Quick Answer: Mediation (*gishor*) in Israel is a confidential, voluntary negotiation process guided by a neutral third party. Unlike arbitration or litigation, it does not produce a binding decision — the mediator facilitates agreement, not judgment. Courts can refer disputes to mediation at any stage under Section 79C of the Courts Law 5744-1984. When parties reach a deal, the written settlement agreement (*heskem gishor*) becomes a binding contract and can be confirmed as a court judgment. Most commercial mediations in Israel conclude in one to three sessions within 30–60 days. The process works best for disputes where preserving the business relationship matters, where both sides have something to gain from a private solution, or where litigation costs would exceed the dispute value.

Most foreign businesses dealing with Israeli partners discover mediation only after a dispute has escalated past the point where it was easy to resolve. The contract is already breached, the relationship is already strained, and someone has already consulted a lawyer. That is a pity. Mediation works best when it is chosen deliberately and early.

Below: how mediation functions inside Israel's legal system, what separates the court-ordered process from voluntary commercial mediation, what the leading institutions charge, and how to turn a mediated deal into something the Execution Office (*Hotzaa LaPoal*) can actually enforce if the other side later walks away from it.

1. What Is Mediation in Israel?

Mediation is a structured negotiation guided by a trained, neutral third party — the mediator (*megaresh* or *megareshet*). The mediator has no authority to impose a decision. If the parties cannot agree, the mediation ends and the dispute goes to court or arbitration.

That is the key difference from arbitration (*borrerut*), where the arbitrator hears evidence and issues a binding award. A mediator is not a judge. The job is to unblock communication, not to decide who is right.

Mediation in Israel covers a wide range of disputes:

  • Commercial contract disagreements between businesses
  • Real estate disputes between buyers, sellers, and developers
  • Shareholder and partnership conflicts
  • Employment and labor disputes prior to Labor Court filing
  • Landlord-tenant disputes
  • Construction defect claims
  • Family financial disputes (property division, maintenance)
  • Insurance claim disagreements

For cross-border disputes with an Israeli party, mediation is worth considering before going straight to arbitration. It is faster, it costs less, and when it works, both sides chose the outcome — which makes compliance more likely than with an arbitral award one party is already planning to challenge.

Israel has no single, standalone Mediation Law equivalent to its Arbitration Law 5728-1968. Instead, mediation is anchored in several legal sources that together create a coherent framework.

Section 79C of the Courts Law 5744-1984 is the primary statutory basis. It authorises Israeli courts to refer parties to mediation at any stage of civil proceedings — before a hearing, in the middle of trial, or even after judgment while an appeal is pending. The court can suggest mediation and, in some circumstances, make referral a condition of continued proceedings. Any settlement reached through court-referred mediation can be confirmed as a consent judgment by the referring court.

The Civil Procedure Regulations 5744-1984 set out procedural rules for mediation referrals, including how mediators are appointed, what fees the court can approve, and how settlement agreements are submitted for confirmation.

The Courts Administration directives have, since the early 2000s, significantly expanded the use of court-connected mediation — including the *Mahut* program described in the next section.

Outside the court context, mediation operates on a purely contractual basis. Parties agree to mediate, they sign a mediation agreement, they participate in good faith, and the result — if any — is a settlement contract. No special statute governs the confidentiality or conduct of private mediation, though institutional rules (ICCA, the Bar Association center) fill that gap.

In Practice: Section 79C(b) of the Courts Law 5744-1984 is the provision that turns a mediated agreement into something enforceable at the Execution Office. The parties submit the signed settlement to the referring court, the judge reviews it for basic legality, and it is entered as a consent judgment. The Execution Office (*Hotzaa LaPoal*) can then enforce it exactly like any other court judgment — including bank account attachments, wage garnishment, and real estate liens. For foreign parties, this conversion matters enormously: without it, a settlement agreement is just a contract, and a breach requires a new lawsuit. With it, breach triggers immediate enforcement within days.

3. Court-Annexed Mediation: The Mahut Process

The most common point of contact with mediation for parties already in Israeli litigation is the Mahut program (*Mahut* — an acronym in Hebrew for "Mediation, Conciliation, and Settlement"). This mandatory early-stage process operates in the Magistrates Courts (*Batei Mishpat HaShalom*) across Israel.

When a commercial or civil case is filed in the Magistrates Court, the court typically schedules an initial Mahut session within the first two to three months of the case. At this session, a trained mediator — drawn from a roster of certified professionals supervised by the Courts Administration — meets with both parties (and their lawyers) for approximately two to three hours.

The Mahut session has a dual purpose. First, the mediator explains how mediation works and its advantages compared with continued litigation. Second, the mediator attempts an actual mediation — helping the parties explore whether there is a negotiated solution available right now, before a single NIS is spent on expert witnesses, document disclosure, or contested hearings.

Participation in the Mahut session is mandatory. Refusing to attend, or attending in a deliberately obstructive way, can result in the court imposing cost sanctions against the uncooperative party when costs are assessed at the end of the case.

If the Mahut session does not resolve the dispute, the parties proceed to regular litigation. There is no prejudice from the mediation attempt — statements made during Mahut are confidential and cannot be used as evidence in subsequent proceedings.

In Practice: Mahut mediators are paid at rates set by the Courts Administration — currently approximately NIS 250–400 per session for both parties combined, a heavily subsidised rate compared with private commercial mediation. The session is short but can be surprisingly effective for smaller commercial disputes in the NIS 50,000–500,000 range, where both parties understand that fighting to a judgment will cost more than the amount in dispute. In cases I have handled in the Tel Aviv Magistrates Court, I have seen about 35–40% of Mahut sessions produce a full or partial settlement on the day. The ones that settle tend to be disputes where the parties have an ongoing commercial relationship and both sides have already spent enough on legal fees to feel the pain. For foreign nationals attending by video link, the session typically runs 90–120 minutes with a Hebrew-to-English interpreter arranged in advance through the court or by the parties.

4. Voluntary Commercial Mediation Outside Court

You do not need pending litigation to use mediation. Parties can agree to mediate at any time — before a dispute crystallises, at the first sign of disagreement, or as a contractual first step before resorting to arbitration or litigation.

Voluntary mediation is initiated by both parties agreeing in writing to submit their dispute to a mediator. This agreement — sometimes called a submission to mediation or a mediation protocol — covers:

  • The identity of the mediator (or the process for selecting one)
  • The scope of the dispute being mediated
  • Confidentiality obligations
  • Cost-sharing arrangements
  • Whether parties will be represented by counsel during sessions
  • The governing language of the mediation

Many commercial contracts between Israeli and foreign parties now include a tiered dispute resolution clause: negotiation first, mediation second, arbitration or litigation third. This structure acknowledges that most commercial disputes settle without a hearing, and the process should be designed to reach settlement at the lowest possible cost.

If your contract does not include a mediation clause, all is not lost. Either party can propose mediation after a dispute arises, and the other party must agree. In practice, a well-framed mediation proposal — focused on the cost and time savings rather than on weakness or capitulation — is accepted more often than lawyers expect.

5. Mediation Providers in Israel

Three types of providers handle the bulk of commercial mediation in Israel:

Israel Commercial Arbitration Center (ICCA)

The ICCA (*Merkaz HaBorrerut HaMishari HaYisreeli*) — sometimes referred to as IACAC in English-language sources — is Israel's leading arbitral institution and also offers structured commercial mediation. ICCA maintains a roster of experienced mediators, administers the procedural logistics, and provides its own rules of mediation that cover confidentiality, costs, and session management. For cross-border disputes where the parties want a recognised institution with international credibility, ICCA is the natural first choice. ICCA mediation proceedings can be conducted in Hebrew or English.

Israeli Bar Association Mediation Center

The Israeli Bar Association (*Lishkat HaOrchim*) operates a dedicated mediation center (*Merkaz HaGishor*) that provides mediators for civil, commercial, and family disputes. The center maintains a national list of certified mediators categorised by specialty area. Fees are structured on a per-session basis and are generally lower than those of major commercial arbitration institutions, making this a good option for mid-size disputes where institutional prestige matters less than cost.

Private Mediators

A significant number of senior Israeli attorneys, retired judges, and specialist practitioners work as private mediators outside any institutional framework. For high-stakes commercial disputes where the parties want a specific individual with deep expertise in a particular industry or legal area — technology contracts, real estate development, financial services — a private mediator appointment by agreement may produce better results than drawing from an institutional list. Former District Court judges who have entered private practice as mediators command hourly rates of NIS 700–1,200, but their subject-matter knowledge and authority often accelerates settlement.

In Practice: When a foreign technology company and its Israeli distributor brought a NIS 3.2 million contract dispute to me, neither party wanted to spend 18 months in litigation or 12 months in ICCA arbitration. We agreed to a single-day mediation at ICCA in Tel Aviv, with the foreign client attending by video from London. The mediator — a retired District Court judge from the commercial division — had both sides in separate caucus sessions by 11am and a term sheet signed by 4pm. The signed settlement was submitted to the Tel Aviv District Court, which confirmed it as a consent judgment the following week under Section 79C(b). Total cost for both sides combined: approximately NIS 45,000 in mediator fees and legal time. The equivalent ICCA arbitration would have cost four to six times that amount and taken eight to twelve months.

6. The Mediation Process: What to Expect

Every mediator has their own style, but most commercial mediations in Israel follow the same basic pattern:

Pre-mediation: Both parties sign a mediation agreement setting out the scope, confidentiality rules, and cost-sharing. Each side submits a brief (typically 3–10 pages) summarising their position and the outcome they are seeking. The mediator reviews the briefs and may have brief individual calls with each side to understand the dispute before the session begins.

Opening joint session: The mediator brings both parties together, explains the process, confirms confidentiality, and invites each side to present their view of the dispute. This is not an adversarial hearing — there is no cross-examination, no formal evidence. The goal is for each side to hear the other clearly, often for the first time without attorneys filtering the communication.

Separate caucuses: The mediator meets privately with each party. In these confidential sessions, parties can speak candidly about their real interests, their flexibility, and what they genuinely need to settle. The mediator carries information (with permission) between the parties, tests proposals, and helps each side reality-check their litigation alternatives.

Negotiation and drafting: If the parties move toward agreement, the mediator helps bridge remaining gaps and facilitates the drafting of settlement terms. A competent mediator will push for specificity in the written terms. Vague commitments that leave room for a follow-on dispute are one of the most common reasons mediated settlements fall apart months later.

Settlement or impasse: If agreement is reached, both parties sign the settlement document. If the parties reach an impasse, the mediator declares the mediation closed and the parties return to their litigation or arbitration track. There is no stigma and no prejudice from a failed mediation attempt.

7. Making the Settlement Agreement Binding and Enforceable

A mediated settlement agreement is a contract. If one party later refuses to perform, the other must sue on it — or take the steps needed to give it the force of a court judgment first.

Two routes to enforcement:

Court confirmation (Section 79C(b)): When the mediation was referred by or connected to court proceedings, the parties submit the signed settlement to the court. The judge reviews it and, if satisfied that the agreement represents a genuine settlement freely entered into, enters it as a consent judgment (*p'sak din be'haskama*). From that point, breach is treated as breach of a court order and the Execution Office can act immediately.

Contract enforcement: For purely voluntary mediation with no pending court case, the settlement agreement is enforced as a contract. If the other side defaults, you file a claim in the appropriate court — typically the Magistrates Court for amounts up to NIS 2.5 million or the District Court for larger sums. Because the agreement itself is the evidence of what was agreed, these claims are usually handled on a fast track and summary procedure.

Foreign parties should almost always seek court confirmation of their settlement under Section 79C(b) where possible. The additional week or two required is well worth the enforcement certainty it provides.

8. Costs and Timeline

The numbers are where mediation's case gets made. Below are typical ranges for commercial disputes in the NIS 500,000 to NIS 5 million range:

Item Typical cost (NIS) Notes
Mediator fee (one-day session) NIS 6,000–15,000 Split equally between the parties; retired judge mediators at the higher end
ICCA administration fee NIS 2,000–5,000 If using institutional mediation
Attorney preparation and attendance NIS 5,000–20,000 per side Depends on complexity and attorney hourly rate
Court confirmation fee (if applicable) NIS 400–800 Court filing fee to convert settlement to consent judgment
Total per side (typical range) NIS 10,000–25,000 For a single-session commercial mediation that settles

Timeline: From both parties agreeing to mediate through to a signed settlement agreement, most commercial mediations in Israel take 3–8 weeks. Scheduling the mediator and session logistics account for most of that time. The actual resolution — once parties are in the room — typically takes one full day.

Compare that with Israeli litigation: contested District Court cases take two to four years to reach a final judgment, with legal costs that typically reach NIS 100,000–400,000 per side for a medium-complexity commercial dispute. Even if mediation fails and the parties must proceed to court, the cost of the failed mediation is minor relative to the total litigation budget.

9. Mediation vs. Arbitration vs. Litigation: Which Fits Your Dispute?

The answer depends on your dispute, your counterparty, and where you are in the conflict. There is no universal right answer, but the patterns are fairly clear:

Mediation tends to work when the business relationship still has value, when both sides want a deal more than a ruling, or when the dispute amount is smaller than what fighting it out would cost either side in legal fees. It also handles things courts cannot — restructured payment terms, a formal apology, an agreement to continue trading under modified conditions. If you want a creative outcome rather than a judgment, mediation is the only tool that can deliver it.

Arbitration is the better choice when negotiated settlement is genuinely off the table — one party is acting in bad faith, the dispute involves third parties who cannot be drawn into mediation, or you need an award enforceable in multiple countries under the New York Convention. The arbitration vs. litigation guide covers that comparison in detail.

Court litigation makes sense when you need urgent coercive relief fast. A court can grant a *Tzav Atzira* asset freeze the same day; mediation takes weeks to schedule. If the counterparty is fraudulent, if there are multi-party claims that do not fit mediation's consensual structure, or if you have clean documentary evidence that makes a summary motion realistic, litigation has structural advantages mediation cannot match.

For most commercial disputes between foreign companies and Israeli counterparties in the NIS 200,000 to NIS 5 million range, the sensible sequence is: direct negotiation first, mediation second, and arbitration or court only if both fail. Most disputes settle somewhere in the first two steps. The parties who end up in three-year court battles are usually the ones who skipped the cheaper options because they were confident they would win.

Common Mistake: Foreign parties often treat mediation as a sign of weakness — something to propose only when you expect to lose in court. This misunderstands how Israeli commercial counterparties read a mediation proposal. In my experience, a well-framed mediation request sent within 30 days of a dispute arising is read as professional and cost-conscious, not as an admission of a weak claim. Waiting until you are 18 months into litigation to propose mediation, by contrast, can look like a tactical manoeuvre at a point when both sides have already spent heavily on legal fees and are entrenched. The parties most likely to benefit from mediation are also the ones least likely to propose it early — because they have not yet felt how much litigation actually costs.