Adv Gill Nadel
Different laws allow defendants to ask the court to oblige the plaintiffs to give collaterals for court expenses.
For example, according to the customs order, when a company sues an importer whose shipment was caught by customs in suspicion of importing fake goods which breach official trademarks., customs demand from the suing company to deposit a guarantee as a condition for holding the delivery, in order to insure the importer's expenses, if the claim against him shall be declined.
According to the Corporate Law, when a claim is filed in Israel by a foreign company that has no assets in Israel, it can be obliged to deposit collaterals to insure that expenses are covered.
The question asked is when such a company files a claim against an importer who is suspected of violating its rights, is it justified to charge it not only with collateral for customs but also with an additional guarantee, according to the Corporate Law, due to it not having any assets in Israel.
The decision recently handed down at The District Court of Haifa discussed this issue.
The facts of the case and claims of the parties:
A Canadian company named Spin Master that deals with manufacturing toys, holds registered patents in the USA as well as trade marks around the world, including Israel, for a game called Bakugan.
This company filed a claim against an Israeli company called Hai Amra Ltd. that was suspected of importing to Israel a shipment of 40,000 units of forged Bakugan games.
De Facto, the custom house in Haifa detained during August 2010 the imported goods, and from a close examination of the goods by the Canadian company representatives, a suspicion arose that the goods were forged.
According to the Customs Ordinance, Customs demanded from the Canadian company, as a precondition for detaining the goods, to deposit a collateral of 45,000 NIS for insuring the importer’s expenses if the claim was to be rejected. The collateral was deposited.
In addition, the foreign company deposited, at the request of Customs, a letter in which she declares it shall compensate the importer for any sum the court will decide upon, even if it is higher than the sum mentioned above.
The importer whose goods were detained filed a claim to the court requesting to increase the collateral and oblige the Canadian firm to deposit a collateral of 100,000 NIS. One of his claims was that the detained toys were original and not fake, and that any claim of the Canadian company was meant to block him from fair competition in Israel by detaining goods for long periods of time and holding it in Customs, causing damages to the importer’s customers, to his reputation and burdening him with high storage expenses.
The importer claimed that since the Canadian company was a foreign company without any presence in the Israeli market - without any assets or businesses in Israel, it should be obliged, in accordance with the Corporate Law, to deposit a higher collateral of 100,000 NIS since the original collateral of 45,000 NIS covers only the Customs expenses (destruction, storage) and not the importer’s expenses.
The Canadian company claimed that the collaterals it deposited (45,000 NIS) were sufficient together with a letter declaring her obligation to compensate the importer for his expenses and it further claimed that since it is a prosperous company, it shouldn't have any difficulties in filling out the court’s demands if the court decides to rule against it.
As for the lawsuit – the Canadian company claimed that a close examination showed that the goods were, without a doubt forged and claimed that the importer was known for such incidents and that a few court procedures are currently being conducted against him.
The court’s decision:
The court decided that the question presented to it as to whether or not an additional collateral according to the Corporate Law should be deposited, must be determined by weighing the foreign company’s right to approach the court, against the importer’s right to insure that his expenses will be covered up the claim were to be rejected.
The court stated that the Canadian company, by depositing 45,000 NIS and a letter declaring its obligation to pay higher compensations, if Customs demands so, proved its serious intention in filing the claim in Israel, which leads to the conclusion that the company will not have any difficulties in paying any sum that is ruled by the court if the claim is rejected.
The court rejected the importer’s claim that the collateral deposited by the foreign company (45,000 NIS) is intended to cover the expenses of customs, and clarified that it was meant to cover the importer’s expenses.
Eventually, the court decided thatsince the foreign company deposited collateral which is nearly 50 percent of the sum requested by the importer, and in addition a letter of obligation on the issue of compensation, all this was enough, and forcing the foreign company to deposit a higher collateral according to the Corporate Law, was not justified.
(C.F (civil file) (district Haifa) 43006-08-10 Spin Master Ltd. Vs. Hai Amra Ltd. judge Dr. Adi Zernkin, decision from 11/1/11, names of –of the representatives of the parties were not mentioned).
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