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Debt Collection

Can a foreign company be sued in Israel for an unpaid debt if it has no office there?

Yes, in defined circumstances. An Israeli court can take jurisdiction over a foreign company that has never opened an office in Israel, provided the claimant first obtains permission to serve the claim outside the jurisdiction under the Civil Procedure Regulations 5779-2018. Permission is granted where the contract was made in Israel, is governed by Israeli law, or was breached in Israel, where the wrong occurred in Israel, or where the subject matter is property located in Israel. A foreign company already carrying on business in Israel is easier still to sue, because Section 346 of the Companies Law 5759-1999 requires it to register and name a person in Israel authorized to accept court documents.

Jurisdiction and service are two separate hurdles. The claimant first applies, usually without notice to the defendant, for leave to serve the claim abroad, showing a good arguable case and one of the recognized connecting grounds. Israel is a party to the Hague Service Convention of 1965, so the papers then travel through the Directorate of Courts to the receiving state's central authority, a route measured in months rather than weeks. The defendant can answer by contesting jurisdiction and arguing that a foreign court is the more appropriate forum, and Israeli courts do decline cases where the connection to Israel turns out to be thin.

The practical leverage is rarely the judgment itself but the Israeli assets. A creditor can apply for a temporary attachment over a foreign company's Israeli bank account, receivables from Israeli customers, or goods held by an Israeli agent, and the court will grant it on prima facie evidence plus a real concern that the assets will be moved, against a guarantee from the claimant. That attachment often produces a settlement long before service abroad is complete. Foreign defendants should note the mirror-image rule as well: an Israeli court can order a claimant with no local assets to post security for costs. The choice of forum is covered further in the guide on suing for debt in Israel.

⚖ In Practice
  • Governing law: service outside the jurisdiction under the Civil Procedure Regulations 5779-2018; registration and service address for foreign companies under Section 346, Companies Law 5759-1999
  • Competent authority: Magistrates' Court (Beit Mishpat HaShalom) for claims up to NIS 2.5 million, District Court (Beit Mishpat HaMechozi) above that
  • Court fee: 2.5 percent of the amount claimed, half payable on filing and the balance before the first hearing
  • Timeline: leave to serve abroad is usually decided within four to eight weeks; Hague Convention service commonly adds a further four to nine months
  • Interim leverage: a temporary attachment over Israeli bank accounts or receivables can be obtained within days, against a guarantee from the claimant

From the full guide: Debt Collection in Israel: A Guide for Foreign Creditors

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