Lebanon
Answer ... As a general principle, Lebanese law recognises the sanctity of contracts and the Lebanese courts will usually uphold the terms of a contract to the extent that they do not violate public policy or laws of mandatory application in Lebanon. Accordingly, the law chosen by the parties will generally be upheld in Lebanon as the applicable law, to the extent that it does not contravene Lebanese public policy or mandatory laws and is selected in good faith.
However, it is recommended that Lebanese law be the law chosen to govern the transfer of the receivables, given that:
- the establishment of a securitisation investment fund in Lebanon is a regulated activity that is subject to the approval of the Capital Markets Authority in accordance with the Securitisation Law; and
- the law includes specific procedures and rules for the transfer of receivables.
In addition, while the Securitisation Law does not expressly prohibit the transfer of receivables from being governed by a foreign law, in the absence of court precedents, there are no assurances as to how a court would rule on the enforceability of a foreign law-governed asset transfer agreement under the Securitisation Law.
It has become common practice to choose Lebanese law to govern the transaction documents, but to allow for dispute resolution to take place outside of Lebanon, such as by submitting to the rules of arbitration of the International Chamber of Commerce.
Lebanon
Answer ... As a general principle, there are no local law requirements (documentary or procedural) to ensure that foreign law documents are recognised and enforceable in Lebanon, provided that there is no violation of public policy or rules of mandatory application in Lebanon. However, if a party wishes to enforce its rights against a contractual counterparty in the Lebanese courts:
- the documents must be translated into Arabic by a sworn public translator in order to be admissible in the courts of Lebanon;
- unless such documents are exempt, stamp duty should be paid in respect thereof; and
- court costs will be payable by the plaintiff in connection with legal proceedings brought in a Lebanese court and/or the enforcement of a court order.
Lebanon
Answer ... Under the Securitisation Law, the originator transfers receivables by solely executing a bordereau (list/schedule) that identifies the receivables, which is delivered to the manager and the custodian and is countersigned by them to acknowledge receipt. This transfers, by operation of law, the ownership of the receivables in a final manner to the estate of the securitisation investment fund. The transferred receivables are removed from the originator’s financial estate and from its balance sheet. The originator may grant the transferee a right of recourse, in whole or in part, provided that this is clearly reflected in the originator’s financial statements.
The transfer of receivables transfers to the account of the securitisation investment fund the securities attaching to the receivables of whatever kind, such as mortgages, guarantees or insurance policies.
The transfer becomes effective between the parties, and vis-à-vis the obligor, its successors in interest and third parties, on the date mentioned in the bordereau. The transferee takes the place of the transferor by operation of law as of this date, without any further procedure and without the need to notify or obtain the approval of the obligor, any security provider, guarantor or any other person.
The transfer of receivables is opposable to the creditor and to third parties, without informing or notifying the obligor. The originator must notify the transfer to the obligor by notice sent through ordinary pre-paid post to the address of the obligor stated in the initial debt contract.
Lebanon
Answer ... The bordereau must include at least the following mandatory information:
- the name of the contract, as a contract for the transfer of receivables through securitisation;
- a reference that the contract is subject to the Securitisation Law;
- the name and address of the originator, manager and custodian;
- the name of the securitisation investment fund;
- the date on which the Capital Markets Authority issued its approval for the establishment of the securitisation investment fund;
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a list of the receivables transferred, along with the elements that identify them and, in particular:
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- the name, address and trade name of the obligor;
- the place of payment;
- the value of the principal;
- the maturity date and interest rate, if any; and
- the nature and details pertaining to all related guarantees;
- the consideration to be paid by the manager for the transfer of the receivables as well as the date and method of payment; and,
- the available credit enhancements, if any.
The transfer of receivables does not include any guarantee of the obligor’s solvency, unless otherwise stipulated by supplementary agreement.
Lebanon
Answer ... While Lebanese law generally recognises the sanctity of contracts and the will of the contracting parties, in the event of a dispute before the Lebanese courts, the judge has the authority to recharacterise a disputed transaction where this is deemed necessary. The judge may not, however, exercise this authority if the parties to the dispute have expressly agreed to limit the scope of the deliberations in the disputed matter put before the judge.
Lebanon
Answer ... A transfer of receivables concluded in accordance with the Securitisation Law may not be invalidated in the event of the cessation of payment, insolvency or bankruptcy of the originator. As such, in order to mitigate the risk of invalidating a transfer of receivables due to the insolvency of the originator, it is recommended to apply the procedures set out in the Securitisation Law to effect a transfer of receivables.