The legality of Lebanese banks’ restrictions on deposits: Between challenges and practice

Abstract

For almost two years, Lebanon has been suffering from a severe economic downturn, the worst since the end of the civil war (1975–90). This has led to a complete financial collapse, with significant material losses incurred by the Lebanese Central Bank (BDL). It has also fuelled protests against the rampant corruption plaguing the country. Since the beginning of the banking crisis in Lebanon characterized by a lack of liquidity and the cessation of banks from dealing in US dollars, the risks surrounding deposits belonging to residents and non-residents, as well to foreigners, have emerged. This exacerbated the absence of procedures to determine the fate of deposits and the applicable legislation that protects these deposits. This article examines the resulting imbalances in the financial paradigm and demonstrates the illegality of actions or restrictions taken by banks. Consequently, this article explores the means to protect depositors’ rights and the legal steps followed by depositors to retrieve their money or at least to save what is left of it.