Insurance policies typically refer to the jurisdiction of local Courts, mainly in their Particular Terms and Conditions. This is considered as the most common and basic mechanism for insurance dispute resolution in Lebanon.

However, some policies may contain clauses that allow arbitration or other alternative methods for resolving disputes, particularly for highly technical issues, complex products, specialty lines insurance, commercial insurance, corporate insurance, cross-border insurance, large-scale insurance and reinsurance.

It is important to note that ICC may be consulted by the policyholders and beneficiaries to conduct mediation and seek to resolve their complaints through amicable means (Art. 4 of MoET Decision No. 5/ICC of 18 June 2009 relating to the Internal Regulation of ICC). If conciliation was not reached between the two (2) parties, ICC shall refer to the Insurance Arbitration Council (IAC) which constitutes a Court specializing in insurance disputes, established at MOET (Art. 48 IRL), or any party may file a claim before the competent Court. Furthermore, some insurance contracts include a clause referring to the right of the insured or the beneficiary to seek the Insurance Complaints Handling Office (ICC Care) at ICC in case any complaint being unresolved with the insurance company for the purpose of resolving it by administrative and conciliatory means (MoET Decision No. 149/ICC of 28 May 2014).

The insured is required by law to inform the insurer of any contingency likely to involve the insurer’s liability, within three (3) days after the insured has been acquainted with such contingency (Art. 974 COC).

No other specific requirements governing pre-action conduct are established by the law. However, insurance policies may outline some additional procedural measures that the insured should observe, such as submitting a claim containing all relevant information or documentation clarifying, substantiating and quantifying his claim. Parallelly, the insurer might be subject to some requirements particularly with respect to appointing an expert or a loss adjustor to evidence the claim or the damage and assess the amount of indemnity that should be paid to the insured. The insurance company usually has a procedure for handling complaints and will attempt to resolve the dispute internally and amicably with the insured.

Lebanese Courts, whether Civil, Commercial or Criminal Chambers (in case of accidents that occur to third parties leading to death or bodily injuries), possess highly competent judges with extensive experience and are generally well adapted to handle common insurance disputes and tort disputes, due to the large number of disputes that are filed each year.

In addition, IAC constitutes a Court specializing in insurance disputes, composed of two (2) chambers, each presided by a judge and comprised of experienced insurance professionals and other specialized experts (an expert in road traffic and accidents for Chamber 1 and a medical doctor for Chamber 2). IAC handles disputes relating to financial claims arising from policies covering vehicles, carriages and traffic accidents (Chamber 1), as well as to financial claims arising from policies covering medication and hospitalization (Chamber 2), subject to the conditions that the amount of the claim should be inferior to seventy-five million (75,000,000) Lebanese Pounds and that the plaintiff has not previously introduced a Court action with respect to the same case (Art. 48 IRL).

However, since insurance products are constantly evolving and part of the terms and conditions of insurance policies might address complex or highly technical matters, this might be a challenging issue for judiciary.

In Lebanon, Alternative Dispute Resolution (ADR) is not mandatory. Parties may voluntarily choose methods, such as negotiation, mediation or arbitration, to settle their disputes.

Thus, the general rule is to resolve disputes between the insurer and the insured by resorting to competent Courts, unless the insurance policy imposes ADR.

The parties may agree to opt for arbitration for disputes arising from an insurance contract (Art. 964 COC). Arbitration proceedings are ruled by the Code of Civil Procedure, which contains a dedicated chapter on arbitration that distinguishes between local arbitration (Artt. 762 to 808 CCP) and international arbitration (Artt. 809 to 821 CCP).

Mediation is encouraged by the law as a method to resolve disputes between parties. Mediation is regulated by virtue of Law No. 82 of 10 October 2018 on Judicial Mediation and Law No. 286 of 12 April 2022 on Conventional Mediation.

Resorting to arbitration, requires the contracting parties to agree on it either by including an arbitration clause in the original contract (Art. 762 CCP), or through an arbitration agreement under which the parties mutually agree to resolve the existing dispute by arbitration (Art. 765 CCP).

In all cases, arbitration only includes the insurer and the policyholder and not third parties, given that it requires the existence of an arbitration agreement (Art. 800 CCP), in addition that arbitration is originally limited to the parties to the contract and it is not permissible for third parties to be included or to intervene in the arbitration trial unless the third party and the original opponents agree to this (Art. 786 CCP).

Although the Lebanese law does not impose restrictions on including arbitration clauses in insurance contracts, however, it establishes exclusive territorial jurisdiction for specific insurance disputes. In this respect, disputes related to life insurance fall under the jurisdiction of the Courts located at the insured’s place of domicile (Art. 109 CCP), disputes related to accidents fall under the jurisdiction of the Courts located either where the accident occurred or at the insured’s place of domicile (Art. 110 CCP) and disputes related to fire insurance fall under the jurisdiction of the Courts located where the fire occurred (Art. 111 CCP).

Moreover, clauses under insurance contracts issued in Lebanon and relating to risks existing in Lebanon are considered null and void in case of submission to the arbitration of an arbitrator not electing domicile in Lebanon and not issuing their award within the country, except for insurance of transportation risks and insurance of body of ships and aircrafts (Art. 11 IRL).

The costs of trial shall be borne by the unsuccessful party (Art. 541 CCP). The law sets out a list of costs including judicial fees, witnesses’ compensation, experts’ fees, costs of procedures which their tariffs are officially determined, and lawyers’ bar fees (Art. 540 CCP). As for lawyers’ remunerations, they are generally borne by each party, and their reimbursement is not awarded by the Court.

However, the Court may apportion the costs among parties in the manner it deems appropriate or have one of the parties bear all the costs, if the litigant appears to be unjust in some of his requests (Art. 543 CCP).

The Court may also rule that the successful party should pay all of part of the costs if the right was recognized by the unsuccessful party prior to the filing of the lawsuit, or if the successful party wrongfully incurred additional or useless costs or if he left his opponent in ignorance of the conclusive documents he has in his possession or of the content of those documents (Art. 542 CCP).

As for the cases brought before IAC, they are exempt from judicial fees and stamp duties, though they are not exempt from other costs. In addition, parties may file cases before IAC without requiring legal representation (Art. 48 IRL), in contrast to standard litigation proceedings before Lebanese Courts, whereby litigants should seek the assistance of a lawyer in cases in which the value of the claimed right exceeds fifty million (50,000,000) Lebanese Pounds or in which there is no specific value and in other cases where the law requires the assistance of a lawyer (Art. 378 CCP; amount as modified by virtue of Decree No. 13909 of 12 September 2024).

Courts decisions can be subject to recourse through ordinary and extraordinary methods. Ordinary methods are opposition and appeal, whilst extraordinary methods are third-party opposition, retrial, request for cassation as well as the claims for state’s liability resulting from the actions of judges (Art. 630 CCP).

Decisions rendered by IAC are open to recourse, but only for opposition, third-party opposition and request for cassation (Art. 48 IRL).

Arbitration awards can be challenged in the following ways:

• By filing an ordinary appeal before the Court of Appeal, unless the parties have renounced the appeal in the arbitration agreement. However, such appeal is not permissible against arbitral awards rendered on an ex aequo et bono basis, unless explicitly the parties have reserved their right to appeal in the arbitration agreement (Artt. 799 & 802 CCP).
• By filing a recourse in annulment before the Court of Appeal in specific cases despite any contrary agreement (Artt. 800 & 802 CCP).
• By filing a retrial before the Court of Appeal within the specific conditions applicable to such a procedure. The decision rendered by the Court of Appeal can be subject to recourse by way of cassation and third-party opposition (Art. 808 CCP).
• By filing a third-party opposition before the court that would have had jurisdiction the parties had not referred their dispute to arbitration (Art. 788 CCP).
• It should be noted that the decision rendered by the Court of Appeal, in the event of filing an ordinary appeal or in the event of filing a recourse in annulment, can be subject to recourse by way of cassation as per the general rules. However, awards rendered on an ex aequo et bono basis, can be referred only to the Court of Cassation in the event the Court of Appeal has annulated the award (Art. 804 CCP).

The insured is required to state accurately, when the contract is concluded, all the circumstances that are likely to enable the insurer to assess the risk he is insuring (Art. 974 COC).

In many lines of insurance (life insurance, medical and health insurance, property insurance, commercial insurances etc.), the insurance applicant is required to fill out a Proposal Form which helps the insurer to gather information about the prospective policyholder. This formal application document plays a crucial role in risk assessment and underwriting process and serves as the basis of the insurance contract. Misrepresentation or omission of material facts or information in the Proposal Form can lead to future complications such as the annulment of the contract or the denial of claims.

The duty of disclosure does not end at the inception of the policy, whereby the insured must inform the insurer of any new circumstance that may aggravate the risks. However, this provision is not applicable in life insurance (Art. 974 COC).

In this context, it is important to note the following (Art. 977 COC):

• If the insured intended to commit any act that would aggravate the risks to the extent that if the insurer knew about such aggravation, he would not have concluded the contract or would have concluded it only for a higher premium, the insured is required to make prior declaration of this act to the insurer by a registered letter.
• If the risks are aggravated without any act on behalf of the insured, the latter must inform the insurer thereof within a maximum time limit of eight (8) days starting from the date of his knowledge of such aggravation.
• In both cases, the insurer is entitled to terminate the contract, unless the insured agrees to a scaling up of the premium upon suggestion of the insurer.
• However, the insurer may no longer invoke the aggravation of risks, if, after knowing them in any manner whatsoever, he manifested his consent to maintain the insurance, especially by continuing to receive the premiums or by paying an indemnity following a contingency.

The insurance contract may be annulled in case of concealment or intentional false declaration by the insured, if such concealment of false declaration modifies or mitigates the object of the risk according to the insurer (Art. 982 COC).

However, concealment or false declaration does not entail nullity of the insurance contract unless it is proven that the insured was with bad faith (Art. 982 COC).

In this context, it is important to note the following (Art. 982 COC):

• This annulment clause is effective even if the contingency occurred and if the risk concealed or falsely declared by the insured did not affect its occurrence.
• All premiums paid then are non-refundable and the insured shall be on the obligation of payment of all due premiums as damages.
• If a concealment or a false declaration are revealed before the occurrence of the contingency, the insurer is entitled to terminate the contract within ten (10) days of notification to this effect addressed to the insured by a registered letter, unless the insurer is satisfied to maintain the contract in consideration of an increase of the premium accepted by the insured.
• If concealment or false declaration are revealed following the contingency, indemnity is reduced proportionally to the difference between the rate of the paid premiums and those that should have been paid if the risk was accurately declared.

The Code of Obligations and Contracts prohibits or considers null and void specific clauses or even the issuance of the insurance contract itself under specific circumstance:

• Clauses inflicting forfeiture on the insured in the event of violation of laws and regulations, are considered null and void, unless such violation is in effect a grievous and inexcusable fault. However, these provisions do not prevent the stipulation of forfeiture by reason of infringement of laws and regulations which texts are totally reproduced in the policy (Art. 983 COC).
• Clauses inflicting forfeiture on the insured by reason of mere delay in his declaration of contingency to the authorities or in the production of documents, are considered null and void (Art. 983 COC).
• Clauses reducing the time limits set by the law related to the default of paying premiums on the due date, in addition to all clauses exempting the insurer from serving notice for non-payment, are considered null and void (Art. 975 COC).
• Clauses reducing the period of prescription of actions arising from an insurance contract, are considered null and void (Art. 986 COC).
• Clauses requiring the insured to prove that the loss or damage are not occasioned by foreign or civil war or riots or popular movements, if such risks are covered by the insurance contract, are considered null and void, whereby the law requires the insurer to provide evidence that loss or damage resulted from one of these risks (Art. 969 COC).
• It is prohibited in life insurance to conclude insurance depending on the death of a minor less than fifteen (15) years old or a restrained or lunatic person (Art. 996 COC). Moreover, no third party is entitled to conclude insurance depending on the death of a person under guardianship without the authorization of the guardian. Such authorization however does not exempt the personal consent of the incapable person, wherever deemed necessary (Art. 997 COC).
• It is also prohibited for life insurance contracts to be to the bearer (Art. 999 COC).

As for the Insurance Regulatory Law, it also prohibits or considers null and void specific clauses or the issuance of the contract under specific circumstance:

• It is prohibited to contract the insurance of funds, real estate properties or risks existing in Lebanon except by companies duly licensed. No insurance company may engage into insurance activities until after it legally obtains a license to operate in Lebanon, or if that license was either suspended or withdrawn. No intermediary or natural or legal person are permitted to conclude contracts, whether directly or indirectly, with a Lebanese or a foreign insurance company that is not licensed in Lebanon except for risks on imported or exported goods. Aviation risks may be exempted from these provisions through a decision issued by MoET following consultation with the National Insurance Board (NIB). No insurance company may issue an insurance contract for an amount exceeding its own funds, unless it can prove the existence of a reinsurance contract with a reinsurer acceptable by MoET following consultation with NIB. Shall be considered null and void any insurance contracts either signed or implemented in Lebanon in breach of these provisions. However, this nullity in no way absolves the offending insurance company from its obligations towards the insured (Art. 9 IRL).
• General Terms and Conditions of Policies signed in Lebanon are considered null and void in case they are not drafted in Arabic language. However, general conditions may be drafted in a foreign language on condition, and subject to nullity, that a true translation in Arabic language is drafted side by side. In the event of inconsistency between the two (2) texts, the Arabic text shall prevail. As for the Particular Terms and Conditions, the insurer is required to provide the insured with a true Arabic translation, if so, requested in writing. MoET following the consultation of NIB may exempt certain types of insurance policies from being drafted in Arabic, wherever deemed necessary (Art. 10 IRL).
• Clauses under insurance contracts issued in Lebanon and relating to risks existing in Lebanon are considered null and void in case of submission to the arbitration of an arbitrator not electing domicile in Lebanon and not issuing their award within the country, except for insurance of transportation risks and insurance of body of ships and aircrafts (Art. 11 IRL).
• Clauses inserted in an insurance contract aiming at excluding the competence of IAC, are considered null and void (Art. 48 IRL).
• Information mentioning or insinuating anything related to the supervision of the state other than the insurance company’s submission to the provisions of the Law Regulating Insurance Companies, is prohibited. The same applies for information including anything likely to mislead the true nature of insurance companies’ operations or their financial position (Art. 53 IRL).

Moreover, the Consumer Protection Law contains several provisions that prohibit the professional from adopting certain practises. Such prohibitions can be applied to insurance companies and insurance contracts. This will be elaborated in detail in Q&A No. 11.

First, it is important to note that there is no clear provision under the current Lebanese law on utmost good faith “Uberrima fides”.

However, the Code of Obligations and Contracts necessitates good faith in concluding all types of contracts by the contracting parties. The law stipulates that contracts must be understood, interpreted and performed in good faith and in accordance with equity and custom (Art. 221 COC). This may be applied in an insurance contract to both the insurer and the policyholder.

As for the policyholder, please refer to Q&A No. 7 with respect to the duty of disclosure of the insured.

On the other hand, various legal and regulatory texts affirm concepts reflecting the doctrine of utmost good faith, including the principles of good faith, honesty, integrity, clarity, trust, transparency and information disclosure by the professional or the insurer, in pre-contractual stage, during the formation of the contract and even into its post-formation, termination or renewal.

In this context, the Consumer Protection Law contains several provisions that affirm the professional’s duty to adhere to these principles. This will be elaborated in detail in Q&A No. 11.

As for the Insurance Regulatory Law, it also contains certain provisions aiming at ensuring clarity, transparency and information disclosure by the insurer. In this respect, IRL contains the following provisions:

• ICC right to impose on insurance companies to amend the General Terms and Conditions of insurance contracts should those conditions prove to be vague or unclear to the insured (Art. 47 IRL).
• ICC right to impose on insurance companies to undertake all publicity required by the applicable laws and regulations (Art. 47 IRL).
• Insurance companies should clearly specify, alongside their trade name, on all papers, contracts, publications, advertisements, letters, billboards or leaflets, and in all that they distribute to the public or publish in newspapers, the number and date of registration at the ad-hoc register of insurance companies in Lebanon, with mention that they are governed by the provisions of the Law Regulating Insurance Companies (Art. 53 IRL).

Furthermore, within the framework of exercising its supervisory role, the Market Conduct Unit at ICC is responsible for the following missions (Art. 8 of MoET Decision No. 5/ICC of 18 June 2009 relating to the Internal Regulation of ICC):

• Monitoring insurance companies in terms of their respect of insurance rules and principles.
• Monitoring relationship between insurers and policyholders and how insurers implement their obligations.
• Monitoring insurance contracts prototypes, publications and promotional methods used by insurance companies and ensuring that they do not contradict with the principles and ethics of insurance market and that their content is not misleading or fraudulent.
• Monitoring the extent to which insurance companies adhere to the instructions addressed to them and their commitment to provide the correct required information.

In addition, and as per MoET Decision No. 27/ICC of 25 January 2019, ICC must take into consideration, while exercising their supervisory role, the “Insurance Core Principles” (ICPs), adopted by the Insurance Association of Insurance Supervisors (IAIS). ICPs, in their last revision adopted in December 2024, seek to encourage the maintenance of high supervisory standards in IAIS member jurisdictions for the protection of policyholders and the promotion of stability in the insurance sector. With respect to the principle of utmost good faith, ICPs urge the supervisory authorities to adopt the following principles in conducting their supervisory mission towards the insurers and the intermediaries:

• The supervisor requires insurers and intermediaries to treat customers fairly, both before a contract is entered into and through to the point at which all obligations under a contract have been satisfied (ICP 19), to act with due skill, care and diligence when dealing with customers (ICP 19.1), to promote products and services in a manner that is clear, fair and not misleading (ICP 19.6), and to provide timely, clear and adequate pre-contractual and contractual information to customers (ICP 19.7).
• The supervisor requires insurers to service policies appropriately through to the point at which all obligations under the policy have been satisfied, disclose to the policyholder information on any contractual changes during the life of the contract, and disclose to the policyholder further relevant information depending on the type of insurance product (ICP 19.9).
• The supervisor requires insurers to handle claims and complaints in a timely, fair and transparent manner (ICP 19.10 – ICP 19.11).
• The supervisor requires insurers to disclose relevant and comprehensive information on a timely basis in order to give policyholders and market participants a clear view of their business activities, risks, performance and financial position (ICP 20).

The Consumer Protection Law aims to safeguard purchasers of goods and services and the public against unfair practices in the marketplace. There is no separate code or law aiming strictly at protecting the interest of insurance consumers in Lebanon. However, it is important to mention that the Insurance Regulatory Law has, as one of its fundamental purposes, to protect the public as insurance consumers and policyholders (as stated in Artt. 46 & 47 IRL).

The consumer, as defined by CPL is the natural or legal person who buys, rents, uses or benefits from a service or commodity for purposes which are not directly related to his professional activity (Art. 2 CPL).

As for the insurance sector, CPL clearly indicates that its provisions relating to contracts between the professional and the consumer are applied in everything that does not contradict the legal provisions that govern the activities of insurance companies (Art. 17 CPL). This gives rise to implied terms in consumer insurance contracts.

CPL sets out the right of the consumer, which includes fundamental rights such as the right to information. In this respect, CPL contains the following provisions:

• Placing on the professional the obligation to provide the consumer with exact, sufficient and explicit information about the product or the service (Artt. 3, 4 & 52 CPL).
• Prohibiting the professional from deceiving the consumer, whatever method is used, such as omitting or concealing information on the consumer or providing him with false information (Artt. 48 & 50 CPL).

On another note, CPL prohibits or considers null and void certain practices such as arbitrary clauses. Are considered arbitrary, clauses that may lead to the imbalance between the rights and obligations of the professional and of the consumer to the disadvantage of the latter. Arbitrary clauses are considered null and void, provided that other provisions of the contract produce their effects. In this respect, they are considered arbitrary, including but not limited to (Art. 26 CPL):

• Clauses that negate the responsibility of the professional.
• Consumer’s waiver of any of his rights stipulated in laws and regulations.
• Placing the burden of proof on the consumer in cases other than those stipulated by the law.
• Granting the professional solely the authority to amend all or any of the provisions of the contract.
• Granting the professional the right to terminate the indefinite duration agreement without informing the consumer of his desire to do so within a reasonable period.
• Obliging the consumer, if he does not fulfill any of his contractual obligations, to pay compensation to the professional that is not proportionate to the resulting damage.
• Granting the professional the right to construe solely the provisions of the contract.
• Obliging the consumer to fulfill his obligations if the professional refrains from implementing what he pledged to do.

In some compulsory insurance products, regarding insurance claims received from third parties, the insurer is obligated to pay indemnity to the affected third party, even in cases where the insurer may have recourse against the insured or the person who has caused the damage. Hence, the insurer’s right to rely on defences in such types of compulsory insurances where the policy is designed to respond claims by third parties, is limited, for the purpose of safeguarding the rights of those third parties.

According to Decree Law No. 105 of 30 June 1977, related to “Compulsory Insurance against Civil Liability for Bodily Injuries caused by Road Vehicles to Third Parties”, the National Institution of Compulsory Insurance (NICI) and the insurance companies have the right to recourse against the vehicle’s owner or the person responsible for the accident or both together, to recover what they might have paid for the affected person as compensation in the following cases (Art. 16 of Decree Law No. 105/1977):

• (1) If it is proven that the driver of the vehicle was during the accident in a state of drunkenness or under the influence of drugs.
• (2) If it is proven that the vehicle was used for a different purpose than the purpose declared in the certificate of registration or for purposes conflicting with applicable laws and regulations.
• (3) If the vehicle’s driver does not have a legal, valid and enforceable driving license for the type of insured vehicle.
• (4) If the vehicle has not been presented to mechanical test at the date fixed for this purpose, or if the driver continued to drive the vehicle despite the refusal of renewal of his driving license or if it has been proven, in an irrevocable verdict, that the accident resulted from negligence in the maintenance of the vehicle.
• (5) If it is proven that the accident resulted from a material fault by the driver of the vehicle, which helped to increase the possibility of the accident occurrence.
• (6) If it turns out that the insurance contract was signed according to false declarations of the insured or according to his concealment of substantial facts affecting the assessment of the insurance company or the NICI.
• (7) If it is proven that bodily injury resulted from an act committed intentionally by the driver.

Furthermore, the Decree No. 2180 of 5 June 2009 related to the implementation of Article 13 of Decree Law No. 105/1977 stipulates the following provisions with respect to the occurrence of a road accident that caused bodily injury to third parties:

• In the event that two (2) or more vehicles are involved in the accident, all of which are insured, each insurance company must pay a percentage of the hospitalization expenses divided by the number of vehicles, and that on a temporary basis, either until the dispute is resolved amicably between the insurers or until a final judgment is rendered by the competent Courts determining responsibilities. In the event that the two (2) or more vehicles are involved in the accident, one or some of which are not insured, each insurance company must pay a percentage of the hospitalization expenses divided by the number of vehicles, and that on a temporary basis until a final judgment is rendered by the competent Courts determining responsibilities, whilst reserving the right of the insurers to recourse against the owner(s) of the uninsured vehicle(s). If the accident occurred from one insured vehicle, the insurer must pay the full hospitalization expenses on a temporary basis until a final judgement is rendered by the competent Courts determining responsibilities, whilst reserving the right of the insurer to recourse against every person who he may have recourse against him (Art. 2 of Decree No. 2180/2009).
• Courts are not bound by the above-mentioned percentages since such percentages are considered as temporary until they are determined pursuant to a final judgment by the competent Courts (Art. 3 of Decree No. 2180/2009).
• Insurance companies shall conduct accounting or setoff between them, either after resolving the dispute amicably or after a final judgment is rendered by the competent Courts determining responsibility of each insurer (Art. 4 of Decree No. 2180/2009).
• Insurance companies may recourse against every natural or legal person against whom it is legally permissible to recourse (Art. 5 of Decree No. 2180/2009).

On another note, with respect to compulsory hunting insurance, there are similar provisions whereby the insurer is obligated to pay indemnity to the affected third party, whilst having the right to recourse against the insured (i.e.: hunter) or the person responsible for the accident or both together in specific cases (Art. 9 of Prototype of the General Terms and Conditions of Insurance Policies against Risks occurring to Third Parties as a result of Practising Hunting regulated under Decree No. 11987 of 24 May 2014 implementing Hunting Law No. 580 of 25 February 2004).

In some other compulsory insurances, e.g., Workmen’ Compensation, liability is imposed on the insurer without the need to establish the fault of the policy’s subscriber, whereby employers are liable towards their employees following any work-related accident, irrespective of any personal fault of the employer (Prototype of the General Terms and Conditions of Workmen’ Compensation Policies issued according to Decree Law No. 136 of 16 September 1983 on Workplace Contingencies).

Generally, the insurer is responsible for any loss or damage occasioned by force majeure or accidents or faults of the insured (Art. 966 COC) or by persons for whom the insured is legally responsible (Art. 967 COC).

The usual trigger for cover under insurance policies covering first party losses (e.g.: Health Insurance, Comprehensive Car Insurance, Property All Risks Insurance, etc.) results from the occurrence of the insured risk on the insured person or on the insured thing. In this context, the law defines the insurance contract as being a contract by which the insured commits himself to certain obligations in case of the occurrence of certain contingencies relating to the insured person or assets (Art. 950 COC).

The usual trigger for cover under insurance policies covering liability claims (e.g.: Liability for Bodily Injury caused by Road Vehicles towards Third Parties, General Third-Party Liability Insurance, Professional Indemnity Insurance, etc.) results from the occurrence of the insured risk on the third-party or on the assets of the third-party due to the fault of the insured or the fault of the persons for whom the insured is legally responsible. The law also tackles the issue of insurance for the benefit of a third party by stipulating that insurance may be concluded in favor of a specific beneficiary indicated in the insurance policy or in favor of any unspecified beneficiary (Art. 961 COC). This comes in line with the general rules governing obligations, whereby any party may enter a contract in favor of a third party who becomes the creditor of the promising party by the contract itself (Art. 227 COC). Contracting in favor of a third party may occur in favor of future persons or persons who are not currently specified, provided that they might be specified at the time when the contract is to produce its effects (Art. 228 COC). The third-party beneficiary of such a contract becomes the immediate and direct creditor of the promising party (Art. 230 COC).

As for life insurance contracts, the law has specified the trigger for cover, whereby the insurance amount may be payable: (1) In case the insured is still alive at a determined date; (2) In case of death of the insured; (3) Either in case the insured is still alive at a determined date or on his death occurring before that date to his heirs and rightful claimants or to one or several determined beneficiaries (Art. 1002 COC).

In all cases, a claim must be submitted by the insured or the third party to the insurer. This claim must be filed within the limitation period.

Moving to the limitation period for the commencement of an action against the insurer, the law stipulates that all actions arising from an insurance policy prescribe within two (2) years dating from the event that generated them. However, this prescription runs: (1) In case of contingency, only from the day when the concerned parties knew about it, if they prove that they were not aware of it until then; (2) In case of an action by the insured against the insurer which has for its cause a third party’s action, the prescription runs only when the third party has taken action against the insured or has been indemnified by the latter (Art. 985 COC).

It should be noted that the two-year prescription period may be interrupted by one of the ordinary causes interrupting prescription (Art. 987 COC). Prescription is interrupted: (1) By any judicial or extra judicial claim, duly registered, which makes the debtor in state of delay of performing his obligation, even if such claim was filed before an incompetent Court or in the case it was void for the flaw of form; (2) By a petition requesting the admission of the debt into the debtor bankruptcy; (3) By any protective act taken on the debtor’s assets, or by any petition for authorizing to proceed such kind of act (Art. 357 COC). Prescription is also interrupted by the debtor’s acknowledgment of the creditor’s right (Art. 358 COC).

It is also worth mentioning that if the trial has been left inactive for two (2) years from the date of the last valid procedure, it may be dismissed by the Court upon the request of any of the opponents (Art. 509 CCP). If the trial has been left inactive for five (5) years from the date of the last valid procedure, the Court may ex-officio decide to dismiss the trial without calling the opponents (Art. 512 CCP).

There are two (2) types of exclusions. Exclusions under the law, and exclusions under the terms and conditions of the insurance policies.

As for the exclusions stipulated in the insurance contracts, particularly the common exclusions in the prototype wordings of the policies General Terms and Conditions, typical exclusions depend on the type of insurance and the premium paid. Unless otherwise provided in the insurance contract, this may include, Pre-Existing Claims; Inherent or Latent or Design Defects; Wear and Tear; Contractual Liability; Fraud and Dishonesty; Intentional or Grossly Negligent Acts or Wilful Misconduct; Unlawful Acts; Breaches of Statutory Regulations; Administrative and Judicial Acts; Fines and Penalties; International Sanctions; Business Interruption; Indirect and Consequential Losses; Non-Pecuniary Damage; Political Risks, War and Terrorism; Confiscation, Expropriation and Nationalization; Natural Disasters; Nuclear, Chemical, Biological Risks and Radioactivity; Environmental Pollution and Contamination; Pandemic and Epidemic; Asbestos; Cyber Risks.

Moving to the exclusions stipulated by the law, it is important to note that the insurer is not responsible, (1) For any loss or damage resulting from any intentional fault of the insured (Art. 966 COC); (2) For vice, malfunction or shortage that befalls the insured item as a result of an inherent defect (Art. 968 COC); and (3) For destruction or damage caused by foreign or civil war or by riots or popular movements, unless any covenant, to the contrary (Art. 969 COC).

As for the exclusions stipulated by the law for life insurance contracts:

• The exclusion of covering suicide, unless any covenant to the contrary. However, the insurer must undertake to pay the insured sum in case of covering suicide or of the sentence of capital punishment of the insured. Nevertheless, such clause is not operative before two (2) years following the conclusion of the contract. In case of execution of capital punishment, the date when the crime was perpetrated shall be considered in the computation of this delay (Art. 1000 COC).
• The cessation of the effect of the insurance contract when the beneficiary, had intentionally or by his act, occasioned the death of the insured, except if there had only been mere imprudence. The amount of the reserve must be paid by the insurer to the heirs or successors of the insured if the premium has been paid for a period of three (3) years or more (Art. 1015 COC).

For Compulsory Insurance against Civil Liability for Bodily Injuries caused by Road Vehicles to Third Parties, the law excludes from the right to benefit from indemnity the following persons (Art. 7 of Decree Law No. 105/1977):

• (1) The owner of the insured vehicle and every person to whom its guardianship is transferred.
• (2) The driver of the insured vehicle if he suffers from bodily injuries while driving it.
• (3) The spouse, ascendants or descendants of the persons referred in the two (2) previous clauses, if they suffer from bodily injuries while they are inside the insured vehicle, or while getting in or out of it.
• (4) The staff and employees of the persons referred to in clause 1, if they suffered from bodily injuries caused by the insured vehicle while carrying out their work.
• (5) The persons related to those referred to in clause 1, if they suffer from bodily injuries while they are inside the insured vehicle, or while getting in or out of it.
• (6) The legal representatives of a natural person whose liability is insured in case they suffer from bodily injuries while they are inside the insured vehicle, or while getting in or out of it.

The law considers the insurance contract as a contract of adhesion (Art. 172 COC). In adhesion contracts, including the insurance contract, the Courts interpret ambiguous wordings in a manner that is consistent with the interest of the weaker party, that is the insured in insurance contract, in addition to the reason that the insurer being the party that drew up the contract, and thus bears that risk (i.e.: the Contra Proferentem or the interpretation against the drafter rule).

Moreover, the Consumer Protection Law requires that contracts be construed in the interest of the consumer (Art. 18 CPL).

Although the “but for” or “proximate” test of causation is not addressed in law in an explicit manner, part of the jurisprudence considers it for determining the adequate cause of the loss in insurance, tort or criminal law where there are multiple causes (Please refer to Q&A No. 17). In complex scenarios, the dominant and adequate cause of the loss is mostly considered.

Distinction should be made between “Actual Cause” and “Proximate Cause”:

• “Actual Cause” (or Cause in Fact) refers to the actual causation or the direct cause or link between the defendant’s action (or omission) and the loss occurred. The “but for” (conditio sine qua no) test is used to establish the actual cause of the loss. It asks whether the loss would have occurred “but for” the actions of the defendant. If the loss would not have occurred without the actions of the defendant, then the defendant actions are considered the actual cause. The purpose of this test is to establish that the defendant’s actions are the direct cause of the loss, meaning that if those actions hadn’t been occurred, the loss wouldn’t have happened.
• “Proximate Cause” (or Legal Cause) refers to the legal causation whether the loss was a foreseeable result of the defendant’s action (or omission) or not. Proximate cause does not necessarily refer to the final event before a loss occurred, nor is it always the first event that triggered the chain events. Rather, it is the cause that led to a foreseeable outcome, and without which the loss would not have happened. The “proximate” cause (causa proxima) test helps to determine whether the loss is a foreseeable result of the defendant’s action, limiting liability to those consequences that were reasonably foreseeable. The purpose of this test is to determine liability to those losses that were foreseeable consequence of the defendant’s actions, avoiding situation where the link between the action and the loss is too distant or indirect.

Anyhow, it should always be referred in all types of policies, especially in liability insurance, to the insurance contract wording, particularly to stipulations related to causation. Insurance contract terms usually require a direct causal link between the losses and the insured perils. Generally, the policyholder bears the burden of proving causation, unless the burden of proof is shifted under certain circumstances, specific elements of the case, or by legal or contractual provisions.

In principle, in Tort Law, a person is liable for a damage caused by his personal act, negligence or impudence (Artt. 122 & 123 COC). However, if the victim had committed a mistake that might mitigate the responsibility of his opponent without extinguishing it, the liability must be apportioned in a manner that shall reduce the compensation granted to the prejudice party (Art. 135 COC). Moreover, when several persons have caused the damage, joint liability exists if there has been joint action or if it is impossible to determine the proportion of damage caused by these persons (Art. 137 COC).

In Criminal Law, in case of multiple causes, a causal link between an act or omission on the one hand, and the criminal consequences on the other, shall not be precluded by the concurrent existence of other previous, simultaneous or subsequent causes, even if they were unknown to the perpetrator or independent of his act. However, if the subsequent cause is independent and sufficient itself to bring about the criminal consequence, the perpetrator shall incur the penalty only for the act that he committed (Art. 204 of Criminal Code, enacted by Decree Law No. 340 of 1 March 1943).

Hence, it is necessary to demonstrate the causal link between the insured event and the loss.

If loss results from multiple causes, the jurisprudence adopts one (1) of two (2) different doctrinal theories of causation:

• “Equivalence of Conditions” theory, according to which each of the concurrent causes shall be considered as the cause of the loss, same as the actual cause or cause in fact related to the direct connection between the defendant’s action and the loss that occurred.
• “Adequate Cause” theory, which selects the adequate, productive and determining cause of the loss, if such cause is sufficient itself to bring out the loss.

In Fire Insurance, the fire insurer is answerable for all damage caused by conflagration, blazing or mere combustion. However, he is not answerable for any damages occasioned by the simple reaction of heat or by direct and immediate contact with fire or incandescent substance, if there has been no fire or the beginning of fire likely to generate into an actual fire (Art. 988 COC). The insurer shall insure only against material damages that are the direct and immediate result of fire or the beginning of fire (Art. 989 COC). Are considered among direct material damages, those damages suffered by the insured thing because of aid work and rescue measures (Art. 990 COC).

Anyhow, it should always be referred in all types of policies to the insurance contract wording, particularly to stipulations related to causation, cover extent and exclusions.

For some contractual original vices at the time of formation of the insurance contract, remedies available to insurers are the following:

• First, please refer to Q&A No. 8 with respect to remedies available to insurers in case of concealment, false declaration or breach of the duty of disclosure (Art. 982 COC).
• Moreover, insurance is void if the insured thing, at the time of the formation of the contract, has already been perished or may no longer be exposed to risks. In this case, the insured, who bad faith is proven, owes the insurer a sum double than that of a year’s premium. In case of proof of the insurer’s bad faith, the insurer pays an equal sum to the insured (Art. 981 COC).
• If an insurance contract was concluded for a sum higher than the value of the insured thing with deceit or fraud by one of the parties, the contract is void in relation to that party and damage and interests may additionally be allocated to the party in who favor annulment has been awarded for this cause. If there has been no deceit or fraud, the contract is valid but solely up to the actual value of the insured thing, and the insurer shall not be entitled to the premiums for what is in excess. Only the due premiums and the premiums for the ongoing year shall remain definitely acquired (Art. 956 COC).
• For life insurance contracts, errors as to the age of the insured entail annulment of the contract when the insured actual age happens to stand beyond the limits fixed for the conclusion of insurance according to the insurer’s rates. In any other case, if, due to an error of this kind, the paid premium is less than the premium which should have been settled, the insured capital or annuity is reduced proportionately to the paid premium and to that which would have corresponded to the actual age of the insured. If, on the contrary, following an error on the age of the insured, the premium was overpaid, the insurer is required to return that portion of the premium which he received in excess, without interest (Art. 1018 COC).

As for the breach of the policy terms after the formation of the insurance contract, remedies available to insurers are the following:

• Right to termination of the insurance contract or its enforcement by Court in case of default of payment of one of the premiums on the due date: The default of payment of one of the premiums on the due date suspends the insurance contract from being operative, ten (10) days after the insured has been served with notice sent by a registered letter to the insured or to the person in charge of the payment of premiums at his last address known by the insurer. The insurer is entitled, within twenty (20) days of the expiry of the sub-mentioned time limit (i.e.: 10 days), to terminate the contract or to make it enforced through Court in order to compel the insured to execution. The insurer may declare termination by a registered letter addressed to the insured. In contracts stipulating the non-termination in case of default by the insured in payment of the premium on the due date, the insurer is discharged from the obligation of serving notice for payment. The due premium shall be perceived out of the reserve and the insured shall be advised accordingly by a registered letter (Art. 975 COC).
• Right to termination of life insurance contract or reduction of its effects in case of default of payment of one the premiums on the due date: The insurer may not take any action for the payment of premiums. Failure to pay a premium entails the termination of the insurance contract or the reduction of its effects, after the completion of legal formalities (formalities as prescribed by Art. 975 COC). In the insurance contracts depending on the death of the insured and concluded for the lifetime of the latter without the condition of his survival after a determined date, and in all contracts where it is agreed to pay the insured sum or annuity after a certain number of years, failure to pay may have no effect except reduction, notwithstanding any covenant to the contrary when three (3) annual premiums or more have been paid. Reduction may particularly involve either the amount of the insured sum or annuity, or the term of the insurance contract. As for contracts stipulating the non-termination in case of default of payment of the due premium by the insured, such contracts shall not be affected by the termination or the reduction as provided above (Art. 1012 COC).
• Right to termination of insurance contract or increasing the premium in case of aggravated risks: Please refer to Q&A No. 7 in this respect (Art. 977 COC).
• Right to claim compensation in case of delay in declaration of contingency or production of documents: The insurer has the right to claim compensation in case of the insured’s delay in the declaration of contingency to the authorities or in the production of documents. This compensation should be proportionate to the damage that such delay has caused to the insurer (Art. 983 COC).

The principle is that liability is due to personal act. A person is liable for the damage caused by his act, negligence or imprudence (Art. 123 COC).

In return, joint obligation exists among debtors when several debtors are held for the same debt and each debtor is liable, in his relationship with the creditor, as the debtor of the whole debt (Art. 23 COC). Nevertheless, solidarity among debtors is not presumed. It must be established expressly by virtue of the contract generating the obligation, by law or by nature of the case. However, solidarity definitely exists in obligations concluded among merchants in matters of trade, if the contrary is not stated in the contract creating the obligation or by law (Art. 24 COC).

These rules can be applied to the insurance contract. In case the policy provides cover for more than one policyholder, the breach of policy terms by any of them does not, in principle, constitute a reason to invalidate or terminate the effect of cover for the rest of the policyholders, unless it is clear from the insurance contract or by the nature of the case that there is solidarity among policyholders, or in the event the contract is jointly concluded by merchants in matters related to their trade.

Hence, a distinction should be made between joint insurance and composite insurance. Joint insurance exists where two (2) or more persons with a joint interest take out a single insurance policy, whereas composite insurance exists where two (2) or more persons with separate interests take out a single insurance policy. In case of breach by one policyholder, such breach does not usually affect the rights of other policyholders, in composite insurance, contrary to joint insurance.

It is worth mentioning that the law does not mention any explicit provisions regarding solidarity among policyholders, except when it deals with the subject of the death of the insured or the transfer of the insured thing and the continuation of the insurance contract in favor of several heirs or purchasers, whereby they are jointly held to satisfy all the obligations of the original insured towards the insurer particularly with respect to the payment of premiums (Art. 979 COC).

The law does not contain any explicit provisions pertaining to policyholders’ requirement to comply with policy conditions in case the insurers decline cover for claim. In such a case, the policyholder has in fact two (2) options:

• To comply with the policy’s conditions since part of those conditions constitutes his contractual obligations throughout the term of the insurance policy. The decision of complying with the policy’s conditions may in fact be based on various reasons, inter alia, if the decline of the claim is not of substantial effect or if does not constitute a material breach of the insurer’s obligation or if the right of coverage may be contested, or simply for the purpose of sustaining the cover in the event of a new accident.
• Or to dissolute the insurance contract.

As for the dissolution of the contract, we can refer to the general rules and principles and the general provisions specified by the law in this regard. At that point, the law contains specific provisions relating to the dissolution of contracts for subsequent reasons or circumstance after its formation, whereby dissolution may be through cancellation which has retroactive effects or termination with effects limited to the future (Art. 238 COC).

Regarding the cancellation of the contract, it should be referred to the following provisions:

• Cancellation of the contract may occur by reason of a cancellation clause included in it, by a suspected intention by the contracting parties (such as a tacit nullifying clause) or by the extinction of one or several obligations due to the impossibility of their performance (Art. 239 COC). Such cancellation takes place definitely without the necessity of recourse to legal proceedings (Art. 240 COC).
• Cancellation clauses are implied in all bilateral contracts if one of the parties did not perform his obligations and was unable to invoke the impossibility of performance. However, in such a case, the contract is not definitely cancelled. The party, whose rights were not executed, is given the choice between compulsory execution of the contract or its cancellation with claim of damage. Such cancellation is basically awarded by the Court, which in case of partial performance, shall assess if such lack in the said performance is serious and important enough to justify the cancellation of the contract. Nevertheless, the parties may agree, in written, formal and express terms, that in the case of non-performance, the contract shall be definitely cancelled, without recourse to legal proceedings, or even without recourse to legal proceedings and serving notice (Art. 241 COC).
• Cancellation for non-performance of obligations has the same effects as cancellation resulting from an express cancellation clause (Art. 242 COC).
• Cancellation dissolves the contract retroactively, to the exception of the acts of administration, which remain valid. Without prejudice to such limitation, the situation must be restored to the state where it would be if the dissolved contract has never been concluded (Art. 240 COC).

Regarding the termination of the contract, contracts may not be usually terminated except by the unanimous consent of all contracting parties (Art. 245 COC). However, unilateral termination is valid if it has been stipulated in the contract or by law (Art. 246 COC). In case of termination, the contract does not expire except on the date of termination and without retroactivity. The effects that it has previously produced are permanently acquired (Art. 247 COC).

Once entitlement to recover under the policy is established, the process of determining quantum can differ depending on the type of insurance and the nature of the loss. In insurance claims, quantum is typically assessed based on the actual loss sustained or on the agreed basis of claim settlement as per the terms outlined in the policy. The insured must provide the insurer with relevant evidence to substantiate and quantify the loss (e.g.: pictures of damages, proforma invoices or commercial invoices for replacement or repair, BOQs, receipts, etc.). In complicated cases, insurers may appoint experts or loss adjustors to evaluate the damage. In parallel, the insured can also engage experts or surveyors for assisting him in his claim assessment.

As per the Terms and Conditions of insurance contracts, the basis of claim settlement in the event of damage to the insured thing, consists of three (3) main methods:

• Agreed Value basis: Cover is provided by paying to the insured a pre-determined amount agreed by both the insurer and the insured upon issuance of the insurance policy. This basis of settlement does not consider neither replacement cost nor age or depreciation.
• Reinstatement Value basis or New Replacement Value (“New for Old”): Cover is provided by paying to the insured the full cost of repair, replacement or reinstatement of the insured thing, to a condition equal but not better than its condition when new.
• Market Value basis: Cover is provided by paying to the insured the market value of the insured thing, i.e., the replacement value of the insured thing as new at the time of loss or damage less wear and tear and/or depreciation.
• If the basis of indemnity settlement is not stipulated otherwise in the insurance policy, then according to insurance practices and law, it is supposed to be the actual market value whereby depreciation rate shall be considered for the assessment of material value.

Experts and adjustors are appointed among experts duly registered on the list of insurance experts and on the schedule of experts as per the provisions of laws and regulations. In this respect, it is worth mentioning some of the statutory provisions related to experts:

• No person, except for the employees of the insurance companies, may practice the profession of expert charged to survey accidents and conduct damage assessment related to non-life operations, unless he has been duly registered on the list of experts established in accordance with the specialization of each expert. MoET proposes to the Higher Judicial Council (HJC) the list of experts specialized in the field of insurance, following the consultation of NIB (Art. 41 IRL). In general, experts are registered on a special schedule drawn up by HJC, which should be then approved by the Minister of Justice and published in the Official Gazette (Art. 1 of Decree Law No. 65 of 9 September 1983 relating to the Statute of Experts which had replaced Decree Law No. 54 of 17 March 1953 and its subsequent amendments).
• Insurance experts are classified in the following categories (Art. 16 of Decree No. 1205 of 24 April 1978 relating to the Implementation of some of the provisions of the Law Regulating Insurance Companies): (1) Terrestrial, marine and aviation transportation and insurance of their risks; (2) Vehicles and insurance of their risks; (3) Fire, explosions and insurance of their risks; (4) As for other risks, it can be resorted to the schedule drawn up by HJC.
• MoET may approve the registration of international institutions specialized in insurance related expertise on the register of experts, provided that they appoint a responsible agent in Lebanon and that their eligibility is proven by a duly authenticated official certificate from the competent authority in their head office (Art. 15 of Decree No. 1205/1978).
• Any report drawn up by a person who is not registered on the experts’ list is considered null and void (Art. 42 IRL).
• Any person who practices the profession of insurance expert without being registered on the above-mentioned list or after his name has been delisted, shall be punished by imprisonment and fine or by any of these two (2) penalties (Art. 58 IRL).

Experts or adjustors reports are not binding. After the evaluation of damage, both parties may conduct negotiations and discussions to reach an amicable agreement regarding the amount to be settled without or before proceeding to legal action, thus avoiding additional costs. In case of disagreement, the insured may resort to dispute resolution to resolve the matter.

Property Insurance contract is an indemnity contract. It must not place the insured, in case of contingency, in a better financial position than if no risk has occurred (Art. 955 COC). Indemnity or compensation to which the affected person is entitled must correspond basically to the incurred damage (Art. 134 COC).

In the event of damage to the property insured, calculation of the recoverable loss should be made on the basis of claim settlement as outlined in the policy, which consists of three (3) main methods as previously mentioned: Agreed Value basis, Reinstatement Value basis, Market Value basis. Unless otherwise stipulated in the insurance contract, the basis of claim settlement should be upon Market Value.

Going back to the basics, the purpose of insurance is to put the insured back into the financial position as if the insured peril had not occurred. The fact that the insured has not declared to the insurer of his pre-existing plans for change of use does not exempt the insurer from indemnifying the insured according to the Terms and Conditions of the insurance contract.

Courts in our jurisdiction are not likely to consider pre-existing plans for a change of use while calculating the recoverable loss. Unless the policy states otherwise in case of pre-existing plans, or in case the reinstatement of the property is not carried out for reasons beyond the insured’s control or if he opts to abandon the damaged property, then the recoverable loss should be calculated upon the basis of claim settlement as stated in the policy (i.e.: Agreed Value, Reinstatement Value, Market Value, etc.).

The insurer, who has paid the insurance indemnity, is subrogated to all rights and actions of the insured against third parties who, by their act, have caused the damage creating the insurer’s liability. However, the insurer may be discharged, wholly or partially, of his liability towards the insured when subrogation can no longer, due to the act of the insured, operate in favor of the insurer. Notwithstanding the preceding provisions, the insurer has no right to action against the children of the insured or his descendants or ascendants or his direct relatives by marriage or his employees or workers or domestic servants and generally any person living usually with the insured, unless in case of fraud committed by one of these persons (Art. 972 COC).

As for recoveries which result from the recourse of the insurer instead of the insured against the third parties who, by their act, have caused the damage, creating the insurer’s liability, the question of recovery distribution between the insurer and the insured does not arise in such a case, since the insurer subrogation to rights and actions of the insured against third parties necessitates first that the insurer has paid indemnity to the insured, whereby by compensating the latter, the obligation of the insurer is extinguished due to performance or payment. According to the law, obligations are extinguished normally when performed (pursuant to Art. 290 COC).

The law does not contain any explicit specific or particular provisions stipulating the right of the insured to claim compensation for damages in the event of late payment by the insurer. However, it is possible to refer to the general provisions of the law and apply them in this case.

In this context, the law stipulates the right of the creditor to claim damage compensation in case of late performance of the debtor (Artt. 252 & 257 COC).

Damages are usually assessed by Court, by law or by mutual agreement (Art. 259 COC).

If the obligation involves an amount of money (e.g.: payment of insurance indemnity resulting from a valid claim), the debtor is required to pay to the creditor interest on the overdue amount according to the legal rate. However, if the debtor is of bad faith, additional damages may be granted to the creditor prejudiced by an illegal abstention (Art. 265 COC).

Claims can be made against insurance policies taken out by persons or companies which have since become insolvent. In case of insolvency of the insured, the latter or the third-party claim can be addressed against the insurer with whom the insurance policy was underwritten.

The situation might differ in case of bankruptcy of the insured. Generally, this shall not affect the insurance agreement or the liability of the insurer, except for what follows the general rules of law, or depends on certain circumstance such as the terms of the policy, the state of bankruptcy and if the policy has not been terminated by the insurer.

In this respect, the law contains provisions related to the termination of the insurance policy for reason of bankruptcy or Court liquidation of both the insured and the insurer. In this regard, the law stipulates that in case of bankruptcy of the insured or of his Court liquidation before the expiry of the insurance period, the insurer has the right to terminate the insurance contract after having warned the insured to provide a solvent guarantor within eight (8) days, if the warning remains ineffective (Art. 980 COC).

Furthermore, the trustee (syndic) in bankruptcy may treat the insurance policy as an asset of the person or company.

However, the termination of an insurance policy which is contracted for the benefit of a third party might create an issue, as well as the matter of considering it among the assets of the bankrupted person or company, since the contract is in favor of the third party who becomes the immediate and direct creditor of the insurance company by the contract itself (In accordance with Artt. 227 & 230 COC).

It should be noted that insurers’ commitments towards the insured persons or the beneficiaries, are guaranteed by a preferential right over all the insurers assets. This preference ranks next to Treasury claims and judicial taxes. Commitments towards beneficiaries of life insurance operation or indemnity insurance for death or bodily damage, all of which are of equal rank, have priority over all other commitments (Art. 28 IRL).

Class actions or group litigation are not available under Lebanese law. No person can bring a class-action on his behalf and on behalf of other persons affected by the same issue who become automatically part of the class action and must “opt-out” if they refuse to join the claim. On the other hand, several people cannot join or “opt-in” together in one legal action for their separate claims even in case of similarity of their legal positions.

The Code of Civil Procedure requires three (3) elements for the admissibility or receivability of a legal action: the legal status, the interest and the capacity (Artt. 9 & 12 CCP). The law defines legal action as the right of every person with a claim to submit it to the judiciary for a ruling on its subject (Art. 7 CCP). The legal status usually belongs to the owner of the right personally, to the person who received his right, such as the heir or the purchaser, or to the representative of the owner of the right. In addition, the interest must be personal and direct. The legal status to file a legal action belongs to the personal and direct owner of the interest whom the right to claim is intended to protect. Therefore, legal action requires unity of the subject matter and unity of the claim.

However, certain associations, corporations, syndicates or unions may bring actions to the collective interests of their members.

Moreover, the Consumer Protection Law entitles Consumer Associations to represent consumers collectively and litigate with the aim of preserving their rights (Art. 67 CPL).  This may be applied to insurance consumers.

Thus, these bodies can represent the collective interests of the related persons. This means that the claimant must individually sue the defendant for his self-interest. Few exceptions are made under limited conditions:

• For instance, workers syndicates and professional organisations whose members are engaged in a collective labour agreement are entitled to initiate legal proceedings pertaining to such agreement on behalf of their members. No proxy from the member is needed in this regard, provided that the latter has been notified of the matter and has not objected (Art. 24 of the Law on Collective Agreements, Mediation and Arbitration, ratified by Decree No. 17386 of 2 September 1964).
• Some laws organizing liberal professions (e.g.: Lawyers, physicians, architects, etc.), enable the president of the order to intervene in actions related to any of its members. For instance, the President of Lawyers’ Bar is entitled to institute proceedings in the name of the Bar, intervene personally or through a Bar Council member chosen by him in any case interesting the Bar or a lawyer and appear in the capacity of personal plaintiff in any case relating to acts that may affect the honour of the Bar or one of its members (Art. 60 of the Law Organizing Lawyer’s Profession, enacted by virtue of Law No. 8 of 11 March 1970 and its subsequent amendments).
• The Consumer Protection Law grants the right to consumer to litigate directly or through consumer associations collectively, to protect his rights or compensate him for damages that may have been caused to him (Art. 3 CPL).

It should be noted that the Code of Civil Procedure allows multiple plaintiffs to bring together one action (Art. 467 CCP). Nevertheless, the subject matter or cause of action should be related to the same right, whether indivisible or not, or to a joint obligation among creditors.

Since 2019, Lebanon has been facing major setbacks: financial and economic crisis, impairment of the bank sector and risks of deposits, local currency depreciation, exchange rate collapse, inflation rates, default of sovereign debt, refugee crisis, COVID-19 pandemic, August 4^th, 2020, devastative explosion at the Port of Beirut, regional conflicts and escalation, Gaza war, September 2024 Lebanon war, and an ongoing political unrest.

Following the onset of the economic and financial crisis in 2019, depositors’ trusts in the Lebanese banking system were stuck from recovery. The “Lollar”, a term coined referring to a “Lebanese Banking Dollar” which consists of a deposit recorded as a US Dollar, though cannot be withdrawn as such due to the banks’ liquidity crisis, instead being available only for exchange for Lebanese Pound at massively reduced rates.

Lebanon economic and financial crisis has had a profound impact on insurers in the country:

• In the aftermath of the crisis, insurance companies were witnessing an increase in claims and general expenses as well as financing costs.
• As a result, insurance companies began paying their dues to the insured persons or beneficiaries in “Lollar” in a manner that does not equal the actual value of the due indemnities. When policies came up to renewal, insurance companies started requiring clients to pay premiums in “Lollar”. However, insurers considered that unless paying premiums in fresh US Dollar, a mismatch would occur (i.e.: underinsurance) and the insured would have to pay out of pocket for the difference between the “Lollar” rate and the real US Dollar. This practice led to numerous disputes between insurers and policyholders.
• Insurers also tussled with hospitals over medical insurance settlements.
• Furthermore, Insurers have faced issues paying reinsurers who have become more cautious about working with them due to this reason, in addition to the country’s political and economic instability and risks of war escalation.

Insurers initially began collecting their premiums in Lebanese Pound or in “Lollar” and then transitioned to a gradual dollarization trend. This situation persisted for over three (3) years whereby starting from 2022, pricing of premiums was adjusted and premiums on new policies were paid in fresh US Dollars. Today, the insurance market has entirely adopted the US Dollar as its currency, almost returning to pre-economic crisis price levels.

These impacts on policyholders have varied between life and non-life insurance products:

• For general insurance policies, most disputes that arose were extinguished after complete dollarization of premiums since the policy period for a non-life insurance is usually short, e.g., one (1) year. The same applies to term life insurance providing coverage for a specified period.
• As for long term life insurance or permanent life policies, as well as investment and unit linked plans, particularly those concluded prior to the onset of the 2019 crisis, insurance companies insisted that their clients should be paid out in “Lollar” when redeeming their policies. To this day, this issue still raise disputes between insurers and policyholders, whereby insurance companies dealing with their customers has been in many ways similar to banks.
• An Announcement was issued by the Capital Market Authority (CMA) on “Clients with Security Portfolio Outside Lebanon” which requires the financial institutions, in the event a client decides to liquidate his positions from foreign securities located outside Lebanon, to transfer the net fund resulting from the sale to the client, either to a “Fresh Funds” account in Lebanon or to an account outside Lebanon, upon the Client’s request (CMA Announcement No. 71 of 1 April 2021). ICC has addressed two (2) Circulars to insurance companies operating in Lebanon calling them to adhere to CMA Announcement with respect to their clients who own portfolio of financial instruments outside Lebanon (ICC Circular No. 920/ICC of 18 May 2021 and ICC Circular No. 481/ICC of 15 February 2023).

In addition, more complex disputes have emerged after the explosion that occurred at the Port of Beirut on 4 August 2020 and resulted in high volume of insurance claims for losses and damages resulting from the blast. As per the Beirut Blast August 4 Monitoring Report issued by ICC and updated periodically, the filed and estimated claims are over one (1) billion US Dollars, with more than ninety (90) percent related to Property and Casualty line of business mostly associated with Fire and Property All Risks insurance policies. The retained losses for Fire branch are around five (5) percent only while the reinsured losses are around ninety-five (95) percent. Thus, nearly ninety-five (95) percent of the claims were reinsured. According to latest statements by officials of the supervisory authority, almost ninety-five (95) percent of claims were settled.

Nevertheless, the problematic issue remains in the currency by which the claims were settled, as many insurance companies have totally or partially paid indemnity in “Lollar”, while they received from reinsurers their shares of the loss in real or actual US Dollar. ICC has issued many circulars and directives urging to pay part of the indemnity in real US Dollar equivalent to the reinsurers portion of the loss (ICC Circular of 2 December 2020) and to assess the loss considering the exchange rate of real US Dollar and the determination of currency and mechanism of payment that allow the insured to a fair compensation for the damages resulting from the incident (ICC Circular No. 1728/ICC of 10 September 2020). Moreover, a law was enacted by parliament stipulating that the amounts of money resulting from reinsurance contracts should be paid in Fresh Currencies, i.e., US Dollar or Euro (Law enacted on 30 June 2021). However, this law was sent back to the parliament for another revision (By virtue of Presidential Decree No. 8040 of 28 July 2021). Nevertheless, it should be well noted that the Code of Obligations and Contracts expressly stipulates that the compensation should be equal to the damage (Art. 134 COC).

As for the remaining unsettled claims resulting from the Beirut Port explosion, part of which turned into legal disputes. Nevertheless, many complexities surround legal proceedings since the cause of the explosion has not been judicially determined yet since the competent judicial authority (i.e.: the Judicial Investigator responsible for the investigation of the Port of Beirut explosion file) is still conducting an investigation (as of the time of writing this Chapter), which has faced years of obstacles. Considering that around ninety-five (95) percent of the policies related to the blast, according to many statements and reports, do not cover acts of war and political violence, if the explosion is classified under an act of war, insurance companies shall not cover the incident due to policies’ exclusion of such risk.

The position of the insurers in Courts is that the legal proceedings related to insurance claims should suspend pending the conclusive outcome of the judicial investigation, relying on the principle rooted in the civil law tradition that the criminal proceedings take precedence over civil proceedings “Le pénal tient le civil en l’état” (Enshrined by virtue of Art. 8 of the Code of Criminal Procedure, enacted by Law No. 328 of 2 August 2001 and its subsequent amendments). On the contrary, the policyholders position is that this principle is not absolute and has limits that restrict its adherence especially with respect to proof related matters, in addition that the burden of proof requires the insurer to provide evidence that loss or damage resulted from an act of war, as per Art. 969 COC.

It should be noted that early administrative and police investigations conducted by local authorities, as well as international investigations carried out by foreign investigators, have led to initial findings basically turning aside the hypothesis of external interference. Nevertheless, no report was publicly published. Moreover, loss adjustors assessment reports related to the blast have pointed out that the most likely hypothesis around the cause of the incident being accidental, with no proof of exclusion, is likely to be brought by the insurers, thus recommending taking this fact into consideration for the settlement of claims since the burden of proof to reject liability being on the insurer. Based on the foregoing, most claims were settled by insurers and reinsurers.

Technology has already begun to have an impact and is expected to significantly transform the insurance dispute sector in the coming years.

Firstly, this may happen through the digitization of insurance sales and insurance claims handling by several means:

• Using digital distribution channels and mediums to market and sell insurance products, including websites, emails, mobile phone applications and online platforms.
• Allowing policyholders to file claims, upload documentation and communicate with insurers and intermediaries from any place.
• Processing with claims digitally by automating routine tasks, such as data gathering and analysis, damage evaluation, claim assessment and approval.
• Improving customer service by providing policyholders with real time tracking and updates on their claims, allowing for more transparency.

On another note, Lebanon is marking today the first steps towards a digitized judiciary. Transformative initiatives are taken to modernize legal workflows and enhance procedural efficiency, including the implementation of authorized E-Signatures to digitize judicial documents, the introduction of an E-Wallet platform for Bar Association members to facilitate Court-related financial transactions, and the adoption of an advanced electronic system for issuing legal petitions or actions and tracking case progress.

A law was enacted pertaining to Electronic Transactions and Personal Data (Law No. 81 of 10 October 2018). This law provides that electronic documents and signatures have the same legal effect and probative value as paper documents and manuscript signatures. For the implementation of this law, a decree was ratified on Electronic Official Documents (Decree No. 14115 of 18 October 2024). These two (2) texts constitute the pillars of a reform step that paves the way for e-government in Lebanon.

The rise of Insurtech, Legaltech and Lawtech will help to support, supplement or replace traditional methods and develop technological solutions in insurance disputes sector.

Significant trends/developments in insurance disputes in recent years include the following areas:

• First, please refer to Q&A No. 27 with respect to the impact of local currency depreciation and the Beirut Port explosion on insurance disputes.
• Moreover, adjusting premium pricing was a matter of dispute between insurers and insured persons, though this issue was gradually resolved due the dollarization of the economy. In this context, and prior to the complete dollarization of premiums in 2022, some insurance companies included in their policies a “Currency Clause” stipulating that premiums will be collected in the same currency of the policy, otherwise claims will be paid in the same currency and conversion rate used by the client to settle the policy. After the complete dollarization of premiums in 2022, all insurance companies included in their policies a “Fresh Dollar Clause” stipulating that the currency of the contract is Fresh US Dollar, which rules the method of payment of premiums, benefits and claim reimbursement.
• On another note, the COVID-19 pandemic, Port of Beirut explosion, and September 2024 Lebanon war increased disputes related to business interruption and financial insurance.
• Same events, in addition to Gaza war, increased disputes pertaining to cancellation of events insurance.
• Also, the COVID-19 pandemic increased disputes related to medical and life insurance. However, a Ministerial Decision was issued by MoET on epidemic/pandemic cover requiring insurance companies to include in their contracts cover to all diseases resulting from pandemic/epidemic with respect to medical and hospitalization insurance contracts, as well as cover to death resulting from the same causes in life insurance contracts (MoET Decision No. 80/ICC of 15 April 2020).
• Additionally, numerous disputes were always occurring between insurers and policyholders over the refusal of the insurers to the renewal of cover in medical insurance policies or due to imposing discretionary amendments over the premium pricing, extent of cover and exclusions. To resolve this issue, a Ministerial Decision was issued by MoET aiming at the enforcement of guaranteed renewability on all medical and hospitalization insurance contracts for the entire life of the insured and without any amendment (MoET Decision No. 186/ICC of 17 April 2018).
• Furthermore, increased disputes arose pertaining to marine cargo insurance due to threats and attacks in the Red Sea.

Taking into consideration recent experience due to multiple factor crisis in addition to emerging perils and unexpected circumstance, insurers focused on reassessing and updating their policies to address this situation by introducing new provisions and tailoring new products designed to mitigate possible disputes related to such risks.

Lebanon insurance industry succeeded in defying the challenges the country has been facing. However, the insurance disputes sector is still facing some challenges that were posed due to the economic and financial crisis and the August 4^th, 2020, devastating explosion.

In the short term, it is expected that most of insurance disputes will be concentrated on unsettled claims associated with the payouts, maturity, surrender or redemption of long-term life insurance and investment plans concluded prior to the onset of the 2019 crisis. The same applies to many unsettled claims related to property damage that resulted from the Beirut Port blast.

It should be noted that medical health insurance and motor insurance are traditionally the two (2) largest generators of insurance disputes. The economic and financial crisis had a strong impact on the ability of all public funds to provide healthcare coverage. There are six employment-based social insurance funds publicly managed in Lebanon (The National Social Security Fund being the largest, which is a mandatory insurance for the formal sector employees, in addition to the Civil Servants Cooperative and four military schemes). Consequently, people have resorted more to private healthcare insurance providers (i.e.: insurance companies and mutual funds) which has led to a growth in health coverage insurance disputes.

However, we envisage that other insurance segments will be much more adopted in the coming years such as Life & Investment products (under new contracts), Political Risks insurance, Climate Risks, Cyber Risks, Securities Risks, Cryptocurrency Risks, Loss of Banking Depositors Assets, Takaful Insurance, Professional Liability Insurance, Directors & Officers Liability Insurance, Warranty & Indemnity/Mergers & Acquisitions Insurance, etc. As insurers will look to strongly defend ensuing claims and test the limits of relevant policies’ exclusions, we anticipate that the insurance disputes sector will see growth in these areas.

Moreover, we expect growth in ADR mechanisms, particularly to address highly technical issues, complex products, specialty lines insurance, commercial insurance, corporate insurance, large-scale insurance and reinsurance.

In the author’s opinion, such areas of growth in the insurance disputes sector necessitate to introduce alongside reforms in the legislative framework governing insurance activities and insurance contracts, mainly through adopting three (3) new laws: (1) A new modern insurance regulatory law organizing and regulating insurance sector instead of the current applicable law ratified by Decree No. 9812/1968, (2) a modern special law governing insurance contracts detached from the Code of Obligation and Contracts, and (3) a special law for insurance consumers protection.