French Supreme Court Rules Lebanese Bank Directed its Activities to France

In a judgment of 18 September 2024, the French supreme court for civil and criminal matters (Cour de cassation) dismissed a challenge to the jurisdiction of French courts over a Lebanese bank which was found to have directed its activity to France. The plaintiff was a consumer domiciled in France who had deposited monies with the Lebanese bank, Saradar Bank, in 2014 and had not been able to get it back since 2019.

The case is not isolated. Lebanese banks have blocked their clients’ assets since the uprising of the population in 2019. Most of these clients were likely local residents, but many were based abroad. The Francophone press has reported that, since the mid-1990s, Lebanon sought to finance its debt through its banks which attracted foreign deposits, in particular from the large Lebanese diaspora, with attractive interest rates.

The website of Saradar Bank is pretty clear in this respect: “Depositing and receiving fresh money from anywhere in the world has never been easier.”

Some Lebanon based clients famously committed hold-ups, sometimes with fake pistols and unmasked, to recover their monies. Some clients based abroad sought more sophisticated remedies.

Remedies

A number of clients have initiated proceedings in France against their Lebanese bank.

A first approach was to seek to open insolvency proceedings against the foreign bank. Under French law, there were authorities that French courts would retain jurisdiction if the debtor had interests in France. It was also possible to rely on the French nationality of the plaintiff (Article 14 of the Civil Code). However, as already reported on this blog, in a case against a bank (Bank of Beirut) with no interest in France, the Cour de cassation overruled its precedents and ruled that nationality based jurisdiction does not apply to insolvency proceedings, thereby denying access to French courts to a French Lebanese client.

A second approach was to rely on the consumer status of the client. If domiciled in a Member State, the consumer could rely on Article 17 of the Brussels I bis Regulation. In this case, it has been reported that the client was a Syrian national who had been living in Paris for 45 years. Her consumer status was not challenged. However, in order to benefit from the special protection of consumers under the Brussels I bis Regulation, she had to demonstrate that Saradar Bank had directed its activities to France.

Directed Activities to France?

The Cour de cassation started by quoting Pammer and Alpenhof (Cases C-585/08 and C-144/09) and insisted that French courts should conduct an overall analysis of the activities of the foreign trader, focusing, inter alia, on a number of criteria identified by the CJEU in this judgment at para. 93.

The Cour de cassation then ruled that, in the particular case, the following facts sufficed for concluding that Saradar Bank had directed its activities to France.

The Court first listed the following facts:

1. the bank offered accounts in currencies other than the Lebanese pound, including US dollars,
2. clients could transfer monies internationally
3. employees of the bank had neutral email addresses, ending with ‘.com’
4. employees had phone numbers indicating an international code
5. the bank had a website in English
6. the bank used contractual documentation in English

The Court then added that:

1. the contract and later additional documentation were signed at the client’s domicile in France.
2. The employees managing the accounts of the client spoke French.
3. they could be contacted on a French phone.
4. one of those employees had once worked in the French branch of the bank, when it existed (which was before the particular contract was concluded)

The Court concluded that Saradar directed its activity to France, because it offered its services to international clients, and that, as result, French courts had jurisdiction under Article 17 of the Brussels I bis Regulation, irrespective of the clause providing for the exclusive jurisdiction of Lebanese courts (Article 19 of the Brussels I bis Regulation).

Assessment

The issue with the judgment appears in the following proposition: Saradar directed its activity to France, because it offered its services to international clients.

There is no doubt that Saradar directed its activities abroad.  The first 6 facts identified by the Court are clear enough. But does that mean that Saradar directed its activities, in particular, to France? The second list of facts does not seem to show anything else that the bank was happy to make efforts for a potential new client by sending people who could speak her language. But it barely shows that Saradar directed its activities to France in the first place. Interestingly enough, the Court mentioned that Saradar offered accounts in dollars, but did not mention Euros.

Saradar has requested that the issue be submitted to the CJEU. The Cour de cassation dismissed the request by ruling that there was no reasonable doubt.

What Now?

The obvious question that any judgment obtained on the basis of an exorbitant rule of jurisdiction raises is that of its enforcement abroad.  The issue was resolved at the earliest stage by the client’s French lawyers, who had carried out provisional attachment over assets of Saradar in France, in particular deposits with Bank of France, and who have reported that the client has now been fully paid, including of its costs.

The French general press wonders whether this case will trigger many others. Probably not against Saradar, which argued in court that it only had 5 France based clients. For other Lebanese banks, it will depend on how they interacted with their clients, but the Cour de cassation has not put the bar very high.