ISRAEL Law and Practice Contributed by: Charles Gottlieb and Osnat Issan, Gottlieb Gera & Co Advocates
Agreement . The Israel Tax Ordinance places the duty to withhold and remit withholding tax on the payor. 2.4.2 Effects of Leasing on the Residence of a Foreign Lessor A lease of aircraft to an Israeli lessee by a foreign les - sor, or the enforcement thereof, would not typically create a permanent establishment for the lessor in Israel. The tax treatment of any transaction is depend - ent on the facts and circumstances of such a transac - tion and any applicable tax treaty. 2.4.3 Engine Maintenance and Operations A foreign lessor may be liable in tort or on other grounds in Israel in respect of aircraft or engine main - tenance and operations in the event that linkage is sufficiently established between the relevant damages and the actions or omissions of such lessor under the general principles of tort law. 2.4.4 Damage or Loss Caused by an Asset Israel has not applied the doctrine of strict liability towards aircraft or engine owners or lessors, or finan - ciers financing such assets on lease, who have no operational interests or duties regarding the aircraft or engine. However, to the extent that a lessor is deemed to be the manufacturer or importer of an aircraft into Israel, such lessor may have exposure under Israel’s Defec -
Additionally, the Israel Airport Authority has a statutory lien over assets within its control to recover fees or charges due to it, which may limit or impose condi - tions on the rights of the lessor under the lease. The statutory lien grants certain preference to the Israel Airport Authority over other creditors. Furthermore, the Minister of Defence is granted authority – pursuant to the Registration and Mobilisa - tion of Equipment to the Israeli Defence Forces Law 1987 – to requisition any aircraft that is owned, con - trolled by, or within the possession of an Israeli entity, provided that reasonable payment is made to the owner or operator of the aircraft. Furthermore, addi - tional compensation may be provided to the owner or operator of an aircraft if the aircraft is damaged during the requisition period. 2.5 Insurance and Reinsurance 2.5.1 Requirement to Engage Domestic Insurance Companies Israeli legislation does not impose an obligation to place any part of the insurances over an aircraft with domestic insurance companies. 2.5.2 Mandatory Insurance Coverage Requirements The applicable Israeli aviation regulations establish mandatory minimum coverage requirements for com - mercial aircraft, which are determined based upon the maximum take-off mass of the aircraft in question. 2.5.3 Placement of Insurance Outside of Jurisdiction The Israeli aviation regulations do not restrict reinsur - ances being placed outside Israel, provided that the foreign insurers and/or reinsurers are authorised to act under the applicable law of their jurisdiction. 2.5.4 Enforceability of “Cut-Through” Clauses “Cut-through” clauses are generally enforceable to the extent that they are drafted properly and estab - lish clear privity between the reinsurer and the party named as loss payee. 2.5.5 Assignment of Insurance/Reinsurance Assignments of insurance or reinsurance are generally permitted under Israeli law, to the extent that proper
tive Products Liability Law 1980. 2.4.5 Attachment by Creditors
Creditors of a domestic lessee who do not hold pos - sessory liens or statutory liens would not typically have a right to attach an aircraft owned by a third party that is unrelated to the domestic lessee, unless such a creditor can establish a direct linkage between
the aircraft and the debt in question. 2.4.6 Priority of Third Parties’ Rights
Israeli law provides certain third parties with the right to take a lien over an asset, such as a contractor that was given possession of an asset pursuant to the Contract for Services Law 1974 and an injured party pursuant to the Contract (Remedies for Breach of Contract) Law 1970.
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