ISRAEL Law and Practice Contributed by: Yitzhak Yaari, Chen, Yaari, Vaki & Co.
the aider is stated in Section 12 of the Torts Ordi - nance [New Version], according to which “someone who participates in, aids, advises or induces an act or omission that was done or is about to be done by another, or commands, permits or ratifies them, will be liable for them.” The aider’s liability does not derogate from the fraudster’s liability, and they are jointly and severally liable to the injured party. The condition for imposing liability on an aider is that they contributed to the commission of the tort, that they are aware of (or even merely turned a blind eye to) the wrongful conduct, and the aider materially contributed to the commission of the tort. Anyone who bought or received an asset from some - one who obtained the asset fraudulently will be liable to return the property to its lawful owner, since it is a basic principle that no one can pass on to another more rights than they have ( nemo dat quod non habet ). The exception to this is the “market overt” doctrine, which is stated in various statutes of which the best known is the Sale Law, according to which if anyone buys a tangible asset (but not a right) for considera - tion from someone who is in the business of selling assets of that type, in the ordinary course of business, received it and acted in good faith, their right will pre - vail over the right of the person from whom the asset was taken unlawfully (such as by fraud or theft). 1.4 Limitation Periods The usual limitation period in civil claims is seven years. However, Section 7 of the Prescription Law provides that “the running of limitations for a claim will be suspended as long as the plaintiff does not file a claim because the defendant, or someone acting on his behalf, knowingly misleads the plaintiff, exerts force on him, threatens him or takes advantage of his distress.” This Section was amended in 2015 and expanded the old section that only dealt with a claim based on fraud. The courts tend to construe the law so that claims of fraud are not dismissed because of limitations. Therefore, it was held that in order for the limitation period to start, actual and subjective knowl - edge of the fraud is required, rather than the objective knowledge of a reasonable person. Only knowledge that can be established by evidence in court will be regarded as actual knowledge, whereas suspicions are insufficient to fulfil the requirement of subjective
knowledge. It was further held that “the court should not go out of its way to dismiss a case against a fraud - ster because of limitations, and any doubt should work against the fraudster” (CA 4683/16 Israel Electric Corporation Ltd v Estate of the late Asher Cohen (23 January 2019)). Another relevant section is Section 8 of the Prescrip - tion Law, which provides that if the facts constituting the cause of action were unknown to the plaintiff, for reasons beyond their control and which could not have been prevented even with reasonable care, the limita - tions period will begin to run on the date on which the facts became known to the plaintiff. Therefore, as long as the plaintiff does not know the facts that constitute a cause of action of fraud, the limitations period does not begin to run. 1.5 Proprietary Claims Against Property The right of tracing is recognised in Israel. As part of the tracing process, a new asset is identified as a potential subject of a lawsuit based on its being a substitute for an original asset that was itself the subject of the lawsuit. The new asset replaces the old one and may therefore be exposed to the same law - suits. A distinction should be made between “tracing” and “following’: in the ”following” process, the goal is physically to locate a specific tangible object that has passed from hand to hand. In such a case, the plaintiff’s goal is to realise their right in relation to the original object. Their right in such a case is based on their property right in the object. On the other hand, in the “tracing” process, the focus is on the substitute asset that came into the hands of the original holder instead of the previous asset, and the plaintiff’s right is based on the laws of unjust enrichment. One way or another, an order may be obtained to return the asset to the plaintiff whose property was stolen, provided that the original property or the sub - stitute asset is identifiable. Funds can be traced even if they have mixed with other money. The right of tracing is overridden by someone who bought the asset in market overt, provided the condi - tions for the acquisition are met, especially the pur - chase of the asset for consideration and in good faith. Moreover, according to the Unjust Enrichment Law,
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