George Gabriel Bitar v Banque Libano-Française Sal

A banking deposit contract may confer a right to international transfers even where it contains no express reference to transfers outside the country. The court must construe the agreement in context, having regard to the parties’ intention, purpose, subsequent conduct and applicable consumer-protection rules. A bank cannot unilaterally remove a fundamental transfer obligation through an internal policy or general variation clause, particularly where the change substantially deprives the consumer of the value of the deposit. A customary banking right is assessed by reference to the custom existing when the contract was made. Specific performance may be ordered, with statutory interest applicable to foreign-currency debt where the governing law so provides.

The claimant held a substantial USD joint deposit with the defendant Lebanese bank. Before Lebanon’s financial crisis, the bank regularly executed international USD transfers. From late 2019, it restricted transfers and offered payment in Lebanon by BDL cheque or in depreciated Lebanese banking dollars.

The claimant sought transfer of the balance to his London account, alternatively repayment or damages. The issues included construction of the deposit agreement, the effect of banking custom, whether the bank had varied or suspended its obligations, the validity of the claimant’s demands, the effectiveness of the cheque tender procedure, the availability of specific performance and the applicable interest rate.

1. International transfer right. The agreement was ambiguous because it provided for transfers without specifying whether they were domestic only or included international transfers. Applying articles 366 and 367 of the Lebanese Code of Obligations and Contracts 1932 and article 18 of the Consumer Protection Law 2005, the court considered the contractual purpose, factual context and subsequent conduct. The agreement conferred an international USD transfer right, subject to specific exceptions such as fraud, money laundering, sanctions and exchange controls. It did not contain a general discretion to refuse transfers.
2. Custom. Although unnecessary to the result, the court held that a custom is assessed at the date of contracting. A bank cannot impose future, unknown customs on its customer. The evidence established both repetitio and opinio necessitatis, and the presumption under section 4(2) of the Civil Evidence Act 1972 applied to the findings in Manoukian and Bitar v Bank of Beirut.
3. Variation or suspension. Article XI of the agreement did not authorise removal of the fundamental international transfer obligation. An internal decision could not be self-executing. The communications with the claimant’s family did not objectively exercise a contractual variation power and did not provide adequate written notice. If article XI had permitted the change, its exercise would have been abusive and void under article 26 of the Consumer Protection Law 2005.
4. Demands and remedy. The claimant’s demands of 31 August and 5 November 2020 were valid and triggered the bank’s obligation. Specific performance was available and appropriate. The bank was ordered to transfer the USD balance to the claimant’s London account, with interest at 9 per cent under articles 257 of the Lebanese Commercial Code 1942 and 265 of the Lebanese Code of Obligations and Contracts 1932. The bank’s counterclaim based on tender and deposit was dismissed.