Are there any legal remedies for depositors?

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If a bank tells you that they refuse to give your money, doesn’t this meet criterion 1 of Article 2?

by Dan Azzi -Source: Annahar

I’m not a lawyer, so I shouldn’t be writing this article, but since nobody else did, I thought I’d jump in myself. I once tweeted on this topic, so consider this article an expanded version. There’s not much original thought — I’m just translating Lebanese jurisprudence on the topic, mainly Law 2/67 passed on January 16, 1967, 53 years ago, almost to the day. For such an old law, it is surprisingly comprehensive because it’s simple and it was written at a time when banking was simple, before it was polluted by financial engineering.

Here are some excerpts:

Article 1: All banks, operating in Lebanon, that “stopped paying” are subject to this law.

Article 2: Upon proving that a bank has stopped paying, it is incumbent upon the Governor of the Central Bank to ask the relevant court to apply this law on the delinquent bank and inform the Minister of Justice and the Minister of Finance. A bank is considered to have “stopped paying” if any the following conditions apply:

 

  1. If the bank announces that it stopped paying.
  2. If the bank does not meet any obligation to the central bank upon maturity.
  3. If the bank withdraws a check drawn on the central bank with insufficient funds.
  4. If the bank does not provide sufficient liquidity to cover an account resulting from clearinghouse operations.

Article 4: Every claimant is entitled to ask the relevant court to apply the articles of this law in the two cases referenced in Article 489 of the Trade Law.

Article 6: The court shall examine, and in the event of compliance, shall issue an accelerated decision to declaring the delinquency and assign a date for the breach, after taking into account the Governor’s opinion, as well as the opinion of the representative of the effected bank, and this decision would be to remove all board members of the delinquent bank.

Article 13: All monies, tangible and intangible, belonging to natural persons presently holding positions as board members for the bank that stopped paying, as well as all senior bank officers with signing authority, as well as its auditors, and those who held such positions in the 18 months preceding the breach, shall be deemed preemptively frozen without any need for further legal action, in order to guarantee all their obligations … These persons shall declare to the management committee all assets they possessed one year before the delinquency … If they fail to comply they are subject to incarceration and jail time …

Article 14: The General Prosecutor, or temporarily assigned bank manager or management committee shall seek to prosecute the persons mentioned in the previous article for civil, as well as criminal penalties, under the bankruptcy provisions.

Article 15: As of the delinquency date, all these persons shall be deemed to have waived bank secrecy laws, by virtue of accepting their positions.

I will leave it to a real lawyer to analyze which one, if any, of the 4 criteria of Article 2 apply to our current situation; however, here are my thoughts:

If a bank tells you that they refuse to give your money, doesn’t this meet criterion 1 of Article 2?

Does issuing a bankers check that bounces, when deposited overseas, not meet criterion 4 in article 2? Isn’t a bankers check simply a promissory note and not a method of payment, until it meets the purpose it was intended by the depositor?

 

 

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