Litigation: Enforcement of foreign judgments in Israel

General framework

Domestic law

Which domestic laws and regulations govern the recognition and enforcement of foreign judgments in your jurisdiction?

Israeli law on the integration of foreign judgments is set out in the Foreign Judgments Enforcement Law (5718-1958). That law establishes a normative framework by which the Israeli courts may recognise a foreign judgment or declare it to be enforceable.

International conventions

Which international conventions and bilateral treaties relating to the recognition and enforcement of judgments apply in your jurisdiction?

Under Israeli law, a treaty is not directly incorporated into national law. Rather, it must be ratified and authorised by enacting a domestic law. Israel is a party to five treaties on the enforcement of foreign judgments:

• the UN Convention on the Recovery Abroad of Maintenance (June 20 1956), which took effect in Israel on May 25 1957;
• the bilateral treaty with Austria regarding the enforcement of foreign judgments (June 6 1966), which took effect in Israel on July 26 1971;
• the bilateral treaty with Germany regarding the enforcement of foreign judgments (October 28 1977), which took effect in Israel on January 1 1981, with regulations promulgated in 1981;
• the bilateral treaty with the United Kingdom (October 28 1970), which took effect in Israel on July 26 1971; and
• the bilateral treaty with Spain (May 30 1989), which took effect on January 13 1991.

Section 13 of the Foreign Judgments Enforcement Law states that the minister of justice is authorised to prescribe regulations for the implementation of the law, including special rules for enforcement necessary to give effect to an agreement between Israel and a foreign state. At present, regulations have been promulgated only for the treaty between Israel and Germany. The other treaties mentioned above have not yet been incorporated into Israeli domestic law.

Competent courts

Which courts are competent to hear cases on the recognition and enforcement of foreign judgments?

The Foreign Judgments Enforcement Law does not specify which court has the jurisdiction to hear an application for the enforcement or the recognition of foreign judgments. In Fox v Katznellenbogen (CA 7551/00) the Israeli Supreme Court stated that any court hearing a civil case is authorised to hear a complaint for declaratory relief. The court's jurisdiction will then be determined based on the declaration requested.

Under the Civil Procedure Regulations, a magistrate's court is authorised only to hear claims with a value of up to NIS2.5 million (approximately $700,000). Any claim for a higher amount is heard by a district court. Thus, the amount set out in a motion regarding the enforcement of a foreign judgment will determine which court has jurisdiction.

Where the amount applicable to the foreign judgment cannot be determined, the motion will be heard by the district court (in accordance with that court's inherent jurisdiction). This principle was upheld in Katznellenbogen, where the Supreme Court held that the relief sought in the Israeli court had a monetary value (ie, the amount of the obligation that the foreign judgment imposed) and that since the amount of NIS1 million specified in the petition was within the magistrate court’s jurisdiction, the case should be transferred to that court.

Distinction between recognition and enforcement

Is there a legal distinction between the recognition and enforcement of a judgment?

The Foreign Judgments Enforcement Law distinguishes between the enforcement of a foreign judgment and the recognition of a foreign judgment, and sets out different conditions for each. The distinction is based on the nature of the remedy sought, as follows:

• Enforcement concerns in personam rulings, which impose a personal obligation, and grants the creditor the means of carrying out the judgment.
• Recognition concerns in rem rulings, which entail no personal obligation and require no execution; this remedy applies to matters of property and possession, or matters of personal status.

Recognition may be granted to the foreign judgment incidentally (ie, within the context of judicial discussion relating to another judgment) or directly (ie, by issuing a declarative judgment affirming the validity of the foreign judgment).

This distinction was discussed recently in Levin v Zohar (CA 1297/11). In that case, the Supreme Court held that a foreign ruling imposing a personal liability is intended for enforcement, while a ruling that does not impose personal liability but establishes status, for example, is not enforceable and is appropriate only for recognition. The court further held that the Foreign Judgments Enforcement Law allows two distinct possibilities for recognising foreign judgments:

• the direct route, with the objective of recognising the foreign judgment under the conditions set out in Section 11(a) of the law; and
• the indirect route, where a court may recognise a foreign judgment “incidental to a case under its jurisdiction, and for the purposes of that matter".

Direct recognition is possible when the foreign judgment constitutes the main cause of action in the local court, while incidental recognition occurs when the foreign ruling arises in the course of a discussion on another matter. The legislature has set different cumulative conditions for each of the three tracks. In regard to enforcement, it is necessary to examine the degree of applicability and validity of the enforcement of the foreign judgment, both in the country of origin and in Israel. In regard to direct recognition, the legislature has focused the examination on:

• whether there is a bilateral treaty between Israel and the state in which the foreign decision was made;
• whether under that treaty Israel undertook to recognise a foreign decision of the same type; and
• whether the pre-conditions for application of that treaty have been met.

On the other hand, the main condition for incidental recognition is that it is justified based on "the interests of law and justice", and provided that such recognition is sought in a matter which is under the court's jurisdiction and for the purposes of that matter.

Ease of enforcement

In general, how easy is it to secure recognition and enforcement of foreign judgments in your jurisdiction?

As a general principle of Israeli law, foreign judgments can be recognised and enforced in Israel in accordance with the Foreign Judgments Enforcement Law. Once a foreign judgment is declared to be enforceable, for the purposes of execution it has the same validity as an Israeli judgment. In general, the Israeli courts are inclined to enforce foreign judgments if the conditions under the Foreign Judgments Enforcement Law, which are not very onerous, are met. However, in respect of direct recognition the situation is different, since a treaty is required and Israel is party to only a few such bilateral treaties. In regard to incidental recognition, the matter is more vague and depends on the court's assessment of the applicable "interests of law and justice".

Reform

Are any reforms to the framework on recognition and enforcement of judgments envisioned or underway?

At present, there are no substantial reforms underway. However, Israeli literature and case law have often expressed different opinions with regard to the existing legislation. For example, Haggai Carmon’s commentary in his book Foreign Judgments in Israel - Recognition and Enforcement (2011) states:

"A key issue wanting further development is recognition of foreign judgments, particularly the distinction between the options that exist for recognition and the defences relevant in each. Israeli law clearly differentiates between the recognition and the enforcement of foreign judgments. As a result, there are differences between the recognition procedures and those for enforcement. There are cases where a foreign judgment cannot be enforced within the existing frameworks, although it may be recognized. This issue should be thoroughly examined to appreciate whether or not it presents an ideal model."

Conditions for recognition and enforcement

Enforceable judgments

Which types of judgment (eg, monetary judgments, mandatory or prohibitory orders) are enforceable in your jurisdiction and which (if any) are explicitly excluded from recognition and enforcement (eg, default judgments, judgments granting punitive damages)?

Under Section 1 of the Foreign Judgments Enforcement Law (5718-1958), Israeli courts recognise and enforce judgments rendered in civil disputes (as opposed to criminal cases), including monetary judgments and permanent injunctions. However, a judgment ordering the payment of compensation or damages to an injured party can be enforced in Israel even if was not entered in a civil matter.

Regarding punitive damages, in Greenberg v Bamira (CA 1268/07) the Israeli Supreme Court affirmed a district court judgment which enforced a New York Supreme Court judgment awarding both punitive and compensatory damages for breach of a partnership agreement on the grounds that the obligation comprised punitive damages awarded in civil proceedings. In this regard, the criteria for the enforcement of a foreign judgment under Section 1 of the Foreign Judgments Enforcement Law was applied. In its decision the Supreme Court held that punitive damages do not conflict with Israeli public policy, since under Israeli law courts are authorised and empowered to impose punitive damages, although in practice they rarely do so.

How are foreign judgments subject to appeal treated?

Regarding the enforcement of a foreign judgment, according to Section 3(2) of the Foreign Judgments Enforcement Law, one of the conditions necessary for declaring a foreign judgment enforceable is that “the judgment is no longer appealable”. Provided that the judgment is appealable in the foreign country (regardless of whether an appeal was already filed), it cannot be declared enforceable pursuant to the Foreign Judgments Enforcement Law. However, Section 8 of the law includes certain exceptions to this condition concerning alimony and child-support judgments:

"The court may, if it considers that the circumstances of the case justify it doing so, enforce a foreign provisional judgment or interim order in a matter of maintenance even though such judgment or order may still be appealable, so long as the other conditions imposed by this Law are fulfilled in respect thereof."

In this regard, Section 8 grants the court the authority to enforce appealable provisional judgments or interim support orders, despite the condition set out in Section 3(2) of the law. When a judgment is final, and once the conditions of the law have been met, the burden of proof passes to the party objecting to enforcement to produce evidence of the law’s defences. For an interim order, on the other hand, even after proving that all of the preconditions are satisfied, the petitioner still bears the burden of proving that the specific circumstances justify the interim order’s enforcement.

This requirement is not mentioned in the Foreign Judgments Enforcement Law with respect to the recognition of foreign judgments.

Formal requirements

What are the formal and documentary requirements for recognition and enforcement of foreign judgments?

Enforcement Under Section 3 of the Foreign Judgments Law, a foreign judgment will be enforced in Israel provided that all of the following conditions have been complied with: 

·         The judgment has been rendered by a foreign court, which under the laws of the foreign jurisdiction was competent to render the judgment;

·         The foreign judgment is final and not subject to appeal, and an appeal is no longer possible (or an appeal has been rejected and no further appeal is possible);

·         The obligation imposed by the foreign judgment is enforceable under the rules of enforcement of judgments in Israel;

·         The content of the foreign judgment does not contradict Israel's public policy; and

·         The judgment is capable (as a legal matter) of being executed in the jurisdiction where the judgment was made.

Under Section 4 of the Foreign Judgments Enforcement Law , Israeli courts will enforce only foreign judgments which were rendered in a country which would similarly enforce a judgment given by an Israeli court.

It is for the claimant to prove to the Israeli court that all the conditions listed above are satisfied.

A motion for the enforcement of a foreign judgment is required to be filed with the competent Israeli court within five years of the foreign judgment being rendered. Such motion should be supported by an affidavit regarding the facts and content of the applicable foreign law (possibly in the form of an expert opinion), in order to prove that the conditions for enforcement under Section 3 of the Foreign Judgments Enforcement Law have been satisfied.

Recognition The Foreign Judgments Enforcement Law allows two possibilities for the recognition of foreign judgments:

• direct, with the aim of recognition of the foreign judgment under Section 11(a) of the law; and
• incidental, in which a court may recognise a foreign judgment “incidental to a case under its jurisdiction, and for the purposes of that matter”.

Where the foreign judgment is the cause of action in a domestic court, direct recognition is preferred. When the foreign judgment's recognition arises incidentally in a case where the cause of action is different, incidental recognition is sought.

Four cumulative conditions must be met in order for an Israeli court to recognise a foreign ruling, in accordance with Section 11(a) of the Foreign Judgments Enforcement Law:

• An agreement with a foreign country applies to the judgment;
• Israel has agreed in such agreement to recognise foreign judgments of that nature;
• Israel’s stated obligation applies solely to foreign judgments enforceable under Israeli law; and
• The judgment complies with the terms of the agreement.

The issue of incidental recognition of a foreign ruling in Israel is governed by Section 11(b) of the Foreign Judgments Enforcement Law. Section 11(b) provides that in hearing a case within its jurisdiction, and for the purpose of that matter, a court may recognise a foreign judgment if it deems such recognition to uphold the interests of law and justice. In Regev v Saadi (DCC (TA) 1802/01) the district court set three conditions for the incidental recognition of a foreign judgment:

• The incidental recognition of the foreign judgment should be within and for the purposes of the case before the court;
• The recognition should be incidental, which is possible only when “the foreign judgment is not the subject of the argument itself”; and
• The court "deems it proper to do so in the interests of law and justice”.

Within the framework of the court's considerations, Israeli case law has held that Section 6 of the Foreign Judgments Enforcement Law (regarding the defences available to the losing party to a foreign judgment) may be used in order to consider whether incidental recognition is deemed proper "in the interests of law and justice" (see Stern v Verifone Holdings Inc (RCA 3973/10)).

Substantive requirements

What substantive requirements (if any) apply to the recognition and enforcement of foreign judgments? Are enforcing courts in your jurisdiction permitted to review the foreign judgment on the merits?

As a general principle, there is no review of the merits of the judgment given by the court of origin. In Wells Fargo Bank of Minnesota National Association v Zimmering (DCM (Jm) 4052/05) the court held that “the court does not require a new, local investigation of the foreign court proceedings; does not examine the factual or legal correctness of the foreign judgment; and does not even take the reasoning of the judgment into account". However, a judgment which conflicts with Israeli public policy will not be enforced. Further, Section 7 of the Foreign Judgments Enforcement Law protects Israel’s vital interests regarding its international status and foreign relations which, in cases of conflict, will override foreign judgments which are sought to be recognised or enforced in Israel. In addition, the enforcement of a foreign judgment may be refused if the judgment conflicts with another valid judgment, whether Israeli or foreign.

Limitation period

What is the limitation period for enforcement of a foreign judgment?

Section 5 of the Foreign Judgments Enforcement Law provides that the court will not hear an application for enforcement of a foreign judgment if such application is filed more than five years after the day on which the judgment was entered, unless a different period has been agreed between Israel and the state where the judgment was entered or the court considers there to be special reasons justifying the delay. This requirement is not mentioned in the Foreign Judgments Enforcement Law with respect to the recognition of foreign judgments.

Grounds for refusal

On what grounds can recognition and enforcement be refused?

See above.

Service of process

To what extent does the enforcing court review the service of process in the original foreign proceedings?

Under Section 6(a)(2) of the Foreign Judgments Enforcement Law , a foreign judgment will not be enforceable if it is demonstrated to the court that the defendant was not afforded reasonable opportunity to:

• present arguments; and
• submit evidence before the judgment being given.

This principle was discussed by the Israeli Supreme Court in JSC VTB Bank v Margolis (CA 1948/15). In that case the defendant (who held dual Russian-Israeli nationality) was a guarantor in favour of certain Russian banks and provided an address in Moscow for the purpose of receiving notices concerning the guaranties, although the guarantor did not actually reside at that address.

One of the banks commenced legal proceedings against the guarantor and served the claim at the address provided by him. In court the bank argued that this was confirmation of valid service. The bank proceeded to obtain a summary judgment against the guarantor and sought to enforce the judgement in Israel. The defence raised by the guarantor was that since he had not been served with the court papers in the proceedings in Russia, he had no knowledge of the proceedings.

In determining the guarantor's argument, the Israeli Supreme Court stated that as long as the party seeking enforcement of the foreign judgment produces “some” evidence that service was made at an address "reasonably associated" with the defendant, the burden rests with the defendant to demonstrate that such service was not sufficient to put it on notice of the legal proceedings. 

This was not the first case in which the Supreme Court approved the enforcement of a foreign default judgment. However, in that particular case the court expressed a relatively low level of interest as to whether the Russian procedures for performing service of process were in fact fully complied with.

Public policy

What public policy issues are considered in the court’s decision to grant recognition and enforcement? Is there any notable case law in this regard?

Section 3(3) of the Foreign Judgments Enforcement Law states that a foreign judgment will not be enforced if its content “contradicts the public policy in Israel”. In this regard, the term ‘content’ appears to include not only the judgment, but also the factual basis in the particular case. The implication of this is that although the judgment might appear to be compatible with Israeli public policy, the Israeli court will not enforce the foreign judgment if the factual background or circumstances contradict such policy.

Inevitably, the question arises as to what is meant by ‘public policy’. Legal scholar Amos Shapira has stated that the term ‘public policy’ is by its nature flexible, not subject to definitive interpretation and encompasses underlying political, social and economic interests as well as basic social values, longstanding ethical principles and fundamental principles which are considered as being decent and just (Shapira, “The Recognition and Enforcement of Foreign Judgments”, 4 Iyunei Mishpat 509, 530-534 (1974)).

In this regard, Shapira cites the following domestic principles and interests that must be taken into account in the case of foreign judgments which a court is requested to recognise or enforce in Israel:

• Basic lifestyle of the domestic society – foreign judgments that overtly contradict the basic and normative lifestyle found in Israel will not be recognised or enforced in Israel (eg, equal rights for women and the best interests of the child);
• The state’s vital interests with respect to international relations – an Israeli court will not recognise or enforce a foreign judgment that significantly harms Israel's international status and interests, including the security needs of the state and the objective not to adversely affect or unnecessarily criticise the laws of a friendly foreign state; and
• Basic values of ethics, justice, freedom and fairness – foreign judgments that contradict the inherent values found in Israeli society will not be enforced or recognised in Israel. This would include judgments which are characterised by racial discrimination or lack of religious tolerance, as well as judgments that unjustly or arbitrarily confiscate property.

In Ashkar v Hiams (CA 1137/93) the Israeli Supreme Court held that only in exceptional circumstances will a foreign judgment not be enforced due a conflict with Israeli public policy. In this regard, an allegation that a foreign judgment is flawed or unjust will be insufficient. Thus, even when a foreign judgment is based on a norm that diverges from norms of Israeli law, this inconsistency alone is generally insufficient to constitute a conflict with public policy in Israel.

Jurisdiction

What is the extent of the enforcing court’s power to review the personal and subject-matter jurisdiction of the foreign court that issued the judgment?

Section 3(1) of the Foreign Judgments Enforcement Law prescribes as a precondition for declaring a foreign judgment enforceable that “the judgment was given in a state the courts of which were, according to its laws, competent to give it”.

In this regard, the issue of jurisdiction with respect to the foreign forum that rendered the foreign judgment may arise with respect to both the internal jurisdiction (under the laws of the country where the judgment was entered) and international jurisdiction (under the rules of Israeli private international law concerning the jurisdiction of foreign courts).

Concurrent proceedings and conflicting judgments

How do the courts in your jurisdiction address applications for recognition and enforcement where there are concurrent proceedings (foreign or domestic) or conflicting judgments involving the same parties/dispute?

Section 6(a)(5) of the Foreign Judgments Enforcement Law states that a foreign judgment will not be declared enforceable if it is proven to the court that when the action was brought before the foreign court, a suit on the same issue and between the same parties was pending before an Israeli court. The defence contained in this section, which applies the legal principle of lis alibi pendens (a suit pending elsewhere), is intended to prevent the possibility that a party to a suit pending before an Israeli court will initiate, for tactical or other reasons, parallel proceedings in a foreign court in order to be awarded a judgment that can then be used in Israel.

This requirement is not mentioned in the Foreign Judgments Enforcement Law with respect to the recognition of foreign judgments.

Opposition

Defences

What defences are available to the losing party to a foreign judgment that is sought to be recognised and enforced in your jurisdiction?

Under Section 6 of the Foreign Judgments Enforcement Law (5718-1958) the respondent to the enforcement motion may, in response to the motion, raise the following defences against the enforcement of the foreign judgment:

·         The judgment was obtained by fraud.

·         No fair opportunity was granted to the respondent to bring the case before issuance of the foreign judgment.

·         The foreign judgment was given by a court not competent to give it according to the rules of private international law applicable in Israel.

·         The judgment contradicts another judgment given in the same matter between the same parties, and that other judgment is still valid.

·         Pending proceedings relating to the same subject and between the same parties in Israel commenced before institution of the proceedings in the foreign country.

If the respondent is able to prove any of the defences, the Israeli court will not enforce the foreign judgment.

These defences are not mentioned in the Foreign Judgments Enforcement Law with respect to the recognition of foreign judgments.

Injunctive relief

What injunctive relief is available to defendants (eg, anti-suit injunctions)?

Israeli law does not specifically address the possibility of providing injunctive relief as part of an application for the enforcement of a foreign judgment. However, this possibility has been mentioned in several cases, thus enabling injunctive relief, together with the application to enforce a foreign judgment or even separately from such application (as in the case of an anti-suit injunction).

In a number of judgments the Israeli courts have held that they are authorised to restrain a party, over which an Israeli court can exercise jurisdiction in personam from initiating or continuing proceedings in a foreign court, where it is necessary to do so in the interest of justice. The legal basis for the court’s authority is set out in Section 75 of the Courts Law (Consolidated Version) 1984, as well as in the inherent jurisdiction of the courts. The cases where the court has exercised its authority to grant an injunction demonstrate that an anti-suit injunction will be granted only in exceptional cases. In this regard, the criteria applied by the court include the following:

·         The fact that proceedings are held both in Israel and in a foreign country does not in itself suffice for the grant of an anti-suit injunction against the foreign proceedings.

·         An anti-suit injunction will be granted to a party which has a good arguable case in Israel and can prove that its interests will be materially harmed if it has to litigate in the foreign country, or that the foreign proceedings are oppressive, vexatious or cause serious injustice.

·         Such circumstances may be found to exist if a party has expressly committed itself not to bring proceedings in the foreign forum.

·         The court should then weigh the interests of the plaintiff in the foreign proceedings and the harm suffered by the plaintiff if an anti-suit injunction were to be granted.

·         The party applying for an anti-suit injunction must discharge the onus.  

Recognition and enforcement procedure

Formal procedure

What is the formal procedure for seeking recognition and enforcement of a foreign judgment?

A party seeking to enforce or recognise a foreign judgment should file an appropriate motion. The court filing fee is NIS1,141 (approximately $300).

Such a motion should be supported by an affidavit regarding the facts and content of the applicable foreign law (possibly in the form of an expert opinion) in order to prove the satisfaction of the conditions for enforcement under Section 3 of the Foreign Judgments Enforcement Law (5718-1958). In addition, a copy of the foreign judgment confirmed by a competent authority of the country where it was given should be attached to the motion.

The party opposing recognition of the foreign judgment is required to file a reply to the application within 30 days should it wish to object to the application.

Timeframe

What is the typical timeframe for the proceedings to grant recognition and enforcement?

It is difficult to estimate the length of this type of proceeding since the time taken depends largely on the defence put forward by the respondent. Assuming that the respondent objects to the motion and evidentiary hearings need to take place before issuing a judgment, first-instance proceedings may take up to one year (or more).

Fees

What fees apply to applications for recognition and enforcement of foreign judgments?

The plaintiff is required to pay a filing fee to the court. The amount of the filing fee is determined and occasionally updated in the Court Regulations (Fees) 5767-2007. The filing fee is NIS1,141.

Security

Must the applicant for recognition and enforcement provide security for costs?

No security for costs is necessary in order to apply for recognition or enforcement of foreign judgments.

Appeal

Are decisions on recognition and enforcement subject to appeal?

Yes. The court's ruling on the recognition and enforcement of a foreign judgment is subject to appeal, as are all judgments rendered in Israel.

Other costs

How does the enforcing court address other costs issues arising in relation to the foreign judgment (eg, calculation of interest, exchange rates)?

The general rule is that every successful plaintiff is entitled to be compensated for interest and ‘linkage’. The general rule is that the losing party pays at least part of the winning party’s legal costs for the proceedings before the Israeli court. The trial court has substantial discretion in determining the amount of costs. In this regard, the court takes into account the amount of the claim as well as the amount of relief awarded. The court may also consider the manner in which the litigants conducted the case.

In addition, Section 10(b) of the Foreign Judgments Enforcement Law states that:

"When a foreign judgment that has been declared enforceable requires a person to make a payment in foreign currency, the obligation shall be discharged in Israel in Israeli currency at the rate of exchange of the day of the payment; Provided that the debtor shall have fulfilled his obligation under the foreign judgment, if he pays what is due.”

Enforcement against third parties

To what extent can the courts enforce a foreign judgment against third parties?

In general, the Israeli courts will not enforce a foreign judgment against third parties. As in the case of a local judgment, a foreign judgment will bind the parties and their successors, but not bind third parties. In this regard, the court may declare a foreign judgment enforceable against a legal successor only on the basis of a proven legal succession to the debt or to the debtor, according to Israeli law.

Partial recognition and enforcement

Can the courts grant partial recognition and enforcement of foreign judgments?

The Israeli courts can grant partial recognition and enforcement of foreign judgments. For example, in Casson v Casson (CA 619/89, PD 45(2) 656 (1991)) the court held that there is no impediment to enforce only certain parts of the foreign judgment. The need for partial recognition or enforcement can arise where parts of the foreign judgment are enforceable while other parts are not (eg, a judgment that includes a determination of ownership of an asset, which is not enforceable, alongside a determination for monetary compensation, which is enforceable). In the case of matters concerning domestic relations, this issue may become more complicated. Courts have discussed whether it is possible to enforce only the monetary part of a foreign domestic relations judgment without enforcing the status part of the judgment (eg, whether parties are married or whether their divorce is valid), and this matter has not been resolved in a consistent matter. While some judges are of the view that such partial recognition or enforcement is possible, others consider such partial recognition or enforcement to be in violation of Israeli public policy.