Quick Answer: International commercial arbitration in Israel is governed by the International Commercial Arbitration Law 2024, which adopted the UNCITRAL Model Law and replaced the decades-old domestic Arbitration Law 1968 for cross-border disputes. Foreign businesses can now arbitrate with Israeli counterparties under a modern, internationally recognised framework — whether seated in Israel or with Israeli parties in offshore proceedings. Awards are enforceable in Israel under the New York Convention.

For any foreign company, investor, or legal counsel dealing with an Israeli counterparty, understanding how arbitration works in Israel has become significantly more important — and more straightforward — since 2024. Israel's adoption of the UNCITRAL Model Law on International Commercial Arbitration brings the country into line with over 80 jurisdictions worldwide, including the UK, Germany, Singapore, and Canada.

Whether you are negotiating a commercial contract with an Israeli tech company, managing a real estate joint venture, or dealing with a dispute that has already arisen, this guide explains how international commercial arbitration in Israel works under the new law, what institutional options exist, and how awards are recognised and enforced on both sides of the border.

1. Israel's New International Commercial Arbitration Law 2024

In February 2024, Israel enacted the International Commercial Arbitration Law 2024 ( , "–2024). This replaced the domestic Arbitration Law 1968 as the governing framework for international commercial arbitrations seated in Israel or involving Israeli parties in cross-border disputes.

The 2024 Law adopts the UNCITRAL Model Law on International Commercial Arbitration (as revised in 2006) almost verbatim. Key features carried over from the Model Law include:

  • Party autonomy — parties may agree on procedure, language, applicable law, and institutional rules
  • The arbitral tribunal has authority to rule on its own jurisdiction (Kompetenz-Kompetenz)
  • Interim measures can be granted by the tribunal or by Israeli courts in support of arbitration
  • Strict, narrow grounds for setting aside an award — confined to procedural irregularities and public policy
  • Recognition and enforcement of foreign awards under the New York Convention framework

The domestic Arbitration Law 1968 continues to govern purely domestic Israeli arbitrations — disputes where both parties are Israeli and the subject matter has no international element. For all cross-border commercial matters, the 2024 Law applies.

This reform was long overdue. The 1968 Law gave Israeli courts broader supervisory powers that made Israel a less predictable seat for international arbitration. The 2024 Law corrects this by limiting court intervention to the narrow grounds permitted under the UNCITRAL framework, giving parties far greater confidence that their arbitration agreement will be respected.

2. When Does International Arbitration Apply?

The 2024 Law applies to "international commercial arbitration" — defined by reference to two criteria: the subject matter must be commercial in nature, and the dispute must have an international element.

A dispute is international if, at the time the arbitration agreement was concluded, any of the following is true:

  • The parties have their places of business in different states
  • The place of arbitration is outside the state where both parties have their places of business
  • A substantial part of the obligations is to be performed outside those states
  • The subject matter of the dispute is most closely connected with a state other than where both parties have their places of business

In practice, any dispute involving a non-Israeli party — a foreign company, foreign investor, or foreign individual — will almost certainly qualify as international. This covers the full range of commercial relationships: technology licensing, distribution agreements, joint ventures, construction contracts, real estate investments, M&A transactions, and financial instruments.

"Commercial" is interpreted broadly, consistent with international usage. It covers virtually all business and investment disputes. It excludes employment disputes, consumer matters, and family law — which are governed by separate Israeli legal frameworks.

3. Choosing an Arbitral Institution

Parties to an international commercial arbitration have full freedom to select any arbitral institution or to agree on ad hoc arbitration under UNCITRAL Rules. The main options used in Israel-related disputes are:

Israeli Institutions

  • Israel Centre for Commercial Arbitration (IICA) — operated under the Federation of Israeli Chambers of Commerce. The IICA administers both domestic and international commercial arbitrations and offers competitive fees compared to major international bodies. See our guide to the IICA for full details.
  • Israeli Institute for Business Arbitration (Borerut) — an independent institution specialising in commercial arbitration and mediation, commonly used for technology and IP disputes.

International Institutions

  • ICC (International Chamber of Commerce) — the world's most widely used arbitral institution. Suitable for high-value disputes where parties require maximum international recognition. ICC arbitrations can be seated in Israel or in a neutral jurisdiction.
  • LCIA (London Court of International Arbitration) — favoured by parties from common-law jurisdictions. LCIA Rules are compatible with the Israeli 2024 Law framework.
  • ICSID (International Centre for Settlement of Investment Disputes) — available where a bilateral investment treaty between Israel and the investor's home country provides ICSID jurisdiction. Israel is a member of ICSID.
  • UNCITRAL Ad Hoc Rules — parties may opt for the flexibility of ad hoc arbitration under UNCITRAL Rules without institutional administration. This reduces costs for simpler disputes but requires more coordination between the parties.

The choice of institution should be driven by: the size and complexity of the dispute, the nationalities of the parties, the governing law of the contract, and any existing institutional relationships or preferences. For disputes primarily involving Israeli parties with limited international exposure, the IICA is often the most practical and cost-effective choice.

A Dutch technology company licensing software to an Israeli distributor included an ICC arbitration clause in their agreement, seated in Paris, with English as the language of proceedings. When the Israeli distributor withheld NIS 780,000 in royalty payments following a product dispute, the Dutch company filed a Request for Arbitration with the ICC Secretariat. The Israeli party initially challenged jurisdiction, arguing the dispute was purely domestic — a challenge rejected at the preliminary hearing within four months. The ICC tribunal issued a final award in favour of the Dutch licensor eighteen months after filing, and the award was subsequently registered with the Tel Aviv District Court under the New York Convention without objection. The lesson: selecting a named institution with a clear seat of arbitration eliminated the jurisdictional ambiguity that a vague "arbitration in Israel" clause would have created.

4. Drafting the Arbitration Agreement

Under the 2024 Law, an arbitration agreement must be in writing — broadly defined to include electronic communications and records. A clause in a signed commercial contract, a separate arbitration agreement, or an exchange of emails confirming the agreement all satisfy the writing requirement.

A well-drafted international arbitration clause for Israeli disputes should specify:

  • Scope: "All disputes arising out of or in connection with this agreement, including disputes as to its existence, validity, or termination" — broad language to avoid jurisdictional gaps
  • Institution and rules: Name the institution and the version of its rules (e.g. "ICC Rules as in force at the time of commencement")
  • Seat of arbitration: The legal home of the arbitration — determines which court has supervisory jurisdiction. Tel Aviv, London, and Geneva are common seats for Israel-related disputes
  • Language: English is standard for international disputes; Hebrew for domestic ones
  • Number of arbitrators: One arbitrator for smaller disputes (under approximately USD 1–2 million); three for complex or high-value matters
  • Governing law: The substantive law applicable to the merits — often Israeli law, English law, or New York law

Avoid pathological clauses — ambiguous or contradictory language that can paralyse proceedings. Institutional model clauses are a safe starting point; adapt them with experienced counsel rather than drafting from scratch.

For a deeper analysis of drafting principles, see our guide on drafting arbitration clauses for Israeli contracts.

5. How International Arbitral Proceedings Work in Israel

Once a dispute arises and a party commences arbitration (by filing a Request for Arbitration with the chosen institution, or by delivering a notice of arbitration in ad hoc proceedings), the process broadly follows these stages:

  1. Tribunal constitution: Arbitrators are appointed under the institutional rules or by agreement. If parties cannot agree, the institution or an appointing authority designates the arbitrator(s). The 2024 Law requires arbitrators to disclose any circumstances that may give rise to justifiable doubts about their impartiality.
  2. Preliminary hearing and procedural timetable: The tribunal issues procedural directions — submission deadlines, document production, evidence rules, and the hearing schedule.
  3. Written submissions: Claimant files its Statement of Claim with supporting documents; Respondent files its Defence (and any counterclaim). Further rounds of submissions may follow.
  4. Document production: Unlike full US-style discovery, international arbitration typically involves targeted document requests. The IBA Rules on the Taking of Evidence are commonly adopted by agreement.
  5. Evidentiary hearing: Witnesses give oral evidence and are cross-examined. Expert witnesses may be appointed by the parties or by the tribunal itself.
  6. Post-hearing briefs and award: After closing submissions, the tribunal deliberates and issues its final award. Under most institutional rules, this takes several months from the close of the hearing.

Israeli courts may be called on to support arbitration proceedings — for example, to grant interim attachment orders over Israeli assets, compel a non-cooperative party, or appoint an arbitrator where the agreed mechanism has failed. Under the 2024 Law, Israeli court assistance is available both where the seat is in Israel and in support of arbitrations seated abroad that have a connection to Israel.

6. Challenging an Award in Israel

One of the most significant improvements under the 2024 Law is the narrowing of grounds on which an Israeli court can set aside an award. Under the old 1968 Law, courts had relatively broad supervisory powers. The 2024 Law limits setting-aside applications to the grounds in the UNCITRAL Model Law, which are exhaustive:

  • A party to the arbitration agreement was under some incapacity
  • The arbitration agreement is invalid under the applicable law
  • A party was not given proper notice of the arbitrator appointment or proceedings, or was otherwise unable to present its case
  • The award deals with matters beyond the scope of the arbitration agreement
  • The composition of the tribunal or procedure was not in accordance with the parties' agreement (or, failing agreement, the applicable law)
  • The subject matter of the dispute is not capable of settlement by arbitration under Israeli law
  • The award conflicts with Israeli public policy

Merits review is not available — an Israeli court cannot set aside an award simply because it disagrees with the tribunal's legal analysis or factual findings. This makes Israel-seated international arbitration far more predictable than under the previous regime.

Applications to set aside must be brought within three months of receipt of the award. See our guide on challenging an arbitral award in Israel for detailed procedural guidance.

7. Enforcing Awards: In Israel and Abroad

Enforcing a foreign award in Israel

Israel acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 1959. A foreign arbitral award is enforced in Israel by filing an application with the District Court. The court applies the New York Convention grounds — if none applies, the court must declare the award enforceable without reviewing the merits.

The grounds for refusing enforcement mirror the setting-aside grounds above: incapacity, invalidity of the agreement, procedural irregularity, excess of jurisdiction, and public policy. Israeli courts apply public policy narrowly and enforcement is generally granted promptly where the procedural requirements are met.

Enforcing an Israeli award abroad

An award made in an Israel-seated arbitration is enforceable in any of the 170+ countries that are parties to the New York Convention. Because Israel is a Convention member, Israeli awards carry the full benefit of the Convention's enforcement regime — recognition as a matter of right, subject only to the narrow Convention defences.

To maximise enforceability of an Israeli award abroad, ensure that:

  • The arbitration agreement is in writing and clearly covers the dispute
  • Proper notice was given throughout the proceedings
  • The tribunal was constituted in accordance with the agreement
  • The award is signed, dated, and contains the reasoning (if required by the institutional rules)

For a full guide to enforcement of foreign awards in Israel, see Enforcing Foreign Arbitral Awards in Israel.

In Practice: The ICA Law 2024 and the Arbitration Law 1968 now coexist — the 2024 Law applies to "international" arbitrations as defined by that law (different nationality or domicile of parties, or seat/place of contract performance outside Israel). When drafting a new clause for a cross-border contract, specify explicitly which law governs the arbitration; clauses that are silent on this point have generated preliminary satellite disputes about which statute applies before the substance of the dispute could be heard.
In Practice: Under the 2024 ICA Law, an Israeli court can grant interim asset attachment orders (tzav ikul) in support of international arbitration even when the seat of arbitration is outside Israel. Apply to the Tel Aviv District Court simultaneously with filing your notice of arbitration — the application can be made ex parte (without advance notice to the respondent) if urgency is shown. This is one of the most effective tools for preventing asset dissipation before a foreign-seated award can be enforced.