© 2017 Sherby & Co., Advs.
We recently posted a partial summary of the March 6, 2017 judgment by Israel’s Supreme Court in JSC VTB Bank v. Margolis (Civil Appeal 1948/15, March 6, 2017), in which the Court enforced a series of (related) Russian judgments and addressed multiple issues arising under Israel’s Enforcement of Foreign Judgments Law (1958). We noted that the JSC decision is significant with respect to the circumstances under which an Israeli court would accept the defense (section 6(a)(2) of the EFJL) that the judgment-debtor was not afforded a “reasonable opportunity” to present its defense before the non-Israeli court. The March 10 post focused on a number of Russia-specific issues, and we indicated that a subsequent post would address the “lack of reasonable opportunity” defense.
But first we address, in this post, an issue that had not (prior to JSC) been ruled on by the Israeli Supreme Court – namely, whether an Israeli court should consider a foreign court to have properly exercised jurisdiction solely on the basis of implied consent to that court’s jurisdiction.
Coincidentally, in our post of February 8, 2017, we discussed a recent District Court case, Otkritie, and we observed:
For at least 20 years, case law from Israel’s Supreme Court has recognized two grounds . . . for finding that a foreign court had personal jurisdiction over the foreign (usually Israeli) defendant – “residence” or “submission.” The “residence or submission” rule has been repeated several times by Israel’s Supreme Court.
In analyzing the issue of the personal jurisdiction of an English court, the [District Court in Otkritie] made the following observation:
Consent to jurisdiction may be given in different ways, including orally and implicitly. One of the ways to give consent to jurisdiction is when a litigant litigates in a foreign court on the merits.
Undoubtedly there is case law from other Israeli district courts that supports the above-quoted statement from the Otkritie court. But the Otkritie court did not cite to any Supreme Court case in support of that proposition.
The reason appears to be that there simply is no such case law from Israel’s Supreme Court.
We wrote that post on February 8, 2017. Little did we know that approximately a month later, the Supreme Court would address this very issue.
In the JSC case, the Israeli-based judgment debtor argued that the Russian court did not have personal jurisdiction over him – even though he had executed multiple agreements that included a provision in which he expressly consented to the jurisdiction of the Russian courts. (Para. 22)
It was a loser of an argument, but it provided a springboard for the Supreme Court to examine generally the issue of the approach, under the Enforcement of Foreign Judgments Law, to the exercise of jurisdiction by non-Israeli courts. Not surprisingly, the Court referred to its multiple decisions setting forth the general rule that a foreign court will be considered to have had jurisdiction over the foreign (usually Israeli) defendant based upon “residence” or “submission” (consent).
As noted in our blog post of February 8, the Supreme Court had never (as of then) held that “consent” could include implied consent.
In JSC (issued on March 6, 2017), the Supreme Court cited approvingly to an article published by Professor Amos Shapira (Tel Aviv University Faculty of Law) – perhaps the leading Israeli law professor in the field of conflicts of law (referred to in Israel as “private international law”) – in which he opined that consent to the jurisdiction of a foreign court could be “expressed or implied.” (Para. 22)
That ended the ambiguity.
The Israeli Supreme Court has now confirmed that which had been held by several District Courts – namely, that for purposes of determining whether a non-Israeli court properly exercised jurisdiction over a judgment-debtor, consent to the jurisdiction of that court may include implied consent.
Our next post on the JSC case will address the “lack of reasonable opportunity” defense.
But it can already be observed that JSC should be added to the list of very pro-enforcement decisions of Israel’s Supreme Court.