George Gabriel Bitar v Bank of Beirut S.A.L

This is the third case tried before the High Court in London arising out of the failure or refusal of Lebanese bankers to pay to depositors sums alleged to be owing on their accounts. The Banks have said that the issues arise out of difficult financial conditions faced by Lebanese banks. The previous cases were Khalifeh v Blom Bank SAL [2021] EWHC 3399 (QB) (Foxton J 17 December 2021) (“Khalifeh”) and Manoukian v Banque au Liban SAL and another [2022] EWHC 669 (QB) (Picken J 25 March 2022) (“Manoukian”). The Lebanese bank prevailed in Khalifeh, whereas the depositor prevailed in Manoukian. There was an application for permission to appeal in Manoukian, which has been rejected.

By this claim, the Claimant seeks repayment of money in two bank accounts (the “First Account” and the “Second Account”) he holds with the Defendant (the “Bank”). The Accounts are held under two contracts (the “First Account Agreement” and the “Second Account Agreement”) which are in materially the same terms. The amount of the indebtedness between the accounts is a sum of US$7,790,624 plus interest.

The Claimant claims that the Bank is obliged to make international transfers to transfer money to the Claimant’s UK bank account. Such obligation arises from the terms of the accounts and/or from banking custom and practice. The Claimant claims specific performance, alternatively damages together with interest at the rate of 9% per annum.

The Bank says that the terms of the agreements do not as a matter of construction contain an obligation to make international transfers. Although there was a custom to make international transfers from inception subject to an “acceptable reason” exception, it says that by the time the Claimant gave his instructions, the custom had come to an end due to the political and banking crisis in Lebanon and to guidance given by the Association of Lebanese Bankers (“ABL”). In any event, the Bank says that in these circumstances, it had an acceptable reason not to make an international transfer.

In the alternative, the Claimant claims repayment of the debt which the Bank owes him. As to the claim in debt, the Bank says that it has discharged the debt by mean of a Banqu du Liban (“BdL”) cheque using the Article 822 or “tender and deposit” procedure, a Lebanese procedure whereby a debtor can seek to discharge a debt by payment via a notary. If this occurred, it was not before January 2022. It is common ground that in the event that the Claimant was entitled to an international transfer, whether by contract or by custom, that occurred before January 2022, and the Article 822 procedure would not apply.

The parties and their relationship

The Claimant is a consultant radiologist at Chelsea and Westminster Hospital. He was born and educated and has always lived and worked in England, and is a UK national, but he and his parents are also Syrian nationals. He does have Lebanese connections and ties. His parents are also Lebanese nationals, and his mother has lived in Lebanon for over 20 years; and his father has split his time between Nigeria (where the family’s business is located) and Lebanon. He considers himself to have “Lebanese connections and ties”.

The Bank is a Lebanese joint stock company formed under the laws of Lebanon, and carries on business as a retail bank. In December 2006, the Claimant opened an account (numbered 466150) with his father and brother. Later, he opened a personal account (numbered 469020) in his sole name, but in June 2015 he asked for that account to be closed. In July 2015, the Claimant opened the accounts which are now in dispute, namely:

the First Account (numbered 469770) with his wife; and

the Second Account (numbered 469775) with his parents and brother.

The First Account and the Second Account have a number of sub-accounts, the names and functions of which the Claimant explains in his written evidence. Three of those sub-accounts are the subject of the present proceedings. They are:

the First USD Current Account, which is a sub-account of the First Account and is a form of current and checking account called a “winner” account;

the Second USD Current Account, which is a sub-account of the Second Account and is also a “winner” account; and

USD Fixed Deposit Account, a sub-account of the Second Account.

The funds in the USD Fixed Deposit Account have, since the beginning of these proceedings, been transferred by the Bank to the Second USD Current Account. Therefore, this claim now simply concerns sums sent to and/or contained in the First USD Current Account and the Second USD Current Account.

The obligation in respect of a loan under Lebanese law is that absent some clause to this effect, a bank receives a money deposit to use those funds as its own. As in the case of English law, the bank becomes the owner of the funds and has an obligation of retuning the deposited funds by providing the equivalent quantity of the sum in the same currency.

The Claimant’s residence

An issue which has arisen is whether the Claimant represented in certain forms that he was resident in London. It is not apparent to what this issue goes to in the determination of this litigation. If it goes to credit, I am satisfied, having seen the Claimant give evidence, that he is an honest witness who did not intend to mislead the Bank. He was hampered in his ability to fill out forms because he was not able to understand forms in Arabic. Further, as Mr Georges Assaf acknowledged, the Claimant’s personal information form was completed by the Bank. The Bank also completed some forms erroneously: on one of them, it referred to his being a self-employed contractor with an income of zero yet depositing income from his work of $100 per month.

In another, it provided his address as being in Nigeria. This was despite the Claimant having stated to the Bank in 2017 that his tax residence was in the UK. The Claimant had declared by 24 December 2017 at the latest that his “Residence Address” was in the UK and “Country of Tax Residence” was the UK. He wrote letters and emails to the Bank giving his address as Lennox Gardens.

It was apparent from a statement of one of his relationship managers, Mr Haddad from an interlocutory hearing, that he and Mr Chidiac were aware that the Claimant lived in England. Mr Assaf accepted in his evidence that he knew that the Claimant worked at the Queen Elizabeth Hospital (in fact, it was the Queen Alexandra Hospital, Portsmouth, but that simply reflected an inexactitude in the question, and it was obvious that it was a UK hospital). Mr Assaf said that he had known that the Claimant’s brother lived and worked in Nigeria and that Mr Chidiac had known that the Claimants father worked there. Having seen that the Claimant ticked the “Outgoing transfers” box on one of the forms, Mr Assaf accepted that it was clear from the account forms that the Claimant would want international transfers including transfers to and from England. The account opening documents from December 2006 show that the Claimant was British and had a UK passport. Further, his account 469020 (the one that the Claimant asked to be closed in 2015) was or included a GBP account for use in the UK. He requested transfers to his UK account, and he corresponded regularly with Mr Kanzaria of Bank of Beirut UK. The Bank sent hundreds of texts over the years to the Claimant’s UK mobile number.

The Claimant was taken to documents (in Arabic) showing that the Bank had a Rabieh address on file for him. He does not own a Rabieh address (he does own a property in Baabda), but his brother did. It is possible that this was some correspondence address or that there was some confusion between the Claimant’s address and members of his family.

If and insofar as the Bank wished to prove that the Claimant has represented that he was despite the above in fact a person resident in Lebanon, then it called the wrong witnesses. The primary witness for the Bank was Mr Assaf who accepted that he had no role in the process of filling in the account opening forms or in the account opening process after the forms had been filled in. He was not a relationship manager, the relevant ones being Mr Haddad and Mr Chidiac, neither of whom were called, despite having given evidence in the jurisdictional challenge. Mr Hikmat El Bikai, a senior executive of the Bank responsible for legal and credit affairs was called to give evidence, but he candidly admitted that he took no role in handling customer complaints, and he had no role in handling customer complaints and was not responsible for the Bank’s policy in relation to transfers. The Court was then left with the straightforward evidence of the Claimant and the deficient evidence of the Bank about overseas transfers. I shall refer more fully below to the evidence of the witnesses.

I am satisfied from the evidence as a whole that the Bank knew at least from the relationship managers and from information provided by the Claimant to the Bank that the Claimant lived and worked as a doctor in England. The Bank’s understanding that the Claimant was either resident in England or, at very least, that he was non-resident in Lebanon to the extent that he worked in the UK and paid his tax there, have some significance. They form part of the background against which the Account Agreements fall to be construed. In the words of Picken J in Manoukian at [63], “The expectation of the parties must surely have been that an expatriate such as Mr Manoukian would have the international transfer right which he asserts”.

Use of the accounts for international transfers

The Claimant had made international transfers on his previous accounts. In the four years after opening the accounts referred to above, the Claimant made transfers of varying sizes (including one of almost £200,000), in different currencies (GBP, USD and Euros) and to various international destinations (London, New York, Paris and Italy). He gave examples in his evidence of more than 12 transfers.

The crisis in Lebanon

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. The way in which the matter was expressed by Mr Justice Picken in Manoukian was as follows at [20-22]:

A notable feature of the response by Lebanese banks to the crisis has been an attempt to restrict what customers may do with any money—even USD—held with them. According to Mr El Bikai:

Mass protests commenced in Beirut against a Lebanese bank on 17 October 2019.

On 21 October 2019, most Lebanese banks closed.

On 1 November 2019, the Bank reopened, but sought to impose “informal restrictions” on withdrawals and transfers. The purpose of these informal restrictions was said to be to prevent “a run on the banks”. Other Lebanese banks sought to impose similar measures, but there were inconsistencies among those measures.

On 17 November 2019, apparently in response to those inconsistencies, the Association of Banks in Lebanon (“the ABL”), a professional trade association of banks in Lebanon, issued a circular in which it advised all member banks to impose uniform capital controls, which it called “temporary directives” restricting withdrawals and transfers from Lebanese banks. There was an exception for dollars transferred to Lebanon after the start of the crisis. In Manoukian, Picken J found at [24] that “the ABL Circular did not have legal force.” This was accepted by Professor Najm at [391] of her report and expanded upon at [390-406] to the effect that a such a circular cannot put any restriction on financial transfers or affect or limit the contractual and legal obligations of banks. It does not provide the banks any valid basis for failing to comply with their contractual obligations, such as international transfer instructions of their customers.

Mass protests continued in December 2019 and thereafter. Lebanon defaulted on a $1.2 billion Eurobond in March 2020 and the Beirut port explosion occurred in August 2020.

According to Picken J’s judgment in Manoukian at [22]:

Transfer requests of the Claimant

The Claimant’s evidence is that some transfers were honoured by the Bank even after the crisis began. There was a transfer of £155,000 in November 2019 and also seven transfers from 26 December 2019 to 21 July 2020 each to the UK, the largest being for £15,031. They related mostly to payments for building works. Mr El Bikai provided two further examples of payments. However, the effect of the restrictions was to cause difficulties for the Claimant during 2020 who was dependent on the transfers to pay for his household expenditure which exceeded his income from his medical practice, particularly the costs of education of his children.

The Claimant then decided to instruct the transfers of the full balances. The transfer instructions which are the subject of this dispute are as follows:

on 6 September 2020, the Claimant instructed the transfer of $470,000 to his UK account;

on 20 October 2020, the Claimant (by solicitors) instructed the Bank to transfer the full balance then standing to the credit of the USD Current Accounts to his UK account;

on 3 November 2020, the Claimant (himself) instructed the Bank to transfer the full balance then standing to the credit of the USD Current Accounts to his UK account;

on 9 March 2021, the Claimant instructed the Bank to transfer the balance of the fixed deposit accounts to his UK account on maturity;

on 7 April 2021, the Claimant instructed the Bank to transfer $459,771 and $4,275,773 from the respective USD Current Accounts to his UK account;

on 20 August 2021, the Claimant instructed the Bank to transfer the balance of the USD Fixed Deposit Account to his UK account on maturity; and

on 21 October 2021, the Claimant instructed the Bank to transfer $459,603 and $7,331,021 from the respective USD Current Accounts to his UK account.

The Bank did not comply with any of these instructions. It is the dispute arising out of the Bank’s failure or refusal to comply with these instructions that has given rise to these proceedings.

The tender and deposit procedure

The English proceedings were started on 9 April 2021. In January 2022, the Bank sought to begin the “tender and deposit” procedure in Lebanon. The procedure is designed to allow a debtor to discharge a debt by leaving payment with a notary public, and then seeking a court order to the effect that the payment gives good discharge.

On 25 January 2022, the Bank commenced “validation proceedings” in Lebanon to procure such an order. There were questions about service and jurisdiction in respect of those proceedings. The Bank has given undertakings to this court not to move ahead with the proceedings while this claim is pending, and to accept this court’s determination of the dispute as final. Ms Aida Abou Hanna for the Bank says that the Bank has not taken steps in the validation proceedings since 28 January 2022.

The questions for the court as set out in the opening of the Claimant are as follows:

It is worthy of note how the issues arose in the case of Khalifeh and Manoukian. It provides a context to the issues to be determined in the instant case as well as to the difference in the outcomes of the case. In Khalifeh, it was not contended either as a matter of construction of the contract or custom that there was an obligation on the part of the bank to honour a request for an international transfer.

At [136], Foxton J said:

Khalifeh was then decided on the basis that the Article 822 tender and deposit procedure prevailed. On that basis a cheque in Lebanon gave a good discharge of the Bank’s debt to Mr Khalifeh.

By contrast, in Manoukian, it was stated as follows:

In Manoukian, it was found that an international transfer right arose and was exercised, and the customer prevailed. It was then not necessary to decide any question arising out of the Article 822 tender and deposit procedure.

It should also be noted that the English law relating to reliance on previous English decisions concerning foreign law. The Civil Evidence Act 1972 s.4(2) reads as follows:

any finding made or decision given on that question in the first-mentioned proceedings shall, if reported or recorded in citable form, be admissible in evidence for the purpose of proving the law of that country, territory or part with respect to that matter; and

if that finding or decision, as so reported or recorded, is adduced for that purpose, the law of that country, territory or part with respect to that matter shall be taken to be in accordance with that finding or decision unless the contrary is proved:

The factual witnesses

The Claimant gave evidence. In my judgment, his evidence was measured and calm. The Bank suggests that his case was given through a prism which he knew that he had to argue. In my judgment, it was the evidence of an honest witness of obvious intelligence. Far from being an implied criticism as appears from the Bank’s submissions, his evidence was “well-prepared”: this was inevitable given the obvious importance of the case to him and his family. The evidence about the signing of the forms was not “somewhat incredible” but is illustrative of the difficulties of signing standard form documents in a country whose language is not understood by the customer. The summary of the evidence above shows that the Bank, which would be expected to be careful in the preparation of these documents, was rather lackadaisical in this regard.

The relevant relationship managers of the Bank were Mr Chidiac and Mr Haddad at the time of the making of the contracts. They provided written evidence at an earlier stage of the proceedings but were not used as witnesses for trial. Mr El Bikai said that he had no role in handling customer complaints and was not responsible for the Bank’s policy in respect of transfers, or in deciding whether to accept or decline transfers. He was not involved in the restrictions of transfers, he was not part of the COD approvals group, and he was not copied in to an email of 25 November 2019 about the restrictions.

Ms Hanna, the Bank’s commercial credit manager, accepted that she did not have any dealings with the Claimant before he brought the claim. She was not responsible for applying the policy on transfer.

Mr Assaf, the manager of the Antelias branch of the Bank, gave his evidence through an interpreter. Although it is necessary to make allowances for any limitations caused by his giving evidence through an interpreter, his evidence was of limited assistance. His written evidence purported to give evidence as to the various accounts of the Claimant and his family. It made particular criticisms about information regarding his residence, and particularly highlighting documents referring to residence in Lebanon.

In fact, Mr Assaf’s detailed written evidence was undermined for a number of reasons including the following, namely:

He had made a number of substantive errors about accounts in previous witness statements which he had to correct.

He said that he never met with the Claimant and the other members of his family who were account holders. He was not involved in the filling in of the forms. He did not speak to the Claimant’s wife when she went to the Bank’s branch in 2021.

He believed that the Claimant spoke Arabic, but if he had dealt with the Claimant in respect of any documents, he would have known that the Claimant cannot read or write Arabic and therefore was not able to understand the forms of the Bank in Arabic.

His evidence about what non-resident meant to the Bank was confusing in that it appeared to be a reference to having a business address outside Lebanon provided that they paid their tax outside Lebanon.

When asked to explain the numerous inconsistencies in the Bank’s documents, it was evident that he had little or no direct knowledge, and generally was not able to explain matters outside the documents.

It followed that insofar as he made criticisms of the Claimant in his witness statement, he had no ability to substantiate them. For example, there was a suggestion that the Claimant had provided an address in Lebanon in order to obtain a “winner” account, but that collapsed in his oral evidence. There was nothing to suggest that the Claimant had ever asked for a winner account as such and in any event, non-residents could have a winner account.

At best, the evidence of the Bank’s witnesses is therefore of limited assistance in respect of the issues to the Court. The attempts to be critical of the Claimant were not substantiated. The internal documentation of the Bank left a lot to be desired. Those witnesses who could have given evidence about the relationship with the Claimant were not called to give evidence, and their absence was not explained.

The expert witnesses

Professor Marie-Claude Najm, expert witness for the Claimant

Professor Najm is a Lebanese professor of law specialising in private international law and civil law, holding the position of Professor at Saint-Joseph University of Beirut and having been a visiting professor at the Sorbonne in Paris and at the Pantheon-Assas University in Paris collectively for over a decade.

It was suggested that her expertise from her published articles focus on conflict of laws and family law, and that she had no specific expertise in banking law. She said that the questions which she was asked to consider were about contract law, obligations law and sources of the law which were areas of her expertise as a lecturer at university over the last 20 years and as an attorney until 2005 and as a consulting lawyer since then.

I was concerned from that line of questioning as to the expertise of Professor Najm. However, having heard her answers in detailed and probing cross-examination from Mr Isaacs QC, I am satisfied that she has a mastery of the subject matter. Having reviewed her expertise again, I am also satisfied that she is well qualified to be able to give this evidence.

Dr Fadi Moghaizel, expert witness for the Bank

Although a practitioner and not an academic, he qualified at the Saint Joseph University in Beirut and then obtained LLM and PhD degrees in the University of London. His practice includes litigation, arbitration, contract law and banking law. He refers to 850 lawsuits covering banking and financial activities. He has acted as an expert in foreign courts. He was the expert for the banks in the recent cases of Khalifeh and Manoukian referred to above. In Khalifeh, he was appraised by Foxton J as [122] “the more persuasive expert when arguing at a level of principle rather than simply by reference to what cases have decided.” In Manoukian, he received a less complimentary assessment from Picken J. In a number of respects, he referred to aspects of his evidence as ‘unconvincing’ [85], ‘extreme’ [92], not realistic [103] and ‘difficult to follow’ [115]. The favourable and unfavourable treatment of his evidence by other judges is not the point: what is in point is how I deal with his evidence and how he came over to the Court.

Although qualified to give expert evidence about Lebanese banking law, there were times when I was concerned about his tending towards being an advocate which impaired the independence of his evidence. He had particular difficulties in dealing with matters in point to the issues in the instant case which had been considered in Manoukian in a way contrary to the bank’s case in Manoukian and contrary to the case of the Bank in the instant case. Despite this, Dr Moghaizel sometimes took different positions from his position in Manoukian or from the position as found by Picken J.

Dr Moghaizel could have confronted the point up front. He could have pointed out the nature of the difficulty, and in a measured way explained why he was now taking a different position. Instead of doing this, the inconsistencies had to be extracted from him in cross-examination. As he rejected what was being put to him, from time to time seeking to argue the case in an unconvincing and unrealistic way, there were real questions about his objectivity or reliability bearing in mind that he had so recently been grappling with these issues. As an 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.

A particular example which is more germane to the nature of the evidence of Dr Moghaizel than to the issues in the case concerned Article 26 of the Consumer Protection Law (“CPL”). Dr Moghaizel relied on writings of Nammour of 2006 for a proposition that the CPL did not apply to bank contracts with consumers. He did not refer to the same author’s writings in 2007 which corrected the relevant sentence. This mistake would have been easy to understand, but for the fact that this issue had arisen in the evidence in the Manoukian case. This omission showed a lack of attention to detail in respect of a matter which would have been expected to have been within the immediate recall of Dr Moghaizel. I shall refer to other instances of concern about Dr Moghaizel’s evidence later in this judgment. For the main part, I found the evidence of Professor Najm more helpful, measured and ultimately more informative than the evidence of Dr Moghaizel.

It was common ground that there was a good summary of how the Court should determine questions of foreign law given by Simon J (as he then was) in Yukos Capital SARL v OJSC Oil Company Rosneft [2014] EWHC 2188 at [25-29] as follows:

The relevant codes

There was a useful summary of the relevant codes in the judgment of Foxton J in Khalifeh at [124]. It is useful because it is consistent with the evidence in the instant case. Foxton J said:

It ought to be added that there is a hierarchy of codes. As in other areas, the special prevails over the general. So here the experts are agreed that the LCC as the specific code prevails over the general code the LCOC, and the CPL similarly prevails over the LCOC. There ought also to be taken into account in the instant case the Consumer Protection Law (no.695/2005) (“CPL”). This would apply to banking in a non-business context.

Case law

There were more controversies in the instant case about the law of precedent. As will be recalled, Dr Moghaizel was the expert for the Bank in Khalifeh. Foxton J took into account the opinion of Dr Moghaizel in reaching this summary at [125 - 129]:

Status of Urgent Matters Decisions

There is a controversy in the instant case about whether Urgent Matters Decisions can have any weight. Dr Moghaizel for the Bank says that there is no weight to be given such decisions for the following reasons:

they are a summary procedure and therefore carry no weight unlike a case of the Court of Cassation.

they are generally not relied upon as a source of law and are therefore not cited by higher courts;

on the subject of whether or not there is a right to have an international transfer and/or whether such right has come to an end in view of the banking crisis in Lebanon, the cases do not speak as one, and it largely depends which judge is hearing the matter.

The Claimant through Professor Najm says that:

the decisions do not carry the same weight of the Court of Cassation, but they are nevertheless decisions which inform as to the relevant law and as to the existence of custom;

there are so many cases in point that it would be wrong to ignore them, particularly absent a case of the Court of Cassation;

although some decisions have been stayed pending appeal to the Court of Appeal or the Court of Cassation, the last five cases have not been stayed. Those which are stayed may indicate not that the law supports the Bank’s case, but that the courts of summary procedure have no jurisdiction because the matter cannot be decided without getting into the merits.

I am satisfied that it is appropriate to look at Urgent Matters Decisions for the following reasons:

In Manoukian, Dr Moghaizel’s evidence started by saying that Urgent Matters Decisions could not be cited, and indeed not even in the Court of Appeal. Picken J in Manoukian rejected this submission in that a body of decisions pointing in the same direction must serve as some sort of indication as to what Lebanese law should be taken to be.

In Manoukian, Dr Moghaizel himself cited a decision of an Urgent Matters Judge. He also modified his position in respect of a Court of Appeal decision by saying that it carried “less weight” rather than “no weight”. In the end, Counsel for the Bank in Manoukian did not adopt the evidence of Dr Moghaizel: see the judgment of Picken J at [86-106] and [115].

It is consistent with the decision of Simon J in Yukos above and the extract from Dicey in the above quotation that decisions which provide evidence as to Lebanese law may carry at least some weight, particularly in an area where there is no Court of Cassation authority.

According to Article 3 of the LCC, “In the absence of any applicable legal provision, the judge can draw upon previous test cases for guidance as much as he may let himself inspired by the strictures of commercial equity and loyalty.”

I am fortified by Picken J’s conclusion in Manoukian at para. 115 that decisions including Urgent Matters Decisions are appropriately taken into account when seeking to derive assistance as to what Lebanese law is. I The decisions of the lower courts, absent evidence from the Court of Cassation, provide evidence for the English court as to the content of Lebanese law on the issues which they cover.

It is necessary not to give too much weight to such decisions by themselves, bearing in mind that (a) any matter which requires an analysis of the merits will not be suitable for that Court, (b) even although there was a preponderance of decisions, there was not uniformity, and (c) even at Court of Appeal level, there was a case in favour of a bank, albeit that it was about the jurisdiction of the Urgent Matters Judge rather than determinative of the point. That is not to say that it is not appropriate for an English court to have any regard to such decisions, especially where the cases are prevalently in one direction, albeit not necessarily uniformly so.

I regard it as significant that there is a preponderance of cases in the Court of Appeal affirming the decision of the Urgent Matters Judge against banks. The cases will be referred to below. Whether it is four cases to one case or three cases to one case (on the basis of a distinguishing feature in one of them), as contended for by the Bank, it is a significant preponderance. It is wrong to say, as does the Bank, that “there is a wide divergence of opinions of the judges of the lower courts”: as the Claimant submits, there is a broad uniformity in the decisions, as illustrated in the opening argument at [102-104]. There is no single decision against the Claimant: there are only decisions that other customers are not so right as to engage the urgent matters jurisdiction.

By way of summary only of the Claimant’s opening at [102-104] and the cases referred to in the Schedule to the opening:

The cases are all concerned with depositors who have been trying to withdraw their money from Lebanese banks by way of transfers to other countries.

None of them support either the proposition that the custom was or is subject to an “acceptable reasons” exception, or that the custom has changed so as to release banks from their transfer obligations.

No decision has been found that holds that banks are not under transfer obligations. Where the application failed, this was because the point in dispute was not so obvious and thus the jurisdiction requirements for urgent matters were met.

Of the substantive decisions in evidence, 27 out of 37 of them are to the effect that the claimants were clearly right that there was an obligation to effect transfers.

In at least 22 of those cases, the banks were ordered to carry out the transfer requested.

Of the 10 decisions holding that the court had no jurisdiction, at least 5 are partially helpful to the Claimant in that 3 recognise a customary transfer right, and 2 say that a transfer right arises under the contract (by implication or the Lebanese-law equivalent).

7 of the 13 sole judges whose decisions were surveyed have decided in favour of claimants on the basis that the transfer obligation exists, and only 2 of them have expressly held that the customary transfer right is seriously disputed. Some of the judges in the minority have expressed sympathy with aspects of the majority reasoning.

Although there were points of detail which arose in cross-examination regarding particular cases, it is not necessary for that to be examined closely in that the point of principle as to whether they should be considered at all was in issue. I am satisfied that Picken J did not err in having regard to such cases. The precise weight that he may have attached to them is not the issue for this Court. The approach of Dr Moghaizel to attach no weight to any of these decisions is exceptionable both because they do provide at least some assistance absent any relevant Court of Cassation case, and because this represents a different position from the one which he came to adopt in Manoukian.

Construction of contracts under Lebanese law

In Manoukian, Picken J said at [43] as follows:

contracts are to be construed and implemented in good faith, in accordance with the principles of fairness, and consistently with prevailing customary practices: Article 221 of the Lebanese Code of Obligations and Contracts (the ‘LCOC’);

Lebanese law requires the ascertaining and giving effect to the parties’ joint intention, and not just the words used by the parties in the written contract interpreted literally: Article 366 of the LCOC;

contractual provisions that are ambiguous and require interpretation are to be interpreted in light of other contractual provisions, the general organisation of the document, its coherence and its purpose: Article 367 of the LCOC;

Lebanese law requires the taking into account of the meaning of the contract as a whole and the other provisions in the contract in interpreting each provision: Article 368 of the LCOC;

a judge must apply established ‘customary provisions’ into the contract, even if these are not expressly incorporated into the contract, unless they are contradicted by the terms of the contract: Article 371 of the LCOC;

furthermore, in the case of ambiguity in certain contracts involving consumers, Article 18 of the Lebanese Consumer Protection Law (the ‘Consumer Law’) provides those ambiguous clauses are construed in favour of the consumer.”

Prof Najm confirmed that Picken J’s description is “a correct summary of the relevant principles”: see [73] of her report. It does not appear to be disputed by Dr Moghaizel.

The Claimant submits that an obligation to effect an international transfer arises from the terms of the Account Agreements (leaving aside custom). I shall refer to the contractual provisions and then to the Claimant’s and the Bank’s respective submissions. The Claimant relies on a range of such terms. In particular:

Article 4(c) of the fourth part of the General Terms provides as follows (emphasis added):

Article 4(c) of the fourth part of the General Terms goes on to state as follows:

Article 2 of the fourth part of the General Terms also provides as follows (emphasis added):

The seventh part of the General Terms deals with instructions given by telephone, telex, fax or email. Article 1 of the seventh part of the General Terms provides as follows:

Article 6 of the seventh part of the General Terms then provides as follows:

Article 2 of the And/Or Terms provides as follows (emphasis added):

Article 3 of the And/Or Terms provides as follows (emphasis added):

Paragraph 1 of article 1 of the “General Conditions and Provisions Relating to Banking Services through Electronic Means” provides as follows (emphasis added):

The above submissions are far from easy to unravel. They involve a textual exegesis. Submissions of this kind found favour with Picken J in Manoukian. It is to be borne in mind that the terms of each contract are different, and so nothing which was stated in Manoukian is directly relevant as regards construction.

The contractual terms are far from direct. It could have been provided in very clear terms either that there was a right for an international transfer or the converse, namely that the Bank had no obligation to provide an international transfer.

The Bank submits that the fact that a provider of a multitude of potential services sets out in a standard form contract the terms of providing each of those services does not necessarily mean that the provider has an obligation to provide them. They involve specific issues such as inadequate methods of giving instructions and the position of the Bank or how to take instructions on a joint account or how to deal with termination of an account or the Bank’s wish to exclude or limit liability. The Bank submits that the terms refer to generic services rather than creating specific obligations to provide transfers.

In the first of the eight questions posed by the Claimant, the Claimant seeks to advance a case where there is established a contractual right, without resort to custom. The advantages of this course of action are that they are not dependent on the vagaries of whether the custom is subject to refusal for an acceptable reason or the possibility that the custom will cease and be replaced by another custom (which have given rise. This is the way of avoiding some of the complications of the second to the fifth questions. This reflects the approach of the Court in Manoukian faced with a submission from Mr Toledano QC for the claimant that there was no necessarily bright line between a right in contract and an independent right based on custom. That is because the contract needs to be construed not only by reference to general principles of construction but also in line with Article 18 (ambiguities construed in favour of the consumer) and with custom. At [46], Picken J stated:

Here lies the precedent for the approach of separating custom and contract, but in it also lies the artificiality, which Picken J accepted, of attempting to separate two aspects which are inextricably linked.

Whilst the motivation is good, it is artificial to construe the contract without regard to context and to custom. The written terms seen against the factual matrix (to use a term familiar to English contract law) come to life. The provision that “Lebanese law requires the ascertaining and giving effect to the parties’ joint intention, and not just the words used by the parties in the written contract interpreted literally” appears to do that. The Court must therefore have regard (as Picken J did in Manoukian at [57]) to the context in which, and the expectations against which, the Account Agreements were entered into. In the instant case, there are various matters relevant to context to be taken into account including:

When opening both of the Accounts, the Claimant marked the boxes on the “KYC” forms indicating that the “Type[s] of Transaction” for he would use included “Outgoing Transfer”.⁴³¹ Therefore it was at least envisaged in relation to each Account Agreement that the Claimant would be using the accounts for outgoing transfers and that the Bank would perform “Outgoing Transfer” services;

The Bank entered into the Account Agreements in the knowledge that its customers party to those agreements lived or worked abroad and would therefore expect to be able to perform international transfers;

The Bank performed international transfers in respects of account previously operated by the Claimant since 2006. The Claimant’s “clear understanding and expectation” (no doubt informed by experience of being a Bank customer since 2006) on opening the Account was that he “would be entitled to access and us [his] funds in whatever was [he] saw fit, including by effecting international transfers to [himself] in England” (the Claimant’s third statement at [37])

In the “Welcome Note” from Mr Chidiac dated 23 July 2015, the Bank provided an international telephone number, account numbers, and IBAN and SWIFT details, thus showing an expectation that the account holders would make international transfers.

On its 2015 website, the Bank:

advertised customers’ ability to use the “iMobile - Mobile Banking Application” to “perform various operations […] such as […] transfer of funds” and to “Conduct personal and third party local and international account to account transfers” (indicating a fortiori that such operations could be completed by non-mobile banking as well);

advertised its correspondent bank network for various currencies, including EUR, GBP, and USD;

expressly stated that time deposit accounts were available to non-residents, and assumed that holders of time deposit accounts would also hold current accounts too;

advertised itself as providing “Banking Beyond Borders”.

According to Lebanese law, subsequent conduct is relevant to construction of the contract. It is significant that following the contract and at least until the time of the banking crisis in Lebanon, requests for international transfers were routinely acceded to. There were at least 12 examples of the Bank complying with international transfer requests prior to November 2019 and even after that, there were examples of the Bank complying with international transfer requests. The first time the Bank even alleged that it was not obliged to make a transfer on instructions was in its solicitors’ letter dated 20 January 2021. Thus, the parties’ conduct confirms that the Account Agreement required the Bank to effect international transfers on request.

Given the above factors, the circumstances indicate that the joint intention of the parties was that the Bank expected and intended to contract on the basis of providing to the Claimant international transfers and the Claimant intended to contract on the basis of making use of international transfers. Against this background, the contractual terms can be more readily understood as being obligations to provide an international transfer service. This particularly applies to the first of the terms, namely “The Second Party agrees that withdrawals from these accounts shall be made by virtue of cheques, bonds, or transfer orders issued by the Bank in the currency of the account.” This was described by Mr Cutress QC in submissions as “the key clause”.

This clause appears in the context of the contract as whole to indicate a facility and a requirement to allow withdrawals from any of the methods contemplated, namely cheques, bond or transfer orders. I reject the submission that it provided a range of methods of withdrawal which could be selected by the Bank. 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.

Seen in the context of a joint intention of the parties to offer and use international transfers, this clause confers a right on the part of the Claimant to have the benefit of an international transfer. It also imposes a corresponding obligation on the part of the Bank to provide an international transfer. The other clauses in this context (but not necessarily by themselves) do seem to be predicated upon the same right/obligation. Any other construction would appear to offend against commercial common sense, bearing in mind that this service was essential for the Claimant, and likewise the Bank appeared to attract people in the position of the Claimant by providing an international transfers’ service.

A part of the factual matrix is the custom which was prevalent. That does not as a matter of Lebanese law live outside the contract. The admissions include that a Lebanese Court must or may adhere or have regard to custom when applying Lebanese law to construe a contract governed by Lebanese law. Another admission is that at the time of the contract and until 4 November 2019, there was a custom among banks in Lebanon to make international transfers of funds when instructed to do so, subject to an acceptable reason not to do so. There will be a more detailed discussion below as to what is an acceptable reason. For the moment, pending that discussion, the existence of the custom adds to the context argument such that the provisions of the contract relating to transfer are to be construed as giving rise to a contractual obligation to effect an international transfer pursuant to customers’ instructions.

I am therefore satisfied that the contract falls to be construed on the basis that there was a contractual obligation on the part of the Bank to accede to requests for international transfers.

It is therefore not necessary to determine a secondary submission of the Claimant that if the clauses were not sufficiently clear to give rise to an express obligation to effect international transfers, then they were ambiguous, and ambiguities ought to be construed in favour of the customer since it was a consumer contract: see Article 18 of CPL. The Court was not provided with assistance as to how an ambiguity was to be identified in Lebanese law. Absent this assistance, the Court will not rush to find an ambiguity unless there appear as a matter of language or context to be two meanings, and the Court has to choose between the two. Despite the repeated reference to ambiguities as an alternative submission, they were not instances of the words or phrases with two meanings.

Custom as a source of the law

Case law can acknowledge and record custom and thereby document and elucidate custom. The jurist Tyan writes, “The decisions of the courts, repeated and similar, serve to attest the existence of customs in a concrete and authentic manner. It is thus being said, in this respect, that case law is the registrar of customs”.

The importance of custom is enshrined in the Lebanese codes. Specifically:

Article 221 LCOC provides as follows:

Article 371 LCOC provides as follows:

Article 4 LCC provides as follows:

Article 4 LCCP provides as follows:

Thus, custom is source of law, and contracts must be interpreted in accordance with it. This view is supported by the writings of Fabia and Safa, and Prof Barsa adds that custom is “superior” to case law. Dr Moghaizel agrees that customs rank higher than “provisions of general law (civil law)” in the hierarchy of norms.

There is a matter on which there were different opinions. Referring to Article 371 of the LCOC above, Dr Moghaizel says (at [28] and [70] of his report) that the customary clauses are express clauses which actually and customarily exist in other contracts. That is a strange construction because it is difficult to imagine whole clauses which would customarily go into a contract. It means that the Court will not imply a term to reflect a custom, except in the very limited range of cases where other contracts contain an express term reflecting that custom. It leaves no room for the court to imply a term in other cases, such as where the term is so obvious as to go without saying.

It seems more plausible, as Professor Najm suggests, that the custom would inform as to the construction “either by the process of contractual interpretation or by an implied term”: see her report at [101(1)]. This all seems consistent with the word “usages” in the French, referring to customary practices rather than customary clauses. Even if the Claimant cannot rely on Article 371, he ought also to be able to rely on the other provisions and especially Article 221 LCOC which states that “contracts are to be “understood, interpreted and performed in accordance with…customs”. The case of the Bank is that Article 371 must be interpreted as meaning customary clauses: otherwise Article 221 would add nothing. I prefer the construction of the Claimant that clauses can partially overlap rather than having a strained and unwarranted construction so as to avoid this consequence. In cross- examination Dr Moghaizel sought to support his construction of Article 371, saying that it was what “we call in French ‘clauses de style’” He said it three times at [T3/187:23]–{T3/188:6]; [T3/191:24]–[T3/192:1]; [T3/201:4]–[T3/201:6]. That was wrong because the expression which is used is ‘clauses d’usage’ (‘usage’ being normally translated as custom). This was not an interpretation of Dr Moghaizel in Manoukian, and there is no reason to support this gloss.

The Bank also relies upon a discussion about bank transfers in Khalifeh especially at [172-173], and in particular that the expert for Mr Khalifeh conceded that there was no obligation on a bank to effect international money transfers at all, let alone that it was common practise within the banking community to include such a written express term. This reliance on Khalifeh does not assist in this case. Khalifeh was not a case in which there was reliance on a transfer obligation. It has not been possible to discern why that was the case or why it was that it was asserted to be the case in Manoukian.

The decision in Manoukian turned upon Mr Manoukian’s case that there was a transfer obligation in the contract, and he established this on the facts of the case both by reference to the terms of the contract and to the custom at the time. In this case, there are also admissions made on behalf of the Bank to the effect that there was an obligation to effect an international transfer obligation. It is the scope of those admissions that I now turn. In view of those admissions, the differences regarding Article 371 and 221 and that which was mentioned by Foxton J in Khalifeh in respect of a point not before him appear to be insignificant for the purpose of the decision in this case.

Admission about custom

In the instant cases, there is an admission in the Defence about using custom as an aid to construction of a contract or a provision of Lebanese law. The Re-re-amended Defence provided as follows:

There was also an admission as to the existence of a custom of banks in Lebanon to make international transfers as follows:

It will be noted that this has two qualifications, namely:

It was up to 4 November 2019 (temporal limit);

It was subject to an acceptable reason not to do so (exception).

The dispute between the parties is about whether there exists a customary acceptable reason exception to the admitted custom requiring banks to make international transfers. By a letter dated 8th June 2022, the Bank confirmed that it was not seeking to resile from its admission after service of Dr Moghaizel's report. At times during the trial, the Bank has made allegations inconsistent with the admission, such as by contending that there was only a custom to offer transfers and not to provide transfers.

In accordance with the temporal limit, it was denied in the Re-re-amended Defence that that custom still existed at the time of the transfer requests: see [16D.2]. The qualifications will be considered in due course, but at least up to 4 November 2019, the custom was accepted. Further, there was never an occasion at that point of time of an acceptable or legitimate reason arising as a reason for rejecting a request for a transfer: on the contrary, every request for a transfer was acceded to.

The admissions then give rise to related issues, namely:

Whether a change of a custom after the time of the contract may excuse a bank from following a custom in existence at the time of the contract (change of custom);

Whether there was an acceptable reason exception to the obligation to provide an international transfer, and if so, what was its scope? If so, did such exception extend to a refusal to honour an instruction to avoid a rush on the banks (acceptable reason exception);

Other reasons excusing the Bank for refusing to perform an international transfer (other reasons).

It will be apparent from Manoukian that the Judge held that the relevant time to follow a custom is the time when the Bank first entered into the contract and not a later time such as the time of the transfer instruction. Dr Moghaizel reluctantly agreed in that case that it was the former and not the latter time. This is reflected at [13] of the judgment of Picken J who said:

There are other indications which point to the inability for the purpose of the construction of a contract to have regard to the change of the custom after the time of the contract. This includes the following:

contractual interpretation looks to the intention of the parties at the time of the contract. Professor Najm referred to the writings of Terre, Simlar and Lequette who wrote “ this common intent [of the parties] can only be determined through placing oneself in the circumstances in which the parties were at the time when they have entered into the contract. This intent is the one that the parties actually had at the time when they entered into the contract.” This is a scholarly writing in respect of French law, but in respect of provisions which have been adopted into Lebanese law (e.g. LCOC Article 366 which is taken from the French Code Article 1156 as set out below).

There was also evidence of a Belgian scholar Frankignoul that the rationale for the incorporation of custom is assumed knowledge of the custom and intention to incorporate it at the time of contracting. Frankignoul was commenting on Articles 1135 and 1160 of the Belgian Civil Code. which corresponded with the French code pre-2016 which in turn corresponded with Article 221 of the LCOC and Article 371 of the LCOC. Dr Moghaizel, after at first refusing to engage with a Belgian commentary, then was driven to concede that the Belgian provisions were comparable to the Lebanese equivalents. Frankignoul’s analysis is that “the Civil Code assumes that the persons who enter into an agreement are aware of the customs, and that by not excluding them from their contract - even if only implicitly - they demonstrate their intent to incorporate them.”

This is supported by Dr Nammour since he says that customs are binding between professionals, but only binding against the customer to the extent he was aware (or can be assumed to be aware) of the custom at the time of contracting. The focus on the time of contracting shows that this is the relevant date for assessing custom. As Nammour wrote: “custom is opposable to the customer only to the extent that he was aware of it at the time of the conclusion of the contract. Otherwise, custom will be unenforceable.”

The prevalence of Lebanese sources is that a bank’s obligation to perform transfers arises at the time of contracting, and by virtue of the express or implied contract, according to 12 urgent matter decisions and three Court of Appeal decisions identified at footnotes 207 and 208 and beneath [80.2] of the Claimant’s opening skeleton argument (Footnote: ¹).

A further matter of assistance in this regard is the code provisions. In Article 366 of the LCOC, it was provided:

In cross-examination, Dr Moghaizel was cross-examined about this provision. It was put to him that this provision was based on article 1156 of the French Code, and the citation above from Terre, Simlar and Lequette was put to him to the effect that under Lebanese law the relevant time to ascertain the intention of the parties was the time when they entered into the agreement. Dr Moghaizel accepted this: see T4/72/1 - T4/73/16. He later sought to say that the position was different with custom because if the custom changed, then the contract changed: see T4/73/17-T4/76/8.

I have expressed reservations above about the evidence of Dr Moghaizel. In this regard, Dr Moghaizel has sought to move from the evidence which he provided in Manoukian. I reject his qualification. I accept that a custom may change, but the interpretation of the intention of the parties of a contract is under Lebanese law to be determined at the time that the parties entered into a contract. If the common intention of the parties is then to follow customs from time to time thereafter, then the change in the custom may change the contractual obligation. However, if the common intention of the parties is apparent from the contract and from the contractual context including or excluding a custom prevalent at the time, then in my judgment that obligation is not altered because of a subsequent change in custom. In coming to that conclusion, I do so based on the evidence of Professor Najm whose evidence I prefer over the evidence of Dr Moghaizel. I have also had regard to the scholarly writings and the case law. I am also following the underlying reasoning in Manoukian to like effect.

Dr Moghaizel suggested that custom is applied to a contract in a similar way to jurisprudence. If the prevailing view of judges changes from the time of the contract to a later stage (e.g. because of a subsequent decision of the Court of Cassation), that is a risk taken by the parties and the prevailing jurisprudence at the time of the dispute or the court case applies. It was submitted that the same applies to new customs. Insofar as it is suggested by Dr Moghaizel that the contract is varied by the operation of a subsequent custom, I have found little or nothing in the scholarly writings and case law to support this assertion. It may be that the custom changes, but it does not follow that the contract changes. By contrast, I accept the learning of Professor Najm to the effect that the contract stands to be construed at the time of the making of the contract. The Bank relied on the writings of Paul Roubier to the effect that there are no questions of conflicts in time: just as the understanding of the law changes, so does custom. In my judgment, Professor Najm was right to say that jurisprudence and custom are not the same. The sentence that there are no conflicts in time is entirely consistent with the relevant custom being the one at the time of the contract. In any event, even if the statement of Roubier bore the meaning given to it by the Bank, this statement is to be weighed against the large amount of material to contrary effect.

The Bank submitted that if the time of contracting was treated as the operative time, then an interpretation might be different on the basis of identical terms and conditions depending on what custom existed at the time of the contract. I reject the notion that this “is likely to create chaos” (the Banks’s closing [70.3]): it simply recognises that contract interpretation (including subject to Lebanese law) is not simply the construction of words in abstract, but is an iterative process moving between the words and anything else which assists regarding the joint intention of the parties. It puts the words into a context at the time of that particular contract between those particular parties to the contract. The difficulty is perhaps exaggerated because it ignores the fact that contracts are often updated. Mr Assaf at [11] of his second witness statement, stated that it was the Bank’s practice to obtain newly signed contractual documents every two or three years.

In any event, there is nothing simpler about the Bank’s construction because this would involve having to consider when a custom changed and whether at a particular point of time, it operated on facts such as this case so as to excuse a bank for failing to make a transfer. That has a practical application to the facts of this case because it is not apparent on the Bank’s case when the custom changed and in particular which instructions for a transfer were before or after the custom change. This is referred to below at [113] in respect of instructions before and after 26 October 2020.

Professor Najm was cross-examined to the effect that Article 4 of the LCC (quoted above) was such that it imposed on the parties to the contract the prevalent custom not only at the time of contracting but also from time to time: see [T3/114/10-T3/115/17]. It is far from clear that Professor Najm agreed to this from a reading of the questions and answers. It would have been an answer in contradiction with much of her other evidence. I read her answers as saying that custom was a source of Lebanese law: see Article 4 and that the contracts were to be understood, interpreted and performed in accordance with customs: see Article 221 of the LCOC. In the context of her evidence as a whole, she was not intending to say that the effect of these provisions was that a consumer would contract on the basis of the custom from time to time.

In the light of the above, I am satisfied that the relevant time to determine the intention of the parties is the time of the contract and not at the time of the request for an international transfer. I am satisfied that the intention of the parties at the time of the contract can be determined from the words of the contract seen in context either without custom or with custom prevalent at that time. If it were the case that the custom thereafter changed, then that does not affect the construction of the contract. If it were the case that it was the intention of the parties that they were agreed that something in the contract would yield to a subsequent change in custom, that might then affect the obligations of the parties.

In my judgment, that is not the case here. First, I have found the obligation about international transfers to arise without reference to custom in any event. Second, to the extent that that construction of the contract was 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. I accept the evidence of Professor Najm that “an amendment to the contract, requiring the agreement of both parties, would be required in order for a new custom to be incorporated” see her report at [101(1)]. As the Court of Appeal of Beirut said in Byblos Bank SAL v Marie Rizk 11 February 2021 “the bank cannot unilaterally refuse to perform the transferor’s order without obtaining the acceptance of the other party, as long as the contractual relationship between the parties is not terminated by agreement or in court.”

Customs are only enforceable against a customer where the customer knows about the custom at the time of contracting: see the reference to Nammour above. Thus, even if the custom changes, the changes will be irrelevant, at least against the customer. Dr Moghaizel also sought to rely on the recent student law to the effect that the law compels banks to make transfers, but only in certain limited circumstances. The legislation did not contain any recitals to the effect that the banks were entitled to withhold transfers generally. The Bank’s case is that this was a tacit recognition of the restrictions put in place by the Lebanese banks. This does not imply that it was lawful, but seeks to address a particular problem affecting students. Further, it does not follow from the student legislation that no bank transfers are available outside the circumstances for which that law provides.

This is all subject to other arguments which will be considered such as whether a change of custom provides an acceptable reason or reasonable excuse for a bank to refuse the request for an international transfer. It also begs the question as to whether there was a change of custom at all, which will be considered below.

The Bank puts forward answers which do not depend upon the time when the custom is established. It states that even if it were the case that the custom was established at the time of the contract, it was subject to an exception of “an acceptable reason.”.

In Manoukian at [86-93], Picken J held the following:

At [118] of Manoukian following a detailed analysis of Lebanese decisions, Picken J concluded as follows:

The foregoing is a recognition 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.

Thus, the obligation is qualified by established matters such as insufficiency of funds of the account holder, insufficient information to identify the beneficiary, anti-money laundering and counter-terrorism funding regulations and policies, suspicions of fraud (whether fraud on the client or a third party) and sanctions or restrictions on the transfer of sums to particular countries.

The argument was run in Manoukian that the qualification to the absolute obligation could be extended to a concern on the part of a bank that complying with a transfer request would risk a run on that bank and other banks. In Manoukian, neither Dr Moghaizel, nor the expert for the customer Dr Najjar, went so far as to say that it could extend to a concern about a run on the bank. Picken J in Manoukian therefore rejected this as a reason not to accede to a request for an international transfer.

There are other reasons for rejecting the attempt to widen the acceptable reason exception. First, there was no evidence to the effect that the acceptable reason extended to a concern about a run on the Bank. In my judgment, it is for the Bank to prove this exception and to state how and when it arose. The Bank failed to adduce evidence to this effect.

Second, it is not contended that this reason would come within force majeure: see the Bank’s opening at [80]. That is because there is no evidence that it would be impossible to make the transfers. Mr Bikai accepts in his witness statement that the Bank “could, hypothetically, satisfy an individual customer’s international transfer request”: see Mr Bikai’s second witness statement at [14]. Thus, the requirement of impossibility is not met. I accept the evidence of Professor Najm that there is no reason to lower the bar of force majeure through an acceptable reason exception. The circumstances relied on by Dr Moghaizel could not amount to force majeure. Professor Najm is right in her assessment that there is no good reason to have a dilution of force majeure, sub silentio, through an acceptable reason exception.

If there was an exception to force majeure, one would expect it to be referred to in the Lebanese cases. There is none. Instead. the Lebanese cases have been to contrary effect. 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: see the cases cited in Manoukian at [107] Decision no. 17/2020 dated 17 January 2020 Urgent Matters Judge Rola Chamoun, at [108] Decision in Rahman v Lebanese Credit Bank SA, Decision no. 5/2020 dated 13 January 2020 Urgent Matters Judge Rita Herro and at [109] Makhlouf, Decision no. 240/2020 dated 30 July 2020, Urgent Matters Judge' Carla Shwah.

At [112] in Manoukian, reference was made to Byblos Bank v Rizk, a decision of the Court of Appeal in Beirut (Third Chamber) dated 11 February 2021, in which the decision of an 'Urgent Matters Judge' requiring the bank to perform a transfer of AED 136,000 to the UAE was upheld, the bank had challenged the Urgent Matters jurisdiction on the basis that, so it was suggested, there was a serious dispute as to the existence of any custom such as that alleged in the present case. The Court of Appeal said the following relevant to force majeure:

It was submitted that Professor Najm accepted that whatever the scope of force majeure, she accepted that acceptable reasons were the same test as legitimate reasons: see [119] of the Bank’s closing submissions. However, the context in which that question was asked was not by reference to the acceptable reason for not honouring a request for an international transfer, but to Article 181 of the LCOC which reads as follows:

As has been submitted correctly on behalf of the Claimant, that is referring to the position before a contract is entered into. In this case, the contracts were entered into when the Bank agreed to take on the Claimant and others as customers, and not at the time of the relevant requests for international transfers. In the context of certain relationships there must be a legitimate reason to refuse to contract. That does not apply where the contract is already in existence. In the context of a banking contract which required the bank to accede to requests for international transfers, I reject the submission that Article 181 enabled the Bank to rely on a legitimate reason to refuse to provide consent to the transfer.

Third, reliance on the risk of insolvency is misconceived. The cases do not countenance that the possibility of insolvency can be an acceptable reason. The consequence would be to prefer the Bank’s shareholders over depositors. It was submitted on behalf of the Bank that the Bank was seeking to protect its deposit holders. To send a large sum to one depositor might prevent sending money to “small customers”. The Bank cannot fall back on some procedure different from insolvency or some other procedure recognised under Lebanese legislation. The submission was by reference to the evidence of Ms Abou Hanna [T2/10/25-T2/11/13]. When asked if any analysis had been done as to the effect of payment on other depositors, Ms Abou Hanna admitted that there was no analysis, simply that liquidity at banks abroad was limited. In my judgment, this does not give rise to a defence to a legal obligation to honour a request for an international transfer. Likewise, guidance by an association of Lebanese Banks (the ABL) does not provide a reason not to honour such a request.

This attempt to invoke a process whereby the Bank or a group of Banks can decide whether to honour requests for transfers is to allow a unilateral action as an excuse for not honouring obligations. It is tantamount to an imposed moratorium falling outside the agreement of the parties or statutory provisions. It bears no relationship to the provisions which entitle a bank not to make the transfer e.g. where there are insufficient funds or where a bank would be assisting or facilitating illegality of some kind.

Even if the above were wrong, there would still have been very significant problems about timing. In order to distinguish this case from Manoukian, the Bank submits that the failure of the bank in that case was because the instructions in that case were before the change in custom. The last of the instructions in that case was 26 October 2020: see Manoukian [26-34]. On this basis, if the change of custom was 26 October 2020, the earliest time after the instructions in Manoukian, that would be after the first two instructions to transfer in the instant case (6 September 2020 and 20 October 2020). On this basis, the first two instructions in this case would have been before the change of custom, and so transfer instructions of $470,000 and the full balance then standing to the USD Current Accounts would have fallen outside the change of custom.

For all these reasons, the reliance on acceptable reasons makes no difference. There must be exceptions to the scope of the obligation to effect international transfers e.g. where there are not sufficient funds, so as not to assist money laundering or fraud and the like. There is no basis for an acceptable reason because some banks consider that there will be a run on the banks. Likewise, it is not an acceptable reason because a lot of banks have ceased to provide this service.

The Bank seeks to say that there is no obligation to honour the request for an international transfer for a different reason. Dr Moghaizel’s evidence is that the Bank does not provide the facility of the international transfer pursuant to the original banking contract, but in its position as an agent. An agent cannot be compelled to act as such. The relationship of the banker in connection with international transfers was that of agent for the customer. His position is that each transfer represented a separate mandate to which the Bank must consent: see his report at [82]. He said that the bank transfer of funds is not mentioned in Article 314 of the LCC and they are governed by Articles 769-822 of the LCOC. He relied on Article 769 of the LCOC which provided:

Dr Moghaizel said that the banking contract was not the source of the obligation to provide the international transfer, but it was an offer of cashier services, and not an obligation to execute all cashier services requested. The case of the Bank is that the French law prior to 1941 was that consent was required prior to each transfer, and that more recent French doctrine is to that effect: see the Bank’s opening at [34.2]. Thus, cashier services were offered only at the time of the opening of the account, but each order required the specific consent of the Bank: see Bank’s opening at [34.3]. The Bank’s position is that Article 181 of the LCOC referred to above applies in that there is no pre-existing obligation to act on the mandate, but the Bank, having offered to provide banking services, cannot refuse it without a legitimate reason.

The evidence of Dr Moghaizel was also that an agent can terminate the mandate as a matter of general law even if there is an express term to require the transfer to take place. He relied on Article 808 of the LCOC that an agency comes to an end among other things due to revocation of the agent. He said that an acceptable reason exception arises because the agent is the principle only if such termination is sudden, untimely and without an acceptable reason and as stated in Article 822 LCOC: see Dr Moghaizel’s report at [109]. (Footnote: ²) At one point during his evidence, Dr Moghaizel abandoned this theory, twice conceding that, if a bank was under a contractual obligation to make a transfer, and there were sufficient funds in the account, and the bank had successfully made all compliance checks, it would not be able to refuse to make the transfer (absent force majeure).¹⁷⁶ He was then shown that this was inconsistent with his report, at which point he sought to resile from this evidence: see [T4/111/4-T4/112/7]; T4/113/16 – T4/114/8]; [T4/114/9-T4/115/10]. It was common ground that Article 808 can be excluded and so it must be the case that it could yield to custom or to contractual terms.

In oral opening, the Bank relied on Bonhomme (Dalloz), and in particular paragraph 122 thereof, for the proposition that banks only agreed to offer transfer services, and therefore that a fresh consent is needed for each transaction.

The Bank also submitted that it can elect in consenting to provide cashier services to decide how to pay e.g. by cheque or by transfer or by cash.

Dr Moghaizel relied especially on Dr Nammour’s writings. The Bank’s evidence was that a bank transfer was a consensual transaction that takes place by agreement of the transferring bank, the transferee bank and the customer which is separate from the bipartite banking contract. Reliance was placed on Dr Nammour in his specialist banking doctrine who observed that:

Each of these points has been answered on behalf of the Claimant. As regards the general mandate and the suggestion that the Bank acted as agent with a discretion on each transfer, I reject that suggestion. The sources (including Byblos Bank v Rizk, Bonhomme (Dalloz), and Hamel) all say that the bank gives general undertakings upon opening the account, and that the bank’s ability to refuse to perform transfers is thereafter tightly circumscribed. Therefore, the concept of consent is being used not to describe contractual consent, but rather:

the practical requirement for the bank to comply with its instructions, having made the necessary compliance checks; and/or

the need for certain limited additional criteria or pre-conditions (i.e., that the instruction must be properly given, that the transfer must be lawful, and that the customer must have sufficient funds) to be met and/or verified.

As regards the suggestion that there could be selective termination of elements of the mandate without a termination of the relationship between banker and customer, this too is rejected. The suggestion has been expressly rejected by the Court of Appeal in Beirut, which said as follows in Byblos Bank v Marie Rizk (referred to above) as follows:

The above is consistent with numerous urgent first-instance decisions in which it was said that there was no discretion on the part of the bank to refuse the transfer: see the Claimant’s closing at [45] and his opening at [86.2].

As regards the contention that the bank is merely offering to provide cashier services at the time of the banking contracts, that owes its origin in part to a misleading translation of the relevant sentence (as Dr Moghaizel agreed). he word which has been translated “offer” is in fact “rendre”, which means “to deliver” or “to provide”. Further, as Prof Najm explained in her oral evidence, the totality of the passage including at [120-121] in fact supports her view that the bank generally undertakes to perform transfers upon opening the account. The better explanation is therefore that Bonhomme and the other sources use the concept of consent in the manner suggested above.

I accept the evidence of Professor Najm that a transfer is the implementation of the prior commitment of the Bank upon opening the account to perform as the client’s agent the current cashier services requested by the client. It therefore follows that:

the bank is obliged to carry out the customers local or international transfer orders unless that obligation is explicitly excluded in the contractual documentation;

the bank's consent is not required or needed prior to the issuance of each transfer order;

an alternative way of saying the same thing is that a consent must be provided to the bank transfer by the Bank, but it is obliged to provide that consent because of the banking contract, unless it comes within the cases where it is excused from the transfer such as want of funds in the account of the customer or facilitation of fraud, money laundering or other illegality. Put this way, there may be consent to the bank transfer, but that does not mean that the Bank is able to refuse the transfer. This is because of its prior obligation in the banking contract;

the obligation to perform the transfer is an obligation of result and must be discharged without delay: see Professor Najm’s report at 107-124;

the Bank could not unilaterally refuse to make a transfer, whilst retaining the money deposited by the client As she said in the joint report in her column in point 2 of areas of disagreement in respect of question 8: “Under Lebanese law, and as a matter of good sense, the bank is not allowed to keep the contractual relationship, while derogating from its main obligations (cashier services). Terminating one of the bank’s main casher services, while maintaining the bank deposit contract […], would deprive the customer of part of what he had contracted for.”

Were it otherwise, the admission of the Bank about the custom relating to international transfers would be so watered down as to be of little use to a customer in a controversy with a bank. The Bank would be able to terminate the agency at any time unilaterally and thereby remove the content of its obligation. Even if it was by reference to a legitimate reason, it would still undermine the basis on which the customer contracted, namely to be able to use the cashier services at any time subject to the customer having money in the bank to cover the transfer and not being involved in or facilitating fraud or money laundering or other illegality. Essential to the banking relationship was that the Bank would honour the instruction of the customer during the banking relationship. The conduct of the Bank does not honour that essential obligation.

I reject the case to the effect that the mandate could be honoured by an election on the part of the Bank to provide a cashier service of its election. It makes no commercial sense, and I do not accept that this alleged entitlement of the Bank has been demonstrated by any of the materials placed before the Court. If such an election could be made, it would have far-reaching implication. If there was urgency about an international transfer, a payment by cheque may take a long time to process. The payment of say £10,000,000 in cash rather than by way of an international transfer would provide very challenging difficulties in an age when even a small fraction of such a sum would be difficult to deal with having regard to concerns about money laundering. It would simply be not the service for which the customer has contracted.

More generally, Professor Najm relied in particular on scholarly writings including:

Ali Addine Awedh, an Egyptian scholar, but whose writings have been cited in the Lebanese Court of Appeal, including his publication “Banking Operations from a legal perspective 1993 no. 158 pp.202-203 who said:

Salman Bou Ziab Bank Transfer, Operations of Local and International Transfers, Comparative Study for Lebanese and French law, 1985 p.88:

Cabrillac in ‘Le cheque et le virement’ (5th Ed.) said:

Encyclopedie Dalloz, another French work, states that it has “always” been the case “that the banker who has accepted to open an account has therefore undertaken towards the client to effect the transfers that the latter asks him to operate; he cannot therefore refuse to make a transfer”. [This too was cited by Picken J in Manoukian [82] who pointed out that this passage has been applied in recent decisions in Lebanon, including, for example, the ‘Enforcement Judge’ decision in Bank of Beirut SAL v Hasan Makki, Decision no. 54/2021 dated 30 November 2021.

Lebanese jurists have relied upon the Encyclopedie Dalloz. It was cited by Thus, Fabia and Safa said the following:

The reliance on Dr Nammour was misplaced in that it failed to take into account Dr Nammour’s writings as a whole and in particular:

Nammour’s Instruments de Paiement et de Crédit (from 2008)¹⁹⁷ says “the bank is not required to execute a transfer order […] unless at the date of the order, the funds are available” and “The transfer order is part of a general mandate related to the collection to which the bank committed”.¹⁹⁸ Picken J relied on this passage in Manoukian, but, despite that, Dr Moghaizel did not provide a translation of it for these proceedings. (There are further examples of Dr Moghaizel’s selective translations of Nammour’s works.)¹⁹⁹

Nammour’s Droit Bancaire (from 2012)²⁰⁰ contains no suggestion that the bank’s consent is required, but on the contrary says, “The banker shall execute the transfer as soon as he has received the order”. (Footnote: ³)

The evidence of Professor Najm comprised court decisions including the following:

Lebanese court decisions over the last two years including numerous Urgent Matter Decisions of which the preponderance support the Claimant’s right to an international transfer. There was no decision denying the bank’s obligation to perform the transfer. The “widespread majority” of the decisions of the Urgent Matter Decisions that they have jurisdiction because the customers right to obtain the execution of the transfer is not seriously disputable. The same conclusion has also been reached by enforcement courts. Three decisions issued by urgent matter courts have simply considered that the issue is disputed and should be addressed by the Court's ruling on the merits. These decisions have not taken a position on whether there is a banking transfer obligation or not.

Decisions of the Lebanese Court of Appeal from the Urgent Matters Decisions. In Traboulsi v Fransabank SAL, the Court of Appeal decided that the depositor’s claim was one of serious dispute going to the jurisdiction of the Urgent Matters Judge. In the following cases, it was found that the bank had an obligation to provide transfers in Blom Bank SAL v Khalil Nakad and others 26 April 2021 Court of Appeal in Mount Lebanon; Byblos Bank v Marie Rizk, 11 February 2021 Court of Appeal in Beirut; and Chucri Kurban and Randa Chahine v Bank of Beirut, SAL. 31 March 2022 Court of Appeal in Beirut. In the last case of Kurban and Chahine, the bank in that case had accepted the mandate to transfer, which is a distinguishing feature. Nevertheless, the Court of Appeal stated the following in general terms and germane to the instant case:

In Byblos Bank v Marie Rizk (referred to above), the Court of Appeal in Beirut said the following:

Three of the academic commentaries cited by Professor Najm concern Lebanese law (Awad, Bou Ziab and Gannage) and Awad has been relied upon in a Court of Appeal decision on the question of transfer rights: see Traboulsi v Fransabank (16.12.21), albeit one which decided that the depositor’s claim was the subject matter of a serious dispute and therefore excluding the conditions for the intervention of the judge for Urgent Matters;

There was also a French work of Hamel (Banques et operations de banque, Avant-propos) from 1943 which states the law as at the spring of 1939, which proves that the transfer right existed before the 1941 codification. It was therefore about a practice which was part of the jurisprudence incorporated into Lebanon at the point of it becoming an independent state: see the joint of the experts report at page 35.

A large part of Professor Najm’s sources (decisions of the Court of Appeal, Urgent Matter Decisions and various commentaries) were referred to in the Claimant’s opening at [86] and at footnotes [231-241].

It is to be noted that there are no relevant substantive decisions of the Court of Cassation. I have rejected the submission that absent a decision of the Court of Cassation that this Court must decide the matter without reference to the case law of other courts in Lebanon. It is accepted that they are less authoritative than decisions of the Court of Cassation, but they provide some guidance particularly as here where there is a preponderance of case law for certain propositions.

It is still significant to note that there have been challenges by banks in recent cases where they have been ordered to carry out international transfer requests which has led to rulings by the Court of Cassation on requests for a stay. There were identified four decisions where there were orders for stays, but there have been five recent decisions issued on 11 January 2022 where the Court of Appeal decided to confirm decisions taken by Courts of Appeal rejecting the claims for the stay of enforcement. They are referred to at page 42 of the report of Professor Najm at footnote 74. Dr Moghaizel’s evidence is that it is very rare for a stay of the decision of the summary procedure judge to be ordered, not least because that would be inconsistent with the urgent and essentially interim nature of the jurisdiction (as found by Foxton J in Khalifeh at [129], and quoted above). A stay is only to be granted when it appears clear to the relevant court (whether the Court of Appeal or the Court of Cassation) that the consequences resulting from enforcement would be unreasonable, or if there is a likelihood that the appealed decision will be overturned.

I take all of the above into account, but I bear in mind that if and to the extent that the decision about a stay indicates that a likelihood that the decision will be overturned (unless it is on the unreasonable consequences ground), it is only in the context of a decision which is a jurisdictional determination about the judge of urgent matters and not a substantive ruling. I also have regard to the more recent decisions where no stay was ordered.

In the circumstances, I am satisfied on the basis of the evidence as a whole about the following matters:

The custom, insofar as it is relied on, against which the contract is to be interpreted, must be determined at the time of the contract and it does not suffice if there was a different custom at the time of the instruction to transfer.

There is no acceptable reason in a loose sense on which a bank can rely. There are acknowledged and limited reasons for a bank not to act on the instructions of its customer comprising reasons such as lack of funds or involvement in an illegal transaction (referred to more fully above), but a desire to avoid a run on the banks is not a reason not to make an international transfer pursuant to a contractual obligation. Nor is any other characterisation of the desire of the Bank to refuse to make an international transfer in response to the current banking crisis.

There is no reduced concept of force majeure capable of application to the concern about a run on the banks.

Nor is there any analogous loose concept of acceptable reason capable of justifying the refusal to provide a bank transfer for reasons such as avoiding a run on the banks or to avert insolvency or to distribute money between customers in a way that it would regard as fairer.

The Bank is unable to refuse to execute the instruction on the mandate by reference to being an agent because the pre-existing contractual obligation took priority.

In any event, I am not satisfied that the alleged new custom satisfies the requirements of a custom under Lebanese law. The experts agree in this case that for a custom to be binding, it must meet the following two requirements, namely:

repetitio – it must have been repeated over a reasonable period of time: it requires a general and longstanding and constant action, practice or other behaviour; and

opinio necessitatis – it must be subjectively regarded as a binding norm: it a psychological element referring to a general acquiescence to the factual element in that it must be followed: see the Bank’s opening skeleton at [58]..

Given the admission that there was a custom until at least November 2019 to effect international transfers (subject to an acceptable reason referred to above), there is still the question as to whether the requirements of repetitio and opinion necessitates were satisfied such as to change the custom.

I am not satisfied that these conditions were satisfied. As regards repetitio, it had to be of long standing. In older times, particularly before modern communications and especially the internet, it would have required a very long time to replace a custom of long standing. Dr Moghaizel’s view was that a custom could be overtaken almost instantaneously. In cross-examination, he accepted that the emergence of a custom “cannot be overnight”, but rather “it must be a matter of months” at least rather than weeks or days. He referred to it taking “long months” [T4/181/9-20]. The question in this case was whether it had changed.

The Bank’s case was that there was a constant practice in accordance with the ABL press release. This was a circular of a body of Lebanese banks dated 17 November 2019 in which members were advised to impose uniform capital controls to avoid a collapse of the Lebanese banking system. International transfers were not to be executed unless they fell into permitted categories such as education purposes, urgent personal expenses or were from funds introduced into the Lebanese banking system after November 2019. The effect of this, as submitted by the banks in Manoukian at [25] was that “implicit in these circulars is the acknowledgement that banks are not obliged to provide international transfer services in amounts or for reasons other than those stipulated.”

There are problems about demonstrating that this gave rise to a custom. Although there was an internal email of 25 November 2019 about a process for accepting instructions for payments, there is no document evidencing the Bank’s acceptance of the ABL press release. In any event, the Bank did depart from the press release in that it refused to pay amounts which might fall within the permitted categories (family health insurance, payments to the landlord for refurbishment work). It would pay only some urgent expenses, and not others. Mr Bikai indicated that payments would be made for the Claimant’s father, evidently a wealthy customer on the basis that his requests would be granted exceptionally and on the basis that he had been a customer for a long time.

Dr Moghaizel accepted in oral evidence that the banks’ practice was not consistent but started in phases and took several months with transfer instructions being honoured less and less over time. This was the result of a bank run in October 2019, of the default of sovereign debt in March 2020 and of COVID becoming serious in Lebanon in about May 2020. In short, the position was changing over a period of time and there was no consistency in approach. This was confirmed by the Claimant. There was a newspaper article from the Financial Times of 13 July 2020 indicating that some customers were preferred over others. This was inconsistent with the agreed requirement of a general longstanding and constant (unchanging) practice.

As regards opinio necessitatis, there must be a belief in the legally binding force of the custom. The case for the Claimant was that this could not be the case in view of how widespread were protests and objections including a series of press articles and FCO documents, objections by associations of liberal professions, the volume of litigation (there were 340 cases in 2020 and 279 in 2021, and 88 commenced by 20 May 2022). The Bank said that the custom did not have to be universally accepted, and it sufficed if it was generally accepted. In my judgment, those numbers are not negligible numbers: it is not a natural inference that all others accepted the position: they might have been watching for the result of those cases and hoping that they could follow a successful result for themselves. That does not connote acquiescence. At least one of the members of the ABL, namely AM Bank objected to ABL’s action on the basis that it should have safeguarded the depositors and rectified matters in their best interests.

The Bank’s argument is that opinio necessitatis is not akin to acceptance, but that it is sufficient if there is a general feeling that the practice is inevitable. Even if that were right, and the authority for the point is sparse (see the reference to a commentary from Deumier referred to at [70] of the Claimant’s closing skeleton), the evidence of protests, objections and hundreds of lawsuits contradict such a feeling of acceptance Dr Moghaizel agreed that people were not happy [T4/197/10-202/12]: it is hard to see how this amounts to general acceptance.

In Manoukian, there was a particularly apposite part of the judgment of Foxton J at [131] in the following terms, namely:

I respectfully adopt the foregoing. It follows from the discussion above that the Bank has failed to establish that there was a change in the custom. A circular of the ABL was not sufficient to end a custom or to create a new custom. There was no evidence of constant practice. There was no evidence of sufficient acceptance of it from customers of Lebanese banks or outside the banking community in Lebanon.

For all these reasons, I am not satisfied that an acknowledged custom at the time of the making of the contracts ceased to operate. This is at least for the following reasons:

the Bank has failed to show and/or it has not been demonstrated how or when the custom which it acknowledged to exist before the banking crisis came to an end;

The evidence does not satisfy the twin requirements of repetitio and opinio necessitatis;

the desire to avoid a run on the banks was not an acceptable reason insofar as this was an exception to the pre-existing custom;

A custom incorporated into a contract could not be replaced by a different custom without the assent of the parties to the contract;

The Bank was unable to avoid the obligation to transfer by relying upon a right not to accept the request because it was acting as agent or to terminate the mandate as agent because the obligation to transfer was pursuant to the contract itself.

Professor Najm did not accept that there was any such concept as an acceptable reason exception (insofar as it was any wider than the refusal to provide a transfer for want of funds/illegality etc referred to above): see [84, 96 and 103-104] of her report. Nor was this accepted in any of the scholarly commentaries on which she relies: see footnote 221 to the Claimant’s opening (at [83.3]).

It is common ground in this case that if the Court were to decide that the transfer obligation had arisen prior to the tender and deposit procedure in January 2022 that the claim (subject to questions of remedy, that is to say specific performance or damages) should succeed. This follows the acceptance by the banks in Manoukian that article 822 would be inappropriate in those circumstances. In Manoukian at 130, Picken J said as follows:

In the light of this, the tender and deposit cannot assist a bank that is under an accrued obligation to transfer. It therefore follows that it is not necessary to consider the submissions which would have arisen for determination in the event that I had not found that there was an accrued obligation to transfer.

In my judgment, specific performance is available to the Claimant for breach. It is the evidence of Professor Najm that it is available, even that it is the primary remedy. I take into account that Professor Najm is supported by the following:

three scholarly commentaries: see Bou Ziab, Bou Nassif and Eid: see footnote 376 to the Claimant’s opening skeleton argument at [120]. (The fact that this was not mentioned by other scholars does not affect the overall position, as explained by Professor Najm);

at least 22 urgent matter cases referred to in the expert evidence;

a very recent decision of the CFI (i.e. a full merits decision), namely Traboulsi v Fransabank (of 21 June 2022).

Dr Moghaizel’s attempt to argue otherwise is less impressive for the following reasons:

his original report at [173] seemed to agree, but he then said that there was missing word “not” such as to express the opposite view;

he did not cite any case or doctrine in support of his position, and as regards the case law, his case must therefore be premised either on the fact that case law is irrelevant or inadmissible or in the instant case wrong, neither of which is satisfactory;

the bank cannot be compelled to act as an agent for the customer. This is not accepted generally. More particularly, when the court makes an order for specific performance the action is being done to fulfil an order of the court and not to act pursuant to the agency.

As noted above, in Manoukian, it was common ground in the pleadings that specific performance was available, despite Dr Moghaizel having given evidence for the banks. Having found against the banks, Picken J ordered specific performance.

If specific performance had not been available, it is agreed that subject to liability, damages would have been an appropriate remedy. On the basis that the customer has been deprived of an international transfer, there was a suggestion that the value to the customer of the cheque in Lebanon might have to be the subject of a credit, that is 13.6 per cent of the value on an international transfer. This was apparent in an exchange between the Court and Mr Isaacs QC [T5/177/21-T5/180/12] In my judgment, there is no need to give any credit against the full value of the sum which would have been transferred. There is some doubt as to whether the cheque with the notary public is still available to the Claimant. If the cheque is still available, it is circuitous that the Claimant should make use of this instrument at the expense of the Bank rather than have the full sum in damages without a deduction. In order to avoid double recovery, the Bank would upon payment of the damages be able to cancel the cheque.

It is common ground that the statutory rate for interest under Lebanese law is 9% per annum.  I am satisfied that this applies to decisions awarding foreign-currency payments.  This was established by the Court of Cassation in 2019: see Court of Cassation, 4^th Chamber, Decision no.10/2019 of 21 February 2019. Dr Moghaizel’s statement that “Lebanese courts have applied lower  interest  rates  for  decisions  awarding  payment  in  foreign  currency” is not supported by cases and cannot be sustained.  The Claimant is therefore entitled to interest at 9% per annum according to Lebanese law.  The point has not been addressed as to whether the amount of interest may be governed by domestic law in respect of an interest on a debt the subject of litigation in England and Wales.  The question is whether the lex causae (Lebanon) applies or the lex fori (England and Wales), and if it is the latter, does it make any difference to the rate to be paid?  There is a useful discussion in Dicey, Morris & Collins on the Conflict of Laws 15^th Edition especially at paras. 7-103 – 7-105. 

It may in the end make no difference because either interest in the context of specific performance may be substantive law (as is alluded to at the end of the joint report of the experts) or the interest rate under section 35A of the Senior Courts Act 1981 may be sufficiently flexible to allow the court to fix an appropriate rate having regard to the relevant law of the lex causae.  This consideration was not in the draft judgment which I handed to the parties, but the point ought not be ignored.  I therefore shall do the following, namely (i) make the part of the order about interest a payment on account, (ii) leave open the amount of interest to the consequentials to be heard in the week commencing 22 August 2022.  In addition to considering interest on this basis, there is also to be considered interest by reference to offers made to date.

It follows from all of the above that I have concluded that:

the Bank had a contractual obligation to make international transfers as sought by the Claimant and which it failed or refused to make;

The contractual obligation is established from the combination of the words used and the intention of the parties having regard to the context of the agreement of the parties.

It is not necessary to consider custom as part of that context, and so the construction would be arrived at without reference to custom.

The contractual construction is reinforced by reference to the custom which existed at the time.

It therefore follows that it is not necessary to consider whether there would have been an international transfer obligation if the matter had depended entirely on custom.

The transfer obligation is not absolute, but it is not so loose as to incorporate what was described as an acceptable reason beyond inadequate funds and established reasons such as not assisting fraud, money laundering or illegality.

In coming to these conclusions, I have considered all of the evidence before the Court. That includes (without limitation) especially the following:

The expert evidence and my findings which are to accept the evidence of Professor Najm and, where there has been conflict, to prefer the evidence of Professor Najm to the evidence of Dr Moghaizel.

I have found the evidence of the Claimant to be honest and reliable and have referred to a number of deficiencies in the factual evidence on behalf of the Bank. All of this is relevant to the context within which the contract is to be construed and in assessing the joint intention of the parties.

I have been assisted by the decision of Picken J in Manoukian. However, I have been careful to avoid simply following Manoukian, mindful that the contractual terms are not identical and that the evidence was different in the two cases.

I am satisfied that the current crisis in Lebanon and/or a desire to follow any advice of the ABL and/or a desire to avoid a rush on the banks or to treat depositors according to some notion of fairness of the banks does not provide a legitimate reason or an acceptable reason (if there is such an exception to the obligation on the part of the bank to transfer money to the order of the Claimant) for not acceding to the requests for the international transfers in this case.

The Bank is liable to the Claimant for not acceding to his requests for transfers.

That suffices for the purpose of the judgment, but I shall now revert briefly to the eight questions.

For all these reasons, there will be judgment for the Claimant in the form of an order for specific performance in the sum of USD7,790,624 together with interest at an annual rate of 9%. The periods of interest will be from the date of the transfer obligation until payment. The parties shall draw up an order to reflect the foregoing.

It remains for the Court to thank all Counsel and solicitors for the very high standard of preparation and presentation, both in writing and orally, which has been of great assistance to the Court.