Adv. Gill Nadel, Ohad Krief
When a lawsuit is filed, the plaintiff is required to send the statement of action documents by personal delivery to the defendants' residence. This is done to ensure the defendant may properly respond to the plaintiff's claims.
Many lawsuits pertaining to international trade and forwarding involve entities based beyond the borders of Israel, such as carriers, forwarders, or suppliers.
In such cases, the plaintiff must prove the case relates to Israeli jurisdiction for the court to authorize summoning the foreign defendant to a trial in Israel.
In the following article, we will review the Supreme Court's decision to reject an American forwarder's appeal, ruling that a lawsuit filed against him regarding goods imported to Israel will be adjudicated by an Israeli court.
Case Facts and Detailed Arguments:
44 tons of frozen fish were imported from the U.S. to Israel by an Israeli importer. All sides agree the cargo was shipped to Israel via a ship chartered by a foreign shipping company, and that it was not stored in the required temperature (-10° instead of -18° Celsius). Consequently, the Ministry of Health prevented the release of the cargo in Israel, and it was shipped back to New York. The matter of who is liable for the temperature inaccuracy and resulting damages is the subject of the dispute between the foreign shipping company, the Israeli forwarder and the American forwarder.
In light of the above, the importer filed a monetary claim of 620,000 ILS against the foreign shipping company and the Israeli and American forwarding companies.
The importer requested leave from the court to send the statement of action documents abroad, thus authorizing the court to hear his case against the foreign forwarder, but his request was denied. The rationale presented for the denial was the forwarder's reasonable expectation to be triad in his place of residence within the U.S., where the key witnesses reside, as well as the fact that the forwarder's insurance doesn't cover legal proceedings beyond U.S. borders.
The Israeli forwarder and the foreign shipping company, as defendants in the case, filed third party notifications against the American forwarder. This re-raised the question of whether the court will grant them leave to send the prosecution documents abroad, adding the American forwarder as a defendant in the case.
The Magistrate Court's Ruling:
The Magistrate Court rejected the request for leave, ruling the American forwarder cannot be added as a defendant. The court determined that the American forwarder contacted the shipping company, itself a foreign company, in order to transport cargo within the U.S., by ground transport, from point A to point B. The court ruled that under these circumstances, the American forwarder has no reasonable expectation to be triad in Israel. Moreover, the waybill included a jurisdiction stipulation.
The District Court's Ruling:
The District Court accepted the appeal, overturning the Magistrate Court's decision and ruling the American forwarder may be added as a defendant in the case.
Contrary to the opinion of the Magistrate Court, the District Court determined that the appropriate jurisdiction for the trial to be held in is Israel. This is due to the fact that three of the four entities involved in the trial - the importer, the Israeli forwarder and the foreign shipping company - will be triad in Israel. In such a case, stated the court, there is no justification for excluding the American forwarder from the proceedings. The court ruled that the forwarding should be viewed as a single, continuous process, adding that the attempt to divide it into separate sections is superficial. Such division will only result in unnecessary multiple proceedings, and may lead to contradictory rulings in different courts.
In addition, the court ruled the appropriate jurisdiction for the trial is Israel due to the fact that the damages were sustained by an Israeli company, in Israel, by loss of a cargo meant to be imported to Israel. Moreover, the contract between the importer and the Israeli forwarder for forwarding the cargo was signed in Israel. Although the American forwarder was not a side in that contract, this contract was the main proponent of the entire, ultimately failed, forwarding process.
The District Court rejected the argument relating to the waybill including a jurisdiction clause, ruling that such clause was not exclusive.
The Supreme Court's Ruling:
The Supreme Court determined that the legal matter in question is not a wide-ranging matter which justifies a third appeal to the Supreme Court, after the matter was already deliberated in two lower courts. The question of how jurisdiction is determined in cases involving foreign defendants was discussed expansively in previous rulings, and the present case is simply an application of these rulings, obviating the Supreme Court's involvement.
The Supreme Court noted that the District Court was asked to determine where the case should be adjudicated, in the U.S. or in Israel. The District Court found the proper jurisdiction to be an Israeli court, due to the fact that the majority of linkages in the case are to Israel. In addition, the District Court determined that the policy considerations and the expectations of the differing sides also tip the scales in favor of adjudicating the case in an Israeli court.
The Supreme Court rejected the request for appeal, and charged the American forwarder 10,000 ILS legal costs to be paid to each side in the case.
[Supreme Court: Request for appeal 1785\15 Alison Transport Inc. v. Cosco Container Lines Co. Ltd. and others, presiding judge: Daphne Barak-Erez, 15.7.15
District Court: Appeal 53829-02-14Mentfield Logistics Ltd. (1983)v. Alison Transport Inc. and others. Appeal 52407-02-14Cosco Container Lines Co. Ltd.v. Alison Transport Inc. and others. presiding judges: Issaiyho Schneller, Dr. Kobi Vardi, Hagai Brenner]
For previous articles on the appropriate jurisdiction for holding trial in cases involving a foreign entity \ forwarder, please see the following links:
The above review is a summary. The information presented is for informative purposes only, and does not constitute legal advice.
For more information, please contact Adv. Gill Nadel, Chair of the Import, Export and Trade Law Practice
Email: Gill.Nadel@goldfarb.comPhone: 03-6089979.