Attorney Gil Nadel, Gilad Paz
The Magistrates Court of Netanya has recently accepted an opposition of the Japanese refrigerator manufacturer, Sharp, and, in effect, determined that it is not possible to sue Sharp in Israel for damage caused as a result of a defect in a refrigerator manufactured by the company and sold to an end user in Israel by a retailer.
The case in point is an insurance claim (subrogation) submitted against Sharp, but the final result of the decision is that this claim against Sharp must be submitted in its place of residence in Japan.
The case:
A refrigerator manufactured by Sharp broke down and caused a fire in an apartment.
Migdal insurance company, which had insured the apartment, compensated the policyholder and submitted a subrogation claim against four defendants: Ms. Miriam Nakash (the tenant of the apartment), Home Center Ltd. (where the refrigerator was purchased), the importer of the refrigerator (Y. Shalom Ltd.) and the refrigerator's manufacturer, Sharp, in Japan.
As for Sharp, since this is a Japanese company, not an Israeli one, Migdal needed to request special license from the court to send the statement of claim to Sharp in its place of residence in Japan. This type of license was indeed granted to Migdal at first, the statement of claim was in fact given to Sharp in Japan and Sharp chose to act on its right to submit a request for this license to be canceled.
In this request for cancellation, Sharp claimed that if Migdal is interested in taking legal action against them for damage that was caused to an apartment due to a defect in the refrigerator, Migdal must do take this legal action within a Japanese court, as per Japanese law. Sharp based this claim on the fact that the cause for this claim was damage, and such a claim may be administered only in the country where the injustice had been committed.
In this case, Migdal claimed that the injustice that had been committed was a malfunction that had occurred during the manufacturing process of the refrigerator. Since the entire manufacturing process of refrigerator had been executed at Sharp's factory in Japan, Sharp claimed the legal proceedings must be administered in Japan.
Court ruling:
The cause for sending the statement of claim to Japan was based on two causes that appear in the regulations for civil legal proceedings:
"An action or oversight within the borders of the state", and "The defendant is an essential party to the proceeding".
As for the first cause, the court accepted Sharp's claim that the action or oversight had not occurred in Israel, stating that if anything had indeed happened, it was in Japan, the country where the refrigerator had been manufactured, and canceled the approval that had been granted to Migdal to send the statement of claim to Japan, and in so doing, prevented Migdal in practice from taking legal action against Sharp in an Israeli court.
As for the second cause, the court determined that although it is possible to claim that the refrigerator manufacturer is an essential party to the investigation of the proceeding, since it is the first link in the chain, but there the manufacturer is not a direct opponent of the end user who purchased the refrigerator in Israel.
Furthermore, the court also based its decision on the fact that this is a case where the lawsuit was submitted by virtue of the Law for Warranty of Defected Products, 1980, which makes it possible for the court to place the responsibility for damage caused as a result of a damaged product, on the product's importer.
In this case, since Migdal had anyways chosen to submit the claim against the refrigerator importer as well (Y. Shalom Ltd.) the court did not find it appropriate to allow Migdal to carry out the proceedings against Sharp, the manufacturer, as well.
[Expedited civil suit (Magistrates Court of Netanya) 20942-04-10 Rahmani and others vs. Nakash and others, decision from September 4, 2012, Judge Yael Klugman, party representatives were not noted].
Notes:
In this case, since Sharp is not an Israeli company, Migdal insurance company was forced to request court approval for sending the statement of claim abroad.
We believe that Migdal could have taken a different approach which may have brought about the desired results.
Regulation 482 of the regulations for civil legal proceedings allows the plaintiff to send the statement of claim to an Israeli factor with "power of attorney" for the foreign defendant, located in Israel.
According to the ruling, "power of attorney" is given to a body located in Israel and who is in continual contact with the foreign body, to such an extent that the intensity of their communication points at the probability that the Israeli body will bring the lawsuit to the attention of the foreign body.
Since Sharp has an Israeli importer, it may be that Migdal should have handed the statement of claim against Sharp to the importer and to claim that it holds "power of attorney" for Sharp.
According to Supreme Court ruling (i.e. civil appeal authorization 11556/05 Kamur Vehicles vs. Haim Himo), the format of the "power of attorney" can be used when suing for damage and not only for contractual claims.
Thus for instance, in a similar case that was recently ruled, an insurance company submitted a subrogation claim against Esco of Sweden, when a dishwasher manufactured by the company caused a short circuit in an apartment in Israel.
The statement of claim was sent to Neli Top Properties, the importer for the Swedish company, claiming that they constitute a body with "power of attorney" on behalf of the Swedish company. Neli Top tried to deny having "power of attorney" but the court deferred their claim, and in effect, made it possible to proceed with the insurance claim against the Swedish company in Israel.
[Civil suit (Magistrates Court Tel Aviv) 44616-08-10 Tel Ran Communications (1986) Ltd. vs. Neli Top Properties Ltd. and others, Judge Eli Sapir, decision of July 16, 2012, party representatives were not noted].
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