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.