BILAL KHALIFEH v BLOM BANK SAL

Under Rome I Regulation (EC) No 593/2008, an implied choice of law is assessed objectively. An exclusive jurisdiction clause, references to local law and a closely connected agreement may together establish that choice. Minor later variations do not ordinarily reset the relevant contracting date. Directed activity requires an intention to establish commercial relations with consumers in the relevant country; website accessibility and an international dialling code alone are weak evidence. Under Lebanese law, a foreign-currency bank balance creates a debt rather than a deposit in specie. A bank may discharge a debt payable in Lebanon in local currency at the market equivalent, and a banker’s cheque credited to a notary’s account may discharge the debt despite restrictions on access to the funds.

Mr Khalifeh, a Lebanese citizen who later became resident in the United Kingdom, opened a personal US dollar account with Blom Bank at its Beirut branch. During Lebanon’s financial crisis, the Bank declined to transfer the balance to the United Kingdom, closed the account and tendered banker’s cheques drawn on the Banque du Liban. The cheques were deposited with a Lebanese notary public.

Mr Khalifeh claimed the account balance and consequential foreign-exchange loss. The Bank relied on Lebanese law and contended that the tender and deposit procedure discharged the debt. The central issues were the governing law, the money and method of payment, and whether the Lebanese tender procedure was effective.

Claim dismissed. The Bank established that the debt had been discharged under Lebanese law.

1. The Personal USD Account Agreement was governed by Lebanese law. Objectively, the exclusive jurisdiction clause in favour of Beirut, the contractual references to Lebanese legislation and the express choice of Lebanese law in an interwoven securities agreement together demonstrated an implied choice of Lebanese law. The account’s closest connection with Lebanon was supportive but insufficient on its own.
2. The relevant date for Rome I Regulation (EC) No 593/2008 was the date on which the account contract was concluded. Minor later variations to charges and account terms did not cause the entire contract to be reclassified under Article 6 at the date of variation. A complete restatement or novation was left open for consideration in an appropriate case.
3. Alternatively, the evidence did not establish that the Bank had directed relevant account-opening activity to the United Kingdom or that the account fell within the scope of such activity. The Bank’s United Kingdom activity promoted services of a London branch of a French subsidiary, not accounts opened in Beirut. Mere website accessibility and an international telephone code were insufficient. Mr Khalifeh was also not habitually resident in the United Kingdom on 14 October 2016. The Article 6(4)(a) exception would, in any event, have required the services to be supplied exclusively outside the consumer’s habitual residence, which was inconsistent with remote operation of the account.
4. Under the Lebanese Code of Obligations and Contracts, read with the Lebanese Code of Commerce and Lebanese Code of Money and Credit, a bank deposit created a debtor-creditor relationship. Article 711 did not apply. The money of account was USD, but Article 301 permitted discharge in Lebanese pounds at the market equivalent where the debt was payable in Lebanon.
5. A banker’s cheque was capable of constituting actual payment, unlike an ordinary cheque, which remained conditional until cleared. Restrictions on withdrawing or transferring the credited funds did not prevent payment. The BdL cheques were validly tendered and their subsequent credit to the notary public’s account discharged the debt.
6. The validation proceedings commenced before Mr Khalifeh rejected the tender remained live for the purposes of Article 824 of the Lebanese Code of Civil Procedure. Fresh proceedings were not required. The alternative damages and currency-of-judgment issues therefore did not arise, although the judge gave brief provisional conclusions on them.

First-instance proceedings. Earlier applications for summary judgment and to challenge jurisdiction were rejected by Master Davison. An anti-suit application concerning Lebanese validation proceedings was partly resolved by undertakings before Freeman J, with mandatory relief adjourned to trial.