Dubai-based Al Habtoor Group has said it will pursue legal action against Lebanese authorities over losses exceeding $1.7 billion, a move that could further undermine Lebanon’s fragile efforts to restore investor confidence and attract much-needed Gulf capital. The announcement comes as Lebanon continues to struggle with the aftermath of its 2019 financial collapse, one of the worst economic crises in modern history.
The Dispute
In a statement, Al Habtoor Group said its investments in Lebanon suffered “severe and sustained harm” due to restrictions imposed by Lebanese authorities and the central bank, Banque du Liban. These measures, which effectively acted as informal capital controls, prevented the group from accessing and transferring funds it had lawfully deposited in Lebanese banks. Although the government never passed formal legislation authorising capital controls, banks enforced tight withdrawal and transfer limits as the crisis deepened.
Scale of the Losses
The group said the damage to its assets and properties in Lebanon exceeded $1.7 billion and that it had exhausted all attempts to resolve the issue amicably. It did not specify whether legal proceedings had already begun or which jurisdiction it plans to pursue. Lebanese officials, including the prime minister’s office and the central bank, did not immediately comment.
Blow to Lebanon’s Recovery Efforts
The threat of legal action lands at a sensitive moment for Beirut. For decades, Gulf investment and remittances were a vital source of foreign currency for Lebanon. Since the financial collapse, however, many Gulf states have pulled back, with some imposing trade bans and freezing investments. Although diplomatic ties have slowly improved, Gulf countries have largely conditioned renewed investment on Lebanon implementing long-delayed reforms under an IMF-backed programme.
A Wider Signal to Investors
Al Habtoor’s move reinforces concerns about legal uncertainty and investor protection in Lebanon’s financial system. In January 2025, the group’s chairman Khalaf Ahmad Al Habtoor said he had cancelled all future investments in the country and planned to sell existing assets, citing ongoing instability. The prospect of a high-profile legal battle may deter other foreign investors already wary of entering a system still grappling with unresolved banking losses and weak governance.
What’s Next
Attention will now turn to whether Al Habtoor formally files lawsuits and where those cases are brought, potentially setting precedents for other foreign investors seeking compensation. For Lebanon, the episode adds urgency to stalled banking and capital-control reforms, as well as negotiations with the IMF. Without credible legal and financial guarantees, the risk is that Gulf investors will remain on the sidelines, delaying any meaningful economic recovery.
With information from Reuters.
