Arbitration in Israel

The arbitration process in Israel is primarily governed by the Israeli Arbitration Law, 5728-1968 (Hereunder: "The arbitration law"). It provides the parties a simple method for having their dispute decided efficiency and finally. The arbitration process, under this law shall take place where the parties entered into a written arbitration agreement. Article 2 rules that the arbitration law supplement completes the party's agreement as a default, unless they agreed otherwise. This supplement includes important terms that are implemented for decades nearly in any arbitration in Israel. It shall be stated that under this arbitration agreement the arbitrator is not required to apply the substantive law, the court procedure and the evidence rules unless the arbitration agreement provides otherwise. Thus, the arbitrator is expected to decide the dispute efficiency and justly.

Another important rule included in this supplement is that the arbitrator is required to state the reasons upon the Award is based on. This rule was included in the 2nd amendment of the arbitration law which took place in 2008.

Nearly any dispute can be settled through the arbitration process but there are some exceptions. An arbitration agreement in a matter which cannot form a subject matter between the parties shall not be arbitrated. That includes any criminal matters, labor rights or any illegal agreement between the parties.

Despite the advantages of the arbitration process as a rapid and efficient one it hasn't fulfilled its potential yet. Since one of its main drawbacks is the lack of an appeal process, the "Knesset", which is the Israeli Parliament, amended the arbitration law in 2008 and added two consent appeal options: a) Appeal instance in the presence of an arbitrator. B) An appeal process by leave of the court. These two options enable the parties overcoming their major fear of the substantial Award's mistake which cannot be amended by the court. Parties, who have agreed on the appeal process, must include their choice in the arbitration agreement. Have they done it, the second supplement would take place as their arbitration agreement, unless they agreed otherwise. The second supplement suggests some important rules like a practical timetable and other procedures for having a due process. It shall be emphasized that if the parties have not included one of the appeal options, the traditional process, without an appeal process, would take place.

The Award shall be in writing, signed and dated by the arbitrator. If a Tribunal of arbitrators conducted the arbitration process a signature of the majority, under an explanation for the lack of other signatures, would be sufficient. The arbitral Award can be confirmed as a judicial one in accordance with article 23 under a simple procedure. However, a motion for setting the Award aside can be filed within 45 days on receipt of a copy of the Award, but if a confirmation request has been filed, the timetable would be shortened down to 15 days. The court may set the Award aside in whole or in part, supplement, amend, or return it to the arbitrator for one of 10 reasons. For instance, when the arbitration agreement is not valid, the arbitrator has decided the dispute, or part of it with no authority, or when the parties have not been given a due opportunity to raise their claims or bring their evidence. These causes refer mainly to the arbitration process conduction. However, since there is no appeal track to deal with a substantial mistake through the traditional process, the parties, who have lost their case under the Award try to base their claims on the these causes. It shall be emphasized that the approach of the Israel courts has been in favor of the arbitral Awards and usually they are confirmed as judicial Awards which can be enforceable. The Arbitration procedure Regulations, 1969 govern the court procedures in implementing the arbitration law.

Israel rarified the New Convention on Recognition and Enforcement of Foreign Awards on June 10th 1958 and it came into force on June 7th 1959 with no reciprocity reservations. The regulations for Execution of the New York Convention were published On August 6th 1978 and came into force on September 5th that year. The New York Convention has been highly enforced in within the courts for many years.

Today, the Israeli arbitration law enjoys a renewed opportunity in dealing efficiently and safely with civil disputes.

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