Civil Case (Jerusalem) 71355-05-25 Moshe Gertner v. Gezel Weinroth - part 3

The heirs will be the parties in place of the deceased. 

The aforesaid does not impede the appointment of other litigants if it will be necessary in the future."

30. Neither the statement of claim nor the statement of defense was amended following the aforementioned development.
31. As stated, an appeal was filed against the Family Court's decision in the District Court. In the appeal, Gartner reiterated the claims that a permanent estate administrator should be appointed.  They noted, among other things, that "...  The amount of the deceased's debt to the Gertner brothers...  is expected to be significantly higher than the total assets of the estate..." (paragraph 45.1 of the notice of appeal), and that "...  Since the debt of the deceased is higher than the sum of all the assets of the estate...  Thus, it is forbidden [emphasis in the original - the undersigned] to distribute the assets of the estate before the conclusion of the investigation of the Gertner brothers' debt claim against the estate" (paragraph 249 ibid.).  They explained that while they may suffer significant damage if an estate administrator is not appointed and the estate is divided, which could lead to the emptying of the estate and the danger that "it will not be possible in the future to collect the debts of the estate from the heir..."Thus, the harm to Weinroth's heirs, even if the claim is rejected, "amounts to delaying the distribution of the estate only" (section 289 ibid.).  Weinroth's heirs, on the other hand, argued that "the delay in the distribution of the estate will not cause negligible harm, but will cause very significant damage to the respondents" (see paragraph 7 at p.  6 of the judgment given in the appeal in the District Court.  See also section 15).
32. The District Court issued a judgment on June 28, 2020, rejecting Gertner's appeal. It was determined, inter alia, that there was no reason to delay the distribution of the estate "...  This is because the delay in the distribution of the estate is liable to severely harm the heirs and delay their ability to enjoy it for a long time" (paragraph 15 at p.  9 of the judgment).  The court also noted that "the way to ensure the appellants' ability to collect their debt from the estate to the extent that they win their claim is not by appointing an estate administrator, but by filing a request for temporary relief, such as injunctions in the framework of the arbitration proceeding" (paragraph 6 at p.  7 of the judgment).  He also noted that investigations regarding the scope of the estate are also a matter for the arbitration proceeding (paragraph 12 at p.  8 of the judgment).
33. Gertner filed a motion for leave to appeal the judgment, in which they reiterated the arguments they had raised in the District Court, but this was rejected in a Supreme Court decision of October 15, 2020.
34. It can therefore be concluded that even after the arbitrator's decision that Weinroth's heirs would be the parties in place of the deceased, Gertner continued their attempt to bring about the appointment of a permanent executor of the estate, thus preventing the execution of the division of the estate until the claim that was filed was clarified. The arbitrator was apparently aware of this, and therefore, as stated above, he also ruled that the decision given according to which Weinroth's heirs would replace the deceased did not prevent the determination of other parties if it would be necessary in the future.
35. In 2020, Arbitrator Goren resigned from conducting the parallel arbitration between Gartner and Gertler, and in early 2021, Arbitrator Orenstein was appointed to conduct this arbitration. Subsequently, Arbitrator Goren also resigned fromthe arbitration between Gertner and the Weinroth heirs, and therefore the parties turned to Arbitrator Orenstein in order to serve as an arbitrator in this arbitration as well.  At the request of the arbitrator, the parties submitted to him, at his request, a concise document on the dispute that is the subject of the arbitration.
36. In a document submitted by Gertner in this regard, dated July 28, 2021, they explained that after various proceedings that took place before the Family Court in connection with the death of the late Adv. Weinroth, on December 22, 2019, the arbitrator's decision was given according to which the heirs would be the parties in place of the deceased (see paragraph 12 of the document). Section 125 states that "the heirs of the late Adv. Weinroth must return to the Gertner brothers all the funds held by him in trust...  (a total of $63,278,497 as of the day the lawsuit was filed), and to compensate the Gertner Brothers for the damages caused by Adv. Weinroth to the Gertner Brothers...  (Total $489,133,200 per day of filing of the claim") (paragraph 125 of the document).  Similar formulations relating to the Weinroth heirs also appear in paragraphs 86 and 87 of the document.  In addition, the document detailing the matter of the arbitration being conducted does not make any additional reference to the Weinroth heirs and their status in the case.
37. Weinroth's heirs submitted a document on their behalf on August 2, 2021, in which they noted that "it is with great regret that on October 16, 2018, Dr. Weinroth passed away prematurely.  Accordingly, and after a litigation that took place on this matter with the Honorable President (retired) Uri Goren, it was decided to change litigants, so that under Dr.  Weinroth, his successors would continue to conduct the proceeding in his place..." (paragraph 52 of the document).  Apart from that, there is no further reference in the document to the status of the heirs in the case.
38. The status of the Weinroth heirs in the case was also not discussed later in which letters of claim and/or evidence were brought before Arbitrator Orenstein in the arbitration proceeding. In the summaries submitted by Gertner in the case, which spanned more than 400 pages, they claimed in the last two paragraphs that "in light of all of the above, the honorable arbitrator is requested to obligate the heirs of Adv. Weinroth, jointly and severally, to pay the Gertner brothers all the sums as detailed above...  In addition, the Honorable Arbitrator is requested to instruct the heirs of Adv. Weinroth, jointly and severally, to pay the Gertner brothers their expenses in the proceeding..." (paragraphs 2167-2168 of the summaries).  Similar wording was also adopted in two sections of the final chapter of the summaries of the reply that they submitted.  There is no other reference in the summaries to the status of the Weinroth heirs in the proceeding.  Weinroth's heirs did not address the matter at all in their summaries.
39. In the arbitration award that was given, the arbitrator explained that "during the arbitration, on October 16, 2018, Adv. Weinroth passed away, and his heirs came in his shoes, as detailed in the title of the arbitration award. I will also refer to December 22, 2019, in which it was determined, inter alia, that Adv. Weinroth's heirs will be the parties in place of the deceased" (see paragraph 24 of the arbitration award), that "the defendants and counter-plaintiffs who came in the shoes of Adv. Weinroth, are his heirs, Adv. Weinroth, mentioned in the title of this arbitration award - Adv. Weinroth's wife and children, and in accordance with the decision of the previous Arbitrator Goren of December 22, 2019...  For the purposes of this arbitration award, the term 'Adv. Weinroth' refers to the heirs of Adv. Weinroth for all intents and purposes, with the necessary adjustments...  The decisions in this arbitration award, the credits and charges relating to Adv. Weinroth, apply, for all intents and purposes, respectively to his heirs..." (paragraph 41 of the arbitration award).  The fact that the heirs became a party to the arbitration following the decision of the arbitrator Goren, was also briefly noted on page 56 of the arbitration award.
40. At the conclusion of the arbitration award, in paragraph 183 summarizing Gertner's claim, it is stated that "from the totality of the aforesaid, the defendants and counter-plaintiffs, Adv. Weinroth and his heirs, jointly and severally, must pay the plaintiffs and counterdefendants, the Gertner brothers, the sum of $37,500,000 million." In the summary of the arbitration award, section 191.2 states that "the defendants and counter-plaintiffs: the heirs of the late Adv. Dr. Yaakov Weinroth, Gisele Weinroth, Yechiel Weinroth, Dov Weinroth, Ze'ev Weinroth, Shmuel Weinroth, Esther Atzmon, Hannah Tzipora Lev must pay the plaintiffs and the counter-defendants...  Total US$37,500,000...  When the Libor interest rate is +4.5% at an annual rate, it will be added to the principal amounts...".  And in section 191.4 it is stated: "The liability of the defendants is jointly and severally."
41. Apart from the above references, the arbitration award that was issued, which as aforesaid, extends over more than 500 pages, does not make any further reference to the Weinroth heirs and their status in the case.

The main arguments of the parties

42. As stated, Weinroth's heirs claim that they became a party to the arbitration proceeding only in order to allow it to continue to be managed, upon the deceased's death. According to them, the arbitrator did not have the authority to personally discuss their charge against Gartner, which was not handled for consideration, and that their status as a "substitute" did not confer such authority on him when they entered the arbitration proceeding only for the purpose of managing it.  There is no place for their personal liability for the amount of the arbitration award, which deals with the disputes between the deceased and Gertner, and not with the question of the responsibility of the Weinroth heirs for the debts of the deceased, which, according to them, must be clarified in accordance with the provisions of the Inheritance Law.  Therefore, according to them, the arbitration award should be annulled as granted in deviation from the authority as stated in section 24(3) of the Arbitration Law.
43. It was further argued that the question of the personal liability of the heirs of Weinroth in the framework of the arbitration proceeding did not constitute a dispute that was discussed before the arbitrator. In the statement of claim that was filed, there is no claim that the estate was divided and that assets from it went to the heirs.  This question was therefore not brought to the arbitrator for a decision at all, and therefore it was not established at all, and the heirs were not even given an opportunity to argue as to the value of the estate and that it was less than the amount of the award that was given.  Therefore, the arbitration award should be annulled even because the Weinroth heirs were not given a proper opportunity to argue their claims as stated in section 24(4) of the Arbitration Law.
44. In this regard, it should be noted that although the details of the estate that were prepared at the time by the temporary executor of the estate when the proceedings were being conducted in the family court were not attached to the cancellation request that was filed, it was subsequently submitted (confidentially) to the court file by the Weinroth heirs, at the request of Gertner. From this particular, it appears that the estate does not indeed include sums in a scope that even approaches the arbitral award given (even before the interest is added to it), even though its sums are not completely negated (see the assessment of Attorney Gertner with respect to the sums that arise from the privatization at p.  41, paras.  10-11 of the minutes of the hearing held before me).
45. It was further argued that in the aforesaid circumstances, the arbitrator also did not fulfill his duty to explain his decision in the absence of any discussion or explanation as to the liability of the Weinroth heirs, jointly and severally, for the amount awarded, and therefore the award should be cancelled by virtue of the provision of section 24(6) of the Arbitration Law. In addition, the arbitration award must be revoked by virtue of the provision of section 24(7) of the Arbitration Law, which deals with the arbitrator's obligation to award where it was so agreed in accordance with the substantive law, and when the arbitration award given contradicts this, since in accordance with the Inheritance Law, the heirs should not be obligated to pay an amount that exceeds the value of the estate.  All this, when it was not established at all in the arbitration proceeding that the estate contains assets and that it was divided, these are conditions required for the heirs to personally pay their debts.
46. It was further argued that a result whereby the Weinroth heirs owe the amount that was awarded, beyond the estate they received, is contrary to public policy, and leads to a disastrous result that actually leads to bankruptcy and the loss of their ability to make a living (taking into account that some of them are also lawyers, and the restriction on a bankrupt to serve as a lawyer). Therefore, the arbitration award should be annulled even by virtue of the grounds in sections 24(9) and (10) of the Arbitration Law.
47. Gartner argues that the arbitrator was authorized to adjudicate the obligation of the Weinroth heirs to Adv. Weinroth's debts, as a result of the provision of section 4 of the Arbitration Law, by virtue of which they came in the deceased's shoes and became his substitutes in the arbitration agreement, which is still in force against them, and since section 21 of the Arbitration Law stipulates that the arbitration award will also bind the parties' substitutes. The arbitrator also ruled in his decision that the heirs of Weinroth would become litigants, despite the demand of the heirs of Weinroth that they enter the proceeding only in order to manage it; And since they have not raised a claim regarding the decision that was given, they are prevented and silenced from doing so today.
48. Gertner also rejects the Weinroth's heirs' arguments regarding the applicability of the provisions of Sections 24(4), 24(6) and 24(7) ofthe Arbitration Law. According to them, from the moment it was determined that the Weinroth heirs were a party to the arbitration proceeding, they were obliged to claim that the amount of the claim exceeded the amount of the estate, and to prove this.  The heirs - who were represented and are lawyers themselves - did not do so out of full awareness and out of their own considerations, and all the more so since Arbitrator Goren even pointed out during the hearing that was held (as quoted above) that the division of the estate exposes them to a personal obligation.  Therefore, the Weinroth heirs have no one to complain about themselves if in the arbitration proceeding there is no claim on their part in this matter, and this does not confer a ground for annulment by virtue of the provision of section 24(4) of the Arbitration Law.
49. After the heirs of Weinroth filed the particulars of the estate, Gertner further claimed that, as it emerges, the deceased and his heirs acted to reduce the value of the deceased's property, and to remove him from the estate, which they say also arises from what was stated in this regard by the executor of the estate in the framework of the privatization that was filed. According to them, it is clear that the Weinroth heirs deliberately chose not to raise claims regarding the value of the estate in the framework of the arbitration proceeding, which would have required them to disclose the details of the estate and its assets, and therefore their claims were not made in this regard.  However, this consideration does not mean that they were prevented from arguing.
50. According to Gartner, the Weinroth heirs are in fact seeking to conduct a "deluxe" arbitration, in the sense that after the first round of the proceeding, if they lose it, it will be necessary to conduct an additional proceeding against them, in order to collect what is due from them. There is no place for this, and the Weinroth heirs should have raised all of their defense arguments in the framework of the arbitration proceeding, and if they did not do so, they would have borne the result that arises.
51. In view of the aforesaid, Gartner also argues that no cause of cancellation in view of the lack of reasoning in accordance with section 24(6) of the Arbitration Law arose. The arbitrator was not required to explain a matter that did not constitute a party in the arbitration proceeding at all, since the Weinroth heirs chose not to place him as such.  Therefore, there is also no room to say that the arbitrator did not rule in accordance with the provisions of the substantive law as stated in section 24(7) of the Arbitration Law.  The arbitrator was not required to hear the arguments that were not made before him.  In any event, according to Gertner, this ground for annulment applies only when an arbitrator knowingly ignores the substantive law, something that did not occur in our case, and that even if the arbitrator erred (which is not the case according to them), it does not constitute grounds for annulling the arbitral award.
52. In light of the above, Gartner argues that no grounds for cancellation have arisen under sections 24(9) and (10) of the Arbitration Law. In accordance with the arbitration award, the deceased took out of the funds deposited in the trust by Gartner in the amount of $37.5 million in 2006, and the deceased and Weinroth's heirs benefited from these funds.  A comprehensive arbitration procedure over a period of more than a decade, while bearing the huge costs involved.  It is precisely the non-existence of the arbitration award in such circumstances, against those whose money was stolen by someone who was loyal to them about 20 years ago, that would be unjust.

Discussion

53. Sections 126-128 of the Inheritance Law regulate the question of the personal liability of heirs to the debts of the estate. As can be seen from these sections, the law distinguishes between a number of situations: one - whether the estate is divided or not, and the second - to the extent that the estate is divided, whether creditors have been invited to notify their debt or not.
54. As it emerges from section 126 of the Inheritance Law, "until the division of the estate, the heirs are not responsible for the debts of the estate, except for the assets of the estate." Therefore, at this stage, it is not possible to sue the heir personally for the debts of the estate from his other assets (see explanation of this, for example, in Civil Case (Jerusalem District) 40350-07-19 Israel Discount Bank in Tax Appeal v. Ruth Ben Avi (June 26, 2022) - "The Discount Case", at para.  10).
55. After the distribution of the estate, and to the extent that creditors were summoned in the manner required in accordance with the provisions of the Inheritance Law, and were given the opportunity to notify the debt, and the debts that were known at the time of the distribution were discharged, as stated in section 127 of the Inheritance Law, "... The heir is not liable for debts that have not been cleared unless it is proven that he knew about them at the time of the division and up to the value of what he received from the estate." If the creditors were not summoned, "...  Each heir is responsible for debts that have not been cleared so that the value of the entire estate at the time of distribution...(see section 128(a) of the Inheritance Law); When it was further determined in this regard that "proof of the value of the estate or of what the heir received from the estate is the responsibility of the heir" (see section 128(b) of the Inheritance Law) (see explanation regarding what is also stated therein).  Hence, after the division of the estate, the heir can personally owe the debts of the estate, in accordance with the arrangements set forth in sections 127 and 128 of the Inheritance Law.
56. Section 1 of the Inheritance Law establishes the "Principle of Immediate Fall," according to which "upon the death of a person, his estate passes to his heirs." However, this does not mean that the estate is considered to have been divided from the moment of death. The law does not define what is the "division" stage of the estate.  In this regard, the case law held that "in order for it to be possible to say that the remainder of the estate was divided among the heirs, even though they deny it, there is a need for some external act attesting to the existence of a division" (see Civil Appeal 810/77 Darwish v.  Lusthaus (May 20, 1979) ("the Dervish case" - the minority opinion of Justice Asher, but not on this matter).  See also the matter of Discount in verse 25 and the references cited there.  Such an external act may be the registration of an asset in the name of an heir, a distribution agreement between the heirs (written or oral), etc.  (, at para.  30).
57. As further explained in the Discount case, "the burden of proving that the estate was divided is on the creditor" (emphasis added) (see para. 26; See also the matter of dervish; and so on.  Shilo, Interpretation of the Inheritance Law, 5725-1965 (Vol.  3, 5762-2002) ("Shilo") at p.  358).
58. With regard to the burdens that apply with regard to the aforesaid, see also Civil Appeal 865/76 Hannah Lopez v. Eli Shoshani (September 18, 1977): "Section 128(b) of the Inheritance Law imposes the duty to prove the value of the estate or of what an heir received from the estate - on the heir, but the heirs do not have the burden of proving all the other facts relating to the extent of the heirs' liability, but usually the primary burden of proof is on the respondent.  who wishes to take the debt out of their hands" (emphases added).
59. What follows from the aforesaid is that prima facie condition for imposing a personal liability on the heirs in respect of the debts of the estate is the establishment of the fact that the estate was divided. This is a factual matter, which requires the establishment of an external act indicating the distribution, and the burden in the matter falls on the creditor, as stated.  If a division has been made, the heirs can personally owe the debts of the estate when their liability in this regard does not exceed the value of the estate.  If no summons has been made to the creditors, the burden of establishing the value of the estate is on the heir.  If an heir fails to establish the value of the estate, or does not claim it at all, this can lead to his liability exceeding the value of the estate.  See, for example, the Darwish case at paragraph 5 of the judgment of President Sussman; and Shiloh at p.
60. On the basis of the aforesaid, the various grounds for cancellation claimed by the heirs of Weinroth in the motion for cancellation will be analyzed below.

Ground for cancellation by virtue of section 24(3) of the Arbitration Law

61. This cause of cancellation concerns an arbitrator's action without authority or in deviation from the powers given to him under the arbitration agreement, when, as detailed above, Weinroth's heirs claim that the arbitrator had no authority to rule on their personal liability to Gertner, as opposed to the liability of the deceased (and subsequently his estate).
62. In accordance with the provisions of section 4 of the Arbitration Law, "an arbitration agreement and the authority of an arbitrator pursuant to it have the same power with respect to the parties' alternatives to the agreement... And all this when there is no other intention implied by the agreement."
63. Also relevant to our matter is section 38 of the old Rules of Procedure (which applied at the relevant time to the matters that are the subject of this proceeding, although it does not appear that there has been a change of substance in this matter in accordance with the Civil Procedure Regulations, 5779 - 2018), which states that "if a party dies or has gone bankrupt or whose property has been transferred by virtue of the law, the court or the Registrar may order... that the executor of the estate, or the heirs or trustees or any other substitute of the litigant, in whole or in part, shall be the parties...".
64. As Ottolenghi explains in her book "Arbitration of Law and Procedure" (4th ed. - 2005) ("Ottolenghi"), "...  Today, there is no longer any doubt, and it seems that the matter is clear - the arbitration agreement is valid vis-à-vis the heirs" (see p.  99).  See More, Civil Appeal 10892/02 Neot Oasis Hotels in Tax Appeal v.  Mordechai Zisser (6 June 2005): "...  The term substitute was not defined in the Arbitration Law, or in other laws in which it was used.  In light of this, case law has given content to this concept, and its significance is known from the grouping of the various judgments that have been rendered over time.  In essence, a successor is a person to whom the right (or liability) of the original owner of the right (or liability) has been transferred, by virtue of a law (such as: an estate administrator, heir, bankruptcy trustee, etc.) or in other circumstances...  The caliph entered completely in the shoes of the original right-holder, while the latter disappeared and is gone." (emphasis added); See also, for example, Civil Appeal Authority 2435/17 Zamira Molad v.  Zamir Paniri (19 July 2017)).
65. It follows from the aforesaid that there is no reason not to see the Weinroth heirs as substitutes for the deceased in the matter of the disputes discussed by virtue of the arbitration agreement.
66. Weinroth's heirs argue, however, that since the question of the personal liability of heirs is determined in accordance with the provisions of sections 126-128 of the Inheritance Law, and therefore involves various questions stemming from these sections, such as the question of whether there are assets in the estate, the question of whether it is divided or not, the question of its value, etc., this is a matter that goes beyond the dispute that was addressed to the arbitrator in the framework of the arbitration. According to them, the arbitrator in the dispute between Gartner and the deceased was authorized as part of the arbitration agreement to decide "the disputes between them." These disputes did not include (and could not include) issues relating to the personal liability of the heirs.  Therefore, according to them, even if it is true that as provided in section 4 of the Arbitration Law, the force of the arbitration agreement is also applicable to the heirs, the matter relates to the financial disputes that existed between Gertner and the deceased, but not to matters relating to the heirs and their personal responsibility by virtue of being the heirs of the deceased.  These are matters that arose from the time the estate was created, and involve new factual and legal questions, which are not part of the arbitration agreement or the fact that the Weinroth heirs are substitutes in it, and they have never given their consent to litigate these questions in the framework of the arbitration.
67. On the one hand, there can be reason for arguing that where heirs become parties to the arbitration proceeding by virtue of being substitutes, they should be seen as entering it in order to end it, i.e., in a way that there will be no need to clarify the proceeding against them in two "stages", first determining liability regarding the assets of the estate, when the heirs are substitutes only for the purpose of "managing" the proceeding, and then conducting another proceeding in court against the heirs personally. It will discuss the questions relating to personal liability as heirs of the estate.  Thus, just as where a proceeding is conducted in a court regarding an estate that has already been divided, it is usually required (as will also be expanded below) to raise all the arguments relating to its matter in one stroke, including claims by an heir regarding his liability or its scope deriving from the provisions of the Inheritance Law, and the proceeding is not usually split into different and separate proceedings only because it is the heir of the owner of the right who manages it.
68. As stated, an heir is considered a substitute for the purposes of section 4 of the Arbitration Law. Given that an estate does not constitute a legal personality (see Civil Appeal Authority 6590/10 Estate of the late Fuad Shtayyeh et al.    State of Israel - Ministry of Defense (May 28, 2012)), both before and after the estate was divided, the heir is the litigant who is named in the proceeding and is sued in the framework thereof.  This also derives from section 38 of the old regulations.  In this situation, in accordance with the aforesaid logic, there is no room for the creation of subcategories, one with respect to the heir who becomes a successor before the division of the estate, and the other with respect to one who becomes a successor after the division; This is while creating observations according to which the successor with regard to the applicability of the arbitration proceeding against him applies only with respect to liability relating to the stage at which the estate has not yet been divided, but with regard to the subsequent stage, a separate proceeding must be initiated against him, outside the framework of the arbitration.  In accordance with this evidence, it would be appropriate to view the heir to whom the estate was divided as a substitute, who is the arbitrator, who has the authority to adjudicate his case and the matter of his liability in his status as such vis-à-vis his litigant.  Gartner claims that this is also consistent with the fact that, as stated in the Oasis case, the suit completely entered the shoes of the original rightholder.
69. In this regard, it may be added that the provision of section 4 of the Arbitration Law is intended, inter alia, to remove the risk that the conduct of an arbitration proceeding will be thwarted, in the event of a transfer of rights by virtue of the law, including in the event of death. This can be learned from the situation that preceded section 4, in which there was an approach that the heir, who did not enter into the arbitration agreement, was not bound by the proceeding.  See Ottolenghi,   99.  The clause is therefore intended to ensure the efficiency of the procedure and to be a convenient alternative forum for managing disputes.
70. Seemingly this will not be the case, if whenever an estate (or the possibility that an estate will exist) is involved in the proceeding, it will mean that it will not be possible to bring about a complete and final solution to the dispute within the framework of arbitration, but rather the proceeding will become two-stage, in a manner that is conducted before two different forums, first before the arbitrator regarding the liability of the "estate", which can take several years; and then - the opening of another proceeding in court, In order to clarify the debts of the heirs, even though they conducted the arbitration proceeding and the question of their personal liability is inherent to the fact that they are heirs, it will be necessary to conduct an additional proceeding against them in accordance with the provisions of the Inheritance Law (with the time involved), in order to clarify their personal liability by virtue of the arbitration award that was given.
71. This also means that a person who envisions the conduct of a possible proceeding against an heir - whether he enters the proceeding as a substitute while it is already being conducted, or whether he is the person who was sued in the first place - is in fact required to take into account the management of a duplicate proceeding, where his original litigant passed away.
72. According to Gertner, in this case, there was also a counterclaim by Weinroth's heirs, who entered the proceeding as substitutes, against Gartner, which also amounted to tens of millions of dollars. In this lawsuit, Weinroth's heirs personally confronted Gartner when, for example, a review of the summaries they submitted in the framework of the lawsuit shows that they did not define themselves in its title as the person who manages this lawsuit only for "the estate." Gartner argues that it should not be accepted that the heir has the ability to hold the stick at both ends: managing the claim for himself in a manner that grants him a personal right, but a limited claim against the heir in the framework of the same arbitration proceeding, for which his personal liability is determined only in the framework of an additional proceeding.
73. Weinroth's heirs argue that just as other possible substitutes by virtue of the provision of section 4 of the Arbitration Law (as noted in the Oasis case), such as an estate administrator or a trustee in bankruptcy, are not personally liable when they become a party to an arbitration proceeding by virtue of their succession, so too heirs should not be considered to be personally liable by virtue of their becoming substitutes. However, an estate administrator or a trustee in bankruptcy is not a person who is personally liable by their very definition and essence, whether or not they entered the proceeding as a substitute.  This is not the case with an heir, and therefore it does not appear that the fact in itself that an heir enters the proceeding as a substitute prevents his personal obligation.
74. Against the aforesaid, it is not possible, however, to ignore the difficulty in providing a sweeping interpretation of section 4 of the Arbitration Law, according to which an heir will become subject to the provisions of the arbitration proceeding also with regard to the question of his personal liability for the debts of the estate, as opposed to an obligation relating to the assets of the estate. Thus, since the heir has never agreed to the terms of the arbitration, including a situation in which the determinations regarding his personal liability may be unreasoned, or unappealable, or his personal liability may be determined by someone who is not a jurist, all in accordance with the terms of the arbitration between the plaintiff and the testator.  In addition, in a situation in which it was agreed that the arbitration would not be conducted in accordance with the substantive law (which is not the case in this case), the question also arises as to whether the personal liability of the heirs will be determined in such a case not in accordance with the provisions of sections 126-128 of the Inheritance Law, in a manner in which an heir can ostensibly find himself personally liable, sometimes in considerable amounts, due to the decision of an arbitrator (who may not be a jurist at all), who decided as to his personal liability not in accordance with the substantive law.  And even without the ability to appeal.  All of this is by virtue of an arbitration agreement, for which the heir had no opening in his mouth, and his consent was never given.
75. Although the provision of section 4 of the Arbitration Law applies, only to the extent that "there is no other intention implied by the agreement", and the parties to the agreement have the power to prevent such an outcome in advance, if they are concerned about its consequences, but the parties formulating the other agreement do not include the heir. In addition, heirs can ostensibly refrain from dividing the estate before deciding the dispute that is the subject of arbitration, and in such a situation, the question of their personal liability will be prevented.  If necessary, they can also appoint an executor of an estate, in a manner that achieves this result, and if necessary, also allows for the execution of some kind of interim division into their hands, while also avoiding the discussion of personal liability.  However, it is not certain whether this alone would prevent a discussion of the personal liability of the heirs by an arbitrator they did not choose and according to terms that they did not agree on.  For example, if the estate has already been divided at the time the arbitration begins, or if there is a dispute as to whether it was divided.
76. With regard to our matter, I am of the opinion, after consideration, that the arbitrator in any case has acquired the authority to adjudicate the personal liability of the Weinroth heirs as well, even if he finds that the provisions of section 4 of the Arbitration Law alone are not sufficient for this purpose. Considerations for this should be noted:
77. First, as claimed by Gartner, in accordance with section 4 of the Arbitration Law, the force of the arbitration agreement should be seen as applying to the heirs, who become a party to it by virtue of their succession. In our case, the disputes were broadly defined within the framework of the arbitration agreement that applies to the arbitration proceeding, as including "any other relationship between them, past or present", and it was also determined that "to the extent that one of the parties has claims and/or additional demands against the other, they will be clarified in the mediation/arbitration proceeding in accordance with this agreement" (See paragraph 3 of the arbitration agreement - emphases added).  Ostensibly, this broad formulation can also include the issue of the personal liability of the heirs of the deceased, to whom his estate was transferred, and who, by virtue of their succession, became a party to the arbitration agreement and the arbitration proceeding.
78. Second, in this case, the Weinroth heirs are silenced from arguing against the arbitrator's authority to discuss their personal liability as well. As detailed above, the position of the Weinroth heirs was that as substitute litigants who entered the proceeding as heirs, the arbitrator's authority does not extend to their personal liability at the time of the division of the estate.  This is learned from their response to Gertner's request to the arbitrator that they would become the parties in the proceeding, in which they clarified that their agreement was only to "manage" the proceeding in the place of the deceased, in order to enable the "continuation" of the arbitration proceeding, while emphasizing that they do not fall into the deceased's shoes for all intents and purposes that deviate from the conduct of the arbitration.  Gertner responded that they do not agree with the restriction according to which Weinroth's heirs will only enter to "manage" the proceeding, as opposed to being litigants in it.
79. The issue of whether Weinroth's heirs will enter the arbitration proceeding as a party in the arbitration proceeding, or only as someone who "manages" it, was therefore explicitly placed before the arbitrator. As it appears from the decision given by the arbitrator, he did not accept the position of the heirs of Weinroth, and ruled that the heirs of Weinroth would be the parties in place of the deceased.  Since then, their names have also been named as a party to the proceeding in the various court documents, and this has also been stated by Weinroth, and without it being recorded that the heirs are only "administering" the proceeding, whatever the meaning of this term may be.  See, for example, summaries submitted by the Weinroth heirs for a counterclaim in arbitration.  Gartner, for their part, argued, as explained above, on various occasions that the heirs were personally charged, without protest from the heirs of Weinroth.
80. As claimed by Gartner, in these circumstances, and insofar as the Weinroth heirs believed that they should not be regarded as a party for all intents and purposes in the arbitration proceeding being conducted, as emerged from the decision given by the arbitrator, then they should have already claimed at that time that the arbitrator exceeded his authority in his said decision; and to clarify that they can only be included as those who agree to enter the proceeding in order to "manage" it, in a way that will enable the arbitration to continue, but not as those who can personally be obligated to do so.
81. This is certainly necessary, since the Weinroth heirs explicitly clarified the question of whether they were entering the proceeding only as "administering" it for the estate, or as litigants for all intents and purposes, for a personal liability that could ostensibly arise from it; and from the time the arbitrator's decision showed that he rejected their position on the matter. See, for example, Civil Appeal Authority 2638/18 Company Anonymous v.  Partnership et al.  (May 6, 2018), according to which: "If a party knows that his right in the arbitration proceeding has been violated (for example, if he believes that the arbitrator exceeds his authority) but refrains from proactively and at the first opportunity, then he will be silenced from arguing the opposite at the time of the request to annul the award...  This is because 'a person cannot sleep on his rights and then 'wake up' and claim their existence" (v.  14).  See also, inter alia, Civil Appeal Authority 4198/10 Haim Ivgy v.  Rachel Tehila Gabbay (25 December 2012) at para.
82. Contrary to the argument of the Weinroth heirs, it is also impossible to understand what is stated in the arbitrator's decision, according to which his decision does not impede the appointment of other parties in the proceeding if there will be a need to do so in the future, in order to indicate that they entered as litigants but for the purposes of "administering" the proceeding. As emerges from the above sequence of events, this statement of the arbitrator referred to the fact that, as Gartner informed him, at that stage there was still a possibility that an estate administrator would be appointed, in view of the appeal that was pending, and therefore this possibility was left open by him in his decision.  Therefore, the arbitrator's decision in this matter should not be understood in any other way.
83. In this regard, I do not ignore the fact that, as will be analyzed in the next chapter, in practice there is at least ambiguity on the question of whether the actual definition of the parties as laid before the arbitrator at the time of the entry of the Weinroth heirs as litigants, also included an argument regarding the personal liability of the Weinroth heirs, and therefore there is a ground for cancellation by virtue of section 24(4) of the Arbitration Law. Weinroth's heirs claim that they could not protest against a hearing by the arbitrator on the grounds that it was not brought before him at all, and therefore their silence cannot be seen as an agreement to his authority to bind them personally.  However, this is not the case.  As stated, Weinroth's heirs were aware of the distinction between entering the proceeding only in order to "manage" it, and entering as a litigant, which means that they will also be personally obligated to conclude it, as is the case with anyone who is a litigant who is a defendant in the proceeding.  Therefore, they clarified their position that they were entering the proceeding only for the purposes of "conducting it".  Their position, however, was not accepted by the arbitrator, whose decision indicated that they entered the proceeding as parties for all intents and purposes.
84. From the moment it became clear to the Weinroth heirs that they would not have bothered to clarify the matter when they were requested, but they did not protest and did not even ask, at the very least, to clarify the matter in real time, the arbitrator was thus granted the authority to also discuss their personal liability as defendants in the ongoing proceeding. The fact that a cause of cancellation arose with respect to the personal obligation that was determined in their case does not detract from the fact that the arbitrator's authority to hear the matter was acquired in view of the absence of a protest regarding his decision regarding the addition of the heirs as litigants for all intents and purposes, which therefore includes the possibility of their personal obligation.
85. Third, the result that it was within the arbitrator's authority to also discuss the question of the personal liability of the heirs of Weinroth as the inheritors of the deceased's estate, is also derived in the circumstances of the case by virtue of the expansion of the circle of those subject to the arbitration proceeding. This is in the spirit explained, for example, in Civil Appeal Authority 3925/12 Chen Ronen v.  Yuval Cohen (June 17, 2013), which deals with the extension of arbitration proceedings even to those who are not signatories to the arbitration agreement.  In the same matter, the court explained with regard to the extension of retirement as aforesaid also with respect to the third circle of expansion (where the first is the signatories to the agreement, and the second is the person who are substitutes), that the justification for this is intended "...  to prevent parties from evading participation in an arbitration proceeding to which they have substantially agreed on formalistic grounds..." (see verse 14).

See also Motion to Initiate Arbitration (Tel Aviv District) 53555-05-12 Liron Greenberg v.  Shlomo Greenberg (Nevo 17.12.2012) (para.  5) which discusses the justification for adding close parties who take part in the arbitration proceeding for a full decision (emphases added):