Bilal Khalifeh v Blom Bank Sal
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 17 December 2021 |
| Neutral Citation | [2021] EWHC 3399 (QB) |
| Docket Number | Case No: QB-2020-001937 |
| Court | Queen's Bench Division |
[2021] EWHC 3399 (QB)
Mr Justice Foxton
Case No: QB-2020-001937
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Raymond Cox QC and Zahler Bryan (instructed by Rosenblatt (a trading name of RBG Legal Services Limited)) for the Claimant
Ian Wilson QC and Ryan Ferro (instructed by Dechert LLP) for the Defendant
Hearing Dates: 3, 4, 5, 8, 9, 10 and 11 November 2021
Further Submissions: 12, 18, 19 and 25 November 2021
Draft Judgment sent to Parties: 7 December 2021
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
This action arises out of a USD bank account (“the Personal USD Account”) which the Claimant (“Mr Khalifeh”) opened with the Defendant (“the Bank”) in 2016. Mr Khalifeh alleges that the Bank has wrongfully refused to re-pay him the balance on the Personal USD Account in the manner to which he is entitled to such payment, and he seeks to recover the balance and consequential loss which he says he has suffered by reason of its non-payment. The Bank initially contended that no valid demand for repayment has been made, although this issue fell away after the Personal USD Account was closed. The Bank contends that it discharged the debt by tendering payment in a form in which Mr Khalifeh was obliged to accept, and then paying a notary public in Lebanon when Mr Khalifeh refused to accept payment in that form.
The reason for what might, at first sight, seem a rather esoteric dispute is the very difficult financial conditions faced by Lebanese banks and their customers at the current time, and the practical impossibility of transferring foreign currency out of Lebanon, a state of affairs which has had a very prejudicial effect on and been the source of acute anguish for those with foreign currency accounts in Lebanese banks, who have understandably explored every avenue open to them in an effort to access their hard-won savings.
To resolve this dispute, the parties agree that (at least some of) the following questions must be answered:
Governing Law
i) What is the applicable law?
a) Did the parties make an implied choice of Lebanese law under Rome I, Article 3?
b) If not, does Lebanese law apply by virtue of Rome I, Article 6?
i) What is the date (or are the dates) for assessing habitual residence under Article 6(1)?
ii) Was Mr Khalifeh habitually resident in England and Wales on that date (or dates)?
iii) If so, was the Bank pursuing and/or directing its commercial or professional activities in England at the relevant time(s) and/or did the contract(s) fall within the scope of such activities (Article 6(1)(a)-(b))?
(a) What does Mr Khalifeh need to show in order to establish that the Bank pursued and/or directed such activities in England?
(b) Did the Bank do so on the facts?
(c) Must there be a causal nexus between the pursuing and/or directing of such activities and the conclusion of the contract?
(d) If so, was there such a causal nexus on the facts?
iv) If so, was the contract for the supply of services exclusively in a country other than England (Article 6(4)(a))?
Lebanese Law
ii) Is the money of payment of the debt Lebanese Pounds (“LBP”) as a matter of Lebanese law and, if so, is Mr Khalifeh entitled to judgment (subject to defences) in USD?
iii) Does the Bank have a defence because the alleged debt was discharged under Article 822 et seq. of the Lebanese Code of Civil Procedure?
a) Did the Bank's “tender and consignment” lapse because the Bank filed a Lebanese Validation Action before the Bank was notified of the Claimant's rejection of it?
b) Did the “tender and consignment” discharge the alleged debt?
iv) If the debt is due and owing, is the Bank liable for damages for any consequential losses arising from non-payment?
a) Would Mr Khalifeh have converted a USD payment into GBP on receipt and, if so, what foreign exchange losses were suffered?
b) Were such losses a direct and natural result of the breach and/or foreseeable?
c) Do such damages fall to be reduced on the grounds of the Mr Khalifeh's fault?
v) What is the date from which the Mr Khalifeh's damages claim and interest fall to be assessed?
English Law
vi) Is Mr Khalifeh entitled to judgment (subject to defences) in USD?
vii) Is the money of payment LBP? As an aspect of this, was it an implied term of the “contract(s)” that the money of payment was USD?
viii) Does the Bank have a defence on the basis that the Court should have regard to Lebanese law under Rome I, Article 12(2)?
a) What is the meaning and effect of Article 12(2)?
b) Issues iii) and iv) above are repeated mutatis mutandis.
c) How should the Court have regard to Lebanese law?
ix) If the debt is due and owing, is the Bank liable for damages for any consequential losses arising from non-payment?
x) Would Mr Khalifeh have converted a USD payment into GBP on receipt and, if so, what foreign exchange losses were suffered?
xi) Were such losses too remote? Do such damages fall to be reduced on the grounds of failure to mitigate?
xii) What is the date from which Mr Khalifeh's damages claim and interest fall to be assessed?
Before considering those questions, I will set out the key underlying facts.
THE UNDERLYING FACTS
In this section of the judgment, I set out a number of the key facts. They are supplemented by further factual findings in the Confidential Annex to this judgment.
Mr Khalifeh is a Lebanese citizen, whose mother worked for the Bank's principal branch in Beirut (“the Main Branch”) until 2007, and thereafter for Blom France Dubai until 2015.
The Bank is a Lebanese bank, whose headquarters are located in Beirut.
On 11 June 2012, Mr Khalifeh established a digital media agency which was operated by a Dubai company he established known as InsideJob Management DMCC (“InsideJob Dubai”).
In July 2015, Mr Khalifeh incorporated an English company called InsideJob Management UK Ltd (“InsideJob UK”)
On 13 and 14 October 2016, Mr Khalifeh visited Beirut, and on 14 October he opened two US dollar accounts with the Bank, including the Personal USD Account. Mr Khalifeh signed various documents on this occasion, including:
i) A document in Arabic entitled “General Agreement for Opening and Operating Creditor Accounts” (“the General Agreement”). This gave a Dubai address and phone number for Mr Khalifeh.
ii) A document entitled “Information about the client (for individual clients)”. I shall refer to any document of this type as a “Client Information Document” and this particular version as “the 2016 Client Information Document”. This gave an address in Dubai as Mr Khalifeh's domicile.
iii) A “Feature of Term Deposits and Savings Account” document (a “Key Features Document”, and this particular version “the 2016 Key Features Document”) recording the commercial terms relating to the accounts.
iv) A document authorising the giving of instructions relating to the USD accounts by phone or fax (an “Instructions by Phone or Fax Document” and this version “the 2016 Instructions by Phone or Fax Document”).
I address the terms governing the Personal USD Account (“the Personal USD Account Agreement”) below, when resolving the issue as to the applicable law of the account.
Mr Khalifeh transferred his USD savings into the Personal USD Account from his bank in Dubai by seven payments.
In July 2017, Mr Khalifeh visited the Bank's Main Branch in Beirut and on 6 July 2017 he opened an account with the Bank in the name of InsideJob Dubai. At this point, Mr Khalifeh signed:
i) A document entitled “Individual Self-Certification” (an “Individual Self- Certification Document” and this document “the 2017 Individual Self-Certification Document”) which was specifically concerned with issues of international tax compliance. This gave a Dubai address.
ii) Another Instructions by Phone or Fax Document (“the 2017 Instructions by Phone or Fax Document”).
iii) Another Key Features Document (“the 2017 Key Features Document”).
iv) Another Client Information Document (“the 2017 Client Information Document”) which recorded a Dubai address as Mr Khalifeh's domicile.
Mr Khalifeh raised the possibility that he may have signed the 2017 Individual Self-Certification Document as a blank document, which the Bank later filled in. I accept that on occasions Mr Khalifeh signed blank documents provided by the Bank because signed blank copies have been produced as part of the Bank's disclosure. However, on this occasion in 2017, I am satisfied that Mr Khalifeh either gave the Dubai address himself or confirmed that his personal details on file with the Bank (which included the Dubai address) should be used in relation to the account opened for InsideJob Dubai. It is probable that Mr Khalifeh used a Dubai address for the purposes of a bank account opened for a Dubai company and he was still tax-resident in Dubai at this point.
Two other documents were signed by Mr Khalifeh at around this time:
i) A proxy form for Mr Khalifeh's mother.
ii) An English-language Key Features Document.
In October 2017, Mr Khalifeh opened personal and business bank accounts with Lloyd's Bank in the United Kingdom, and I accept that from this point, the business of InsideJob Dubai was swiftly and progressively transferred to InsideJob UK. For the financial year 2017/2018, the turnover of InsideJob UK was £804,000, InsideJob Dubai had ceased employing anyone by January 2018, and by...
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