Executive Summary
- Cedar Mundi (Lebanese venture capital fund) and its investors, including Lebanese banks under BdL Circular 331 and Kuwaiti Al Bahar family interests, are embroiled in litigation over alleged unauthorized and fraudulent transactions.
- Central disputes concern the validity of the Portfolio Preservation and Continuity Agreement (PPC Agreement) and a Sale and Purchase Agreement (SPA) transferring Cedar Mundi’s portfolio assets to Cedar II (a Cayman entity).
- Cedar Mundi alleges fraud and lack of authorization; Defendants deny fraud and assert the transactions were valid and approved.
- The case involves complex cross-jurisdictional issues (Lebanon, UK, BVI, Cayman Islands) amid Lebanon’s ongoing financial crisis impacting fund operations and capital flows.
- Trial scheduled for Feb-Mar 2026; extensive pre-trial disclosure and legal argument ongoing.
Sanctions Highlights
- No direct sanctions imposed, but significant implications arise from Lebanon’s financial crisis and US/UK sanctions regimes affecting cross-border capital transfers.
- Lebanese banks’ inability to transfer US Dollars abroad due to capital controls and foreign currency shortages underpins the dispute.
- The involvement of Kuwaiti investors and Cayman entities raises potential scrutiny under international sanctions and anti-money laundering frameworks.
- The case highlights risks of sanctions-related compliance failures in complex multi-jurisdictional investment structures.
Emerging Risks
- Continued Lebanese financial instability threatens fund solvency and investor recoveries.
- Legal uncertainty over authorization and ownership of portfolio assets increases litigation and reputational risks for involved parties.
- Potential for further regulatory or sanctions investigations given cross-border fund flows and alleged fraud.
- Risk of asset freezes or enforcement complications if sanctions or AML concerns arise.
- Prolonged litigation may impair investor confidence and delay resolution of capital calls or exits.
Geopolitical Impact
- Lebanon’s financial crisis and capital controls exacerbate tensions between local banks (C-331 Shareholders) and foreign investors (Kuwaiti Al Bahar family).
- UK courts’ involvement underscores London’s role as a key forum for resolving Middle East-related commercial disputes.
- US and UK sanctions policies indirectly influence Lebanese banking operations and fund transactions.
- Kuwaiti investors’ participation highlights Gulf states’ growing financial linkages with Lebanon despite regional instability.
- The case reflects broader geopolitical challenges in managing cross-border investments amid Middle East financial and political volatility.
Economic Intelligence
- Cedar Mundi’s fund structure relies heavily on Lebanese banks’ capital contributions under Circular 331, disrupted by Lebanon’s currency devaluation and capital controls since 2019.
- The SPA valued the portfolio at approx. US$25.6 million, down from an initial US$27 million, reflecting asset transfer difficulties.
- The inability to repatriate US Dollars has materially impaired fund liquidity and investor returns.
- The dispute over asset ownership and valuation may affect market confidence in Lebanese tech venture capital investments.
- The case illustrates the economic impact of Lebanon’s crisis on private equity and venture capital sectors.
Strategic Recommendations
- Monitor developments in Lebanese financial regulations and sanctions regimes affecting cross-border fund flows.
- Conduct enhanced due diligence on all parties’ compliance with sanctions and AML requirements, especially Kuwaiti and Cayman entities.
- Prepare for potential asset recovery challenges and enforcement risks in multiple jurisdictions.
- Engage with local counsel in Lebanon and Cayman to assess legal risks and remedies under respective laws.
- Consider mediation or settlement options to mitigate prolonged litigation costs and reputational damage.
- Advise clients on geopolitical and economic risks inherent in Lebanese-related investments amid ongoing crisis.
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**Source Notes:**
Sanctions Intelligence Digest — [https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1930.html](https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1930.html)