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Arbitration

Can a landlord and tenant in Israel resolve a rental dispute through arbitration?

Yes for an ordinary lease, with limits. An arbitration clause in a residential or commercial lease is valid under the Arbitration Law 5728-1968, and an Israeli court will normally stay a lawsuit and send the parties to arbitration under Section 5 of that law. Two boundaries apply. Section 3 blocks arbitration of matters the parties cannot lawfully settle between themselves, which keeps the non-waivable rights of a protected tenant under the Tenant Protection Law [Consolidated Version] 5732-1972 outside the arbitrator's reach. And an eviction award still has to be confirmed by a court before the Execution Office will act on it.

The Arbitration Law treats a lease like any other contract. Where the clause is in writing and covers the dispute, a defendant who has not yet filed a defense can apply for a stay, and the court will grant it unless there is good reason to refuse. The arbitrator can decide rent arrears, damage to the apartment, deposit and guarantee disputes, service charges, and whether the lease was lawfully terminated. What an arbitrator cannot do is override protections the legislature made non-waivable, including the mandatory residential terms introduced by the fair rental amendment of 5777-2017 to the Hire and Loan Law 5731-1971, and an award that tries is exposed to challenge under Section 24.

For a landlord chasing a non-paying tenant, arbitration is often slower than court rather than faster. Israeli civil procedure offers a dedicated fast-track eviction claim that reaches a hearing within weeks, and an arbitration clause can block access to it while an arbitrator is appointed and paid. The award then needs a confirmation application before it is enforceable at all. Arbitration earns its place in the opposite situation: a long commercial lease, a foreign landlord who wants the proceedings conducted in English, and a dispute over construction works, service charges or option renewals, where a specialist arbitrator settles in months what the courts take years to reach. Drafting matters, as set out in the guide to the arbitration clause in Israeli contracts.

⚖ In Practice
  • Governing law: Sections 3, 5 and 24, Arbitration Law 5728-1968; protected tenancies under the Tenant Protection Law [Consolidated Version] 5732-1972; mandatory residential terms under the fair rental amendment of 5777-2017 to the Hire and Loan Law 5731-1971
  • Competent authority: the arbitrator, with confirmation and setting-aside applications heard by the District Court (Beit Mishpat HaMechozi)
  • Deadline to challenge: 45 days from delivery of the award to apply to set it aside under the Arbitration Law
  • Cost: arbitrator's fees commonly NIS 800 to NIS 2,500 per hour plus VAT (2026), usually split between the parties, against a court filing fee of 2.5 percent of the claim
  • Faster alternative: the fast-track eviction claim in the civil courts typically reaches a hearing within 30 to 60 days, which arbitration rarely matches

From the full guide: Construction & Real Estate Arbitration in Israel

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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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