Dechert Wins Dismissal of Lawsuit Against Lebanon’s Central Bank

A Dechert litigation team led by partner Linda Goldstein secured a significant win for client Banque du Liban (BDL), Lebanon’s central bank, in a case arising from Lebanon’s current financial crisis. On April 9, 2021, Judge Denise Cote of the Southern District of New York granted BDL’s motion to dismiss the case, which was brought by two Lebanese American citizens who sought an overseas transfer of U.S. dollar deposits they had made at three Lebanese commercial banks. In their lawsuit, plaintiffs alleged that the Lebanese commercial banks wrongfully refused to transfer their U.S. dollar funds by wire to plaintiffs' domestic U.S. banks, instead giving them checks drawn on BDL that could be deposited only in Lebanon. The complaint alleged that BDL wrongfully dishonored the checks when plaintiffs sought to deposit them in their U.S. bank accounts.

In granting all of the defendants’ motions to dismiss, Judge Cote agreed that BDL was entitled to immunity from the suit as “an agency or instrumentality of Lebanon.” Judge Cote rejected plaintiffs’ attempt to argue that BDL’s alleged actions fell within the “commercial activity” exception to sovereign immunity, recognized by the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1605, and agreed with arguments made by the Dechert team that plaintiffs’ case was not “based upon” a “commercial activity” of BDL. 

Specifically, Judge Cote agreed that the gravamen of plaintiffs’ claims was their business relationship with the Lebanese commercial banks where they had made their deposits, not any relationship between plaintiffs and BDL. And Judge Cote also agreed that any effect plaintiffs felt in the United States was not “direct,” as required by the FSIA, because it occurred as a result of the commercial banks’ decisions to issue checks drawn on the commercial banks’ accounts at BDL and plaintiffs’ decision to seek deposit of those checks in the United States.

The Dechert Team was led by partner Linda Goldstein, with associates Ryan Moore, Selby Brown and Christine Isaacs.

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