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Israel: Credit Card Company Ends Contract with Operator of Pornographic Websites

(Apr. 30, 2013) The Tel Aviv District Court recently rejected a petition brought by an operator of pornographic websites for an injunction against a credit card company (the respondent), to compel it to continue providing authorization services based on a contract between the two. The respondent argued that the petitioner had hidden the true nature of the websites it was operating. In cancelling the contract, it claimed, it was acting in accordance with its policy that prohibited the provision of authorization services for transactions involving pornographic websites (Civil Case 9462-04-13 Top Code Ltd. v. Isracard Ltd. [in Hebrew], NEVO online subscription database (Apr. 19, 2013)).

Having rejected the petition, Judge Hagai Brener held that the respondent had a right to end the provision of authorization services to the petitioner based on section 19 of the contract which stated that “this contract can be cancelled by a written notice of one of the parties to the other. The cancellation will enter into force from the time of receipt of the written notice by the recipient party” (id. ¶ 10). Section 19, however, was included in a page which was missing from those that had been submitted to the Court in support of the petition. In determining whether to grant a temporary injunction, Brener held, the court has to consider whether the petition was filed in good faith. The omission of the page containing the parties’ agreement that the contract could be cancelled at any time subject to written notice, according to Brener, contradicted this requirement (id. ¶ 17).

In addressing the petitioner’s claim that the cancellation violated his right to freedom of occupation, the judge recognized that the respondent was also entitled to such a right. Accordingly, the responder was free to decide not to provide credit card authorization services to clients that deal with “high risk, even if not unlawful,” undertakings (id. ¶ 11). Brener noted that the pornography sector had been considered to be a “high risk sector” by the Controller of Banks, the regulatory body that supervises the respondent’s activities. A refusal to contract with a business that provides such services, according to instructions issued by the Controller, should not be deemed unreasonable (id. ¶ 12).

Another ground indicating the reasonableness of ending the contract by the respondent, according to the judge, was the fact that providing authorization services for the pornographic websites “did not add to the reputation of the respondent” (id. ¶ 11). Since the parties chose to sign an agreement that enables its cancellation for any reason and based on the principle of freedom of contracts, the parties must abide by their agreement and the court cannot rewrite it for them, he concluded (id.).

Although an injunction was not merited in this case, the judge recognized that the petitioner should be afforded reasonable time to prepare before the authorization services provided by the respondent cease (id. ¶ 18).