Quick Answer: Arbitration jurisdiction in Israel is decided by the District Court unless your contract says otherwise. The Arbitration Law 5728-1968 contains no general competence-competence rule, so an Israeli arbitrator can only rule on the validity of the arbitration agreement if the parties expressly gave the arbitrator that power. For international commercial arbitration seated in Israel, the International Commercial Arbitration Law 5784-2024 changed the default: the tribunal decides first, subject to court review. Separability applies either way, meaning a claim that the main contract is void does not automatically destroy the arbitration clause inside it.

A foreign supplier signs a distribution agreement with an Israeli company. Two years later the relationship collapses, the supplier files for arbitration, and the Israeli side responds with a letter arguing that the whole agreement was procured by misrepresentation and is therefore void. If the contract is void, the argument goes, so is the arbitration clause inside it, and the dispute belongs in the Tel Aviv District Court.

That argument comes up in almost every serious commercial dispute where one side prefers a courtroom. Israeli law has answers, but they are not the answers a lawyer trained in England, New York or Germany would expect. The rules differ depending on whether your case is domestic or international, and the single most costly mistake foreign parties make has nothing to do with the merits. It is missing a procedural deadline in the first few weeks.

1. Two Questions Israeli Law Keeps Apart

Every jurisdictional fight involves two separate questions that get blurred together in correspondence between lawyers.

  • Is there a valid arbitration agreement at all? Was it in writing, did the signatory have authority, does it cover this particular dispute, and is the subject matter something Israeli law permits parties to arbitrate?
  • Who gets to answer the first question? The arbitrator, or the District Court?

Most legal systems answer the second question with the competence-competence doctrine (kompetenz-kompetenz): the tribunal rules on its own jurisdiction first, and a court reviews that ruling afterwards. Israel's domestic statute never adopted it. The Arbitration Law 5728-1968 is a short piece of legislation from a period when arbitration was understood as a creature of contract supervised closely by the courts, and it simply does not address the question.

Israeli case law filled the gap with a rule that surprises foreign counsel: an arbitrator in a domestic Israeli arbitration may rule on the validity and scope of the arbitration agreement only where the parties gave the arbitrator that authority. Absent such wording, jurisdiction is a matter for the District Court. A party who ignores this and asks the arbitrator to decide anyway may find the eventual award vulnerable under Section 24(3) of the Arbitration Law, which allows a court to set aside an award made by an arbitrator who acted without authority or exceeded it.

In Practice: Under Section 1 of the Arbitration Law 5728-1968, "court" means the District Court (beit mishpat mechozi). Applications to appoint an arbitrator (Section 8), to confirm an award (Section 23) or to set one aside (Section 24) are filed there, not in the Magistrate's Court, regardless of the amount in dispute. The exception is a stay application under Section 5, which is heard by whichever court the lawsuit was filed in. An originating motion in the District Court carries a fixed court fee of roughly NIS 1,600 under the current fee tariff, payable in two instalments, and realistically NIS 20,000 to NIS 60,000 in attorney fees for a contested jurisdiction application. Budget three to six months from filing to decision in Tel Aviv, longer in Jerusalem and Haifa.
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2. Separability: A Void Contract Does Not Kill the Clause

Separability is the doctrine that treats the arbitration clause as an agreement distinct from the contract that contains it. Israeli courts recognise it, and the International Commercial Arbitration Law 5784-2024 codifies it expressly in Section 17 for international cases.

The practical consequence matters enormously. If your Israeli counterparty argues that the supply agreement is void for mistake, misrepresentation, frustration or breach, the arbitrator keeps jurisdiction to decide that argument. The claim attacks the commercial bargain, not the parties' separate promise about how to resolve disputes. An arbitrator who finds the entire contract void still had the authority to reach that conclusion, and the award stands.

Separability has limits, and this is where foreign parties often over-read the doctrine. It does not protect a clause that suffers from its own defect. If the same problem infects both agreements at once, the arbitration clause falls with the contract. Typical examples:

  • A person signed for an Israeli company without authority under the Companies Law 5759-1999, so nothing in the document binds the company, arbitration clause included
  • The signatory lacked legal capacity
  • The signature itself is forged
  • The document was never signed and no written arbitration agreement exists, which is fatal under Section 1 of the Arbitration Law, since an arbitration agreement in Israel must be in writing

Note the last one. Israeli law requires writing, but it does not require the parties to sign the same page. Courts have accepted an exchange of emails and a signed purchase order incorporating standard terms. What will not work is an oral agreement to arbitrate, however well documented by witnesses.

In Practice: When a foreign company contracts with an Israeli entity, request a company extract (nesach chevra) from the Registrar of Companies at the Ministry of Justice before signing. The extract costs NIS 10 online through the government portal and shows the registered directors. Pair it with a board resolution authorising the specific signatory and a copy of the company's signature rights protocol. Under Section 47 of the Companies Law, a document binds the company only if signed by someone holding signature rights. Twenty minutes of checking removes the most common ground on which an Israeli arbitration clause is later attacked, and it is the one ground separability will not cure.

3. Who Rules on Jurisdiction in a Domestic Israeli Arbitration

For arbitration seated in Israel that falls outside the 2024 international law, the default position is court control. Three routes exist for getting a jurisdiction question answered, and they run on different clocks.

The claimant's route. A party that wants arbitration and meets refusal applies to the District Court under Section 8 for appointment of an arbitrator. The court will not appoint one unless it is satisfied a valid arbitration agreement exists, so the jurisdiction question gets decided as part of that application.

The defendant's route. A party sued in court despite an arbitration clause applies under Section 5 for a stay of proceedings (ikuv halikhim). The court examines whether the agreement is valid and whether the dispute falls within it. This is the most common route by a wide margin.

The post-award route. A party that took part in the arbitration under protest challenges the award afterwards under Section 24, on the ground that no valid arbitration agreement existed or that the arbitrator exceeded authority. This route is expensive and slow, because you fund an entire arbitration before finding out whether it counted.

You can contract out of the default. A well-drafted clause gives the tribunal express power to rule on its own jurisdiction, which Israeli courts will honour as a matter of party autonomy. The court still reviews the ruling at the enforcement or set-aside stage, but the tribunal goes first and the proceedings are not derailed by a parallel court application in month one.

In Practice: Add this to any Israeli arbitration clause you draft: "The arbitrator shall have the power to rule on any objection to the existence, validity, or scope of this arbitration agreement, and on the arbitrator's own jurisdiction." Without it, the Arbitration Law's default sends the question to the District Court. Also disapply the parts of the First Addendum you do not want, because Section 2 of the Arbitration Law imports the whole Addendum as a default, including the three-month period for delivering the award, which is unrealistic for a substantial commercial case and produces avoidable extension applications under Section 19. The Israel Centre for Commercial Arbitration (ICCA) publishes model clauses that already handle both points.

4. What the 2024 Law Changed for International Cases

Israel spent decades as an outlier, applying a 1968 domestic statute to cross-border commercial disputes while most trading partners had adopted the UNCITRAL Model Law. The International Commercial Arbitration Law 5784-2024 ended that. It brings Israeli practice for international commercial arbitration into line with the Model Law framework used in Singapore, Germany, Canada and dozens of other jurisdictions.

On jurisdiction, the change is substantial. Section 17 gives the tribunal power to rule on its own jurisdiction, including any objection to the existence or validity of the arbitration agreement, and treats the arbitration clause as independent of the rest of the contract. A tribunal decision that the main contract is null and void does not by itself invalidate the arbitration clause. Court review is available after the tribunal rules.

Two practical points follow. First, whether the 2024 law applies to your dispute is itself a threshold question, turning on whether the arbitration qualifies as international and commercial, typically because the parties have their places of business in different states. A dispute between a foreign parent's Israeli subsidiary and another Israeli company may not qualify even though the money and the decision makers sit abroad. Second, the jurisdictional objection must be raised early in the arbitration rather than saved for the enforcement stage. Under the Model Law scheme the plea comes no later than the statement of defence, and a party that participates without objecting is generally taken to have waived the point.

In Practice: Under the Model Law scheme adopted by the International Commercial Arbitration Law 5784-2024, a party dissatisfied with a tribunal's ruling that it has jurisdiction has 30 days from receiving that ruling to ask the court to decide the matter. Miss the window and you are stuck with the tribunal's view until the award stage. Diarise the date the moment a jurisdictional decision arrives, and note that arbitration proceedings continue while the court application is pending, so the hearing timetable does not pause for you. Where the seat is Israel and the parties are from different states, confirm with Israeli counsel which statute governs before filing anything, because the deadlines under the 1968 law and the 2024 law are different.
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5. Section 5 Stay Applications and the Deadline That Decides Everything

Section 5 of the Arbitration Law is where most Israeli jurisdiction disputes are actually resolved, and it contains a trap that has cost foreign companies their arbitration clauses.

When a party sues in an Israeli court over a matter covered by an arbitration agreement, the other party may apply to stay the court proceedings and send the case to arbitration. The court will grant the stay if three conditions are met: a valid arbitration agreement exists and covers the dispute, the applicant is ready to do everything needed to conduct the arbitration, and no special reason (ta'am meyuchad) justifies keeping the case in court.

The trap is the timing. The application must be made in the applicant's first submission to the court, before pleading to the merits. File a statement of defence dealing with the substance of the claim and you have submitted to the court's jurisdiction. The arbitration clause is effectively waived. Israeli courts apply this strictly, and no amount of arguing about the strength of the clause later will repair it.

Foreign defendants are particularly exposed here because service of process abroad, translation of Hebrew pleadings and the search for Israeli counsel eat the calendar quickly. A statement of claim arrives in Hebrew, a general manager in Frankfurt or New Jersey spends three weeks finding a lawyer, and by the time anyone reads the arbitration clause the response deadline is days away.

Section 6 operates differently and more favourably where the New York Convention applies. Where the arbitration agreement falls under an international convention to which Israel is a party, the court stays proceedings in accordance with the convention, and the discretion to refuse a stay for a "special reason" is much narrower than in a purely domestic case. Israel ratified the New York Convention in 1959, so this route is available in most cross-border commercial matters.

In Practice: A defendant served with an Israeli statement of claim normally has 60 days to respond where service was effected abroad under the Hague Service Convention, and 30 days for domestic service, though the court may extend. The stay application under Section 5 must be filed within that window and must be your first substantive step. Do not file a defence "to be safe." If you need more time, apply for an extension (bakashat arkhah) while stating expressly that you are reserving the arbitration objection. A refused stay can be appealed by requesting leave to appeal within 30 days, but the odds improve sharply when the original application was filed cleanly and on time.

6. When the Arbitration Clause Itself Fails

Separability protects the clause from the contract's problems. It does not protect a clause that Israeli law refuses to enforce on its own terms.

Section 3 of the Arbitration Law provides that an arbitration agreement has no validity in a matter that cannot be the subject of an agreement between the parties. That is the arbitrability boundary. Criminal liability, personal status questions reserved to the religious courts, and certain regulatory matters cannot be arbitrated at all, whatever the contract says.

Beyond arbitrability, several categories of clause routinely fail:

  • Standard-form contracts. Under the Standard Contracts Law 5743-1982, a term in a standard form contract that deprives a customer of access to the courts may be struck out as unduly disadvantageous. The Standard Contracts Tribunal (beit hadin lechozim achidim) and the civil courts have both invalidated arbitration clauses buried in consumer and adhesion contracts.
  • Employment matters. Cogent statutory rights under Israeli labour legislation, including severance pay and minimum wage, cannot be signed away. A clause purporting to send those claims to private arbitration instead of the Labour Court will not be enforced as to those rights.
  • Pathological clauses. Wording that names a non-existent institution, gives no method of appointing an arbitrator, or points to two incompatible forums invites a court to find no operative agreement. Naming "the arbitration centre of Tel Aviv" without more is a real example of the problem, since no institution carries that name.
  • Scope mismatch. A clause covering "disputes regarding payment under this agreement" does not obviously cover a tort claim for misappropriation of trade secrets. Israeli courts read scope purposively but will not rewrite a narrow clause into a broad one.
In Practice: The wording that survives Israeli scrutiny is broad and specific at the same time: "any dispute, claim or difference arising out of or in connection with this agreement, including any question regarding its existence, breach, termination or validity." Add the seat (Israel), the language (English, if that is what you need), the number of arbitrators, the appointing institution by its exact registered name, and the express grant of jurisdictional power described above. For a consumer-facing or employment-adjacent contract, assume the clause will be tested and consider a mediation-first escalation instead. Israeli courts are far more comfortable enforcing arbitration between commercial parties of comparable bargaining power.

7. If Your Counterparty Challenges the Clause

Assume the challenge is coming and plan for the first 30 days rather than the eventual merits hearing.

Work out immediately which statute governs. A dispute between a Dutch company and an Israeli company, seated in Tel Aviv, most likely falls under the 2024 international law, and the tribunal decides jurisdiction first. A dispute between two Israeli entities, even where one is foreign owned, probably runs on the 1968 law, and the District Court decides unless your clause says otherwise. These lead to opposite first moves.

Then read your own clause with hostile eyes. Does it name a real institution? Does it cover the claim you actually want to bring, including any tort or statutory claims? Does it grant the arbitrator jurisdictional authority? If the answer to any of these is no, the fight over where the case is heard may last longer and cost more than the underlying dispute.

Preserve the objection in writing at every step. If you are the party resisting court proceedings, say so in your first communication with the court and never plead to the merits. If you are resisting arbitration, raise the objection before or with your first substantive submission to the tribunal and repeat it in the statement of defence. Silence is read as consent in both directions.

Finally, weigh the commercial reality against the principle. A jurisdictional fight in Israel adds six to eighteen months and six figures in fees before anyone examines the contract. Where the counterparty's real objective is delay, the faster answer is sometimes to accept the forum they want and press for an expedited timetable. That is a business decision more than a legal one, and it is worth making deliberately rather than by default.

In Practice: An application to set aside an Israeli arbitral award under Section 24 must be filed within 45 days of receiving the award, under Section 27 of the Arbitration Law. Where the other side has already applied to confirm the award, the window shrinks to 15 days from service of that application. These are strict deadlines and the courts rarely extend them. If your jurisdictional objection is the ground you plan to rely on, keep the contemporaneous record: the protest letter, the tribunal's ruling, and the date the award reached you. A challenge under Section 24(1) or 24(3) that rests on a protest first raised at the closing hearing tends not to succeed.