Gill Nadel, Adv.
Legal disagreements relating to international forwarding, by their nature, involve sides found in different countries, who speak different languages, with different legal systems. Given such a situation, it is obvious that in some if not all cases, an Israeli plaintiff will prefer to conduct a legal action against a foreign party in Israel rather than the latter's country. It is easier to conducts the litigation in Hebrew, with a local attorney, and to make the other side take the trouble of coming and conducting the litigation on our home court.
This is subject to at least two conditions: Firstly, that it is really possible to sue the foreign party in Israel, since the court will not always accept jurisdiction over the case; and secondly, that it is efficient to sue the foreign party in Israel.
For the moment, we will assume the first point, which will be discussed later at length, and deal with the second point. When we say "it would be efficient to sue the foreign party in Israel", we essentially mean two things. The first- if the foreign party has property in Israel from which we can collect payment if and when we win the case against him- then we are in great shape. In such a case, we will be able to realize the Israeli decision in the normal fashion. The same applies if, for example, we will be able to seize property held by third parties owed to the foreign party- for example, receipts that the foreign party's Israeli agent should transfer to it.
However, and this is the second thing, if the foreign party does not have property in Israel, we have to carefully check whether it will be possible to realize or enforce the Israeli decision via the court in the foreign party's state. As a rule, the question of enforcing an Israeli decision in a foreign state varies from state to state. There are states in which an Israeli verdict can go through a procedural "conversion" process in the foreign court. The conversion process will not enter into the body of the verdict, but will check, for example, that the foreign defendant received proper summons, or that the decision does not contradict the public interest (we have expanded on this subject in our article "Where can a Chinese Supplier who Breached Contract be Sued?" published in newsletter 31 of Import, Export, and Everything In Between which is published on our office's website (see below)).
For the moment, we will assume that the foreign party has property in Israel, either directly or through property held by a third party. Now let us return to the first question- will it be possible to sue the foreign party in Israel? As a rule, the Civil Procedure Ordinances (ordinance 500) sets a number of criteria under which actions against foreign parties are possible in Israel. For example: when suing for compensation for breach of a contract made in Israel, or when the breach itself was done within Israel, or when suing for compensation for an action or omission that occurred in Israel, and so forth.
However, it is not always possible for that ordinance to apply. For example, when the case involves an Israeli importer who entered into a transaction purchasing goods in which it was agreed the goods be supplied under CIF Haifa or FOB Shanghai conditions (as opposed to DDU or DDP Haifa conditions), and no other duties were agreed upon (such as presenting additional documents in Israel, etc), the breach of contract occurred in China and not in Israel, since the risk, under the Incoterms, had already passed when the cargo left the walls of the ship (see for example 2986/05 Magistrate's Court of Haifa, in which the court rejected the request of an Israeli plaintiff to allow papers to be served outside of the boundaries of Israel for precisely the reason mentioned above- that the breach of contract did not occur in Israel- and even cancelled seizures that had already been made (the foreign supplier was represented by our offices)). Similarly, an Israeli vacationer injured in a holiday cottage in Turkey can't sue the Turkish hotel in Israel, since the damage did not occur in Israel.
Here another legal "trick" comes to the aid of the Israeli plaintiff- the trick called "serving the authorized agent". Ordinance 482(a) to the Civil Procedure Ordinances states that "if the action regarding work or business was against a party who does not live within the jurisdiction of the court issuing the processes of court, it is sufficient to serve the documents to a manager or authorized agent, himself operating at that time on behalf of that person conducting the business or the work in that jurisdiction." The Israel court expanded the application of the above ordinance to "all-embracing" cases, in the spirit of the modern reality in which transmission of information is available and easy. Thus, for example, it was ruled in one case that: "The term "authorized agent" in ordinance 482(a) should not be interpreted in the technical sense of an agent, but rather the decisive test for this question should be the existence of such a level of intensity of bond between the authorized agent and the defendant, since it can be assumed that the authorized agent will bring the proceedings started against the defendant to his attention…Regarding the level of intensity, there is no need to pin it down ahead of time, and each case should be examined according to the circumstances."
Accordingly, for example, plaintiffs have been permitted to present the plaintiff's brief against a Palestinian importer via his customs agent, since the customs agent can be seen as "an authorized agent" according to the above ordinance, given the intensity of the bond between the customs agent and the Palestinian importer.
In a case discussed quite recently by the Supreme Court (2737/08 Uri Arbel v. TUI AG and others), it was ruled that an Israeli vacationer injured while staying in a Turkish hotel, who tried to serve the case against the German company operating the hotel via its Israeli authorized agent- could do so. Who was that authorized agent in Israel? An Israeli company that dealt with promoting Israeli tourism for a subsidiary of the German defendant, who at the time that the papers were served to the Israeli company was in the process of conducting a negotiating between the sole shareholder in the Israeli action and the German company, in the course of which the Israeli company informed the German company of the action being filed. The Supreme Court ruled that given that the Israeli company was part of the marketing and distribution apparatus of the subsidiary of the German company, as well as the shared economic interests between the two regarding the incomes from their services, there is basis under the circumstances to support the existence of a high-intensity bond between the two, which defines the Israeli company as an "authorized agent" for the purpose of serving court papers.
At the same time, the court ruled that the application of ordinance 482(a) above should not be expanded to subsidiary or sister-company that do not operate in Israel, since they do not share the risk of expecting to litigate in Israeli courts.
It should not be forgotten that when papers are served as above to a foreign defendant, the court must weigh whether the Israeli court is the proper forum to conduct the proceedings. Three tests are used to examine the question of whether the Israeli court or the foreign court constitutes the proper forum for the action: (1) which legal forum has the "most connections" to the dispute; (2) what were the reasonable expectations of the sides regarding the location of litigation of disputes that would arise between them; (3) public considerations, particularly which forum has a real interest in conducting the case. The questions will be discussed in a later article.
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