1.1 Advantages

Arbitration in Israel offers three key advantages:

• Israel boasts a modern international arbitration framework, based on the UNCITRAL Model Law;
• Israel is home to highly skilled lawyers who deliver top-tier arbitration services at more competitive rates compared to major arbitration hubs; and
• Israel has a robust and impartial judiciary that supports the arbitration process.

1.2 Disadvantages and common pitfalls

Not all judges are well-versed in the field of international arbitration. In the past, this sometimes led to decisions that conflicted with the principles of the New York Convention. However, the newly enacted international arbitration law is designed to address and rectify this issue. The challenge now lies in its effective implementation and consistent interpretation by Israeli courts.

1.3 Distinctive features

Israel has recently adopted the UNCITRAL Model Law, albeit with minor deviations that merit highlighting.

First, Israel did not include in its arbitration law the principle that nationality should not prevent an individual from serving as an arbitrator. Any court-appointed arbitrator may, moreover, be subject to appeal if leave is granted by the court of appeal.

Second, a decision by the court on a challenge or removal of an arbitrator can be appealed if leave is granted by the court of appeal.

Third, while arbitral tribunals can indicate interim measures, they cannot issue preliminary orders ex parte.

2.1 Legal framework

Since 14 February 2024, international commercial arbitration in Israel is governed by the International Commercial Arbitration Law 5774-2024 (ICAL), which adopts the UNCITRAL Model Law. Prior to the entry into force of the ICAL, all international arbitrations were regulated by the Arbitration Act 5728-1968 (the “Arbitration Act 1968”). The Arbitration Act 1968 continues to apply to domestic arbitration and to international commercial and non-commercial arbitration proceedings commenced before 14 February 2024.

On 12 January 2025, the Ministry of Justice of Israel published draft regulations implementing the ICAL. The regulations are expected to be adopted in the course of 2025.

The explanations that follow cover only international arbitration and are solely based on the ICAL.

2.2 What qualifies under domestic law as “international arbitration”? Is there a specific statute?

Pursuant to Article 3 of the ICAL, an arbitration is international if:

• at the time of conclusion of the arbitration agreement, the parties’ places of business are in different states;
• the place of arbitration, the place where a substantial part of the obligations is to be performed, or the place with the closest connection to the subject-matter of the dispute is situated outside the state where the parties have their place of business; or
• the parties expressly agreed that the subject matter of the arbitration agreement relates to more than one country.

2.3 Ratification of the New York Convention

Israel signed the New York Convention on 10 June 1958; the Convention entered into force for Israel on 5 January 1959.

2.4 Ratification of the ICSID Convention

Israel signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) on 16 June 1980; the Convention entered into force for Israel on 22 July 1983.

2.5 Other treaties relating to arbitration

Israel is party to some 36 bilateral investment treaties and three free trade agreements containing investor–state dispute settlement (ISDS) provisions.

2.6 Choice of forum for intra-EU dispute settlement

Not applicable.

2.7 Is the municipal law governing arbitration based on UNCITRAL Model Law?

Yes.

2.8 Recent amendments or reforms in arbitration laws

The Israeli international arbitration law was overhauled in 2024 with the enactment of the International Commercial Arbitration Law 5774-2024. 

3.1 Presence of local arbitration institutions

The leading arbitral institution in Israel is the Israeli Institute of Commercial Arbitration (IICA). In 2024, the IICA established the Israeli Center for International Arbitration and introduced a specialized set of arbitration rules tailored to international disputes.

3.2 Does the London Court of International Arbitration (LCIA) have a local office?

No.

3.3 Does the Permanent Court of Arbitration (PCA) have a local office?

No.

3.4 Does the ICC International Court of Arbitration have a local office?

No. However, Israel does have an ICC national committee.

3.5 Does the International Centre for Dispute Resolution (ICDR) have a local office?

No.

3.6 Agreement entered into with local offices of international arbitration institutions

Not applicable.

4.1 Requirements as to content and form

An arbitration agreement must be in writing. The writing requirement is satisfied if the content of the arbitration agreement is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means. Parties may also enter into an arbitration agreement by means of electronic communication, as defined in the Electronic Signature Law 5751-2001, provided that the message contained in such electronic communication can be saved and retrieved.

4.2 Validity of arbitration agreements

The ICAL imposes no additional conditions on the validity of an arbitration agreement beyond the requirement that it be in writing. Pursuant to Article 77 of the Legal Capacity and Guardianship Law 5722-1962, the capacity of the parties to enter into an arbitration agreement is determined by the law applicable at the parties’ domicile.

4.3 Special formalities

Under the Israeli Attorney General’s Directive No. 6.1205, dated 12 October 2009, any arbitration agreement involving the State of Israel must receive prior approval from the Attorney General to be valid.

4.4 Governing law

The ICAL does not address the governing law of the arbitration agreement. The case law has yet to address this issue.

Articles 43 and 45 of the ICAL provide that an award can be set aside, or its enforcement can be denied, if the subject matter of the dispute is non-arbitrable under Israeli law. However, the ICAL does not contain a list of non-arbitrable matters, and such a determination is left to the courts. The case law has yet to address this issue.

5.1 Applicable restrictions

In applying the erstwhile 1968 Arbitration Law, Israeli courts have decided that non-arbitral matters included personal status, dissolution of corporations, workers’ rights, protected rent, constitutional matters, criminal affairs, as well as some family matters (adoption, paternity determination, etc.).

6.1 Stay of proceedings

A court hearing a matter subject to an arbitration agreement must stay the proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed.

6.2 Anti-suit injunctions

The courts have broad powers to issue provisional measures, including anti-suit injunctions.

7.1 Restrictions on the parties’ freedom to choose arbitrators

Israeli law does not impose restrictions on the parties’ freedom to choose arbitrators.

7.2 Requirement of arbitrator independence and impartiality

Arbitrators must disclose, prior to the acceptance of an appointment, any circumstances likely to give rise to justifiable doubts as to their independence and impartiality. In addition, from the moment of their appointment and throughout the proceedings, arbitrators must disclose to the parties any such circumstance as may arise.

7.3 Mandatory rules applicable to the appointment process

The parties are free to agree on the appointment process. In the absence of such agreement, the arbitral tribunal shall be composed of three arbitrators.

7.4 Appointment mechanism in the absence of party agreement or applicable institutional rules

In an arbitration with three arbitrators, each party appoints one arbitrator, and the appointed two arbitrators then appoint the third. If a party fails to appoint an arbitrator within 30 days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment, the appointment will be made, upon request of a party, by the court.

In an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, the latter will be appointed, upon request of a party, by the court.

The appointment decisions made by the court are subject to appeal if leave is granted by the court of appeal.

7.5 Mandatory rules applicable to the replacement process

When an arbitrator needs to be replaced, the substitute arbitrator will be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

7.6 Mandatory disclosure obligations

See Section 7.2, above.

7.7 Grounds for challenge

An arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or if the arbitrator does not possess the qualifications agreed to by the parties.

7.8 Mandatory rules governing the challenge of arbitrators

A party intending to challenge an arbitrator must submit a written statement outlining the reasons for the challenge within 15 days of becoming aware of the constitution of the arbitral tribunal or of any circumstance that may give rise to justifiable doubt as to the arbitrator’s independence or impartiality. If the challenged arbitrator does not withdraw or the other party does not consent to the challenge, the arbitral tribunal will decide on the matter.

If a challenge is not successful, the challenging party may request the court, within 30 days after having received notice of the decision rejecting the challenge, to review the matter. In contrast to the UNCITRAL Model Law, the court’s decision may be appealed if leave is granted by the court of appeal.

7.9 Removal

If an arbitrator becomes unable to perform his or her functions, or for other reasons fails to act without undue delay, the arbitrator’s mandate terminates if the parties agree on the termination. If there is a controversy concerning these grounds, any party may request the court to decide on the termination of the mandate. In contrast to the UNCITRAL Model Law, the court’s decision may be appealed if leave is granted by the court of appeal.

7.10 Liability and immunity of arbitrators

Pursuant to Article 8 of the Israeli Torts Ordinance, arbitrators are immune from liability for acts performed in their capacity as such.

The ICAL applies only to international commercial arbitrations seated in Israel, except for the provisions related to the stay of proceedings, interim measures, and the recognition and enforcement of awards. With the exception of these provisions, assistance by the state courts will therefore be limited to international commercial arbitrations seated in Israel.

8.1 Interim measures

8.1.1 Overview of interim measures

The courts have broad powers to grant interim measures, prior to or after the constitution of an arbitral tribunal. These include, for instance, orders of attachment or injunctions.

8.1.2 Relevance of availability of emergency arbitrator mechanism

While the ICAL does not provide for the appointment of an emergency arbitrator, the IICA’s international arbitration rules allow for this possibility.

8.2 Taking of evidence

The arbitral tribunal, or the parties with the approval of the arbitral tribunal, may request the assistance of the courts in the taking of evidence. The courts may carry out the request in accordance with Israeli evidence law.

8.3 Appointment or challenge of arbitrators

See Sections 7.4 and 7.8, above.

8.4 Other available assistance

No other types of assistance to arbitrations are commonly available.

9.1 Domestic scope of sovereign immunity from jurisdiction

Sovereign immunity from jurisdiction is governed by the Foreign States Immunity Law 5769-2008 (“Immunity Law”). Under the Immunity Law, a foreign state has immunity from the jurisdiction of the courts of Israel, unless the cause of action is a commercial transaction.

Where a foreign state agrees to submit a dispute to arbitration, the foreign State does not enjoy immunity from jurisdiction with respect to court proceedings connected with the arbitration, unless otherwise agreed in the arbitration agreement.

However, a foreign state enjoys immunity from jurisdiction when an arbitration agreement is governed by public international law, unless one party is a governmental authority with a separate legal personality from the foreign State, provided that it is not a central bank.

9.2 Immunity from execution

Immunity from execution is also governed by the Immunity Law, which provides that the assets of a foreign state shall have immunity from proceedings for the execution of a judgment or other decision of a court in Israel unless such assets are:

• commercial;
• assets situated in Israel to which the foreign state is entitled by way of succession, gift, or as bona vacantia; or
• immovable assets situated in Israel.

Assets of a foreign state shall not benefit from immunity if the foreign state has expressly waived the immunity in writing, or by written or oral notice to the court. Such a waiver may be made generally or in respect of a specific matter but does not apply to military assets.

Unless the parties agree otherwise, the arbitral tribunal will decide whether to hold oral hearings for the presentation of evidence or arguments, or whether the proceedings will be conducted based on documents and other materials.

If the claimant fails to submit its statement of claim, the arbitral tribunal shall terminate the proceedings. However, if the respondent fails to submit its statement of defense, the tribunal will proceed with the case. If a party fails to attend a hearing or provide documentary evidence, the arbitral tribunal may continue the proceedings and issue an award based on the available evidence.

The ICAL does not specifically address confidentiality. However, in a case involving a third-party request for document disclosure, the Supreme Court of Israel ruled that documents presented during arbitration proceedings may be considered privileged if the parties had a legitimate expectation of confidentiality.

12.1 Requirements as to content and form

The award must be made in writing, dated, and signed by the arbitrators, and it must indicate the seat of the arbitration. Unless the parties agree otherwise, the award must state the reasons upon which it is based.

12.2 Time limit

The law of Israel does not impose a time limit for rendering an award.

12.3 Remedies

Unlike the Arbitration Law 1968, which specifically provided the available remedies (monetary relief, declaratory decision, mandatory or a prohibitive injunction, specific performance, etc.), the ICAL follows the UNCITRAL Model Law and does not address the issue of remedies.

13.1 Interpretation and correction of awards

Within 30 days of the receipt of the award, each party may request the arbitral tribunal to correct any errors in computation, any clerical or typographical errors, or any errors of similar nature. Each party may also, within the same time period, request the arbitral tribunal to give an interpretation of a specific point or part of the award.

13.2 Challenge of an award

An award may be challenged within 90 days of its receipt.

The grounds for challenge are based on the UNCITRAL Model Law. They are:

• Lack of legal capacity of a party to the arbitration agreement or the invalidity of the arbitration agreement.
• Lack of proper notice or inability of a party to present its case.
• The award deals with a dispute not contemplated within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration.
• Irregularity in the composition of the arbitral tribunal.
• The subject matter of the dispute is non-arbitrable.
• The award conflicts with public policy.

13.3 Recognition and enforcement proceedings

The same grounds for challenging an award apply to refusal of its recognition and enforcement. Courts may also refuse to recognize or enforce an award if it has not yet become binding on the parties or has been set aside or suspended by a court in the country where the award was made.

13.4 Cost of enforcement

The filing fee of a request to enforce an award is currently ILS 961 (approximately USD 250).

13.5 Enforcement of orders of emergency arbitrators

Enforcement of orders of emergency arbitrators is not addressed by the ICAL and has not yet been addressed by the courts.

14.1 Process for enforcing New York Convention awards

A party seeking to enforce a New York Convention award must submit the original award or a copy thereof to the court which, under Israeli law, has jurisdiction over the matter that had been referred to arbitration. However, if the relevant court is a Magistrates’ Court, the enforcement request must be submitted to the District Court. It is important to note that Israel applies the New York Convention regardless of reciprocity.

14.2 Grounds for resisting enforcement of New York Convention awards

See Section 13.3, above.

14.3 Enforcing non-Convention awards

The enforcement of non-Convention awards follows the same procedure as that for Convention awards.

15.1 Applicable to counsel

Israeli counsel are bound by the ethical rules of the Israeli Bar Association.

15.2 Applicable to arbitrators

There are no mandatory professional and ethical rules applicable to arbitrators as such. However, if an arbitrator is also a lawyer, the latter may be subject to the ethical rules of a bar association in the jurisdiction in which the arbitrator is admitted to practice law.

16.1 Applicable regulatory requirements

There are no regulations governing third-party funding. However, third-party funding is permitted in Israel and has won judicial approval.

16.2 Overview of the third-party funding market in Israel

Third-party funding in Israel is experiencing steady growth. Currently, three major third-party funders are active in the country, offering financial backing for both litigation and arbitration proceedings.

17.1 Types of specialist arbitration

Israel has been on the front of arbitration in the high-tech sector and is currently leading the discussion on dispute resolution in this sector at the UNCITRAL Working Group II.

17.2 Key legal principles

High-tech arbitrations often require the appointment of arbitrators with the expertise to assess complex technical issues, as well as the involvement of specialized technical experts in fields such as science, engineering, and technology. Additionally, due to the sensitive nature of the information involved (such as patents, software, and trade secrets), arbitrators commonly implement protective measures, including confidentiality orders and non-disclosure agreements.

17.3 Types of claim and defenses typically brought in that area

Claims usually involve an allegation of intellectual property infringement, a breach of confidentiality, or a breach of contractual obligations such as non-competition and non-solicitation (primarily by founders, senior management, officers or partners, and service providers). Defenses commonly raised in such cases include those available in contractual disputes, such as comparative negligence, unenforceability due to illegality, or contractual clauses that limit the liability for certain causes of action or the amount of damages.

17.4 Issues and strategic considerations to take note of

High-tech disputes are well suited to arbitration as they often require prompt resolution, expert decision-makers, and confidentiality. To address these specific needs, Israel recently led the initiative for UNCITRAL to publish Model Clauses for Specialized Express Dispute Resolution, designed specifically for the high-tech sector.

The use of alternative dispute resolution in Israel, particularly arbitration, has seen steady growth in recent years. Israel is now a leading player in discussions surrounding the resolution of high-tech disputes and is part of the initiative of UNCITRAL Working Group II to develop frameworks to promote recognition and enforcement of electronic arbitral awards and the delivery of electronic notices of arbitration. Additionally, Israel’s legal framework for international dispute settlement has been significantly modernized, with the enactment of the International Commercial Arbitration Law in February 2024 and the incorporation of the United Nations Convention on International Settlement Agreements Resulting from Mediation into Israeli law.