Can the Lebanese Financial Crisis Be Considered One?
Force majeure is one of the most important concepts in contract law because it determines whether a party may be released from liability when circumstances beyond its control make the performance of an obligation impossible.
Unlike some legal systems, Lebanese law does not provide a single, comprehensive definition of force majeure. Instead, the Lebanese Code of Obligations and Contracts establishes the principle that an obligation is extinguished when, after it has been created, its performance becomes naturally or legally impossible without any fault or act on the part of the debtor.
Over the years, Lebanese legal doctrine and judicial decisions have developed three essential conditions that generally characterize a force majeure event:
- Externality – the event must be beyond the control of the contracting parties.
- Unforeseeability – the event could not reasonably have been anticipated when the contract was concluded.
- Irresistibility – the consequences of the event could not have been avoided or overcome despite reasonable efforts.
The party invoking force majeure bears the burden of proving not only the occurrence of the event, but also the direct causal link between the event and the inability to perform the contractual obligation. It must also demonstrate that reasonable measures to avoid or mitigate the consequences were not possible.
In many cases, force majeure does not permanently terminate contractual obligations. Where the impediment is temporary, performance is generally suspended until the event ceases, unless the delay defeats the purpose of the contract.
This raises an important legal question in Lebanon today.
Can the Lebanese financial and banking crisis, characterized by banking restrictions, currency depreciation, limitations on access to deposits, and severe economic disruption, be regarded as a force majeure event?
Remember: Force majeure suspends contractual obligations temporarily; it does not permanently extinguish them.