In the absence of formal capital controls, the restriction prohibits certain foreign currency payments – potentially providing Lebanese banks with a basis to resist claims for international transfers
Introduction
On 1 July 2025, Banque du Liban ("BdL"), Lebanon's central bank, issued Basic Decision No. 13729 ("BD 13729"), available in Arabic and French (all translations in this blogpost are unofficial).
BD 13729 requires banks operating in Lebanon to refrain from making any payments from foreign currency accounts held with, or transferred to them prior to 17 November 2019, unless: (1) the amounts fall within limits prescribed by BdL; or (2) prior BdL written approval has been obtained.
The decision was issued against the backdrop of Lebanon's ongoing financial crisis and in the context of proceedings brought by depositors residing outside Lebanon before foreign courts, seeking access to their foreign currency deposits. This post summarises BD 13729 and its stated objectives, and considers its potential relevance for depositors and foreign investors.
Background
Since the onset of Lebanon's liquidity crisis in October 2019 (the "Liquidity Crisis") — which resulted in the collapse of the Lebanese pound's long-standing peg to the US dollar and contributed to a prolonged and ongoing period of hyperinflation — banks operating in Lebanon have applied informal capital controls, restricting access to, and transfers from, foreign currency deposits. These deposits, particularly in US dollars, had been widespread due to the availability of high interest rates.
Despite earlier proposals, these measures have not been formalised through legislation by Lebanon's Parliament, including in response to the International Monetary Fund's recommendations.
As a result, some depositors have initiated proceedings before foreign courts, notably in England and France, seeking the transfer of their foreign currency deposits held with banks in Lebanon. In some cases, courts issued favourable judgments ordering such transfers to be made. These include: (1) in the UK, Manoukian v Societe Generale de Banque au Liban SAL [2022] EWHC 669 (QB); Bitar v Bank of Beirut SAL [2022] EWHC 2163 (QB); and Bitar v Banque Libano-Francaise SAL [2023] EWHC 17 (KB); and (2) a decision against Saradar Bank in France (see the decision of the French Cour de cassation, Pourvoi n° 23-13.732).
In the English cases, some courts accepted jurisdiction on the basis that the claimants qualified as ‘consumers' under the Recast Brussels Regulation (Regulation (EU) No 1215/2012) and could consequently bring proceedings in their country of domicile, the United Kingdom. Applying Lebanese law, the courts considered both the express contractual terms and Lebanese banking custom in concluding that the banks were obliged to effect the requested international transfers, and granted specific performance accordingly.
Decision BD 13729
Article 1 of BD 13729 requires banks operating in Lebanon to refrain from paying any amounts from foreign currency accounts held with them prior to 17 November 2019 — including accounts that were transferred to the bank after that date — if the requested payment: (1) exceeds the limits specified in the regulatory texts issued by BdL; or (2) has not received prior written approval from BdL.
Article 2 states that the decision becomes effective immediately upon its issuance.
While the operative text of BD 13729 is limited, the preamble sets out the context in which it was issued. In particular, the preamble:
- notes that the Liquidity Crisis led to restrictions on depositors' — both residents and non-residents — ability to freely dispose of their funds, particularly foreign currency deposits;
- acknowledges that some depositors have requested Lebanese banks to immediately make full payment of their deposits, and have at times resorted to foreign courts to uphold their rights;
- states that such demands, even if, in principle, could be valid and legitimate, cannot be regarded as such during a banking crisis given that they result in unfair discrimination among depositors — particularly where preferential treatment is afforded to some depositors at the expense of others whose deposits remain wholly or partially inaccessible in Lebanon; and
- affirms that the principle of equal and fair treatment among depositors constitutes a fundamental legal rule and is required by financial integrity and the public interest.
The preamble concludes that systemically carrying out selective payments would constitute a flagrant violation of the fairness and equality principles as well as financial proportionality, in the light of efforts to reach a comprehensive resolution to the financial crisis. On that basis, and invoking considerations of public necessity and financial stability, BdL issued BD 13729 to formalise its position.
Looking ahead
A further consideration is how BD 13729 interacts with the enforcement of foreign court judgments in Lebanon. Lebanon is not party to any bilateral or multilateral treaties on the mutual recognition of judgments with the UK. Accordingly, the recognition and enforcement of such judgments remain governed solely by Lebanese domestic law.
Under Article 1014 of the Lebanese Code of Civil Procedure, a foreign judgment may be recognised and enforced in Lebanon via an exequatur request, provided certain conditions are met. One of these conditions is that the judgment must not violate Lebanese public order.
In this context, it remains to be seen how Lebanese courts may interpret the principles set out in BD 13729 as an articulation of public order in exequatur proceedings. This may become relevant where a depositor seeks to enforce a foreign judgment ordering a transfer of funds from a Lebanese bank.
Comment
BD 13729 marks a significant development. In the absence of formal capital control legislation, it introduces a regulatory restriction prohibiting certain foreign currency payments – potentially providing Lebanese banks with a basis to resist claims for international transfers in future proceedings. Its legal significance remains to be assessed by Lebanese and foreign courts. These issues are also relevant in the context of domestic or international arbitration proceedings – to the extent that agreements between foreign depositors and Lebanese banks contain an enforceable arbitration clause – including where depositors seek to enforce arbitral awards before Lebanese courts
Depositors and investors should also consider the practical implications of BD 13729 for their existing contractual arrangements, including whether BD 13729 may engage specific contractual provisions, or trigger obligations linked to changes in law or policy.
BD 13729 also comes in the context of a legislative push, with Lebanon's recently enacted bank restructuring law. Once in force, the law will establish a new Banking Restructuring Authority responsible for overseeing the restructuring of the banking sector and defaulting institutions. The law's potential impact on foreign currency depositors remains to be seen.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
