Nitsan Bar-Ilan Law Firm

Litigation, arbitration and mediation

We provide litigation services, including representation before the various judicial instances, such as courts, Rabbinical Courts and medical boards. We also provide representation and services in mediation and arbitration proceedings.

Adv. Bar-Ilan, the founder of NBI, is an arbitrator acting on behalf of the Arbitration Institute of the Israel Association Bar and serves as an arbitrator acting on behalf of the Israel Insurance Companies Association (registered association) and on behalf of the Israel Center for Arbitration and Dispute Resolution Ltd.

As part of our commitment to our client, attorneys at NBI view the litigation process as a significant one, directly affecting the results of the proceeding, and therefore, we always learn the details of the file thoroughly, and consider the variety of options available in order to achieve your objective in the most advantageous way for you, so that your position is fully represented before the Court.

What is litigation and who is a litigator

Litigation is the art of appearing before judicial instances. Whether in Court, a Rabbinical Court or various committees and boards, a litigator is the person representing the client, giving the client a voice with which to present his case when appearing. The representing litigator’s job begins long before the hearing, and it requires a thorough understanding of the case and of the client’s matter.

This may be a cliché, but justification is not an insurance policy, for any litigant, and any person who feels justified and is satisfied with that, will most likely be disappointed. The road to winning a case, with the guidance of a skilled litigator, is an arduous and long road, requiring thorough work, in the course of which a considerable various factors affecting the process in which a judgment or a settlement are created and all should be taken into account.

Even if the issue had already been exhaustively dealt with by the best experts, a litigator who takes his job seriously never neglects to thoroughly and extensively explore the issue himself anew. The litigator’s perspective nearly always proves that every problem has more facets, in which the parties involved, being in the eye of the storm, cannot perceive.

Arbitration

Arbitration is an alternative method for dispute resolution, by which the parties to the dispute agree to present their positions before an arbitrator who is an objective third party, in order for him to decide on the dispute.

Arbitration’s place among the various dispute resolution methods

In classifying arbitration as dispute resolution method, it can be said that unlike mediation, which is entirely voluntary and depends on the willingness of the parties, arbitation, in many cases, is forced upon an unwilling party, by virtue of an agreement which he had previously signed, or by virtue of his membership in an association or other body (see the part dealing with arbitration agreements). However, unlike court litigation, it can be said that the parties have a greater degree of control, in that they can choose the person deciding on the dispute – the arbitrator – whereas in court proceedings the judge who hears the case is assigned by the Court Secretariat.

The arbitrator must be objective, but not neutral, as a mediator must be. Objectivity means stating an opinion without prejudice to one of the parties. Neutrality means the absence of an opinion on the matter in question.

Contrary to common belief, the arbitrator does not mediate between the parties, but must decide on the dispute brought before him. The arbitrator may also fully accept the position of one of the parties, require the other party to pay the entire claimed amount, or deny the action altogether. In that sense, the arbitrator is like a judge. The mediator may not decide on the dispute – he may only present to the parties ways in which to resolve the dispute by themselves.

When deciding between arbitration and court litigation, the following should be taken into account:

An arbitral award cannot be appealed against by right. Even if the parties agree that the award can be appealed against, it would still only be an appeal by leave, and only on certain conditions. On the other hand, a first appeal against a court judgment is an appeal by right. Arbitration proceedings do not take long time usually. Litigation before a judge can take many years. The arbitrator’s fees can be very high, compared to court fees. However, in arbitration proceedings, there is no requirement to pay high fees at the beginning of the proceedings. Also, where court hearings are open and the judgment is published, arbitration can remain confidential.

Legal disputes can involve decisions requiring professional or technical knowledge, and the parties can select an arbitrator who is a professional and not a judge – an engineer, accountant, architect, etc.

In court, the rules of evidence are prescribed and known in advance, whereas in arbitration proceedings the parties can make their own rules.

Arbitration in Israeli law

The law encourages arbitration, and regards it as a good way to resolve certain disputes. Section 79B of the Courts Law stipulates that a court hearing a civil matter may transfer the matter to arbitration. Section 65 of the Courts Law stipulates that a judge in a Small Claims Court can hear a matter as an arbitrator. Arrangements in the Family and Agricultural Sector Law, 5752-1992, the ‘Gal Law’, dealing with the moshavim arrangement, subjects hearings before the ‘rehabilitator’ to the provisions of the Arbitration Law.

Arbitration agreements

Every arbitration begins with an agreement between the parties. “Arbitrator” is defined in the Arbitration Law as a person appointed under an agreement to serve as an arbitrator. Therefore, no person can serve as an arbitrator without a written agreement. An agreement is a precondition for the existence of arbitration proceedings. This agreement can be a special agreement regarding arbitration (sometimes called a ‘deed of arbitration’), but usually the agreement is a single clause in a longer agreement regulating all the issues between the parties, such as an agreement for the provision of a professional service, a partnership agreement or an agreement for the sale of an apartment.

Arbitration clauses are standard clauses in the bylaws of cooperative societies, Amutot (non-profit association), professional an sports organizations, various types of associations, who usually desire that disputes between a member and the association and among the members themselves will be resolved by a person that the associations knows and trusts, and not by an external body such as the Court. In such cases, joining the association as a member constitutes agreement to the bylaws, and therefore also to the reference of disputed to arbitration.

Arbitration clauses are also prevalent in other contracts, where the parties are concerned about entering into complicated legal proceedings in the event of a dispute. Often a professional is named as an agreed arbitrator. For example, in a construction agreement, an engineer can be named as an agreed arbitrator in the event of a dispute. Observant people often stipulate that a religious judicial instance be the agreed arbitrator in the event of a dispute.

It is important to note that after Amendment No. 2 of the Arbitration Law, dated 5.11.2008, under the law, if the parties wish that the arbitral award be appealable, this must be stipulated in the arbitration agreement. Should they fail to do so, the rules that existed prior to the amendment would be applicable to the arbitration, i.e., the arbitral award would not be appealable.

The legal scope of the arbitrator

Not every matter can be referred to arbitration. Under the law, an arbitration agreement has no effect to matters that cannot be the subject of an agreement. There is a list of such matters, which include, inter alia: protected tenancy, a person’s employee status (but if it is determined that he is an employee, his rights, such as his wage, social benefits, etc., can be the subject of arbitration), personal status matters (which determine the legal status of a person – married or divorced, paternity matters, etc.), custody, dissolution of companies and partnerships, and more. Moreover, under Israeli law the arbitrator may not decide on his own jurisdiction. That is, if one of the parties argues that the arbitrator does not have jurisdiction to rule on a certain matter, the arbitrator or the parties must apply to the Court in order for it do decide on the scope of the arbitrator’s jurisdiction. Any decision given by the arbitrator without the Court’s approval may enable one of the parties to argue, after the arbitral award is given, that the arbitrator had acted without jurisdiction.

Who is an Arbitrator

Any person can be an arbitrator – no training or special studies are required. It should be assumed that parties would not entrust the decision on their matter to a person who does not know the law or is not familiar with the matter the subject of the arbitration. Some transfer arbitrations to experts on the matter with which the arbitration deals with. Thus, for example, in the case of a construction defects action, it is customary to appoint a construction engineer or a real estate appraiser to serve as arbitrator.

Some parties agree on the identity of the arbitrator themselves, and some need the help of the Court for this purpose, some entrust the determination of the identity of the arbitrator to a third party, for example: ”an arbitrator who shall be appointed by the Israel Garage Association” or ”and arbitrator who shall be appointed by the Israel Bar Association”. The appointment of an arbitrator remains in effect until the end of the arbitration process, unless the arbitrator is removed from the arbitration by the Court, the parties agree to terminate the appointment, or he decides to resign.

A unique institution from Jewish law, which found expression in the Arbitration Law, is ZABLA (an acronym for “ze borer lo echad” – each side chooses one). Each party brings their own arbitrator, who serves more as the trustee or attorney of the person that appointed him. The arbitrator hears the evidence together with the additional arbitrator, and after the end of the hearing of the evidence, the two try to reach an agreed arbitral award. If they are unsuccessful, a third arbitrator is appointed, and the two arbitrators try to persuade of the justification of their position, and he is the one that resolves the dispute. The source of this institution is the Sanhedrin Mishna tractate, page 23 A, where it is stated: “Civil law cases (dinei mamonot) are heard by three, each side chooses one, and the chosen two chose a third”.

Arbitration procedure and arbitral award

Arbitration procedure is usually more flexible, and can be controlled by the parties more. However, if rules are not expressly agreed by the parties, the law sets out rules applicable to all arbitrations, regulating the conduct of the proceedings, preliminary proceedings, examination of the witnesses, the duration of the arbitration, etc. These rules are set out in the first schedule of the law. Arbitrations are not required to be resolved in accordance with substantive law, unless the parties stipulate otherwise or stipulate that the arbitral award would be appealable to the Court. Until 2008, arbitral awards are not required to be reasoned, unless the parties expressly instruct the arbitrator to give a reasoned decision. At the end of 2008, Amendment 2 of the Arbitration Law was adopted, and the default reversed – unless the parties stipulate otherwise, the arbitrator must give reasons. Formal requirements – under the law, the arbitral award must include the arbitrator’s signature and the date of signature.

Approval and cancellation of arbitral awards

An arbitral award cannot be appealed in the usual way. The decision of the arbitrator is final. A party who wins the arbitration can request the Court to approve the award. After the approval, the arbitral award receives the validity of a judgment, and can be executed. When the Court approve the award they do not examine its contents, do not confirm its correctness and do not check its content, other then making sure award was given by an arbitrators that was empowered by the parties, and that no application for cancellation of the award was filed at the time set therefor. If both of these conditions are satisfied, the Court will usually approve the award.

The losing party may file in the court an application for cancellation of the award, within a few days from receiving the award. The application cannot refer to the content of the award. Even if the award contains errors of law and facts that are apparent from the face of the award, this does not constitute grounds for cancellation. This is the arbitrator’s advantage, compared with a judge.

The following are the only grounds for cancellation of an arbitral award by the court:

  • there was no valid arbitration agreement;
  • the award was given by an arbitrator that was not duly appointed;
  • the arbitrator acted without authority or exceeded the authority vested upon him by the arbitration agreement;
  • a party was not given a proper opportunity to present their arguments and evidence;
  • the arbitrator failed to rule on any of the matters which were referred to him;
  • the arbitrator did not give the reasons for his award although the arbitration agreement required him to do so;
  • the arbitrator did not apply substantive law although the arbitration agreement required him to do so;
  • the award was issued after the time fixed for its issuance had expired;
  • the content of the award was contrary to public policy; for example: the court sets aside a decision of a ‘mafia arbitration court’;
  • There have been grounds on which a court would have cancelled a final and non-appealable judgment (mostly in cases of fraud relating to the conduct of the arbitration).

Generally, the grounds for cancellation of an arbitral award are restricted and narrow and apply only in rare cases and in those the court set aside an arbitral award.

Appeal against an arbitral award

Until 2008, an arbitral award was non-appealable. At the end of 2008, Amendment No. 2 of the law was adopted, revolutionizing the field, and allowing the parties to an arbitral award to choose one of two tracks – alternatives to the usual track: 1. appeal before another arbitrator; 2. appeal by leave before a court, in the case of a fundamental error in the application of the law in the arbitral award, resulting in a miscarriage of justice.

Mediation

Mediation is an alternative dispute resolution method, where a neutral person assists the parties in reaching an agreement on a matter in which the parties have a common interest, alongside a dispute. Mediation can be implemented in any type of dispute, from a petty neighbors’ dispute to peace talks between countries.

Characteristics of the mediation process

Mediation is for when there is a dispute, arising from opposing positions between different parties. The parties are voluntary willing to find a positive solution to their problems, and they agree to talk about them, in view of both parties’ interests and objectives. The parties' are willing to reach a solution with the assistance of an independent and neutral person, who has no prior relationship with any of them, maintaining the independence of the parties of the dispute in taking the decision. The parties’ intention is to reach a stable agreement, with long-term consequences.

If these conditions hold true, the mediation process can commence. Mediation is characterized by the simplicity of the process, and by a broad perspective of the parties’ interests, instead of just a narrow perspective of the dispute brought for resolution. The mediator attempts to actively reach an arrangement, with the agreement of the parties, and he has no authority to enforce a solution. In this, mediation is different from most dispute resolution methods (alternative or otherwise).

The mediation process, as a process, is characterized by the following:

  • the neutrality of the mediator – neutrality, as distinct from objectivity, is the complete absence of an opinion on a certain issue, whereas objectivity is taking a position that is not influenced by the position of any of the parties;
  • confidentiality of the information disclosed during the mediation process;
  • The parties participate in the process voluntarily;
  • The parties reach the solution themselves – it will not be forced on them by the mediator.

The mediation process, the role of the mediator

The mediation process is that of an open, free and amicable discussion, which can last several sessions. Unlike processes such as arbitration, or court proceedings, the mediator can meet with a party separately, and hear his opinion. Such a meeting is called ‘caucus’, and although it is not always required, most mediators use it. What is said to the mediator is kept absolutely confidential, and a meeting at which only one of the parties is present is a good way of getting to the bottom of things, unveiling privileged information and previously concealed positions, without the suspicion that they may be used by the other party - they are only used by the mediator, as a tool for promoting the resolution of the dispute.

Qualifications of a mediator

In most countries, the mediator is considered to be the person responsible for giving correct information to the parties on the various consequences of the solutions suggested during the mediation process, in order to allow the parties to effectively assess the chances and risks of the suggested solution. This fact requires that the mediator have significant abilities in the field relevant to the mediation, be it a business, political or family dispute. The mediator must also draft the final agreement, in such a manner that will resolve the dispute in accordance with the solution that the parties had reached.

Basically, the mediator must have a good knowledge of the general concepts of the legal and business systems relevant to the dispute. The mediator is not required to be a lawyer by education, and in fact, many mediators are not. The mediator brings to the mediation process his life experience and his experience in his own professional field – whether it is the legal or economic field or one of the fields of therapy.

In Israel, the now repealed Courts (List of Mediators) Regulations defined the qualification for inclusion in the list of mediators distributed at the court. Essentially, the mediator had to be a graduate of a theoretical and practical mediation course, with a first degree from an accredited academic institution and at least five years’ experience in the field of professional occupation. These regulations were repealed in2008. However, a person who does not meet these criteria is not precluded from practicing mediation, and there are no legal restrictions on engaging in mediation practice.

Mediator’s professional ethics

Under the Courts (Mediation) Regulations, 5753-1993, the following obligations are imposed upon a mediator in Israel:

  • Act fairly, in good faith and without prejudice;
  • Refuse to be appointed to serve as a mediator if there is a relationship or a suspicion of conflict of interests between him and any of the parties;
  • Explain to the parties the need to consider the interests of any minor or legally incompetent person whom the dispute concerns;
  • Not to use any information that reaches him in the mediation for any purpose unrelated to the mediation;
  • Not to disclose any information that reaches him in the mediation to any party unrelated thereto (including the court). Many interpret this section as creating a privilege for the mediator, if he is summoned to court to testify about what had been disclosed to him in the mediation. To this should be added that under the Court's Law, nothing that has been disclosed in mediation shall serve as evidence in civil legal proceedings.
  • If a party discloses information to the mediator, requesting that he keep it confidential, the mediator shall not disclose such information to the others;
  • Not allowed to advise the parties on a professional matter which are not within his areas of expertise, and not to give an expert opinion, even if it is within his areas of expertise;
  • Not allowed to be a party to the agreement reached by the parties, and not allowed to receive any rights or obligations thereunder;

These rules are imposed on any mediator; some mediation associations have drafted more detailed rules of ethics for themselves, addressing additional aspects of the mediator’s activity.

Mediation’s place in the Israeli legal system

Section 79C of the Courts Law [Consolidated Version], 5744-1984, stipulates that the court may, with the agreement of the parties, transfer an action to mediation. This section also defines some of what the mediator may do in the mediation, and what his powers are with respect to the court. Detailed regulations were made under this section, setting out the list of mediators to whom disputes will be referred by the court, and the powers thereof.

As a result of overloading the court system, many disputes are referred by the court to mediation. A case management system operates in many courts, refers cases to mediation that appear suited for it, even before they are scheduled for a hearing before a judge.

Currently, there are many associations that engage in mediation practice. Mediation has become more prevalent, particularly in the field of matrimonial law, and many couples use the services of mediators in events of dispute. Another developing area in mediation, is in the field of criminal law, it is under the term ‘healing justice’, but this process is still in his first stages of development.

MAHUT meetings

An ‘information, acquaintance and coordination meetings’, known under the acronym MAHUT meeting, is a legal procedure in civil proceedings, in certain actions, intended for considering the possibility of solving the dispute through mediation. A MAHUT meeting is a mandatory procedure, free of charge that serves as a kind of preliminary mediation.

The provisions on MAHUT meetings are based on the pilot proposed in the report of the Committee to Assess Ways to Increase the use of Mediation to Decrease the Burden on the Judiciary System, headed by Judge Michal Rubinstein. Under the provisions of the regulations, a MAHUT meeting is only held in the case of civil monetary claims, for an amount exceeding NIS 50,000 (with certain exceptions).

Unlike other alternative dispute resolution methods such as arbitration, mediation or judgments by way of settlement, the parties’ consent to the holding of the MAHUT meeting is not required, and the court does not hear an action without a MAHUT meeting being held first, except in special circumstances where the action must be hear immediately. In such cases, the court may still order that a MAHUT meeting be held at a later stage.

The regulations on the MAHUT meeting are intended for allowing a substantive discussion on the possibility of ending the dispute by mediation or by agreement. Thus, for example, the parties must usually appear in person (or accompanied by an attorney) so that the parties to the dispute themselves are able to directly state their position on it. The mediator, at the MAHUT meeting, has the power to meet with any person with a connection to the dispute, and also the power to meet with a party without his attorney being present, if that party agrees to such a meeting. Like in a mediation process, anything disclosed at a MAHUT meeting is privileged information, and cannot be used as evidence in a civil trial. After the MAHUT meeting, the parties must submit a joint notice stating whether they agree to the action being transferred to a mediation process, or request that the court continue hearing it.