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Arbitration

On what grounds can an Israeli court set aside an arbitration award?

Israeli courts can set aside an arbitration award only on the narrow grounds listed in Section 24 of the Arbitration Law 5728-1968. These include the absence of a valid arbitration agreement, an improperly appointed arbitrator, the arbitrator exceeding their authority or deciding matters outside the agreement, denial of a party's right to be heard, failure to rule on a referred issue, an award made after the deadline, and an award that is contrary to public policy. A mere mistake of law or fact by the arbitrator is not a ground for annulment.

Section 24 sets out an exhaustive list of ten grounds, and courts apply them restrictively to preserve the finality of arbitration. The grounds most often argued are breach of natural justice, meaning a party was not given a fair chance to present its case, the arbitrator acting beyond the scope of the arbitration agreement, and conflict with public policy. Israeli courts will not re-examine the merits of the dispute, so even a genuine error in applying the substantive law is not, by itself, a basis to annul an award. The application to set aside is heard by the District Court, which weighs whether the specific statutory defect actually caused an injustice.

A party that wants to challenge an award must act quickly, because the application to set aside must generally be filed within 45 days of receiving the award, extended to 90 days where the State is a party. Missing that deadline usually forecloses the challenge, and the winning side can instead ask the court to confirm the award, which turns it into an enforceable judgment. Our guide to challenging an arbitral award in Israel walks through each ground in detail. Where the parties agreed in advance to a right of appeal, either before a second arbitrator or to the court on a point of law, that separate appeal route may also be available.

⚖ In Practice
  • Governing law: Section 24, Arbitration Law 5728-1968 (Chok HaBoreruyot), which lists ten exhaustive grounds
  • Competent authority: the District Court (Beit Mishpat Mehozi)
  • Common grounds: no valid agreement, arbitrator exceeded authority, denial of a fair hearing, award beyond the agreement, public policy
  • Not a ground: an ordinary mistake of law or fact by the arbitrator
  • Deadline: generally 45 days from receiving the award (90 days where the State is a party)
  • Alternative: confirmation of the award by the court makes it enforceable as a judgment

From the full guide: Challenging an Arbitral Award in Israel

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