IsraelLawWhat Is Mediation?
Mediation is a voluntary, confidential dispute resolution process in which a neutral third party — the mediator — helps the parties reach a mutually acceptable settlement. Unlike an arbitrator or a judge, the mediator has no authority to impose a decision. The mediator facilitates communication, helps the parties understand each other's positions and underlying interests, and assists them in crafting a resolution that serves both sides.
In Israel, mediation has become an integral part of the civil justice landscape. Courts routinely refer cases to mediation, and dedicated mediation institutions — including the Israel Centre for Commercial Arbitration (ICCA), the Mediation Centre of Israel, and private mediators — handle thousands of cases annually.
Legal Framework
Mediation in Israel is governed primarily by the Courts Law (Consolidated Version), 1984 and regulations made under it, together with the Court Mediation Regulations, 1993 ( - , "—1993). These regulations apply to court-referred mediation in civil proceedings.
Key features of the framework:
- Courts at all levels — Magistrate, District, and Supreme — may refer cases to mediation.
- The parties' participation in mediation is voluntary; a court may recommend mediation but cannot compel the parties to reach a settlement.
- Communications in mediation are confidential and may not be used as evidence in subsequent court or arbitral proceedings.
- A mediated settlement agreement, once approved by the court, has the force of a court judgment.
For private (out-of-court) mediation and family mediation, additional rules apply. Family disputes involving child custody, divorce-related financial issues, and guardianship are increasingly channelled through the Family Courts mediation track, which has specific regulations and trained family mediators.
Court-Referred Mediation
Israeli courts have broad statutory authority to refer parties to mediation at any stage of proceedings — at the initial case management hearing, during pre-trial proceedings, or even after hearings have commenced. In practice, referral most commonly occurs at the first case management hearing.
How It Works
- The judge raises mediation as an option and explains the process to the parties.
- If the parties agree, the court issues an order referring the case to mediation and suspends the court proceedings.
- The parties select a mediator from the court's approved list (or by agreement from outside the list). If they cannot agree on a mediator, the court appoints one.
- Mediation proceeds within a time limit set by the court (typically 45–90 days, extendable).
- If mediation succeeds, the settlement is submitted to the court for approval and converted to a court judgment.
- If mediation fails, court proceedings resume. The judge who referred the case to mediation does not learn what was discussed in mediation — confidentiality is preserved.
Court Pressure to Mediate
While Israeli courts cannot compel settlement, they can and do apply significant informal pressure on parties to attempt mediation. A party that unreasonably refuses mediation may face adverse costs consequences. Some courts have policies requiring mediation before setting a trial date for certain case types.
Choosing a Mediator
For court-referred mediation, mediators must be accredited and appear on the court-approved list. Accreditation requires completion of an approved mediation training course (typically 40–50 hours) and ongoing professional development.
For private mediation, the parties may choose any mutually acceptable mediator. Common categories include:
- Lawyer-mediators. Most common for commercial disputes. Bring legal knowledge and credibility to the process.
- Retired judges. Carry authority and understand court processes; particularly effective in disputes where "reality testing" (explaining what a court would likely do) is valuable.
- Industry experts. Used in technical disputes (construction, engineering, technology) where the mediator's domain knowledge helps bridge gaps.
- Psychologist-mediators. Used in family disputes, particularly those involving custody and parental communication.
Institutional mediation through ICCA or similar bodies provides a roster of approved mediators and procedural rules that govern the process.
The Mediation Process
A typical Israeli mediation follows these stages, though the mediator has broad discretion to adapt the process to the dispute:
1. Introductory Session
The mediator meets with all parties together. The mediator explains the process, ground rules (confidentiality, voluntary participation, mediator neutrality), and the expected timeline. Each party has an opportunity to present its perspective without interruption.
2. Joint Sessions
The mediator facilitates a structured dialogue between the parties, helping them to identify the real issues and explore common ground. The focus shifts from legal positions ("I am entitled to NIS 500,000") to underlying interests ("I need cash flow by next month and I want to preserve the business relationship").
3. Private Sessions (Caucuses)
The mediator meets separately with each party in confidence. In caucus, parties can share information they are not yet ready to disclose to the other side, test ideas, and discuss settlement options candidly. What is said in caucus is confidential; the mediator will not relay it without permission.
4. Negotiation and Drafting
Once the parties move toward settlement, the mediator assists in drafting the terms. This phase often involves the parties' lawyers collaborating on precise contract language.
5. Settlement or Impasse
If the parties reach agreement, they sign a settlement agreement. If not, the mediator may declare an impasse and close the mediation, leaving the parties free to continue to arbitration or litigation.
Confidentiality
Confidentiality is the cornerstone of the mediation process. Under the Court Mediation Regulations and general principles:
- All communications made in mediation — written and oral — are confidential.
- The mediator may not be called as a witness in subsequent proceedings.
- A party may not introduce evidence of what was said or offered in mediation in any court or arbitral proceeding.
- The mediator's notes and working documents are protected from disclosure.
Confidentiality may be waived by the written consent of all parties. It does not cover independently discoverable facts (the mere fact that discussions occurred in mediation does not make those facts confidential), or situations involving serious criminal conduct disclosed in mediation.
For private commercial mediations, it is best practice to include an express confidentiality agreement signed by the parties, their lawyers, and the mediator at the outset of the process.
Settlement Agreements and Enforcement
A mediated settlement agreement is a contract between the parties. It is binding and enforceable as a contractual matter as soon as it is signed.
Court-Approved Settlement (Judgment by Consent)
Where the dispute is already before a court, the parties may ask the court to issue a judgment by consent based on the settlement terms. This gives the settlement the force of a court judgment, enforceable through the Execution Office without further litigation.
The court will typically approve the settlement unless it is manifestly illegal, contrary to public policy, or involves a matter (such as child custody) where the court must independently assess the best interests of the child.
Private Settlement Agreement
If the dispute was never filed in court, the settlement is enforceable as a contract. If one party defaults, the other must file a new court claim for breach of the settlement agreement. To avoid this, parties in private mediation sometimes ask the court to adopt their settlement as a consent judgment even if no prior proceedings were pending — this is possible but requires a formal court application.
Mediation vs. Arbitration
| Factor | Mediation | Arbitration |
|---|---|---|
| Decision-maker | Parties themselves | Arbitrator(s) |
| Outcome | Consensual settlement (or no deal) | Binding award imposed on parties |
| Timeline | Days to weeks | Months to years |
| Cost | Lower | Higher |
| Preserves relationship? | Often yes | Usually damages relationship |
| Requires both parties to cooperate | Yes — any party can walk away | No — proceeding continues in default |
| Suitable for uncooperative respondent | Limited | Yes |
When Is Mediation Appropriate?
Mediation works best when:
- Both parties genuinely want to resolve the dispute and are prepared to compromise.
- The parties have an ongoing relationship (business partners, landlord-tenant, employer-employee) that litigation would destroy.
- The dispute involves complex facts where a creative commercial solution is more valuable than strict legal entitlements.
- One or both parties need a quick resolution — mediation can often resolve a dispute in a single day.
- Confidentiality is paramount — neither party wants the dispute or the settlement in the public record.
- The legal costs of litigation would approach or exceed the amount in dispute.
Mediation is less appropriate when one party is acting in bad faith, when a binding precedent is needed, or when the respondent is entirely uncooperative and the only realistic outcome is a forced execution.
An Australian importer of Israeli agricultural machinery had a NIS 480,000 dispute with its Israeli supplier over delivery delays and alleged quality defects on a shipment of packaging equipment. The parties had filed in the Tel Aviv District Court, and at the first case management hearing the judge strongly recommended mediation. Both sides agreed. A retired District Court judge with commercial experience was appointed as mediator from the court's accredited roster, at a fee of NIS 2,800 per hour shared equally. A single full-day mediation session was scheduled five weeks after the referral order. During the joint session the mediator identified a factual misunderstanding about the delivery specification that neither side had raised in their pleadings. In private caucus with each party he surfaced that the Australian importer primarily needed replacement parts within 60 days, not a cash payment. The Israeli supplier agreed to supply NIS 190,000 in replacement parts at cost, plus a credit note of NIS 60,000 for future orders. No money changed hands. The settlement was converted to a consent judgment by the Tel Aviv District Court two weeks later. Total cost of the mediation: NIS 28,000 in mediator fees — compared to an estimated NIS 180,000 in combined legal fees for a full trial.
Costs of Mediation
Mediation costs include the mediator's fee and, for institutional mediation, the institution's administration fee. Mediators' hourly rates in Israel range from approximately NIS 600 to NIS 2,500 per hour depending on the mediator's experience and the complexity of the dispute. Costs are typically split equally between the parties unless they agree otherwise.
For court-referred mediation, the court may provide a short initial mediation session at reduced cost through a subsidised scheme. Private mediation at ICCA or similar institutions involves fees set by the institution's schedule.
Even at the higher end, mediation costs for a one-day session are a fraction of the cost of full arbitration or litigation proceedings. The savings in legal fees, management time, and commercial disruption typically far exceed the mediation fees.
Frequently Asked Questions
