Quick Answer: Israel enacted the International Commercial Arbitration Law (ICA Law) in 2024, replacing a patchwork of older rules with a modern framework based directly on the UNCITRAL Model Law. For foreign companies contracting with Israeli parties, the ICA Law provides a familiar, internationally recognized dispute-resolution system — with Israeli courts obliged to refer parties to arbitration when a valid clause exists and to enforce awards under the New York Convention framework.

If your company does business with Israeli partners, suppliers, technology firms, or real estate developers, there is a good chance your contracts include an arbitration clause. Until 2024, Israel's arbitration landscape for cross-border disputes was governed by the Arbitration Law of 1968 — a statute that predated modern international arbitration practice by decades. Foreign parties frequently found it difficult to predict how Israeli courts would treat international arbitration agreements and awards.

That changed when Israel enacted the International Commercial Arbitration Law 2024 (the "ICA Law"), aligning itself with the UNCITRAL Model Law on International Commercial Arbitration. The reform was long-awaited. This guide explains what the ICA Law does, when it applies to your dispute, how to structure your arbitration clause, and what happens when you need to enforce an award in Israel.

1. Background — Why Israel Needed a New Law

Israel's original Arbitration Law of 1968 (*Chok HaBorrerut*) was a workable domestic framework, but it was not designed with international commercial arbitration in mind. Over the following decades, Israeli courts developed a body of case law interpreting the old statute, but gaps remained — particularly around the interaction between local courts and international arbitral tribunals, the standards for reviewing foreign awards, and the rights of parties to select foreign institutional rules.

In practice, this created uncertainty for foreign companies. Questions arose regularly:

  • Would an Israeli court stay litigation in favor of arbitration if the clause was broadly worded?
  • Could an Israeli party challenge a foreign award on grounds that had no equivalent in international practice?
  • How would an Israeli court assess whether an arbitral award could be set aside?

The 2024 reform addressed these issues head-on. By adopting the UNCITRAL Model Law as the statutory foundation for international commercial arbitration, Israel joined more than 80 jurisdictions — including the UK, Singapore, Germany, France, and Canada — that use the same underlying framework. For foreign parties, this convergence matters enormously: it means Israeli law now "speaks the same language" as most of the arbitration jurisdictions they already deal with.

2. Key Features of the ICA Law 2024

The ICA Law introduces several core principles that differ materially from the old 1968 regime:

Adoption of UNCITRAL Model Law Standards

The statute mirrors the UNCITRAL Model Law on International Commercial Arbitration (as amended in 2006), including provisions on the composition of arbitral tribunals, jurisdiction challenges, interim measures, conduct of proceedings, and grounds for setting aside awards. Any practitioner familiar with the Model Law will find the ICA Law immediately navigable.

Mandatory Court Referral to Arbitration

Article 9 of the ICA Law adopts the wording of the New York Convention: if a valid arbitration agreement exists, an Israeli court must refer the parties to arbitration unless the agreement is "null and void, inoperative, or incapable of being performed." Courts no longer have broad discretion to allow parallel litigation to continue. This is a significant change for foreign parties who previously worried that an Israeli defendant could avoid arbitration by filing a local court claim.

Party Autonomy

The ICA Law strongly reinforces party autonomy. Parties may:

  • Designate any arbitration institution (ICC, LCIA, AAA-ICDR, SIAC, or the Israeli Israel Centre for Commercial Arbitration — ICCA)
  • Choose any procedural rules they agree upon
  • Select arbitrators of any nationality
  • Specify any seat of arbitration, including a seat outside Israel
  • Apply any substantive law to the merits of their dispute

Interim Measures

The ICA Law includes a full chapter on interim measures aligned with the 2006 UNCITRAL amendments — including emergency measures and court assistance in ordering interim relief before or during arbitration. This closes a practical gap that existed under the old law, where the power to grant interim measures was poorly defined.

Limited Grounds for Setting Aside Awards

Under the ICA Law, a party may apply to set aside an award only on the narrow grounds specified in Article 34 of the UNCITRAL Model Law: lack of a valid arbitration agreement, due process violations, the tribunal deciding matters beyond its jurisdiction, the award conflicting with Israeli public policy, or the subject matter not being arbitrable under Israeli law. Merits review — second-guessing the tribunal's findings of fact or law — is not available.

3. When the ICA Law Applies to Your Dispute

The ICA Law applies specifically to international commercial arbitration. It does not replace the old 1968 Arbitration Law for purely domestic Israeli disputes. A dispute qualifies as international if any of the following conditions is met at the time of the arbitration agreement:

  • The parties' places of business are in different countries
  • The agreed seat of arbitration is outside the country where both parties are based
  • The place where a substantial part of the obligations under the contract is to be performed is outside the country of both parties
  • The parties have expressly agreed that the subject matter of the agreement relates to more than one country

For most foreign companies dealing with Israeli counterparts, the international threshold is easily met — the two parties are simply in different countries. However, if you are a foreign company with an Israeli subsidiary contracting with another Israeli entity, the dispute might be classified as domestic, which means the old 1968 law applies.

The "commercial" requirement is broadly interpreted and covers virtually any business relationship: supply agreements, licensing, technology development, real estate joint ventures, financing, construction, and service contracts all qualify. Consumer contracts and employment disputes are generally excluded from the ICA Law's scope.

4. Drafting Arbitration Clauses Under the New Framework

The ICA Law 2024 gives foreign companies significantly more flexibility when structuring dispute resolution clauses in contracts with Israeli parties. Here are the key drafting considerations:

Seat of Arbitration

The seat (legal place) of arbitration determines which courts have supervisory jurisdiction over the arbitral proceedings. Under the ICA Law, parties may choose a seat outside Israel. Common choices when one party is Israeli include London (LCIA), Paris (ICC), Geneva (Swiss Rules), or Singapore (SIAC). If you choose an Israeli seat, the ICA Law governs procedure and Israeli courts will supervise the arbitration.

Institutional vs. Ad Hoc Arbitration

Major international institutions — particularly the ICC and the LCIA — are commonly used in Israel-related disputes. The Israel Centre for Commercial Arbitration (ICCA) is also available for parties who prefer a local institution with experience in Israeli law. Ad hoc arbitration under UNCITRAL Rules is an option, but institutional arbitration is generally preferred because it provides an appointing authority, manages logistics, and reduces procedural disputes.

Language and Governing Law

Specify both the language of arbitration and the governing law for the contract's merits. English-language arbitrations are common in Israel-related commercial disputes. If you want Israeli law to govern, state "Israeli law" explicitly. If you prefer a neutral governing law (e.g., English law), that is also permissible under the ICA Law.

Sample Clause Language

A basic clause for an Israel-seated arbitration might read:

"Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration under the [ICC/LCIA/ICCA] Rules, which Rules are incorporated by reference into this clause. The seat of arbitration shall be [Tel Aviv / London / other]. The language of the arbitration shall be English. The number of arbitrators shall be [one / three]. The governing law of this Agreement shall be [Israeli law / English law]."

Consult an attorney before finalizing any clause — poorly drafted clauses remain a leading cause of preliminary disputes over jurisdiction and admissibility.

5. Enforcing Awards Under the ICA Law 2024

Enforcement of international arbitral awards in Israel runs through two parallel tracks, depending on the origin of the award:

Awards Made in Israel (Domestic Enforcement)

If the seat of arbitration was in Israel, enforcement is straightforward. The winning party files an application with the relevant District Court to have the award recognized and given the force of a court judgment. Under the ICA Law, courts may refuse enforcement only on the same narrow grounds available for setting aside an award — essentially, due process violations, jurisdictional excess, non-arbitrability, or public policy conflict. Courts may not review the merits.

Foreign Awards (New York Convention)

Israel is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Awards made outside Israel — for example, in an ICC arbitration seated in Paris — are enforced under the Convention. The applicant files with the District Court, presenting the original award and arbitration agreement. The court may refuse only on the limited New York Convention grounds (Article V), and the burden of proof is on the opposing party to establish a ground for refusal.

In practice, Israeli courts are generally pro-enforcement and rarely set aside or refuse foreign awards. The ICA Law reinforces this stance. In January 2025, the Israeli Ministry of Justice published draft Procedure Regulations to make enforcement proceedings more streamlined and predictable — those regulations are expected to be finalized by 2025–2026.

Interim Enforcement and Asset Attachment

Under the ICA Law, an Israeli court may issue interim measures in support of arbitration proceedings even before a tribunal is constituted. This includes *tzav ikul* (attachment orders) against Israeli assets of a counterparty, which can be a powerful tool if you are concerned about asset dissipation while arbitration is pending. See our guide on asset attachment orders in Israel for more detail.

6. Practical Steps for Foreign Companies

Here is a practical checklist for foreign companies contracting with Israeli parties after the ICA Law 2024:

  • Audit existing contracts. If you have Israeli contracts drafted before 2024, review whether the arbitration clause specifies a seat and institution clearly. Ambiguous clauses that referred to the "Arbitration Law of 1968" without more may now benefit from amendment or clarification.
  • Choose your seat deliberately. An Israeli seat gives you the benefit of the new ICA Law's court assistance mechanisms. A foreign seat gives you more neutral procedural supervision if you distrust Israeli court involvement.
  • Specify the institution. Blank clauses that say only "disputes shall be resolved by arbitration" are technically enforceable but create unnecessary friction. Name an institution and adopt its rules.
  • Check arbitrability. Some matters are not arbitrable under Israeli law regardless of what the parties agree — for example, certain family law matters, criminal liability, and specific insolvency proceedings. In commercial contracts, this is rarely an issue, but verify if your contract touches regulated areas.
  • Register your award promptly. If you win an arbitration, do not delay filing for enforcement in Israel. Although there is no short limitation period for enforcing a foreign award in Israel, prolonged delay can complicate asset tracing.
  • Take interim measures seriously. If a dispute arises and you are concerned about the counterparty's solvency or asset transfers, apply for an attachment order in an Israeli court in parallel with initiating arbitration. The ICA Law explicitly preserves this right.

Technology disputes, energy contracts, and real estate development joint ventures are among the sectors seeing the most international arbitration activity in Israel. If your company operates in any of these areas, understanding the ICA Law 2024 is now a baseline requirement for sound contract management.

A South Korean electronics manufacturer whose Israeli distributor commenced court proceedings in Tel Aviv despite a valid ICC arbitration clause in their supply agreement invoked the ICA Law 2024's mandatory referral provision — Article 9 — to obtain a stay of the Israeli litigation within six weeks of filing the application. The Tel Aviv District Court confirmed that the arbitration agreement was valid and operative, stayed all local proceedings, and referred the parties to arbitration under the ICC Rules as agreed. Under the prior 1968 Law regime, similar applications had sometimes taken months and faced broader judicial discretion; the ICA Law's more binding referral standard produced a faster, cleaner outcome. The manufacturer then filed its ICC Request for Arbitration in Paris and obtained a final award eleven months later, which was enforced in Israel under the New York Convention without challenge.

In Practice: The most significant practical change under the ICA Law 2024 is the mandatory referral to arbitration under Article 9: an Israeli court must now stay proceedings and refer the parties to arbitration when a valid clause exists, unless the clause is "null and void, inoperative, or incapable of being performed." Previously, courts exercised broader discretion and sometimes allowed parallel litigation to proceed. For foreign companies with Israeli arbitration clauses, this removes the most common delaying tactic used by Israeli respondents — filing a local court claim to disrupt or complicate arbitration proceedings.
In Practice: The ICA Law's grounds for setting aside an international award (Article 34, based on the UNCITRAL Model Law) are materially narrower than Section 24 of the old Arbitration Law 1968 — in particular, there is no "contrary to applicable law" ground allowing merits review. For parties with international agreements, this means greater finality: an Israeli arbitrator's legal conclusions, even if debatable, cannot be second-guessed by the courts. This is a feature, not a bug — but it makes getting the arbitration right the first time even more critical.