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Israel: Arbitration Law Amended

(Dec. 30, 2008) On November 5, 2008, the Knesset (Israel's Parliament) passed an amendment to the Arbitration Law, 5768-1968. The Law now provides that parties to an arbitration agreement who agreed that the arbitrator should make a determination in accordance with the Law may further agree that a request for permission to appeal may be submitted to a court based on a claim of a substantive error in implementation of the Law resulting in injustice. In an arbitration where the parties so agreed, all meetings should be documented in a way to be determined by the parties, and the arbitrator must explain his decision. According to the Law, if an appeal was lodged with a court, the parties cannot also request that the arbitration decision will be void; that issue will have to be argued in the appeal.

The Law also provides that the parties may agree that the appeal process will be conducted before an arbitrator. In such a case, the arbitrator in the first instance must explain his arbitration decision. If the parties agreed on an appeal before an additional arbitrator, they cannot also agree on an appeal to a court, and can request that the arbitration decision will be void only based on its being contrary to public policy or when grounds exists on which a court would have set aside a final, non-appealable judgment. (The Arbitration Law (Amendment No. 2), 5769-2008, the Knesset website, (last visited Dec. 29, 2008); The Arbitration Law, 5728-1968, 22 LAWS OF THE STATE OF ISRAEL [authorized translation by the Ministry of Justice] 210 (5728-1967/68).)