What is the difference between mediation and arbitration in Israel?

Both are forms of alternative dispute resolution that keep a case out of open court, but they work in opposite ways. A mediator facilitates a confidential negotiation and cannot rule on the merits or force any result. If the parties reach a deal, the written settlement can be given the force of a judgment by the court under Section 79C of the Courts Law 5744-1984. An arbitrator, by contrast, hears the evidence and issues a reasoned award that decides the dispute. Under the Arbitration Law 5728-1968, that award is confirmed by the District Court under Section 23, which gives it the status of a judgment, and it can be set aside only under Section 24 on narrow procedural grounds such as the arbitrator exceeding authority or a denial of due process, generally within 45 days.

For a foreign party, the choice usually turns on how much control and finality you want. Mediation preserves the commercial relationship, costs less, and carries no risk of an imposed loss, which makes it attractive when the parties expect to keep doing business. Arbitration delivers a definitive, enforceable result and is often preferred for cross-border contracts because an arbitral award enforces abroad under the New York Convention, which a court judgment may not. Many Israeli commercial contracts combine the two in a tiered clause that requires mediation first and arbitration if it fails. Our introduction to Israeli arbitration law explains how a binding award is produced and enforced.

From the full guide: Introduction to Israeli Arbitration Law

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