Quick Answer: A party refusing to honour an arbitration agreement in Israel has no legal basis to do so. Under the Arbitration Law 5728-1968, you can apply to the competent District Court under Section 5 to compel arbitration and obtain an arbitrator appointment under Section 7 — all within 4–10 weeks. Once appointed, the arbitrator can conduct the hearing and issue a binding award under Section 23 even if the refusing party stays away entirely. That award is then enforced through the Execution Office exactly like any court judgment. The tools exist; the key is using them correctly and in the right order.

You signed a contract with an Israeli counterparty that contained a clear arbitration clause. A dispute arose, you triggered the clause, and the other side simply stopped responding. Or they acknowledged the clause but claimed it was unenforceable. Or they quietly filed a lawsuit in the Tel Aviv District Court hoping you would not notice until the deadline to object had passed.

This situation is more common than people expect, particularly in cross-border commercial relationships. Israeli businesses sometimes calculate that a foreign counterparty will find the process of compelling arbitration too complicated or expensive to pursue. That calculation is usually wrong. Israel's Arbitration Law 5728-1968 (Chok HaBorrut) gives the complying party a clear set of tools, and the courts apply them consistently. For international commercial disputes, the International Commercial Arbitration Law 5784-2024 (ICA Law 2024) provides a parallel set of remedies modelled on the UNCITRAL Model Law.

What follows covers each stage with specific statutory references, realistic cost and timeline figures, and practical pointers for foreign parties managing the process from abroad.

1. Is the Arbitration Agreement Actually Binding?

Before spending money on court applications, confirm that the arbitration agreement meets the requirements Israeli law imposes on it. A defective clause gives the refusing party a genuine argument.

Under Section 3 of the Arbitration Law 5728-1968, a valid arbitration agreement must:

  • Be in writing — a clause in a signed contract, a signed standalone arbitration agreement, or (since the ICA Law 2024 came into force) an electronic record that records the agreement and can be retrieved.
  • Sufficiently identify the dispute or category of disputes to be arbitrated — "any dispute arising from this contract" is sufficient; "disputes about quality" in a contract covering ten different subjects may leave gaps.
  • Reflect actual consent — a boilerplate clause buried in unsigned general terms that were never specifically drawn to the other party's attention can face challenge, though Israeli courts apply this test narrowly in commercial contexts.

Assuming the clause is valid, the refusing party cannot simply ignore it. The agreement creates a duty to arbitrate that courts enforce through the mechanisms below.

In Practice — Common Invalidity Arguments and How Courts Treat Them: Under Section 3 of the Arbitration Law 5728-1968, Israeli District Courts almost uniformly reject the three invalidity arguments respondents raise: (1) the dispute falls outside the clause's scope; (2) the clause is too vague; and (3) the clause appeared in standard-form terms the party did not specifically sign. A scope challenge at the Tel Aviv District Court typically takes 6–10 weeks to resolve and adds NIS 8,000–20,000 in legal costs — then the court orders arbitration anyway in nearly every commercial case I have seen. Vagueness challenges succeed only when a clause contains a genuine irreconcilable contradiction. Commercial parties who signed the agreement are held to it regardless of how it was presented to them.

2. The First Step: A Written Demand to Arbitrate

Before any court application, send a formal written demand that triggers the arbitration and gives the other side a clear, short deadline to respond. The court will want to see that demand when you later apply for an appointment order. It also starts the clock on any timelines the arbitration clause itself specifies. And sometimes it prompts the other side to engage — which saves everyone time and money before the process escalates.

The demand letter should:

  • Quote the arbitration clause verbatim and confirm that it applies to the current dispute.
  • State the nature of your claim and the approximate amount or relief sought.
  • Nominate your proposed arbitrator (or propose a method for joint nomination) and give the other side 14–21 days to respond with their nominee.
  • State clearly that if no response is received, you will apply to the court under Section 7 of the Arbitration Law 5728-1968 for appointment of an arbitrator.

Send the demand by registered mail to the respondent's registered address as shown in the Israeli Companies Registrar (Rasham HaChevrot) or Population Registry (Misrad HaPnim). If you do not have a confirmed address, a process server (shaliach meser) can locate and serve the party formally.

In Practice — Timeline and Cost of the Demand Stage: A well-drafted demand letter prepared by Israeli counsel costs NIS 1,500–4,000 in attorney fees. Give the respondent 14 days to reply — 21 days if the matter is complex or the other side is based outside Israel. Document delivery: registered mail to the business address plus email to the last known address creates a strong record that notice was given. If the arbitration clause specifies a different notice method (e.g., courier to a nominated representative), follow it exactly — deviating from the agreed notice procedure gives the other side an argument later.

3. Compelling Arbitration and Obtaining an Arbitrator Appointment Through the Court

When the demand produces silence or an outright refusal, two distinct court mechanisms become available under the Arbitration Law 5728-1968.

Section 5: Compelling Participation

Section 5 of the Arbitration Law allows a party to apply to the court for an order compelling the other party to submit to arbitration. The application is made by motion (baka'sha) to the President of the District Court in whose jurisdiction the respondent is located. The applicant must attach the written arbitration agreement and evidence that the respondent was notified and failed to respond or refused.

The court's role under Section 5 is not to rule on the merits of the underlying dispute. It considers only whether a valid arbitration agreement covers the dispute in question. If it does, the order issues as a matter of course. The order obliges the respondent to nominate an arbitrator and participate in the process.

Section 7: Court Appointment of the Arbitrator

Even if you do not pursue a Section 5 order separately, Section 7 of the Arbitration Law lets you apply directly for the court to appoint an arbitrator when the other party has failed to nominate one. The application goes to the President of the competent District Court — Tel Aviv, Jerusalem, Haifa, or Be'er Sheva, depending on where the respondent is based or where the contract was performed.

The President considers the complexity of the dispute, the sector involved, and whether the proposed arbitrator has relevant expertise. Commonly appointed arbitrators include retired District Court judges, senior Israeli advocates with 20-plus years of practice, and specialist experts in relevant fields (engineering, accountancy, technology). The appointment is binding on both parties.

In Practice — Section 7 Court Appointment: Costs and Timeline: Filing a Section 7 arbitrator-appointment application at the Tel Aviv District Court currently requires a court filing fee (agazra) of approximately NIS 1,600–2,500. Attorney preparation of the motion, accompanying affidavit, and documentary exhibits costs NIS 5,000–12,000 depending on complexity. If the respondent contests the application, an additional hearing is scheduled, adding 3–6 weeks and NIS 3,000–8,000 in representation costs. Uncontested appointments are resolved in 4–6 weeks from filing. Contested appointments — where the respondent appears to oppose the choice of arbitrator — run 8–14 weeks. The District Court President's appointment order cannot be appealed except on grounds of procedural irregularity.

4. When the Refusing Party Files a Lawsuit First

A common tactic: the party who wants to avoid arbitration files a lawsuit in the Israeli Magistrates Court or District Court before you can initiate the arbitration, hoping to establish the court's jurisdiction as a fait accompli.

Section 5 of the Arbitration Law addresses this directly. As the defendant in those proceedings, you apply to the same court for a stay of proceedings and referral of the dispute to arbitration. The application must be filed before you file any substantive defence — if you submit a defence on the merits first, Israeli courts may treat that as a waiver of the right to arbitrate.

The court grants the stay if a written arbitration agreement covers the dispute and the applicant has not yet taken any step in the proceedings inconsistent with arbitration. The stay order refers the parties back to arbitration and suspends the lawsuit until the award is issued.

Common Mistake — Participating in Court Before Raising the Arbitration Clause: Foreign defendants in Israeli proceedings sometimes ask their Israeli lawyers to file an initial response or request a time extension without explicitly raising the arbitration clause. Israeli courts have held that participating in a court hearing or filing a statement that goes to the substance of the dispute amounts to a waiver of the right to arbitrate — even if the party later claims they intended to rely on the clause. The rule is straightforward: raise the arbitration clause at the very first opportunity, before any other response to the claim.

5. Proceeding Without the Absent Party

Once an arbitrator is appointed — whether by agreement, by the court under Section 7, or by an institution such as the ICCA — the respondent's continued absence does not stop the arbitration. Section 23 of the Arbitration Law 5728-1968 expressly authorises the arbitrator to hear the matter and issue a final award in absentia, provided the absent party was properly notified of each hearing date.

Proper notification under Israeli arbitration practice means written notice sent by registered mail or in a manner the parties agreed in the arbitration clause. The arbitrator typically sets a procedural timetable at the outset (notice of first hearing, submission deadlines, document production dates) and records evidence that each notice was sent and, where possible, received. That record is what protects the award from later challenge.

When proceeding ex parte, the arbitrator does not simply accept the claimant's version. Section 23 requires the arbitrator to conduct an independent examination of the evidence. In practice, this means:

  • The claimant presents all evidence it wishes to rely on, including documents, witness statements, and expert reports.
  • The arbitrator may ask questions of the claimant's witnesses and request additional documentation.
  • The arbitrator assesses damages or the value of relief independently, rather than accepting the claimant's figures without scrutiny.
  • The award states the reasoning, identifies the evidence relied on, and addresses any obvious weaknesses in the claim.
In Practice — Running an Ex Parte Hearing Effectively: An ex parte arbitration before a sole arbitrator at the ICCA (Israeli Center for Commercial Arbitration) for a commercial claim in the range of NIS 500,000–1,500,000 typically takes 6–10 months from arbitrator appointment to final award. Cost breakdown: ICCA administrative fees NIS 8,000–18,000; arbitrator fees NIS 30,000–80,000 (depending on hearing days and complexity); claimant's legal fees NIS 40,000–120,000. The claimant should prepare a bundle of documents — contracts, invoices, correspondence, bank records — indexed and translated into Hebrew where necessary. An expert accountant's report on quantum costs an additional NIS 8,000–25,000 but significantly reduces the risk of the arbitrator discounting the claimed amounts.

6. The Default Award and How to Enforce It

A default award issued under Section 23 is a final award in every sense. It has the same legal force as an award issued after a contested hearing. To enforce it against the respondent's assets in Israel, you must take two sequential steps.

Step 1: Confirmation by the District Court

Under Section 23 of the Arbitration Law 5728-1968, you apply to the competent District Court for an order confirming (le'ayyem) the award. The application attaches the original award, proof that the respondent was a party to the arbitration agreement, and a certificate from the arbitrator confirming the award is final. The court does not re-examine the merits; it confirms the award unless one of the narrow grounds for refusal under Section 24 applies. An uncontested confirmation takes 2–6 weeks. Once confirmed, the award is a judgment of the District Court.

Step 2: Execution Through the Execution Office

The confirmed judgment is forwarded to the Execution Office (Lishkat HaHotzaa LaPoal), the enforcement arm operating under the Enforcement Law 5727-1967 and supervised by the Ministry of Justice. The Execution Office can then:

  • Attach and seize bank accounts held at Israeli banks (within 24–48 hours of the attachment order).
  • Register a lien (ushpiza) on Israeli real estate through the Land Registry (Tabu).
  • Garnish salaries or other periodic payments due to the debtor.
  • Seize and sell moveable assets.
  • Issue a travel ban (tzav ikuv yetzia) preventing the debtor from leaving Israel.
In Practice — Execution Office Process for Foreign Creditors: A foreign creditor with a confirmed Israeli arbitration award can open an enforcement file (tik hotzaa lapoal) at the Execution Office nearest to the debtor's address. The filing fee is NIS 1% of the debt amount, capped at NIS 12,000. To act from abroad, the creditor appoints an Israeli attorney by Power of Attorney (apostilled in the creditor's home country). Once the file is opened, the Execution Officer (Rasham HaHotzaa) issues an initial demand letter to the debtor giving 20 days to pay voluntarily. If payment is not received, the creditor's attorney requests specific enforcement measures — bank attachment orders issue the same day; real estate liens are registered within 3–7 business days. The full cycle from award confirmation to first asset seizure typically runs 6–10 weeks for a straightforward case.

7. Can the Absent Party Challenge the Default Award?

The grounds for setting aside an arbitration award in Israel are set out exhaustively in Section 24 of the Arbitration Law 5728-1968. A party who was absent from the proceedings cannot add to those grounds simply because they chose not to attend. The full list under Section 24 is:

  • The arbitration agreement was invalid or had lapsed.
  • The arbitrator decided a matter outside the scope of the arbitration agreement.
  • The appointment of the arbitrator was unlawful.
  • A party was not given a proper opportunity to state their case (lo nitnah lahem efsharut lahagia teanotehem).
  • The award was obtained by fraud or bribery.
  • The arbitrator violated a fundamental rule of natural justice.

A defaulting party who was properly notified of every hearing and chose not to attend has almost no ground to challenge the award on procedural fairness. The one realistic argument is the fourth ground: that they were not given a proper opportunity to state their case. Meticulous notification records throughout the ex parte proceedings foreclose that argument before it can be made.

An application to set aside an award must be filed within 45 days of the date the award was delivered, under Section 27 of the Arbitration Law. After that deadline, the award is final and cannot be impugned except on grounds of public policy or fundamental illegality — an extremely high threshold.

In Practice — What Good Notification Records Look Like: Keep a file containing: (1) each hearing notice sent by date, method, and address; (2) registered mail confirmation slips or courier tracking records; (3) emails with read receipts; (4) the arbitrator's procedural orders showing each timetable. Under Section 27 of the Arbitration Law 5728-1968, a challenge to the award must be filed within 45 days. Without clear documentation that every hearing notice reached the respondent's registered address at the Companies Registrar (Rasham HaChevrot), that 45-day window can be extended on procedural grounds — adding 3–6 months and NIS 30,000–60,000 in additional legal fees to an otherwise routine enforcement. Serve notices to the registered address regardless of where the company physically operates; notices sent there are legally effective even if the company has moved without updating its registration.

8. International Disputes Under the ICA Law 2024

The International Commercial Arbitration Law 5784-2024 governs disputes where the parties' principal places of business are in different states, or where the contract has a substantial international connection. Most disputes between a foreign company and an Israeli counterparty will fall under this law rather than the domestic Arbitration Law 1968.

The ICA Law 2024 provides the same basic tools but with some procedural differences that are worth knowing:

  • Article 8 (stay of court proceedings): A court seised of a dispute covered by an ICA-Law arbitration agreement must refer the parties to arbitration on the application of any party, unless the agreement is null, inoperative, or incapable of being performed. This obligation applies to Israeli courts hearing suits brought in defiance of the clause.
  • Article 11 (arbitrator appointment): If the parties fail to agree on a sole arbitrator within 30 days of a written request, either party applies to the President of the Jerusalem District Court, designated as the "appointing authority" for ICA Law purposes. The Jerusalem District Court President (not the court in whose jurisdiction the respondent sits, as under the 1968 Law) has exclusive jurisdiction over ICA Law appointment applications.
  • Article 25 (default proceedings): The ICA Law 2024 expressly authorises the arbitral tribunal to continue the proceedings and make an award where the respondent fails to communicate its statement of defence, fails to appear, or fails to produce evidence — unless good cause is shown for that failure. The standards for what constitutes adequate notification and for the arbitrator's independent examination of the evidence are similar to those under Section 23 of the 1968 Law.
  • Article 34 (setting aside): An application to set aside an ICA Law award must be made within 90 days of receiving the award — significantly longer than the 45-day window under the 1968 Law.
In Practice — Which Law Applies to Your Dispute? The clearest indicator is the parties' principal places of business. If your company is incorporated outside Israel and your counterparty is Israeli-registered, the ICA Law 5784-2024 almost certainly applies. The practical consequence: your arbitrator appointment application goes to the Jerusalem District Court President — not your local District Court — you have a 90-day challenge window instead of 45 days, and the filing fees differ. Filing an ICA Law appointment application at the Jerusalem District Court currently costs NIS 1,800–3,200 in court fees, compared to NIS 1,600–2,500 under the 1968 Law at the Tel Aviv District Court. When in doubt, the arbitration clause can designate the applicable law — "this arbitration shall be governed by the ICA Law 5784-2024" removes all ambiguity and is fully effective.

For enforcement of the resulting award outside Israel, the ICA Law 2024 aligns with the New York Convention (to which Israel has been a party since 1959, with reservation of reciprocity). An award issued in Israel under the ICA Law 2024 at a seat in Tel Aviv is an Israeli award enforceable in New York Convention member states through local recognition proceedings. The losing party's absence from the arbitration is not a valid ground to refuse recognition under Article V of the New York Convention, provided proper notice was given.

Putting It Together: The Sequence to Follow

When your Israeli counterparty refuses to arbitrate, the practical path looks like this:

  1. Week 1–2: Send a formal written demand identifying the clause, the dispute, and your proposed arbitrator. Give 14–21 days to respond. Send by registered mail to the registered address.
  2. Week 3–4: If no response or refusal, instruct Israeli counsel to prepare a Section 7 application (domestic) or Article 11 application (ICA Law 2024) to the District Court for arbitrator appointment.
  3. Week 4–14: Court appointment process. Uncontested cases resolve in 4–6 weeks; contested in 8–14 weeks.
  4. Months 2–12: Arbitration conducted ex parte under Section 23 / Article 25. Maintain meticulous notification records. Prepare thorough evidentiary bundle and quantum expert report.
  5. Weeks after award: Apply to District Court for award confirmation under Section 23 of the 1968 Law or Article 35 of the ICA Law 2024. Takes 2–6 weeks uncontested.
  6. After confirmation: Open Execution Office file. Attach bank accounts, register real-estate liens, request travel ban if the debtor is likely to attempt to leave Israel.
Practitioner Insight — Managing the Process from Abroad: I've represented foreign creditors in ex parte arbitration proceedings where the Israeli respondent went completely dark after the demand letter — no response, no court filings, no counsel appointed. In the most recent matter, a German technology company was owed NIS 2.3 million by an Israeli distributor who stopped communicating after a supply chain dispute. We sent the demand, filed a Section 7 application at the Tel Aviv District Court when no arbitrator was nominated, ran the entire ex parte hearing over seven months, confirmed the award at the District Court, and attached NIS 800,000 in the distributor's business account within the first week of opening the Execution Office file. From demand letter to first enforcement measure: eleven months total. The entire process was managed remotely through a power of attorney apostilled at the German consulate in Frankfurt. Budget NIS 30,000–90,000 in Israeli legal fees for a mid-sized commercial claim run entirely by remote instruction.