Arbitration in Israel is a subject that initially includes many technical details, but when explained properly, it can be of great importance to your life. In this article, we will first define basic terms relating to arbitration for background knowledge. The article will then address the pros and cons of arbitration, followed by a background to arbitration law in Israel, including its constant evolution. The differences between arbitration and mediation will also be included, followed by conclusive remarks. After reading this article, you should have a basic understanding of arbitration, its context in Israel, and how it can be a relevant step you may be willing to take.
What is Arbitration?
Arbitration is a process by which two parties in a disagreement come together to appoint a figure who will review and resolve the dispute between them, known as an arbitrator.
Who can be an arbitrator?
An arbitrator does not have to be a lawyer, but rather any chosen individual by the parties. It is recommended that the parties appoint someone they believe to be knowledgeable, trustworthy, and an appropriate fit for the case. Having an arbitrator settle a dispute is different from a judge in court because a judge cannot be chosen by the parties for the case.
What are the benefits and Shortcomings of Arbitration?
There can be various benefits of choosing to resolve a dispute through methods of arbitration rather than through the courts. Firstly, arbitration can be completed within several months, while an open court case may take years to close. Arbitration can be less costly than the expenses of going to court, and the details of arbitration are always kept private, as opposed to court cases which may be open to public review. Arbitration can also craft a less stressful and more intimate environment, as parties can appoint arbitrators beforehand. Parties may also find satisfaction in knowing that the arbitrator’s decision is legally binding, meaning there is no further room for dispute and disagreement once the arbitrator decides unless the parties agree before beginning the process on the potential to appeal. These factors combined allow for the certainty and timeliness of the case.
From another angle, many might find arbitration to be an expensive procedure, and will also see the limitations on rights of appeals to be challenging. Prior to the recent introduction of the updated arbitration law, only one arbitrator could be appointed, limiting the scope and number of perspectives available to judge the outcome of the case. Moreover, a common concern that arises amidst arbitration is that the courts have a strict and clear procedure for the administration of evidence and for reaching a fair conclusion. However, in cases of arbitration this may not always be the case, potentially hindering the outcomes of the dispute for one party over another.
Arbitration Law in Israel
Arbitration in Israel is originally dictated by the Arbitration Law, 1968, laying out various significant details about its procedure. For example, the law details the number of arbitrators permitted per case, the binding nature of the decision, the length and time of each session, the role of the court in arbitration, and the expenses paid by each party, among other significant considerations. Following the adoption of the Arbitration Law of 1968, in 1974, the law included considerations for foreign arbitration, with further amendments being made in 2008 and 2018.
What did the International Commercial Arbitration Law change?
On February 12, 2024, Israel adopted the International Commercial Arbitration Law, known as the new arbitration kaw, which is currently upheld by several countries. The acceptance of this law has symbolic and practical implications for the future of Arbitration Law in Israel.
From a symbolic perspective, the updated law places Israel as an equal on the world stage in matters of international commercial law, with each country adhering to the same regulations.
Practically speaking, this means that international companies now have the opportunity to settle disputes in Israel just as they would in other countries, thus making it more appealing for foreign companies to engage in business in Israel. The new law also ensures that Israel is up-to-date with the legal proceedings surrounding arbitrary laws on the international stage, rather than independently relying on laws that have existed for decades and may no longer be relevant.
From a domestic point of view, there are numerous impacts that the updated law has on the current arbitral proceedings in Israel. One such note can be made about the increase in flexibility for parties involved in arbitration. For example, Article 13’s wording of “justifiable doubts” sets a lower bar at which parties can request a new arbitrator, complementing Article 17 which permits parties to question the decision made by the arbitrator more easily.
Additionally, the adoption of three arbitrators rather than one per case highlights the opportunities for multiple perspectives to be considered before a decision is made in each case, counteracting the downfall that the conclusions made by the arbitrator are essentially the subjective interpretations of one person. This flexibility and fairness coupled with adhering to international laws overall contributes to Israel’s global reputation as a country equal to others in business and law.
What is the difference between Arbitration and Mediation?
Mediation is a process whereby parties appoint a figure to help resolve a debate between them, known as a mediator, whereas an arbitrator is an individual who decides on the outcome of the dispute. If parties are disappointed with the outcome of mediation, it is not binding and they can go about their business in any direction that they wish. However, with arbitration, if parties are disappointed with the outcome, they can only appeal to a higher court or another arbitrator if they decided before the case opened that this possibility may arise.
Concluding Remarks
At Decker, Pex, Levi, our professional experts can provide excellent guidance in discussing legal matters of arbitration and mediation. For more information or to contact our office, call us at 03-372422 or 055-9781688 or email us at [email protected].