BEIRUT, Dec 17 (Reuters) – A British court ruled on Friday in favor of a Lebanese bank in a case brought by a depositor barred from transferring funds abroad because of capital controls in place since Lebanon’s financial system collapsed in 2019.
The court ruled that BLOM Bank could be considered to have discharged its debt to the plaintiff, Bilal Khalifeh, by issuing a cheque in Lebanon.
Banks have imposed tight controls on accounts, including a de facto ban on transfers abroad and local withdrawals of dollar-denominated deposits in dollars, but the controls have been challenged in Lebanese and international courts.
Banks have sought to discharge dollar-denominated funds via banker’s cheques which cannot be cashed out in dollars and are instead sold on the market at a discount of about three-quarters of their value.
The ruling by London’s High Court of Justice, Queens Bench Division, said BLOM Bank was under no obligation to transfer some $1.4 million in Khalifeh’s savings abroad and could be considered to have discharged his account via a cheque deposited with a notary.
“The debt due from the Bank was payable in Lebanon and… Mr Khalifeh had no contractual right to require the Bank to transfer funds abroad,” it said.
Khalifeh told Reuters he would appeal the ruling.
In a separate case last month, a French court ordered Lebanon’s Saradar Bank to pay $2.8 million to a client residing in France, saying payment via cheque in Lebanon was not valid.
In that case, the documents opening the account were signed by the plaintiff in Paris. Khalifeh did so in Lebanon.
“This judgement means that BLOM Bank can continue to treat all depositors equally in terms of international transfers and cash withdrawals, irrespective of the size of their deposits and their place of residency,” BLOM Bank said in a statement.