Attorney Gil Nadel, Gilad Paz
Israeli companies often want to sue foreign companies in Israel. When a defendant is located abroad, an Israeli court must determine whether it has the authority to judge the lawsuit, and then, whether the Israeli court is the appropriate forum in which to judge the lawsuit.
Recently, the Supreme Court was asked to determine whether the previous courts were correct in determining that they do not have the authority to judge a lawsuit that was submitted against an overseas appraisal company which had examined cargo that had been imported to Israel and was damaged during the shipment.
The Supreme Court determined that the previous courts were correct in their decision, and in so doing, made it difficult for lawsuits to be submitted in Israel against that foreign appraisal company.
The case:
The prosecutor, Bazak Yashir Quality Printing, submitted a lawsuit against Clal Insurance Company, and against a number of companies located in Europe, for damage that was caused to printing machinery which they had purchased and imported to Israel via sea transport. One of the defendants was a company located in Belgium whose services had been hired by the seller (Printon) to examine whether the machinery was in sound order before being packaged and sent to Israel (appraisal company).
Since Clal had insured the cargo that had been damaged, the lawsuit was submitted against them, among others. In an attempt to pass on the blame, Clal requested permission to submit a third party notification (lawsuit) against the Belgian appraisal company. If this appraisal company had been an Israeli company, there would have been no problem to proceed thus, but since this appraisal company was located in Belgium, the insurance company was required to request court approval to send the statement of claim outside of Israel, and in such, to grant the Israeli court with the authority to judge the Belgian company.
The Magistrates and District Courts determined that the appropriate forum for judging this lawsuit against the Belgian company was not in Israel, but in Belgium, and this decision was appealed to the Supreme Court.
The Supreme Court ruling:
The Supreme Court scrutinized most of the linkages to the conflict in order to determine where the appropriate forum to judge this conflict would be. The court noted that the appraisal company was a Belgian corporation and that that was its place of residency. Furthermore, the shipment of printing machinery was examined and loaded onto the ship by the workers of that appraisal company, in Belgium, and so, most of the linkages to the conflict, the proof and witnesses are tied to Belgium and not to Israel.
The court also examined the reasonable expectations of the parties, based upon their mutual business documents. In this case, the contract between the appraisal
company and its clients included a clause which determined a stipulation for special court proceedings which determined that any legal conflict between the appraisal company and its clients will be judged in a Belgian court and under Belgian law. Granted, this stipulation does not refer to the relations between the insurance company and the appraisal company, but it does help to clarify what the appraisal company's reasonable expectations are.
In addition, the court determined that the Israeli legal system's has relatively low interest in investigating a lawsuit against a Belgian appraisal company, and, furthermore, carrying out this investigation against the appraisal company in Israel, might eventually come at the expense of other litigants that have a stronger linkage to the Israeli forum.
Therefore, in the case at hand, the Supreme Court refused to permit Clal Insurance to send the statement of claim to the appraisal company in Belgium, and in so doing, sentenced them to administering the legal proceedings against the appraisal company in Belgium, should they choose to do so, but avoided charging them with expenses.
[Request for civil appeal 7342/11 Clal Insurance Ltd. vs. Incomacs Ltd., in the Supreme Court, Judge Neil Handel, decision of August 2, 2012. Party representatives: on behalf of Clal Insurance- Attorney Moshe Leshem].
Notes:
We would like to note that Israeli courts usually follow a liberal policy, among other things in light of the fact that in 2012 the tendency is to regard the world as a sort of "small global village" and to place little importance on the question of which country the legal proceeding takes place in.
And yet, this does not mean that a request to operate outside of Israel's legal jurisdiction will be automatically approved. There are cases, such as this, where a request of this kind will be deferred. In order to rule upon a request to work outside of the jurisdiction, the court must begin by examining whether the Israeli court is the appropriate forum for judging this relevant legal conflict, or whether the appropriate forum is actually in the foreign court.
This case serves as a good example of the caution and restraint practiced by Israeli courts before deciding that a conflict with international linkage is fit for judgment in Israel, due to the principle of respect for foreign courts and the principle of an appropriate forum, among other reasons.
As we have mentioned in our previous articles, the Israeli courts will not rush to judge every conflict of an international nature that is brought to them, but instead, will thoroughly examine each case to see whether the lawsuit is under their authority, and whether it is appropriate for them to pass judgment upon it.
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