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4. Rational Dispute Resolution
4.1 Rule of Law
4.2 Enforcement of Contracts
4.3 Commercial Dispute Resolution
In-Country Assessment

4. Rational Dispute Resolution –Weak

 

Goal – An efficient institutional framework that balances the rights of the public, owners, lenders and borrowers in the event of a dispute or loan default

Core Question: Do all market participants abide by the rule of law and have confidence in the courts and the ability of police to control crime? Yes – Weak, the majority of market participants abide by the rule of law; however, in some areas in Lebanon police intervention and law enforcement is difficult due to political considerations.

4.1 Rule of Law

Impartiality

4.1.1   What is the confidence level of strength and impartiality of police, courts and contract enforcement? Weak – Percentile Ranking  30 Trend

Source: Governance Matters  2011, World Bank, www.govindicators.org

 

Judiciary

4.1.2   Can members of the judiciary be held accountable for their accounts? No, Weak – Score 61 out of 100     

Source: Global Integrity Report 2009   http://report.globalintegrity.org/Lebanon/2009

 

Costs of Crime

4.1.3   What are the business costs of crime and violence? Weak – Ranking 74th out of 142; Score 4.7 out of 7

Source: The Global Competitiveness Report  2012-2013, World Economic Forum, www.weforum.org/issues/global-competitiveness

 
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4.2 Enforcement of Contracts

Core Question: Are systems in place for timely and efficient enforcement of contracts? Yes – Weak, some procedures used in applying the law are sometimes unclear and enforcement may take too long.

4.2.1   Judicial Enforcement

Commercial Property – Weak – Ranking 121st out of 183 Trend constant from previous year

4.2.1.1         What is the number of procedures involved in resolving a commercial dispute? 37

4.2.1.2         What is the time between the filing of a lawsuit and resolution in judicial enforcements? 721

4.2.1.3         What is the cost of judicial enforcements as a percentage of debt value?  30.8%

Source: Doing Business 2013  www.doingbusiness.org/data/exploreeconomies/lebanon

 

Residential Property

Survey Questions

SQ 10           What is the time between notice of intent to foreclose and loan collection  in judicial enforcement? 225 days

SQ 11           What is the cost of judicial enforcements as a percentage of property value? 14.5%

 

4.2.2    Summary Proceedings

SQ 12  What is the time between notice of intent to foreclose and loan collection  in summary proceedings if available to lenders? Weak – Summary Proceedings are allowed by law but not in use in the market

SQ 13   What is the cost of summary proceedings if available to lenders as a percentage of property value? Unknown

 

4.2.3    Power of Sale

SQ 14  What is the time between notice of intent to sell and loan collection for  power-of-sale agreements if available to lenders? Strong – Power of  sale is allowed by law and used occasionally by lenders

SQ 15   What is the cost of power-of-sale agreements if available to lenders as a percentage of property value? Unknown

 
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4.3 Commercial Dispute Resolution

Core Question: Can commercial disputes be resolved efficiently and fairly without exorbitant expense and delay? Yes – Weak, and parties have the option of resolving disputes in commercial courts or through commercial arbitration, or private mediation.

Survey Questions

Commercial Courts

SQ 16   Do specialized commercial courts exist for handling of property disputes and foreclosures? Weak

Source: www.nyulawglobal.org/globalex/index.html

 

Alternative Dispute Resolution

SQ 17   Are alternative dispute resolution mechanisms in place including commercial arbitration, private mediation and community-based practices?  Strong – Lebanon is a member of the New York Convention; ADR  supported by law and by organizations that train and certify mediators

 

Commercial Treaties

SQ 18   What bilateral, regional and international treaties exist concerning business between countries? Very Weak – Lebanon is not a member of the World Trade Organization

Source: World Trade Organization www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm

 

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In-Country Assessment (as of August 2012)

FQ 8  To what extent do practitioners report the use of formal contracts and trust institutions to support contract enforcement?

Formal contracts are frequently used by practitioners, and institutions are trusted to support contract enforcement and are relied on in case of disputes.