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Legal framework

National arbitration laws
What legislation applies to arbitration in your jurisdiction?

The Arbitration Act 1968 and the Arbitration Procedure Statute 1969 govern arbitration, as well as several minor statutes regarding arbitration in labour unions and family courts.

Mandatory laws
Are there any mandatory laws?

Both the Arbitration Act and the Arbitration Procedure Statutes are mandatory. 

New York Convention
Is your country a signatory to the New York Convention? If so, what is the date of entry into force?

Israel is a signatory to the New York Convention and ratified it in 1959. The Statute for the Implementation of the New York Convention (Foreign Arbitration) (1978) was passed in order to execute the New York Convention.

Are there any reservations to the general obligations of the convention?

No. 

Treaties and conventions
What other treaties and conventions in relation to arbitration is your jurisdiction party to?

The main treaties and conventions to which Israel is party are:

  • the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (1965); 
  • the Euro-Mediterranean Agreement (1995);
  • the Treaty of Conciliation, Judicial Settlement and Arbitration Between Israel and Switzerland (1985).

UNCITRAL
Has your jurisdiction adopted the UNCITRAL Model Law?

No.

Reform
Are there any impending plans to reform the arbitration laws in your jurisdiction?

No.

Arbitration agreements

Validity
What are the validity requirements for an arbitration agreement?

An arbitration agreement must relate to a matter that can be subject to an agreement between the parties. These agreements must usually be in writing.

Enforcement of agreements
How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?

Arbitration agreements are usually implemented by mutual consent, when the parties are in dispute about a matter contained in the arbitration agreement. They can also be enforced by court order, if a claim is filed in a dispute where an arbitration agreement exists. In most cases, arbitration agreements take precedence. Arbitration is a common alternative to litigation, and the courts are generally supportive of it. 

Consolidation
Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

N/A.

Choice of law
How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Arbitrators in Israel are not bound by substantive law, but must use their discretion and best judgement to resolve disputes fairly and efficiently. An arbitration agreement can state that the arbitration will be held according to the substantive law of whichever country the parties agree. 

Separability
Are there any provisions on the separability of arbitration agreements?

Arbitration clauses in contracts are generally held to be enforceable even if the contract has expired or was breached by one of the parties, unless the arbitration agreement itself is invalid. This is set out in case law rather than formal law. 

Multiparty agreements
Are multiparty agreements recognised?

Yes. 

Arbitral tribunal

Criteria for arbitrators
Are there any restrictions?

There are no restrictions in law. However, arbitrators are expected to be knowledgeable in their field of arbitration. Further, the formal institutions which assist in dispute resolution through arbitration require arbitrators to have at least eight to 10 years’ professional experience in their field.   

Contractual stipulations
What can be stipulated about the tribunal in the agreement?

Agreements can stipulate:

  • the number of arbitrators in the tribunal;
  • how the arbitrators will be chosen;
  • the substantive law;
  • the possibility of appealing the arbitral award;
  • whether the arbitration adheres to the laws of civil procedure; and
  • the seat of arbitration.

Default requirements
Are there any default legal requirements as to the selection of a tribunal - for example, concerning the number of arbitrators or their characteristics?

Generally, arbitration is conducted by a single arbitrator. However, if more than one arbitrator is chosen, there must be an odd number of arbitrators in the tribunal, and they must choose one among them to act as the chair.  

Challenging the appointment of an arbitrator
Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for this?

Arbitrators are appointed by mutual agreement. The parties can object to the appointment of another party’s arbitrator if they believe that he or she is biased or has a conflict of interest. However, once arbitration has started, an arbitrator can be dismissed only by the parties’ mutual agreement or a court order. A party to the arbitration can file a motion for disqualification with the appropriate court if an arbitrator is overtly biased, has a conflict of interest or is otherwise incapable of fulfilling his or her duties.

Jurisdictional objections
How should an objection to jurisdiction be raised?

Provided that there is a valid arbitral agreement, there is no question of jurisdiction, as arbitrators may sit wherever they and the parties agree. If the validity of the arbitration agreement is in dispute, the dispute can be brought before a qualified court. 

Replacement of an arbitrator
Why and how can an arbitrator be replaced?

An arbitrator can be replaced by court order or by the agreement of all parties involved. 

Powers and obligations
What powers and obligations do arbitrators have?

Arbitrators must act impartially and have a duty of fidelity towards the parties. In addition, arbitrators must show their reasoning when giving a final decision. Arbitrators are empowered to:

  • decide where and when hearings will take place;
  • instruct the parties in preliminary proceedings;
  • summon and hear witnesses; and
  • refer the matter to an expert witness.

Liability of arbitrators
Are arbitrators immune from liability?

As a judicial institution, arbitrators are immune from liability in torts as relates to their duties. However, if an arbitrator violates his or her duty of fidelity towards the parties, he or she will be liable to compensate the parties as for a breach of contract.

Communicating with the tribunal
How do the parties communicate with the tribunal?

The parties usually communicate with the tribunal in writing. 

Reaching decisions
Is unanimous agreement of the tribunal required? If there is disagreement, does the will of the majority suffice? What are the implications of this?

In relation to arbitral tribunals, a majority decision is required. A dissenting arbitrator may include his or her dissent in the award.  

Arbitrability
Are there any disputes incapable of being referred to arbitration?

Matters that cannot be subject to agreement between the parties and matters relating to rights which are protected by law (eg, guardianship and other personal status matters) cannot be arbitrated. Most criminal matters and matters which are inappropriate for arbitration (as a matter of common sense) cannot be arbitrated. 

Can the arbitrability of a dispute be challenged?

Yes, if one of the parties believes that the dispute is outside the scope of the arbitration agreement. 

Jurisdiction and competence-competence
Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?

The principle of competence-competence is not recognised in Israel. The question of an arbitrator's jurisdiction and competence is usually decided by the court, unless the arbitrator has been authorised by a specific statute or the parties' mutual agreement.

Arbitral proceedings

Starting an arbitration proceeding
What is needed to commence arbitration?

In order to commence proceedings, either the parties’ agreement to act according to an arbitration agreement and refer the dispute to an arbitrator or a court order enforcing an arbitration agreement is required.

Limitation periods
Are there any limitation periods for the commencement of arbitration?

No, but the commencement of arbitration within a reasonable time is assumed to be required. 

Procedural rules
Are there any procedural rules that arbitrators must follow?

The parties can agree that the arbitration will be conducted according to the Civil Procedure Code. Otherwise, there is no such obligation, apart from the requirements set out under the Arbitration Act. 

Dissenting arbitrators
Are dissenting opinions permitted under the law of your jurisdiction?

Yes. 

Judicial assistance
Can local courts intervene in proceedings?

Yes, at the request of one or more of the parties or the arbitrator. 

Can the local courts assist in choosing arbitrators?

Yes, at the request of the parties or if it is stipulated in the arbitration agreement. 

What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?

If a party to an arbitration agreement refuses to arbitrate, the other party can file a motion with the competent court to enforce the agreement. If a party refuses to appear at the arbitration hearings, the arbitrator can hear the dispute without that party, if advance warning that this will be done is given in person or in writing. Only a competent court can issue subpoenas to third parties to appear in arbitration hearings.  

Third parties
In what instances can third parties be bound by an arbitration agreement or award?

In the case of collective or union agreements, members of the group or union are bound by the arbitration agreement by which the group or union is bound, even if they are not direct signatories to the agreement. Further, the arbitration agreement (and any award which results from it) binds the substitutes, locum tenens or original signatories (eg, inheritors, estate managers, trustees or legal guardians).  

Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?

The default language is usually Hebrew, and the location is set at the discretion of the arbitrator. 

Gathering evidence
How is evidence obtained by the tribunal?

The arbitrator may instruct the parties to disclose documents and respond to questionnaires and may call or allow the parties to call witnesses and hear testimony, orally or in writing. 

What kinds of evidence are acceptable?

Any kind of evidence is acceptable, as long as none of the parties involved object. Arbitration is not bound by evidence laws. 

Confidentiality
Is confidentiality ensured?

Arbitral proceedings are confidential and are kept confidential after they are finished, unless all the parties agree otherwise or, in specific and unusual cases, by court order.

Can information in arbitral proceedings be disclosed in subsequent proceedings?

Outside specific and unusual circumstances, information in arbitral proceedings cannot be disclosed in subsequent proceedings.  

Ethical codes
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Arbitrators must be impartial and have a duty of fidelity. If an arbitrator is a lawyer or a retired judge, or is part of a formal arbitration institution or another professional union, he or she is bound by the ethical codes of those professions and institutions. Otherwise, no specific ethical code applies.

Costs

Estimation & allocation
How are the costs of arbitration proceedings estimated and allocated?

Unless specified in the arbitration agreement, arbitrators set their own fees and the costs are shared equally by the parties. The parties may appeal to a competent court for a reduction of the arbitrator's fee if they believe that it is unreasonable. 

Security for costs
Can the national court or tribunal order security for costs under the law in your jurisdiction?

Yes. 

The award

Requirements
What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?

The award must be in writing and include reasoning. It must also be signed by the arbitrator. The parties can either ask a competent court to confirm the arbitral award or execute the award without seeking confirmation if there is no further dispute. 

Timeframe for delivery
Are there any time limits on delivery of the award?

By law, an arbitral award must be given within three months after the process begins. However, this period can be extended. 

Remedies
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?

The arbitrator can order any remedy that a competent court is able to give. These remedies are enforceable by the courts. 

What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?

Arbitrators cannot provide interim remedies. However, the parties or the arbitrator may appeal to a competent court for interim remedies. Generally, when a dispute has been referred to arbitration, the court will not take further action unless a motion is filed by one or more party or by the arbitrator. 

Interest
Can interest be awarded?

Yes. 

At what rate?

At any rate which a competent court can award. 

Finality
Is the award final and binding?

No – awards can be contested or appealed. 

What if there are any mistakes?

The arbitrator can, at the request of one or more parties to the arbitration, correct factual mistakes and omissions in the award. Such a request must be made within 30 days of the delivery of the award to the parties.

Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

The right of appeal may be excluded by agreement, but this does prevent a party from filing a motion with the court asking that the arbitral award be annulled if a grave mistake in law or procedure is made.  

Appeal
On what grounds can parties appeal an award?

The parties can agree on the right of appeal, either to a different arbitrator or the court. In both cases, an award may be appealed if a substantial legal error was made in a way which creates a grave injustice.  

What is the procedure for challenging awards?

A challenge to an award must be filed to the competent court within 45 days of delivery of the award to the parties. There is a fixed list of grounds on which an arbitral award may be annulled. 

Enforcement
What steps can be taken to enforce the award if there is a failure to comply?

Any of the steps which are normally taken in a court judgment (eg, placing liens and issuing various injunctions to enforce the award) can be used. 

Can awards be enforced in local courts?

Yes.

How enforceable is the award internationally?

There is usually no problem enforcing Israeli arbitral awards internationally in countries which are signatories to the New York Convention. 

To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

States or state entities are usually not immune from enforcement of awards in Israel, apart from specific circumstances for specific entities. 

Are there any other bases on which an award may be challenged, and if so, by what?

There is a fixed list of grounds for challenging an award. 

How enforceable are foreign arbitral awards in your jurisdiction?

If they meet the demands of the New York Convention, foreign arbitral awards are easy to enforce in Israel. 

Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

No, an award must be final and valid in the originating country to be enforceable in Israel. 

Third-party funding

Rules and restrictions
Are there rules or restrictions on third-party funders?

N/A. 

Class-action or group arbitration

Concept
Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

While arbitrations have been carried out in the name of groups (eg, unions and organisations), there is no clear concept of group arbitrations compared to regular arbitrations and no precedent of class-action arbitrations.

Hot topics

Emerging trends
Are there any hot topics or trends emerging in arbitration in your jurisdiction?

No.