AN ITALIAN LAWYER IN LEBANON: the reasons of a professional choice,
by Davide Paoli
An Italian lawyer explains the why and how of shifting his life and practice to Lebanon. Mr. Paoli also describes the human, physical and cultural beauties of Lebanon, and outlines significant practice areas.
Work is love made visible. And if you cannot work with love but only with distaste, it is better that you should leave your work and sit at the gate of the temple and take alms of those who work with joy.
Beirut, May 2010
I first set foot in Lebanon in the Autumn of 2007 on a leisure trip. I remember finding a small country proud of its concentrated and elegant variety of striking Mediterranean beauty and a people ready to keep up with its world famous reputation of great hospitality. Mere petits morceaux which were the seeds of a professional project unconsciously growing in my mind.
The reasons why I am presently working in Lebanon may be many: personal, dictated by blind fate, irrational & instinctive in some cases but profoundly rational from a purely professional perspective. The scope of this article is to focus on these latter elements which may serve as a modest proposal to Western professional and legal practitioners who wish to be more actively present in the region (i.e. Middle East & North Africa) and in Beirut in particular. No useful handbook but a personal insight from a European lawyer whose professional vocation was confirmed treading, as many literary clichés often have it, down the less traveled path.
The ultimate decision of reallocating my personal experiences in a new context after five years of practicing law in Italy (Rome and Turin) in Italian international law firms, was taken during six sabbatical months. In this period the horizons lying ahead of me became less and less blurry to the point I ultimately grew almost sure that I could and would be wanting to work in the Middle East as lawyer. But how?
The profession of a lawyer, since my early approach to legal studies at the University, always attracted me for a number of reasons yet found me skeptical as to the possibility of being a truly universal profession (very simply as the profession of doctor, architects, engineers may be). Language issues aside, Postivist thinkers have enlightened us on the noble yet deeply intimate link between a country (better: a people) and its set of rules thus the scarcely successful attempts to mechanical "importation" or "exportations" of laws without recourse to due harmonizing attempts. I dramatically exemplified in my possibly naïf exemplified speculation of the "5 European Friends’ Trip to a Foreign Country" (the first is a dentist, the second an architect, the third a chess player, the fourth a musician, and finally, the last, is a lawyer). In the hypothetical case their passports were confiscated and they were unable to return to their home countries they would likely all face the need to work for a living in the country they traveled to. Boiling down all variables of the example to the basics (thus avoiding the complication of burocracy for instance) all friends' but the lawyer's main challenge and concern would be converting their specific know how and being understood. The lawyer would be the only professional "knowing things", and qualified to deliver his expertise, who would not be able (not only entitled) to physically practice in that country, the only qualified professional with no universal qualification because the rules of his game are significantly different and not assimilable without deep reconsideration, his chess board is longer/shorter/multi-layered/uses different pieces: he may not even apply the principles of law apprehended in the country of origin to the new hosting country without severe alterations and/or ridiculous effects. Principles of laws and legal cultures differ from country to country as only grammars do. Convincing as this example may be it cannot be denied that lawyers are the professionals who face the hardest compatibility issues in moving to other countries. That's why even in the age of standard economic structures, homogenous contractual drafting techniques (as may be in M&As), International conventions and harmonizing auspices under International Law, Regional Institutions and International Institutions soft law, countries are sovereign within their own borders and lawyers can truly provide efficient cross-jurisdiction legal advice to clients only through a cross-jurisdiction network of national lawyers. The following questions of a possible debate on the subject might be: “But what does being a lawyer in 2010 mean?” - “Are we sure lawyer literally refers to: ‘a person whose profession is to represent clients and to advise or act for clients in other legal matters’?”- “And if so how far can we stretch the concept of legal matters?”
All this in my mind and before being able to answer any of the above questions without entering an identity crisis, I ventured to working as a lawyer in Lebanon. That's because I understood that being a lawyer can also be a state of the mind, a membership to a club of like-minded professionals who, though technically diverse from jurisdiction to jurisdiction and potentially distant in a number of crucial procedures, share similar missions in their societies. I ventured in a Region in my capacity as (Italian) lawyer with a good working fluency in a couple of European languages including English, with the scope of offering current and prospective European and American clients opportunities for business in Lebanon and in the Region through Lebanese professionals. In this, the mind structure and the proactive mentorship of my colleagues, allow me to deliver this atypical "form" of legal practice in a reciprocal effort to comprehend and be mutually beneficial to the firm and my clients. Through synergy, shared visions and trust, results are picking up at a consistently impressive pace and from my new perspective as “European Desk Consultant” I am discovering the beauty of passing through the toils and tribulations of the profession with a new insight, confrontation and diversities are helping me rather than impinging my legal reasoning, I am discovering the necessity of an aspect I thought marginal in practicing the law which is cultural mediation.
This is the summary of the summary of a typical informal presentation I like to give clients who do not know much about the country I moved to and who are interested in asking me about the advantages and peculiarities of the general business environment they would face if investing in Lebanon. In other words an answer to: "we hear Lebanon is cool for business: is it true?"
It actually is if one combines the following list of bullet points.
Lebanon's banking system is impressively doing well. As medias have been telling the world since 2008 the banks have proven great solidity during the recent storms which have rocked the world over. The excellence of Lebanon’s banking system passes through professional coherency and ethics which are strenuously applied by the Lebanese Central Bank allowing banks to successfully remain banks. Their identity and the respectability across the territory is confirmed by the banks remaing experts in the activity they are mostly qualifies in: loaning money and making business prosper. Since working in the firm I have seen start-ups receiving approvals in ambitious projects in IT, Real Estate, Restructuring, Alternative Energy Market Solutions, Transport, Automotive, Design, Housing, Food & Entertainment. Banks are essential to the country’s well being and offer advanced services in the country from tailor-made peculiar private banking to Islamic finance. Though equipped to face complexity, banking institutions in Lebanon are a simplifying element in the country's economy rather than a complex sophistication that adds to private investors' concerns.
Furthermore full bank secrecy ranks as the most attractive feature to foreign individual or companies and comparatively as among the strongest remaining in the world.
• Profitable Investment sectors
(i) Many a travel guide hint to the unparalleled peculiarities of Lebanon's unique tourist features (as a small country one can actually ski in the morning and eat fish by the sea at lunchtime): Lebanon's 2009 tourist season has beaten all predictions and records and is promising radiant seasons.
(ii) The Real Estate Market soared 100% in two years (2008-2009) and the figures do not seem to suffer unsteady growth, given the absence of speculation. Properties are sold, bought, used. The market is solid and real.
(iii) Medical Tourism: Health care is booming. Good quality clinics with doctors usually trained abroad, modern private hospitals and clinics, trained personnel make Lebanono the favourite attraction in the region for medical treatments in general (wellness, beauty care, plastic and cosmetic surgery, aesthetical solutions in dentistry and SPAs in particular).
(iv) IT and Media: the country boasts extremely knowledgeable human resources who master sophisticated technology. Together with Jordan the young IT community of tech-educated Lebanese is inventive and active in the world of Medias, software companies and IT solutions in the Region. Not to mention the benchmark commercial production expertise and advertising talended creatives who are forefront in all new exportable artisitic solutions.
(v) Food & Entertainment: come and see for yourself. My words would be inadequate in depicting the edonistic triumph this country personifies (and enjoys).
(vi) Industries such as pharmaceuticals, agro-alimentatio, textiles, furniture, design, and alternative energy development are promising sectors for investiment and I personally interacted with Lebanese entrepreneurs active in the above listed categories.
• Corporate Law
“The most popular Lebanese companies among international investors are Lebanese Joint Stock Companies (SAL), Lebanese Holding Companies (Holding) and Lebanese Offshore Companies (Offshore). These companies require an appointed board with Lebanese majority and a minimum capital of 20,000 USD. “Setting up a company in Lebanon is a straightforward process that takes from one to three business days as of the deposit of the company’s capital at a Lebanese bank.
Any foreign company may open a branch office in Lebanon to undertake any business activity that falls under that company's Articles of Association. Regulations and registration are generally straightforward. There are no minimum capital requirements, but, as in most countries, the office must be registered with the Ministry of Economy and a commercial court. The manager of the office can be a foreigner provided that he has a residence and work permit.
A foreign company may also open a representative office, but in this case they may not become involved with any commercial activity in Lebanon.
The corporate alternatives include:
Partnerships – where foreign and local partners enter into business;
Joint Ventures – where foreign and local companies combine to undertake a specific project, usually a construction project.
Without entering in details which would be outside the scope of this article and avoiding to superficially deal with legal aspects which are to be addressed with sufficiently deap analysis, one can argue that Lebanon enjoys a very favourable tax regime for residents and investors alike.
With reference to corporate taxation, it is worth mentioning that despite its favorable tax regime, Lebanon is not considered as a tax haven and Lebanese companies are widely viewed as serious and reliable structures.
The most favorable structure is the offshore company, which is exempt from tax on capital gains, tax on profits, stamp duty tax and from withholding tax. A Lebanese Offshore company is only subject to a yearly fixed inclusive tax of approximately 700 USD.
Lebanese Joint Stock Companies are subject to 10% taxes on capital gains, 10% withholding tax, and 15% tax on profits.
Transfer of shares in Lebanese companies is also tax exempt, which allows the transfer of assets and properties held through a Lebanese company to be completely exempted from taxes.
Lebanon's legislative framework makes the country one of the most open economies and one of the most attractive places to invest in the region. In order to encourage investment the government has set up the Investment Development Authority of Lebanon (IDAL) to provide services to investors, such as information on companies and permits and licenses, coordination of private and public services, promotion of business opportunities to investors, and tax exemptions on certain investments and activities.
• STAFF, LABOUR, PEOPLE
The country can still boast some of the best level of professionals in the Region (Middle East and Northern Africa that is): engineers, lawyers, doctors and bankers. Labour and staff wages in Lebanon are low by European standards, but high in relation to neighboring countries.
Figures and statistical prospects aside I have the impression of being host to a country whose citizens are natural born entrepreneurs, traditionally devoted to commerce, generally IT savvy and young. The spirit I live every day very much resembles the dreaming desire of growth and safety to be achieved through richness that lead many European countries to their postwar Wirtschaftswunder and ultimately wealth. The current relatively stable political situation is a blessing to general citizens and expats’ enthusiasm. This is allowing the real estate market to grow steadily without the suspicion of speculation: 70% of Lebanese families own their houses. The population pays little tax thus causing the pension system and the social security to be faulty to say the least but a good majority of middle class citizens do not mind this allowing them an apparently higher quality of life. Genuine superficiality of young generations is blatant and ostensibly consumeristic at feverish levels, but the centrality of family, spiritual “thirst” (which I have econuntered, as Christian, only in this region of the world) and the profound respect of human relationships compensate to the lack of diffused and shareable civil rights solidity.
Lebanon has a very Western approach to business and is keen to encourage foreign investment and involvement in trade. While the Prime Minister is currently a businessman (son of a businessman) it can be expected that the laws of the country will encourage such trade more and more. Lebanon is not in the WTO (yet). Given it is not, it (most likely) will. This will open a number of issues most of which are positive though will have to trigger even tougher rigorous reforms than the government has put in place in the last years (including taxation, copyright and patent law).
• Legal System & Language
The Lebanese legal system is a civil law system, originally heavily influenced by the
French legal system.
The official language of Lebanese legal acts is Arabic but unofficial translations of a growing number of laws is available in French and/or English and published on reviews. Though doing business and being involved in legal issues in general demands for the appointment of a lawyer the generally impressive fluency in French and English of the population allows foreigners to obtain many informations.
Last but not least: the geographical factor. Strategically close to the Gulf countries and at crossroads to all other Mena regions it is remarkably close to Europe, which makes it ideal for keeping on going professional contacts with Europe (Cyprus is only 20 minutes off Lebanon's coasts and is willing to help solve many burocratic issues with Visas and the Schengen area to Lebanese and Mena region's nationals nationals alike). It thus comes as no wonder if Lebanon is among the most talented and promising players of the Mediterranean cooperation area with a full set of exportable business models to add to the general koiné of rituals, traditions, the naturally born ability to solve internal complexity, lifestyle.
This combined presence of beauty beyond compare, (and the easy access to it), the Levantine pace of life balanced with economic excellence and a regional leading role, make it a place one would not want to talk too much about. Some say it's the best kept secret in the world and some want to keep it that way, others probably envy the country’s recent success…
The need to safely lock the progress and its outstanding performance (i.e. the setting of a durable standard) is very much sought after by Lebanese and many argue that it has to pass through better security standards. I feel that these could be further fostered if the country strived to export its excellence among those countries which have an immediate ability of understanding it; Lebanon should be more keen in sharing its best with countries who are traditionally and culturally inclined to love it, to people with whom it already shares umbilical ties, possibly playing a role in Barcelona’s talks of Euro-mediterranean cooperation. The country has the cards to play but it should pick the right table: I feel the Mediterranean could be its vocational pick.
Although I'd love to keep my best secret to myself (as many selfish expatriates do…) I will play my part to promote Lebanon. And not only because in the midterm the opportunities of opening to the International legal market could be huge.