LEBANON Law and Practice Contributed by: Mohamed Alem, Mazen Ghosn and Rana Kahwagi, Alem & Associates
3. The Arbitration Agreement 3.1 Enforceability
Public Policy and Social Issues With respect to public policy issues, Lebanese courts generally refrain from excluding the arbitrability of a matter solely on the basis that it involves a public policy issue (Court of Appeal of Beirut, 19 December 2000, Decision 1417/2000; Court of First Instance of Mount Lebanon, 25 June 2001, Decision 25/2001). Other matters that may not be referred to arbitration in Lebanon include those that fall under the exclu - sive or mandatory jurisdiction of state courts, such as commercial representation agreements. However, as indicated in 1.1 Prevalence of Arbitration , Lebanese case law has in certain cases accepted the arbitrabil - ity of disputes arising from commercial representation agreements. Similarly, maritime contracts may fall under the exclu - sive or mandatory jurisdiction of state courts. Pursu - ant to Article 212-1 of the Lebanese Code of Maritime Commerce, any clause which directly or indirectly seeks to derogate from the jurisdiction of the Leba - nese courts in matters relating to bill of lading is null and void. Article 79 of the Lebanese Code of Labour subjects all labour and social security disputes to the exclusive jurisdiction of the Labour Arbitration Boards, which are state courts composed of a presiding judge, an employers’ representative and an employees’ repre - sentative. Lebanese courts have interpreted the juris - diction of the Labour Arbitration Boards as a matter of public policy, thereby ruling in favour of the exclusivity of this jurisdiction at the expense of the parties’ agree - ment to arbitrate (Lebanese Court of Cassation, 26 April 2012, Decision 79/2012). It should be noted that the non-arbitrability of labour disputes does not apply to collective labour agreements. Bankruptcy With respect to bankruptcy matters, according to Article 490 of the Lebanese Code of Commerce and Article 108 of the NCPC, the courts of first instance of the jurisdiction in which the bankrupt business/ merchant is domiciled have exclusive jurisdiction to declare bankruptcy and to hear the disputes arising therefrom. However, as mentioned in 1.1 Prevalence of Arbitration , the liquidator is obliged to enforce arbi -
While the provisions of the NCPC governing domestic arbitration provide that arbitration agreements must be in writing and contain the appointment of arbitra - tors or a method for such appointment (Article 763 of the NCPC) in order to be valid, the section of the NCPC governing international arbitration contains no specific or formal requirements for the validity of arbi - tration agreements. In addition, as mentioned in 2.1 Governing Law , par - ties to international arbitrations may agree, pursuant to Article 812 of the NCPC, to exclude the application of the provisions of the NCPC governing domestic arbitration. In recent years, the Court of First Instance of Beirut has held that the rules of validity applicable to domes - tic arbitration are not applicable in the context of inter - national arbitration (Court of First Instance of Beirut, 28 April 2010, Decision 12/42). This approach seems to be constantly reiterated by this court (Court of First Instance of Beirut, 30 December 2014). 3.2 Arbitrability The section of the NCPC dealing with international arbitration does not contain any provision defining the arbitrability ratione materiae of disputes, nor has there been any case law providing guidance on the criteria to be applied in identifying matters that cannot be submitted to arbitration. In domestic arbitration, Articles 762 and 765 of the NCPC exclude arbitration in matters that cannot be the subject of a transaction. Article 1037 of the Lebanese Civil Code – also known as the Code of Obligations and Contracts (COC) – defines matters that cannot be the subject of a trans - action as follows: • personal status matters, including marriage, divorce, custody of children and inheritance; • matters of public policy; and • personal rights that are not commercial.
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