Ian Wilson QC and Ryan Ferro succeed in first decision on a debt claim brought by a foreign-currency deposit holder against Lebanese bank

On 17th December 2021, Mr Justice Foxton handed down judgment in Khalifeh v Blom Bank SAL [2021] EWHC 3399 (QB).

The claim arose out of the Lebanese financial crisis, which has restricted Lebanese banks’ ability to effect foreign currency transfers out of Lebanon. The Claimant was a depositor with the Defendant, a Lebanese bank. The Claimant alleged that the Defendant had wrongfully refused to re-pay him the (US$) balance on his bank account in the manner in which he was entitled to repayment. He therefore brought claims in debt and damages, including for alleged forex losses.

The claim raised questions as to applicable law and the rights and obligations owed between Lebanese banks and their foreign-currency deposit holders.

As to applicable law, the Claimant contended that English law applied. Specifically, he alleged that he was a consumer who was habitually resident in England at the time of contracting and could therefore rely upon Article 6 (“Consumer contracts”) of the Rome I Regulation to designate English law. However, the Court determined that the parties had impliedly chosen Lebanese law and that in any event the conditions for Article 6 were not satisfied. The Court’s decision on applicable law was dispositive of the Claimant’s English law claims.

The Judgment contains an insightful and important analysis of implied choice of law (including the relevance of asymmetric exclusive jurisdiction agreements to an implied choice in a consumer context), the conditions for Article 6 to apply, and the time for assessing applicable law under the Rome I Regulation (which involved a novel point about whether a contractual variation can trigger a new assessment of applicable law).

As to Lebanese law, the Court held that the Defendant’s debt had been discharged in accordance with Lebanese law. The Claimant’s claim was therefore dismissed. The Judgment addresses in detail various aspects of Lebanese banking law, including the nature of a bank’s obligation to a foreign-currency deposit holder, and how it can be discharged, which will be of interest to Lebanese depositors and banks alike in claims brought before the English Courts arising out of the Lebanese financial crisis.

Ian Wilson QC and Ryan Ferro, who acted for the successful Defendant, were instructed by Adam Silver and Ricci Potts at Dechert LLP.

Click here to view the full judgment.