Security for Costs in Israel: When Foreign Claimants Must Post a Bond

Most foreign claimants only learn about security for costs when the motion lands on their desk, usually two or three weeks after they file suit in Tel Aviv or Haifa. You drafted the claim, paid the 2.5% court fee, retained Israeli counsel. Then the defendant asks the court to make you deposit another six figures before anything else happens. It feels like a penalty for being foreign. In a sense it is, though the reasoning behind it is narrower than that.

The logic is about collection, not nationality. If an Israeli defendant wins and the court awards costs against a claimant whose only assets sit in New Jersey, Manchester or Buenos Aires, that costs award is close to worthless unless the defendant is willing to start enforcement proceedings abroad. Israeli procedure answers this by asking the claimant to park a sum inside the jurisdiction up front. This guide covers when the court will order it, what it typically costs, how the same question plays out in arbitration (where the rules have moved in the opposite direction), and the arguments that actually work when you oppose the motion.

1. What Security for Costs Means in Israeli Practice

Security for costs is not a payment to the other side and it is not a court fee. It is money held in escrow, either deposited into the court treasury or provided as a guarantee from a bank or another acceptable third party, which stays there until the case ends. If the claimant wins, the deposit comes back in full. If the claimant loses and costs are awarded against it, the defendant draws on the deposit instead of chasing the claimant across borders.

Three things distinguish it from the other sums a claimant pays in an Israeli case:

• It is separate from the court fee (agra). The filing fee in a civil money claim is 2.5% of the claim value, split into two installments: half on filing, half before the evidence stage. That money is gone regardless of outcome. Security is returnable.
• It is separate from your own legal fees. Security covers the defendant's anticipated costs, which the court estimates based on the size and expected length of the case.
• It only happens if the defendant asks. No Israeli court imposes security on its own initiative in an ordinary commercial claim. The defendant has to file a written motion, normally alongside or shortly before the statement of defense.

The same mechanism appears under different names in other procedural contexts. A party seeking a pre-judgment attachment must post security for the damage the attachment might cause. A party appealing may be asked for security for the respondent's appeal costs. This guide deals with the version that catches foreign claimants at the start of a case.

2. The Legal Basis: Regulation 157 and Section 353A

Two separate provisions govern security for costs in Israel, and which one applies depends on whether the claimant is a person or a company. The difference matters enormously, because the two rules start from opposite defaults.

Regulation 157(a) of the Civil Procedure Regulations 5779-2018 is the general provision. It took effect on 1 January 2021, replacing Regulation 519 of the old 1984 Regulations, and it states that the court may, if it sees fit, order a claimant to give security for the defendant's costs. If the security is not given within the period the court sets, the statement of claim is struck out. The word that matters is "may." For an individual claimant the default is no security, and the burden sits on the defendant to persuade the court that an order is justified.

Section 353A of the Companies Law 5759-1999 flips that default. Where the claimant is a limited-liability company, the court is directed to order security for the defendant's costs unless it finds that the circumstances of the case do not justify it, or unless the company shows it will be able to pay the defendant's costs if the claim fails. In practice this means a corporate claimant, Israeli or foreign, starts the argument from behind. It has to bring evidence of its own solvency rather than simply pointing out that the defendant has not proved insolvency.

Foreign claimants regularly fall under both headings at once. A Delaware LLC suing an Israeli supplier faces Section 353A because it is a limited-liability company, and faces the foreign-residence factor under Regulation 157 because it has no presence in Israel. Motions in that posture succeed far more often than not.

3. How Israeli Courts Decide: The Four Working Factors

Israeli case law has settled on a short list of considerations that judges weigh when a security motion arrives. No single factor decides the outcome, and a strong showing on one can offset a weak showing on another.

• Residence outside Israel. This is the classic trigger. The concern is enforceability: a costs award against a claimant with no Israeli assets requires the defendant to start recognition proceedings abroad under whatever regime applies in the claimant's home country. The factor carries much less weight where the claimant is based in a country with which Israel has a workable reciprocal enforcement arrangement under the Foreign Judgments Enforcement Law 5718-1958.
• Failure to state a current address. A statement of claim that gives only a lawyer's office or a stale foreign address invites a security motion. Israeli judges read this as a signal that the claimant may be hard to locate later.
• Prospects of the claim. The court takes a preliminary look at the merits. This is deliberately shallow, since a security motion is not a mini-trial, but a claim supported by signed contracts and documented invoices is treated differently from one resting entirely on oral assurances.
• The claimant's financial position. A claimant with audited accounts showing healthy equity is in a much stronger position, particularly under Section 353A, where demonstrating ability to pay is the statutory escape route.

Courts also weigh a fifth consideration that is not strictly a factor: access to justice. Where a security order would effectively shut a genuine claimant out of court, judges have reduced the sum or allowed staged deposits rather than imposing an amount the claimant plainly cannot raise. That argument works best when supported by real financial evidence, not by assertion.

4. How Much You Will Actually Have to Deposit

There is no formula. The court sets an amount it considers a reasonable estimate of what the defendant would recover in costs if the claim fails, which depends on the value of the claim, the anticipated number of hearing days, and whether expert evidence is expected.

Working ranges seen in commercial practice:

• Magistrates' Court claims (up to NIS 2.5 million): commonly NIS 15,000 to NIS 40,000.
• District Court claims of NIS 3 to 10 million: commonly NIS 40,000 to NIS 120,000.
• Large commercial or construction disputes with expert evidence: NIS 150,000 and upward, sometimes ordered in stages tied to the progress of the case.

These are practical observations rather than published tariffs, and any given judge may land well outside them. Treat them as a planning range and confirm the realistic exposure with Israeli counsel who knows the specific court.

The form of the security is usually left to the claimant. A cash deposit into the court treasury is simplest but ties up working capital for the life of the case, which in the District Court often means three to five years. A bank guarantee costs a commission (typically 1% to 2% of the guaranteed sum per year) but leaves the principal available to the business. Israeli courts accept guarantees from Israeli banks readily; a guarantee from a foreign bank generally needs to be confirmed by an Israeli correspondent bank before the court will treat it as adequate.

5. Security for Costs in Israeli Arbitration

Arbitration has moved in the opposite direction from litigation on this question, and the gap between the two is wide enough to influence how you draft a contract.

In domestic arbitration under the Arbitration Law 5728-1968, the arbitrator has wide procedural discretion. Under the First Addendum, which supplies the default rules where the parties have not agreed otherwise, the arbitrator is not bound by substantive law, rules of procedure or the laws of evidence. That discretion has been read as permitting an arbitrator to require security for costs as a case-management measure, and it is also common for arbitrators to require both sides to deposit their share of the arbitrator's fees before the first hearing. Where a party refuses to comply, the arbitrator can suspend the proceedings, and Section 16 of the Arbitration Law lets a party apply to the District Court for assistance on matters the arbitrator cannot enforce directly.

International arbitration is different. The Israel Centre for Commercial Arbitration (ICCA) adopted international rules containing an express instruction that in fixing deposits the arbitrator shall not take into account the fact that a party is based or domiciled outside Israel. The rule was written precisely because the litigation practice of requiring foreign claimants to post security had been migrating into Israeli arbitrations, which undermined the neutrality that international parties choose arbitration to obtain.

For international arbitrations seated in Israel under the International Commercial Arbitration Law 5784-2024, security questions are handled through the interim measures framework. The tribunal can require a party requesting an interim measure to provide appropriate security in connection with that measure, which is a narrower and more targeted power than the general security-for-costs jurisdiction an Israeli court holds under Regulation 157.

6. How to Fight a Security for Costs Motion

You normally have 14 to 20 days from service to respond, depending on the court's directions. Put the effort there. Once a judge has fixed an amount, getting it reduced on appeal is difficult.

The arguments that carry weight, roughly in order of effectiveness:

• Assets in Israel. Documented Israeli assets neutralize the enforceability rationale more completely than anything else. Attach the underlying records.
• Reciprocal enforcement. If you are based in a jurisdiction whose judgments Israel recognizes under the Foreign Judgments Enforcement Law 5718-1958, explain concretely how the defendant would enforce a costs award at home, including the approximate cost and timeline. Vagueness here defeats the point.
• Solvency evidence. For a corporate claimant this is the statutory route out of Section 353A. File audited financial statements for the last two years, and where possible a director's affidavit confirming the company will meet any costs award.
• Strength of the claim. Point the judge at the documents. A claim built on a signed agreement, delivery notes and unpaid invoices carries a different weight from one that depends on contested oral representations.
• Delay by the defendant. A motion brought late, after the defendant has already engaged with the merits or after months of procedural steps, is vulnerable. Courts have reduced or refused security where the timing suggests tactical use.
• Access to justice. Where the ordered sum would genuinely end the case, say so with figures. This works as a reduction argument more often than as a refusal argument.

What does not work: arguing that security for costs is discriminatory in principle, or that your home courts would not impose it. Israeli judges apply Israeli procedure, and the practice is long established.

7. Posting the Security, Getting It Back, and Losing It

The mechanics after the order are straightforward, but unforgiving on timing.

Posting. A cash deposit is paid into the court treasury and the receipt is filed in the case file. A bank guarantee is lodged in original form, made out in favor of the defendant or the court as the decision specifies, and must be open-ended or renewable, since a guarantee that expires mid-case will trigger a motion to strike. Foreign claimants transferring funds into Israel should also expect the receiving bank to run anti-money-laundering checks on the source of funds, which adds time.

Getting it back. Where the claimant wins or the case settles, the deposit is released, but not automatically. A motion for release of the security is required, and where the case settled, the settlement agreement should state expressly that the security is to be returned and that neither side has a costs claim against it. Release typically takes several weeks from filing the motion.

Losing it. If the claim is dismissed with costs, the defendant applies to draw on the deposit up to the amount awarded. Any balance above the costs award returns to the claimant. Where the costs awarded exceed the security, the defendant is left pursuing the difference, which brings the enforcement problem back into view. Our guide on enforcement across borders covers the mirror-image situation.

One consequence catches claimants off guard: money sitting in the court treasury does not earn meaningful interest. On a NIS 100,000 deposit held for four years, the opportunity cost is real, which is the main argument in favor of paying a bank guarantee commission instead.