Lebanon: Judicial Precedent In Lebanon The Arbitrate Stipulation In The Commercial Representation Agreements Is Void

In the case of Zanussi Grandi Ambeanti vs. Faisal Faisal (Akip Hotel) the Court of First Instance rendered its decision empowering the Lebanese courts to take cognizance of commercial representation disputes. The said decision was rendered despite the arbitrate Claus, which commit any dispute between two parties to the International Chamber of Commerce In Paris, France.

Zanussi pleaded the First Civil Court of Appeal for quashing the decision of the Court of First Instance on the ground of its discrepancy to decree law No. 34/67. The plaintiffs’ understanding of Article 5 of the said decree law adheres to the concept of Public Order. Accordingly, the court should dismiss the case on the ground of non-competence of the Lebanese courts and, furthermore, empower the arbitrate clause which commit the dispute to the Italian Law.

Faisal, the defendant, pleaded to decline the plaintiffs' plea, emphasizing the adherence between Article 5 and the Public Order and demanded the endorsement of the appealed decision.

Upon resorting to Article 5 of the decree law No. 34/67 which provides that "Despite any agreement to the contrary, the courts of domicile, where the commercial representative practices its activity, shall have competence to take cognizance of disputes emerging from the commercial representation agreement", the First Civil Court of Appeal endorsed the decision of the Court of First Instance and explained its decision as follows:

Whereas it is the Lebanese legislator will to enact this article taking into consideration the commercial representative itself on one hand, and the disputes that might emerge from the representation agreement on the other hand.

The legislator heeds the commercial representative as the resignant party in a resignation agreement, which, in case of arbitration, can not protect its rights except through resorting to courts of domicile. In such court, the representative enjoys simple procedures, which may not be granted in any other court.

With regard to the dispute that might emerge from the representation agreement, there is no doubt that the domicile court is capable of inspecting the details of the dispute efficiently through using every mean possible to inspect the representatives’ credibility. On the contrary, the representative will lose such a privilege when trailed in any other court.

Consequently, the Lebanese courts shall take cognizance in any dispute emerging from the commercial representation agreement. Therefore, the arbitrate stipulation, subject to appeal, is void, which reserves the competent of domicile courts to take cognizance of such disputes.

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