91-1

LEBANON*

I. Restrictive Covenants: Laws and Typesof Restrictions ............................................................. 91-3A. Governing Legislation .......................................... 91-3B. Type and Scope of Restriction .............................. 91-5

1. Noncompetiton .............................................. 91-5a. Regulatory Framework ........................... 91-7b. Enforceability, Conditions, and

Criteria .................................................... 91-82. Nonsolicitation of Clients and Customers .... 91-113. Nonsolicitation of Employees ....................... 91-154. Confidentiality and Trade Secrets ................. 91-15

a. Misappropriation, Theft, and Misuse ..... 91-18b. Doctrine of Inevitable Disclosure ........... 91-19c. Employer Monitoring and Employee

Privacy Rights ........................................ 91-19 II. Existence of a Duty Outside of an Express

Covenant ..................................................................... 91-20A. Duty of Loyalty (During and Post

Employment) ....................................................... 91-20B. Fiduciary Duty (During and Post

Employment) ....................................................... 91-24 III. Leave and Notice Requirements ................................. 91-24

A. Rules on Garden or Similar Leave (andBreach by Employer) ............................................ 91-24

B. Rules on Compensation ........................................ 91-27

*Christel A. Salem, El-Khoury & Partners, Beirut, Lebanon.

Restrictive Covenants: Int’l Survey91-2

C. Rules on Equity Forfeiture and OtherClawback Provisions, Breach by Employee,and the Employee Choice Doctrine ...................... 91-29

IV. Litigating Restrictive Covenants ................................. 91-29A. Procedural Issues in Litigation ............................. 91-30

1. Jurisdiction (Power of the Forum toAdjudicate a Case) ........................................ 91-30

2. Choice of Forum (Arbitration vs. Courtand Which Court) .......................................... 91-30

3. Venue (Geographical Location) ................... 91-314. Choice of Law ............................................... 91-32

a. General Rules ......................................... 91-32b. Application to Labor and Employee

Law ......................................................... 91-325. Conflicts of Law ........................................... 91-376. Necessary Parties .......................................... 91-377. Statute of Limitations .................................... 91-37

B. Pre-litigation and Privacy Issues .......................... 91-381. Pre-litigation Issues ....................................... 91-382. Privacy Issues ................................................ 91-41

C. Declaratory Relief Actions; Counterclaims .......... 91-411. Declaratory Relief Actions ............................ 91-412. Counterclaims ............................................... 91-41

D. Temporary or Preliminary Relief .......................... 91-421. Temporary Restraining Orders (TROs) ........ 91-422. Preliminary Injunctions ................................. 91-42

E. Litigation Discovery ............................................. 91-44F. Other Pre-Trial Matters ........................................ 91-45G. Burden of Proof .................................................... 91-45H. Final Remedies ..................................................... 91-46

1. Monetary and Injunctive Relief .................... 91-462. “Blue Pencil” Modifications ......................... 91-47

I. Enforcement of Domestic Rulings ....................... 91-48J. Appeal................................................................... 91-48K. Enforcement of Foreign Judgments ...................... 91-50

V. Interference With Contractual Relationship ............... 91-51

Lebanon 91-3I.A.

I. Restrictive Covenants: Laws and Typesof Restrictions

A. Governing Legislation

Lebanon is a free market economy country based on the free-dom of commerce and private entrepreneurship principles. The Lebanese constitution provides that Lebanon is a founding mem-ber of the United Nations bound by the Universal Declaration of Human Rights. Several Lebanese public policies and constitutional principles establish rules that might, in principle, be considered as not favorable to restrictive covenants, such as the freedom of com-merce, the principle of free fair competition, and the right to work.

However, notwithstanding public policy that elevates free-dom of each person to engage in a professional path or in commer-cial dealings and the freedom to engage in fair competition to the level of being one of the principle foundations of the free market economy system, there are other policies of good faith and honesty and other customs applicable to commercial dealings that may favor restrictive covenants the application of which supports due compliance with such policies. Hence, even where competition is free, it remains bound by principles of good faith and honesty in commercial dealings, another important policy consideration that justifies punishment of unfair and “parasitic” competition, hence favoring restrictive covenants that would help preventing such punishable actions.

National statutes governing restrictive covenants are the Civil Code, the Labor Law, the Commercial Code (only in respect of commercial establishments’ divestiture), the Intellectual Property Laws, and the Criminal Code. In this context, national statutes lay down rules governing organization of contractual, commercial, and employment relationships among citizens along the lines of Lebanese public policies.

For example, Article 83 of the Civil Code provides that a contractual covenant that would result in limiting or prohibiting exercise of basic rights and powers that vest in every human being, such as the exercise of civil rights, is considered null and void as contrary to Lebanese public policy. However, that same article validates contractual provisions that prohibit an individual from

Restrictive Covenants: Int’l Survey91-4 I.A.

working in a specific profession or industry sector for a specific time or in a specific geographical area, stating, however, that such validity is contingent on the provision being based on legitimate grounds, the appreciation of which remains subject to the discre-tionary power of the judges. In this case, the Lebanese legislature envisaged validation of noncompetition covenants on the basis of the principle of contractual freedom while asserting boundaries of legitimacy and emphasizing the role of the judiciary’s power in monitoring such balance. The principle of contractual freedom instituted under Article 166 of the Civil Code constitutes a legal basis used to validate contractual restrictive covenants; however, the same article provides that such principle is not absolute, as it remains limited by boundaries of public policies.

Policies and laws on restrictive covenants do not expressly distinguish between industry sectors; however, court precedents1 have shown that court rulings may take into consideration specifics of certain industry sectors while addressing a restrictive covenants issue, notably when it relates to a technology sector involving spe-cific know-how and capacities (e.g., software programmers).

Court precedents2 show that the position, job description of an employee, and duration of employment are significant factors that are taken into account when ruling on validity or breach of restrictive covenants or weighing the damage caused by breach of noncompetition and nonsolicitation covenants or other confidenti-ality and trade secrecy issues. Judges3 often base their appraisal of the damage caused the employer on the employee’s responsibili-ties or position in the company that permitted the employee to be aware of the business strategy of the employer and other confiden-tial information and trade secrets, or to be in permanent contact with employer’s customers or aware of clients’ contacts.

1 Supreme Court, civil chamber 2, No. 36/2008, 29/02/2008 (President Bernard Choueiri); Supreme Court, civil chamber 2, No. 65/2004, 31/5/2004 (President Chabib Moukallad); Court of Appeal, Mount Lebanon, criminal chamber, No. 98/303, 01/04/1998 (President Khalil Rahal).

2 Id.3 Id.

Lebanon 91-5I.B.1.

B. Type and Scope of Restriction

1. Noncompetition

In principle, the above-discussed policies favor the employee in respect of employment relationships, since the employee is con-sidered to be the economically weaker party. Restrictive covenants are only regarded as an exception to the common rule of freedom of work and commerce and free fair competition strictly validated in specific circumstances when based on legitimate grounds; hence Lebanese judges tend to apply a very restrictive interpreta-tion of such covenants to the benefit of the party that is restrict-ing its freedom, more often the employee. For example, even in cases where the noncompetition covenants are in compliance with conditions of Article 83 of the Civil Code (as to the specificity of the industry sector and the timeframe or the geographical loca-tion), judges may invalidate such provision on the ground of public policy. There are court precedents4 invalidating a noncompetition provision that provided that the employee was not allowed to enter into employment contracts for a similar job description for a de-termined period, stating that, even though the provision complied with the conditions of Article 83, the provision in practice would force the employee to leave the country to find work (because the provision did not limit the prohibition to a certain geographi-cal area in Lebanon and because the employee’s background and qualifications do not allow him to engage in work other than that similar to the job description at his former employer’s business); such result is deemed unacceptable as contrary to Lebanese public policy.

Lebanese judges5 tend to strictly protect the interests of the employee on the basis of the freedom to work and engage in

4 Court of First Instance, Beirut, No.91, 08/01/1960 (President Fayad), Italian Restaurant v. Ramillio, Hatem No. 40, p.47, N.K. 1960, p. 150; Court of Appeal, Beirut, civil chamber 1, No. 1403, 11/08/1960 (President Farhat), N.K. 1960 p.665, Hatem No. 43, p. 30; Supreme Court, civil chamber 5, No. 100/2008, 29/07/2008 (President Mouhib Maamari). Contra Supreme Court, civil chamber 2, No. 73, 09/08/1963 (President Yakan), Hatem No. 51, p. 42.

5 Fast Track Judge, Beirut, Decision No. 254, 29/03/1996 (President Ouwaydat), Watermaster LLC v. Allakiss, Al Adel 1997, volume 1, p. 165; upheld by Court of Appeal, Beirut, civil chamber 12, No. 798, 18/7/1996, (President Chucri Sader),

Restrictive Covenants: Int’l Survey91-6 I.B.1.

commercial dealings as a valuable means to earn a living. How-ever, such favorable treatment may be reversed to the benefit of the employer in the following cases:

• If the employee breaches his or her fiduciary duties during the period of employment and before termination of the em-ployment contract. Fiduciary duties are duty of loyalty and good faith of the employee and are widely interpreted by judges6 and scholars7 as implying a noncompete covenant and nonsolicitation even if not expressly stated under the employment agreement. If the employee commits a breach of such duties while still being employed by the employer, he or she will be punished whether such breach was caused by a simple fault, misconduct, or negligence and resulted in harming the employer’s business.

• If, following termination of the employment contract, the employee is declared guilty of breach of a noncompetition agreement signed with his or her former employer, that is regarded as valid in accordance with conditions of Article 83 of the Civil Code, and fair as not resulting in breach of a public policy such as the basic right of every human being to work to be able to earn his living, provided the court has enough evidence of the act of breach and can confirm that it resulted in damages incurred by the former employer.

• If, following termination of his employment contract, the employee committed an act that is punishable under the rule of unfair or “parasitic” competition.

Allakiss v. Watermaster Co., Al Adel 1997 volume 3–4, p. 54; Fast Track Judge, Beirut, decision No. 298, 30/04/1997 (President Ouwaydat), Watermaster Co. v. Bark, N.K. 1997 volume 7 p. 722; Court of First Instance, Beirut, No.91, 08/01/1960 (President Fayad), Italian Restaurant v. Ramillio, Hatem No. 40, p. 47, N.K. 1960, p. 150.

6 Supreme Court, civil chamber 8, No. 30/2006, 21/03/2006 (President Chabib Moukalled); Supreme Court, civil chamber 8, No. 70/2007, 26/04/2007 (President Arlette Al Tawil).

7 Toufic Hassan Faraj, Labor Law under Lebanese and Egyptian Legal Framework 276; Chafik El Hajjar, Employment Relationships (Employment Contracts), M.A.L. 1996, vol. 4–5, pp. 24, 25.

Lebanon 91-7I.B.1.a.

a. Regulatory Framework

As mentioned above, Article 83 of the Civil Code is used by judges to interpret and rule on noncompetition provisions (noncompetes).

In respect of employment relationships, Article 11 of the Labor Law provides that every person is prohibited from entering into a lifetime employment contract or from committing not to work in a specific industry sector for a life term; any contract that directly or indirectly results in binding a person to the above is null as contrary to Lebanese public policy. Lebanese judges8 and scholars9 have interpreted this article from a contrary perspective as allowing a person to refrain from working in a specific industry field as long as it is for a specific time and not for a lifetime. This article is hence regarded as permitting contractual noncompete covenants. Also, the fiduciary duties imposed on an employee as per court precedents10 and scholars’ opinions,11 are interpreted as implying a noncompete duty imposed on the employee during his or her employment term.

Noncompetes are enforceable in Lebanon provided they comply with applicable laws and public policy rules in general. As mentioned above, the public policy issues in respect of noncom-petes relate to several principles such as the freedom of commerce, the right to work, and the free and fair competition principle. Non-competes can also be favored by other public policy rules such as honesty and good faith in commercial dealings and loyalty and good faith in respect of employment relationships.

Noncompetes are subject to a different treatment depending on whether they apply during an employment period in respect of

8 Court of First Instance, Beirut, No. 91, 08/01/1960 (President Fayad), Italian Restaurant v. Ramillio, Hatem No. 40, p.47, N.K. 1960, p. 150.

9 Chafik El Hajjar, Employment Relationships (Employment Contracts), M.A.L. 1996, vol. 4–5, pp. 24, 25.

10 Supreme Court, civil chamber 8, No. 30/2006, 21/03/2006 (President Chabib Moukalled); Supreme Court, civil chamber 8, No. 70/2007, 26/04/2007 (President Arlette Al Tawil).

11 Toufic Hassan Faraj, Labor Law under Lebanese and Egyptian Legal Framework 276; Chafik El Hajjar, Employment relationships (Employment contracts), M.A.L. 1996, vol. 4-5, p. 24, 25.

Restrictive Covenants: Int’l Survey91-8 I.B.1.a.

an employment relationship or outside of an employment term or an employment relationship.

During the duration of an employment contract, the majority of scholars’ opinions12 and court precedents13 agree on the fact that the employee is bound by certain fiduciary duties, that the duties of loyalty and good faith imply a duty not to compete with his or her employer’s business to his or her own benefit or the benefit of a third party, although not expressly committed to under the employment agreement or another separate agreement. Any act of competition carried out by an employee and resulting in compet-ing with his employer’s business would constitute gross miscon-duct rendering the employee liable to his or her employer. Also, this gross misconduct would constitute valid ground for dismissal of the employee without notice or compensation (other than end-of-service compensation) as per Article 74 of the Labor Law.

Outside an employment relationship or following termination of an employment contract, noncompetes are, in principle, sub-ject to restrictive interpretation of judges14 who are eager to en-sure strict compliance of noncompetes with Article 83 of the Civil Code and other public policy rules, unless in cases where breach of noncompetes qualifies as an unfair competition or “parasitic” competition punishable outside the existence of a contractual noncompete.

b. Enforceability, Conditions, and Criteria

As mentioned above, in respect of employment relationships and during an employment term, the noncompete covenant applies unconditionally throughout the term of the employment relation-ship. The employee is liable for any action, fault, misconduct, or negligence that resulted in competing with his or her employer’s business.

12 Id.13 Supreme Court, civil chamber 8, No. 30/2006, 21/03/2006 (President Chabib

Moukalled); Supreme Court, civil chamber 8, No. 70/2007, 26/04/2007 (President Arlette Al Tawil).

14 Supreme Court, civil chamber 2, No. 36/2008, 29/02/2008 (President Bernard Choueiri); Supreme Court, civil chamber 2, No. 65/2004, 31/5/2004 (President Chabib Moukallad); Court of Appeal, Mount Lebanon, criminal chamber, No. 98/303, 01/04/1998 (President Khalil Rahal).

Lebanon 91-9I.B.1.b.

Following termination of the employment agreement or out-side an employment relationship, noncompetes are strictly gov-erned by provisions of Article 83 of the Civil Code, which specifies the following conditions for validity:

• The noncompete should be specific to a profession or in-dustry sector.

• The noncompete should be determined by a time period or a geographical area; although the law is very clear on the fact that such conditions are not cumulative, court precedents15 have shown that judges may invalidate non-competes if undetermined by a time or space limit when it results in severely damaging the basic right of a human right to engage in a professional or commercial activity to earn a living. Hence, economic necessity is also a consider-able factor taken into consideration by court rulings. Also, time limitation is indirectly required under Article 11 of the Labor Law; therefore, a noncompete would likely have more chances to be validated if limited in both time and space. However, space limitation would be an impediment to an employer that is a multinational company, so the non-compete should be explicit and clear on other conditions such as time limitation and profession (preferably a specific position/job description) that falls under the prohibition which specifications have to be justifiable and legitimate from the perspective of the employer.

• The noncompete should be based on legitimate grounds whose bases are likely to be understood and accepted by judges; in this respect noncompetes are considered as val-idly established when they are based on necessity of pro-tection of legitimate interests of a specific business in a situation where competition is likely to occur. This last con-dition opens a window for judges to review noncompetes

15 Court of First Instance, Beirut, No. 91, 08/01/1960 (President Fayad), Italian Restaurant v. Ramillio, Hatem No. 40, p. 47, N.K. 1960, p. 150; Court of Appeal, Beirut, civil chamber 1, No. 1403, 11/08/1960 (President Farhat), N.K. 1960 p. 665, Hatem No. 43, p. 30; Supreme Court, civil chamber 5, No. 100/2008, 29/07/2008 (President Mouhib Maamari). Contra Supreme Court, civil chamber 2, No. 73, 09/08/1963 (President Yakan), Hatem No. 51, p. 42. .

Restrictive Covenants: Int’l Survey91-10 I.B.1.b.

in light of general applicable public policies as mentioned above. Also, this condition implies that noncompetes are legitimate when made to prevent risks of unfair competi-tion or to ensure protection of know-how, confidential in-formation, and trade secrets.

As previously mentioned, given that judges are granted the power to revise the legitimate basis of noncompetes, their analysis is made on a case-by-case basis through consideration of all fac-tors involved, including specifics of certain industry sectors (no-tably technology sectors where acquired know-how, confidential information, and trade secrets are valued differently than in other less technical sectors), position or role of the person bound by non-competes, etc. Also, with respect to the breach of a noncompete duty by an employee under an existing employment relationship, the judges would take into consideration such factors to measure the scope of the damage caused by the employee and rule on mon-etary sanctions and other sanctions to be imposed on the employee.

The employer is not required to give additional consideration (salary bonus, or other benefits) to the employee during any non-compete period. However, if the employer or the person benefiting from the noncompete grants some additional consideration to the employee/person bound by the noncompete, this would positively affect the judge’s ruling as to the validity of the noncompete if it results in certain compensation to the person who is restricting his or her freedom to the benefit of the creator of the noncompete, and as to assessment of damages resulting from breach of such noncompetes and incurred by the creator of the noncompete ob-ligation. In this respect, a ruling issued in 2002 by the high court in France16 stated that compensation was one of the conditions to be fulfilled for validity of a noncompete. This ruling will likely be imported by Lebanese judges as they are often influenced by French rulings which are usually referred to in scholars’ publica-tions and even court judgments.

16 French High Court, Barbier, 2002, Soc. 28.10.97 D.S. 998, 78 obs. G. Couturier.

Lebanon 91-11I.B.2.

Further, certain Lebanese scholars17 are of the opinion that even though a noncompete is in principle enforceable as com-plying with the conditions of Article 83 of the Civil Code and considered legitimate, the employee may be released from such a covenant when termination of his or her employment contract oc-curred as follows:

• the employer terminated or refused to renew the employ-ment contract (where renewal was possible under the lan-guage of the agreement) without cause; or

• the employee terminated the employment contract due to the employer’s breach of the contract, fault, or misconduct.

Therefore, employers should pay attention to conditions of ter-mination of an employment agreement by complying with notice requirements and avoiding abusive terminations, as well as docu-menting the cause of their termination of the contract (through issuance of warnings to the employee prior to termination of the contract).

2. Nonsolicitation of Clients and Customers

There are no national statutes directly addressing the issue of nonsolicitation of customers/clients/employees.

In principle, parties are free under the principle of contrac-tual freedom provided for in Article 166 of the Civil Code to enter into nonsolicitation arrangements. Absent such an express ar-rangement, protection of a client/employee base may be secured under the following rules of law:

• Regarding employment relationships, the employee is bound by fiduciary duties of loyalty and good faith, which are viewed as the legal basis for sanctioning any act of the employee that breaches such principle, including solicita-tion of the employer’s clients/employees for his or her own benefit or the benefit of a third party, which solicitation is

17 Toufic Hassan Faraj, Labor Law Under Lebanese and Egyptian Legal Framework 292; Mohamed Ali Al Chkhaybeh, Intermediary in Labor Law, No. 1, 1973, p. 96.

Restrictive Covenants: Int’l Survey91-12 I.B.2.

harmful to the employer’s business. Any such solicitation would definitely constitute a gross misconduct. It would also constitute valid ground for dismissal of the employee without notice or compensation (other than the end-of-ser-vice compensation he or she is entitled to under the Social Security Law) according to Article 74 of the Labor Law.

• Regarding commercial relationships, a solicitation of cli-ents through fraudulent means or a major solicitation of employees with the intention to disorganize the employer’s business constitutes a criminal act under the rule of unfair competition provided for in Article 714 of the Criminal Code or a tort under the rule of “parasitic” competition provided under Article 97 of Decree Law No. 2385/1924 governing trademarks and industrial designs (if it is in addition to use of trade names of the employer or similar names and logos even though not registered with the Intellectual Property Office). For example, absent an express nonsolicitation of employees, a solicitation act might be sanctioned under the rule of unfair competition, if the solicitation of employees is made in a way that proves that the person who is solicit-ing such employees clearly intends to disorganize and harm the business structure of its competitor in order to steal its client base. For example, massive solicitations of a great number of employees or just a small number of employees who are in charge of key positions are additional proof of the existence of an unfair competition act. Solicitation has to be directed towards employees of a direct competitor or potential direct competitor to the person soliciting. This is subject to the discretionary power of judges, who are com-petent to rule on the existence of such criminal act.

Nonsolicitation agreements are subject to the general rules of contracts under the Civil Code and are, in principle, enforce-able under the principle of the contractual freedom and sanctity of contracts as long as they do not violate public policy rules. The only public policy consideration here would be the principle of free fair competition. Therefore, as long as the covenant is meant

Lebanon 91-13I.B.2.

to prohibit an unfair competition and preserve principle of fair competition, it would be upheld as enforceable.

Unfair competition is likely to occur when the employee has been, by virtue of his or her former position/job description, in-formed of confidential information and secrets that he or she could use with another employer to target the same client base or that he or she could better use with solicited employees. In this context, a nonsolicitation agreement is likely to be validated as preserving the policy of fair competition. However, if the agreement provides for an excessive or indefinite term, it might be invalidated, since (depending on the specifics of each industry) some confidential and secret information becomes public with time or loses its value with the advance of technology and development and change in marketing strategies. Given that with time the agreement loses its legitimate basis, it should be limited for a specific period of time. Space limitation is not relevant here because the agreement is logi-cally applicable to the clients/employee base of the employer that could be located anywhere in different jurisdictions and that could relocate anywhere. However, in case of nonsolicitation of clients, it is advisable that the arrangement be expressly limited to the current client base of the employer at the time of termination of the employment agreement; any wider scope would definitely risk being qualified as excessive. Also, in case of such nonsolicitation being requested by a multinational part of a big group of compa-nies/global company, it is advisable that the agreement specify that the client base be limited to a certain geographical area/country where the employee has worked (i.e., clients who were in contact with the employee or could have been by virtue of his or her posi-tion); otherwise the scope of the covenant might be regarded as excessive if it applies to all clients of the global company, even clients that are not known by the employee.

It is hard to give more guidance in this respect, given that the Civil Code does not provide for specific conditions that make a nonsolicitation covenant reasonable and legitimate as in the case of noncompetes. However, the criterion in general is as follows: the nonsolicitation agreement will be upheld as long as its applica-tion permits to elude risks of an unfair competition (hence its du-

Restrictive Covenants: Int’l Survey91-14 I.B.2.

ration should be fixed on the basis of the duration of such risk) and its scope is measured as per such risk and is not excessive com-paring to the possibility of the risk and its possible consequences. Hence the scope of nonsolicitation being the client base should be clearly specified, excluding future clients, and specific as to the names of the clients or at least a certain category if the employer is a multinational with clients all over the world; if the scope of the nonsolicitation is the employee base, the judges would be more flexible because such base clearly includes all employees of the employer at the time of termination of the contract which are eas-ily identified and evidenced, even though not specified under the covenant’s language.

Also, no monetary compensation requirement is imposed by law or case law. However, if the employer or the person benefit-ing from the nonsolicitation grants some additional consideration to the employee/person bound by nonsolicitation, this would defi-nitely affect the examination of the validity, enforceability, and as-sessment of damages resulting from breach of such nonsolicitation and incurred by the employer or such other person.

As for a nonsolicitation duty imposed on an employee during his or her employment contract, it is supported by the policy of fiduciary duties of the employee including the duty of loyalty and good faith. As mentioned above, during an employment term the nonsolicitation duty applies unconditionally throughout the term of the employment relationship. The employee is liable for any solicitation of the employer’s clients/employees to his or her own benefit or the benefit of a third party. With respect to the breach of a nonsolicitation duty by an employee under an existent employ-ment relationship, factors such as position of the employee/indus-try sector are taken into consideration to measure the scope of the damage caused by the employee and rule on monetary sanctions, and other sanctions to be imposed on the employee.

The employee may be released of such covenant when ter-mination of his or her employment contract occurred due to the employer’s fault. This is based on the general contract rule that allows a party to bilateral contracts to refrain from executing its

Lebanon 91-15I.B.4.

obligations when the other party failed to execute the correspond-ing obligations. However, there are no court precedents in thisrespect.

3. Nonsolicitation of Employees

See discussion under 2. above.

4. Confidentiality and Trade Secrets

As previously mentioned, the Lebanese constitution in its preamble refers to the Universal Declaration of Human Rights, hence integrating its Article 23 guaranteeing the right to privacy to the Lebanese public policy framework. Also, the general policy of honesty and good faith in commercial dealings supports protec-tion against misuse of confidential information and trade secrets. Such policy is also supported by the theory of misuse or abuse of right and power. Further, the public policy related to the fiduciary duties of an employee under an employment agreement helps en-sure protection of confidential information and trade secrets under the duty of loyalty and good faith imposed on such employee. However, there are no regional/national statutes governing confi-dential information, data privacy, or the notion of a trade secret, except that, as discussed under a. below, misappropriation of trade secrets is a criminal offense sanctioned under Article 579 of the Criminal Code. There are no specific statutes related to computer software or scientific data. Also, there are no provisions in Leba-nese statutes (Criminal Code or Labor Law) governing protection of the know-how and skills gained throughout an employment term. However, such know-how may be protectable contractually under a noncompete.

Four rules are used to ensure protection of such concepts, as discussed below.

First Rule

Both confidential information and trade secrets fall under the purview of Article 579 of the Criminal Code; the article provides

Restrictive Covenants: Int’l Survey91-16 I.B.4.

that every person who was made aware of a secret (this term covers both trade secrets or information that is classified as confidential) in the course of his or her position or situation, work, profession, or art and who disclosed such secret without legitimate reason or used it to his or her own benefit or to the benefit of a third party which disclosure/use resulted in damage (even if only moral dam-age) is punished by imprisonment up to one year and a fine up to approximately US$266. Court precedents18 interpret this as im-posing three cumulative conditions for application of the sanctions therein:

• a disclosure of information of a secret nature;• the disclosure was done for no valid or legitimate reason; or • the disclosure resulted in some kind of damage incurred by

the owner of the information.

Under the above, protection is granted to any kind of information:

• that is not considered confidential or proprietary (such as commercial and industrial information specific to a spe-cific business or company);

• that was made available to the recipient by virtue of his or her situation, work, profession or art;

• the disclosure of which proves to be harmful; and• the disclosure of which may not be justified by legitimate

reasons.

This entails protection of all types of information including fi-nancial information, business information, technical information, information related to scientific theories, formulas, and recipes, provided disclosure of the same meets the conditions of the above Article.

18 Supreme Court, criminal chamber 7, No. 266/2005, 27/04/2005 (President Saiid Mirza); Supreme Court, criminal chamber 7, No. 92/2007, 03/05/2007 (President Samir Aliyeh).

Lebanon 91-17I.B.4.

Second Rule

The Lebanese Patent Law provides for similar protection under Article 47, which states:

[A]ny person who by virtue of his position, post, profession or art has possession of secret industrial or commercial information and illegally discloses the same or uses the same for a personal benefit or the benefit of a third party shall be penalized by a fine ranging between five and fifty million Lebanese pounds and/or imprison-ment from three months up to three years.

The above-mentioned article also specifies that sanctions therein shall apply only if:

• the original owner of such information has acquired the subject matter through legal means;

• the industrial or commercial value of such information is deemed to be a secret; or

• the original owner of such information has taken appropri-ate measures to keep such information a secret.

The same article provides that the following information is deemed by law to constitute secret and confidential information:

• methods of manufacturing and experimenting and testing results; and

• secret information that the Intellectual Property Author-ity specifies to be released in order to license use of phar-maceutical preparations and chemical products for use in agriculture.

Such information shall not be released unless the protection and welfare of the public so dictates.

Third Rule

Proprietary information that falls under the purview of the Copyright Law is also protectable since it belongs to the copy-right holder and may not be used by any other person unless authorization of the copyright holder is secured or unless such use falls under the exceptions provided under the above-mentioned law.

Restrictive Covenants: Int’l Survey91-18 I.B.4.

Fourth Rule

The majority of scholars’ opinions19 have agreed on the ex-istence of a fiduciary duty imposed on an employee to safeguard all confidential information and secrets belonging to his employer the disclosure of which may potentially harm the employer’s busi-ness, which duty is deemed to survive termination of the employ-ment relationship, lasting as long as the information is secret and not publicly made available or known; this principle has been based on the public policy of good faith and loyalty as regards the employment relationship.

a. Misappropriation, Theft, and Misuse

Misappropriation of trade secrets is a criminal offense sanctioned under Article 579 of the Criminal Code; all types of evidence are usually acceptable before courts, including written letters and correspondences, witnesses, etc.

Trade secret protection may be denied when the act of dis-closure does not meet all conditions of Article 579 of the Criminal Code. It is most commonly denied where disclosure is based on le-gitimate grounds, for example, where disclosure was made before a tribunal on the basis of use of the defense right.20 Also, some-times employers are unable to prove the scope of damage incurred as a result of such disclosure and when no damage can be proved, the act of disclosure will not be prosecuted, unless it is in breach of a contractual confidential covenant that may be the subject of a civil, not criminal, action.

19 Toufic Hassan Faraj, Labor Laws Under Lebanese and Egyptian Legal Framework 279; Mohamed Hussein Mansour, Labor Laws in Lebanon and Egypt 312 (1995); Hassan Kayri, The Labor Law—The Employment Contract 319 (3d ed. 1983); Issam Youssef Al Kayssah, The Lebanese Labor Law 157 (3d ed. 1997).

20 Supreme Court, criminal chamber 7, No. 92/2007, 03/05/2007 (President Samir Aliyeh).

Lebanon 91-19I.B.4.c.

b. Doctrine of Inevitable Disclosure21

The rules on protection of confidential information do not allow for the existence of the doctrine of inevitable disclosure that is recognized in other jurisdictions such as the United States.

c. Employer Monitoring and Employee Privacy Rights

Lebanese regulations do not distinguish between proprietary, private, confidential information, and trade secrets; all are treated under the same rules. All information considered being secret or proprietary owned by an employer/person and disclosed to other employees/persons for the purpose of completion of a work/mis-sion is protected as per the conditions established under various statutes (as discussed above).

The employer has the right to inspect everything that is avail-able at the workplace or within the company’s premises and of-fices. However, the employer may not inspect personal belongings of employees at their homes without the employees’ permission as this would constitute a breach of Articles 351 and 352 of the Criminal Code (governing privacy of homes and protection of private places); this would require a warrant order issued by the competent public prosecutor.

Even though there is no data privacy protection law in Leba-non, any private data/document submitted by the employer before judicial authorities without due permission from the employee or creator of the document would not be deemed acceptable evidence enforceable against the employee. Under the Lebanese Code of Civil Procedure, the court has the power to order the employee to submit any information/document in his or her possession pro-vided by the employer, and failure by the employee to submit any such information/document would go against the employee’s defense.

21 The doctrine of inevitable disclosure, recognized in some jurisdictions, allows former employers to argue that the court should grant an injunction preventing a for-mer employee from working for a competing employer because that former employee possesses knowledge, confidential information or trade secrets learned at the prior employer that will inevitably be disclosed to the new employer, whether intention-ally or inadvertently. See in Brian Malsberger, Covenants Not to Compete: A State-by-State Survey, Finding List of Additional Topics, Additional Topic 53.A.1 (6th ed. 2008).

Restrictive Covenants: Int’l Survey91-20 I.B.4.c.

These rules result from a general privacy policy instituted under the Lebanese constitution; there are no clear rules and poli-cies regulating monitoring of employees by the employer and pri-vacy of the employees.

II. Existence of a Duty Outside of anExpress Covenant

A. Duty of Loyalty (During and Post Employment)

As previously mentioned in I.B.4. above, scholars’ opinions22 and court precedents23 agree on the existence of fiduciary duties imposed on an employee under an employment relationship. Such fiduciary duties stem from general policies applicable to contrac-tual relationships; however, they have a stronger magnitude in re-spect of employment relationships.

Article 221 of the Civil Code provides that contractual ar-rangements have to be interpreted and executed as per principles of good faith and equity. Based on the above article, scholars’ opin-ions have affirmed the existence of a duty of good faith imposed on the employee in the course of execution of the work.24 Scholars also agree on the existence of a duty of loyalty that is based on the good faith principle and originates in the subordinate relationship that exists between an employer and an employee.25 Hence, the duty of loyalty has been recognized by Lebanese scholars on the basis of the policy of good faith in execution of the contractual

22 Toufic Hassan Faraj, Labor Law Under Lebanese and Egyptian Legal Framework 276; Chafik El Hajjar, Employment Relationships (Employment Contracts), M.A.L. 1996, vol. 4–5, pp. 24, 25.

23 Supreme Court, civil chamber 8, No. 30/2006, 21/03/2006 (President Chabib Moukalled); Supreme Court, civil chamber 8, No. 70/2007, 26/04/2007 (President Arlette Al Tawil).

24 E.g., Toufic Hassan Faraj, Labor Laws Ynder Lebanese and Egyptian Legal Framework 279; Mohamed Hussein Mansour, Labor Laws in Lebanon and Egypt 312 (1995); Hassan Kayri, The Labor Law—The Employment Contract 319 (3d ed. 1983); Issam Youssef Al Kayssah, The Lebanese Labor Law 154 (3d ed. 1997); Chafik El Hajjar, Employment Relationships (Employment Contracts), M.A.L. 1996, vol. 4–5, pp. 24, 25; Mohamed Ali Al Chkhaybeh, Individual Employment Contract 302 (2000).

25 Id.

LebanonII.A. 91-21

relationship26 that is magnified in the context of a subordination scheme (as existent in all employment relationships) so as to take the form of a duty of loyalty and good faith towards the employer.

The above duties exist in respect of all employment relation-ships even if not expressly provided for under the employment contract. According to Article 12 of the Labor Law, it is not man-datory that an employment agreement be in writing; an employ-ment relationship may be evidenced by any means and is deemed to exist when the following cumulative conditions are met:

• a person commits to carry out a certain work/activity on a permanent basis;

• for compensation;• for the account of another person who is in charge of ad-

ministration of such work/activity and supervision of the worker’s performance (the existence of such subordination is essential to prove an employment relationship).

As such a duty is not expressly defined in labor laws and regu-lations, it is subject to discretionary interpretation of competent judges on a case-by-case basis.

In general, scholars deem that the employee should refrain from engaging in any action that would harm the employer’s busi-ness and should carry out all necessary actions that ensure protec-tion of the employer’s interests.27 Failure to abide by the above rules would constitute breach of the duty of loyalty and good faith. Also, according to Article 636 of the Civil Code, the employee is liable for any misconduct, or even negligence or imprudence com-mitted in respect of his or her work, and such liability may not be contractually waived. Based on the above article, even an act of negligence could constitute breach of the duty of good faith and loyalty.

26 Civil Code art. 221.27 E.g., Toufic Hassan Faraj, Labor Laws Under Lebanese and Egyptian

Legal Framework 279; Mohamed Hussein Mansour, Labor Laws in Lebanon and Egypt 312 (1995); Hassan Kayri, The Labor Law—The Employment Contract 319 (3d ed. 1983); Issam Youssef Al Kayssah, The Lebanese Labor Law 154 (3d ed. 1997); Chafik El Hajjar, Employment Relationships (Employment Contracts), M.A.L. 1996, vol. 4–5, pp. 24, 25; Mohamed Ali Al Chkhaybeh, Individual Employment Contract 302 (2000).

Restrictive Covenants: Int’l Survey91-22 II.A.

The following types of conduct are likely to constitute a breach of the above duties:

• The employee does not abide by the work schedule and fails to come to work without valid reason or advance notice;

• The employee does not perform his or her work during working hours but uses such time to perform a work for the benefit of a third party and not his or her employer;

• The employee accepts bribes from customers of the employer;

• The employee discloses commercial, industrial secrets or other confidential information relating to the employer’s business or uses the same for his or her own benefit or the benefit of a third party;

• The employee participates in competing with the employ-er’s business; and

• The employee delays performance of work or slows down his or her workflow without valid cause or reason.

The duties of good faith and loyalty are imposed with re-spect to any employment relationship; however, they do not sur-vive termination of the employment relationship, because they are supported by policies governing the contractual relationship and hence do not exist outside of a contractual relationship. However, scholars agree that the duty of preserving confidential and secret information survives the termination of employment contracts and lasts as long as such information is secret and confidential.

Also, duties are imposed unconditionally and are binding even if no additional money or consideration is granted to the employee.

Given that these duties are types of contractual obligations, they are subject to the common rules of contracts and the common statute of limitations of 10 years. They remain enforceable within such limitation.

The Labor Arbitral Tribunal is the competent judicial author-ity to rule on breach of the employee’s duties. The judiciary au-thority was created under the Labor Law to rule on all disputes arising out of employment contracts and implementation of labor rules; it is a special tribunal where proceedings are carried out on an urgency basis. The rulings of the tribunal are not challenged

LebanonII.A. 91-23

through regular appeal proceedings; they may either be objected to by a convicted party who was not present during the legal pro-ceedings or challenged at the level of the Supreme Court.

Any evidence is acceptable to prove breach of a duty as long as it supports the employer’s claim and it is submitted in compli-ance with procedural requirements (including written evidence such as faxes, bills, witnesses, etc. as long as it is not a private correspondence submitted without permission of its signatory/cre-ator). The laws on evidence have not yet been updated so as to rule on acceptability of electronic correspondences; however, the trend is to apply French rules in this respect, giving such documents the power of a regular written document. Also, audiovisual works and recordings are not acceptable unless the authorization of the person who appears on such material has been secured and can be proven.

The general rule is that any proof submitted by the employer disfavoring the employee’s defense should be challenged by a proof of the same rank (challenge written documents by written documents). In addition, the employee is allowed to submit coun-terclaims stating that the employer has breached its contractual arrangement and submitting needed evidences.

Usually, remedies are monetary compensations assessed as per the scope of damage incurred by the employer. The Labor Arbitral Tribunal may not order the employee to leave work or terminate his or her employment agreement as a remedy. It is not usual for courts to rule that attorneys’ fees are payable as a rem-edy; however, usually the convicted party bears the costs and ex-penses of all legal proceedings of the case as per the Code of Civil Procedure.

The following monetary fines or other penalty for this kind of breach are applied:

• According to Article 68 of the Labor Law, in the event an employee commits a gross misconduct or gross negli-gence or a breach of the internal regulations of the com-pany, the employer is entitled to deduct from his or her salary the amount covering three working days per each punishable act as a penalty. The penalty may not, however, be imposed following expiry of 15 days as of the day the

Restrictive Covenants: Int’l Survey91-24 II.A.

employer was made aware of the punishable fault. If such gross misconduct/negligence/breach resulted in a material damage incurred by the employer, the latter is allowed to be compensated by deducting from the employee’s salary the compensation for such material damage. The employee in this case may always initiate an action before the Labor Arbitral Tribunal in the event he or she deems that his or her actions do not fall under the scope of Article 68.

• The tribunal may rule on any monetary compensation deemed fair and necessary to compensate the employer from damages incurred.

• Further, the tribunal may order a fine for delay of the con-victed party to execute its decisions or restraining orders.

Liquidated damages are also recognized; their amount may only be revised by courts when part of the damage was duly com-pensated through partial reparation in kind.

B. Fiduciary Duty (During and Post Employment)

There are no additional fiduciary duties imposed on corporate officers because of their positions as regards restrictive covenants.

III. Leave and Notice Requirements

Leave and notice requirements are important to examine in the context of restrictive covenants, given that if the employer breaches such requirements it risks enforceability of certain re-strictive covenants such as noncompetes and nonsolicitation of cli-ents (as discussed above).

Lebanon 91-25III.A.

A. Rules on Garden or Similar Leave (and Breach by Employer)28

There are no rules on garden leaves under the current Leba-nese legal framework. Advance written notice is required by either the employer or the employee for termination of an employment contract that has no definite term unless such termination is ex-empted from this requirement under Article 74 or 75 of the Labor Law.

According to Article 74 of the Labor Law, the employer may dismiss any of its employees without advance notice in the follow-ing events:

• If the employee used a false nationality;• If the employee was employed as a trial and the employer

was not satisfied following expiry of a three-month period;• If the employee has committed an act of gross misconduct

or gross negligence intended to harm the employer’s mate-rial interests (in this case the employer is obligated to no-tify the Ministry of Labor in writing of such event within three days as of the date the employer finds out about the employee’s conduct);

28 Garden leave is a term that refers to an employer requiring an employee who has given notice or has been terminated to depart the workplace while continuing to pay the employee during the applicable notice period. In some countries and industries the practice also may involve the use of lengthier notice periods than customary or speci-fied by law, if permissible. The continuation of the employment relationship during a period of garden leave means that the employee remains bound by the employment contract and the duties thereunder. The employer’s intent is to minimize the amount of up-to-date and/or important information that the employee might bring to a competitor by excluding the employee from the workplace during the notice period while at the same time forestalling the employee from working for another competitor during the notice period, which in many countries would constitute a violation of the employee’s duty of loyalty. Garden leave also has the benefit to employers of preventing the em-ployee from being an unproductive or disruptive presence in the workplace. It can also prevent access by the employee to the employer’s confidential information and clients during the period of leave. See Brian Malsberger, Covenants Not to Compete: A State-by-State Survey, Finding List of Additional Topics, Additional Topic 52.41.1 (6th ed. 2008); M. Scott McDonald & Jacqueline Johnson Lichty, Drafting and Enforcing Covenants Not to Compete 373–83 (2009).

Restrictive Covenants: Int’l Survey91-26 III.A.

• If the employee committed an important breach of inter-nal regulations for three times during one employment year and such despite written instructions of the employer;

• If the employee did not come to work without valid reason for 15 days during an employment year or for 7 consecutive days or did not give the employer valid justification for his absence within 24 hours following the same; the employer has to notify the employee in writing informing him about the numbers of days he or she has missed out on work with-out valid cause;

• If the employee has been convicted of a crime sanctioned by at least a one-year imprisonment term or for minor of-fenses committed at the workplace or during performance of the work or if he or she is convicted of not executing the judgment of the Labor Arbitral Tribunal under Article 344 of the Criminal Code;

• If the employee acted aggressively towards the employer or the person in charge of administrative tasks at the workplace.

Article 75 of the Labor Law grants the employee the right to leave his or her work with no advance notice in the following cases:

• If the employer or its representative deceived the employee as to conditions of the work, provided the employee leaves the work before expiry of a 30-day period as of commence-ment of the work;

• If the employer failed to execute its obligations under the employment agreement (such as the obligation to settle monthly salaries, to provide the employee with necessary equipment, to ensure safety and salubrity of the workplace).

• If the employer or its representative committed a crime against the employee or his or family breaching rules of morals; and

• If the employer or its representative acted aggressively to-wards the employee.

Lebanon 91-27III.B.

According to Article 50(c) of the Labor Law, the noticeperiod is one month (if the employment term lasted for a maxi-mum of 3 years), two months (if the employment term lasted be-tween 3 and 6 years), three months (if the employment term lasted between 6 and 12 years) and four months (if the employment term exceeded 12 years).

During the notice period, the employee would still perform his or her obligations under the employment agreement; however, according to Article 51 of the Labor Law the employee is allowed to leave work for one hour, in addition to his or her normal break, in order to look for a job.

The employer can pay an employee for a garden leave period longer than the standard notice period, but the period must be rea-sonable in comparison with the term of employment or the court will decrease the length of time to the maximum statutory period noted above.

B. Rules on Compensation

It is a common practice that employers elect to pay in advance salaries due to the employee during the notice period, hence ter-minating the employment relationship. In this case, the employee is free and can spend the notice period looking for another job. The employment contract is considered terminated upon such pay-ment and the employee is free of all fiduciary duties discussed in II.A. above except the duty of preserving secret and confidential information which survives termination of the contract. This pay-ment is granted to the employee by law and may not be subject to any conditions such as observing a noncompete or nonsolicitation.

The payment discussed above should be based on the last salary of the employee. The amount of the salary is assessed by the court and could include transportation fees and allowances, also the salary of the 13th month additional payment (if this is a right granted to the employee under the employment agreement); also assessment of the salary may take into consideration a bonus if such bonus was usually granted on a regular basis.29 Other com-

29 Supreme Court, civil chamber 8, No. 15/2006, 30/01/2006 (President Chabib Moukalled).

Restrictive Covenants: Int’l Survey91-28 III.B.

pensations may be granted for unpaid leaves not used by the em-ployee. Also, at the end of service, compensation may be granted according to certain conditions if the employee has reached retire-ment age or has worked for 25 consecutive years with the same company.

During the notice period—if not paid and terminated in ad-vance as discussed above—the employee continues to enjoy all benefits and protections granted under the Labor Law and the benefit of equity granted under Article 221 of the Civil Code.

During this period the employee is bound by all duties im-posed on him or her as a result of the employee’s employment and bound by all other contractual obligations and penalties. If the em-ployee breaches his or her noncompetition duty (described in I.B.1. above) or commits an act of solicitation that proved to be intended to harm the employer’s business during the notice period, the em-ployer will be allowed to deprive the employee of his or her rights to the employment contract, including payment of his or her salary for the notice period and immediately dismiss the employee by no-tifying the Ministry of Labor of such fact as per Article 74 of the Labor Law (see previous discussions in this respect under I.B.1., I.B.2., and I.B.3. above covering noncompetes and nonsolicitation covenants). The assessment of the intentional act committed by the employee and the scope of the damage incurred by the employer is subject to the judges’ discretionary appreciation that is made on a case-by-case basis. It may not be compared to criteria imposed on validation of restrictive covenants as previously discussed under above section I.A.

According to Article 50(c), in case an employer/employee is in breach of the notice period rule, the employee/employer may claim monetary damages in the form of compensation equal to the amount of salary due during the notice period and such before the Labor Arbitral Tribunal.

Also, both the employee and the employer have the right to claim damages (compensation) for abusive termination of the em-ployment contract by the other party. Such compensation ranges

Lebanon 91-29IV.

between 2 and 12 months’ worth of salary if the employer termi-nated the contract and between 1 month and 4 months’ worth of salary if the employee terminated the contract.30 The same rule for assessment of the amount of salary as described in this secton above applies in this situation. Termination of the contract might be considered abusive if it is not supported by a valid cause, or due to breach of the contract by the other party.

C. Rules on Equity Forfeiture and Other Clawback Provisions, Breach by Employee, and the Employee Choice Doctrine31

Equity forfeiture and other clawback provisions are not a common practice in Lebanon. In implementation of the rule of contractual freedom, such provisions would be regarded as en-forceable if clearly and expressly stated under the employment agreement, however there is no assurance that the court will re-frain from assessing the reasonableness of the terms therein.

The employee choice doctrine is not recognized under Leba-nese laws.

30 Labor Law art. 50.31 In the United States, New York’s common law “employee choice” doctrine al-

lows employers to argue that a forfeiture-for-competition clause should not be scruti-nized by the courts. The doctrine posits that an employee who voluntarily terminated his or her employment and who received nonvested deferred compensation conditioned on not competing with the employer that conferred such benefits, has the choice either of a) preserving those benefits by refraining from competition or of b) automatically forfeiting the compensation by engaging in such competition. According to this doc-trine, the employee’s decision to compete constitutes an automatic waiver of the right to the compensation without the necessity for judicial review as to reasonableness or other limits on enforceability. Brian Malsberger, Covenants Not to Compete: A State by State Survey, “New York,” questions 3 and 8 (6th ed. 2008); M. Scott McDonald & Jaqueline Johnson Lichty, Drafting and Enforcing Covenants Not to Compete 328, 329 (2009). This kind of clause should be distinguished from a clawback clause, which specifies that the employee must return to the employer finan-cial benefits such as stock options that were granted subject to employee compliance with a noncompete agreement. M. Scott McDonald & Jaqueline Johnson Lichty, Drafting and Enforcing Covenants Not to Compete, 345–56 (2009).

Restrictive Covenants: Int’l Survey91-30 IV.A.1.

IV. Litigating Restrictive Covenants

Under the Lebanese legal framework, the Code of Civil Pro-cedure and the Code of Criminal Procedure provide for proce-dural rules and regulations governing enforcement of rights and claims. There is no special statute governing enforcement of re-strictive covenants.

A. Procedural Issues in Litigation

1. Jurisdiction (Power of the Forum to Adjudicate a Case)

The general rule is that Lebanese courts are competent to rule on any case involving a Lebanese party or an interest located in Lebanon if no other courts are declared to be competent.

Lebanese courts are competent to rule on the following cases initiated against a Lebanese national or foreigner who does not have a place of residency or is not established in Lebanon:

• If the case relates to an asset that is located in Lebanon at the time the case is submitted to Lebanese courts, the asset may be a real property or a moveable asset.

• If the case relates to a contract that was signed in Lebanon and that is to be executed in Lebanon or that provides for one of its main obligations to be executed in Lebanon (the nature of the contract, whether civil or commercial, is ir-relevant to this rule).

• If the claim is a temporary measure or injunction to be im-posed on a property, right, asset, person, or establishment in Lebanon;

• Other claims relating to matrimonial matters;• Bankruptcy claims when the bankrupt is located in

Lebanon;• Personal claims (related to personal rights) when the defen-

dant resides in Lebanon (even if a foreigner);• Claims relating to a legal entity located in Lebanon or hav-

ing a branch or representation office in Lebanon; and

Lebanon 91-31IV.A.3.

• For criminal claims, if the defendant resides in Lebanon or if the criminal act or the damage occurred in Lebanon.

See also IV.A.4. below.

2. Choice of Forum (Arbitration vs. Court and Which Court)

The rules discussed in 1. above regarding jurisdiction con-tain some imperative rules and other rules. When the competence of the Lebanese courts is not imperative, parties may designate a foreign jurisdiction to rule on their dispute; however, when the competence is imperative (such as for cases related to matrimonial matters, state privileges, bankruptcy, life insurance and accident insurance, fire insurance, or crimes committed in Lebanon) Leba-nese courts will not recognize the choice of a foreign forum.

As to the choice of forum, the same reasoning as discussed in 4. Choice of Law below could be adopted when an employee is employed by the Lebanese branch of a foreign employer and if the employee is a foreigner; in such a situation the choice of foreign jurisdiction as the forum where disputes are resolved has more chances to be recognized as valid.

In any other case, it is generally accepted that employment agreements contain arbitration provisions; however, such arbitra-tors have to be Lebanese and arbitration has to be conducted in Lebanon. Therefore, if employers do not meet the above require-ment that would lead to validation of the choice of a foreign forum, they can always subject disputes to arbitration to be conducted in Lebanon. In this respect, the arbitrator might be more lenient as to application of a foreign law; however, since in Lebanon the parties have the right to appeal an arbitrator’s decision to the Labor Arbi-tral Tribunal, it is advisable that the employer makes sure that the foreign law does not clearly contravene the Lebanese Labor Law and public policies; if this is not the case, the arbitral award would risk invalidation before the Labor Arbitral Tribunal.

See also 4. below.

Restrictive Covenants: Int’l Survey91-32 IV.A.4.a.

3. Venue (Geographical Location)32

Plaintiffs should file suits in the branch of the court with ju-risdiction for the area where the defendant has its principle place of business or residency, or where the contract is being executed.

4. Choice of Law

a. General Rules

General rules on choice of law in Lebanon depend on the subject matter of the dispute. The general rules are as follows:

• For moveable and immoveable assets, the governing law is the law of location of such assets; for intangible rights such as an intellectual property right, the governing law is the jurisdiction where such right was first registered (for example, for patents and trademarks) or first used (for ex-ample, first published, transmitted).

• For disputes involving liability in tort, the governing law is the law of the jurisdiction where the tort has been committed.

• For disputes relating to contractual arrangements, parties are free to choose the applicable law; however, Lebanese judges may reject such choice if the applicable law is not connected to the contractual arrangement (for example, the law where the contract was sealed, or the law of the ju-risdiction where execution of the contract or execution of its main obligations will occur, or the law of the jurisdic-tion where one of the parties resides). The Lebanese judge considers that choice of law should be an additional proof of the jurisdiction that is most connected to the contrac-tual arrangement; hence, if the choice of law reveals not to be in connection with the core of the contractual arrange-ment, then the judge is allowed to revisit such choice and designate governing law that has the most connection with the contractual arrangement. For example, regarding em-ployment contracts, the governing law should be the law of the jurisdiction where the employee is performing the

32 The choice of location of a branch of a court within a country.

Lebanon 91-33IV.A.4.b.

work provided for under the employment contract. Also, there are imperative laws (Loi de Police) that govern cer-tain contractual arrangements notwithstanding the will of the parties.

b. Application to Labor and Employment Law

As discussed below, the Labor Law contains provisions and rules deemed to be public policy rules. Opinions diverge as to whether or not the Labor Law imperatively applies notwithstand-ing the choice of another law by the parties.33 Court precedents34 have ruled that the employment contract is a civil contract where parties are free, under the contractual freedom principle, to sub-ject their relationship to the law of their choice. There has not been a final say on this matter yet.

Although some provisions of a contractual arrangement may be submitted to a different governing law than the law governing the whole contract, such provisions must be independent and eas-ily separated from the rest of the contract. It is not certain that a noncompete and nonsolicitation are separable from the rest of the employment contract, especially since it originates and is justified by the existence of the underlying employment relationship. The choice of law governing such covenant should correspond to the

33 Rulings stating that the law is imperative: Supreme Court, civil chamber 8, No. 143, 17/09/1997 (President Zein), Filtamyiz (Sader for Supreme Court Jurisprudence), Civil decisions 1997, p. 548; Labor Arbitral Tribunal, Mount Lebanon, No. 172, 11/02/1970, Korkjah v.s. Awfah. Contra Labor Arbitral Tribunal, Beirut, No. 43, 19/02/1974 (President Torbey), Aboud v. Arabian & Libyan Airlines Co., Hatem, 154, p. 41 (parties to an international agreement executed abroad may elect to subject their relationship to a foreign law especially that the employee is not registered with the Social Security Fund in Lebanon; however, the Labor Arbitral Tribunal is not com-petent to apply such foreign law); Labor Arbitral Tribunal, Mount Lebanon, No. 73, 05/03/1975 (President Jreissati), Sfeir v. Al Banwa, Hatem 164, p. 439 (parties to an employment contract may elect foreign law to govern their relationship, notably a for-eign law that is the law of the nationality of one of the parties, and the Labor Arbitral Tribunal is competent to apply such foreign law); Labor Arbitral Tribunal, Beirut, No. 958, 28/07/1970 (President Yasiji), Moubarak v. Azara, Al Adel 1971, vol. 1, p. 204; Mohamed Ali Chkhaybeh, Abusive Dismissal Under Individual Employment Agreement 136 (1980).

34 Labor Arbitral Tribunal, Mount Lebanon, No. 1, 05/01/1998 (President Natour), Al Doueihy v. Zakhem; Labor Arbitral Tribunal, Mount Lebanon, 08/03/2000 (President Natour), Najm v. Bitar & Co;

Restrictive Covenants: Int’l Survey91-34 IV.A.4.b.

choice of law governing the employment agreement that should abide by connection rules as mentioned above.

Further, in the event the employer is located in Lebanon, or is hiring employees (whether nationals or foreigners) to work in Lebanon, there are certain court precedents stating the following:

• The competence of the Labor Arbitral Tribunal is manda-tory as to the matters listed under Article 79 of the Labor Law (refer to discussions above) and parties may not elect to subject such matters to the competency of other tribunals.35

• The Labor Law is imperative and parties may not elect to subject their employment relationship to another foreign law.36

However, courts are not unanimous as to these statements, as there are court precedents37 holding that an employment con-tract is a civil contract subject to the free will of the parties who

35 Court of Appeal, Beirut, No. 759, 16/06/1966 (President Farhat), Al Moubchir v. Al Chammass, Hatem, vol. 66, p. 23; Court of Appeal, Mount Lebanon, No. 81, 02/05/1983 (President Slim), Al Kasifah v. Al Najjar, Al Adel 1984, vol. 1, p. 150; Labor Arbitral Tribunal, Beirut, No. 657, 09/05/1967 (President Chidiac), Abdel Wahab v. Byblos Film, Al Adel 1969, vol. 3, p. 423; Labor Arbitral Tribunal, No. 29, 04/06/1991, N.Z. Labor Matters 1994, Competence, No. 5, p.181; Court of First Instance, Beirut, civil chamber, 02/05/1969 (President Ghamra), Korkjah v. Awfah; Labor Arbitral Tribunal, Beirut, No. 124/1994, N.Z. Labor matters 1994, Competence No. 12, 120. Contra Labor Arbitral Tribunal, Beirut, 28/10/1970, Al Adel 1971, p. 202; Labor Arbitral Tribunal, Beirut, No. 958, 28/07/1970 (President Yasiji); Moubarak v. Azara, Al Adel 1971, vol. 1, p. 204.

36 Supreme Court, civil chamber 8, No. 143, 17/09/1997 (President Zein), Filtamyiz (Sader for Supreme Court Jurisprudence), Civil decisions 1997, p. 548; Labor Arbitral Tribunal, Mount Lebanon, No. 172, 11/02/1970, Korkjah v. Awfah.

37 Labor Arbitral Tribunal, Mount Lebanon, No. 1, 05/01/1998 (President Natour), Al Doueihy v. Zakhem; Labor Arbitral Tribunal, Mount Lebanon, 08/03/2000 (President Natour), Najm v. Bitar & Co; Labor Arbitral Tribunal, Beirut, No. 43, 19/02/1974 (President Torbey), Aboud v. Arabian & Libyan Airlines Co., Hatem, 154, p. 41 (parties to an international agreement executed abroad may elect to subject their relationship to a foreign law especially that the employee is not registered with the social security fund in Lebanon; however, the Labor Arbitral Tribunal is not com-petent to apply such foreign law); Labor Arbitral Tribunal, Mount Lebanon, No. 73, 05/03/1975 (President Jreissati), Sfeir v. Al Banwa, Hatem 164, p. 439 (parties to an employment contract may elect foreign law to govern their relationship, notably a for-eign law that is the law of the nationality of one of the parties, and the Labor Arbitral Tribunal is competent to apply such foreign law); Labor Arbitral Tribunal, Beirut, No. 958, 28/07/1970 (President Yasiji); Moubarak v. Azara, Al Adel 1971, vol. 1, p. 204.

Lebanon 91-35IV.A.4.b.

can elect a foreign law to govern their relationship, especially if the employee is not registered with the social security fund. The majority of rulings,38 however, have recognized the mandatory competence of the Labor Arbitral Tribunal, although many rul-ings39 have recognized the choice of a foreign law as valid even in employment relationships and recognized that the Labor Arbitral Tribunal is competent to apply such foreign law.

In Lebanon, opinions diverge40 as to whether or not the Labor Law is considered to be an imperative law that applies to all em-

38 Court of Appeal, Beirut, No. 759, 16/06/1966 (President Farhat), Al Moubchir v. Al Chammass, Hatem, vol. 66, p. 23; Court of Appeal, Mount Lebanon, No. 81, 02/05/1983 (President Slim), Al Kasifah v. Al Najjar, Al Adel 1984, vol. 1, p. 150; Labor Arbitral Tribunal, Beirut, No. 657, 09/05/1967 (President Chidiac), Abdel Wahab v. Byblos Film, Al Adel 1969, vol. 3, p. 423; Labor Arbitral Tribunal, No. 29, 04/06/1991, N.Z. Labor Matters 1994, Competence, No. 5, p. 181; Court of First Instance, Beirut, civil chamber, 02/05/1969 (President Ghamra), Korkjah v. Awfah; Labor Arbitral Tribunal, Beirut, No. 124/1994, N.Z. Labor matters 1994, Competence No. 12, 120; Contra Labor Arbitral Tribunal, Beirut, 28/10/1970, Al Adel 1971, p. 202; Labor Arbitral Tribunal, Beirut, No. 958, 28/07/1970 (President Yasiji); Moubarak v. Azara, Al Adel 1971, vol. 1, p. 204.

39 Labor Arbitral Tribunal, Mount Lebanon, No. 1, 05/01/1998 (President Natour), Al Doueihy v. Zakhem; Labor Arbitral Tribunal, Mount Lebanon, 08/03/2000 (President Natour), Najm v. Bitar & Co; Labor Arbitral Tribunal, Beirut, No. 43, 19/02/1974 (President Torbey), Aboud v. Arabian & Libyan Airlines Co., Hatem, 154, p. 41 (parties to an international agreement executed abroad may elect to subject their relationship to a foreign law especially that the employee is not registered with the social security fund in Lebanon; however, the Labor Arbitral Tribunal is not com-petent to apply such foreign law); Labor Arbitral Tribunal, Mount Lebanon, No. 73, 05/03/1975 (President Jreissati), Sfeir v. Al Banwa, Hatem 164, p. 439 (parties to an employment contract may elect foreign law to govern their relationship notably a for-eign law that is the law of the nationality of one of the parties, and the Labor Arbitral Tribunal is competent to apply such foreign law); Labor Arbitral Tribunal, Beirut, No. 958, 28/07/1970 (President Yasiji) Moubarak v. Azara, Al Adel 1971, vol. 1, p. 204.

40 Rulings stating that the law is imperative: Supreme Court, civil chamber 8, No. 143, 17/09/1997 (President Zein), Filtamyiz (Sader for Supreme Court Jurisprudence), Civil decisions 1997, p. 548; Labor Arbitral Tribunal, Mount Lebanon, No. 172, 11/02/1970, Korkjah v.s. Awfah. Contra Labor Arbitral Tribunal, Beirut, No. 43, 19/02/1974 (President Torbey), Aboud v. Arabian & Libyan Airlines Co., Hatem, 154, p. 41 (parties to an international agreement executed abroad may elect to subject their relationship to a foreign law especially that the employee is not registered with the social security fund in Lebanon; however, the Labor Arbitral Tribunal is not com-petent to apply such foreign law); Labor Arbitral Tribunal, Mount Lebanon, No. 73, 05/03/1975 (President Jreissati); Sfeir v. Al Banwa, Hatem 164, p. 439 (parties to an employment contract may elect foreign law to govern their relationship, notably a for-eign law that is the law of the nationality of one of the parties, and the Labor Arbitral Tribunal is competent to apply such foreign law); Labor Arbitral Tribunal, Beirut, No.

Restrictive Covenants: Int’l Survey91-36 IV.A.4.b.

ployment relationships involving an employer located in Lebanon whether through a principal establishment, a branch, or a repre-sentative office and employing individuals to work at such location notwithstanding the will of the parties to subject their relationship to another governing law. Thus, it is very hard to be able to draw conclusions in respect of governing laws and choice of forum in the context of employment agreements, given that court rulings and scholars’ opinions do not yet agree on a final structure. How-ever, one can give some guidance as to foreign employers having businesses in Lebanon.

• Based on a review of existing precedents, there are several factors in favor of the choice of a foreign law as governing law of the contract being considered valid. If the employee in Beirut is employed by a branch of the foreign employer or a representative office and not a subsidiary registered as an independent Lebanese entity, then the election of the law of the jurisdiction of the employer as the governing law of the agreement might be recognized as valid.

• If the employee in Beirut is a foreigner employed by a for-eign employer to work in Beirut through an employment agreement that states that it has been executed outside Leb-anon and the employee may evidence that the employee benefits from social security in the main jurisdiction of the employer, the employer will not be required to regis-ter the employee with the National Fund of Social Security in Lebanon and as court precedents indicate, the fact that the employee is not registered with this fund influences the judge’s decision to recognize validity of choice of a foreign law to govern the employment agreement.

• As to the choice of forum, the same reasoning as above could be adopted. Where the employee is employed by the Lebanese branch of a foreign employer and he or she is a foreigner, the choice of foreign jurisdiction as the forum

958, 28/07/1970 (President Yasiji); Moubarak v. Azara, Al Adel 1971, vol. 1, p. 204; Mohamed Ali Chkhaybeh, Abusive Dismissal Under Individual Employment Agreement 136 (1980).

Lebanon 91-37IV.A.7.

where disputes are resolved has more of a chance to be rec-ognized as valid.

It is generally accepted that employment agreements may contain arbitration provisions; however, such arbitrators have to be Lebanese and arbitration has to be conducted in Lebanon. There-fore, if employers do not meet these requirements, which would lead to validation of the choice of a foreign forum, they can always subject disputes to arbitration to be conducted in Lebanon. In this respect, an arbitrator might be more lenient as to application of a foreign law; however, since the parties have the right to appeal an arbitrator’s decision before the Labor Arbitral Tribunal, it is advis-able that the employer makes sure that the foreign law does not clearly contravene the Lebanese Labor Law and public policies; otherwise the arbitral award risks invalidation before the Labor Arbitral Tribunal.

5. Conflicts of Law

See 4. above.

6. Necessary Parties

Necessary parties are the plaintiff and the defendant. Op-tional parties are the social security fund and the new employer (if available). The prior employer may implicate the new employer in a case involving a noncompete dispute if the prior employer has enough proof of the bad faith of the new employer. In cases relat-ing to breach of the notice requirement under the Labor Law, the new employer may be implicated if the prior employer can prove that the new employer is aware of the former employee’s breach, which did not prevent the new employer from hiring the former employee. In this case, the new employer is by law jointly liable with the former employee to settle due compensation to the prior employer amounting to the salaries covering the notice period.

Liability in tort of the new employer of an employee who has breached a noncompete agreement may be claimed on the basis of the proven bad faith of the new employer. Being aware of the breach of a noncompete committed by the employee constitutes a presumption of bad faith; however, it needs to be supported by ad-

Restrictive Covenants: Int’l Survey91-38 IV.A.7.

ditional proof. In any case, the sanction is limited to settlement of damages (compensation for the prior employer’s losses) and fines; courts do not usually invalidate the new employment agreement.

7. Statute of Limitations

Contractual obligations such as the duty of loyalty under an employment contract and post-employment restrictive covenants are subject to the common rules of contracts and the common statute of limitations of 10 years. They remain enforceable within such limitation.

B. Pre-litigation and Privacy Issues

1. Pre-litigation Issues

Enforcement is typically pursued against a former employee. Under certain circumstances, the new employer may be implicated in the legal proceedings.

Liability in tort of the new employer of an employee who has breached a noncompete agreement may be retained on the basis of the proven bad faith of the new employer. Being aware of the breach of a noncompete committed by the employee constitutes a presumption of bad faith; however, it needs to be supported by ad-ditional proof. In any case, the sanction is limited to settlement of damages (compensation for the prior employer’s losses) and fines; courts do not usually invalidate the new employment agreement.

Also, in cases where an employee has breached the notice requirement imposed under Article 50 of the Labor Law and the new employer was aware of such breach, Article 50 of the Labor Law provides for the joint liability of the employee and the new employer to settle due compensation amounting to the salaries covering the notice period.

Employees usually initiate court proceedings against former employers for breach of the notice requirement, abusive termina-tion, termination of a contract prior to expiry of its original term, and similar claims of benefits, pensions, and compensations. Usu-ally the new employer does not have a cause of action against the former employer, unless the latter committed a criminal offense or is liable for a tort against the new employer.

Lebanon 91-39IV.B.1.

Strategies and approaches obviously depend on the specifics of each case involving issues related to restrictive covenants. How-ever, if an employee is a defendant to a breach of noncompetition claim, the strategy would be to first claim that the noncompetition agreement is not valid as contrary to public policy. Depending on the case at hand, the claim may specify that the agreement does not meet conditions of Article 83 of the Civil Code, or that even if it meets such requirements it results in impeding the employee’s ability to earn a living and compelling him or her to move to an-other country, given that his or her educational background does not make him or her eligible for other job descriptions. Also, the employee may claim that termination of the employment agree-ment was due to the employer’s fault (or the employee could claim that the employer did not fulfill its payment obligations, did not provide needed equipments, or did not duly ensure safety of the workplace). Hence, the employee might be released from such noncompetition obligation given the specifics of the termination event. The downside of making such argument is that it would not be very seriously considered if the employee had not sued the employer for abusive termination of the employment agreement. Also, employees may endeavor to prove that their new job is dif-ferent from their former job description and hence it does not fall under the noncompetition covenant.

The employer’s approach is to claim compensation for breach of the noncompetition agreement. It is recommended that the non-competition agreement provide for a penalty agreed on between the parties that would bind the court if the agreement is deemed valid. The strategy would be to claim that the employee profited from know-how and experience gained at the employer’s business and instigated termination of his or her agreement after having in-tentionally looked for an opportunity to work for a direct competi-tor while he or she did not complain to the employer or even show dissatisfaction with his or her work at the employer’s business. The employer should try to prove that termination of the employment agreement was triggered by the employee with no valid cause even if the notice requirement condition was fulfilled. The employer could also claim that the fact that the former employee is aware of important confidential information and trade secrets may result in a risk of unfair competition. Commencement of unfair competi-

Restrictive Covenants: Int’l Survey91-40 IV.B.1.

tion, even if the employer’s client base is still not damaged, is also sanctioned under Article 714 of the Criminal Code. The employer may also elect to initiate a criminal proceeding to claim breach of the above article.

In general, among the factors taken into consideration to elect whether or not to initiate legal proceedings, the plaintiff should consider the following:

• The scope of the damage incurred by tort or breach of contractual obligations; for the employer it would be an as-sessment of the damage incurred following breach of the fiduciary duties by the employee, or his or her dismissal, or theft/disclosure of information and trade secret, or other offenses; for the employee it would be an assessment of the damage incurred by termination of his or her employment agreement or other damage due to any breach of contrac-tual obligations by the employer; such assessment should be compared to the cost of litigation and chances of success;

• The proof and evidence that could be submitted to the court during the legal proceedings, including proof of the dam-ages incurred and proof of the offense or breach claimed; and

• The employer should ensure that it duly complied with all obligations and procedural requirements imposed under the Labor Law, such as the notice requirement; for example, according to Article 74 of the Labor Law, the employer is obligated to notify the Ministry of Labor of its decision to dismiss an employee who has committed gross misconduct or negligence harming its business; there are other require-ments, for example, for collective dismissals under Article 50 of the Labor Law, the employer should notify the Min-istry of Labor before executing its decision.

The most important step to take in order to preserve any right and duly apply the Labor Law provisions before initiating any legal proceedings or taking any initiative to terminate an employment agreement is to serve a warning to the other party to the dispute. The warning should be clear and express the charges or faulty ac-

Lebanon 91-41IV.C.2.

tions or accusations, given that it qualifies as a proof supporting the plaintiff’s allegations.

As previously mentioned, disclosure of trade secrets is a criminal act under Article 579 of the Criminal Code; therefore, it can be proven by any means, even by witnesses. Also, for ex-ample, to prove that an employee has breached a noncompete or nonsolicitation, the employer may use testimony of witnesses, or bills or checks issued by the employee to the clients.

Where the employer served a warning or a notice of breach to the employee, the employee should diligently respond in writ-ing denying the employer’s allegations and if possible accusing the employer of abusive termination or other breaches, depending on the case. This is a very important defense measure, given that in the event the employee does not respond to the employer’s notice or accusation and remains silent, it would be used against him or her as a presumption of the validity of the allegations of the employer.

2. Privacy Issues

Recordings or video tapes are not acceptable for civil or criminal claims, if they were recorded without authorization of the person involved. It only constitutes a commencement of proof. Also, the employer is allowed to research anything within the workplace, including computers and emails; however, any personal belongings of the employee may not be submitted as proof against the employee. As previously mentioned in I.B.4.c., although there are no data privacy laws in Lebanon, any evidence based on per-sonal data of the employee or taken from the employee’s private home without permission is not accepted as a proof against him or her. The employer’s discovery should be based on researching the workplace, or researching any publicly available information and inquiring about the employee’s actions with other third parties and encouraging them to testify before the court.

C. Declaratory Relief Actions; Counterclaims

1. Declaratory Relief Actions

The employee, or new employer if implicated in the dispute, may request the court ruling on the dispute to interpret a contrac-

Restrictive Covenants: Int’l Survey91-42 IV.C.2.

tual arrangement or review information to decide on whether it constitutes trade secrets; however, there is no action similar to de-claratory relief or declaratory judgment available either under the Code of Civil Procedure or under the Code of Criminal Procedure.

2. Counterclaims

The defendant to a case may elect to submit a counterclaim if it meets the following cumulative conditions:

• If the counterclaim is interrelated to the principal claim in the sense that the ruling on the claim will affect the ruling on the counterclaim and vice versa;

• If the counterclaim falls under the scope of competence of the court; and

• If it is made for one of the following purposes:– as a set-off against the initial claim;– as compensation for damages incurred as a result of the

initial claim or the proceedings of the court;– as any other claim of a material benefit/interest other than

just rejecting the allegations stated in the initial claim.

The employee, the prospective employer, or the new em-ployer should ensure that they have solid legal basis and grounds supporting the counterclaim given that rejection of the same might adversely affect their defense in relation to the initial claim.

D. Temporary or Preliminary Relief

1. Temporary Restraining Orders (TROs)41

The Code of Civil Procedure does not provide for temporary restraining orders.

41 A temporary restraining order is the term used in the United States and a num-ber of other common law jurisdictions for an emergency ex parte injunction that the plaintiff obtains for a limited period to prevent irreparable harm, pending a hearing with the defendant represented.

Lebanon 91-43IV.D.2.

2. Preliminary Injunctions

There are preliminary injunctions and conservatory injunc-tions that might be ordered by the fast track judge or the judge ruling on the case or the execution office.

The fast track judge or the judge ruling on the case or the ex-ecution office is the competent authority to order preliminary in-junctions. Before a trial, the party may submit a request to the fast track judge claiming a preliminary injunction the nature of which depends on each case. The judges’ decision may be appealed be-fore the Court of Appeal within eight days as of notification to the parties of such decision. Also, during a trial a party to the dispute may request the judge ruling on the case to order a preliminary injunction. The fast track judge and the judge ruling on the mer-its may ask the party claiming the injunction to deposit a certain amount on the account of a guarantee.

Preliminary injunctions are all measures necessary to ensure preservation of rights (in a situation where a right is threatened by infringement, for example) and prevention of damages such as the following:

• Imposing a restraining seal on disputed properties or com-mercial establishments, shops, and companies;

• Imposing judicial custody on certain assets and properties;• Selling assets that risk deterioration;• Making a report description of a place or situation (mostly

in criminal cases);• Preparing an inventory of disputed assets and properties;• Appointing experts including forensic experts; and• Eliminating infringement (such as restraining a party from

using a trademark or trade name).

The party who possesses a debt owed by another party can also request the execution office to order a conservatory seizure of the assets of the debtor by submitting the debt instrument (which does not have to be the original document). The conservatory sei-zure is repealed if the plaintiff does not initiate a trial before the

Restrictive Covenants: Int’l Survey91-44 IV.D.2.

competent courts within five days as of the date of submittal of the request for seizure.

For a conservatory seizure, the party must submit a debt in-strument. For other preliminary injunctions, there must be proof that the injunction is needed for the right/claim to be preserved or the damage to be prevented or contained, or the infringement to be removed because it might result in material damages. The damage can be future damage; however, it has to be certain. The damage does not have to be of an irreparable nature; however, it has to be material. Requests for preliminary injunctions might be rejected when the damage does not prove to be material or certain or where the judge is not convinced of the validity of the right claimed to be threatened or infringed.

There is no time frame for submitting requests for prelimi-nary injunctions; however, a request should be made before initi-ating a trial or during the hearings of the courts of first instance. Preliminary injunctions remain in effect until the final ruling on the merits unless they have been challenged by the party against whom the injunction was issued and the court decided to repeal the injunction. Also, courts or judges may remove injunctions upon their own initiative if the circumstances of the case have changed (facts upon which they have based their decision to order an injunction have changed).

Breach of a preliminary injunction is a criminal act punished by imprisonment between one month and a year and a fine rang-ing between approximately US$66 to US$1,000.

E. Litigation Discovery

In the context of litigation discovery, and in respect of crimi-nal offenses (such as theft or disclosure of confidential informa-tion or secrets, or unfair competition), a claim is submitted to the general prosecutor where the employer’s business is established, following which the general prosecutor orders the judiciary police to investigate the case. The judiciary police have all rights to in-terrogate the plaintiff and the defendant, research the employer’s place of business for evidence or the employee’s place of residence after having obtained a warrant, and seize any assets or other be-

Lebanon 91-45IV.G.

longings. The judiciary police’s report is a very important docu-ment on the basis of which the court will decide whether or not to convict the defendant.

In respect of civil claims, the burden of proof lies in the plain-tiff. However, under Article 135 of the Code of Civil Procedure, the court is entitled to initiate discoveries to try to get additional evidence other than that submitted by the parties. Further, courts may elect to appoint an expert if the ruling on the case requires specific technical or artistic skills or other know-how upon re-quest of one of the parties to the dispute or upon its own initiative. Experts are usually required to give their findings in writing or orally; however, the court is not bound by the expert’s findings. A party to the dispute may oppose appointment of an expert only in specific cases where the expert is related to one of the parties or there is a conflict of interest situation or similar case. If a party refuses to collaborate with the expert during the investigation, it will be considered as a presumption of proof against such party.

In respect of civil offenses, there is no time frame for discov-ery imposed by law. In principle, for civil cases the courts decide on the time frame granted to the expert for completion of his or her assignment. However, the Labor Arbitral Tribunal is required to issue a ruling on labor cases related to abusive termination of the employment agreement within a maximum time frame of three months as of initiation of the legal proceedings.

Further, under Article 135 of the Code of Civil Procedure, the court is entitled to initiate discovery to try to get additional evi-dence other than that submitted by the parties. Hence, Lebanese judges are given the opportunity to be very active in helping the parties to support their evidence based on their role of pursuing the truth and administrating justice. Indeed, judges play an impor-tant role in this area; they even have the right under Article 208 of the Code of Civil Procedure to request that a third party to the dispute be implicated in the proceedings for the purpose of order-ing him or her to submit a document/proof in his or her possession.

F. Other Pre-Trial Matters

There are no other pre-trial matters.

Restrictive Covenants: Int’l Survey91-46 IV.H.1.

G. Burden of Proof

According to Article 131 of the Code of Civil Procedure, the person making the allegation that needs to be proven has the bur-den of proof. This rule does not vary at any stage of the proceed-ings. It is founded upon the more general rule guaranteeing that every person is in principle innocent and everyone who claims the contrary must prove it.

H. Final Remedies

1. Monetary and Injunctive Relief

Final remedies include monetary compensation, fines, impris-onment for certain criminal offenses, deregistration of trademarks and other intellectual property rights, removal of commercial ad-vertisements or permanent retaining seals mostly in disputes relat-ing to unfair competition claims, or restitution of stolen documents and secret information in relation to trade secrets claims.

In principle, reparation for breach of contractual obligations or other liabilities should be in kind according to Article 249 of the Civil Code. Monetary compensation for damages is only an alternative solution where it is not possible to seek reparation in kind. When reparation in kind depends on the debtor (because where possible the creditor may request that it executes the repara-tion on the account of the debtor), the court may order a fine per day of delay if the debtor is reluctant to execute the court ruling. In general, reparation in kind is sought only when possible, and only when it does not have any effect on third parties not related to the initial contractual arrangement between the parties to the dispute or the tort or the criminal offense committed.

In respect of breach of noncompetes, the court may issue a re-straining order to the employee not to work with the new employer during the term of the noncompete, failing which he or she would settle a daily fine for delay in executing such sentence. However, as previously mentioned, the court decision does not have the ef-fect of annulling the new employment contract.

In respect of labor disputes, reparation in kind is hardly pos-sible and usually courts order monetary compensations and fines

Lebanon 91-47IV.H.2.

given that the court may not order the employer to dismiss the em-ployee or annul the new employment contract and order the new employer to dismiss the employee. However, a daily fine imposed in cases where the convicted party fails to abide by the restraining order of the court is considered an efficient remedy.

Courts do not have the power to modify contractual terms of restrictive covenants; they only invalidate such terms if deemed contrary to applicable rules and public policy. However, if the restrictive covenant provides for a penalty in case of breach, the court is allowed to revise the amount of such penalty only when the reparation in kind has been partially completed.

Where the noncompetition contract provides for a specified penalty in case of breach, the court that ruled on the existence of the breach is bound by such penalty and will not rule on reparation in kind through restraining orders as discussed above, given that reparation is either in kind or in equivalent monies and not both.

2. “Blue Pencil” Modifications42

As discussed in I.B.1. above, judges are granted the power to revise the legitimate basis of noncompetes—i.e., in some situ-ations a noncompete may nominally be valid under Lebanese law because it meets the specific conditions of article 83 of the Civil Code as being limited in time and space, but the noncompete may still result in illegitimate treatment of the employee in the specific case at hand (for example, if the employee works in a very special-ized sector and has no experience in other sectors and hence the noncompete, even though specified to cover a specific sector for a period of time, would result in actually forcing the employee

42 “Blue pencilling,” also referred to as “severing,” refers to the authority recog-nized in courts in some countries to delete unenforceable parts of a restrictive covenant rather than finding the covenant unenforceable in its totality. Such authority can also extend to “notional severance” (as opposed to actual severance), which involves inter-preting the scope of the requirement so as to reduce its effect to one that would be in accord with law, as opposed to severing the offending language by the “blue pencil” mechanism. It does not involve writing missing words into the covenant. See question 4 in Brian Malsberger, Covenants Not to Compete: A State-by-State Survey (6th ed. 2008). Some restrictive covenants may contain provisions expressly authoriz-ing blue pencilling/severance of provisions found contrary to law as a means of pre-serving the nonoffending provisions of the restrictive covenant concerned.

Restrictive Covenants: Int’l Survey91-48 IV.H.2.

to stop working for that period of time, which is not legitimate under Lebanese public policies). In such circumstances the judge is allowed to invalidate a provision even though compliant with Lebanese law on the face of it. In such situations a judge’s analysis is made on a case-by-case basis through consideration of all fac-tors involved, including specifics of certain industry sectors (no-tably technology sectors where acquired know-how, confidential information, and secrets are valued differently than in other less technical sectors) or the position or role of the person bound by noncompetes.

However, blue pencilling per se is not a common practice in Lebanon. When the noncompete is considered to be contrary to Lebanese laws it is invalidated and entirely unenforceable.

I. Enforcement of Domestic Rulings

Enforcement of a domestic ruling is subject to the provisions of the Code of Civil Procedure. A final domestic ruling is en-forced before the execution office upon submittal of a copy of the judgment stamped as “valid for execution.” Following submittal, the execution office notifies the relevant party against whom the judgment has been issued and orders him or her to execute the same within 10 days as of the date of notification. If the party fails to duly execute the judgment or refuses to execute it, the office will seize his or her assets and personal belongings to sell it in public tenders and collect the amount of compensation due. If the judgment ordered the party to take some action other than settle-ment of compensation, for example, to restore documents taken from the former employer’s work place and the party fails to ac-complish the same, the execution office may request the internal security department to interfere and compel the party to execute the sanction.

J. Appeal

As noted under IV.A.2. Choice of Forum above, arbitration is generally accepted as a legitimate forum in Lebanese employment contracts. However, the parties have the right to appeal an arbitra-

Lebanon 91-49IV.J.

tor’s decision to the Labor Arbitral Tribunal, which has the power to invalidate it.

The right to appeal a court decision is a right having the value of a public policy. Preliminary decisions taken by the fast track judge may be appealed before the Court of Appeal within eight days as of notification of the decision to the relevant parties. A civil ruling on the merits issued by the court of first instance may be appealed before the Court of Appeal within 30 days as of the date of the notification of the ruling to the parties involved in the dispute, provided the monetary value of claim exceeds US$2,000. However, the following claims may be appealed even if under the value threshold:

• Claim challenging competence of the court that issued the ruling;

• Claim of nonvalidity of the ruling of the court of first in-stance for failure to abide by formal requirements or proce-dural requirements;

• Claim that the ruling on the merits contains contradictions;• Claim that the court omitted to rule on one of the claims

submitted; or• Claim that the ruling relates to matters not claimed by the

parties, or exceeds the matter claimed.

Judgments of the Court of Appeal may be challenged before the Supreme Court within 60 days as of the date of notification of the judgment to the parties involved in the dispute, provided the monetary value of the claim exceeds US$4,000.

Rulings in criminal cases may be appealed in certain situ-ations (in cases of criminal offenses, in cases of minor offenses that exceed US$333) before the criminal chamber of the Court of Appeal within 15 days as of the date of notification of the ruling to the relevant parties. Decisions of the Court of Appeal related to criminal offenses may be challenged by the convicted party in specific cases before the Supreme Court within 15 days as of the date of notification of such decision to the relevant parties. Deci-sions on minor offenses may not be challenged before the Supreme Court. For crimes, and following investigation of the judiciary po-lice, the case is transferred to the accusation committee (similar to

Restrictive Covenants: Int’l Survey91-50 IV.J.

the grand jury) that transfers the case to the criminal court if there is a presumption of existence of the crime. The decision to transfer the case before the criminal court may be challenged before the Supreme Court. The judgment of the criminal court may be chal-lenged before the Supreme Court within 15 days as of notification of the same to the relevant parties.

Rulings of the Labor Arbitral Tribunal may not be challenged through regular appeal proceedings. They may either be objected to by the convicted party who was not present during the legal proceedings or be challenged at the level of the Supreme Court.

The Court of Appeal may decide to stay an injunctive ruling upon request of one of the parties to the dispute.

One of the procedural requirements to be taken into consid-eration is the obligation to pay a fee amounting to 2.5 percent of the value of the dispute for the appeal to be accepted.

The party should also take into account the lengthy proceed-ings before the Court of Appeal; in general disputes are resolved by the Court of Appeal within a minimum time frame of three years.

K. Enforcement of Foreign Judgments

Enforcement of foreign judgments is governed by the follow-ing rules:

• Foreign judgments may not be executed in Lebanon unless they are granted “exequatur.”

• The request for “exequatur” should be submitted to the president of the Court of Appeal of the district where the relevant party implicated in the judgment, or the assets that constitute the object of the claim, are located or otherwise to the president of the Beirut Court of Appeal.

The “exequatur” is granted if certain conditions are fulfilled.

• The foreign judgment must be issued by a competent court, the competency of which is not only based on nationality of one of the parties to the dispute.

Lebanon 91-51V.

• The foreign judgment must be final and enforceable in the jurisdiction where it has been issued, and such jurisdiction must recognize the execution of Lebanese judgments.

• The foreign judgment must not be contrary to Lebanese public policy.

The judge of “exequatur” may not revise rulings of the for-eign judgment except in the following cases:

• If the ruling is based on documents and facts that prove, following issuance of the judgment, to have been falsified;

• If the ruling contains contradictions as to the decisions taken by the foreign court that makes its enforcement im-possible; and

• If the laws of the jurisdiction where the judgment is issued allow revision of the findings of a Lebanese judgment in the course of enforcement proceedings.

The party against whom the execution is pursued may ob-ject to the execution of the foreign judgment within 30 days as of the day he or she is notified that the “exequatur” request has been upheld. In the event the “exequatur” has been rejected, the party seeking execution may appeal such decision before the same Court of Appeal within 15 days as of the date he or she is notified of the same.

V. Interference With Contractual Relationship

Liability in tort of the new employer of an employee who has breached a noncompete agreement may be claimed on the basis of the proven bad faith of the new employer. Being aware of the breach of a noncompete committed by the employee constitutes a presumption of bad faith; however, it needs to be supported by ad-ditional proof. In any case, the sanction is limited to settlement of damages (compensation for the prior employer’s losses) and fines; courts do not usually invalidate the new employment agreement.