ISRAEL Trends and Developments Contributed by: Zvi Bar-Nathan and Daphna Kapeliuk, Goldfarb Gross Seligman & Co
Goldfarb Gross Seligman & Co Ampa Tower 98 Yigal Alon Street Tel Aviv 6789141 Israel
Tel: +972 3 608 9999 Fax: +972 3 608 9909 Email: info@goldfarb.com Web: www.goldfarb.com
Introduction Traditionally, Israel’s legal system has relied heavily on court litigation for the resolution of disputes. In domestic disputes, court litigation is the most com - mon method of the settlement of disputes. However, in international commercial disputes, with the develop - ment of the global economy, the limitations of court- based litigation – such as lengthy procedures, juris - dictional issues, and enforcement challenges – have become more apparent. This has led to a gradual shift towards alternative dispute resolution (ADR) methods, with international arbitration being at the forefront. Israel’s accession to international conventions, such as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 1958, marked a significant step in this direction. The Con - vention was enacted into the legal system in 1974, by amending the Arbitration Law of 1968. The adoption into the law of the New York Convention has enabled the courts to enforce both arbitration agreements and foreign arbitral awards in accordance with the provi - sions of the Convention. In February 2024, with a view to promoting inter - national arbitration, Israel adopted the International Commercial Arbitration Law, 2024 (the “ICA Law”), which is based on the UNCITRAL Model Law on Inter - national Commercial Arbitration as amended in 2006 and closely follows its text (with only minor changes). The Arbitration Agreement Under the ICA Law, when a party files a claim before a state court in a dispute that is subject to an interna - tional arbitration agreement, the court will at first await
the defendant’s response to determine if it agrees with its jurisdiction or requests a stay of proceedings based on the arbitration clause. When a party does not object to the jurisdiction of the court, the court will hear the dispute submitted to it. The ICA Law adopts the wording of the Model Law with respect to the enforcement of international arbitration agreements. The Article incorporates the enforcement provision of Article II(3) of the New York Convention, which, by implication, denies the court any discretionary power and directs it to “refer the parties to arbitration” unless it finds that any of the exceptions enumerated in the Article – that is, that the agreement “is null and void, inoperative or incapable of being performed” – exist. The ICA Law requires that the arbitration agreement be in writing. The writing requirement may be satis - fied when the agreement is entered into by way of an electronic message, as defined in the Electronic Sig - nature Law 2001, and is deemed to have been made in writing if the message can be saved and retrieved. The Article also includes an incorporation by refer - ence clause, according to which, when a provision in a contract requires parts of a document containing an arbitration clause to apply to that contract, that contract constitutes a written arbitration agreement. In this way, Israel has adopted a broad definition of a written agreement, which is in line with technological developments. The ICA Law shall not affect any other law under which certain disputes may not be submitted to arbitration or may be submitted to arbitration only in accordance
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