Israeli Supreme Court Adopts Doctrine Of Implied Consent to Jurisdiction

© 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.

 

Israeli Supreme Court on Enforcing Foreign Judgment – “Da”

© 2017 Sherby & Co., Advs.

Israel’s Supreme Court has long articulated a liberal interpretation of Israel’s Enforcement of Foreign Judgments Law (1958).  See Encyclopedia of International Commercial Litigation (Israel Chapter) § B11.1.  In the recent case of JSC VTB Bank v. Margolis (Civil Appeal 1948/15, March 6, 2017), the Supreme Court extended that liberal approach.  The JSC decision is noteworthy in at least two respects – (a) it is the second time in less than three years that the Supreme Court has dealt with the issue of enforcement of judgments from Russia, and (b) it contains a detailed discussion as to the availability of the statutory defense that the respondent (defendant before the foreign court) did not receive a “reasonable opportunity” before the foreign court to present his defense.

This blog post deals primarily with the Russia-related issues from the JSC case, and in a subsequent blog post, we will discuss the Supreme Court’s analysis of the availability of the “lack of reasonable opportunity” defense.

Enforcement (again) From Russia:

The first case in which Israel’s Supreme Court dealt with the enforceability of a judgment from a Russian court was in 2014, in Double K Oil Products Ltd. v. Gazprom Transgaz Ltd.  The Double K decision received a great deal of attention (and some criticism), primarily for two reasons – (a) its “benefit of the doubt” approach concerning the integrity of the Russian judicial system, and (b) its flexible (or “open to reexamination”) approach to the issue of reciprocity concerning Russian courts.

On the issue of the Russian judicial system’s integrity, the Court in Double K took note of the fact that courts in the United States and in the UK have enforced Russian judgments notwithstanding contentions by some that the Russian judicial system is corrupt.  Without closing the door to the possibility that a future litigant could successfully oppose the enforcement of a Russian judgment by proving corruption, the Supreme Court relied heavily upon the fact that the respondent in Double K had executed a contract that included a forum selection clause that expressly authorized the Russian courts to exercise jurisdiction.  Essentially the Supreme Court told the respondent:  “Once you consent to the jurisdiction of the Russian courts, don’t come crying to us about that court system’s integrity.”

On the issue of reciprocity, the Supreme Court in Double K held (in a nutshell) that, until proven otherwise, the Israeli judiciary should assume that Russian courts would recognize Israeli judgments.

JSC and Consent to Jurisdiction:

As was the case in Double K, the applicant in the JSC case was able to point to the signature of the respondent on a contract (actually multiple contracts) containing a forum selection clause conferring jurisdiction upon the Russian courts.  To a large extent, the existence of the forum selection clauses was a showstopper – the Supreme Court in JSC cited to its longstanding rule that consent to foreign jurisdiction estops a defendant from denying the jurisdiction of the designated court.  (Pp. 20-21, para. 22)

Reciprocity — Silence is Golden:

As indicated above, in Double K, the Supreme Court left open the possibility that, if it were to turn out that Israeli judgments are not enforced “as a matter of principle” in Russia, there might be a change with respect to the enforceability in Israel of Russian judgments.

Citing to the above observation in Double K, the respondent in JSC asserted that, subsequent to the decision in Double K, no Israeli judgment had been enforced in Russia, and the respondent argued that, therefore, the reciprocity requirement in its case was not met.

The Supreme Court made short shrift of that argument.  The Court observed that the argument was made with little or no proof. (P. 20, para. 21)

Of course, the Court could have been even more critical of the respondent on this issue – because the question is not whether any Israeli judgment has been enforced in Russia.  Rather, the issue is whether enforcement of an Israeli judgment has been denied by any Russian court.  Apparently the respondent was not able to call to the court’s attention any such case.  It is, of course, possible that many judgments have been rendered by Israeli courts in recent years against debtors located in Russia but that there was no need in those cases to seek enforcement in Russia.

As indicated above, a subsequent blog post will address the Supreme Court’s analysis of the availability of the “lack of reasonable opportunity” defense.

 

Israeli Court Refuses to Enforce Forum Selection Clause in Online Foreign Exchange Agreement. What’s Next?

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Case law sometimes chips away at well recognized general rules, and it appears that, with respect to the general rule of enforcing forum selection clauses, Israeli district courts are doing their fair share of chipping  — at least insofar as online contracts are concerned.

Background:

As noted in our post of June 29, 2016, as a general matter, Israeli courts are deferential to forum selection clauses in international commerce.  See Encyclopedia of International Commercial Litigation (Israel Chapter) § A4.23.  But in the case summarized in our June 29 post – which was a purported class action against Facebook – a judge in Israel’s Central District refused to enforce a forum selection clause that called for all litigation between Facebook and its Israeli customers to take place in California.  The Facebook court made clear that the primary grounds for its holding was that the cause of action asserted was for breach of privacy under Israel’s consumer protection statutes.

Along comes the Tel Aviv District Court in Forex Capital Markets Ltd. (Civil File 39265-04-16) and, purporting to rely (heavily) on the Facebook decision, declares that a forum selection clause that calls for litigation in London is unenforceable against an Israeli citizen who has a claim in excess of NIS 1 million (approximately $260,000) arising from alleged breaches of a contract for online trading.

Before reviewing the details of the Forex decision, we briefly recap our observations concerning the Facebook decision.  Our June 29 post concluded as follows:

Did the Israeli court properly deny Facebook’s motion to dismiss? Probably yes – if ever there were a case for applying the presumption of the Standard Contracts Law that a forum selection clause in a standard contract is overly generous to the supplier, it would seem that a claim for breach of privacy, by Israeli consumers, would be such a case.

However, the court’s analysis appears to open the door to attacks on forum selection clauses merely because (a) of the parties’ unequal bargaining position and/or (b) a claim is non-contractual in nature. Hopefully subsequent cases will construe the Facebook decision narrowly.

The Forex case indicates that the Facebook decision is being construed anything but narrowly.

The decision in Facebook was based largely on the applicability of Israel’s Standard Contracts Law (1982) and its presumption that certain contractual provisions are “unduly disadvantageous” and, thereby, subject to annulment or amendment.  See Encyclopedia of International Commercial Litigation (Israel Chapter) § A1.31.

As indicated in our June 29 post, the Facebook court took note of the following:

  • the claimant was asserting a purported class action;
  • the value of each class member’s individual suit was relatively small, which meant that, absent class certification, the claims most likely would not have been pursued (and certainly not outside Israel); and
  • the cause of action was not a contract claim but one arising under the consumer protection statutes.

The Forex Decision and Prior Case Law:

Even though the decision in Forex cites extensively to Facebook, the Forex court gives almost no indication that Facebook was based on the above factors.  When the Forex court discusses the analysis of Facebook, there is nary a hint that the purported cause of action in Facebook was a violation of the privacy of Israeli class members.  Similarly, Forex contains no analysis as to the importance of the quantum of damages allegedly suffered by the plaintiff(s) – which was a significant factor in the analysis of the Facebook court.

Another case on which the Forex court relied was Kalingofer v. Paypal Pte. Ltd (Tel Aviv District Court, Civil File 39292-04-13), which was also a purported class action involving alleged violations of the consumer protection laws.  In Paypal, the damages allegedly suffered by Israeli class members were that they were unlawfully charged by Paypal for foreign currency conversions.  Although the discussion in Paypal regarding the quantum of damages was sparse, the claim of unlawfully being charged for foreign currency conversions suggests that the damages to any individual class member were not great.

Yet when the Forex court discusses Paypal, Forex is silent as to the issue of the quantum of damages.  And just as the Forex court’s analysis of Facebook fails to mention that the cause of action therein was for privacy violations, when discussing Paypal, the Forex court does not mention that the cause of action was for violation of the consumer protection laws.

In summary, even though the Forex court relied heavily upon the Facebook and Paypal decisions, and even though two important factors in those two earlier decisions were (a) that the claims arose under the consumer protection statutes, and (b) they were brought as class actions, the Forex court makes no mention of those factors whatsoever.

Moreover, as noted above, the claim of the plaintiff in Forex was for NIS 1 million – which means that plaintiff was hardly the defenseless consumer who, in Facebook (and apparently in Paypal too), would have likely thrown up his hands because the small claim was not worth pursuing outside of Israel.  If the claim of the plaintiff in Forex had been dismissed by the Israeli court, that plaintiff would have had the financial incentive to pursue his rights in London.

The court in Forex completely sidestepped that issue.

The reader of the Forex decision is left with the clear impression that the court was determined to disregard the forum selection clause – regardless of whether case law supports such position.

Going Forward:

In light of Forex, what should be done by a non-Israeli company that had been relying upon a forum selection clause in its online contracts with Israelis?

Such a company has a few different options:

  • Use an arbitration clause instead of a forum selection (litigation) clause:  Because Israel’s Standard Contracts Law includes a carve-out for contractual provisions that are consistent with an international treaty to which Israel is a party, and because the New York Convention is such a treaty, presumably Israeli courts will recognize that they have no discretion and must refrain from exercising jurisdiction when an arbitration clause is involved.
  • Custom-draft contracts that include a forum selection clause: Doing so would arguably take the contract outside the scope of the Standard Contracts Law.  But doing so carries with it significant logistical headaches, which means that, as a business matter, it would often be impractical.
  • Hope that other Israeli courts do not follow Forex and do construe Facebook narrowly (prayer wouldn’t hurt either).

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.

 

הצרות באות בצרורות

חברה ישראלית נוספת נושאת בהשלכות של התעלמות מחוקים נגד שחיתות

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רק שבוע לאחר שפורסם כי חברת ניפ גלובל בע”מ הסכימה לעסקת טיעון עם פרקליטות המדינה בגין הפרת החוק הישראלי למניעת שוחד, ורק מספר ימים לאחר פרסום ההודעה לפיה איש העסקים בני שטיינמץ נעצר בחשד להפרת אותו החוק, חברת טבע תעשיות פרמצבטיות בע”מ —  החברה הגדולה ביותר בישראל ואחת מיצרניות התרופות הגדולות בעולם — הודיעה על עסקת טיעון (להלן– “ההסדר“) עם משרד המשפטים האמריקאי בגין הפרת החוק האמריקאי למניעת שוחד.

על-פי ההסדר, טבע תשלם קנס של למעלה מ-500 מיליון דולר.

אלו לקחים יכולות חברות ישראליות אחרות ללמוד מהמקרה של טבע והסדר טיעון?

הנה מספר לקחים:

כל חברה נמצאת תחת מיקרוסקופ: כל חברה ישראלית אשר פעלה תחת ההנחה כי אינה צריכה לחשוש מאכיפת החוק האמריקאי למניעת שוחד חייבת לחשוב בשנית. אם לחברה שלכם יש כל קשר משמעותי לארה”ב (לרבות מניות שנסחרות שם או שיש חברה אמריקאית קשורה), עליכם להניח כי אתם מתחת למיקרוסקופ של מחלקת ההונאה של משרד המשפטים.

כפי שההצלחה של קומץ חברות היי-טק ישראליות גורמת לקהילת המשקיעים לשים לב לחברות היי-טק ישראליות אחרות, כך גם פרשת השחיתות של טבע תגרום למשרד המשפטים האמריקאי להקדיש יותר תשומת לב לחברות ישראליות שאינן גדולות כמו טבע אך פועלות במישור הבינלאומי.

בורות לא תהווה תירוץ: הערה קשורה היא קל וחומר מההוראה לעיל — אם כי ברמת הפרט. משרד המשפטים יניח כי המנהלים הבכירים בחברה בסדר גודל של טבע — ללא קשר לשאלה אם הם יזמו את מתן השוחד או עצמו עיניים בנוגע לתשלומים אלה — היו מִשּׁוּפְרָא דְּשׁוּפְרָא של הקהילה העסקית בישראל. מכיוון שטבע נסחרת בארה”ב, יש להניח כי מנהליה הבכירים עברו הכשרה כלשהי במניעת שחיתות.

משרד המשפטים יניח כי אם מנהלים שבאמת עברו הכשרה במניעת שחיתות היו מוכנים לשים הכשרה זו בצד במטרה של הגדלת רווחי החברה, אז כמובן שמנהלים בחברות ישראליות קטנות יותר — בהן הכשרה במניעת שחיתות היא לאו דווקא חלק מהשגרה — יהיו מוכנים לעשות זאת.

אין הטענה “לא ידענו שזה לא חוקי לשלם שוחד במדינה זרה על-פי החוק האמריקאי” מהווה טענת הגנה.

קחו גילוי עצמי (self-disclosure) ברצינות: נקבע בהסדר כי טבע לא גילתה מרצון בזמן את התנהלותה הלא חוקית למשרד המשפטים:

טבע… לא גילתה מרצון בזמן את ההפרות [של ה- FCPA] שלה [מחלקת ההונאה של משרד המשפטים], וכתוצאה מכך החברה [טבע רוסיה] לא הייתה זכאית להנחה משמעותית יותר מסכום הקנס או דרך של יישוב העניין…

לאנשי עסקים ישראליים רבים, הביטוי “גילו עצמי” מכיל מילה שלישית, מוסתרת – המילה “פרייר“. אנשי עסקים ישראלים רבים מגיבים בתדהמה לרעיון שחברה עשויה להודיע לרגולטורים (או לגורמי אכיפת החוק) על התנהלות בלתי חוקית, כולל התנהלות פלילית, שהחברה מגלה בכוחות עצמה. אנשי עסקים אלה מעדיפים לקחת את הסיכון שלא ישימו לב להתנהלות זו.

אך כל איש עסקים ישראלי שאינו רוצה להיחשב לפרייר צריך לזכור כי הקנס שטבע הסכימה לשלם הוא למעלה מ-500 מיליון דולר. אין ספק שבעלי המניות של טבע אינם מרוצים מהקנס הנ”ל.

לכל אלו שחושבים כי גילוי עצמי הינו לפריירים בלבד, המקרה של טבע גורם להם לחשוב על תפיסה זו מחדש.

הבעיה הבאה תגיע מבעלי המניות: כפי שצוין לעיל, בהסדר, משרד המשפטים למעשה הודיע לבעלי-המניות של טבע כי, אילו הייתה החברה מבצעת גילוי עצמי, סכום הקנס עלול היה להצטמצם.

עם זאת, יש קביעה נוספת (שחזרה על עצמה מספר פעמים) בהסדר שצריכה לעורר דאגה בקרב הנהלת טבע. בהסדר צוין לפחות חמש פעמים כי התנהלותה הבלתי חוקית בוצעה על-ידי מנהלים “בכירים” של טבע או של חברת הבת הרוסית שלה.

אם וכאשר בעלי-המניות של טבע יגישו תביעה נגזרת כנגד המנהלים של החברה, תהיה להם תחמושת מן האמור בהסדר הן בכדי לטעון כי ההחלטה על-ידי ההנהלה הבכירה לשלם שוחד מהווה הפרה של חובות נאמנות, והן בכדי לטעון כי ההחלטה שלא לבצע גילוי עצמי (או לא לעשות זאת בזמן) מהווה הפרה של חובות אלה.

אין ספק כי טבע הייתה מעדיפה שההסדר לא יכלול (א) כל התייחסות למעורבותה של ההנהלה הבכירה, או (ב) כל אזכור לעובדה כי גילוי עצמי על-ידי טבע היה יכול להוביל לקנס נמוך יותר.

אך משרד המשפטים רואה עצמו כבעל מחויבות לציבור המשקיעים. גם אם טבע הייתה מתחננת למחוק את האמירות הנ”ל מטיוטת ההסדר, סביר שמשרד המשפטים לא היה נענה לבקשה זו.

על כל חברה ישראלית שמניותיה נסחרות בארה”ב ללמוד מכך כי — ללא קשר לשאלת מעורבות ההנהלה הבכירה בתשלום שוחד, אי-גילוי עצמי, או כל שיקול אחר — הסדר הטיעון עם משרד המשפטים עשוי להכיל מידע רב שישמש את בעלי-המניות התובעים בתביעה נגזרת נגד החברה.

אחת הדרכים להפחית בעיה כזו (במקרים רבים) היא דרך גילוי עצמי.

ברוכים הבאים לאמריקה.

לסיכום, אין זה מקרי כי, בהודעה לעיתונאות בנוגע לעסקת הטיעון, המנכ”ל של חברת טבע השתמש ארבע (4) פעמים במונח “culture of compliance”.  כפי שציינו בפוסט שלנו מיום 20.12.16, הדרך הטובה ביותר (אולי הדרך היחידה) להימנע מבעיות משפטיות בנושא שוחד בינלאומי הינה לאמץ תכנית שמאפשרת לחברה להוכיח לגורמי אכיפת החוק שהחברה פועלת בהתאם ל-“culture of compliance”.  שימוש גרידא במונח לא יספיק.

 

ייזהר המוכר” — עידן חדש במניעת שוחד בינלאומי”

© Sherby & Co., Advs.

 

העולם העסקי הישראלי הוכה בתדהמה כתוצאה מפרסומם של שני אירועים תוך ארבעה ימים – (א) הסדר טיעון (שפורסם ביום 15.12.16), עם חברת ניפ גלובל לפיו החברה תיקנס ב-4.5 מיליון ש”ח בגין מתן שוחד בממלכת לסוטו (באפריקה), ו-(ב) מעצרו של איש העסקים בני שטיינמץ (פורסם אתמול) בחשד שהוא שילם שוחד לבכירים בממשלת גיניאה.

א. הרקע

לפני כ-20 שנה, מס הכנסה הישראלי היה מכיר כהוצאה מוכרת מתן שוחד על-ידי חברה ישראלית כאשר הדבר היה נדרש על-מנת להשיג פעילות עסקית בחו”ל (בעיקר במדינות עולם שלישי). אך בשנת 2008 תוקן החוק הישראלי (סעיף 291א לחוק העונשין), כך שמתן שוחד לעובד מדינה זרה מהווה עבירה פלילית.

החל משנת 2009, ארגונים בינלאומיים, וביניהם ה-OECD, עקבו אחרי רמת האכיפה של החוק בישראל, וחלק מהארגונים הנ”ל הביעו ביקורת על כך שבמדינת ישראל לא נפתח אף תיק פלילי בקשר למתן שוחד בחו”ל.

בכנס שהתקיים בתל אביב, לפני כשלוש שנים, ניסה פרקליט בכיר בפרקליטות המדינה להסביר כי העובדה שלא הוגשו כתבי אישום בנושא שוחד בחו”ל נובעת מכך שבישראל צריכים רמה גבוהה של ראיות על-מנת להרשיע וכי בדרך כלל קשה להשיג את רמת הראיות הנדרשת כאשר פעולת מתן השוחד בוצעה במדינה זרה.

ב. אירועי השבוע שעבר

כנראה שהמצב השתנה.

על-פי הדיווחים הראשונים, בתיק של שטיינמץ, הרשויות הישראליות נעזרו בסיוע מגורמים אמריקאיים, ובעניין ניפ גלובל, הרשויות הישראליות נעזרו בסיוע של הארגון UNCAC. בעסקת הטיעון הסכימה ניפ לשלם קנס של 4.5 מיליון ש”ח.

ג. עם הפנים קדימה

כל חברה ישראלית הפועלת בחו”ל – במיוחד אלו שפועלות במדינות עולם שלישי – צריכות להפיק לקח מפרשת שטיינמץ ומפרשת ניפ גלובל.

רשויות אכיפת החוק מודעות לטענה לפיה “אי-אפשר לנהל עסקים” במדינות רבות בעולם מבלי לתת שוחד לעובדי אותה מדינה. לטענה זו אין ערך משפטי. על-פי החוק, חברה ישראלית הפועלת בחו”ל חייבת לעמוד בסטנדרטים של הדין הישראלי – אפילו כאשר הנוהג במדינה זרה דורש פחות.

בתחום של מניעת שוחד, אחת מהבעיות הנפוצות ביותר היא דרישה מאת סוכן במדינה זרה לקבלת כסף עבור תשלום “מיוחד” או עבור “לוגיסטיקה מיוחדת”. במקרים רבים דרישה כזו היא בקשה בכסות מאת הסוכן לקבלת כסף עבור שוחד שיינתן לעובד המדינה בה החברה הישראלית מנסה לעשות עסקים.

לפי הדיווחים, המצב המתואר לעיל היה בדיוק הפלונטר בו נפלה חברת ניפ גלובל – היא שכרה את השירותים של “מתווך” בממלכת לסוטו, ואותו מתווך העביר כספים לעובד המדינה או לקרוב משפחתו.

על-פי הדין, מתן שוחד על-ידי סוכן או מתווך (זר) דינו מתן שוחד על-ידי החברה הישראלית.

בכל רחבי העולם, חברות ממדינות מערביות מנסות להתמודד עם הבעיה של פעילות לא חוקית ע”י סוכנים/מתווכים. הפיתרון אינו עצימת עיניים – אלא אימוץ תוכנית למניעת שוחד.

כבר כ-40 שנה חברות אמריקאיות מודעות לסכנה במתן שוחד בעסקים בינלאומיים, והדבר גרם לקהיליית העסקים בארה”ב לאמץ תוכניות למניעת שוחד. תוכניות אלו מבוססות הן על לימוד עובדים על האיסור למתן שוחד והן על הקפדה, בבחירת סוכנים זרים/מקומיים, על כך שגם הם יבינו את חומרת האיסור ואת ההשלכות המשפטיות של עבירה על החוק.

אנשי עסקים רבים בעולם המערבי שואלים: “מה יקרה אם, למרות כל המאמצים הסבירים למנוע מתן שוחד ע”י נציגינו וסוכנינו, אחד מהם עדיין משלם שוחד, ללא ידיעתנו, בקשר לעסקה שלנו?” התשובה אינה פשוטה. בהנחה שהניסיון בארה”ב יהיה רלבנטי גם בארץ, ככלל חברה שמצליחה לאמץ “culture of compliance” יכולה להתגונן בפני אשמה שסוכן מטעמה שילם שוחד.

בארה”ב היו מקרים בהם סוכן זר שילם שוחד, ללא ידיעתה של החברה, והרשויות החליטו לא להגיש כתב אישום כנגד החברה. מדוע לא? מכיוון שהחקירה שבוצעה ע”י גרומי אכיפת החוק גילתה שבאותה חברה ההנהלה אכן אימצה תוכנית למניעת שוחד ואכן יצרה  “culture of compliance” בחברה.

מהי “culture of compliance”? בקליפת האגוז, היא מודעות אצל כל אחד בחברה לפיה החברה לא תסבול פעולה כלשהי שאינה חוקית.

לסיכום, אירועי השבוע שעבר מוכיחים כי עולם העסקים הישראלי עובר מעבר – מה שנחשב עד לאחרונה כעבירה “תיאורטית” הוכיח את עצמו כסיכון של ממש. לאור הסיכון של קנסות של מיליונים והאפשרות להרשעה בעבירה פלילית, כל חברה ישראלית בתחום הבינלאומי חייבת להשקיע את המאמצים הנדרשים לוודא שהיא עומדת בדרישות הדין.

כל חברה שכזו חייבת לאמץ תוכנית למניעת שוחד.

ICC סיכום הכללים החדשים של ה

© Sherby & Co., Advs.

בפוסט שלנו מתאריך 15.11.16 דיווחנו על הכללים החדשים של לשכת המסחר הבינלאומית עבור סכסוכים (יחסית) קטנים (Expedited Procedure Rules). באותו פוסט (שהיה חלק ראשון משניים – והחלק השני טרם פורסם) התייחסנו לנקודת המבט של חברות ישראליות ששוקלות להכניס סעיף בוררות שמסמיך את ה-ICC.

אנשים רבים בקהיליית הבוררות הבינלאומית התייחסו לאחרונה לכללים החדשים הנ”ל, אך טרם ראינו סיכום טוב ומקיף – עד אתמול כאשר משרד Jones & Day (משרד של כ-2,500 עורכי-דין) פרסם מאמר בבלוג שלו שמתייחס לסוגיה בצורה כוללת ומעמיקה.

לכל חברה ישראלית בתחום הבינלאומי מומלץ לעיין ב http://www.jonesday.com/the-new-icc-expedited-procedure-rules-a-new-experiment-12-13-2016/.

The Israeli Long-Arm Rule – On Steroids

© 2016 Sherby & Co., Advs.

Israeli law regarding the exercise of personal jurisdiction has long been characterized by the dichotomy between the conservative approach dictated by the Supreme Court and the more liberal approach practiced by the lower courts.  The recent decision in IRS Group Ltd. v. Simon Katan et al (Haifa District Court) seems to have taken that schism to a new level.

IRS Group involved an oral contract to distribute goods in the United States.  The defendants were (a) an Israeli-Turkish citizen who resided in the United States, and (b) a limited liability company, established in the United States after the alleged oral contract was arrived at.

Background:  Before describing the circumstances concerning the alleged oral agreement, we set forth a brief summary of the relevant portion of the (multi-prong) Israeli long-arm jurisdiction rule and some basic principles of Israeli jurisdiction:

  • An Israeli plaintiff may not serve process upon a foreign defendant absent court permission;
  • An Israeli court may exercise jurisdiction over a non-Israeli defendant with respect to a contract claim if that contract was “made” in Israel (the long-arm does not use the term “signed” in Israel);
  • A motion for such permission is routinely filed on an ex parte basis and granted on an ex parte basis – with the defendant’s right to move for vacatur being reserved;
  • In order for this prong of Israel’s long-arm to be met, there is no need that the intended place for performance be in Israel;
  • Israel’s Supreme Court has long held that any doubt as to whether the alleged conduct of the non-Israeli defendant falls within the scope of the long-arm rule is to be construed in favor of the foreign defendant.

See Encyclopedia of International Commercial Litigation (Israel Chapter) § A4.3-§ A4.9.

Analysis of Factual Allegations Relating to Jurisdiction:  In IRS Group, the plaintiff asserted both a claim for breach of (an oral) contract and a claim for copyright infringement.

The Breach of Contract Claim:

Both with respect to the circumstances of reaching the agreement and the terms of that agreement, the decision in IRS Group is sparse.  The alleged oral agreement was arrived at in the Israeli office of an accounting firm (presumably the accountants of the plaintiff, IRS Group).

The court added the following observation regarding the chronology of the contractual relationship (as per the plaintiff’s factual contentions):

The principles were agreed upon, in the presence of the parties, at a meeting . . . . [and] the defendant [Simon] requested to prepare the agreement in Israel due to costs considerations, and it was agreed to form a joint company in Dallas Texas for tax purposes.

The parties began their cooperation, even though the defendant [Simon] put off the signing of the contract . . . .

(Paragraphs 2.2-2.3)

The above description – specifically the statement that the defendant put off the signing of a written contract – raises a fundamental question as to whether the execution of a written agreement was intended to be an integral part of the parties’ alleged meeting of the minds.  In essence, the court raised the issue but then dropped it – which seems inconsistent with the Supreme Court’s admonition to construe all doubts in the defendant’s favor.

Moreover, the court in IRS Group glossed over the fact that the corporate defendant did not even exist at the time the alleged oral contract was made in Israel.  In a case in which the lone jurisdictional basis is that an agreement was “made in” the forum state, it is difficult (to say the least) to justify exercising jurisdiction over an entity that did not even exist at the time of such alleged agreement.

Thus there are two grounds for questioning the court’s conclusion that the “contract made in Israel” prong was satisfied – (a) a serious doubt as to whether the parties intended there to be a binding contract absent a signed document, and (b) the lack of any basis for tying the corporate entity, which had not yet come into existence, to the oral contract.

The Copyright Claim:

As indicated above, the plaintiff also asserted a claim for copyright infringement.  The plaintiff claims to have sent photographs (for catalogue use) to defendant Simon, and both defendants are alleged to have used those photos to market goods other than those of the plaintiff.  From the description in the court’s decision, it appears that the alleged acts of copyright infringement occurred entirely outside of Israel.

Yet as a general matter, an Israeli court will be very hesitant to exercise jurisdiction over a non-Israeli defendant for infringement that is alleged to have taken place entirely outside of Israel.

Moreover there is no indication from the court’s decision that the issue of use of the photos was a term of the alleged oral agreement (and even if it had been a term of the agreement, as noted above, the corporate entity could not have been a party to any agreement before it was incorporated).

If the contract did not deal expressly with the issue of the use of the photos, then the plaintiff is left with a claim for copyright infringement against two non-Israeli entities relating to conduct entirely outside Israel.  In other words, if the contract did not deal expressly with the photos, then the existence of an alleged copyright claim would not appear to salvage the jurisdictional problems relating to the contract claim.

Considerations of Convenience: 

The court’s jurisdictional analysis did not stop with the conclusion that the “contract made in Israel” prong of the long-arm was satisfied.  Rather, based upon case law from Israel’s Supreme Court, the district court was required to, and did, consider whether Israel would be a convenient forum for adjudicating the claims.

One of the factors to be considered regarding the issue of the convenient forum is the reasonable expectation of the parties as to the forum for the adjudication of disputes.  On this issue, the court’s analysis was remarkable:

I accept the contention of [the plaintiff’s owner] that he thought that he was doing business with an Israeli citizen, who has a close connection to Israel.  The mother of [defendant Katan] had been living in Israel, and the defendant habitually visited her, and he also came here in order to sit shivah [the traditional Jewish seven-day mourning period] when she passed away.  The defendant [Katan] told [the plaintiff’s owner] that he gets dental treatments in Israel and comes [here] for that purpose every few months.  It can be assumed that the reasonable expectation of the plaintiff was that the place for adjudication in the event of a dispute would be in Israel and that Israeli law would apply to a deal made in Israel.

Although the Israeli dentistry industry might be flattered by such analysis, IRS Group is probably the first time that an Israeli court, in considering the appropriate forum for adjudicating a business dispute, relied upon sitting shivah or sitting in a dentist’s chair.

In deciding that the personal visits to Israel of Katan rendered it reasonable for the plaintiff to expect to litigate in Israel, the court essentially ignored all of the business factors – not the least of which were that (a) the parties agreed to establish a limited liability company in the United States, and (b) the territory for marketing the products was the US.

Take-Aways From This Case:  Arguably the outcome in IRS Group was not surprising – Israeli courts hold plaintiffs to a relatively low evidentiary standard when deciding issues of personal jurisdiction.  But a low evidentiary threshold does not mean that factors weighing against the exercise of jurisdiction may be ignored – even when the court adjudicates a jurisdictional motion on an ex parte basis.

As indicated above, a non-Israeli defendant is given the opportunity to seek vacatur of such an ex parte order after having been served with the court papers.  But that fact alone does not absolve a court from taking into consideration obvious factors that weigh against the exercise of jurisdiction over non-Israeli defendants.

 

 

 

Medical Tourism – Israel’s Proposed Statute (Part THREE) [Bilingual Post]

© 2016 Sherby & Co., Advs.

In two previous posts (July 29 and Sept. 7), we reviewed some of the restrictions in the proposed Medical Tourism Law (the “Proposal”).  In this, our final review of the Proposal, we explain why it is a boondoggle.

The “players” in the Israeli medical tourism field include private hospitals, public hospital, and independent “agents.”  As described in our September 7 post, the Proposal creates a clear economic advantage for hospitals over independent brokers – the former (hospitals) are not precluded from “tying“ the provision of medical services to other economic services, whereas the latter (independent agents) are so precluded.

The “no tying” provision of the Proposal gives both private hospitals and public hospitals an advantage over the independent agents.

But that advantage is not the only one that the Proposal confers upon private hospitals.  Even as between the two kinds of hospitals – public and private – the Proposal gives an additional advantage to the private hospitals.

Section 28(a) of the proposal makes it illegal for a public hospital to provide medical tourism services between 7 AM and 3 PM (15:00).  Note that such restriction applies to public hospitals only.  In other words, private hospitals may provide medical tourist services without any restriction whatsoever as to the time of day for the provision of such services.

Thus section 28(a) confers a clear economic advantage to the private hospitals over the public hospitals.

To summarize, the “no-tying” provision of the Proposal gives the private hospitals a clear economic advantage over independent agents, and the “after-hours only” provision of the Proposal gives the private hospitals a clear economic advantage over the public hospitals.

In other words, notwithstanding the altruistic purposes set forth in the preamble of the Proposal, it is largely draft legislation that will have the effect of expanding the piece of the pie that private hospitals have over the medical tourism market.  If it passes, the Proposal will reduce competition in the medical tourism field.

The Proposal should be stopped in its tracks – or at least amended – as soon as possible.

 

בשני פוסטים קודמים (29.07.16 ו-07.09.16), סקרנו חלק מהמגבלות בהצעת חוק
התיירות הרפואית (להלן — “ההצעה“). בפוסט זה, שהינו הסקירה האחרונה שלנו על ההצעה, נסביר מדוע ההצעה חסרת תועלת (בלשון המעטה).

בתחום התיירות הרפואית הישראלי, ה”שחקנים” כוללים את בתי החולים הפרטיים, בית החולים הציבוריים, ו”סוכנים” עצמאיים. כפי שהוסבר בפוסט שלנו מיום 07.09.16, ההצעה יצרה יתרון כלכלי מובהק לטובת בתי חולים על פני סוכנים עצמאיים — הראשונים (בתי החולים) אינם מנועים מ”כריכת” מתן שירותים רפואיים עם שירותים כלכליים אחרים, ואילו האחרונים (סוכנים עצמאיים) מנועים מלעשות זאת.

סעיף “האוסר כריכה” של ההצעה מקנה הן לבתי חולים פרטיים והן לבתי חולים ציבוריים יתרון על פני סוכנים עצמאיים.

אך היתרון הנ”ל אינו היתרון היחיד שההצעה מקנה לטובת בתי חולים פרטיים. אפילו בין שני סוגי בתי החולים — ציבוריים ופרטיים — ההצעה נותנת יתרון נוסף לטובת בתי החולים הפרטיים.

סעיף 28(א) להצעה אוסר על בתי חולים ציבוריים מלספק שירותי תיירות רפואיים בין השעה 7 בבוקר לשעה 3 אחר הצהריים (15:00). יש לשים לב שמגבלה זו חלה על בתי חולים ציבוריים בלבד. במילים אחרות, בתי חולים פרטיים יכולים לספק שירותי תיירות רפואיים ללא כל מגבלה באשר לשעה ביממה של מתן שירותים שכאלה.

בכך, סעיף 28(א) מקנה יתרון כלכלי מובהק לטובת בתי החולים הפרטיים על פני בתי החולים הציבוריים.

לסיכום, סעיף “האוסר כריכה” של ההצעה מקנה לבתי החולים הפרטיים יתרון כלכלי על פני הסוכנים העצמאיים, וסעיף “רק לאחר שעות הפעילות” של ההצעה מקנה לבתי החולים הפרטיים יתרון כלכלי מובהק על פני בתי החולים הציבוריים.

במילים אחרות, על אף המטרות האלטרואיסטיות המפורטות במבוא להצעה, מדובר בהצעה שתגרום להגדלת חתיכת העוגה שיש לבתי החולים הפרטיים בשוק התיירות הרפואית. במידה וההצעה תעבור, היא תפחית את התחרות בתחום התיירות הרפואית.

יש לעצור את ההצעה — או לפחות לתקנה — בהקדם האפשרי.

International Chamber of Commerce Changes Arbitration Rules – The Israeli Perspective (Part One)

© Sherby & Co., Advs.

The International Chamber of Commerce recently announced the adoption of a set of “expedited rules.”  In a subsequent post, we will examine the extent to which these rule changes are likely to affect the decision by Israeli companies to select ICC arbitration, and we will do so utilizing some empirical data concerning the views of Israeli in-house counsel.

But in this post, we start with the question of whether one of the rule changes indicates that the ICC has, essentially, followed the lead of Israel’s oldest arbitral institute, the Israeli Institute of Commercial Arbitration (http://www.borerut.com/).

Specifically, one of the ICC’s rule changes attempts to solve the same problem that the IICA attempted to solve years ago – namely, whether an arbitral institute should, in connection with relatively small cases, be bound to appoint three arbitrators solely because the arbitration agreement calls for the appointment of three arbitrators.

The ICC has not yet published on its website the full set of the expedited rules (that will probably change soon), but the ICC has announced that those rules will give the institution the discretion to appoint a sole arbitrator in connection with a contractual dispute not greater than $2 million even if the parties had specified in their contract that any dispute would be arbitrated by more than one arbitrator.

Almost immediately after the announcement, some international arbitration practitioners questioned whether the ICC has gone too far – because the rule change overrides contractual stipulations for arbitration before multiple arbitrators.  Invoking the principle that arbitration is a creature of contract, some observers have expressed the concern that, in an effort to promote “speed and efficiency,” the ICC has ridden roughshod over the fundamental principle of freedom of contract.

Commenting in Global Arbitration Review, Jose Maria de la Jara and Nicolas Rosero recently wrote:

Some practitioners will no doubt argue that the parties’ consent is not breached because they have chosen to arbitrate the dispute under the ICC [‘s then existing] rules, which now include the regulation regarding the expedited procedure.  Thus, the parties have implicitly given consent to resigning their right to a three-person panel.

But . . . implicit consent does not accurately represent the intention of the parties.  Companies simply do not sign contracts with a hypothetical low-value dispute in mind that would force them to go to an expedited procedure decided by a sole arbitrator.  Hence, caution should be exercised on overriding an explicit and crystal-clear agreement expressed in the arbitration clause with a presumed and hypothetical consent.  After all, arbitration is a matter of consent, not coercion.

Time will tell whether other observers will join the chorus criticizing the “implied consent” basis for the rule change.

But regardless of how that specific part of the debate plays out, arbitral institutions worldwide still need to grapple with the issue of the efficiency of multiple arbitrators in relatively small cases.

The Israeli Institute of Commercial Arbitration addressed this issue as far back as 2007, when the IICA adopted its International Rules.

In drafting its International Rules, the IICA recognized that a three-arbitrator case can be expensive and that not every transnational dispute merits the costs inherent in three-arbitrator adjudication.  (See http://www.sherby.co.il/cgi-bin/Israels_New_International_Arbitration_Rules.pl)  In the Israeli context in particular, there is a perception that a contractual requirement of multiple arbitrators can be abused by a party that has the greater ability to bear the higher costs inherent in such a case.  Id.

Therefore, Rules 1.1(a)(iv) and 4.2(b) of the IICA’s International Rules attempt to establish a balance between the general rule of honoring the parties’ pre-dispute agreement to use multiple arbitrators and the cost/burden of a three-arbitrator case.  Those rules provide that the parties’ pre-dispute agreement to arbitrate before three arbitrators will be honored by the IICA, subject to one caveat:  at least one party must, in its initial pleading with the IICA, make an express request for the appointment of three arbitrators.  In other words, if the plaintiff fails to include a “multiple arbitrator statement” with its application to commence the arbitration, the plaintiff will be deemed to have waived any contractual right to request that the case be adjudicated by three arbitrators.  Similarly, if the defendant fails to include a multiple arbitrator statement with its statement of defense, the defendant will be deemed to have waived any contractual right to request the appointment of multiple arbitrators.

The above mechanism gives parties to an arbitration agreement the certainty that their pre-dispute selection of three arbitrators will be honored by the IICA, subject simply to their paying sufficient attention to raise the issue at the first opportunity.  (Unlike the ICC, the IICA never had to be concerned about the “implied consent” issue – because the very first version of the IICA’s International Rules included the above-described Rules 1.1(a)(iv) and 4.2(b).)

It is likely that other arbitral institutions will consider yet other solutions to the problem of the perceived inefficiency in using three arbitrators for relatively small cases.  But what is clear from the International Chamber of Commerce’s recent announcement is that the ICC recognizes the problem.

As Israeli lawyers, we take pride in knowing that an Israeli arbitral institution was at the forefront, years ago, of the efforts to address this issue.

(As indicated, our next post concerning the new ICC rules will address the extent to which these rule changes are likely to affect the decision by Israeli companies to select ICC arbitration.)