The Other Victim of the “Sex for Judgeship” Scandal Is Arbitration

The Israeli daily Haaretz has published a piece by Eric Sherby under the above title,

The original text submitted to Haaretz was a bit longer (and was reduced to meet the newspaper’s space limitations).  Set forth below is the full version:

The Other Victim of the Naveh Scandal

© Eric S. Sherby 2019

The Israeli public at large and the legal community in particular were justifiably shocked by the news, leaked on January 16, that the president of the Israeli Bar Association, Efi Naveh, was the prime suspect in a sex-for-judicial appointment scandal.  Naveh’s decision to resign about 24 hours after the scandal broke was a sign to many that, despite the inappropriate leak of the investigation, the allegations against Naveh are wellgrounded in fact.

Why are we shocked by this news?  Because almost all of us had assumed that the process of judicial appointments is above board, and these revelations indicate that we were naïve.  Although the conventional wisdom has always been that protexia helps in the judicial selection process, most of us thought that even protexia has its bounds.

Much like the Moshe Katsav scandal, which tarnished the nation’s presidency, it is easy to envision the Naveh scandal tarnishing both the judiciary and the bar for many years to come.

But it is not only the judiciary and the bar that have been tarnished by the Naveh scandal, and so far few, if any, observers have taken note of this additional victim.  The “quiet” victim of the Naveh affair is arbitration.

Arbitration is, essentially, the process of having a civil dispute resolved privately – not through the court system.  Agreements to arbitrate are enforceable.  Although under the Arbitration Law (5728-1968), a district court may appoint an arbitrator when the contract is silent as to how the arbitrator will be appointed, if the contract states that the arbitrator is to be appointed by a third party – for example, by the president of the bar association – such a provision is enforceable.

As president of the Israeli Bar Association, Naveh repeatedly exercised the power to appoint arbitrators.

For decades, a common practice in Israel had been for agreements to provide that, in the event of a dispute, the president of the bar association would appoint an arbitrator to adjudicate the dispute.

Throughout the decades of the above-referenced practice, it was common knowledge that the president appointed his friends and political allies.  Similarly, it was commonly expected that, when the president of the bar association was up for reelection, those whom he had appointed as arbitrators would contribute (whether monetarily or otherwise) to his campaign.

This practice of having the president of the bar appoint an arbitrator continued through 2009.  In 2009, the then-president of the Israeli Bar Association, Yuri Guy Ron, made a dramatic change – Guy Ron established an arbitration institute under the auspices of the Israeli Bar Association.  The Israeli Bar Association’s Arbitration Institute functioned largely independently of the president.  The appointment of arbitrators by the arbitration institute was carried out not by the president of the bar but by the Chair of the Institute.

The establishment of the Israeli Bar Association’s Arbitration Institute was considered one of the greatest steps ever in democratizing the field of “alternative dispute resolution” in Israel.

In 2011, Guy Ron lost his bid for reelection as president of the bar association, and all eyes were on his successor, Doron Barzilay, to see whether he would maintain support for the Israeli Bar Association’s Arbitration Institute.  Barzilay did – throughout his four-year term.

(In the interest of full disclosure, I had been appointed by that institute both under Guy Ron and under Barzilay.)

When Naveh defeated Barzilay in 2015, one of Naveh’s first major acts of “reform” was to shut down the bar’s arbitration institute.  Naveh did so without consulting with the bar generally.  He did so without issuing any public explanation as to why closing the arbitration institute might be in the “public interest” or in the interest of the bar.

Everyone in the legal community who paid attention in 2015 to the prompt killing of the Israeli Bar Association’s Arbitration Institute understood precisely why Naveh disbanded the institute – Naveh wanted all of the power to appoint arbitrators to himself.

Fast forward to early 2019, when the public learns of the sex-for-judicial appointment scandal.  Given the long history whereby bar presidents (prior to 2009) used the power to appoint arbitrators to assist in their reelection efforts, and given the unilateral decision by Naveh in 2015 to kill the arbitration institute that thrived under two of his predecessors, does anyone believe that, when Naveh appointed arbitrators, he conducted himself under a higher ethical standard than he did when he took part in appointing judges?

Of course not.

In the judicial appointment process, Naveh did not exercise any powers by himself.  But in the arbitrator appointment process, Naveh alone was King.

It would be sheer speculation (based on what the public knows at this stage) to suggest that sexual favors played a role in any appointment of an arbitrator by Naveh.  But one need not use much imagination to assume that Naveh’s appointment of arbitrators was accompanied by a quid pro quo – perhaps a more extreme level of quid pro quo than had ever been used by bar presidents in the pre-2009 era.

Assuming that Naveh acted improperly in the appointment of (some) arbitrators – What is the remedy, if any, for parties to arbitration cases before arbitrators who were appointed by Naveh?  The answer is far from clear, but it is precisely such lack of clarity that suggests that arbitration as an institution has taken a great hit.

Under the Arbitration Law, an arbitrator can be removed for misconduct or if the court concludes that s/he is not worthy of the confidence of the parties.  It is unclear whether acceding to pressure from the person (official) who appointed the arbitrator would arise to the level of conduct that would cause a court to remove that arbitrator.

Of equal importance (and somewhat ironic) is that, in many cases, both sides to an arbitration would be hesitant to “rock the boat” – in other words, so long as neither party perceives the arbitrator as favoring the other party, there is little incentive to risk alienating the arbitrator by raising any issue related to disqualification.

At the same time, it is common for defendants in arbitration to look for excuses to derail the adjudication process, and for such defendants, the Naveh affair might be a Godsend.  It would come as no surprise if a defendant in an arbitration before a Naveh-appointed arbitrator were to file a motion with the district court for an order to stay the arbitration until after the police issue their report concerning their investigation of the scope of the Naveh affair.

Given the unchartered waters of the Naveh affair, no one could guaranty at this stage that such a motion to stay would be considered frivolous.

The police are occupied investigating (perhaps as many as) 300 judges who were appointed during Naveh’s term – in order to determine the scope of the improper involvement by Naveh.  It is likely that, as far as the police are concerned, few resources would be available to investigate arbitrators who were appointed by Naveh.

That is where the Israeli Bar Association comes in.  Only the bar association has the full record of the number of arbitral appointments by Naveh.

The Bar should recognize immediately the cloud that the Naveh affair has put on arbitration as an institution.  The new president of the Israeli Bar Association should promptly appoint a commission to review the process by which each and every arbitrator was appointed by Naveh.

At the same time, the bar needs to be sensitive to the reality that some parties (usually the defendant) to arbitrations might have an interest in delaying the adjudication of their case.  In order to ensure that the bar is not perceived as “inviting” any parties to torpedo the progress of an arbitration, the review of the arbitrator-appointment process should (at least initially) be done without interviewing the parties to the arbitration cases.

If an arbitrator who was appointed by Naveh fails to cooperate with such review board, then the review board should consider (a) referring the matter to the police for them to consider within the overall scope of the Naveh investigation, and (b) notifying the parties to that specific arbitration.

The bar association should go one step further.  Every candidate for the bar presidency should commit that, throughout his/her term as president, s/he will appoint arbitrators under the oversight of an independent review board that will interview each candidate to ensure that the candidate is appointed on the grounds of merit – not political patronage.

The bar association created this mess.  The bar association needs to take the laboring oar in cleaning it up.  If not, the public’s already low opinion of the bar will only descend further.


The author, an American-Israeli lawyer, is a member of the panel of arbitrators of the Israeli Institute of Commercial Arbitration.


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