Commercial Arbitration in Israel

By: Adv. Eli Shimony

Any corporate connection can experience a commercial disagreement, regardless of the parties’ size or nature. These disagreements may be expensive, time-consuming, and risky for the relationships between businesses. Commercial arbitration in Israel is one option to stay away from the dangers of courtroom litigation. Arbitration is a common way to settle business disputes in Israel.

In private arbitration, the parties agree that one or more arbitrators, as opposed to a judge, will settle their dispute. Except for restricted reasons, the arbitrator’s ruling is final and enforceable against the parties. Arbitration has grown in popularity as a flexible and effective alternative to courtroom litigation in business conflicts.

The Arbitration Law, 5728-1968, establishes the legal framework for commercial arbitration in Israel. Under the New York Convention, the Arbitration Law allows for the recognition and execution of foreign arbitral awards. Israel has ratified various bilateral investment treaties that contain clauses that call for the arbitration of disputes and is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

Israeli Arbitration Agreements.

According to the Arbitration Law, any issue that can be settled by mutual consent between the parties may be submitted to arbitration. The agreement to arbitrate may be expressed as a separate agreement or as an arbitration clause in a contract. The parties or their representatives must both sign the agreement, which must be in writing.

The seat of arbitration, or the location where the arbitration will be considered to have taken place, must also be specified in the arbitration agreement. Because it establishes the law that will govern the arbitration processes and the court that will have the authority to hear any challenges to the arbitration judgment, the location of the arbitration is crucial.

Commercial Arbitration in Israel Proceedings.

If the parties have decided to submit their dispute to an institution, the arbitration processes in Israel will be governed by the Arbitration Law and the regulations of that institution. The parties may also decide to arbitrate their disputes on an ad hoc basis, without the assistance of an organization.

Flexible and effective procedures are used to carry out the arbitration proceedings. The right of the parties to be heard, to offer testimony, and to legal representation is guaranteed. The arbitrator has the authority to award costs as well as to impose temporary measures like injunctions and attachment orders.

The award made by the arbitrator must be in writing and bear the arbitrator’s signature. Unless the parties have agreed otherwise, the award must include the reasoning behind the choice. There are few grounds for contesting the decision, but it is final and binding on the parties.

Israel’s acceptance and execution of arbitral awards.

The Arbitration Law and the New York Convention both apply to the recognition and execution of arbitral judgments in Israel. A foreign arbitral award is enforceable in Israel under the Arbitration Law if it is regarded as binding by the law of the nation where it was made.

Foreign arbitral awards may be recognized and upheld in Israel under the New York Convention. Israel’s Foreign Judgments (Reciprocal Enforcement) Law, 5718-1958, codifies the New York Convention into Israeli law. A foreign arbitral award that is recognized as binding by the New York Convention is enforceable in Israel, according to the Foreign Judgments Law.

A party must submit an application for recognition and enforcement to the appropriate court in order to have a foreign arbitral award enforced in Israel. Unless the opposing party can show one of the few grounds for contesting the award under the Arbitration Law or the New York Convention, the court will recognize and enforce the award.

Commercial Arbitration in Israel – Conclusion.

In Israel, using commercial arbitration in Israel to settle business disputes is very common. It provides a versatile and effective alternative to courtroom litigation, and it has evolved into a crucial instrument for companies looking to minimize their legal risks.

Israel’s legal system for commercial arbitration is well-established, and the nation is regarded as one of the top worldwide arbitration centers. The arbitration process is also very well supported by Israeli courts, who will only very rarely overturn an arbitration ruling.

Israel has a domestic arbitration system, is a member of the ICSID Convention, and has ratified various bilateral investment treaties that provide for arbitration as a means of dispute resolution. Israel’s standing as a good location for international arbitration has been improved because to several international accords.

Arbitration is a private process, and no one is allowed to observe the proceedings. For parties that want to keep their conflict private, this may be useful. In addition, the parties can avoid the exposure and animosity that can accompany legal disputes in court, which can help to maintain commercial partnerships.

To sum up, commercial arbitration is a well-liked and productive way to settle business disputes in Israel. The nation is acknowledged as a premier center for international arbitration and has a well-established legislative framework for commercial arbitration. Arbitration has emerged as a crucial instrument for companies looking to control their legal risks because it provides a flexible and effective alternative to courtroom action. Commercial arbitration in Israel can offer a dependable and efficient way to settle your business issues, regardless of whether you are a local company or an international investment.

Eli Shimony – Israeli law firm represents clients on all legal matters in Israel. For any questions please contact us and we will be happy to assist.
By email: [email protected], By phone: +972-52-2769773, +972-3-5507155.
The above is only general information and does not replace legal advice which is usually necessary before taking legal proceedings.


Adv. Eli Shimony

Attorney Eli Shimony holds a bachelor's degree in law (LL.B) and a master's degree in business administration (MBA), brings a broad legal knowledge in his areas of expertise. In addition, attorney Shimony holds a wide range of professional certifications in the fields of civil law, banking, compliance, intellectual property, corporate law and more... Attorney Shimony's main areas of practice: Civil and Commercial Litigation, Class actions, Mediation and Arbitration, Intellectual Property, Companies, Real estate, Wills and Inheritances, Monetary claims, Crypto Currencies, Banking, Compliance and Investments.

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