October 22, 2026
The Lebanese Constitutional Council annulled Article 3 of the law amending the banking reform law, following the appeal submitted by the President of the Republic, Joseph Aoun, reinstating the previous legal text, which includes an explicit reference to the Monetary and Credit Law.
The Presidency’s appeal came in objection to the Finance and Budget Committee’s deletion of the explicit referral to the Monetary and Credit Law, which the appeal considered an infringement on the reference that regulates the work of the Bank of Lebanon, in addition to the lack of clarity in the distribution of powers between the Central Council, the Supreme Banking Authority, and the Banking Control Commission. This deletion raised concerns about overlapping jurisdictions and exposing restructuring procedures to challenge.
The reasons confirmed that the appeal was not aimed at reform or seeking to disrupt accountability and exempt the Central Bank from oversight, but rather an adherence to clear rules governing the responsibilities of each party within a legal framework that preserves the independence of the Bank of Lebanon and keeps it accountable. It also indicated that the phrase “taking into account the provisions of the Monetary and Credit Law” was part of the previous text and was reintroduced before it was deleted, which made the amendment a violation of a basic legal reference during the stage of treating troubled banks.
For its part, the Constitutional Council based its invalidation of Article Three on the fact that it had not been approved in accordance with constitutional principles, which led to a return to the previous text. This step is of great importance according to five interconnected dimensions:
First, re-establishing the authority of the Bank of Lebanon by emphasizing the application of the Banking Reform Law within the existing legal system of the Monetary and Credit Law.
Secondly, reducing the overlap of powers between the Central Bank’s bodies and councils, which reduces the space for competing interpretations and conflicts of jurisdiction.
Third, enhancing legal certainty in decisions to restructure, capitalize or liquidate banks, due to their sensitivity towards the rights of depositors and shareholders.
Fourth, to preserve the independence of the Bank of Lebanon while keeping it accountable within the limits of the law.
Fifth, protecting the regularity of the work of institutions and preventing conflicts that may hinder the path of reform and weaken public confidence.
With this decision, the Constitutional Council did not overturn the banking reform law or stop the process of accounting and structuring, but rather restored matters to their constitutional and legislative order, stressing that the path of financial and banking reform requires bold decisions that respect the constitution and clearly define the institutions’ powers and responsibilities towards depositors.
