International Commercial Arbitration Bill

Barnea Jaffa Lande & Co.
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The commercial business world is a global one, and so are the disputes that arise within it. Such disputes are adjudicated in courts in various countries or in arbitration proceedings, with each procedure regulated under relevant domestic legislation. (For example, the Israeli Arbitration Law regulates Israeli arbitration proceedings.)

This causes difficulties when a global dispute “must” subject itself to the domestic arbitration laws of the country where the arbitration is held. The gap between the arbitration laws of various countries leads to legal and commercial uncertainty and unnecessary expenses for the parties to the dispute.

In order to ease this difficulty, the United Nations Commission on International Trade Law created in the 1980s a model law for international commercial arbitration, which countries may adopt. The commission keeps a registry of the countries and jurisdictions that have adopted the model law, for commercial entities to use when drafting agreements to determine the location in which an international arbitration will be held. As of now, 84 countries (and 117 jurisdictions in total) have adopted the model law.

Israel’s Ministry of Justice recently put forth a bill for the “International Commercial Arbitration Law,” as part of which Israel will also adopt the model law. If and when the bill is enacted into law, Israel will be added to the list of countries who have adopted the model law. This will strengthen Israel’s position in the area of international arbitration. It means Israeli entities that enter into commercial agreements with different entities around the world will be able to include in such agreements a provision for arbitration to be conducted in Israel, without this compromising parties’ legal certainty, because the arbitration will be subject to the same international standards as those of the model law.

Among the topics regulated in the model law are the principle of non-interference by the courts in the arbitration proceeding except in essential cases, the principle of equality between parties to the arbitration, the arbitrator’s power to determine the scope of its authority, the arbitrator’s power to grant temporary relieves, and the arbitrator’s power to give the effect of a judgement to a settlement agreement. Also included are issues relevant to the conduct of international arbitration procedures, such as the location of the arbitration, the language of the arbitration, the number of arbitrators, and conflict of laws.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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