Quick Answer: An Israeli arbitrator can award the full range of remedies available to a court (compensatory damages, declaratory relief, injunctions and specific performance), with two key limits: punitive damages are not available in commercial disputes, and the award only becomes enforceable once ratified by the District Court. Interest and CPI linkage must be expressly claimed. Once ratified, the Execution Office can freeze bank accounts and attach assets to force payment.

Foreign companies entering Israeli commercial arbitration generally focus on jurisdiction and procedure: which law governs, who appoints the arbitrators, and how long the hearing will last. The question most often left until last is also the most practical: what can the arbitrator actually order?

The answer shapes litigation strategy from day one. A claimant who understands the available remedies can frame its claims more precisely and avoid seeking relief the arbitrator cannot grant. A respondent who grasps the realistic ceiling of its exposure can calibrate settlement calculations rather than litigating to a result it could have predicted. This guide sets out the remedial powers of Israeli arbitrators, the rules governing interest and costs, the formal requirements for a valid award, and the steps needed to convert an award into an enforceable court judgment.

1. The Scope of Arbitral Relief Under Israeli Law

Israel operates two parallel arbitration regimes. The Arbitration Law 5728-1968 (*Hok HaBorut*, the "domestic Law") governs most arbitrations seated in Israel. The International Commercial Arbitration Law 5784-2024 (the "ICA Law") came into force in late 2024 and applies to international commercial arbitrations, broadly those in which at least one party has its place of business abroad or where the subject matter or agreed seat connects the dispute to more than one country. The ICA Law is modelled on the UNCITRAL Model Law on International Commercial Arbitration.

Under Section 21 of the Arbitration Law 5728-1968, an arbitrator holds the same powers as a court to grant relief, unless the arbitration agreement expressly restricts those powers. This is a broad grant. The starting point is that anything a District Court judge could order, the arbitrator can order too, subject to the limits discussed below. The ICA Law gives the tribunal comparably wide remedial authority under provisions aligned with Articles 17 and 34 of the UNCITRAL Model Law.

The range of remedies available in Israeli arbitration includes:

  • Compensatory damages for actual financial loss caused by a breach
  • Consequential and indirect damages, subject to foreseeability and any contractual cap
  • Declaratory relief — declaring that a contract is valid or void, a clause is unenforceable, or a party is in breach
  • Specific performance — ordering a party to complete a contractual obligation
  • Injunctions — ordering a party to stop specific conduct
  • Restitution and unjust enrichment under the Unjust Enrichment Law 5739-1979
  • Account of profits, primarily in intellectual property disputes
  • Cost orders covering arbitration fees and legal expenses
In Practice — Domestic vs. International Track: If your contract was signed between two Israeli entities, the domestic Arbitration Law 5728-1968 applies by default. If at least one party is foreign or the place of performance is outside Israel, you may elect the ICA Law 5784-2024 instead — which follows the UNCITRAL Model Law and gives the tribunal wider powers, including the ability to grant provisional measures without first applying to a court. The election must be made expressly in the arbitration agreement. The Israel Centre for Commercial Arbitration (ICCA) administers proceedings under both regimes and can advise on which track fits your commercial relationship.

2. Monetary Damages: Scope and Limits

The governing framework for damages in Israeli arbitration is the Contracts Law (Remedies for Breach of Contract) 5731-1970. Section 10 of that Law provides that a breaching party is liable for losses that "arose from the breach and that were foreseeable by the breaching party at the time of contracting as a probable result of the breach." This is Israel's codification of a foreseeability-based damages limit, comparable in effect to the English rule in Hadley v Baxendale, but enacted as statute rather than developed through case law.

In practice, monetary damages in Israeli arbitration fall into three categories:

Direct damages are normally recoverable without controversy. They include unpaid invoices, the cost of procuring substitute performance from another supplier, and the difference between the contract price and market value where a sale was not completed.

Consequential and indirect damages (lost profits, additional financing costs, third-party claims triggered by the breach) are recoverable if they were reasonably foreseeable when the contract was made. The critical complication is contractual limitation clauses. Most Israeli commercial contracts, particularly supply, licensing and service agreements, contain a clause excluding liability for consequential, indirect or special losses. Israeli arbitrators give effect to such clauses. A foreign claimant who suffered significant downstream losses (disrupted supply chains, lost downstream contracts, reputational harm in its home market) may recover far less than expected once the limitation clause is applied to the facts.

Punitive damages are not available in Israeli commercial arbitration. The Contracts Law (Remedies) 5731-1970 is compensatory in design: you recover the financial loss you actually suffered, not an enhanced sum intended to punish the other side. The sole statutory exception is enhanced damages under the Equal Rights for Persons with Disabilities Law 5758-1998 for specific discrimination claims. Do not build a punitive damages theory into your arbitration strategy — no Israeli arbitrator can grant it in a commercial dispute.

In Practice — Review Your Limitation Clause Before Filing: Israeli courts and arbitrators apply contractual liability caps strictly. Section 14 of the Contracts Law (General Part) 5733-1973 allows a court or arbitrator to void an unconscionable clause, but this bar is high in commercial disputes between businesses. Before you file, have Israeli counsel map your actual losses against the limitation clause to understand the realistic ceiling of recovery. A case worth NIS 3 million in theory may be worth NIS 800,000 in practice once a "direct damages only" cap is applied to the facts.

3. Injunctions and Specific Performance

Israeli law is more willing to grant specific performance than English common law. Section 3 of the Contracts Law (Remedies for Breach of Contract) 5731-1970 states that a party is entitled to specific performance as the primary remedy — monetary compensation is the substitute, not the default. An Israeli arbitrator applying this Law can order a party to complete a share sale, deliver contracted goods, or finish construction works, rather than simply paying damages for the failure to do so.

Injunctions are also within the arbitrator's power. The Schedule to the Arbitration Law 5728-1968 grants the arbitrator authority to order parties to do or refrain from doing specific acts, which encompasses both mandatory injunctions (ordering action) and prohibitory injunctions (forbidding conduct).

For urgent situations, waiting for the arbitral tribunal to be constituted and convened is often not realistic. If the other party is dissipating assets, breaching a non-compete, or disclosing trade secrets, you need relief within days, not months. Two routes are available:

  • Court-ordered interim injunction (*tzav meni'a zmanit*): Section 22 of the Arbitration Law 5728-1968 explicitly preserves the right to apply to an Israeli court for interim relief even after arbitration has commenced. The Magistrates' Court or District Court can issue a temporary injunction within 24 to 72 hours if you demonstrate real risk of imminent harm that money cannot adequately compensate. The court injunction does not waive your right to arbitrate the underlying dispute.
  • Emergency arbitrator under ICCA rules: The ICCA's updated 2024 procedural rules allow a party to apply for an emergency arbitrator before the main tribunal is constituted. The emergency arbitrator can be appointed within two business days and may issue provisional measures. This route is effective when you need a neutral, binding order quickly and the other side contests court jurisdiction.
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In Practice — Timing Is Everything for Injunctions: Courts apply a three-part test before granting a temporary injunction in Israel: (1) a prima facie case on the merits, (2) a real risk of harm or asset dissipation if relief is refused, and (3) the balance of convenience favours the applicant. If you can satisfy all three, the court can act within a day. Prepare a sworn affidavit (*tatzhereh*) in advance and have your Israeli counsel draft the motion before the crisis hits. Once assets leave Israel, recovery through the Execution Office becomes far more difficult.

4. Interest and CPI Linkage on Your Award

Interest on an arbitral award in Israel is more complex than most foreign parties expect, and the difference between getting it right and getting it wrong can amount to a significant percentage of your total recovery.

For domestic arbitrations under the Arbitration Law 1968, the default rules (Schedule, Rule 24) allow the arbitrator to award interest on the principal sum from the date the debt became due until the date of actual payment. The rate is typically set by reference to the judgment interest rate under the Adjudication of Interest and Linkage Law 5721-1961 and its subordinate regulations. As of early 2026, the judgment interest rate under the relevant Ministry of Finance regulations is approximately 7.75% per year, calculated as the Bank of Israel prime rate (4.5%) plus a regulatory spread. This rate applies to NIS-denominated claims.

CPI linkage (*hatsmadat madad*) is a separate issue. An Israeli court judgment is automatically CPI-linked — the principal is adjusted to track Israel's Consumer Price Index from the date of the claim until payment. A domestic arbitral award does not carry automatic CPI linkage: the arbitrator must specifically order it. Foreign parties frequently overlook this. If your NIS claim runs for two years before the award is paid (a realistic timeline for a contested arbitration) and annual CPI inflation runs at 3%, you lose 6% of the real value of your award by omitting the linkage prayer. Always claim CPI linkage expressly in your statement of claim.

For awards denominated in USD, EUR or another foreign currency, Israeli arbitrators generally apply a commercial interest rate appropriate to the currency rather than the NIS judgment rate. Most apply a rate based on SOFR (for USD claims) or EURIBOR (for EUR claims) plus a spread reflecting commercial lending practice.

In Practice — The Compounding Effect on a Large Claim: On a NIS 2 million principal claim running for two years before the award is ratified and paid, interest at 7.75% per year adds approximately NIS 310,000 — before enforcement costs. CPI linkage at 3% annually adds a further NIS 120,000 in real value protection. Combined, these ancillary claims add roughly 21% to your recovery. Many arbitration claimants treat interest as an afterthought and claim it with minimal argument. A detailed interest and linkage schedule, presented as a schedule to your statement of claim, puts the arbitrator in a position to grant it in full without needing to recalculate.

5. Cost Orders and Legal Fee Recovery

Who pays the lawyers is a question that deserves attention from the outset, not after the award is received.

Under the default rules of the Schedule to the Arbitration Law 5728-1968 (Rule 23), the arbitrator has discretion to award the costs of the arbitration — including the arbitrator's fees, the institution's administrative fees, and the legal costs of the parties. This discretion is broad. The arbitrator is not bound by any fixed scale and is not required to award costs to the winning party automatically, though in practice most experienced Israeli arbitrators do so where the outcome is clear-cut.

In practice, Israeli arbitrators:

  • Typically award costs to the substantially prevailing party
  • Scale the amount to the result — a partial win on two out of three claims usually produces a proportionate cost order
  • Have discretion to deny costs to a winner who refused a reasonable settlement offer and obtained no better outcome in the award
  • May reduce the costs awarded if the winner ran unnecessary procedural steps or inflated the dispute

Recoverable amounts are rarely the full legal bill. Most Israeli arbitrators apply a "reasonable and proportionate" standard. In a NIS 2 million to NIS 5 million commercial dispute, it is realistic to expect cost orders of NIS 80,000 to NIS 200,000 in legal fees to the prevailing party, depending on complexity and the quality of the costs submissions.

In Practice — ICCA Fee Scale and Settlement Letters: Under the ICCA fee schedule (updated 2024), a sole arbitrator in a dispute valued at NIS 2 million charges an administrative fee of approximately NIS 15,000 plus the arbitrator's hourly rate — typically NIS 1,500 to NIS 4,000 per hour for experienced commercial arbitrators. For a case running 60 to 80 hours to final award, total arbitrator costs commonly reach NIS 100,000 to NIS 250,000. To maximise your cost recovery, submit formal settlement offers in writing before the hearing and retain evidence of service. If the other party refused your offer and the award matches or exceeds it, a detailed costs submission can significantly increase what the arbitrator grants. Israeli arbitration does not have a formal Calderbank procedure, but arbitrators regularly take refused offers into account when exercising their discretion on costs.

6. Award Form, Content and Timeline

For a domestic arbitration award to be valid under the Arbitration Law 5728-1968, it must satisfy several formal requirements. A defective award can be challenged or refused ratification, so getting the form right matters as much as getting the merits right.

A valid award must:

  • Be in writing
  • Be signed by the arbitrator or by a majority of arbitrators (if the agreement permits majority awards)
  • State the date of the award
  • Be delivered to each party by registered post or personal service
  • Include the arbitrator's reasons, unless the parties agreed in writing before the hearing to waive a reasoned award

The time limit for issuing the award depends on the arbitration agreement. If the agreement is silent, there is no hard statutory deadline under the domestic Law, but significant delay can justify an application to the District Court to remove the arbitrator or to extend the time. Institutional rules impose their own deadlines. Under ICCA's 2024 rules, the arbitrator must render the final award within six months of the close of proceedings, extendable by the ICCA Secretariat for good cause.

After the award is delivered, there is a correction window. Either party may apply to the arbitrator within 45 days of receiving the award to:

  • Correct arithmetic or clerical errors
  • Seek interpretation of an ambiguous passage
  • Obtain an additional award on claims that were presented in the proceedings but not addressed in the main award

These correction applications run concurrently with the challenge window: they do not pause the time to challenge the award at court.

7. Ratifying Your Award as a Court Judgment

An arbitral award rendered in Israel under the domestic Law is binding between the parties, but it is not self-executing. To compel a non-compliant party to pay or perform, you need a ratification order (*tzav ekronot* or *kabalat psakdin*) under Section 23 of the Arbitration Law 5728-1968. Ratification converts the award into a court judgment with the same status as a judgment issued by the court itself.

The ratification application goes to the competent District Court: the court in the district where the arbitration was conducted, or where the respondent is domiciled or has assets. The process requires filing:

  • The original signed award or a certified copy
  • A copy of the arbitration agreement
  • Identification documents (or company registration documents for a corporate party)
  • The court filing fee: NIS 1,579 under the 2026 tariff (Schedule A to the Court Fee Regulations 5767-2007, row 19)

If the application is uncontested, ratification typically takes 30 to 90 days from filing. The court will refuse ratification only if the respondent successfully raises one of the specific grounds for setting aside in Section 24 of the Arbitration Law:

  • The arbitration agreement was invalid or did not cover the dispute
  • The arbitrator exceeded the authority granted by the agreement
  • A party was not given a reasonable opportunity to present its case
  • The award was obtained by fraud
  • Ratification would be contrary to public policy or to a statutory provision enacted for the protection of the public

Israeli courts interpret these grounds narrowly. A party cannot re-argue the merits at the ratification stage: the only question is whether a listed defect is present. The courts take the finality of arbitral awards seriously and refuse to reopen factual or legal disputes that the arbitrator has already decided.

For awards issued under the ICA Law 2024, Section 44 of that Law provides a parallel enforcement mechanism, with grounds drawn from the UNCITRAL Model Law (Article 36) and the New York Convention. Israel became a signatory to the New York Convention, and an Israeli award ratified under the ICA Law can in principle be recognised and enforced in over 170 contracting states through that framework.

Once ratified, the court judgment goes to the Execution Office (Lishkat HaHotza'ah LePo'al). The Execution Office can:

  • Attach and freeze bank accounts (*tzav atimah al cheshbon*)
  • Register a lien on real property owned by the debtor in the Land Registration Bureau (Tabu)
  • Issue a wage-garnishment order against an individual debtor's employer
  • Order the forced sale of attached assets at court-supervised auction
  • Issue a stay-of-exit order (*tzav ikuv yetziah*) preventing the debtor from leaving Israel until the debt is paid
In Practice — Challenge Deadline and Ratification Timing: Under the Arbitration Law 5728-1968, a party has 45 days from delivery of the award to apply to the court to set it aside. Under the ICA Law 2024, the window is 3 months. These deadlines are strict. As the winning party, you can file for ratification as soon as the challenge window closes — doing so creates a timing advantage because a ratified judgment starts accruing judgment-rate interest and allows the Execution Office to begin action. If the debtor has assets in Israel, consider whether to file a pre-ratification *tzav atimah* application at the court during the challenge window: the court can freeze assets on an interim basis while ratification proceeds, preventing dissipation.