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We offer our clients innovative and personalized solutions across a wide spectrum of services and industries including: Real Estate, Franchising, Intellectual property, Insurance, Payment gateways and solutions, F.M.C.G , Pharmaceuticals, Biotech, Printing and publishing, Healthcare, Industrial, Hospitality, Fintech, Private equity, Power and Energy, Infrastructure, Start-ups, technology and TMT including digital media.
We cover the full spectrum of employment matters and cases and are proud of our successes in settling amicably most of the employment disputes.We accompany the employers and the employees as of early stages of negotiation and offer advisory as well as litigation and ADR services, all in connection with labor and social security laws. We provide a full range of legal services in relation with employment agreements and documents, including negotiating, drafting and reviewing. Our services tackle, inter alia: Termination Restructuring Mobility End of service Internal regulations, policies and codes of conduct Social security Authorizations, licenses and work permitsRead More
We provide high-quality, practical and innovative solutions in dealing with real estate assets. We have strong real estate and construction credentials, and our clients comprise property owners, institutional investors, developers, contractors and project managers. We act on behalf of our clients on real estate purchases as well as on agreement negotiations, drafting and reviewing. Our services include: Sales and purchases Construction and construction management Development, financing and operations Property investments and disputes Joint ventures PartnershipsRead More
We deal with domestic and international tax planning for companies and high-net-worth individuals and families by advising on most tax effective solutions, updating our clients continuously on tax regulations amendments and deadlines, as well as handling authorities’ declarations and tax procedures on behalf of our clients.Read More
We act as business partners to our clients and are involved in decisions related to the legal, commercial aspects of the business life. We offer comprehensive advisory services for local and foreign companies including corporate ﬁnance, business advisory and management consultancy. We handle companies' full spectrum day-to-day operations and commercial activities. Our services include, at a glance: Shares allocation management Commercial documents and agreements (Memoranda of Understanding, Shareholders’ agreement, Non-disclosure and confidentiality) Franchising Bankruptcy and liquidation Corporate governance, corporate asset planning and structuring Foreign investments, anti-dumping and subsidies, Incoterms Mergers and acquisitions, stock and asset backed purchases, leveraged buyouts, recapitalizations and takeovers Data privacy and data protectionRead More
We offer specialist advice across the spectrum of corporate and business crime including: Criminal litigation services Criminal investigation and prosecution CybercrimeRead More
We handle a wide range of litigation and alternative dispute resolution services in complex domestic and international disputes covering various sectors such as civil, commercial, real estate, banking, insolvency, inheritance, crime and employment. Our litigation and ADR services include: Legal research Field actions (courts, registries, notifications) Memorandum drafts Foreign correspondents and partners’ liaison in cross-border cases Complex negotiations Ad hoc and institutional commercial arbitrations, notably under ICC rules and QICCA (Qatar International Center for Conciliation and Arbitration) Mediation casesRead More
We deal with both lenders and borrowers and advise on general corporate banking, lending transactions, takeovers and leveraged finance, including but not limited to day-to-day banking needs, loan agreements and investment plans. Our comprehensive experience in banking and finance and our debt and equity capital markets services enable us to cover a wide scope of transactions such as: Initial public offerings (IPOs), secondary, and follow-on stock offerings Corporate debt and bridge financings Convertible debt offerings and equity-linked securities Private Equity and mezzanine financing Private placements Liability management transactions, (tender offers and exchange offers)Read More
We work closely with high-net-worth individuals and families to support them in planning, managing and protecting their wealth, local and international, for future generations. Our services include: Trusts, foundations and companies Asset planning solutions ranging from distribution of assets and wills to complex global holding structures Asset management and protection Advisory and cross-border implementation of solutionsRead More
Tohme Law Firm is a top-tier boutique law firm in Beirut, Lebanon, providing a broad range of legal services tailored to both businesses and individuals, with a focus on corporate and commercial law, estate planning and alternative dispute resolution.
The firm was founded by Youssef Georges Tohme in 1979 and the Firm’s clients are leading companies operating in various sectors in Lebanon and abroad as well as high-net-worth individuals.
We walk the talk. Here is a glimpse of what we have been doing for the past 42 years.
Since the coronavirus has been spreading around the world, the majority of the affected States have taken strict measures in order to decrease the virus spread, including full lockdowns, businesses shutdowns and closures. These measures have been reported to affect the performance of contractual relationships, to disrupt business, notably trading, supply chains and business services both at the international and domestic levels. The repercussions on employment have also been significant and have affected the contractual obligations of employers and employees. On 15 March 2020, the Lebanese government has declared a state of “general mobilisation” applicable until 29 March 2020, extended afterwards until 12 April 2020. The decision included shutting down Beirut airport, seaports and land borders. It also stated, beside the closure of all restaurants, shops, entertainment facilities, schools and universities, the suspension of work in the private sector (with some exceptions related to basic consumables and transport). How are the various parties affected by this general mobilisation likely to react? All speculations currently turn around the concept of Force Majeure. Therefore, we reflect below on the concept of Force Majeure under Lebanese Law and the extent of its application in the current circumstances to the affected parties, with a focus on employment agreements. Analysis What is Force Majeure from the perspective of Lebanese Laws? The concept of Force Majeure in contractual obligations is referred to by article 341 of the Lebanese Code of obligations and contracts as the “impossibility of performance of an obligation” because of an external event to the acts or faults of the debtor. In the absence of a clear definition of the Force Majeure in the Lebanese legislation, both doctrine and case law converge on the following definition: “Force majeure is an unforeseen unavoidable external event beyond parties' control that prevents one or both parties to a contract from fulfilling their obligations”. This said, the qualification of an event as a Force Majeure requires the fulfilment of three conditions cumulatively, developed by judges and courts. The event must be unforeseeable, unavoidable and external. Unforeseeable means that the event that led to the impossibility of execution of the obligation was unexpected and could not be reasonably predictable by the parties at the time of signature of the contract. Therefore, a recurring epidemic would most probably not be deemed as unforeseeable. Unavoidable means that the party with the obligation of execution was not able to resist or prevent the occurrence of such event. Since COVID-19 is declared by the majority of States and by the WHO as an epidemic, it is most likeable to be considered as unavoidable. External means that the event was driven by external factors unrelated to the will of any of the parties and beyond the control of the party invoking Force Majeure. The Lebanese Government's decision of public mobilization would most likely be deemed “beyond the control of the party invoking Force Majeure”. Needless to point out that an event will not be qualified as Force majeure unless it prevents the debtor of an obligation from performing it. This idea is in the core concept of “Force Majeure” as enshrined in the above-mentioned article 341 of the Lebanese Code of obligations and contracts and constitutes one of the required criteria of Force majeure under article 1218 of the French Civil Code. This said, the fact that an obligation has become more onerous or more difficult to perform is not sufficient to qualify the event of Force Majeure. Therefore, if the impact of current epidemic is merely to make the performance of an obligation more difficult or onerous, it would most probably not be considered as an event preventing the performance of contractual obligations. How do parties to affected contracts benefit from invoking Force Majeure? If the party invoking Force Majeure succeeds in demonstrating that its conditions indeed apply, two consequences are possible: In principle and as stated in article 341 of the Lebanese Code of obligations and contracts, if Force Majeure leads to permanent non-performance of an obligation, it has the effect of terminating the contract and exempting parties from performing their obligations. However, article 343 of the Lebanese Code of obligations and contracts states that, the exemption of performance is always related to the extent of impossibility resulting from the Force Majeure. Therefore, if the demonstrated Force majeure partially prevents the performance of an obligation, parties will be merely partially discharged from their obligations. Another scenario could occur when Force Majeure leads to a temporary prevention of performing obligations. In such a case, Lebanese legal theory and jurisprudence state that the contract/agreement will be suspended for the duration of the Force Majeure, only if the end of the Force Majeure's impact is predictable within a reasonable period of time. This is explicitly stated in article 1218 of the French Civil Code. Will coronavirus be qualified by Lebanese courts as an event of Force Majeure? There is no such a thing that a certain event would constitute a Force Majeure in absolute terms. Lebanese courts proceed on a case-by-case basis in order to qualify an event of Force Majeure and examine the circumstances of each case in concreto. This explains why the same event can be considered as Force Majeure in some cases but not in others, and why we cannot, at this stage, qualify COVID-19 as a Force Majeure. Generally, Lebanese courts tend to adopt a strict approach in applying the Force Majeure criteria. There are no judgements or decisions related in particular to epidemic cases in the Lebanese case law. The cases mainly revolve around war situations and even war was not considered as a Force Majeure in some circumstances. Coronavirus seems to verify the conditions detailed above of a Force Majeure event, but its qualification as such depends on the circumstances of the case where it will be invoked and their appreciation by the court. It remains to be seen how Lebanese courts will deal with COVID-19, depending on the impact it will develop on contractual obligations in the upcoming weeks, months. Does the same reasoning apply to employment agreements? The concept of Force Majeure does not change in employment agreements. However, its application is different. It is strictly limited by article 50 (F) of the Lebanese Labour Law. Article 50 (F) of the Lebanese Labour law grants the employer the right to terminate all or some of his/her establishment's employment contracts in the event of Force Majeure or of compelling economic or technical circumstances, such as the reduction of size of the establishment, or replacement of a manufacturing process by another, or final stop of work; all this under two mandatory cumulative conditions: (1) The employer is required to notify the Ministry of Labour of his/her intent to terminate those contracts one month prior the execution. (2) The employer is required to consult the Ministry regarding the method of termination of employment contracts taking into consideration the employees' seniority, specialisation, age, social and family status, and means deemed to be necessary for their re-employment. That being said, the only option foreseen by the labour law in case of Force Majeure, is the termination of contracts under the abovementioned conditions. The Ministry of Labor intervenes to verify if the termination is justified. The Ministry can also go further as to request that these measures be necessary for the survival of the company and be justified only and directly by the event of Force Majeure, in this case, by coronavirus. If such procedure is not followed, termination shall be deemed unlawful. It is obvious that the spirit of the Lebanese Labour law and case law is protective towards employees. No other provisions than article 50 (F) of the Lebanese Labour law would be applicable on termination of employment agreements for Force Majeure and Lebanese courts tend to be strict regarding the application of the conditions of article 50 (F) of the Lebanese Labour law and consider these conditions as part of the Ordre Public. At this stage of the coronavirus situation does not justify by itself the termination of employment contracts. Where the prevention of performance caused by a demonstrated event of Force Majeure is only temporary, the consequence is in principle the suspension of contracts, as mentioned under the second question above tackling how contracts in general are affected by Force Majeure. What would be the fate of the employees' salaries if the employment agreements are suspended? In its decision of general mobilization on 15 March 2020, the Lebanese Government ordered the suspension of “work” in all private companies (subject to few exceptions) until 29 March 2020, extended until 12 April 2020. However, the mentioned decision remained silent regarding the fate of employment agreements and salaries meanwhile. Since the Labour law is also silent regarding such a particular scenario, some suggest the applicability of article 624 of the Lebanese Code of obligations and contracts that enshrines the principle of “No work without remuneration”, in order to infer that employees who are unable to perform their employment obligations immediately lose their right to remuneration. We do not favour such an opinion at least not with a radical and immediate effect, considering that the Labour Law - protective of employees' rights- prevails on the application of the general provisions of article 624 of the Lebanese Code of obligations and contracts. In addition, article 7 of the Arab Convention No. 15 concerning the determination and protection of wages of 1983, ratified by Lebanon in 2000 and applicable in this case, states that employee has the right to his complete remuneration even if he was prevented from performing his work when such prevention is caused by external factors unrelated to his will. Within the same logic, Lebanon Legislative-Decree No. 17/1977 on organising the consequences of work suspension caused by Lebanese war, distinguished at the time between the temporary failure of performance of obligations, for which the employment agreements were suspended, on one hand; and the definitive failure of performance of obligations, for which the employment agreements had to be terminated, on the other hand. It also had foreseen the payment of salaries (although lower than the initially agreed on salaries) even in the period of suspension, which aimed at having the employers and the employees share the burden of the ongoing circumstances. How could employers behave in the absence of definitive solutions? Currently and in the absence of any legislation determining the fate of employment agreements and salaries during general mobilization period, employers are invited to proceed, in our opinion, with progressive and fair alternatives for their employees, instead of immediately and completely suspending contracts and cutting salaries at this stage. We are of course limiting our reasoning here to acts arising directly and solely out of the coronavirus situation. Lebanese employers have already been struggling for months, sometimes years, because of the economic and financial situation in the country; the repercussions of which are different and will not be tackled below. In situations where the nature of work allows it, the employers shall be taking all necessary measures to ensure the work-from-home for their employees. In such cases, employees shall be considered on ordinary working hours and their salaries shall be normally paid. In other cases where working from home is not possible for employees, and the nature of work does not allow its suspension, the employers may negotiate with the employees a progressive and temporary plan applicable along the period of general mobilization. The plan may determine a replacement schedule among employees, or a decrease in salaries according to decreasing working hours; these plans being only temporary. In all cases, we suggest having the employees participate in discussions and consent on any measure taken, even if temporary. It is also recommended that the employers notify at least the Ministry of Labor all the plans they may be applying during the relevant period as soon as they can. In cases where working remotely is not accessible to employees and these latter are obliged to remain home, and since they will be in quarantine, employers can start by considering that employees are on sick leaves according to article 40 of Labour Law. Another possibility could be to consider employees on annual paid leave, since article 39 of the Labour Law stipulates that every employer has the right to fix the annual leave days of the employees according to work requirements. All the above is provided under current legislation in force, we are hoping for new legislation which would put an end to the improbabilities caused by COVID-19 and fairly determine the fate of affected employment agreements. Away from statutory provisions of Force Majeure, what else could parties in a contract consider? Force Majeure/hardship clauses: parties may have inserted a Force Majeure or a hardship clause in their contract, intending to cover cases in which unforeseen events occur that fundamentally alter the equilibrium of a contract resulting in an excessive burden being placed on one of them. These clauses, like any other contractual clause, will be interpreted and applied by the judge, according to the will of both parties. Parties shall also bear in mind that the effectiveness of these clauses might be foiled by judges if their existence threatens the rights of the weaker party (employment contract, consumer contract...) by making him/her bear liability even in events of Force Majeure. Negotiations and revision of contract: although the revision of contract could not be enforced by judges under Lebanese Law so far, even in cases of a major alter in the equilibrium of the contract, parties can however negotiate and decide on that by common agreement at any stage of the performance of contract. Acting in Good Faith: parties may tend to neglect the importance of “good faith” principle in contractual obligations. Under the Lebanese legislation, this principle has a particular importance as the parties are obligated to act in good faith at each and every stage of the contract, from its negotiation to its termination. That said, in these difficult times, acting in good faith is as relevant, if not more. Parties shall take all necessary measures to mitigate each other's loss, to notify each other with steps that need to be taken, to communicate and negotiate when possible/necessary, and most importantly, to avoid the sanctioned behaviours of abuse and fraud.
Although face to face meetings are now less of an option, and the exchange of hard copy documentation is becoming more difficult, contracts must continue to be concluded in order to ensure the continuity of businesses. For this reason, the reference to electronic documents and contracts is currently increasing as a viable option for business, and the electronic signature is encouraged as an alternative to “wet ink” signature where it is practicable and available with little or no legal risk. This being said, the question is: are electronic contracts enforceable and digital signatures valid in Lebanon? This commentary answers the question and sets out the legal requirements for the validity of e-documents and e-signatures under Lebanon Law No. 81/2018 Related to Electronic Transactions and Personal Data. Lebanon Law No. 81/2018: Lebanon's first step into the e-transactions' world On 10 October 2018, Lebanon joined the modern business network where electronic communications are good practice, by issuing an e-transactions and data protection law under Lebanon Law No. 81/2018. Up until this date, e-documents and signatures could merely serve - upon judges' discretion - as a preliminary evidence and data protection was absent from the Lebanese legislative environment. Lebanon Law No. 81/2018 has the merit of acknowledging the existence and enforceability of e-documents and e-signatures, but also of drawing a legal framework for e-commerce and setting a protective ground for personal data. In this article, we will only address the e-documents and e-signatures' validity chapter of the Lebanon Law No. 81/2018. This chapter deserves as special focus taking into consideration the importance and increasing need of businesses for e-signatures. E-documents and e-signatures' validity and recognition Lebanon Law No. 81/2018 has brought a first-time definition to both writings and signatures. The writing is defined regardless of the format used and the medium through which the information is transferred, which can equally be paper or electronic, while the signature is defined by its common function, as a requirement to the completion of a legal process in order to identify the party thereto and confirm their consent to the signed legal process. Moreover, the main achievement of Lebanon Law No. 81/2018 is in equating e-signatures and e-documents with paper-based signatures and documents. As provided in Article 4 of Lebanon Law No. 81/2018, “electronic writings and signatures shall have the same legal effect as the writings and signatures made on paper or any other medium”, under the following two cumulative conditions: the person producing the documents is identifiable; and the documents are organized and stored in a way that preserves their safety, which we will be detailing thereafter. One particular and relevant legal effect tackled by Article 7 of Lebanon Law No. 81/2018 is related to the evidentiary weight of e-documents and e-signatures that will be accepted as evidence and have the same validity and power of proof as the written paper-based document, under the same aforementioned conditions. Otherwise, in case the electronic writing does not meet the mentioned criteria, it will be considered as the introduction of written evidence. The multiple copy rule stipulated in Article 152 of Lebanon Decree No. 90/1983 on the Civil Procedure Law for paper-based documents is still required for e-documents under Article 10 of Lebanon Law No. 81/2018. It is deemed satisfied when the ordinary document is organized as per the reliability requirements set forth in Lebanon Law No. 81/2018, and when the mechanism used by each party allows to obtain or access a copy of the document. Challenges of implementation Although Lebanon Law No. 81/2018 offers many merits, it is however not devoid of “challenges” for the parties who wish to contract electronically or issue an electronic document under the Lebanese law. Official electronic documents A first challenge in the implementation of Lebanon Law No. 81/2018 is related to official electronic documents. These documents will not produce any legal effect until regulated by virtue of a decree of the Council of Ministers upon a proposal of the Minister of Justice. Said decree, yet to be issued, is expected to govern the special procedures and guarantees pertaining to the documents and their scope as provided for in Article 8 of Lebanon Law No. 81/2018. Some transactions that must be official in principle, such as the transactions relating to personal law (marriage, divorce and wills) and to immovable property , tend to be excluded from e-transactions laws in general. This, for instance, is particularly the case of Federal Law No. 1/2006 Concerning Electronic Transactions and Commerce of the UAE. However, Lebanon Law No. 81/2018 does not comprise any exclusion in this regard. We are still waiting to discover whether the mentioned transactions will be electronically possible upon the issuance of the decree of implementation relating to official documents, or whether they will be excluded. Safety of electronic writings and signatures (official and unofficial) Another pertinent challenge lies in the means to ensure the safety of electronic writings and signatures as a legal requirement for their validity. As mentioned earlier, one of the mandatory conditions that will allow electronic writings and signatures to produce the same effects as if they were paper based, is their organization and storage “in a way that preserves their safety”. Article 5 of Lebanon Law No. 81/2018 determines the meaning of “storage of electronic data” as “the recording of the data on a storage medium in a way to ensure that the data is safe and accessible at all times in a way that allows copying or extracting content”, but uncertainty remains as to how to ensure the safety of e-writings and signatures. Lebanon Law No. 81/2018 doesn't seem to be clear about it. So why would parties resort to protection means? And what are some of these means? In fact, safety is key in e-commerce which is why e-transactions must be regulated, with regards to all their particularities and technicalities; for safety brings integrity, and integrity brings reliability. This idea is reflected in Article 15 of Lebanon Law No. 81/2018 which stipulates that “the protection measures are used in electronic writings and signatures to make them more reliable”. The protection measures will help perform several functions such as: verifying the identity of the document organizer, assigning a correct date to the document, and/or ensuring its storage and the integrity of its content (in other words, in way that does not allow the modification of its content). Article 9 of Lebanon Law No. 81/2018 establishes a “presumption of reliability” for electronic signature, if it is produced and authenticated through a procedure by an authorized authentication service provider. Only in this case, it is presumed that the signatory is identified and that the signature corresponds to the legal process in question, unless proven otherwise. But what is an authorized authentication service provider? The reference to one or more authentication service provider (also referred to as Certification service provider or CSP) is one of the means to ensure protection of signatures and writings, stipulated as such by Lebanon Law No. 81/2018. These authentication service providers must, upon performance of said functions, deliver a certificate of authentication to the concerned person, as per Article 15 of Lebanon Law No. 81/2018. Chapter IV of the Lebanon Law No. 81/2018 stipulates that the Lebanese Accreditation Council (COLIBAC) will determine the conditions of accreditation of the CSPs and that an implementing decree is required to address the legal recognition of electronic authentication certificates. In the absence of such decree and considering that COLIBAC is non- operational in performing its functions, in particular determining the accreditation conditions, the full implementation of Lebanon Law No. 81/2018 is unfortunately delayed. In the meantime, and until CSPs are approved by the COLIBAC. the presumption of reliability set forth in Article 9 of Lebanon Law No. 81/2018 is disabled; and instead, the judges will have a discretionary power to assess the power of proof of the electronic signature or writing, unless the parties agree otherwise, as per Article 18 of Lebanon Law No. 81/2018. Lebanon Law No. 81/2018 also stipulates that the functions above (identity of the organizer, date of document, the safety of its content, etc.) may be performed through other techniques as well, left to the creativity of the interested parties since the law does not refer to any of them. General implementation of the law Lebanon Law No. 81/2018 has been in fact effective since January 2019 (three months from its publication in the Official Gazette). However, as stipulated in Article 134 of Lebanon Law No. 81/2018, details of enforcement of Lebanon Law No. 81 /2018 will be defined, where necessary, by decrees issued by the Council of Ministers upon the proposal of the Minister of Justice, the Minister of Economy and Trade, the Minister of Finance, the Minister of Industry and the Minister of Telecommunications, each within the limits of their power. However, Article 64 of Lebanon Law No. 81/2018 remains an exception to the Lebanese government's pace, since it entitles the Central Bank to issue implementing measures to the authentication of e-signatures relating to e-payments. Such autonomy given to the Central Bank in regulating the implementation of laws relating to the banking sector explains why this sector is ahead of the rest of the economy especially when it comes to e-commerce. Given the failure of issuing any implementation decree related to Lebanon Law No. 81/2018, the consecutive council of Ministers that have been in place since its issuance are delaying the implementation of the new Lebanese e-transactions and data protection law. Conclusion and recommendations In conclusion, and thanks to Lebanon Law No. 81/2018, electronic writings and signatures now produce the same legal effects and have the same evidentiary weight as paper-based documents when conditions of safety as detailed above are met. That said, decrees are still needed and authentication providers are still to be accredited in order to consider Lebanon Law No. 81 /2018 as fully applicable. Does that mean that it is still not possible at all in Lebanon to use e-documents and e-signatures? Since the statutory presumption of reliability is currently disabled, the validity of electronic signatures and writings is left to the discretion of judges until Lebanon is able to have “authorized authentication service providers”, according to Article 18 of Lebanon Law No. 81/2018. This, however, does not mean that Lebanon Law No. 81/2018 cannot be implemented but means that users must be taking all necessary measures to mitigate the risk of invalidity of their e-documents and signatures. How would they do it? Article 15 of Lebanon Law No. 81/2018 states that the several functions guaranteed by the protection measures, such as the identity of the document organizer, assigning correct date to the document, and/or ensuring its storage and the integrity of its content, are “provided by one or more authentication service provider who shall, upon performance of said functions, deliver a certificate of authentication to the concerned person”. Therefore, all parties wishing to electronically contract under Lebanese legislation will have to refer to one or more authentication service provider in order to fulfil the two conditions set forth in Article 4 of Lebanon Law No. 81/2018 (identification and safety). We can refer here to the authentication service providers who are currently performing at the international market such as GlobalSign, Adobe, Microsoft, etc. Since no authentication service providers are yet authorized in Lebanon and the power of proof of the electronic signature or writing is left to the discretion of judges, the users are advised to refer to well-known safe and secure CSPs. The more the CSP referred to is safe and secure, the less the risk is. For instance, GlobalSign and Adobe happen to be very well known as secure authentication service providers on the international market, more than Microsoft. If an e-document or signature is authenticated by GlobalSign or Adobe, the risk that the judge would not give it its full power of proof as if it was paper-based is very little, almost non-existent. The good thing is that Lebanese judges are currently being trained by the Internet Society Lebanon on the technical implementation of Lebanon Law No. 81/2018 and are getting more familiar with the names of international CSPs and their particularities, which will mitigate their discretion in assessing the power of proof of e-writings and signatures in case they are authenticated by these particular well-known CSPs. Article 15 of Lebanon Law No. 81/2018 also states that all the above-mentioned functions could be performed through other techniques than the reference to authentication service providers, without mentioning any of these “other techniques”. Could these be for example biometric recognition techniques such as face recognition? In all cases, where parties wish to refer to techniques other than authentication service providers, they are invited to be very prudent in their choice as it will directly affect the power of proof of their e-documents. In the absence of Lebanese case law in this field, we are not sure how the judges will receive and assess the different techniques of authentication. As a last recommendation, it would be useful for parties to e-contracts to incorporate a reference to e-signature in the document itself. They might also agree, in their contract, on the authentication body they are going to use e-signatures according to Article 18 of Lebanon Law No. 81/2018 “unless the parties agree otherwise”.
Mediation in Lebanon was first introduced in 2005, through the Centre Professionnel de Mediation at Saint Joseph University, one of the oldest and most reputable universities in the country. However, it was more than a decade later that mediation was introduced in the Lebanese legal system. In September 2018, the Lebanese Parliament enacted Lebanon Law No. 82/2018 on Judicial Mediation, which introduced judicial mediation into the civil system for the first time. This commentary aims to analyse the law, the scope of judicial mediation, its process and benefits. Raison d'être of judicial mediation Referring to judicial mediation within a court process complies with the recent international development of alternative dispute resolution practice (ADR). The Lebanese Parliament, by adopting Lebanon Law No. 82/2018, aimed at bringing the best of mediation's advantages in the resolution of a dispute that is brought before judicial courts. In the written motives of Lebanon Law No. 82/2018, the legislator first pointed out the constant developments and diversification of commercial transactions and operations in Lebanon; such developments have exhausted the resources of the national judicial system due to the high number of lawsuits and the length that it takes to solve each lawsuit. Secondly, the legislator has indicated that the cost of going to court is not an accessible option for many. Finally, it was mentioned that opting to find a solution in court is not always the best option. Indeed, in court, unlike in mediation, there is always a losing party. This leads to scepticism and criticism of the judge and gives the losing party a possibility for appeal. However, the mediation process aims at reaching an agreement between both parties and finding a solution for their dispute that fits their needs and satisfy their mutual interests. These are the reasons the Parliament found it necessary to implement alternative dispute resolution that would resolve conflicts in a swifter, just and a cost-effective way. The judicial mediation process comprises of full confidentiality, unlike most litigation cases, and ensures that both parties are cooperating and communicating in order to find a balanced compromise. Evidently, the promulgation of Lebanon Law No. 82/2018 aims at encouraging and developing the practice of mediation throughout the nation. The scope of judicial mediation Mediation is a form of alternative dispute resolution. It is best defined as a negotiation between two parties with the assistance of a third impartial party, the mediator. Mediation requires all parties to agree on a solution, and the process usually takes place without the involvement of the court. Judicial mediation however allows the parties to have recourse to mediation only after their disputes have been submitted to court and it can be referred to at any time during the lawsuit and court proceedings according to Article 1 of Lebanon Law No. 82/2018. According to Article 2 of Lebanon Law No. 82/2018, judicial mediation can be referred to in order to solve any type of dispute that do not contradict mandatory laws or public policies and that can be settled by a transactional agreement as provided for in the Lebanese laws. This excludes, for example, non-pecuniary personal rights, matters related to personal status, crimes, bankruptcy or inheritance. Referral to mediation As mentioned previously, judicial mediation can be referred to at any time during the court proceedings. The referral can take place in three instances: if it is proposed by a competent judge in court and approved by all parties involved; if it is requested by one of the parties; or if it was made in application of a mediation agreement clause. Article 4 of Lebanon Law No. 82/2018 specifies that referrals are not subject to appeal by neither ordinary nor extraordinary means. This highlights another reason why mediation can be a faster option to resolve disputes. Proceedings Lebanon Law No. 82/2018 regulates the process of judicial mediation in Lebanon. First, the parties must be present personally (if natural persons) or must be duly represented (if corporate/legal entity) as per Article 12 of Lebanon Law No. 82/2018. During the judicial mediation proceedings, the mediator is legally bound to take into account the needs of all parties involved and apply equal treatment. However, the mediator is allowed to meet with one of the parties separately, but they are prohibited from disclosing any information obtained from the private hearing to the other party as per Article 14 of Lebanon Law No. 82/2018, unless the disclosing party requires or approves it. It is important to note that the mediator is present to assist with the negotiations between the parties, and they, unlike in arbitration proceedings, do not have the power to implement nor to propose solutions to the dispute. According to Article 17 of Lebanon Law No. 82/2018, the parties involved are required to participate in good faith and act cooperatively and transparently; they are invited to agree on a solution that they would both reach for their dispute, preserving both parties' interests. This feature demonstrates that mediation aims to protect and maintain the business or personal relationships of the parties. This is less likely to happen in court. Overall, the duration of the mediation should last a maximum of 30 days from the date of referral according to Article 11 Lebanon Law No. 82/2018. However, the mediation centre may extend this period for an additional 30 days subject to a written request signed and approved by the mediator and the parties. This extension must be notified to the court within three working days. This feature reflects how time-effective the practice of mediation is compared to the traditional litigation process. The mediator Article 1(c) of Lebanon Law No. 82/2018 defines the mediator as a natural person belonging to one of the mediation centres approved by the Ministry of Justice. If the parties do not agree on the mediation centre referred to, the court will determine the mediation centre to resolve the dispute. Lebanon Law No. 82/2018 regulates the conduct of the mediator. The mediator is legally obliged to remain impartial and independent of all parties involved in the process. Under Article 8(2) of Lebanon Law No. 82/2018, the mediator must sign a statement of impartiality and independence. Annex 1 of Lebanon Law No. 82/2018 provides a non-exhaustive list of the impartial and independent conducts. For example, the mediator must give all parties a fair and equal chance to participate and share their view of the dispute, they must not accept any bribes from the parties and must notify the mediation centre of any facts or circumstances that might hinder their impartiality or independence. Annex 1 of Lebanon Law No. 82/2018 further specifies that the mediator must deal with the details of the disputes in full confidentiality and must handle the proceedings in a professional and serious manner. Outcomes of judicial mediation There are two possible outcomes at the end of the mediation. Either the dispute has not been settled, in which case the relevant court will resume its proceedings, or the dispute has been settled, in which case the competent court will grant this settlement an exequatur such as an enforcement order that will render it legally binding. Article 21 of Lebanon Law No. 82 /2018 specifies that the settlement is not subject to appeal by the parties once it has been submitted to court. This once again highlights the time-efficient attribution of the mediation route. Mediation is completed in one of the following situations as per Article 19 of Lebanon Law No. 82/2018: the settlement agreement is signed by both parties; one of the parties submits a written declaration that they no longer wish to continue with the mediation; the mediator submits a written declaration stating that mediation is fruitless, and no solution can be reached via this route; an agreement is signed between the parties and the mediator stating that mediation has ended; one of the parties was absent for two consecutive mediation sessions without a legitimate excuse; or the duration of the judicial mediation (and/or its extension) is expired. Recommendations Worldwide, mediation has proven to be a popular method to solve disputes. This is no surprise as it is an effective, cost-friendly and swift method to resolve disputes. Despite these benefits, the practice of mediation has not fully integrated the Lebanese landscape yet. According to Article 24 of Lebanon Law No. 82/2018, Lebanon Law No. 82/2018 will only enter into force six months after the date of its publication in the Official Gazette. During these six months, the Cabinet of Ministers is invited according Article 24 of Lebanon Law No. 82/2018 to enact implementation decrees, based on the proposition of the Minister of Justice. Although Lebanon Law No. 82/2018 was enacted more than two years ago, not a single referral to judicial mediation has been done by the Ministry of Justice. Due to the absence of implementation decisions taken, not a single mediation centre has been approved by the Government yet. Unfortunately, the benefits of Lebanon Law No. 82/2018 are yet to be enjoyed in Lebanon as the law remains in the theoretical realm. There is an urgent need to promote mediation for litigants to ensure the resolution of commercial and civil disputes. This is especially true now, as the judicial system in Lebanon is being overflowed with cases and disputes due to the economic collapse that the nation is enduring. Mediation will bring a valuable contribution to Lebanese businesses. Even though the Cabinet of Ministers still hasn't fully implemented Lebanon Law No. 82/2018, the Lebanese legal sector is ready to welcome mediation. Indeed, the two main mediation centres in Lebanon are the Centre Professionel de Mediation (CPM) at Saint Joseph University and the Lebanese Arbitration and Mediation Centre established at the Beirut Chamber of Commerce. Furthermore, Lebanon has seen a numerous amount of law firms adding mediation to their services. Integrating the practice of mediation within the system in Lebanon will be beneficial to all, including the parties, the courts and the economy. It is not enough to enact the legislation; we should make sure it is being implemented. The Ministry of Justice is invited to encourage judges to refer to judicial mediation more often as to make a norm out of it.
Lebanon Law No. 175/2020 Combating corruption in the public sector and establishing the National Anti-Corruption Commission was published in the National Official Gazette on 14 May 2020, entering immediately into effect. Subject to parliamentary discussions since 2018, the long-awaited Lebanon Law No. 175/2020 was finally issued and is hoped to be one of the most important steps towards effectively fighting corruption in the Lebanese public sector. Lebanon Law No. 175/2020 provides a definition of corruption for the first time in the Lebanese internal legislation and creates a first of its kind Committee, which would be receiving information about corruption from the public in order to channel it into the adequate prosecution path. Lebanon Law No. 175/2020 not only foresees the creation of the National Committee but also sets its missions and powers, in addition to the special procedure for investigating and ruling in corruption crimes. This commentary aims to analyse Lebanon Law No. 175/2020, providing guidance on its application, challenges and role in combatting corruption in the Lebanese public sector. Background According to the World Bank and the UNODC, developing countries among which includes Lebanon, lose between USD 20 to 40 billion each year through bribery, misappropriation of funds and other corrupt practices. These criminal acts drain economic development initiatives and contribute to the further impoverishment of these countries affecting all sectors such as health, education and basic needs of the population. Lebanon is going through a tragic economic and financial situation due largely to the corrupt practices that have been exhausting the country for decades. Lebanon was ranked 137 out of 180 countries in the 2019 Corruption Index and therefore urgently needs the proper legislative framework to fight corruption, in addition to implementation of effective measures. Lebanon Law No. 175/2020 is, among other laws and recommendations, part of the National Strategy on Combatting Corruption that was being prepared with its implementation plan since 2018 and was recently approved by the Council of Ministers on 12 May 2020. Lebanon Law No. 175/2020 was being discussed in parliamentary sessions since 2018. After having been approved by the Parliament in June 2019, Lebanon Law No. 175/2020 was rejected by the President of the Lebanese Republic and returned to the Parliament to be reviewed. As the impact of corruption on the economy was heavily felt by Lebanese people in the recent years, and as the revolution of 17 October has particularly targeted corruption, serious measures had to be taken in this regard. Amid this social environment, Lebanon Law No. 175/2020 – which was slightly modified compared to its initial project - was finally adopted. Implications and objectives Lebanon Law No. 175/2020 focuses on combatting corruption in the public sector only, due to the particular aggravated danger of corruption in the latter. Lebanon Law No. 175/2020 provides for creating the National Committee for combatting corruption in the public sector, defines its missions and powers and determines the procedures to be followed for investigating and ruling in corruption crimes. Lebanon Law No. 175/2020 aims at detecting corruption, promoting integrity and transparency in the public sector and spreading the culture of combatting corruption in the Lebanese society, notably in the educational sector. Merits and main provisions of Lebanon Law No. 175/2020 Defining corruption Lebanon Law No. 175/2020 defines corruption as the “utilization of the authority or the occupation in relation with the public funds in order to obtain undue profits and benefits for oneself or for others, whether in a direct or indirect way”. Lebanon Law No. 175/2020 also considers corruption acts as all the crimes against the public administration as provided for in the existing legislation such as the Criminal Code and Lebanon Law No. 154/1999 on Illicit Enrichment, in addition to the acts of corruption that are stipulated in international conventions related to corruption which Lebanon has joined. Regarding corruption crimes (crimes against the public administration), all the legislative provisions related to the determination of these crimes and their sanctions, existing before the issuance of Lebanon Law No. 175/2020, remain applicable. Lebanon Law No. 175/2020 determined three additional types of corruption crimes: attaining projects or permits illegally from a public agent for personal benefit; utilizing public funds, means or persons illegally and for personal benefit; and buying or selling movable or immovable properties, based on confidential information non accessible to public related to the increase or decrease of prices, in cases where this information is obtained by virtue of the person´s occupation, authority, partnership, relations, work or service and resulted in an effective profit. Creating the National Committee for Combatting Corruption The National Committee for Combating Corruption (referred to as the “National Committee” herein) created by virtue of Lebanon Law No. 175/2020 is an administrative independent committee and an independent legal person/entity which enjoys both financial and administrative autonomy. As stated in Article 5(b) of Lebanon Law No. 175/2020, the Committee members must execute and practice their mission in complete independence. However, the members of the National committee are designated by a decree from the Council of ministers for un-renewable six years. The National Committee is composed of six members, among which include two retreated judges, a lawyer or a jurist, an accountant expert, a banking or economic expert and an expert in management. The two judges are elected according to the same elections procedures of the Higher Council of Justice, while all the other members are chosen by the Council of Ministers following suggestions made by the correspondent syndicates or orders. With respect to the provisions of Lebanon Law No. 175/2020, the interested entities, syndicates or orders must complete their election or nomination for the first time within a three-month period from the publication of the law. By the end of this timelimit, the Council of Ministers must designate the members of the National Committee within a month. This said, if such provisions are respected, the National Committee will be constituted by September 2020. According to Article 6 of Lebanon Law No. 175/2020, the National Committee members must have high ethics and reputable transparency in addition to their academic skills and experience. They must also comply with the required conditions for nomination, such as age conditions and non-political affiliation. In addition, the members of the National Committee are prohibited from occupying any other professional positions whether in the public or private sector as stated in Article 7 of Lebanon Law No. 175/2020, such as any ministerial, parliamentary, public administration or private company position. Once designated, the National Committee members must take an oath, then prepare (within two weeks) their financial disclosure documentation as stipulated in Lebanon Law No. 154/1999, which will be published on the Committee's website. They must lift the bank secrecy off their personal accounts and those of their relatives. The members of the National Committee enjoy an immunity against all kind of criminal proceedings and cannot be prosecuted or arrested along their mandate unless permitted by the Committee. Moreover, a member of the National Committee may not be removed from office except by virtue of decision from the Council of Ministers after a decision taken by the National Committee with a two third majority and in certain specific cases only, detailed in Article 12(a) of Lebanon Law No. 175/2020. However, the council of ministers shall not suspend or stop the operation of the National Committee or dissolute it under any circumstances, including urgent situations and wars. The National Committee members must meet once per week at least, and whenever needed. The said committee must prepare its own internal regulations determining the detailed procedures applicable to its operation, organization and financial administration including the powers of its president, vice president and other positions. An administrative body is dedicated to cooperating with the National Committee, which can also request the assistance of external experts. The budget of the National Committee will be determined under the general budget and must be sufficient to cover all its expenses and activities. Defining the National Committee's mission The main mission of the National Committee is fighting, preventing and detecting corruption as well as implementing the international conventions related to corruption that Lebanon has joined. In addition to its principal mission, the National Committee is entrusted with special tasks according to the provisions of Lebanon Law No. 175/2020 as follows: receiving complaints relating to corruption, investigating corruption crimes, examining them and assigning them to the relevant entities; monitoring corruption, its causes and costs and the efforts of combatting and preventing it in light of the legislation and adopted policies and conventions, in addition to preparing periodic reports relating to corruption and publishing them; providing its opinion in the legislation, decrees, decisions and policies relating to combatting and preventing corruption; and participating in promoting the culture of integrity and transparency in the public administration and society in general. Moreover, the National Committee is entrusted with some special tasks by virtue of other laws such as: receiving and safeguarding financial disclosure documentation according to the provisions of Lebanon Law No. 154 /1999; protecting and rewarding whistleblowers according to the provisions of Lebanon Law No. 83/2018 on Protecting Whistleblowers; receiving the complaints relating to the non-application of Lebanon Law No. 28/2017 Access to Information Law, investigating such complaints and issuing the correspondent decisions; and receiving the complaints relating to the violation of Lebanon Law No. 28/2018 on Transparency in the Petroleum Sector, investigating such complaints and issuing the correspondent decisions, in addition to other missions stated in Article 19 of Lebanon Law No. 28/2018 such as the surveillance of the transparency of the provided information in the petroleum sector and the drafting of annual reports on the application of the mentioned law. Determining the powers of the National committee The National Committee is provided with special powers for each of its tasks as follows: Investigation and assignment: The National Committee has the power to investigate corruption crimes, whether systematically or based on the information or complaints it receives. With regards to its investigation powers, it can seek the help of the Law Police officers to collect information, and even ask the Special Investigation Committee of the seek the help of the Law Police officers to collect information, and even ask the Special Investigation Committee of the Lebanese central bank to lift the bank secrecy of certain bank accounts. It also enjoys has the right to ask the relevant entities to take all possible preventive measures such as temporary injunctions and freezing of accounts. Once the investigation process completed, the National Committee has the right to assess whether to drop the complaint/case or to assign it to the prosecution or to the adequate judicial body. Monitoring and evaluation: The National Committee has the power of monitoring, documenting and following up on corruption cases. It shall also evaluate the laws and decrees related to fighting and preventing corruption , as well as evaluating the risks of corruption in the public sector. Providing opinions: With regards to providing its opinion in the legislation relating to corruption, the National Committee will prepare annual reports relating to its activities and the adopted public policies, in addition to special reports relating to the state of corruption in Lebanon. It is also entitled to offer advisory in light of the reports that the Lebanese Government has to draft by virtue of international conventions. Advisory: Besides giving its opinion on the legislation relating to fighting corruption, the National Committee can suggest a code of conduct for the public officials and offer advisory for the drafting of the National strategy for combatting corruption. Spreading anti-corruption culture: In the event of spreading the anti-corruption culture, the National Committee will lead studies and research on the mentioned subject and publish the related outcomes and reports. It may also organize conferences and seminars in order to promote the anti-corruption culture. Determining the special procedures for investigating and ruling in corruption crimes Lebanon Law No. 175/2010 states expressly that when the investigation in a corruption crime is led based on the request of the National Committee, the investigation procedure can be implemented without any administrative permission. This procedural rule lifts the protection of the public agents but does not tackle however the immunity of the President, Ministers and deputies which is still guarded by the Constitution. Moreover, the National Committee may ask any Lebanese public administration or administrative entity to provide the necessary documents for its operation. They have the obligation to respond accordingly without any delay. Impact of Lebanon Law No. 175/2020 We are certainly not able to measure the success of Lebanon Law No. 175/2020 nor its impact on corruption in the public sector at this early stage. However, some consequences can already be pointed out. First, the publication of Lebanon Law No. 175/2020 regulated the creation of the National Committee which was long awaited. Certainly, other entities and committees existed before the issuance of Lebanon Law No. 175/2020, such as the Special Investigation Committee of the Central Bank – representing the Lebanese Financial Investigation Unit - created by virtue of Lebanon Law No. 44/2015 on Combatting Money Laundering and Terrorism. Practically, the said committee refuses to receive complaints submitted by the public, even when these complaints are related to money laundering. Besides this committee, the judicial system along with other administrative entities such as the Court of Accounts and the Central Inspection, were entrusted and were supposed to contribute in the fight against corruption but haven't been effective so far. This said, why would we create another entity for combatting corruption? The main advantage behind creating the National Committee for Combatting Corruption might lie in the centralization of all the complaints and issues related to corruption. The latter, dedicated fully to combatting corruption, will be able to receive all kind of corruption complaints, to protect the people who reveal corruption cases and filter them before proceeding accordingly. The National Committee has the discretion to decide to classify a complaint, to assign it to the criminal prosecutor or to submit a claim directly before courts. This may have the effect of avoiding the obstruction of Lebanese courts and other committees with unfounded claims and information as well as ensuring more efficient judicial processes. Moreover, the issuance of Lebanon Law No. 175/2020 enabled the effective implementation of other laws related to corruption such as Lebanon Law No. 83/2018 on Protecting Whistleblowers, as well as Lebanon Law No. 28/2017 Access to Information Law and Lebanon Law No. 28/2018 on Transparency in the Petroleum Sector, as detailed above. Conclusion As previously mentioned, Lebanon Law No. 175/2020 has created the National Committee for Combatting Corruption, which has become indispensable to enable the implementation of several laws related to fight against corruption in Lebanon. Therefore, it is a must. In addition, the Committee can contribute successfully in the long and difficult fight Lebanon must carry out against corruption, but only if it achieves its mission professionally, independently and efficiently, and does not become another financial burden on the Lebanese State without producing any outcome. A couple of months have passed since Lebanon Law No. 175/2020 was enacted and Lebanon has still not observed any serious initiative towards the effective creation of this Committee. It is hoped that this Committee will be created within legal timeframes and will start contributing effectively in the fight against corruption which the country desperately needs. All the above said, this Commission, or any other initiative or body, will not be able to operate and thrive without a clear political will to fight corruption in the country, and without an independent judiciary.
In 2005 the Lebanese government finally enacted the first consumer protection legislation. This is a tardy reaction from the government compared to the international community. Indeed, in 1962, the US Congress acknowledged the necessity to protect the consumer. In 1973 France adopted the legislation entitled “loi orientation du commerce et de artisanal' which canters around consumer protection. In 1975, the European Economic Community adopted a preliminary programme for consumer protection. Meanwhile in Lebanon, the consumer was protected by scattered sources of regulations. For example, Lebanon Decree No. 8664/1968 gave the Ministry of Economy the power to ensure that legislations which are focused on consumer protection are properly applied. This includes Ministerial Decree No. 88/1975 that dictates the regulation of the sale of tin cans or Ministerial Decree No. 3/1979 which regulates rules concerning the display of prices of products. Following discussions and amendments by the joint parliamentary committees and the Parliament, the draft law on Consumer Protection was approved. Lebanon Law No. 659/2005 on Consumer Protection was published in the Official National Gazette on 4 February 2005, entering into force on 10 May 2005. Was Lebanon Law No. 659/2005 worth the wait? This commentary aims to analyse Lebanon Law No. 659/2005 providing guidance on its application and highlighting striking provisions. Merits and main provisions of Lebanon Law No. 659/2005 Recognition of the consumer Decades after most common and civil law jurisdictions, the Lebanese government finally recognised the consumer as a person of legal nature with exclusive rights. Article 1 of Lebanon Law No. 659/2005 defines the consumer as a ‘natural or legal person who buys, rents, utilizes or benefits from goods or services, for purposes other than its professional activity'. Article 3 of Lebanon Law No. 659/2005 sets out the rights of the consumer, which includes fundamental and universal rights such as: the right to information; the right to health and safety; the right to non-discrimination; the right to assert their rights and access to justice; and the right to representation. By recognising the consumer as a subject of legal nature, Lebanon Law No. 659/2005 does not only assert the latter's rights, but also sets out the obligations of the merchant towards the consumer. Article 3 of Lebanon Law No. 659/2005 defines the merchant as ‘a natural or legal person, from the private or the public sector, engaged in the distribution, sale, or rent of goods or in the provision of services, on its behalf, or in the interest of someone else'. The merchant's obligations towards the consumer Obligation of information The most important and relevant obligation placed on the merchant is the obligation to provide the consumer with ‘exact, sufficient and explicit' information about the products as per Article 4 of Lebanon Law No. 659/2005. This is a very important obligation that sets a fair dynamic between the consumer and the merchant Indeed, there is always an imbalance of powers between the merchant and the consumer since the merchant has the upper hand by possessing better access to information. The merchant has the duty to inform the consumer about all the necessary details whether its specific technicalities, potential risks, condition of use etc. This obligation is ensured in many different ways. For example, the price of the product has to be clearly displayed in Lebanese pounds, without the need to ask the merchant as per Article 5 of Lebanon Law No. 659/2005. In the country's situation today, this provision is hardly applied. Now that the Lebanese pound has lost 80% of its currency and is constantly fluctuating, most merchants avoid displaying the price of the products. Furthermore, some businesses only display their products in USD. As per Article 118 of Lebanon Law No. 659/2005, lack of information or misinformation is punishable by a fine varying from LBP 30 million to 50 million. Recent case law demonstrates that the judges apply these sanctions in case of misinformation or lack of information. Cases relating to misinformation have been rising due to the deteriorating economic situation. In 2019 for instance, a judge sanctioned a company under Article 118 of Lebanon Law No. 659/2005 for selling their products at a price higher than the official price originally specified by the competent administration. Obligation of guarantee The merchant is placed under an obligation of guarantee towards the consumer. This obligation translates into various ways. Article 28 of Lebanon Law No. 659/2005 states that the merchant must guarantee the quality of the goods and services. This is an obligation that the judiciary applies strictly. For instance, in a recent case in 2018, a merchant who was found guilty of selling products that contain toxic substances used as a defence that he bought these products from another merchant and thus should not be sanctioned as it was not the merchant's products initially. The judge dismissed this argument and stated that this is not a valid defence as the merchant still remains a professional in the field and should constantly verify the quality of the goods the latter sells. The merchant must also comply with the description of the product or services, whether the description was made by the seller himself or whether it was requested by the consumer in writing. Article 19 of Lebanon Law No. 659/2005 further states that the merchant has an obligation to guarantee invisible defects that damage the quality or render the goods or services unsuitable for destined use. However, it is up to the consumer to prove that the invisible defects existed at the time of the purchase according to Article 30 of Lebanon Law No. 659/2005. Article 32 of Lebanon Law No. 659/2005 states that if the merchant does according to Article 30 of Lebanon Law No. 659/2005. Article 32 of Lebanon Law No. 659/2005 states that if the merchant does not comply with the obligations stated above, the latter must repair or replace the goods or services for no charge within a reasonable time. If the merchant does not do so, the consumer has the right to cancel the contract and request for a full refund. Obligation of safety The merchant also has an obligation of protecting the health and safety of consumers. Article 36 of Lebanon Law No. 659/2005 states that the merchant must provide the consumer with sufficient information about the goods and services and the risk they might pose. Indeed, article 46 of Lebanon Law No. 659/2005 places the liability on the merchant if the consumer was harmed. The latter will be responsible for the damage caused to the public health and safety even if the merchant possessed all the necessary qualifications and certificates related to his profession. The contractual relationship between the consumer and the merchant Chapter 6 of Lebanon Law No. 659/2005 organises the contractual relationship between the consumer and the merchant. This is an important chapter for the consumer as it acknowledges the socio-economical imbalance between the merchant and consumer. By imposing certain conditions and adopting provisions related to the contractual relationship of both parties, Lebanon Law No. 659/2005 aims at restoring and ensuring the balance of powers between the two parties. For example, Article 18 of Lebanon Law No. 659/2005 states that the contract should always be interpreted to the benefit of the consumer. This demonstrates that Lebanon Law No. 659/2005 acknowledges the advantage the merchant generally has in these circumstances, therefore acknowledging the need to place an extra layer of protection for the consumer. Furthermore, Article 19 of Lebanon Law No. 659/2005 imposes different contractual conditions on a contract made between the consumer and the merchant. For example, Article 19 of Lebanon Law No. 659/2005 forbids said contract to refer to documents that were not supplied to the consumer before entering the contract. This ensures that the consumer will have been provided with all the necessary information before entering into the contract. Another important provision in this chapter that seeks to ensure the balance of powers between the consumer and the merchant's is Article 26 of Lebanon Law No. 659/2005. Article 26 of Lebanon Law No. 659/2005 states that all abusive clauses are void and cannot be enforced. The provision sets out a non-exhaustive list of abusive clauses. For instance, a clause that exempts the merchant from its obligations or a clause where the consumer waives rights granted by Lebanon Law No. 659/2005 is considered as an abusive clause. On the other hand, one striking provision in this chapter is Article 17 of Lebanon Law No. 659/2005, because of its lack of protection of the consumer. Article 17 of Lebanon Law No. 659/2005 specifies that Lebanon Law No. 659/2005 applies to all contracts concluded between a consumer and a merchant. However, Article 17 of Lebanon Law No. 659/2005 also specifies that if the provisions of Lebanon Law No. 659/2005 are contradictory to the laws on liberal professions, banks and insurance companies, it is the latter law that will take precedence over the provisions of Lebanon Law No. 659/2005. This means that the articles discussed above will not apply if they contradict banking laws, insurance companies' laws or liberal professions laws. This can be disadvantageous for the consumer because Article 17 of Lebanon Law No. 659/2005 demonstrates that the scope of protection of Lebanon Law No. 659/2005 is limited. It seems like important sectors are discharged from responsibility towards the consumer. The courts have yet to confirm which sectors are specifically included in Article 17 of Lebanon Law No. 659 /2005 and what is the scope of this provision, as no case law has been recorded to date. The role of the government Lebanon Law No. 659/2005 has created two government bodies that play a significant role in consumer protection. The National Consumer Protection Council The National Consumer Protection Council (hereby referred to as the Council) is created by Article 60 of Lebanon Law No. 659 /2005. According to Article 61 of Lebanon Law No. 659/2005, the Council has an advisory role and will provide suggestions and recommendations for the following objectives: to promote the role of the consumer in the national economy; to safeguard the consumer safety and health and protect the latter's rights; to ensure the safety of goods and services and improve their quality; to inform and educate the consumers and to encourage them to adopt permanent consumption methods and to use environment friendly products; and to suggest implementation procedures regarding the provisions of Lebanon Law No. 659/2005. The Consumer Protection Directorate The Consumer Protection Directorate (hereby referred to as the Directorate) is created by Article 63 of Lebanon Law No. 659 /2005. According to Article 64 of Lebanon Law No. 659/2005, the Directorate's mission is to ensure the implementation and the application of Lebanon Law No. 659/2005 by: ascertaining the quality and safety of goods and services; controlling prices and price movements; preparing documents and publications related to consumer education and awareness; and conducting research. The Directorate ensures this implementation through its own employees, judicial police officers and competent employees from the relevant Ministries as per Article 71 of Lebanon Law No. 659/2005. Dispute settlement Lebanon Law No. 659/2005 offers two ways (outside of the judiciary) to resolve disputes. The first one is through a mediation process and the second one is through the dispute settlement Committee. The mediation process If the dispute is worth less than LBP 3 million, then the dispute should be settled through mediation as per Article 83 of Lebanon Law No. 659/2005. The mediator is appointed by the Ministry of Economy and Trade and their decision is enforceable by law. It can be noted that the expertise level of the mediator is not known and that leaves a lot of discretion to the ministry. One can raise concerns about how neutral the mediator can actually be if the latter is appointed by a government body. The conditions of the mediation are detailed in Article 83-97 of Lebanon Law No. 659/2005. According to Article 93 of Lebanon Law No. 659/2005, the mediator suggests a solution for both parties, the parties have the option to accept the solution or reject it. If they do not reach an agreement on the suggestions, then the unsettled dispute must be addressed to the Dispute Settlement Committee created by Article 97 of Lebanon Law No. 659/2005. The conditions of mediation set out by Lebanon Law No. 659/2005 seem to go against the logic and purpose of the conventional mediation process. Traditionally, the mediator aims to facilitate the communication between both parties until they reach a common agreement. However, in Lebanon Law No. 659/2005 the current mediation process is closer to a “conciliation” than a mediation. The Dispute Settlement Committee Article 98 of the Consumer Protection Law No.659/2005 states that the Dispute Settlement Committee (hereby referred to as the Committee) is concerned with disputes arising between the consumer and the merchant, regardless the value of the dispute, with respect to the “mediation” process for disputes of less than LBP 3 million. It is important to note that the Committee possesses an important role in protecting the consumer because it has an exclusive jurisdiction over the disputes related to consumerism. This means that it is the only body in Lebanon that has the authority to pass a final judgement on relevant disputes. Amendments of Lebanon Law No. 659/2005 In 2014 a series of publicized scandals concerning food contamination and lack of proper hygiene generated a wide response from government to ensure that food safety is treated as a pressing issue on the Lebanese cabinet's agenda. This pushed the government to take a closer look at the 2005 provisions of Lebanon Law No. 659/2005. There was a wide consensus from the public and officials alike that the articles relating to fraud in Lebanon Law No. 659/2005 do not effectively deter fraud, especially in terms of penalties. This lack of protection against fraud heavily affected the food sector, posing serious risks to the health and safety of the Lebanese consumers. It is in this political climate that Lebanon Law No. 659/2005 was amended by Lebanon Law No. 265/2014 on 15 April 2014, entering immediately into effect. Lebanon Law No. 265/2014 replaced 19 provisions of Lebanon Law No. 659/2005 in view of ensuring strict compliance with the consumer protection law. Sanctions Almost half of the provisions of Lebanon Law No. 265/2014 concerns sanctions. As a response to the criticism and in order to deter fraud, Lebanon Law No. 265/2014 imposed stricter sanctions. For example, Article 8 of Lebanon Law No. 265/2014 amended article 108 of Lebanon Law No. 659/2005. Previously, the imprisonment sentence was three months to one year long and the fine varied from LBP 20 million to 75 million. After the amendment, the prison sentence is longer varying from six months to two years long and the fine is more expensive, varying from LBP 50 million to 150 million. The same kind of change occurred in Article 109 of Lebanon Law No. 659/2005 where the amendments imposed a stricter penalty by prolonging the prison sentence and making the fine more expensive. It is clear that Lebanon Law No. 265/2014 was produced to tackle particularly fraud in the food sector. Indeed, Article 13 of Lebanon Law No. 265/2014 replacing Article 117 of Lebanon Law No. 659/2005 sets out conditions where the penalties can be reduced. However, the same article specifies that this reduction do not apply in the event of committing the crimes related to food commodities stipulated and punishable in Lebanon Law No. 659 /2005. The Dispute Settlement Committee Articles concerning the Dispute Settlement Committee were also amended in 2014. Although the Committee is practical as it would make it easier for consumers to seek legal compensation from predatory merchants, it has been widely criticised for its lack of work. This pushed the government to amend Article 101 of Lebanon Law No. 659/2005 by adding that the Committee must issue a decision within six months from the claim being filed. The Consumer Protection Directorate Finally, Lebanon Law No. 265/2014 specifies more details about the responsibilities of the Consumer Protection Directorate to ensure that the provisions of Lebanon Law No. 659/2005 are applied in practice. For example, Article 3 of Lebanon Law No. 265 /2014 states that the Directorate should confiscate all papers that prove the violation of Lebanon Law No. 659/2005 or that lists the people who may be responsible and deliver the documentation to the competent officials. The Directorate must also confiscate goods that are found to be counterfeit, toxic, unfit for consumption, or not in conformity with the general standards, or that endanger the health and safety of the consumer. Furthermore, Article 4 of Lebanon Law No. 265/2014 states that the Directorate must also confiscate the materials, machinery or equipment that were used to manufacture, collect and package contaminated goods. Afterwards, it must close down the location and refer the file to the competent court. Conclusion It is clear that enacting the long-awaited Lebanon Law No. 659/2005 as amended by Lebanon Law No. 265/2014 is just the first step. It was a necessary step to take from an economic standpoint and from a basic right standpoint. Despite the 2014 amendments of the current legislation, the food sector in Lebanon is still plagued by fraud and contaminated food as of 2020. The legislator still needs to address certain shortcomings in Lebanon Law No. 659/2005 and make sure that the sanctions are applied in practice. For example, there needs to be a better protection for the consumer when the latter is faced against powerful bodies such as banks or insurance companies. It seems like the law is limited. Furthermore, new conditions should be set in place in order to ensure that the dispute settlement process is clearer and provides a neutral and objective solution as the Dispute Settlement Committee is still controlled by the Ministry of Economy. Lebanon Law No. 659/2005 should clarify whether arbitration is an option for dispute settlement. Finally, this initiative should be accompanied with an independent judiciary, without one, the fight for consumer rights would not prevail.
Under the initiative of Cabinet Minister Raymond Edde, Lebanon Law No. 1/1956 on Bank Secrecy was adopted in 1956 establishing bank secrecy in Lebanon. The latter was inspired by the Swiss banking system and believed that the country could reap benefits from a similar system. The policy makers were influenced by two main factors: A political factor: At that time Lebanon enjoyed political stability unlike its neighbouring countries such as Syria and Egypt which were affected by political instability and an outflow of investments. An economic factor: The desire to attract foreign deposits into the Lebanese banking sectors. This was an ideal context to adopt a bank secrecy law. Lebanon Law No. 1/1956 incited investors and elites of the region to transfer their assets into the Lebanese banking sector. Lebanon at the time was the only country in the Middle East to adopt a liberal system economically and politically, hence acquiring the label of “the Switzerland of the Middle East.” Lebanon Law No. 1/1956 benefited the country and contributed to the growth of the banking sector. However, almost 70 years later, the Lebanese banking sector, paralysed by the worst financial crisis in Lebanese history, bank insolvency and de facto capital controls faces major public distrust. From economic growth to economic collapse, Lebanon Law No. 1/1956 still applies today. This commentary aims to explain how Lebanon Law No. 1/1956 is implemented, identify its beneficiaries and determine its limits. Merits and main provisions of Lebanon Law No. 1/1956 The scope of banking secrecy In essence, banking secrecy is an agreement between banks and the clients by which the client's activities and details remain confidential and private. Article 2 of Lebanon Law No. 1/1956 prohibits banks in Lebanon to disclose information about their clients such as their name or their funds to anyone whether it is a private individual or a public authority. This duty is imposed on the managers, employers, directors of the bank and anyone who, by virtue of their position, has information concerning the bank's books transactions or correspondence. According to Article 1 of Lebanon Law No. 1/1956, this duty applies to all banks in operation in Lebanon, including branches of foreign banks. Lebanon Law No. 1/1956 did not intend to create secrecy as a privilege to be enjoyed by banks, but rather intended to impose banking secrecy as a duty that banks must observe, not only for the benefit of the economy and the banking profession, but also for the interest of the public. Sanctions for violations of Lebanon Law No. 1/1956 The violation of banking secrecy is considered a misdemeanour. Article 7 of Lebanon Law No. 1/1956 specifies that it is punishable by imprisonment for a period of three to twelve months under the Criminal Code. The same sanctions apply to any attempts of violations under Article 127 and 203 of the Code of Currency and Credit. Furthermore, a person who was indicted for this violation is prohibited from undertaking employment in the banking sector. This prohibition is permanent and applies to both intentional (sanctioned under criminal law) or unintentional (sanctioned under common law) violations. Exemptions from bank secrecy There are limited exceptions to banking secrecy in Lebanon. These exceptions are either derived from Lebanon Law No. 1/1956 itself, or from other sources in domestic legislation such as Lebanon Law No. 159/1999 on Illicit Enrichment. Exceptions found within Lebanon Law No. 1/1956 Article 2 of Lebanon Law No. 1/1956 specifies that information concerning the names of the clients, their funds or any related matter may be disclosed only if: the client or the concerned heirs gave their written consent, the client is declared bankrupt, or in the case where a lawsuit is taking place between the bank and the client over banking operations. Article 7 of Lebanon Law No. 1/1956 also specifies that banks are exempt from invoking professional secrecy if they are requested to do so by judicial authorities concerning illicit enrichment lawsuits. This exception was initially tied to the old Illicit Enrichment Laws of 1953 and 1954 but currently concerns the latest illicit Lebanon Law No. 159/1999, which we will discuss further in the next section. Exceptions in other domestic laws Lebanon Law No. 159/1999 on Illicit Enrichment Lebanon Law No. 159/1999, adopted in 1999 and recently amended in October 2020, criminalizes illicit enrichment and defines it as the significant increase in the assets of a public servant, judge or associates. Initially, Lebanon Law No. 159/1999 stipulates that banks are forbidden from invoking bank secrecy under Lebanon Law No. 1/1956 when investigations conducted by the relevant judiciary in cases of illicit enrichment are concerned. Additionally, Article 2 of Lebanon Law No. 159/1999 imposes a duty on public officials to submit a financial declaration of their assets and their families' assets. Article 3 of Lebanon Law No. 159/1999 further specifies that the public officials must submit this declaration upon assuming office and upon termination of their services. The recently amended Lebanon Law No. 159/1999 imposes that an additional declaration must be submitted every three years. Lebanon Law No. 159/1999 ensures that there are regular inspections. The new amended version of Lebanon Law No. 159/1999 pushes for more transparency, which in turn affects banking secrecy in multiple ways. For instance, the definition of public officials has been extended. Previously, a public official was defined as any person exercising a public function, the amendment now includes any person working on behalf of the government. This means that more people must declare their assets, therefore affecting the principle of banking secrecy on a greater scale. Foreign Account Tax Compliance Act (FATCA) The Foreign Tax Compliance Act is a legislation enacted in 2014 by the US. This legislation was applied worldwide, imposing a duty on banks and financial institutions to report to the Internal Revenue Service on accounts with FATCA indicia (US citizen, US citizen, power of attorney holder, etc.). Due to the strict sanctions involved, banks across Lebanon had no choice but to comply. Accordingly, secrecy on the concerned accounts is lifted. Lebanon Law No. 44/2015 on Fighting Money Laundering and Terrorist Financing In 2001, the Parliament adopted Lebanon Law No. 318/2001 on Anti-Money Laundering and the Fight Against Terrorism, which was subsequently amended by Lebanon Law No. 44/2015 on Fighting Money Laundering and Terrorist Financing. Lebanon Law No. 318/2001 aimed to conform with international anti-money laundering standards by imposing transparency without getting rid of banking secrecy. Lebanon Law No. 318/2001 created the “Special Investigation Commission” (SIC), an independent legal entity with judicial status. The SIC was granted the permission to lift banking secrecy as a temporary and preventive measure in order to investigate money laundering offences. The scope of the SIC's power widened in 2015 when Lebanon Law No. 44/2015 amended the original legislation. Lebanon Law No. 44/2015 extended anti-money laundering offences to corruption, tax evasion, embezzlement and illicit enrichment. This widening of possible offences gives permission to the SIC to lift bank secrecy in a larger amount of cases. Furthermore, Lebanon Law No. 44/2015 imposes a duty on bankers and professionals in the banking sector to apply due diligence, organise, store data of their clients and notify the SIC if they suspect that money laundering offences are being committed. Lebanon Law No. 55/2016 on the Exchange of Information for Tax Purposes New international laws and norms have gradually challenged the banking secrecy law in Lebanon over the decades. Many regulations from other jurisdictions have pushed bank secrecy in Lebanon to the edge. In 2016, the Lebanese Parliament enacted Lebanon Law No. 55/2016 on the Exchange of information for Tax Purposes as an implementation of the Conventions on the Mutual Administrative Assistance in Tax matters (MAC and MCAA) ratified by Lebanon. Lebanon Law No. 55/2016 enabled Lebanon to incorporate the Common Reporting Standards (CRS). Simply said, countries who are participants of the CRS must obtain and gather information from their financial institutions and exchange this information to other jurisdictions on an annual basis. This impacted the banking secrecy in Lebanon. It imposed a duty on banks and other financial institutions to identify the clients who are tax residents outside Lebanon. Banks and other financial institutions have a duty to compile and collect the information related to their clients' accounts and any related matters and send it to the relevant authorities in Lebanon, who in turn provide the information to foreign jurisdictions. Conclusion On 28 May 2020, the Lebanese Parliament intended to implement a new legislation that would override bank secrecy rules in order to fight the ongoing corruption that has plagued the country with an unprecedented economic crisis. This project has been scrapped, and so far there is no clear vision of whether such a legislation will be ratified at all. Banking secrecy was once an important tool for Lebanon's economy. However, it is clear today, amidst the economic collapse, that banking secrecy is no longer the beneficial tool it once was. Throughout the years, banking secrecy was transformed into a mean of corruption instead, for both public officials and citizens. In 2020, professionals across the country are trying to salvage the economy by organizing a way to recover stolen assets that were hidden and protected by Lebanon Law No. 1/1956. Asset recovery begins by collecting information about the assets concerned, and this cannot be possible if these assets are still protected by banking secrecy. This calls for a reform whereby at least political figures would be excluded from the privilege of banking secrecy. The banking sector is currently facing a complete public distrust and in order to regain this trust, transparency is a key.
As the USD/LBP market exchange rate skyrockets, and since the October 2019 uprising, the public debate has shifted to focus on the fight against corruption. The economic crisis in Lebanon has been an ongoing freefall and was bound to happen ever since the establishment of the post-civil war economic model coupled with massive corruption and years of neglect. One of the major reforms that could reshape Lebanon’s economy towards a more sustainable model is the reform of public procurement. This reform was a cornerstone in 2018 in the design of the CEDRE conference. Lebanon’s public procurement system is very fragmented, inefficient, and deeply corrupt, the quality of the procurement system is below average. It accounts for 20% of the central government expenditures and 6.5% of the Gross Domestic Product (around USD 3.4 billion) on a yearly average. According to Transparency International, Lebanon ranks 137 over 180 countries when it comes to the quality of public procurement. The legal framework governing public procurement was archaic, contradictory, and cleared the way for political patronage. The lack of laws and regulations has led to a decline in the quality of public procurement: Lebanon Decree No. 14969/1963 on Public Accounting and Lebanon Decree No. 2866/1959 on Public Tenders, as amended in 1963, have lost all validity. The corrupt political class takes advantage of the gaps in the texts and the political coverage to conclude amicable contracts which are, most of the time, inefficient and unsuccessful. The Lebanese government promised, ever since the CEDRE conference in 2018, major reforms to the public procurement sector. In 2018, the government announced the Capital Investment Program (CIP). In order to reorganise public procurement by introducing model specifications and clear procedures, Lebanon needs to provide itself with a well-equipped and modern law to fight the institutionalised corruption and looting. The promulgation of a new law is considered as a necessary and unavoidable condition for all the rescue plans proposed for Lebanon from CEDRE, the IMF, and the International Community in general. A draft law was proposed by the Basil Fuleihan Institute and by MP Yassin Jaber based on the Methodology for Assessing Procurement System in Lebanon (MAPS)’s report. In July 2020, a MAPS report was published about the state of public procurement in Lebanon and the results were neither surprising nor shocking: disastrous public procurement regulations and deep-rooted corruption. The draft law is aligned with international standards and could be an important step towards a better public procurement system, as it advances the procurement regime dating back to the 1960s. It was adopted on 30 June 2021 by the Lebanese parliament and published in the Official Gazette on 29 July 2021 as Lebanon Law No. 244/2021 on Public Procurement. Lebanon Law No. 244/2021 is a milestone, but it raises concern when it comes to its implementation that needs to be coupled with good governance and accountability in order to have a positive impact. Is Lebanon Law No. 244/2021 as promising as it is meant to be? Can we expect some real change in the upcoming years? Promises of reform The MAPS report and the state of public procurement The MAPS report stands for Methodology for Assessing Public Procurement Systems. It assesses the state of public procurement in Lebanon and is prepared by the Lebanese Institute of Finance. Its objective is to identify strengths, weaknesses and corruption risks. It helps public actors to move towards better and more transparent practices. The latest MAPS report was published in July 2020. The Agence Française de Développement (AFD) and the World Bank (WB) have pooled their expertise and resources to support the Lebanese Institute of Finance in preparing this document. In the current context, this report gives guidelines and is the first step for a reform that is a condition for obtaining financial assistance from the IMF and the international community. As for public procurement in Lebanon, according to the MAPS report, its state is below the regional average and is considered among the most corrupt in the world. Lebanon checked 11 out of the 210 criteria for evaluation adopted by the Organization for Economic Cooperation and Development (OECD) and the WB. For example, there were no standardised and clear documents, no effective complaint mechanisms, excessive use of Over the Counter (OTC contracts), limited access to information for the public, overlapping roles of control entities, and a number of exceptions to every rule. These factors inhibit competition, paving the way for corruption, collusion, and conflicts of interest, encourage inflation in market pricing and keep public investment at a relatively low level (5% of GDP). After uncovering the state of public procurement in Lebanon, the MAPS report offered recommendations, among which include: establish an independent review body in line with international standards to handle complaints, and set a clear timeline for handling the complaints; eliminate the conflicts of roles of the Court of Accounts and the State Council as appropriate for preventing both the reality and the appearance of a lack of impartiality and independence of the rulings made; give the State Council necessary authority to enforce its decisions and prevent administrative silence; and introduce the possibility to summarily suspend the procurement process when a complaint is made and introduce a standstill period to prevent a contract from being concluded and entered into force before a decision is taken based on a complaint against the award decision. Based on these recommendations, the draft law was proposed to the Parliament in February 2020. Lebanon Law No. 244/2021 on Public Procurement Lebanon Law No. 244/2021 is based on the universality of all transactions of the Lebanese State with all its institutions and services. A clear public procurement system, in line with international standards and based on legal and institutional foundations is thought to achieve savings of around USD 500 million every year, according to a study conducted by Basil Flueihan Institute of Finance. Lebanon Law No. 244/2021 is aligned with international standards such as the Model Law of the United Nations Commission on International Trade Law (2011), and the findings of a comparative study of regulatory frameworks adopted by our Arab neighbours, including Jordan (2019), Egypt (2018), Palestine (2014) and Tunisia (2014). Lebanon Law No. 244/2021 promotes the integration of public procurement within the Public Finance Management Cycle and advocates for multi-year budgeting, which ensures strategic visibility of financial flows. It is also in favour of local economic development, employment, national production, and resource optimisation. Lebanon Law No. 244/2021 has 8 guiding principles: integration, transparency, competitiveness, efficiency, accountability, integrity, professionalism, sustainability, and local development. Integration: The provisions of Lebanon Law No. 244/2021 apply to all administrations, institutions, bodies, and agencies that are responsible for public funds expenditure. Transparency: Ensured for all public procurement operations, and all stakeholders have access to all the data and information electronically. Many documents related to procurement procedures would be published according to Lebanon Law No. 244/2021 even if some are not available when related for example to “national security and general security”. Such exceptions are understandable but seem absolute, not leaving any space to assess the harm of access versus public interest, as outlined Articles 6 and 9 of Lebanon Law No. 244/2021. Competitiveness: Ensured by conducting public procurement using competitive procedures to fight corruption. Efficiency: Ensured by rationalising public spending and ensuring value for money while providing services that are of quality to citizens, and building efficient relationships and collaborations between the public and private sectors. Accountability: Ensured by overseeing control mechanisms throughout the whole cycle, and developing a system for appropriate complaint and effective processes for sanctions. Integrity: Notably ensured by using digital methods (e-procurement) to reduce corruption and conflict of interest. Professionalism: Ensuring that all procurement workforce involved in all stages of procurement meet high professional standards and have the capacity to continually deliver value for money efficiently and effectively. Sustainability and local development: Ensuring that public procurement is aligned with the Sustainable Development Goals (SDGs) in their economic, social, environmental dimensions and balanced against the primary procurement objectives. This reform aims at providing more clarity and flexibility and ensuring more efficiency, better assessment, monitoring, risk management and accountability, while enhancing service delivery to citizens. It also meets the main demands for transparency in public expenditure management and contributes to transitioning the country’s economy to a model that is more profitable and more competitive. Concerns related to the provisions of Lebanon Law No. 244/2021 and its implementation The public procurement reform is presented under the form of a new Code of Public Procurement. It mainly tackles procedures and consists of 110 articles. The draft of Lebanon Law No. 244/2021 was read and edited by major stakeholders from the private and public sectors as well as the legal community. The pre-contractual complaint mechanism One of the major issues that was very much debated in Parliamentary committees when discussing the draft of Lebanon Law No. 244/2021 was the “nature” of the pre-contractual complaint mechanism. This mechanism is aimed at rendering the public procurement process more effective. Finally, the pre-contractual independent review body was approved and is described in Articles 89-99 of Lebanon Law No. 244/2021. Prior to the reform, the procurement system had a weak and inefficient complaints review mechanism with no review body with a proper expertise to handle these complaints in the pre-contractual phase. Complaints used to be addressed to the Central Tender Board, the Court of Accounts, or even the State Council Judge of Urgent Matters. There was nothing systematic or unified about the institution that should receive these complaints due to legal fragmentation. When it comes to the State Council, the complaints were not aligned with the speed or quality of international standards and were therefore unsatisfactory. As mentioned previously, the MAPS report pointed out the lack of regulations when it comes to abiding by timelines and quality of review and resolution. The report also recommended that these complaints be handled by an independent authority. More than 10 consultation meetings took place to tackle this matter and finally led to a common understanding. The types of review bodies that were considered were either an independent review body or a body belonging to the judiciary. International experts alongside the MAPS report advocated for an independent review body. They confirmed that referring to an independent review body is more advantageous than directly referring to the judiciary as a first instance. First, it is more efficient. Second, the independent review body would have more expertise since the members of that body would be experts, well versed in procurement procedures and rules compared to judges. Third, in Lebanon, there are no first instance administrative courts, only the State Council. If a “first instance” body is not instituted, complaints will go directly to the State Council and that would be problematic. The State Council’s decisions are often issued too late to have any impact on the procurement procedure and its outcome. In this newly approved Lebanon Law No. 244/2021, the pre-contractual review body consists of four members appointed by the Council of Ministers in a decree (a president, three members). This raises the question of independence. The members can have no ties and no interest (direct or indirect) in any entity or administration part of the procurement. The conditions that the members must abide by in order to qualify as members of this body are found in Articles 91-94 of Lebanon Law No. 244 /2021. Until this review body is created, all complaints must be referred to the State Council, according to Article 103 of Lebanon Law No. 244/2021. The electronic procurement Electronic procurement is stipulated in Articles 66-71 of Lebanon Law No. 244/2021. E-procurement is a necessary step towards an e-government. The development of a central e-platform for public procurement allows information to be published. This platform should provide free access for decision makers and stakeholders to ensure the good implementation of Lebanon Law No. 244/2021 and to guarantee a transparent and fair procurement process. This step is crucial to improve the procurement system. However, Article 71 of Lebanon Law No. 244/2021 defers all details of electronic procurement to a decree by the Council of Ministers which is criticised as adding another layer of steps towards efficient and effective implementation of Lebanon Law No. 244/2021. The beneficial ownership Another weak point in Lebanon Law No. 244/2021 is the absence of provisions related to beneficial ownership data in procurement, which is already in place in several countries: 112 countries have committed to beneficial ownership transparency. The popularity of beneficial ownership provisions in public procurement rose due to numerous procurement scandals in the last few years, for example in the Czech Republic and the UK. In Lebanon, and under the pressure of the international community, laws were adopted to increase transparency. One of them was the amendment of Lebanon Law No. 106/2018 on Tax Procedures through the introduction of the concept of beneficial ownership and of sanctions for the non-declaration. Decision No. 1472/1 clarified the definition of beneficial owner further. According to the said decision, the beneficial owner is defined as “the natural person who holds directly or indirectly 20% or more of the share capital, or who holds the majority of the voting rights, or who holds the "main" decision-making rights, for example that of the dismissal of directors or supervisory bodies, or any person in a "senior management" position.” The concept of beneficial ownership helps us understand the company’s true ownership through open data platforms. According to the World Bank, 70% of all the grand corruption cases involve anonymously owned companies. Publicly available beneficial ownership data can only benefit procurement. First, this data detects actors trying to subvert existing legislation for personal gain and therefore prevents corruption and fraud: the information can help detect undisclosed /hidden conflict of interest and raise red flags on potential bidding rigging and collusion. Second, it enhances due diligence and improves competition: by reducing operational and financial risks, by diversifying suppliers and by detecting shared ownership. Third, it verifies the eligibility of suppliers for preferential public procurement also known as strategic procurement and which is any procurement that gives preference to certain suppliers, thereby deviating from the traditional principles of public procurement of equality, non-discrimination, and competition. Overall, beneficial ownership information helps combat money laundering and corruption while exposing conflict of interests. It provides a healthier environment for government procurement. Therefore, and although Lebanon has enacted laws related to beneficial ownership, it seems important to reinforce the legislation and to include this concept in the vital area of public procurement for more transparency and in the objective of a better fight against corruption. Conclusion: a step in Lebanon’s fight against corruption Most African countries went through public procurement reforms under the pressure of the World Bank and the International Community. The laws are, on paper, good laws but did not answer and adapt to the circumstances and problems of each country. Therefore, the public procurement in some African countries is still dysfunctional even with an updated legal framework that is aligned with international standards. Public procurement is a pillar indicator of the State’s development. However, the fact that Lebanon Law No. 244/2021 is an important and well-drafted law in general does not ensure its lawful and effective implementation in Lebanon, as corruption is still deeply rooted in the socio-economic-political system. That said, Lebanon Law No. 244/2021 is an essential step towards the fight against corruption and efforts to enact it should not go in vain. Consequently, it is crucial to allocate all necessary resources and focus on the issuance of all necessary decrees and on moving forward with the implementation plan for Lebanon Law No. 244/2021.
How can beneficial ownership transparency limit tax evasion? Principles and Standards One essential way of addressing dangers pertaining to a system’s financial integrity is the declaration of beneficial ownership information. Beneficial ownership is now a key element of international tax transparency and fight against tax evasion and other financial crimes. Indeed, beneficial ownership allows competent authorities, notably tax authorities, to conduct due diligence on an entity’s real owners in order to perform an a priori as well as an a posteriori control on all taxpayers and connected activities. Tax evasion can effectively be prevented by beneficial ownership declarations when the relevant authorities who have access to information pertaining to taxpayers can effectively impose the payment of the taxes due and can identify taxpayers who have not made their declarations or payments. Beneficial ownership declarations can also help identifying aggressive schemes and structures hidden under tax optimization. In order to adequately prevent and help fight tax evasion, beneficial ownership must be properly implemented. Below are some of the necessary principles and standards13, for the effective applicability of beneficial ownership, notably with regards to tax evasion: The scope and thresholds of application of the beneficial ownership should not be subject to multiple variations. Indeed, the definition of beneficial ownership must be clear and easy to understand in order to avoid any misunderstandings. The collection of information as well as its verification must be adequate and subject to consistent and effective control. Information pertaining to beneficial ownership should not only be accessible to authorities but also to all the public through the enactment and launch of a public registry. International Standards include timely access by authorities to updated and verified information. Open Ownership takes it a step further and asks for beneficial ownership information to be accessible to the public, therefore helping in public accountability. Moreover, putting in place digital registries helps in combating tax evasion and broadening the tax base by allowing the aggregation of taxpayers' data from a variety of sources. “Ideally, the register should be digitalized and maintained in a secure IT platform. Digital technologies are critical for managing high volumes of information, facilitating the reporting of information by obliged entities, lowering transactional costs, and ensuring the integrity of the information. Maintaining the register in an IT platform also facilitates the checking of consistency with other data sources and the timely access to information by law enforcement authorities”. Read more about Beneficial Ownership
Introduction In 2010, the U.S. Geological Survey assessed the undiscovered oil and gas resources of the Levant Basin Province. Following such discoveries, it became compulsory for Lebanon to regulate all stages of the petroleum sector in order to ensure that a country rich in resources not only benefits from them but also avoids the resource curse. Indeed, in 1711, The Spectator wrote "It is generally observed, that in countries of the greatest plenty there is the poorest living". History has witnessed the collapse of resource rich countries throughout the years due to the mismanagement and the corruption governing the natural resource sector. The oil and gas sector is recognised as one of the fields where corruption thrives given that such sector generates immense revenues and is governed by people entrusted with high power. The fear of undergoing the resource curse was not the only factor that stimulated a legal framework for the petroleum sector in Lebanon. Indeed, the petroleum sector is primarily dependant on international know-how, workforce and most importantly, funding. Therefore, Lebanon had to present a credible image to international stakeholders in order to attract foreign investment and know how. All the above contributed to the establishment of a legal framework in the petroleum sector which started with the adoption of the first petroleum-related law, Lebanese Law No. 132/2010 Lebanese Offshore Petroleum Resources Law. Subsequently, other laws, decrees and international initiatives were adopted in Lebanon including Lebanese Law No. 84/2018 Enhancing Transparency in the Petroleum Sector. Lebanese Law No. 84/2018: A step forward in Lebanon’s fight against corruption According to Transparency International, there are five key ingredients that prevent corruption from taking place, one of which being promoting transparency and access to information. Lebanese Law No. 84/2018 was first presented to the parliament in 2016 under the denomination “combatting corruption in the oil and gas sector”. This tool had been introduced in the Lebanese agenda in 2016 but also and most importantly, when Lebanon announced in January 2017 that it intends to join the Extractive Industries Transparency Initiative (EITI). Therefore, implementing such standard through a domestic law was one of the necessary remaining steps to prevent corruption in the oil and gas sector. In addition, and at the international level, Lebanese Law No. 84/2018 is one of several strides taken by the Lebanese authority to reassure the international community of its seriousness in taking action to combat corruption in Lebanon and gain the international community’s trust again. If implemented properly, this law can be a means to enhance relations between the government, civil society, and the private sector. Read more about Lebanon Petroleum Transparency Law