The trustees further claim that even if the agreement does not come into effect, clause 16.3 of the agreement constitutes an obligation that survives the cancellation of the agreement. It was argued that the purpose of the clause is to prevent traffic devices - precisely in the event that the agreement is cancelled - from making use of the connections established with the JAC with the help of the companies and the information that came into its possession by virtue of those connections. According to the argument, the prohibition also applies in the case of non-fulfillment of the suspension condition, since traffic devices can easily cause its non-fulfillment, as was indeed done in practice, and immediately afterwards operate behind the backs of direct imports for the purpose of obtaining a concession from the manufacturer while causing damage to direct imports in bad faith. In addition, it was claimed that Traffic Devices thwarted the fulfillment of the suspension condition in breach of its obligations under the agreement, by not providing the Ministry of Transport with a bank guarantee in the sum of approximately ILS 1 million, which was a condition for the contractor of the import license. It was further argued that even if Traffic Devices believed that direct imports should participate in some way in providing the guarantee, it could have approached the trustees for this purpose, but it did not do so.
Finally, the trustees claim that Traffic Devices should be instructed to hand over all correspondence exchanged between it and JAC. This was after Givaton admitted in his interrogation that Traffic Devices had concealed from the trustees material correspondence that had been exchanged between her and the manufacturer in recent months, including through the WeChat application.
- The Commissioner of Insolvency and Economic Rehabilitation Proceedings (the "Commissioner") supports the trustees' request. The Director-General is of the opinion that the receipt of the import license does not constitute a suspension condition that has the power to cancel the agreement. According to him, this is a regular contractual obligation, and at least a "hybrid" between a suspension clause and a regular stipulation, or alternatively, a termination clause. Therefore, the result is that the secondary obligations under the agreement continue to apply, including clause 16.3 of the agreement, which according to its language is intended to apply as long as the parties continue to hold shares of China Israel.
The Commissioner further argues that it is doubtful whether Traffic Devices has indeed done everything necessary to obtain the import license. The fact that the concession was approved at the meeting of the board of directors of China-Israel Company, even after the contractual deadline for obtaining the concession had passed, indicates that the parties' expectation was for the realization of the joint transaction and not for its cancellation. According to the Director-General, the actions of traffic devices are inconsistent with its obligations under the agreement and the letter of undertaking. In addition, the Commissioner claims that Traffic Devices sought to take advantage of the insolvency of the companies in order not to obtain the import license, in order to gain the right to cancel the agreement, in contravention of section 68(b) of the Insolvency Law.
- On the other hand, Traffic Devices claims that the application against it should be rejected. According to her, the agreement was canceled in circumstances in which no bank was found that agreed to open an account with China Israel due to the fact that Direct Import held its shares, and therefore Traffic Devices had no choice but to cancel the agreement, which is non-existent and had no hope of fulfillment. It was further argued that no written consent was given by Traffic Devices, as required by the agreement, to extend the date for obtaining the import license, and the alleged conduct of any of the parties cannot be viewed as changing the language of the agreement. According to Traffic Devices, receiving the import license is a suspension condition in the agreement. This is learned both from the title of Clause 2 of the Agreement and from the explicit language of Clauses 2.1 and 2.4 of the Agreement. According to the claim, clause 16.3 of the agreement does not survive the cancellation of the agreement. In addition, it was argued that if the parties had sought to apply the provisions of clause 16.3 of the agreement even in circumstances in which it expired, an explicit provision in this regard would certainly have been included in the agreement, all the more so when it is a business contract. It was further argued that clause 2.4 of the agreement also indicates that the non-fulfillment of the conditions of the suspension leads to the cancellation of the entire agreement and not only of the transaction under it.
Traffic Devices also claims that it did not thwart the fulfillment of the suspension condition. The obligation of the parties to act in order to bring about the fulfillment of the suspended conditions is an obligation of effort and not an obligation of a result, and in any case Traffic Instruments made great efforts to obtain an import license for the Sino-Israel company, unlike direct imports. According to the claim, Traffic Devices reflected to the trustees in the cancellation letter the inability to open a bank account for the Sino-Israel company in order to obtain the import license. On the other hand, the trustees did not reflect to traffic devices that there is a way to overcome this difficulty in an attempt to fulfill the condition from a suspension. In addition, Traffic Devices rejects the claim that it is the one that is supposed to provide the equity alone for the purpose of obtaining the import license.