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Arbitration in the Age of the Global Village

Writer: Tziki Woolfson, Attorney.

In light of the "shrinking" village called the Earth, arbitrations are sometimes held where the decisions are relevant to implement in Israel, but for various reasons are held abroad.

Sometimes these are arbitrations involving international companies with branches in Israel or employees in Israel, and the arbitration results have direct implications for entities in Israel and enforcement of the arbitration award is necessary in Israel. It is also possible that an arbitration process according to Torah Law will be held abroad, but its outcome has implications for various assets or persons or legal entities in Israel. In this case, too, enforcement of the award in Israel is required.
Various countries are aware of this situation, and since the arbitration tools are common in various countries and among business entities, they have given due consideration to the need to create rules and conventions to regulate the issue.
The most well-known and comprehensive treaty, if not the most comprehensive one, is known as the "New York Convention". The New York Convention was adopted in Israel - as in many countries

Arbitration in Israel vs. Foreign Arbitration

Similar to an arbitration award given in Israel, an arbitration award issued abroad - a "foreign arbitration award" - is not automatically enforceable in Israel and must be approved by a competent court to "raise" to the level of enforceable judgment by the various judicial enforcement instances.
The date for submission of an application for confirmation of a foreign arbitration award is different from that of an arbitration award rendered in Israel.
According to Section 27 of Arbitration Law, in conjunction with Section 10 of Arbitration Procedure Regulations, in the matter of an arbitration award given in Israel, a Court will not be required to annul an arbitration award that was filed 45 days after the decision was rendered to the requesting party. An additional restriction - 15 days from the date on which the party requesting to cancel the application for confirmation of the award - but not more than 45 days from the date of rendering of the award.

However, when it comes to a foreign arbitration ruling, Section 29 A of Arbitration Law provides that an application for the confirmation or cancellation of a foreign arbitration award to which Israel is a party to and which provides provisions in this matter shall be submitted and discussed in accordance with those provisions. That is, it is necessary to examine where the award was given, whether there is a convention to which Israel is party to, what is the procedure provided by the convention, and accordingly the date for submitting an application for confirmation or cancellation will be determined.

Why Is It Important?

The process is important both parties - the winner and the loser, the applicant for confirmation or the applicant for cancellation – as the party requesting confirmation of an award given in Israel can submit it at any time, and it is best to submit it 45 days after the date of its rendering to the party that may request to cancel it. However, when considering a foreign award, one must well consider the law and the procedure, where the convention came into force, since the applicant for confirmation could lose the time to approve it, as in contrast to the law in Israel, there is a time limit for submitting a request for confirmation.

Thus, too, with regard to the petition for cancellation of the arbitration award - it may be that the date differs from that in the law regarding an arbitration award given in Israel that is more than the 45 day limit or 15 days from the date of submission of the request for approval when limited to the 45 days, or negatively, that is - a shorter period.

One must examine clearly, immediately with rendering the foreign arbitration award, with competent professionals regarding the manner of implementing the foreign arbitration award in Israel.

What About Temporary Remedies?

Temporary remedies are sometimes provided by the arbitration process[1]. When considering an arbitration process abroad, each party can also obtain temporary remedies there.
What can a party that was awarded temporary relief do – for example an injunction?

Our Firm recently dealt with a similar case when a client, in the framework of arbitration process conducted abroad, asked that an injunction order that was issued in his favor become effective immediately in Israel even before the final arbitration award was issued abroad.

On the one hand, that party could approve the injunction award in Israel as an interim ruling in the context of the confirmation of an external ruling. However, this is a mixed blessing, as until the award will be confirmed and if the counterparty fails to comply with it, the passage of time will apparently overturn the injunction order - which is essentially immediate relief – to become irrelevant.

In this case, the same party may file an application for confirmation of the foreign award - an interim ruling, dealing with the injunction order, and to request interim relief in Israel - an injunction in Israel, until the main proceedings – the confirmation of the interim order, the injunction order.

In conclusion, that stated above relates to only some of the many different issues and solutions that require proceedings in Israel to enforce an external ruling[2].

It should be noted that since this is not a very common procedure - although recently the circumstances of the global village are increasingly frequent - sometimes complex and creative solutions are needed for various issues that arise in such cases, and it is advisable to consult with experts on the issue.

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[1] This article does not deal with all provisional remedies that may be available in the framework of the arbitration process in Israel. Suffice it to say that these are possible.
[2] There may be other solutions available as well, but due to the fact-spectific nature of particular cases, this is not the place to resolve them.

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*This article is not meant to constitute legal advice for a particular client, for which consultation with a qualified attorney is required.