ISRAEL Law and Practice Contributed by: Joseph Sprinzak and Rahel Rimon, J.SPRINZAK
4.12 Damages in the Event of Wrongful Arrest of a Vessel There is no decisive authority in the Admiralty Court regarding damages for wrongful arrest. A party seeking an interim remedy (such as an attachment) may potentially be liable in tort if they have acted unreasonably or maliciously (CA 732/80 Arens v Bait-El, where the Supreme Court discussed the applicant’s duty to present the Court with the full factual basis). Alternatively, if the Admiralty Court has required a guarantee to be put up at the time of arrest, that could be forfeited in the appropriate circum - stances. 5. Passenger Claims 5.1 Laws and Conventions Applicable to the Resolution of Passenger Claims Israel is not a party to the Athens Convention relating to Carriage of Passengers and their Lug - gage by Sea. Accordingly, it seems likely that in passenger claims brought in Israel the courts would apply Section 5 of the Prescription Law – 1958, which sets a limitation period of seven years for non-land disputes. It is possible to stipulate a limitation period in a contract, albeit such a stipulation would be open to scrutiny as a potentially unfair restrictive clause. Section 41(6) of the Shipping (Vessels) Law creates a statu - tory right in rem to claim compensation for death and bodily injury caused to passengers on the vessel.
There have been cases, particularly where the vessel is deteriorating in value, guarantees have not been produced in lieu of arrest or crew and suppliers have not been paid, where the court, at the request of a claimant, will order the appoint - ment of a receiver in order to preserve the ves - sel, and her crew and cargo. Normally, this pro - cess will shortly afterwards be followed by an order of sale, with or without judgment in favour of the claimant. In all these cases, the sale pro - ceeds will serve as substitute security for the claim, pending judgment on the claim in rem and subsequently subject to an order as to priorities in accordance with Section 41 of the Shipping (Vessels) Law – 1960. It should be noted that in mortgage cases where an urgent sale is required in order not to preju - dice the rights of a mortgagee, Section 74 of the aforementioned law specifically allows the sale of the vessel by private agreement even before judgment is given on the claim. Section 72 of the law empowers the court to appoint a receiver or manager for a vessel and to grant them any of the powers that a district court may grant to a receiver, and this would likely also include the power to conduct a private sale of the vessel in a non-mortgage case. All of the maritime liens set out in Section 41 (except “necessaries”) rank higher in terms of priority than the statutory right in rem granted by a mortgage. 4.11 Insolvency Laws Applied by Maritime Courts As a matter of Israeli practice, a ship-owning or other company must settle its business, file suits, etc, while it retains its legal personality. Usually, all business is taken care of prior to or during the process of dissolution of the company and not after it has ceased to exist.
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