IsraelLawDoes the limitation period continue to run in Israel during arbitration proceedings?
Section 15(a) of the Limitation Law 5718-1958 provides that commencing a legal proceeding to enforce a right interrupts the running of the limitation period. Israeli courts have consistently held that a proper arbitration demand constitutes such a proceeding, so the interruption applies from the moment the claimant sends a written arbitration notice identifying the dispute, invoking the arbitration clause, and demanding appointment of an arbitrator or the commencement of the agreed institutional process. Sending an informal email that does not clearly invoke the arbitration clause may not suffice — the notice must be unambiguous about invoking arbitration rights. Under the International Commercial Arbitration Law 5784-2024 governing international arbitrations seated in Israel, the same interruption principle applies, and the commencement date is determined by the institutional rules (for ICCA proceedings, by the date the request for arbitration is received by the secretariat).
The most dangerous limitation trap in Israeli arbitration arises when the arbitration process fails midstream. If an arbitration clause is later found to be unenforceable, the sole arbitrator dies without a replacement mechanism, or both parties abandon the process and allow it to lapse, the question becomes: how much time remains on the original limitation period? Israeli courts calculate this by determining how much of the seven-year period had already run at the moment arbitration was commenced and subtracting that from seven years. In a dispute where five years had elapsed before arbitration began, only two years remain once the failed arbitration is set aside. This creates acute urgency: a claimant whose arbitration fails for procedural reasons must move to file in court immediately. Keeping detailed records of the arbitration demand date — including proof of receipt by the respondent — is therefore as important as tracking the cause-of-action date itself.
- Governing law: Section 15(a), Limitation Law 5718-1958; Section 8, Arbitration Law 5728-1968; ICA Law 5784-2024 for international proceedings
- Interruption trigger: date a clear written arbitration demand is sent to and received by the respondent, identifying the dispute and invoking the arbitration clause
- Fresh period: a new 7-year limitation period starts from the date the final arbitral award is issued (for enforcement of the award under the Execution Law 5727-1967, Section 10)
- Failure risk: if arbitration collapses (invalid clause, abandoned process), the pre-arbitration limitation clock resumes — file in court immediately on learning the arbitration has failed
- Evidence to keep: proof of arbitration demand dispatch and receipt; demand must specifically invoke the arbitration clause to constitute a legal proceeding under the Limitation Law
From the full guide: The Israeli Arbitration Process: From Clause to Award — A Step-by-Step Guide
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