Quick Answer: Med-arb is a hybrid where one neutral first mediates your dispute and, if no settlement is reached, switches roles and issues a binding arbitration award. It is permitted in Israel because arbitration under the Arbitration Law 5728-1968 runs on party consent, but the same-neutral setup carries a real enforcement risk: a losing party can ask the District Court to set the award aside under Section 24 by arguing the arbitrator was tainted by confidential information heard during the mediation. Done with the right written consent and safeguards, med-arb can resolve a commercial dispute in three to six months instead of the two to four years a court claim usually takes.

If you are a foreign company or investor in a dispute with an Israeli counterparty, you usually want two things that pull in opposite directions: a real chance to settle without a war, and certainty that someone will actually decide the matter if settlement fails. Med-arb is the tool that tries to give you both. One neutral sits down with the parties as a mediator first. If the talks succeed, you walk away with a settlement. If they collapse, the same neutral takes off the mediator's hat, puts on the arbitrator's, and issues a binding award.

That switch is exactly where the trouble hides. An arbitrator who has already heard each side's private admissions in a mediation caucus is no longer a blank slate. Israeli law lets you run med-arb, but the courts watch it closely, and a losing party who feels the deck was stacked has a statutory route to attack the award. This guide walks through how med-arb works under Israeli law, where the enforcement risk sits, and how to structure the process so your award survives a challenge.

1. Overview

Med-arb combines two separate dispute-resolution tools into a single appointment. Mediation (gishur) is a voluntary, confidential negotiation run by a neutral who has no power to impose an outcome. Arbitration (borerut) is a private trial: the neutral hears evidence and issues a binding award that a court will enforce. Standard practice keeps these jobs in separate hands. Med-arb deliberately gives both to one person, on the theory that a neutral who already understands the dispute can move straight to a decision without a second learning curve.

Two structures dominate. In classic med-arb, the neutral mediates first and only arbitrates if mediation fails. In arb-med-arb, the parties open a formal arbitration, pause it for a mediation window, and resume the arbitration if no deal is signed. The second structure is popular in international practice because a mediated settlement can be recorded as a consent arbitral award, which travels well across borders.

For a foreign party, the appeal is practical. You are unlikely to want a Tel Aviv District Court claim that runs two to four years and demands repeated appearances. A single neutral who can settle or decide the matter within months is a far easier commitment to make from abroad.

Nothing in Israeli law bans med-arb, and nothing formally blesses it either. Its legality is stitched together from two separate frameworks that you combine by agreement.

Arbitration sits under the Arbitration Law 5728-1968. The whole regime runs on consent. Section 3 requires the arbitration agreement to be in writing, and once you have that agreement, Section 5 lets either side ask the court to stay a competing lawsuit and send the parties to arbitration instead. Because the parties define the arbitrator's powers, they can also agree that their arbitrator may first act as a mediator. The statute does not prohibit it.

Mediation sits under a different roof: Section 79C of the Courts Law [Consolidated Version] 5744-1984 and the Courts Regulations (Mediation) 5753-1993. These make mediation confidential and give a court the power to turn a mediated settlement into a judgment. Private commercial mediation borrows the same confidentiality norms through the parties' own mediation agreement.

Med-arb lives in the overlap. You consent to mediation under one framework and to arbitration under another, with a written term saying the same neutral may do both. That consent has to be genuine, informed, and recorded, because the written consent is the shield that later protects the award.

In Practice — Build the Paper Trail Early: The most common reason a med-arb award is challenged in Israel is that the parties never properly documented their consent to the dual role. Before the neutral mediates, put three things in writing: (1) the arbitration agreement itself, which Section 3 of the Arbitration Law 5728-1968 requires to be written; (2) an express clause stating that if mediation fails, the same neutral will arbitrate and issue a binding award; and (3) a waiver acknowledging that the neutral will have heard confidential material. The Israeli Institute of Commercial Arbitration (ICCA), the country's main private arbitration body, administers both mediations and arbitrations and can supply model clauses. A clause drafted at the start of the relationship, inside the commercial contract, is far stronger than consent scraped together on the day mediation collapses and tempers are running high.

3. The confidentiality problem

Mediation works because people speak freely. In a caucus, which is a private side meeting with one party, a company will often tell the mediator its real bottom line, the weak point in its own case, or how badly it needs cash this quarter. None of that is meant to reach the other side, and under Section 79C(d) of the Courts Law it is inadmissible in later proceedings.

Now picture that mediator becoming the arbitrator. The same person who heard your opponent admit their bottom line is now deciding who wins. Even a scrupulously fair neutral cannot un-hear what was said in caucus. The losing party will suspect, fairly or not, that the caucus tipped the scales.

Israeli law hands that losing party a weapon. Section 24 of the Arbitration Law 5728-1968 lists ten exhaustive grounds on which the District Court can set aside an award. Two of them fit a med-arb attack. Section 24(4) covers an award made where a party was not given a proper opportunity to argue its case or present its evidence, which is the natural-justice complaint. Section 24 also lets the court step in where the award offends public policy (takanat hatzibur). A neutral who decided partly on secret caucus information, without giving the other side a chance to respond to it, sits squarely in the danger zone.

In Practice — The 45-Day Clock and the Setting-Aside Motion: A party that wants to kill a med-arb award does not file a fresh lawsuit; it files a motion to set the award aside in the District Court. Under Section 27 of the Arbitration Law 5728-1968, that motion must be filed within 45 days of the day the award reaches the applicant, and only 15 days if the winning side has already served an application to confirm the award. Miss the deadline and the objection is usually lost. The court will not re-hear the merits: on a Section 24(4) natural-justice ground it asks a narrow question, whether the process was fundamentally unfair, not whether it would have decided the case differently. The awards that survive are the ones where the arbitrator, before switching roles, disclosed on the record that caucus information would play no part in the decision, and gave both sides a fresh chance to make their full case in the arbitration phase.

4. Drafting a med-arb clause safely

You cannot erase the confidentiality tension, but you can manage it down to an acceptable risk. A well-drafted med-arb process usually builds in several safeguards:

  • No secret caucuses, or a clean break. Either the mediation phase runs without private caucuses, so nothing reaches the neutral that the other side has not heard, or the parties sign a fresh, specific consent after mediation fails, confirming they still want the same neutral to arbitrate despite the caucuses.
  • A reasoned award. The parties require the arbitrator to give a written, reasoned award. Reasons force the neutral to show the evidence behind each finding, which makes any hidden reliance on caucus material much harder to sustain.
  • An opt-out. Either party may object, before the arbitration phase begins, to the same neutral continuing, in which case a different arbitrator is appointed.
  • A fallback arbitrator. The clause spells out how a replacement arbitrator is chosen if the med-arb neutral is disqualified or steps down.

The arb-med-arb structure builds some of this in automatically, because the arbitration is opened first and the mediation is a defined pause inside it rather than a separate proceeding you have to bolt on afterwards.

Advertisement
In Practice — Default Rules You Should Override in Writing: If your clause is silent, the First Schedule to the Arbitration Law 5728-1968 fills the gaps, and its defaults may not suit you. By default the arbitrator must render the award within three months of entering on the reference (extendable by the parties or the court), is not bound by the rules of evidence or substantive law, and is not required to give reasons. For med-arb, that last default is dangerous: an unreasoned award is far easier to attack as tainted. Spell out in the agreement that the award must be reasoned, set a realistic timetable (many commercial med-arbs allow four to six months end to end), and decide whether you want the appeal mechanism added by Amendment No. 2 of 2008 under Section 29B, which lets the parties agree in advance to appeal the award, either to the court on a question of law or to a second arbitrator.

5. Costs and timeline

Med-arb is usually cheaper than a full court fight, but it is not free, and the neutral's time is the biggest line item.

Arbitrators in Israel who take commercial med-arb work are typically retired judges or senior advocates. In 2026 their fees commonly run from NIS 1,500 to NIS 3,500 per hour, and many require a non-refundable retainer at the outset. Because one neutral handles both phases, you avoid paying two separate professionals to learn the same file, which is a genuine saving over appointing a separate mediator and arbitrator.

If you administer the case through the ICCA rather than running it privately, the institution charges a case-administration fee that scales with the amount in dispute. Expect an opening fee starting in the low thousands of shekels and rising for larger claims. Confirm the current tariff with the institution, since the schedule is updated periodically.

Mediation-phase costs are modest by comparison. Court-listed mediators charge a regulated fee for the first session under the 1993 regulations, after which private hourly rates apply, often NIS 500 to NIS 1,500 per hour split between the parties.

Enforcement carries its own small cost. Applying to the District Court to confirm an award is a fixed-fee motion, on the order of NIS 1,000 to NIS 1,500 as of 2026. Confirm the current figure under the Courts (Fees) Regulations 5767-2007.

In Practice — A Realistic Timeline From Signature to Enforceable Award: For a mid-size commercial dispute run through med-arb, plan on roughly this schedule in 2026. Appointing the neutral and holding the first mediation session takes two to four weeks. The mediation phase runs one to three sessions over four to eight weeks. If it fails, the arbitration phase with document exchange and a hearing adds a further two to four months, within the three-month default of the First Schedule unless the parties extend it. The award issues within weeks of the hearing. Confirmation by the District Court under Section 23 typically takes four to eight weeks for an uncontested award. Compare that with a District Court claim on the same dispute, which routinely runs two to four years to a first-instance judgment before any appeal is even filed.

6. Enforcing the outcome

How you enforce depends on which phase produced the result.

If the mediation phase settles the dispute, do not leave the deal as a bare contract. Convert it into an enforceable instrument. The cleanest route in an arb-med-arb structure is to have the arbitrator record the settlement as a consent award, which is then enforceable like any other award. Alternatively, a court can give a mediated settlement the force of a judgment under Section 79C of the Courts Law.

If the arbitration phase produces an award, that award binds the parties under Section 21 of the Arbitration Law, but it is not yet directly enforceable. You apply to the District Court to confirm it under Section 23. Once confirmed, the award has the force of a court judgment. From there, collection runs through the Execution Office (Hotza'a La'Poal): you open a file, the debtor receives a demand and a window to pay, and if they do not, enforcement steps such as liens, bank-account attachments, and asset seizure become available.

If your counterparty's assets sit outside Israel, an Israeli award can still be enforced abroad. Israel is a party to the 1958 New York Convention, so a domestic arbitral award, including a med-arb award, can be taken to the courts of most other member states for recognition and enforcement, subject to that country's own procedure.

In Practice — Confirmation Turns Paper Into Leverage: An unconfirmed award is just a document, and the Execution Office will not act on it. Consider a case for a foreign supplier owed roughly NIS 480,000 by an Israeli distributor. The med-arb award issued in March; the supplier applied to the District Court to confirm it under Section 23 of the Arbitration Law 5728-1968, and with no valid Section 24 objection filed inside the 45-day window, the court confirmed it about six weeks later. An Execution Office file was opened the same week, and the debtor, now facing a bank-account attachment, paid within 30 days. The lesson for foreign creditors is to budget for the confirmation step from the start, because that is the point where a private award becomes something the state will enforce on your behalf.

7. Med-arb vs the alternatives

Med-arb is not always the right tool. Choose by what you value most in the particular dispute.

Pure mediation fits when the relationship matters more than a guaranteed outcome and both sides genuinely want a deal. It is cheap and fast, but it produces nothing binding if it fails.

Pure arbitration fits when you expect a fight and want a clean, enforceable decision without the confidentiality baggage of a neutral who has heard private caucus material. It is the safest structure if you think the other side will hunt for any ground to attack the award.

Arb-med-arb is the compromise many international parties prefer. You get the settlement window of mediation, but the process is anchored in an arbitration from day one, and any deal can be captured as a consent award. For cross-border disputes where enforcement may happen abroad, that portability is worth a great deal.

The right answer depends on the counterparty, the sums at stake, and how much you value speed against the risk of a challenge. This is a conversation to have with Israeli counsel before you sign the dispute-resolution clause, not after the dispute has erupted.