This article is the first in a series on litigation in Israel and outlines the structure of Israeli courts and their jurisdiction and extraterritorial services of process.
As Israeli litigation involving global corporations becomes more prominent than ever, becoming acquainted with litigation practices could prove advantageous for companies involved in, or looking to enter, the market.
The state of Israel has an independent, adversarial legal system, modelled after the common law tradition. Disputants are free to define the scope of their dispute and the court will adjudicate only on the basis of their pleadings and the evidence that they present.
In determining the outcome, the court will apply the law, which consists of primary legislation enacted by parliament and subsidiary legislation, such as regulations and legal precedent. All judicial proceedings in Israel are bench trials as there is no right to trial by jury.
Traditionally, Israeli civil procedures embraced written submissions and affidavits (subject to cross examination) rather than oral arguments and testimonies. However, the Civil Law Procedure Regulations (following extensive revision) took force on 1 January 2021 and now instates a clear preference of direct examination and oral summation. Many judges have yet to adopt this new approach and prefer to rely on their discretion as established by the regulations.
In recent years, certain influences of continental law principles can be identified within the Israeli legal system. These influences can be seen in the revision of the regulations – which envisages a more active role for judges – and in the continuous effort by the Israeli Parliament to codify substantive civil laws.
Israel is a highly litigious state. It has the highest number of lawyers per capita, and an overwhelming number of claims filed each year, crowding its courts. According to the courts administrator, approximately 840,000 new claims and appeals were filed in 2021 – roughly one claim per 11 citizens. This exceptional popularity of litigation ultimately leads to a tendency to default to legal proceedings (both in the court system and alternative dispute resolution forums such as arbitration) as the go-to option for solving disputes.
Structure of Israeli legal system
The Israeli judiciary comprises a general court system and specialised tribunals. The general court system includes the Supreme Court, six district courts (one in each judicial district) and 30 magistrate courts located throughout the different districts.
Permanent specialised tribunals operate alongside the general court system, with limited subject matter or personal jurisdiction. These tribunals include:
- labour courts;
- administrative courts;
- military courts;
- religious courts;
- family courts;
- the Antitrust Tribunal; and
- the Standard Form Contracts Tribunal.
Magistrate courts
The magistrate courts serve as the trial court of first instance for most civil disputes, having subject-matter jurisdiction over claims for relief valued under 2.5 million shekels. The magistrate courts are usually presided over by one judge.
District courts
District courts have appellate jurisdiction over the magistrate courts, and they serve as a residual trial court of first instance when the magistrate courts and specialised tribunals lack jurisdiction. The district courts are usually presided over by one judge in their capacity as trial courts, and three judges in their capacity as appellate courts.
The Tel Aviv and Haifa District Courts each have a specialised economic division. These economic courts are granted exclusive subject-matter jurisdiction within the court over economic claims (eg, shareholder disputes or derivative actions). Judges with relevant knowledge and experience preside over each of these divisions.
Supreme Court
The Supreme Court is the highest court in Israel. It serves both as an appellate court for the district courts (by right of appeal for first instance cases and by certiorari for appellate cases) and as a High Court of Justice with powers of judicial review. 15 justices are members of the Supreme Court, the senior of which is named president of the Supreme Court. Most cases are presided over by one or three justices, and five or more justices can preside over matters deemed especially significant. The decisions of the Supreme Court are final and are not subject to appeal. However, in extremely rare and unique circumstances, a Supreme Court verdict can be subject to a re-hearing.
As the High Court of Justice, the Supreme Court has material jurisdiction over petitions for judicial review of legislative and administrative action, including limited review of decisions of the specialised tribunals. While the High Court of Justice is the court of first instance in some of these cases, it is not a trial court and it applies administrative rules of evidence, rather than civil law rules of evidence. Appropriately, the High Court of Justice also has unique procedural regulations.
Since many cases are granted right to the Supreme Court, either by appeal or as first-instance petitions, the Supreme Court is extremely active with almost 9,000 cases opened in 2021.
According to the courts administrator, the average length of regular civil proceedings in each of the following courts is as follows:
- magistrate courts – 11.4 months (including claims that are dismissed before final judgment);
- district courts – 20.2 months (including claims that are dismissed before final judgment); and
- Supreme Court – 17.3 months.
Jurisdiction and extraterritorial service of process
Service of process is what allows an Israeli court to acquire jurisdiction over a foreign defendant.
The regulations establish that a prospective plaintiff can serve a foreign prospective defendant – if there are grounds for extraterritorial service – without requesting leave. The plaintiff is still required to motion the court requesting orders for executing the service. This motion must be accompanied by an affidavit that:
- supports the cause of action of the prospective suit;
- supports the existence of grounds for extraterritorial service; and
- includes the defendants address abroad to which process is intended to be served.
The regulations include a comprehensive list of grounds for extraterritorial service, such as that the claim concerns a property located in Israel, or that the claim concerns a contract subject to the laws of Israel. All the grounds require some connection between the claim and the state of Israel, which justifies the court assuming jurisdiction over the claim.
The regulations establish an especially broad scope of grounds for service of process concerning torts. According to the regulations, damages incurred by the plaintiff in Israel from a product, service or conduct of the defendant are sufficient grounds for extraterritorial service. This is provided that the defendant could have anticipated that the damages could be caused in Israel, and that the defendant, or person affiliated with them, is significantly engaged in international commerce or services.
This clause came into force in December 2018 and applies prospectively to claims initiated thereafter.
The court has the discretion to deny the prospective plaintiff’s motion for orders for execution of service, and rule that, under the given circumstances, process will not be served extraterritorially. If the court does not deny the motion and process was served accordingly, the defendant may move to quash the extraterritorial service arguing that the Israeli court lacks jurisdiction or is not the appropriate forum for adjudication of the dispute.
Read the Article at Lexology >>
For further information on this topic please contact Sivan Wulkan at Arnon, Tadmor-Levy & Co by telephone (+972) 3 608 7999 or by email sivanb@arnontl.com. The Arnon, Tadmor-Levy & Co website can be accessed at www.arnontl.com
