Israeli District Court’s Mini-Treatise on Enforcement of Foreign Judgments

© 2017 Sherby & Co., Advs.

Although Israeli courts tend to take a pro-recognition approach to non-Israeli judgments, it is unusual for an Israeli court to issue a 38-page decision when adjudicating such a matter.  At the same time, not every day does a non-Israeli judgment creditor seek to enforce a foreign judgment in excess of $160 million.  The recent case of Otkritie International Investment Management, Civil File 35884-05-14 was such a decision.  Money “talks” – and sometimes that “talk” results in a detailed judicial decision.

Various aspects of the Otkritie decision are of interest.  In this blog post, we will address only two issues – (a) the court’s analysis of the question of personal (international) jurisdiction, and (b) the award of costs.

Jurisdictional defense available to a judgment-debtor:  Under Israel’s Enforcement of Foreign Judgments Law (1958), one of the defenses available to a judgment-debtor is that the foreign judgment was given by a court “that was not authorized to give it under the rules of private international law as applied in Israel” – or (in common law parlance) that the non-Israeli court was without personal jurisdiction.

For at least 20 years, case law from Israel’s Supreme Court has recognized two grounds (arguably only 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 Otkritie court 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.

This state of the case law is interesting for a number of reasons – not the least of which is that, in many areas of international litigation, case law from Israel’s Supreme Court is more favorable to non-Israeli litigants than is case law from Israel’s lower courts.  Two examples of such dichotomy are the enforceability of forum selection clauses (calling for litigation outside Israel) and the exercise by Israeli courts of “long-arm” jurisdiction.  In those two areas, it is common for a non-Israeli defendant to “wish” that the lower court would faithfully apply Supreme Court precedent.

In any event, the implied consent rule, as summarized by the Otkritie court, is reasonably grounded in district court case law such that, when a judgment-debtor asserts the lack of jurisdiction of the non-Israeli court, the judgment-creditor can assume that, as a general matter, a well-grounded assertion of implied consent will prevail.

Award of Court Costs:  As indicated above, the Otkritie decision is 38 pages.  The primary reason for such a lengthy decision appears to be the judgment-debtor’s “hold no punches” litigation strategy – it asserted just about everything.  The District Court did not like that approach, as reflected in paragraph 141 (the final paragraph) of the decision:

Taking into account the [above] and the totality of the [circumstances] and the relevant considerations, including the manner in which the case was litigated, the monetary sum in dispute, the complexity of the case, the testimony that was brought (including expert opinions and from abroad), and other factors . . . , the defendants are required to pay the plaintiffs the amount of NIS 450,000.

It is extraordinary (albeit not unheard of) for an Israeli court to issue a costs order of NIS 450,000.  It appears that the “kitchen sink” approach taken by the defendants was the key ingredient (excuse the pun) in the court’s decision to impose significant costs.

As indicated above, various aspects of the Otkritie decision are of interest, and we will report on those in a future blog post.


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