Israel

Introduction

In February 2024, Israel enacted the International Commercial Arbitration Law, inspired by the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (1985). Thus, different laws apply to different types of arbitration: the Arbitration Law (1968) applies to regular arbitrations seated in Israel, and the International Commercial Arbitration Law (2024) applies to international commercial arbitrations.

Apart from a few exceptions, the International Commercial Arbitration Law adopts most of the Model Law’s provisions. It is important to note that most sections of the Israeli International Commercial Arbitration Law apply only to international commercial arbitrations seated in Israel, but some of its most significant provisions also apply to international commercial arbitrations seated outside Israel. It can be said that almost every commercial arbitration with an international aspect falls under the International Commercial Arbitration Law, and its provisions will apply to it, at least to some extent.

Please note that no regulations regarding the new law have been put in place to date, and understandably the body of case law in that regard is also scarce. Consequently, there is significant uncertainty regarding many relevant issues.

Part I: what can be enforced?

1. What counts as an arbitral “award” that can be enforced?

A final award issued by an arbitrator or an arbitration panel.

A partial award that resolves aspects of the arbitration in segments issued by an arbitrator or an arbitration panel.

2. Formal requirements that an award needs to conform with to be enforceable

Finality: the decision must fully resolve the issues in dispute.

Written, dated and signed: the award must be documented in writing, dated and signed by the arbitrator(s). In cases where there is more than one arbitrator, the signatures of the majority are sufficient, provided any missing signatures are explained.

Due process: the parties involved must have had a fair opportunity to present their case and have been properly notified of the proceedings.

Conformity with public policy: the award must not contradict Israeli public policy, laws, or fundamental principles of justice and morality.

3. Orders on interim measures: enforceability

a. Domestic awards

Currently, there is ambiguity regarding the authority of arbitrators to grant interim measures. Generally, the law stipulates that it is the court which is authorised to grant interim measures, even in proceedings conducted before an arbitrator. The court is authorised, inter alia, to grant the following interim measures: attachment of funds and assets; imposition of bonds or guarantees; the appointment of a receiver or other officers; and mandatory and prohibitory injunctions (including enjoining dispositions of assets). It is possible that an arbitrator may have the authority to grant certain interim measures if the parties so agree in advance, provided that the interim measures granted affect only the parties themselves and not third parties. However, even in such cases, the enforcement of these interim measures by a court is uncertain.

b. International commercial arbitration awards

The International Commercial Arbitration Law stipulates as a default rule that as long as the international commercial arbitration is seated in Israel, arbitrators are authorised to grant, in writing, the following types of interim measure:

protecting the status quo or restoring the status quo ante, pending resolution of the dispute

protecting the integrity of the arbitration proceedings

preserving assets which could be used in enforcing a future arbitral award

preserving evidence that may be relevant and material for the resolution of the dispute

In any case, Israeli courts will act to enforce interim measures ordered as part of an international commercial arbitration upon a written request, regardless of the jurisdiction in which the arbitration is being conducted. It is important to mention that alongside the authority of the tribunal, a party may approach the court with a motion for interim measures concerning a matter currently under arbitration.

4. Emergency awards: enforceability

a. Domestic awards

The concept does not exist.

b. International commercial arbitration awards

The enforceability of emergency awards has not been properly addressed by the Israeli courts.

Part II: resisting enforcement

5 a. How are awards set aside?

When dealing with an arbitral award in international commercial arbitration seated outside Israel, it would typically not be possible to request to set the award aside in Israel. Enforcement could be challenged under International Commercial Arbitration Law s45.

b. Can enforcement be resisted if the respondent has not formally applied to set aside the award?

Yes, a court may refuse to enforce an arbitral award, even if the respondent has not moved to set it aside. The relevant provisions are found in International Commercial Arbitration Law s45(a)(2), based on Article 36(1)(b) of the UNCITRAL Model Law on International Commercial Arbitration, which states the following:

If the court finds that:

the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or;

the recognition or enforcement of the award would be contrary to the public policy of this State.

The Hebrew version of the law is the binding text, and the provisions of the Model Law cited here are for illustrative purposes only and do not constitute an official translation.

c. Can non-parties seek annulment?

Case law on the matter is rare. It would appear, though, that the answer is no, but if the award adversely affects the rights of a third party it would not be binding upon it and such party could initiate separate proceedings to protect its rights (Beitar Jerusalem Holdings (2000) Ltd (In Liquidation) v Beitar Jerusalem Sports Association (In Liquidation) et al, District Court of Jerusalem).

d. Grounds to seek setting aside

The relevant provisions are found in International Commercial Arbitration Law s45(a)(1), based on Article 36(1)(a) of the UNCITRAL Model Law on International Commercial Arbitration, which states the following:

At the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:

a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made.

The Hebrew version of the law is the binding text, and the provisions of the Model Law cited here are for illustrative purposes only and do not constitute an official translation.

e. Timelines to seek setting aside

As stated, the way to challenge, in Israel, the enforcement of an arbitral award of an international commercial arbitration proceeding seated outside Israel, is by objecting to the request for its recognition. Such objection must be submitted within 15 days from the day the notice regarding the other party’s request for recognition of the arbitral award was served.

f. Grounds to resist enforcement

Please refer to question II(5)(d).

g. Which court to go to for setting aside?

Please refer to questions II(5)(a) and II(5)(e).

h. Formal requirements before court can grant setting aside

Israeli courts do not have the authority to set aside an international commercial arbitration award if the seat of arbitration is not in Israel. A party wishing to set aside such an award should initiate setting-aside proceedings in the seat of arbitration.

i. Do courts grant stay on enforcement as an interim measure?

Yes, as stated in International Commercial Arbitration Law s45(b).

j. What is the appellate mechanism against the decision of the court of first instance?

An appeal requires the court’s permission which is not easily granted. As typically the courts dealing with arbitration matters are the district courts, an appeal would be heard by the Supreme Court.

Part III: enforcing foreign awards

The responses below address international commercial arbitrations seated outside Israel.

6. New York Convention applicability

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (New York Convention) has been effective in Israel since 7 June 1959. Additionally, Israel enacted legislation to implement it: Regulations for the Implementation of the New York Convention (Foreign Arbitration) 1978.

7. Timelines for enforcement

Israeli law does not set a mandatory deadline for a winning party to submit an arbitral award for recognition: “A party that has won an arbitration award should, out of procedural fairness, submit it for recognition within a reasonable time frame given the specific circumstances of the relevant case. A party that has ignored the award for many years, not acted according to it, and is seen as no longer adhering to it, can expect to face a procedural estoppel argument against them” (Agudat Beit HaKnesset HaGadol “Shoneh Halachot” v Municipality of Netanya, Supreme Court of Israel).

The quote provided above does not constitute an official translation of the judgment.

8. Which court to go to? Relation with location of assets?

As the law excludes the authority of the magistrates’ court, typically the competent court would be the district court, though where the underlying dispute is subject to the jurisdiction of another court (such as the Family Court), it would have jurisdiction over the enforcement as well.

As for local jurisdiction, the normal rule shall apply (the defendant’s place of residence or business, the place of the act or omission that gave rise to the claims, the place where relevant real estate is located, etc).

9. Can non-parties resist enforcement?

10. Compelling disclosure of local assets? How to identify assets available for enforcement?

Generally, the same enforcement tools available for the enforcement of judgments rendered by Israeli courts are available. The plaintiff may file for asset disclosure. If such a request is granted, the defendant will be obligated to detail assets and property as required by the order.

11. Are third-party funded awards enforceable?

It seems no case law exists on the matter and the answer is most probably yes.

12. What interim reliefs are available pending enforcement of awards? Which of those reliefs are granted ex parte?

According to the Civil Procedure Regulations 2018 s94, a court is authorised to grant interim measures aimed at securing an apparent right during the legal process and ensuring the proper and efficient conduct of the proceedings or the proper execution of the judgment. General examples of interim measures provided by the court include, inter alia:

temporary restraining orders

temporary injunctions

temporary foreclosure/attachment orders

According to s97(a): “… the court may, for special reasons, grant a temporary ex parte relief if it is convinced, based on sufficient evidence, that there is a reasonable fear that the delay caused by holding a hearing in the presence of the parties or notifying the respondent of the application would thwart the purpose of the temporary relief or cause severe harm to the applicant”.

The Hebrew version of the law is the binding text, and the translation provided above does not constitute an official translation.

13. Formal requirements for enforcement application: what documents need to be filed in court?

A party seeking court recognition and enforcement of an arbitral award shall submit a request in the form of a notice, prepared according to Form 3 in the addendum to the Israeli Regulations of Procedure in Arbitration Matters 1968, and attach a copy of the arbitral award signed by the arbitrator, along with as many additional copies as the number of respondents, providing one copy to each respondent, and if the court orders so, a translation of the award to Hebrew. Please note that no regulations have yet been promulgated under the new law.

14. Enforcing awards that have been annulled/set aside at other courts

The relevant provisions are found in International Commercial Arbitration Law s45(a)(1)(e), based on Article 36(1)(a)(v) of the UNCITRAL Model Law on International Commercial Arbitration, which states the following:

At the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that: … the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; ...

The Hebrew version of the law is the binding text, and the provisions of the Model Law cited here are for illustrative purposes only and do not constitute an official translation.

15. Once application for enforcement is allowed, how does the actual enforcement against assets work? What are the remedies available for tracing assets during enforcement proceedings including for assets disposed of by fraud?

After an arbitral award is recognised, the claimant may approach the Law Enforcement and Collection System Authority, which will act to enforce the arbitral award against the defendant.

16. What is the procedure for repatriation of sums awarded after obtaining an order for enforcement?

Without getting into details, Israel does not limit international transfers and foreign currency transactions (subject to typical money laundering rules and applicable sanctions regime).

17. Do courts grant orders for security for costs?

In certain cases.

18. Exchange control regulations: do they affect payments to foreign award holders?

Without getting into details, Israel does not limit international transfers and foreign currency transactions (subject to typical money laundering rules and applicable sanctions regime).

19. Enforcing awards from non-New York Convention places

Israel is also a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (1966) (ICSID Convention), so arbitration awards from jurisdictions covered by the ICSID Convention, and not the New York Convention, will also be enforceable.

Additionally, the new International Commercial Arbitration Law seems to open a path for enforcement even where the conventions do not apply, but one should wait for the development of new case law in that regard.

20. Enforcing against sovereigns

In matters of arbitration, under s11 of the Foreign States Immunity Law (2008):

If a foreign state has agreed in writing to submit to arbitration a dispute that has arisen or may arise in the future, such foreign state shall not have immunity from jurisdiction in court proceedings related to the arbitration, unless otherwise stipulated in the arbitration agreement.

The provisions of this section shall not apply to an arbitration agreement between states subject to public international law, except for such an agreement where one of the parties is a separate entity that is not a central bank.

Additionally, according to Foreign States Immunity Law (2008) s3, a foreign state does not have immunity from jurisdiction in a lawsuit whose cause is a commercial transaction. Furthermore, according to s16, the following specified assets of a foreign state do not have immunity under the aforementioned section:

commercial property

property in Israel that came into possession of the foreign state by inheritance, as a gift, or as property acquired without an owner

real estate property in Israel

The Hebrew version of the law is the binding text, and the translation provided above does not constitute an official translation.

21. Appellate mechanism available?

Part IV: enforcing domestic awards

The responses below address international commercial arbitrations seated in Israel.

22. Timelines for enforcement

The quote provided above does not constitute an official translation of the judgment.

23. Which court to go to? Relation with location of assets?

As the law excludes the authority of the magistrates’ court, typically the competent court would be the district court, though where the underlying dispute is subjected to the jurisdiction of another court (such as the Family Court), it would have jurisdiction over the enforcement as well.

As for local jurisdiction, normal rules shall apply (the defendant’s place of residence or business, the place of the act or omission that gave rise to the claims, the place where relevant real estate is located, etc).

24. Compelling disclosure of local assets? How to identify assets available for enforcement?

25. Are third-party funded awards enforceable?

It seems no case law exists on the matter and the answer is most probably yes.

26. What interim reliefs are available pending enforcement of awards? Which of those reliefs are granted ex parte?

temporary restraining orders

temporary injunctions

temporary foreclosure/attachment orders

According to s97(a): “ … the court may, for special reasons, grant a temporary ex parte relief if it is convinced, based on sufficient evidence, that there is a reasonable fear that the delay caused by holding a hearing in the presence of the parties or notifying the respondent of the application would thwart the purpose of the temporary relief or cause severe harm to the applicant”.

The Hebrew version of the law is the binding text, and the translation provided above does not constitute an official translation.

27. Formal requirements for enforcement application: what documents need to be filed in court?

28. Filing for enforcement when application for annulment is pending

If the claimant seeks enforcement of an arbitral award that is challenged, the two motions will likely be heard together (the claimant would be required to mention the fact that there is a setting-aside motion pending).

29. Once application for enforcement is allowed, how does the actual enforcement against assets work? What are the remedies available for tracing assets during enforcement proceedings including for assets disposed of by fraud?

After an arbitral award is recognised, the claimant may approach the Law Enforcement and Collection System Authority, which will act to enforce the arbitral award against the defendant.

30. Do courts grant orders for security for costs?

In certain cases.

31. Appellate mechanism available?

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Jacob Enoch

Senior Partner, Head of M&A, Head of International Arbitration | Firon Law Firm | Israel

Jacob_e@firon.co.il

+972 3 7540161 Jacob Enoch is a senior partner at Firon Law Firm, head of the M&A and international transactions department, head of the international arbitration practice, and chairman of the marketing forum. Jacob is a highly acclaimed attorney with over two decades of experience in managing complex M&A transactions, both in Israel and abroad, valued at billions of dollars. He advises foreign and Israeli clients on cross-border deals in various regions and sectors. Jacob is also a top-rated litigator and one of the few world-class international arbitration experts in Israel. He represents leading clients in arbitrations under various institutions and rules, such as the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the Singapore International Arbitration Centre (SIAC), the International Centre for Settlement of Investment Disputes (ICSID) and more. He also serves as an arbitrator and a mediator, both locally and internationally. Jacob has multidisciplinary education and experience, which grant him technological, financial, and accounting expertise. He worked as an investment banker at Salomon Smith Barney (Citibank) on Wall Street and as an executive vice president of an international software company in the healthcare sector. Jacob is the only Israeli attorney ranked as a Legal 500 Leading Individual in both M&A and International Arbitration. He is also recognised by Chambers & Partners, IFLR1000, Who’s Who Legal, BDI, Dun & Bradstreet and The Best magazine as one of Israel’s top M&A and litigation attorneys. Jacob is Israel’s most senior member of the ICC Commission on Arbitration and ADR and served on several of its task forces. He also speaks on different topics and serves on panels in various conferences and conventions. Jacob served as an adjunct lecturer at the Buchman Faculty of Law at the Tel Aviv University. Additionally, Jacob authored the chapter about smart contracts in the book Emerging Technologies: Challenges for Israeli Law published by Nevo and Reichman University.