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Israel's Milestone in International Commercial Arbitration
Israel's Milestone in International Commercial Arbitration
Introduction:
On February 12, 2024, Israel marked a significant milestone in international commercial arbitration with the enactment of the International Commercial Arbitration Law, 2024 (ICA Law). Based on the UNCITRAL Model Law, this legislative move represents a substantial departure from the existing arbitration legal regime and aims to position Israel as a favourable hub for resolving international commercial disputes.
History of Arbitration Legislation in Israel:
The precursor to the ICA Law was the Arbitration Law of 1968, a framework governing domestic and international arbitration in Israel. Over time, this law underwent three amendments, addressing issues such as the enforcement of foreign arbitration agreements and awards, the supervisory role of courts on arbitral awards, and the jurisdiction of courts in arbitration matters. However, the 2018 amendment, allowing Magistrate Courts to handle arbitration cases, led to confusion and a lack of coherence in arbitration jurisprudence. The ICA Law seeks to address these challenges and promote a more solid and coherent legal framework for international commercial arbitration in Israel.
Key Features of the ICA Law:
Scope of Application:
The ICA Law aligns with the UNCITRAL Model Law's criteria for international arbitration, allowing parties to expressly agree that their dispute involves more than one country.
While the term "commercial" is not defined in the ICA Law, its broad interpretation, as suggested by the Model Law, covers matters arising from all commercial relationships, whether contractual or not.
The Court Having Jurisdiction:
Unlike the Arbitration Law, the ICA Law excludes Magistrate Courts from handling arbitration cases. District Courts are designated as the competent courts for matters falling under the ICA Law. This change is expected to contribute to the development of a more coherent and solid body of case law, in line with the international principles of Model Law.
Enforcement of Arbitration Agreements:
Section 9(a) of the ICA Law incorporates provisions from the Model Law and the New York Convention, emphasizing the mandatory referral of parties to arbitration unless the agreement is null and void, inoperative, or incapable of being performed. The ICA Law aims to encourage a more uniform and coherent approach to the enforcement of arbitration agreements, promoting international arbitration in Israel.
The Number of Arbitrators:
Section 11(c) of the ICA Law establishes that, in the absence of an agreement between parties, the tribunal will consist of three arbitrators. A noteworthy addition in the ICA Law is a subsection addressing conflicts between the parties' agreement on the number of arbitrators and relevant arbitration rules, prioritizing the parties' agreement unless the rules state otherwise.
Leave for Appeal on Certain Court Decisions:
Departing from the Model Law, the ICA Law allows appeals to a higher instance (typically the Supreme Court) for specific decisions, including arbitrator appointments, challenges, termination of mandates, and tribunal jurisdiction. Leave to appeal is granted sparingly, emphasizing its reserved use for exceptional cases where a question of principle beyond individual interests arises.
Conclusion:
The adoption of the ICA Law in Israel signifies a crucial step towards enhancing the country's standing in international commercial arbitration. By aligning with the UNCITRAL Model Law, Israel aims to create a more coherent and internationally recognized framework. The courts must interpret and apply the ICA Law in a manner that upholds the principles of the Model Law, ensuring uniformity and promoting the use of international commercial arbitration in Israel. As the legal landscape evolves, the hope is that the ICA Law will foster robust arbitration jurisprudence, making Israel an attractive destination for resolving global commercial disputes.
- The ICA Law aligns with the UNCITRAL Model Law's criteria for international arbitration, allowing parties to expressly agree that their dispute involves more than one country.
- Unlike the Arbitration Law, the ICA Law excludes Magistrate Courts from handling arbitration cases.
- The ICA Law aims to encourage a more uniform and coherent approach to the enforcement of arbitration agreements, promoting international arbitration in Israel.
