© 2025 Eric S. Sherby
Over the past two weeks, a great deal has been published concerning a decision in late August, by the Tel Aviv District Court, denying enforcement of an arbitral award given by a Paris-based panel under the auspices of the International Centre for Settlement of Investment Disputes (“ICSID”) under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”). (Civil File 11552-02-23)
The arbitral award was rendered in favor of a German company and against Spain. In the Israeli proceeding, Spain argued that Israel is not an appropriate forum for the enforcement of the award. The German company argued that the ICSID Convention obligates the Israeli court to enforce the arbitration award because a prevailing party under that convention may seek enforcement of the award in any signatory country of its choosing.
District Court Judge Yehudit Shevah agreed with the position of Spain, holding that Israel is not an appropriate forum – due to the lack of any Israeli connection to the parties or their assets.
Some commentators have expressed surprise at this decision. It is possible that the surprise arises (at least in part) from an imperfect translation of a portion of Judge Shevah’s decision. The court rejected the argument by the German company that the ICSID Convention gives the Israeli court no discretion. Here is how one Israeli newspaper translated the portion of the decision:
“This sweeping claim, which would completely deny a court any discretion and turn it into an administrative body, or a kind of clerk, required to rubber-stamp every recognition and enforcement request for an ICSID arbitration award, does not align with the essence of the judicial function, nor with the spirit of the law.”
The problem with that translation is that the reference to “the law” is not a reference to any statute or regulation but rather a reference to case law (as is clear from the use by Judge Shevah of the word פסיקה).
The Israeli court relied on an analogy to the general rule under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), which requires that, when parties have executed a valid arbitration agreement, and if a lawsuit between those parties has been filed in court, then the court is required to issue a stay of proceedings and refer the parties to arbitration; Judge Shevah relied upon a narrow line of Israeli case law under the New York Convention, which held that, notwithstanding the requirement to issue a stay and refer the parties to arbitration, in extreme circumstances, the Israeli court has the discretion to refrain from issuing a stay.
In essence Judge Shevah took a narrow exception from one area of international arbitration and applied it to another area of international arbitration. The court essentially held that, when a creditor under an ICSID arbitral award engages in “forum shopping,” the court has the discretion to refrain from adjudicating the issue of enforcement of that award.
One law firm asserted on its blog that the recent decision means that “Israel may be regarded as a selective enforcement jurisdiction.” It is questionable that such a general statement may be inferred from a single decision. There is more than one hint in Judge Shevah’s decision that, if Spain had any assets in the State of Israel, then the outcome would have been different.