The provisions currently governing arbitration in Lebanon are:

1. the Lebanese Civil Procedure Code (“CPC”) – as amended by Decree 90 of 16 September 1983 and by Law No. 440 dated 29 July 2002 – which provides the legal framework for both domestic arbitration (Articles 762–808) and international arbitration (Articles 809–826); and
   
   
2. Articles 188, 1037 and 1039 of the Lebanese Code of Obligations and Contracts (“COC”), and Article 4 of the Lebanese Code of Commerce, which addresses the issue of arbitrability.

Arbitration was regulated for the first time in Lebanon by the original version of the CPC, which was enacted in 1933 under the French mandate.

As indicated above, arbitration in Lebanon is regulated principally by Articles 762–826 of the CPC, as amended by Law No. 440 dated 29 July 2002, which filled the gaps left by previous legislation and extended its application to administrative matters. The aforementioned amendments contributed to making arbitration a more attractive and predictable dispute resolution option for domestic and foreign users.

The attractiveness of pursuing international arbitration in Lebanon also increased as a result of the ratification by the Lebanese Government of the 1958 New York Convention in 1998 and the consequent enactment of Law No. 629 of 23 April 1997. That said, the Government entered a reciprocity reservation when signing the New York Convention with the consequence that Lebanese Courts are only obliged to follow the regime contained in the New York Convention when dealing with foreign awards rendered in countries that are also party to the New York Convention.

Arbitrability
As a general rule, all disputes may be submitted to arbitration in Lebanon unless the law clearly provides to the contrary. Examples of disputes that are not arbitrable include disputes relating to public order offences, personal capacity, bankruptcy, criminal offences and – to some extent – employee compensation and social security issues.

Courts have also tended to deny the rights of parties to submit disputes relating to the termination of commercial agency agreements to arbitration, although this issue is the subject of vigorous legal debate.

It is clear, however, as a result of Law No. 440/2002, that arbitration proceedings may now be brought by or against public bodies including local authorities, public entities and public institutions provided that such bodies have obtained the prior consent of the Council of Ministers before signing the relevant arbitration agreement or the contract in which the arbitration clause is situated.

Domestic and international arbitration
Lebanese law makes a basic distinction between domestic and international arbitration.

According to Article 809 CPC, international arbitration is suitable for any matter which “involves international commercial interests”. The field of application of this Article is very broad.

Article 812 CPC confers a larger degree of flexibility and autonomy on parties to international arbitration proceedings than on parties to domestic arbitration proceedings. Articles in the CPC relating to domestic arbitration apply to international arbitration unless the parties have agreed to the contrary.

The arbitration agreement may be included in a larger contract or in an addendum, in a separate document linked to the main contract, or as an entirely separate agreement where the parties agree to submit an existing dispute to arbitration (known as a submission agreement). Lebanese law considers that an arbitration clause survives the nullity of the underlying agreement in both domestic and international arbitration proceedings.

A submission agreement must define the subject matter of the dispute referred to arbitration and the powers of the arbitrator(s).

In domestic arbitration, both arbitration agreements need to be made in writing in accordance with Articles 763 and 766 CPC. However, in the context of international arbitration, the requirement of a written agreement is not necessary according to Article 812 CPC.

The constitution of the arbitral tribunal
Under the Articles applicable to domestic arbitration (Articles 763 and 766 CPC), the arbitration agreement must either designate the arbitrator(s) or determine the manner in which they are to be designated (including ad hoc mechanisms or reference to arbitral institutions).

In domestic arbitration proceedings, the arbitral tribunal may be composed either of one arbitrator or any other odd number of arbitrators (Article 771 CPC). In international arbitration proceedings, the parties can appoint an even number of arbitrators.

A legal entity cannot be appointed as an arbitrator but may administer the arbitration (Article 768 CPC).

The President of the competent Tribunal of First Instance has jurisdiction to resolve any difficulties which may arise related to the constitution of the arbitral tribunal in the context of domestic arbitration proceedings (Article 764 CPC). For example, he can appoint the arbitrator(s) in domestic arbitration proceedings if the parties fail to cooperate in the appointment process, or if other complications arise (Article 764 CPC).

If any difficulty arises in connection with the constitution of an arbitral tribunal in international arbitration proceedings when the seat is in Lebanon (or if the parties have chosen Lebanese procedural law), either party may – in accordance with the provisions of Article 810 CPC and in the absence of any agreement to the contrary – submit the case to the President of the Tribunal of First Instance of Beirut, requesting him to resolve such difficulty. The President of the Tribunal of First Instance will resolve the issue in accordance with the procedure on urgent applications used in judicial proceedings. His order is not subject to appeal unless the Court of Appeal declares the arbitration agreement to be void. If an appeal is permitted, the Court of Appeal will likewise follow the urgent procedure used in judicial proceedings.

In the case of institutional arbitration proceedings, it is generally considered that the above procedure may only be used when the applicable institutional rules are silent on how to resolve problems in constituting the tribunal.

Challenge to arbitrators
In domestic arbitration proceedings, an arbitrator may be challenged on the same grounds as are used to challenge judges in judicial proceedings, namely if he has an interest in the outcome of the dispute; if he has any financial interest or family relationship with any of the parties; or has prior knowledge of the dispute. The arbitrator has a duty to disclose any facts that could potentially give rise to a challenge on any of the above grounds (Article 769 CPC). If any such facts do exist, the arbitrator may still accept his appointment provided the parties accept his appointment in full knowledge of the existence of such facts.

The President of the competent Tribunal of First Instance is the competent authority to decide on petitions challenging the appointment of the
arbitrator(s) (Article 770 CPC).

The same rules apply to international arbitration proceedings unless otherwise agreed by the parties. Indeed, Article 811 CPC provides that if a challenge arises regarding one of the arbitrators in an international arbitration whereby the place of arbitration is in Lebanon, or if the parties have chosen Lebanese procedural law, such a challenge will be resolved by the President of the competent Tribunal of First Instance.

The appointment of substitute arbitrators
The Lebanese Courts are seemingly not competent to appoint replacement arbitrators once the arbitral tribunal is fully constituted. Indeed, Article 781 CPC expressly provides that the arbitral proceedings will be deemed terminated if one of the arbitrators dies or otherwise becomes incapacitated, unfit to act or refuses to act. Accordingly, if an arbitrator resigns, dies or refuses to accept an appointment, there may be a deadlock resulting in the termination of the arbitration unless the parties have agreed upon an appointment procedure for substitute arbitrators.

Arbitrators’ fees and expenses
The CPC does not have any express provisions in respect of arbitrators’ fees and expenses.

In ad hoc arbitration, the arbitrators fix their own fees. If the arbitration is conducted under the auspices of the Court of Arbitration attached to the Chamber of Commerce and Industry in Beirut, the arbitrators’ fees and expenses will be fixed by the Chamber of Commerce according to their published fees.

Competence to rule on its own jurisdiction
Article 785 CPC confers on the arbitral tribunal the competence to rule on its own jurisdiction in both domestic and international arbitration proceedings. This competence extends to determining the validity of its own appointment and the validity of the arbitration agreement.

If a request to appoint an arbitrator is submitted to the competent court then the court must verify that there is a valid arbitration agreement before appointing the arbitrator.

The power to grant interim measures
The tribunal has no power to order interim measures.

Even in the presence of an arbitration agreement, the Lebanese courts remain exclusively competent when it comes to provisional and protective measures that may be needed to support arbitration proceedings.

General procedural principles
Proceedings should always be conducted fairly taking into account the rights and obligations of each party, including the right of each party to present its case and to receive copies of the pleadings and documents presented by the other party.

Domestic arbitration
By virtue of Article 776 CPC, the arbitral tribunal should follow the rules of procedure applicable to judicial proceedings, unless the parties have agreed otherwise.

International arbitration
The arbitration agreement can specify the procedure to be followed, or refer to a body of national procedural rules or to the rules of an arbitral institution.

According to Article 811 CPC, in the absence of a choice of applicable procedural rules in the arbitration agreement, the arbitral tribunal will determine the appropriate procedural rules.

In addition, the arbitral tribunal must apply the following general principles:

• it is only competent to rule on the issues that the parties have agreed to submit to arbitration (Articles 365 and 366 CPC);
• it cannot base its award on facts that have not been raised during the arbitration proceedings (Article 368 CPC); and
• it must act impartially and provide the same information to all parties.

Commencing the arbitration
According to Article 778 CPC, domestic and international arbitration proceedings with their seat in Lebanon are commenced by the filing of a Request for Arbitration by the parties acting jointly or, more commonly, by one of the parties acting unilaterally.

Place and language of the arbitration
If not expressly agreed in the arbitration agreement, these matters are determined by the arbitral tribunal.

Oral hearings and written proceedings
In general, the arbitral tribunal determines the date and venue of any oral hearings. The parties are obliged to present to the arbitral tribunal written submissions as agreed in the Terms of Reference. Each party may require the arbitral tribunal to schedule an oral hearing in order to clarify a particular point or to hear witnesses.

If a party who is duly notified of a hearing does not attend, the proceedings shall continue as if the defaulting party were in attendance.

Evidence
The rules of evidence applicable to judicial proceedings also apply before the arbitral tribunal (i.e. the rules on disclosure of documents, witness statements, expert reports, etc.), unless otherwise agreed by the parties. The arbitral tribunal may order a party to produce evidence in its possession, but they cannot impose any sanctions if such party does not abide by such order. In appropriate circumstances, the arbitral tribunal may have recourse to competent national courts for assistance in such matters.

Pursuant to Article 779 CPC, the arbitral tribunal also has the power to appoint an expert and to hear witnesses, although it cannot apply sanctions against a witness who refuses to cooperate. The arbitral tribunal can, however, apply to the competent national court for an order compelling a witness to appear before the arbitral tribunal.

Making of the award and termination of proceedings
According to Article 773 CPC, if the arbitration agreement does not fix a time limit for rendering the award, the arbitration award should be rendered within a period of six months from the date of the acceptance by the last arbitrator of his appointment. Any extension of that period must be granted by the competent national court upon the request of one of the parties or of the arbitral tribunal.

The arbitrators fix the date of termination of the proceedings in order to prepare their award. From the date of termination of the proceedings, the parties will not be allowed to present any written submissions or demand or produce any additional documents (Article 787 CPC).

Choice of the law
Domestic arbitration:
By virtue of Article 776 CPC, the arbitration award must be based on the applicable rules of law chosen by the parties in their arbitration agreement. In the absence of an express choice of governing law, the arbitral tribunal will select the law it considers to be the most appropriate.

The arbitral tribunal may also decide the dispute on an ex aequo et bono basis if the parties so agree.

International arbitration:
According to Article 813 CPC, the parties are free to select the rules of law applicable to the dispute. In the absence of an express choice of law, the arbitral tribunal will apply the rules of the law which it considers the most appropriate. In addition, the arbitral tribunal is bound to apply any relevant trade customs even if the parties did not expressly authorise the arbitral tribunal to apply such customs.

Article 813 CPC also provides that – as in domestic arbitration proceedings – the arbitral tribunal may rule on an ex aequo et bono basis if the parties so agree.

Form and content of the award
Domestic arbitration:
According to Article 790 CPC, the award in domestic arbitration proceedings must contain:

• the name(s) of the arbitrator(s);
• the date and place when and where the award was rendered;
• the names and addresses of the parties and the names of their attorneys and representatives;
• a summary of the parties’ submissions and the issues upon which they agree; and
• the reasons for the decision(s) made in the award.

Furthermore, according to Article 791 CPC, the award must be signed by all or at least the majority of the arbitrators.

Article 800 Paragraph 5 CPC provides that if the award does not contain reasons, is not signed, or does not mention the date on which it was made or the names of the arbitrators, it will be deemed to be null and void.

International arbitration:
Unless otherwise agreed by the parties, Articles 790 and 791 CPC also apply to international arbitration proceedings.

Correction and interpretation of the award
Domestic arbitration:
In accordance with Article 792 CPC, the arbitral tribunal in domestic arbitration proceedings has the right to interpret the award, complete it or correct all material mistakes it may contain. This task must be performed by the arbitral tribunal within the time limit fixed by the parties, any applicable institutional rules or by law. Article 773 CPC provides that unless otherwise agreed by the parties, the tribunal can only correct or interpret the award within the six-month period allowed for issuing the award. If such time limit has expired, only the national court will have the power to interpret and correct the award.

International arbitration:
Unless otherwise agreed by the parties, the above rules also apply to international arbitration proceedings.

Costs
In the case of non-institutional arbitration, the arbitral tribunal has the right to determine its own fees and expenses. The arbitral tribunal is also competent to apportion its fees, and the other costs of the arbitration, between the parties. As a general rule, the losing party will be responsible for such costs.

Domestic arbitration
According to Article 800 CPC, even if the parties have waived their right to appeal the award, the award can be challenged through annulment proceedings on any of the following grounds:

• the absence of a valid arbitration agreement or if the award is based on an invalid arbitration agreement (including on the basis of the incapacity of one or more of the parties);
• irregularities in the constitution of the arbitral tribunal;
• if the tribunal has exceeded its jurisdiction by ruling on matters that fall outside the scope of the arbitration agreement;
• failure to respect the right of defence;
• formal procedural defects; or
• if the award is contrary to principles of public policy.

An annulment application can be filed before the competent Court of Appeal at the seat of the arbitration within 30 days of the notification of the award. It is not possible for the parties to agree to waive their right to file an annulment application.

By virtue of Article 799 CPC, the award can be appealed before the Court of Appeal at the seat of the arbitration, unless the parties have expressly waived their right of appeal.

An award rendered on an ex aequo et bono basis cannot be appealed unless otherwise agreed by the parties. If the parties have preserved the right to appeal such an award, the appeal will likewise be conducted by the competent Court of Appeal on an ex aequo et bono basis.

In certain limited circumstances (e.g. fraud or the discovery of new evidence), Article 808 CPC also allows the parties to file a petition to the competent Court of Appeal at the seat of the arbitration to re-open the case on its merits.

International arbitration
Pursuant to Article 819 CPC, an award rendered in Lebanon in an international arbitration can be challenged by way of an annulment application on the same grounds as in domestic arbitration proceedings.

Such an annulment application should be filed with the Court of Appeal at the place in which the award was rendered within 30 days of the date of notification of the award.

Domestic arbitration
The recognition and enforcement of a domestic award is granted after the enforcing party has deposited a certified copy of both the award and the arbitration agreement with the Court of First Instance at the seat of the arbitration. The court must grant leave for enforcement unless there are serious reasons for refusing enforcement (e.g. if the award is clearly contrary to Lebanese public policy).

According to Article 805 CPC, the decision granting enforcement of the award cannot be appealed but can be challenged by way of an annulment application.

According to Article 806 CPC, the decision refusing enforcement can be appealed to the Court of Appeal within 30 days of the date of notification of the judgment refusing enforcement of the award.

International arbitration
Pursuant to Article 814 CPC, a party wishing to enforce a foreign arbitral award in Lebanon must file a petition attaching original or certified copies of the award and the arbitration agreement before the Court of First Instance at the seat of the arbitration, or before the Court of First Instance in Beirut.

The court will enforce the award unless its enforcement would be clearly contrary to international public policy. Since the grounds for refusing recognition and enforcement are narrower under Lebanese law than under the New York Convention, it may be preferable for the enforcing party to seek enforcement under Lebanese law.

In light of the reciprocity reservation entered by the Lebanese Government when signing the New York Convention, an enforcing party will not be able to invoke the provisions of the New York Convention in support of an application to recognise and enforce an award rendered in a country that is not party to the New York Convention.

The Levant Lawyers
Tilal Building, Block A7
226–228 Achrafieh Street
Beirut, Lebanon


Choucri ElKhoury
T +961 1 20 72 22
M +961 3 29 06 00
E choucri.elkhoury@tll.cc


Emile Kanaan
T +961 1 20 72 22
M +961 3 31 33 23
E emile.kanaan@tll.cc


Selim Tohme
T +961 1 32 29 22
E selim.tohme@tll.cc