Quick Answer: If someone sues you in an Israeli court over a matter your contract says should go to arbitration, you do not have to litigate. You ask the court to stay (freeze) the case under Section 5 of the Arbitration Law 5728-1968 and send the parties to arbitration. The court will grant the stay when there is a valid written arbitration agreement covering the dispute and you are genuinely ready to arbitrate. The catch is timing: you must raise it before you argue the merits. File a defence on the substance first and you are usually treated as having given up the clause.

Here is a situation that comes up often for foreign parties. You signed a commercial contract with an Israeli company, and buried in the boilerplate near the end there is a clause saying that any dispute will be resolved by arbitration. Months later a dispute erupts, and instead of appointing an arbitrator, the Israeli side files a lawsuit against you in a court in Tel Aviv or Haifa. A summons lands at your office abroad. You expected a private arbitration, and now you are looking at what appears to be full-blown Israeli litigation in a language you do not read.

Israeli law backs arbitration agreements strongly, but it does not enforce them for you automatically. The court will not throw out a lawsuit just because an arbitration clause exists somewhere in the file. Someone has to invoke the clause, correctly and on time. This guide explains the mechanism Israeli law uses to divert a court case into arbitration, the conditions a judge checks before doing so, the deadline that catches unwary defendants, and why the rules give foreign parties in cross-border contracts a slightly stronger hand.

1. What "Compelling Arbitration" Means in Israel

Lawyers trained in the United States talk about filing a "motion to compel arbitration." Israeli law reaches the same result through a different door. There is no order that forces the other side into arbitration directly. Instead, the party who wants arbitration asks the court to stay its own proceedings (ikuv halikhim, ืขื™ื›ื•ื‘ ื”ืœื™ื›ื™ื). Once the court case is frozen, the arbitration clause is left as the only live route to a decision, and the dispute moves to arbitration. The practical effect is identical to compelling arbitration; the legal tool is a stay, not a compulsion order.

The governing statute for most cases is the Arbitration Law 5728-1968 (Chok HaBoreirut). It applies to domestic arbitration and to the ordinary cross-border commercial contract that names Israel or leaves the seat open. For genuinely international commercial arbitration seated in Israel, a newer framework based on the UNCITRAL Model Law now runs in parallel, which we cover in a separate guide to Israel's International Commercial Arbitration Law 2024. For the typical foreign party holding a signed contract with an arbitration clause, Section 5 of the 1968 Law is the provision that does the work.

Two different scenarios bring people to this question. In the first, you are the defendant: the other side has sued you in court and you want the dispute in arbitration, so you file a stay motion. In the second, you are the one who wants to start arbitration but the other side is stonewalling and will not agree on an arbitrator. There the tool is different. You nominate an arbitrator under the mechanism in your clause, and if the other side refuses to cooperate, you apply to the court under Section 8 of the Law to appoint one. Most of this guide deals with the first scenario, because that is where the tight deadlines bite.

In Practice: The single most useful thing you can do at the very start is decide, in writing, that you want arbitration and act on it. If your clause names an arbitral institution such as the Israeli Institute of Commercial Arbitration (ICCA, HaMosad HaYisraeli LeBoririut Iskit), send the institution your request to commence, and copy the other side. A dated document showing you moved toward arbitration promptly is exactly the evidence a judge looks for under Section 5 when deciding whether you were "ready to do everything necessary" for the arbitration. Building that record in the first week costs nothing and protects the clause.

2. The Legal Basis: Section 5 of the Arbitration Law

Section 5 is short, and worth understanding in its own words rather than in paraphrase. Section 5(a) provides that where an action is brought before a court in a dispute that the parties agreed to refer to arbitration, a party to that action who is also a party to the arbitration agreement may apply for a stay, and the court shall stay the proceedings between the parties to the agreement, provided the applicant was ready, and is still ready, to do everything needed to carry out the arbitration.

The word "shall" is doing heavy lifting. It signals that a stay is the default outcome, not a matter of open judicial discretion. Once the applicant clears the conditions, the judge is directed to send the parties to arbitration rather than weigh whether the court would be a more convenient forum. Israeli courts have consistently read Section 5 as reflecting a strong policy of holding parties to the dispute-resolution bargain they struck.

One structural point matters for multi-party situations. The stay operates "between the parties to the agreement." If a claimant has sued three defendants but only one of them signed the arbitration agreement, the court can stay the case against the signatory and send that slice of the dispute to arbitration, while the claim against the non-signatories continues in court. That split is not always granted, and it feeds directly into the "special reason" question we come to in section 6 below.

3. The Five Conditions the Court Checks

When a stay motion lands on a judge's desk, the analysis works through a short checklist. Get all five right and the stay is close to automatic. Fail one and the case stays in court.

  • A written arbitration agreement exists. Section 1 of the Law requires the agreement to be in writing. It does not have to be a standalone document; a clause inside a commercial contract is enough. It does not have to be in Hebrew.
  • The applicant is a party to that agreement. You have to be bound by the clause you are relying on. Questions arise with guarantors, group companies, and assignees, and this is often the real battleground.
  • The dispute falls within the scope of the clause. The judge reads the wording. A clause covering "any dispute arising out of this agreement" is broad; a clause limited to "disputes over the quality of goods delivered" is narrow and may not capture a payment claim.
  • The subject matter is arbitrable. Section 3 says an arbitration agreement has no effect on a matter that cannot be the subject of a private agreement between the parties. Ordinary commercial and monetary disputes are fine. Criminal liability and certain protected status questions are not.
  • The applicant is and was ready to arbitrate. This is the condition people underestimate. You must show you were prepared to do your part, including paying your share of the arbitrator's deposit and cooperating on appointment.
In Practice: The "ready and willing" requirement in Section 5(a) is where otherwise valid clauses often collapse. If a defendant spent six months ignoring the other side's letters proposing an arbitrator, then suddenly demanded arbitration only when the lawsuit arrived, the court can find the demand opportunistic and refuse the stay. The fix is behavioural, not legal: respond to any arbitration proposal in writing, offer to split the arbitrator's advance (commonly a few thousand shekels each to open a file at the ICCA or with a sole arbitrator), and never file a counterclaim on the merits before your stay motion is decided. Filing a substantive counterclaim is often read as choosing the court.

4. The Deadline That Trips People Up

If you take one thing from this guide, take this. Section 5(b) says the application for a stay may be made in the statement of defence or otherwise, but not later than the day on which the applicant first pleads to the substance of the action. In plain terms: you must ask for the stay before you argue the merits of the case. The moment you file a defence that engages with the substance of the claim without first requesting a stay, you have submitted to the court, and the arbitration clause is gone.

This is unforgiving in practice. A foreign defendant who receives an Israeli summons and, wanting to look cooperative, files a detailed response explaining why the claim is wrong on the facts has usually just waived arbitration without realising it. The correct first move is the opposite: file the stay motion, and say as little about the merits as possible until the stay is decided. If you must file a defence within the court's deadline to avoid a default judgment, the defence should lead with the request for a stay and reserve all substantive arguments.

For someone served abroad, the clock is tied to proper service. Service on a foreign defendant generally has to go through the route the Civil Procedure Regulations 5779-2018 allow for out-of-jurisdiction service, and the response times are longer than for a local defendant. That extra time is a cushion, not a reason to relax. The practical failure mode is a business owner who sits on the summons for a few weeks hoping it will resolve itself, then engages a lawyer only after informally responding to the Israeli side about the underlying facts.

In Practice: Treat the arrival of an Israeli summons as a same-week emergency, not a same-month one. The Section 5(b) deadline is measured against your first plea to the substance, so the safe sequence is: (1) engage Israeli counsel within days; (2) file the stay motion; (3) only then deal with the merits. The court filing fee for a written motion of this kind is modest, in the low hundreds of shekels under the Courts Regulations (Fees) 5767-2007, and is trivial next to the cost of losing the clause and litigating a multi-year case in a foreign court. Verify the current fee with counsel, since the tariff is updated periodically.

5. International Contracts and the New York Convention

Foreign parties get a meaningful upgrade when their contract is international. Section 6 of the Arbitration Law provides that where an international convention to which Israel is a party applies to the arbitration, and that convention deals with a stay of proceedings, the court exercises its Section 5 powers in accordance with the convention. The convention in question is almost always the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Israel ratified it in 1959 and brought its stay provisions into the Arbitration Law by a 1974 amendment.

The reason this matters is Article II(3) of the Convention. It directs a court seized of a dispute covered by an arbitration agreement to refer the parties to arbitration unless it finds the agreement is "null and void, inoperative or incapable of being performed." That test is deliberately narrow. Notice what is missing from it: there is no general discretion to keep the case for a broad "special reason." So in a Convention case, the domestic escape hatch in Section 5(c), which we discuss next, does not apply. The court either finds the agreement fundamentally defective, or it refers the parties to arbitration.

For a foreign company, that is a stronger position than a purely Israeli litigant enjoys. If your contract is between businesses in different countries, or the arbitration is otherwise international in character, your counsel will usually frame the stay motion under Section 6 and the Convention rather than under Section 5(c) alone, precisely to close off the discretionary argument. Where the arbitration is seated in Israel and is international and commercial, the International Commercial Arbitration Law 2024 may also apply, adding a Model Law framework on top of the Convention.

In Practice: Identify early whether your case is a Section 5 domestic matter or a Section 6 Convention matter, because it changes how you argue. In a cross-border deal, the stronger approach is to plead the New York Convention front and centre and ask the court to refer under Article II(3), which strips the other side of the "special reason" argument. Israel has been a Convention state since 1959, and its courts routinely enforce that referral duty. The distinction is not academic; it can be the difference between a stay granted in a matter of weeks and a contested hearing over whether the Israeli court is the "better" forum.

6. When a Court Will Refuse to Stay

Domestic stays are strong but not absolute. Section 5(c) lets a court decline to stay if it sees a special reason (taam meyuchad) why the dispute should not be dealt with by arbitration. Courts use this sparingly, but foreign parties should know the arguments the other side will reach for.

The most common special-reason argument is fragmentation. If the same facts involve several parties and only some are bound by the arbitration clause, a claimant will argue that splitting the case, arbitration for one defendant and litigation for the others, risks inconsistent findings and wastes everyone's time. A judge who is persuaded of a real risk of contradictory rulings can keep the whole matter in court. A second recurring argument is that the contract containing the clause was procured by fraud or is void, so that the clause never came into being. A third arises where the specific arbitrator named in the clause has died, is conflicted, or plainly cannot serve, and the mechanism for replacement has broken down.

What rarely works is a bare claim that the court is faster, cheaper, or more familiar to one side. The whole point of Section 5 is that the parties already chose arbitration, and mere second thoughts are not a special reason. When Israeli courts refuse a stay, it is usually because of a genuine structural problem such as unavoidable multi-party fragmentation, not because a litigant would simply prefer to be in court.

In Practice: If you are the party trying to force arbitration, anticipate the fragmentation argument and defuse it before the hearing. Where extra parties have been added, examine whether they are truly outside the clause or whether, as group companies, guarantors, or assignees, they can be brought within it so the entire dispute goes to one arbitrator. Bundling everyone into the arbitration removes the court's main basis for invoking Section 5(c). Remember also that Section 5(c) is a domestic tool only; if you are in a New York Convention case governed by Section 6, the special-reason discretion is off the table entirely.

7. Step-by-Step: Filing the Stay Motion

The sequence below is the standard path Israeli counsel follow for a defendant, including one located abroad. Each step can be handled remotely through a lawyer holding your power of attorney.

Step 1: Appoint Israeli counsel with power of attorney

If you are abroad, sign a power of attorney (yipui koach) authorising an Israeli lawyer to represent you. Where the court or opponent may challenge it, the power of attorney is signed before a notary in your country and apostilled under the Hague Apostille Convention, which usually takes between one and five business days depending on the country. Your lawyer can send you the exact wording and the apostille authority to use.

Step 2: Confirm the clause is valid and covers the dispute

Before filing anything, counsel reads the arbitration clause against the actual claim. Is the agreement in writing (Section 1)? Are you bound by it? Does the language capture this particular dispute? Is the subject matter arbitrable (Section 3)? A weak answer on scope is better identified now than after you have committed to the argument.

Step 3: File the stay motion promptly, before pleading the merits

Counsel files a motion to stay the proceedings under Section 5 (and, in a cross-border case, under Section 6 and the New York Convention). The motion attaches the contract and the arbitration clause, sets out the five conditions, and, importantly, exhibits your evidence that you are ready to arbitrate: a letter nominating or proposing an arbitrator, an offer to pay your share of the deposit, or a request already sent to the ICCA. This is filed before, or as the lead element of, any defence.

Step 4: The other side responds and the court decides

The claimant files a response, typically arguing that the clause does not cover the dispute, that you were not ready to arbitrate, or that a special reason justifies keeping the case (in a domestic matter). The court decides on the papers or after a short hearing. If the motion is granted, the litigation is frozen.

Step 5: Move the dispute into arbitration

With the stay in place, the parties proceed to arbitration. If they cannot agree on an arbitrator, or the other side drags its feet, you apply to the court under Section 8 to appoint one, or you rely on the appointing mechanism of your chosen institution. The ICCA, for example, will appoint from its panel where the parties are deadlocked.

In Practice: Budget realistically for the arbitration you are asking the court to send you to. A stay motion itself is inexpensive, but the arbitration that follows is not free. A sole arbitrator, often a retired judge or a senior commercial lawyer, may charge on an hourly basis or a fixed fee, and the parties typically each advance a deposit to open the file, which for a mid-sized commercial dispute commonly runs from a few thousand to several tens of thousands of shekels depending on the amount in dispute and the arbitrator's rate. Institutions such as the ICCA publish fee schedules tied to the sum in dispute. The award can shift these costs onto the losing party at the end, but you need the working capital to get there.

8. Costs, Timeline and What Comes After

People weighing whether to fight for arbitration want to know two things: how long, and how much. On timing, the stay motion is usually decided within a few weeks to a few months of filing, depending on the court's docket and whether a hearing is held. The arbitration that follows is generally faster than court litigation. Under the default terms in the First Schedule to the Arbitration Law, unless the parties agree otherwise, the arbitrator is required to give the award within three months of the day the arbitrator began, or was required to begin, hearing the dispute, though this period is routinely extended by agreement or by the court for larger cases. A comparable claim litigated through the courts, with appeals, can run for years.

On cost, the pieces are the modest court filing fee for the stay motion, your legal fees, and then the arbitration's own costs: the arbitrator's fee and any institutional administration charge. Those arbitration costs are real, but so is the speed and privacy you buy, and the arbitrator has discretion to award costs against the losing side.

One last point that foreign parties often miss: winning the arbitration is not the finish line. An arbitral award is not self-executing in Israel. To turn it into something the Execution Office will enforce, you apply to the court to confirm the award under Section 23 of the Arbitration Law, at which point it has the force of a court judgment. The other side then has a limited window to try to set the award aside under the narrow grounds in Section 24, and Section 27 sets the deadline for that challenge at 45 days from when the award was made known to them (subject to extension). Plan for that confirmation stage from the outset, because it is where a resistant opponent makes a final stand.

In Practice: Keep the endgame in view when you fight for the stay. The three-month award target in the First Schedule and the 45-day challenge window under Section 27 mean a well-run arbitration can deliver an enforceable result far faster than litigation. But an award only becomes enforceable once confirmed by the court under Section 23, and enforcement then runs through the Execution Office (Hotzaa LaPoal) like any judgment. Where the losing party or their assets sit outside Israel, you may need to enforce the award abroad under the New York Convention instead, which our guide to enforcing an Israeli arbitral award abroad covers in detail.

Frequently Asked Questions

No. You can ask the court to stay (freeze) the case under Section 5 of the Arbitration Law 5728-1968 and send the dispute to arbitration instead. The court grants the stay if there is a valid written arbitration agreement covering the dispute and you are genuinely ready to arbitrate. The important condition is timing: you must file the stay application before you argue the merits. If you file a full defence on the substance first, you are treated as having accepted the court's authority and you lose the clause.
Under Section 5(b) of the Arbitration Law, the stay application must be made no later than the day you first plead to the substance of the claim. If you file a statement of defence that argues the merits without first asking for the stay, an Israeli court will usually treat the arbitration clause as waived and keep the case in court. This is the most common way foreign defendants accidentally give up their right to arbitrate, and it is often unrecoverable, so getting Israeli counsel involved within the first days of being served matters a great deal.
Yes. The Arbitration Law only requires the arbitration agreement to be in writing (Section 1); it does not require Hebrew. An arbitration clause inside an English commercial contract is enforceable in an Israeli court, and the court reads the clause to decide whether the dispute falls within its scope. What matters is that the agreement is written, clear about referring disputes to arbitration, and binding on the parties. For a court hearing, a certified Hebrew translation of the contract is usually filed alongside the original.
Yes. Asking a court for urgent interim relief, such as a freezing order or a temporary injunction to preserve the status quo, does not waive the arbitration clause. Israeli courts have express power to grant provisional remedies in aid of arbitration, and applying for one is not treated as pleading to the merits. This matters because arbitrators cannot always act fast enough at the very start of a dispute, so a party can obtain emergency court relief and still insist that the underlying dispute be decided in arbitration.
Often, yes, and in your favour. Where the New York Convention applies to the arbitration agreement, Section 6 of the Arbitration Law directs the court to refer the parties to arbitration unless the agreement is null and void, inoperative, or incapable of being performed. That is a narrower test than the domestic rule, because the court does not have discretion to keep the case for a general special reason under Section 5(c). Israel ratified the New York Convention in 1959, so a foreign party with a cross-border contract usually has stronger footing to force arbitration than a purely domestic litigant.