

Tom, Alex and Raïan’s article, published in Thomson Reuters Regulatory Intelligence on 16 September 2022, can be found here

The English High Court recently handed down judgment in Bitar v Bank of Beirut SAL [2022] EWHC 2163.  This is the third decision in quick succession relating to UK-domiciled individuals seeking to force the transfer of their foreign currency deposits from a Beirut bank after the Lebanese financial crisis. Bitar follows Khalifeh v Blom Bank SAL [2021] EWHC 3399 and Manoukian v Société Générale De Banque Au Liban SAL and Bank Audi SAL [2022] EWHC 669.  Together these judgments reveal how the English court grapples with foreign law contractual construction, polices the role of foreign law experts and will grant specific performance against banks outside the jurisdiction.

The backdrop to the cases is dramatic and directly relevant to the relief sought: “In late 2019, Lebanon entered a severe economic crisis, the effects of which were then compounded by the global pandemic that began in early 2020. The value of the Lebanese currency (LBP) has collapsed, and Lebanon has defaulted on its sovereign debt.” (Bitar [18]).  The Lebanese Banking Association then advised its members to impose restrictions on international transfers to avoid a collapse of the entire Lebanese banking system.  In turn, this stopped many outside Lebanon (including in the UK) from accessing their money.  In Bitar, the depositor sought repayment of approximately US$7.8 million plus interest.

The seriousness of this unprecedented crisis led to the IMF agreeing a 46-month Extended Fund Arrangement for about US$3 billion.  This was linked to reforms to Lebanese banking laws and the implementation of formal capital controls.  Such controls have given rise to widespread protests in Beirut from those already struggling from capital controls currently in place.  One desperate depositor recently held employees of his bank hostage before going on hunger strike in custody.

The English Court’s Jurisdiction over foreign-law governed consumer contracts

Lebanese law applied to the contracts between the bank and consumers in all three cases. Pursuant to the exception provided in (what is now) sections 15A-15E of the Civil Jurisdiction and Judgments Act 1982, English Courts can accept jurisdiction over a foreign-law governed consumer-contract as a consumer may bring proceedings against its counterparty in the courts for the place where the consumer is domiciled (regardless of the domicile of the other party to the consumer contract), subject to specific requirements including the need for the contract not to be entered into by the person for a purpose which is “outside the person’s trade or profession” (Section 15E(1)).

Tender and deposit under Lebanese law

Article 822 of the Lebanese Code of Civil Procedure provides for the discharge by a bank of a debt owed to a customer by depositing the funds at a notary public or an “acceptable bank or in the Treasury”. In Khalifeh, Foxton J found that, by depositing a cheque at a notary public in accordance with the tender and deposit procedure outlined in Article 822, the debt owed had been correctly discharged and as such Mr Khalifeh was not entitled to repayment of the balance of his account; Mr Khalifeh did not pursue the point that he had a right to an international transfer.  In Manoukian, Foxton J’s decision on this point was challenged, though this issue did not need to be determined as Mr Manoukian succeeded on other grounds.

In Manoukian and Bitar, specific performance of an international transfer right was claimed.  The banks were precluded from relying upon Article 822 insofar as a contractual obligation between the bank and customer existed in an Account Agreement and a request was made prior to any discharge under Article 822.  In Manoukian, Picken J noted that “Article 822 was limited to [an] alternative claim in debt, in the event, that the Court were to decide that there was no transfer right…” [129].  If the contractual obligation is to make an international transfer, making a deposit in Lebanon rather than internationally is disproportionate and ineffective.

When does a right to transfer arise?

Principles of contractual construction or in Freedman J’s words, a “textual exegesis” (Bitar [60]) were applied in Manoukian and Bitar to look for a recognisable right to transfer.

In Bitar, the bank asserted as part of its defence that a standard form contract setting out “the terms of providing each of those services does not necessarily mean that the provider has an obligation to provide them” [62].  Nonetheless, a common intention to effect international transfers was found by Freedman J, who noted that “the Court…must…have regard…to the context in which…the Account Agreements were entered into” [65].

In Manoukian and Bitar, the court applied Lebanese law that ambiguous clauses should be construed in the consumer’s favour.

The courts considered that, until the banking crisis in Lebanon, requests for international transfers were ordinarily accepted.  Therefore, when the contracts were entered into, the expectation was that banks would carry out international transfers upon request.  The parties had a joint intention to offer and use international transfers and the different Account Agreements represented obligations to provide an international transfer service. The bank’s submission in Bitar that the contractual terms allowed the bank to choose between differing withdrawal options was rejected as it: “makes no commercial sense that a customer could seek an international transfer and that the Bank could choose to provide a cheque. This is especially so in an international context, where it would take much longer for the customer or a third party to obtain the money with potentially serious consequences.” [68]

Custom as law

The obligation to make international transfers was found to arise in Manoukian and Bitar without reference to existing custom in Lebanese banking practice; however, both cases explore the concept of custom to establish if it also provides a right to transfers.

Lebanese law says that: “contracts are to be “understood, interpreted and performed in accordance with…customs”.  To constitute a ‘custom’, the conduct must be a “general and longstanding and constant action, practice or other behaviour; and… subjectively regarded as a binding norm:…a general acquiescence to the factual element in that it must be followed” (Bitar [135]).  The correct time to apply this custom is at the time of contracting, not at the time of a transfer request (Manoukian [13]).

To the extent that construction of a contract is reinforced by the existence of a custom at that time, it does not follow that a change in custom can alter the meaning of the contract.  Customs are only enforceable against a customer where the customer knows about the custom at the time of contracting.  Even if the custom changes, the changes will be irrelevant, at least as against the customer.  In Bitar, a circular of the Lebanese Banking Association of Banks was insufficient to end the existing custom or to create a new one.

Acceptable reason’ exception

In Bitar, the banks argued that even if it were the case that the requisite custom was established at the time of the contract, it was subject to an exception of ‘an acceptable reason’.

Importantly, the Bitar judgment accepts that: “the obligation to transfer is not absolute, as accepted by the banks in Manoukian. However, this does not admit an elastic legitimate reason qualification and/or it is not so elastic that it could extend to a risk of a run on the bank concerned or other banks” (Bitar, [102]).

In line with Lebanese banking customs, a bank’s obligation to make a transfer was not overridden by its concern about a run on the bank.  This is because, if that was permitted to be an ‘acceptable reason’ exception, the custom would risk finding itself so diluted that there would be no obligation at all. “This would run counter to the good faith requirement that there be balance, fairness and equity as between banks and their clients” (Manoukian, [92]). 

Additionally, the existence of an ‘acceptable reason’ exception was rejected by the Courts as, first, the banks did not evidence how effecting a transfer would risk a run on the bank and, secondly, the ‘acceptable reason’ exception does not constitute a force majeure as there was no evidence adduced by the banks that it would be impossible to make the transfers. “Force majeure has been said in cases in Lebanon not to be a basis to excuse a bank seeking to excuse itself by reference to the current banking crisis” (Bitar, [107]).

Foreign law experts

Bitar is also a recent affirmation of the English courts’ expectations as regards the objectivity of experts (including those on foreign law), particularly where the same expert had appeared in more than one case on the same legal points and had changed views doing so (as in these cases). In Bitar, Freedman J noted of the bank’s expert: “…it behoved him to give measured responses and expressly take into account contrary views.  In the event, he had a tendency to veer towards the approach of an advocate by arguing for the different position rather than assisting the court as to how and why it could prefer that position” ([44]).


The Court found in Bitar, like in Manoukian, that specific performance was available to effect an international transfer in addition to interest under Lebanese law at the statutory rate of 9% per annum from the date when each transfer ought to have been made.  The tender and deposit procedure under Article 822 could not be relied on to negate this obligation, as it was in Khalifeh.

Freedman J has refused the bank in Bitar permission to appeal, as the Court of Appeal did in Manoukian.  This will inevitably mean that others will feel more confident in asserting their rights in the English courts and other cases are in the pipeline (see “Another Lebanese Bank Sued For Refusing To Transfer Funds”, Law360, London (August 30, 2022, 4:02 PM BST)).  Their success will turn on the extent to which their banking terms and conditions establish a right to transfer, and their ability to show they are a ‘consumer’ domiciled in the UK.

Consistent with the views set out above, Bobby Friedman of Wilberforce Chambers, who was part of the counsel team that represented Mr Manoukian has commented:

The judgment in Bitar is a further important decision in relation to the rights of consumers to bring claims in England against Lebanese banks for the specific performance of their international transfer requests.  In particular, the repeated findings as to the banking custom of a right to an international transfer; that Article 822 will not assist the banks – at least where the transfer request was made prior to the Article 822 process being invoked; and that Lebanese consumer law works in the customer’s favour, will all give consumers much more confidence that they can pursue their claims in England.  For customers who have been kept out of their money for a very substantial period of time, this will doubtless give them some hope, although each case will need to be considered on its merits“.

In the same vein, representatives of depositors in Lebanon have welcomed these English judgments as confirming that “the argument of systemic bankruptcy invoked by banks to justify evading their obligations to return their customers’ deposits or to execute their transfer requests is not admissible, contrary to what many judges in Lebanon are inclined to accept”.

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