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Can a debtor in Israel claim compensation if an asset attachment was wrongful?

Yes. A pre-judgment attachment is granted on the creditor's own undertaking and almost always against a bank guarantee or cash deposit, and the temporary remedies chapter of the Civil Procedure Regulations 5779-2018 lets the court compensate the respondent out of that security where the attachment turns out to have been unjustified. The debtor does not have to show malice. Showing that the claim failed, or that the attachment reached far more than the claim could ever justify, is generally enough to put damages in issue.

Israeli courts grant a temporary attachment only where the applicant produces prima facie evidence of the claim, a real concern that assets will be dissipated, and a target proportionate to the sum in dispute. Because these orders are often made without notice to the debtor, the Regulations counterbalance them with three protections: a personal undertaking from the applicant to compensate for any damage caused, security fixed by the court, and a prompt hearing once the debtor has been served. If the main claim is dismissed or withdrawn, or the order is cancelled as excessive or improperly obtained, the respondent applies within the same file for compensation out of the security, which avoids launching a fresh lawsuit. A separate action in tort remains available where the conduct went well beyond error.

For a foreign party the damage from an Israeli attachment is usually commercial before it is financial. A frozen account can collapse a property closing, halt payroll, or trigger default clauses with a lender. Work on two tracks: apply immediately to cancel or narrow the order, and start documenting losses at the same time, because the court will want figures rather than descriptions. Attachments issued after judgment through the Execution Office are a different animal, since they rest on a valid judgment, and compensation there is realistically limited to cases where the wrong asset or a third party's asset was seized. The underlying procedure is set out in the guide to pre-judgment asset freezes in Israel.

⚖ In Practice
  • Governing law: the temporary remedies chapter of the Civil Procedure Regulations 5779-2018; Civil Wrongs Ordinance [New Version] for a separate claim in tort
  • Competent authority: the court that granted the order, Magistrates' or District, deciding the compensation application in the same file
  • Security posted by the creditor: a personal undertaking is mandatory, and courts routinely add a bank guarantee or cash deposit fixed case by case
  • Grounds: dismissal or withdrawal of the main claim, cancellation of the order as excessive, or non-disclosure of material facts when it was obtained without notice
  • Timing: apply to cancel within days of learning of the attachment; the compensation claim is normally raised at or shortly after disposal of the main case
  • Recoverable losses: bank charges, failed or reversed transfers, replacement financing costs, and a transaction demonstrably lost because of the freeze

From the full guide: Asset Attachment Orders in Israel (Tzav Ikul): A Complete Guide

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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