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Arbitration

Must a dispute between a member and an Israeli kibbutz or moshav go to the Registrar of Cooperative Societies instead of court?

Usually yes. Section 52(2) of the Cooperative Societies Ordinance directs disputes between a cooperative society and its members, or between members acting in that capacity, to the Registrar of Cooperative Societies, who either decides the matter or appoints an arbitrator. Kibbutzim and moshavim are registered cooperative societies, so internal disputes over membership, housing rights, and the allocation of a nachla start there rather than in the civil courts. Ordinary commercial contracts with outside suppliers are not caught and go to the regular courts.

The Ordinance treats the internal life of a cooperative society as a self-contained legal world, and the reference to the Registrar is mandatory rather than optional. Once the Registrar appoints an arbitrator, the proceeding is conducted under procedural rules made for cooperative disputes, with the Arbitration Law 5728-1968 applying in modified form. The arbitrator issues a reasoned award that a party can then take to court for confirmation and enforcement in the ordinary way. Where a claim mixes internal and external elements, an Israeli court will look at the substance of the relationship rather than how the claim is labeled, and will send the internal part to the Registrar.

This surprises foreign heirs and investors more than anyone. A diaspora family inheriting a moshav nachla, or an overseas partner in a kibbutz-owned business, will find a claim about membership rights or the right to occupy a house routed away from the courts they expected. Proceedings run in Hebrew, the arbitrator is often drawn from a panel familiar with cooperative practice rather than commercial litigation, and internal society bylaws (takanon) carry real weight in the outcome. Read the bylaws before filing anything, and see the background on buying a house in a moshav for how membership and property interact.

⚖ In Practice
  • Governing law: Section 52(2), Cooperative Societies Ordinance (mandatory reference of internal disputes); the accompanying dispute-settlement regulations; Arbitration Law 5728-1968 applies in modified form
  • Competent authority: Registrar of Cooperative Societies (Rasham HaAgudot HaShitufiyot)
  • Scope: disputes between the society and a member, a former member, or a member's heirs arising out of the society's business; contracts with outside suppliers and third parties stay in the ordinary courts
  • Timeline: an appointed arbitrator commonly takes 9 to 18 months, and the Registrar can extend the period on application
  • Enforcement: the award is confirmed and enforced through the Magistrates' or District Court in the same manner as any arbitral award, and then collected through the Execution Office

From the full guide: Introduction to Israeli Arbitration Law

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