IsraelLawThe International Chamber of Commerce is the arbitration institution most foreign companies reach for first. The name recognition helps, and so do the institutional safeguards: scrutiny of draft awards, an emergency arbitrator procedure, and a large secretariat in Paris that has administered more cases than most national court systems see in a decade.
When the other party to the contract is an Israeli company or individual, some extra questions arise. Which court watches over the proceedings? What law governs? And what does an ICC award actually get you if the Israeli party refuses to pay? This guide answers those questions in the order a practitioner would work through them.
1. What ICC arbitration means in the Israeli context
The International Chamber of Commerce — based in Paris, not to be confused with the ICCA (Israel Centre of Commercial Arbitration) — runs one of the world's largest international commercial arbitration dockets. When one party to an ICC case is Israeli, that party's home courts enter the picture at two points: when the opposing side tries to litigate in Israel instead of arbitrating, and when the winner tries to collect from Israeli assets.
Israel became a contracting state to the New York Convention in 1959. From January 2024, the International Commercial Arbitration Law 5784-2024 (the ICA Law) replaced the older patchwork of provisions that governed recognition and enforcement of foreign arbitral awards. It adopts the UNCITRAL Model Law framework, which most major trading economies now use for international commercial arbitration, and Israeli courts are required under it to recognize and enforce foreign awards unless the resisting party can establish one of the limited grounds under Section 36.
- ICA Law Section 3 defines "international" arbitration to include cases where the parties have their places of business in different states, where the seat is outside the state of the parties' main places of business, or where a substantial part of the obligations has its closest connection with a country other than Israel. Most ICC cases with an Israeli party will satisfy at least one of these.
- An ICC arbitration seated in Paris, London, Geneva, or Amsterdam is foreign arbitration for enforcement purposes in Israel. An ICC arbitration seated in Tel Aviv is international arbitration governed by the ICA Law throughout, including its chapters on court support during proceedings.
- Israeli District Courts (Batei Mishpat Machozi) have exclusive jurisdiction over recognition applications. The application is filed in the district where the respondent has assets or, if unclear, in Jerusalem.
2. Drafting the ICC clause for contracts with Israeli parties
The official ICC Model Clause is: "All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules." That clause works. What causes problems is what gets added to it.
Hybrid clauses giving both courts and arbitrators jurisdiction, tiered clauses requiring negotiations and mediation in sequence without specifying what constitutes a trigger, and clauses naming the ICC for administration but then giving jurisdiction to "the courts of Tel Aviv" for disputes "arising from this clause" — all of these have been litigated. Israeli courts have enforced clean ICC clauses against Israeli parties who tried to litigate instead, and they have also declined to enforce ambiguous ones. The drafting matters.
- Add four things in the clause or a separate schedule: (a) seat of arbitration, (b) governing law of the substance, (c) language of proceedings, and (d) number of arbitrators. Leaving all four blank is not fatal — the ICC Court fills in defaults under ICC Rules 2021 Article 18.1 — but default outcomes (seat chosen by ICC Court, three arbitrators for most disputes) are often not what the parties would have picked.
- ICA Law Section 9 requires an Israeli court to refer the parties to arbitration on the respondent's application if the agreement is not "null, inoperative, or incapable of being performed." In practice, a clear ICC clause with a stated seat will get a stay. Bring the stay application promptly — filing a statement of defense on the merits before requesting the stay can be read as a waiver.
- For contracts governed by Israeli law, state that separately. Israeli courts have on occasion read an arbitration agreement narrowly when the contract contains an Israeli governing-law clause without a corresponding explanation of how arbitration and Israeli substantive law interact.
3. Choosing the seat when one party is Israeli
The seat is the juridical home of the proceedings. It sets the lex arbitri — the procedural law governing anything the ICC Rules do not cover — and it determines which national courts can hear setting-aside applications after the award is made.
For most commercial contracts where the Israeli party might turn out to be the respondent, the common choices are:
| Seat | Supervisory law | Setting-aside court | Notes |
|---|---|---|---|
| Paris | French NCCP (Book IV) | Paris Court of Appeal | ICC's home city; court rarely intervenes; familiar to Israeli counsel |
| Geneva or Zurich | Swiss PIL Act, Chapter 12 | Swiss Federal Tribunal | Extremely limited setting-aside grounds; favored in pharma, commodities, finance |
| London | English Arbitration Act 1996 | English Commercial Court | More interventionist but well understood; English-language proceedings standard |
| Tel Aviv | ICA Law 5784-2024 | Israeli District Court | ICAL facilities available; witnesses attend without video; Hebrew documents stay in Hebrew |
- Seating in Paris or Geneva means the Israeli party's only option for attacking the award is in French or Swiss courts — not Israeli courts. An Israeli court asked to recognize the award cannot set it aside; it can only refuse recognition on the Article V-equivalent grounds in ICA Law Section 36. Parties who want to minimize the Israeli party's ability to challenge the award after it is made should pick a neutral seat with narrow challenge grounds.
- A Tel Aviv seat gives Israel's courts a supervisory role: they can set aside the award if it was obtained by fraud, violates due process, or breaches Israeli public policy. That extra exposure is sometimes worth it when most witnesses and documents are in Israel and hearing logistics in a foreign city would add significant cost.
- Under ICC Rules 2021 Article 18.1, the ICC Court fixes the seat in the absence of party agreement. For contracts with Israeli parties, ICC Court practice has generally favored Geneva or Paris as a neutral location. Don't rely on the default if you have a preference.
4. The law governing the substance of the dispute
The seat governs procedure. The governing-law clause governs the substance — what the contract means, whether a party is in breach, what damages follow. The two are separate choices and should be stated separately in the contract.
Parties contracting with Israeli companies commonly choose Israeli law (appropriate when the contract involves Israeli real estate, Israeli employment law obligations, or Israeli regulatory matters), English law (widely used in shipping, finance, and trade, with well-developed case law that Israeli counsel know), or New York law (common in venture capital and startup financing where the Israeli company has US investors).
The arbitral tribunal applies whichever substantive law the parties choose. It does not automatically apply Israeli law because one party is Israeli. If no governing law is specified, the ICC tribunal will determine the applicable rules of law under ICC Rules 2021 Article 21.1 — which typically means applying conflict-of-laws principles to identify the law with the closest connection to the contract.
- Mandatory Israeli rules apply regardless of governing-law choice when the dispute has a close enough connection with Israel. Consumer protection under the Consumer Protection Law 5741-1981, employee rights under the Wage Protection Law 5718-1958, and certain competition law provisions can all be invoked by an Israeli party as overriding mandatory rules even in a foreign-law arbitration seated abroad.
- If the contract will be performed mainly in Israel and the parties choose Israeli law as the substantive law, check that the arbitrators you expect to appoint know Israeli law well enough to apply it without expensive expert witnesses. Israeli contract law has parallels with English commercial law in many respects — Israel's Contract Law (General Part) 5733-1973 draws on common-law and civil-law sources — but there are distinctive Israeli provisions on mistake, misrepresentation, and good faith that a non-Israeli arbitrator may not know.
- An ICC tribunal seated in Paris can apply Israeli substantive law. The ICC Court will appoint arbitrators with appropriate expertise if requested, and Israeli counsel can appear in an international seat without limitation.
5. The ICC process: from request for arbitration to final award
An ICC case runs through a staged procedure under the 2021 Rules. The broad shape is familiar to anyone who has been through international arbitration, but some ICC features — Terms of Reference, ICC Court scrutiny of awards — are specific to this institution.
- Request for arbitration — filed with the ICC Secretariat in Paris; claimant pays a preliminary filing fee of USD 5,000 (non-refundable)
- Answer — respondent files within 30 days; counterclaims can also be submitted at this stage
- Constitution of the tribunal — the ICC Court confirms or appoints arbitrators; a sole arbitrator for smaller disputes, three for large ones
- Terms of Reference — the tribunal and parties sign a document defining the disputes, claims, and procedural ground rules; distinctive to the ICC and not found in UNCITRAL or LCIA rules
- Case Management Conference — procedural timetable agreed; under the 2021 Rules the tribunal must consult on use of technology, document production scope, and treatment of witnesses
- Written submissions and document production — typically one or two rounds of memorials, plus production of documents in disputes that require it
- Hearing — one to three days for a commercial dispute of moderate size; usually at the seat or at ICC premises
- Deliberation and draft award — the tribunal submits the draft to the ICC Court for scrutiny under Article 34; the Court checks for formal quality and may make notes
- Final award — issued after scrutiny; notified to the parties by the Secretariat
The ICC's own statistics put the average duration of a case resolved by a final award at around 26 months from filing. Complex construction or M&A disputes routinely run longer.
- ICC Emergency Arbitrator (Rules 2021 Article 29, Appendix V): a party needing urgent interim relief before the tribunal is constituted can apply to the ICC Secretariat. The ICC appoints an Emergency Arbitrator within two business days of receipt of the application. The Emergency Arbitrator renders an order or award within 15 days of receiving the file. Emergency arbitrator orders are not automatically binding on national courts, but they carry practical weight in Israeli courts when used to support a concurrent freezing-order application under ICA Law Section 17J.
- Costs are substantial. For a dispute of USD 5 million, the ICC's advance on costs (arbitrator fees plus ICC administrative fees) runs to approximately USD 130,000-170,000 using the ICC cost calculator, split between the parties. That figure is separate from legal fees, which in a fully contested case are typically larger. An Israeli District Court recognition application adds Israeli legal fees on top, usually in the range of NIS 20,000-50,000 for an uncontested recognition.
- Due process requirements under ICC Rules 2021 Article 22.4 mirror those in ICA Law Section 18: fair treatment, equal opportunity to present the case, proper notice of proceedings. Israeli courts check compliance with these requirements at the recognition stage. Tribunals that conduct hearings on short notice, change the procedure without notice, or exclude a party's evidence run a real risk of having the award refused in Israel on due-process grounds under Section 36(a)(1)(ii).
6. Enforcing an ICC award against an Israeli party
Winning an award and collecting on it are different problems. Here is what the enforcement process looks like in Israel once an ICC award has been issued.
The procedure under the ICA Law 5784-2024:
- File a recognition-and-enforcement application with the Israeli District Court in the district where the Israeli party's assets are located
- Attach: a certified copy of the award, the arbitration agreement or the contract containing the ICC clause, and a certified Hebrew translation of both
- The court issues a recognition order unless the Israeli party establishes a ground under Section 36
- Once recognized, the award becomes an executable judgment; the foreign party opens a file with the Execution Office (Hotza'a LaPoal) under the Execution Law 5727-1967 and can attach the Israeli party's bank accounts, registered real property, and receivables from third parties
- Once you file the recognition application, the Israeli party has 30 days under the ICA Law to respond. Contested recognition proceedings in Israeli District Courts currently take six to eighteen months, depending on how hard the opposing party fights and how crowded the court's docket is. An uncontested recognition — where the Israeli party accepts the award — can be processed in a few weeks.
- Once an Execution Office file is opened, the office can issue a bank account freeze order within days. For an Israeli company that is still operating, a freeze on working capital accounts often produces a settlement faster than the merits ever would.
- If the award is denominated in a foreign currency, the Israeli Execution Office converts it to NIS at the Bank of Israel's official rate on the date of payment. The creditor can request that the court order linkage to the relevant foreign exchange rate or the Israeli CPI in the enforcement proceedings, reducing currency risk.
- An Execution Office file against an Israeli company also gives the creditor access to asset disclosure procedures: the respondent must declare its assets under oath under Section 7A of the Execution Law, and third-party garnishment orders can reach Israeli banks holding the company's accounts even if those accounts are abroad in an Israeli-headquartered bank.
7. When the Israeli party resists the award
Under ICA Law Section 36, which mirrors Model Law Article 36, the grounds an Israeli respondent is likely to raise are:
No valid arbitration agreement — the most common challenge for poorly drafted or unsigned clauses; the court checks whether the clause covers the dispute in question, whether all parties signed, and whether it satisfied the writing requirement under ICA Law Section 7. An ICC clause in an unsigned draft contract or a clause that was only in a preliminary term sheet has a real risk of failing this test.
No proper notice or inability to present the case — the Israeli party claims it was not given adequate notice of the arbitration, the appointment of arbitrators, or the hearing. This sometimes succeeds when the ICC Secretariat's notices went to an old address, were sent only in a language the respondent did not speak, or arrived with inadequate time to respond. Serving notices by courier to the Israeli party's registered address with the Companies Registrar, in Hebrew where the contract was in Hebrew, is a basic safeguard.
Award beyond the scope of the clause — the tribunal decided an issue it was not asked to decide. Israeli courts apply this narrowly and require the resisting party to identify specifically which part of the award goes beyond the submission.
Improperly constituted tribunal — the appointment procedure deviated from what the parties agreed. A common version of this is where the contract specified a sole arbitrator but the ICC Court appointed three due to the amount in dispute; the court will usually uphold the ICC's default rules if the parties did not specify the number of arbitrators clearly.
Public policy — Israeli courts define this as basic principles of law recognized in Israel, not mere disagreement with the result. An award upholding a contract that violates Israeli competition law, ordering payment in breach of Israeli anti-money-laundering provisions, or based on forged documents has a realistic chance of being refused on public policy grounds. An award that simply reaches a conclusion an Israeli court would not have reached does not.
- An Israeli party cannot go to an Israeli court to set aside an ICC award seated in Paris, Geneva, or London. Setting aside is a remedy that belongs exclusively to the courts at the seat. Israeli courts can only refuse recognition. If the Israeli party wants to attack the award itself, it must file a setting-aside application in the courts at the seat within the deadlines set by the supervisory law — three months from notification under Swiss PIL Act Article 100, two months from the date the award was communicated under French Code of Civil Procedure Article 1519.
- If the Israeli party has already failed to set aside the award at the seat, that failure is persuasive but not technically binding on the Israeli recognition court. Israeli courts take into account foreign setting-aside decisions but conduct their own Section 36 analysis.
- A party that loses the recognition fight in the District Court can appeal to the Supreme Court under ICA Law Section 43. Appeals on recognition decisions tend to take another twelve to eighteen months. The creditor can ask the recognition court to continue enforcement pending appeal if it posts security.
Frequently Asked Questions
