Civil Case (Tel Aviv) 9387-07-13 The Association for the Advancement of Youth in Basketball and Sports Maccabi Ramat Gan v. Bnei Ramat Gan Association The Basketball Department Founded by Beitar and Maccabi Ramat Gan

1. I have before me a request for a stay of proceedings by virtue of the existence of a statutory arbitration obligation and an arbitration clause.
2. This is a claim in the amount of ILS 300,000 filed by the Association for the Advancement of Youth in Basketball and Sports (hereinafter: "the Plaintiff" / "the Respondent") against the Bnei Ramat Gan Association of the Basketball Department (hereinafter: "the Defendant" / "the Applicant").  According to the statement of claim, in summary, on September 7, 2011, an agreement was signed between the parties according to which the plaintiff would manage the youth, boys and children basketball department at Ramat Gan for the defendant for five seasons beginning in the 2011/2012 season, while the defendant would pay the plaintiff ILS 300,000 per year in ten equal installments starting from February 2, 2013 as an actual participation (hereinafter: "The Agreement").  According to the plaintiff, the defendant did not begin to pay this amount.  On the other hand, the defendant claimed breaches of the agreement and on June 9, 2013, announced its cancellation.  As part of the lawsuit, the plaintiff petitions to oblige the defendant to pay her the sum of ILS 300,000 and to declare that the agreement is valid and exists since it was not breached by the plaintiff and that the defendant must continue to pay the payments set out in the agreement in the future as well.

The arguments of the parties in the present application

3. According to the Applicant, the proceedings in the action should be delayed and transferred for clarification within the framework of the Arbitration Institute of the Israel Basketball Association (hereinafter: the "Arbitration Institute") by virtue of the existence of a statutory arbitration obligation between the parties and an arbitration clause in the agreement. The Applicant refers to section 5(a) of the Arbitration Law, 5728-1968; Sections 10(a), 10(c) and 11 of the Sports Law, retried in 1988 and sections 1c, 1e, 2b and 3 of the Arbitration Institute's bylaws, and argues that by virtue of those laws and sections, the parties as aforesaid have a statutory duty to arbitrate.  This obligation was also explicitly enshrined in clause 28 of the agreement, according to which claims involving an agreement will be heard in the framework of an arbitration proceeding at an arbitration institution, unless the association does not have substantive jurisdiction.  According to the Applicant, the Arbitration Institute has the authority to hear the claim since we are dealing with the interpretation of a contract with respect to the contractual relationship relating to the operation of basketball teams.  Notwithstanding Section 5 of the Arbitration Law, which grants the court discretion in transferring a matter to arbitration, when the arbitration is a statutory arbitration, the court lacks discretion and is obligated to do so.  The Applicant further refers to the Civil Appeal Authority 189/07 Amir Katz v.  the Basketball Association [published in Nevo] (hereinafter: "the Katz Case") and argues that the Court ruled that disputes relating to contractual relations between parties that originate in an arbitration clause require a recourse to arbitration and in any case of dispute regarding the authority of the Arbitration Institute to clarify the claim: A broad interpretation should be given that will favor the resolution of the dispute in arbitration.
4. The Respondent rejects the application. In its view, it does not dispute the provisions of the Sports Law, the Arbitration Institute's Regulations or the arbitration clause in the agreement between the parties, but this section does not apply to the lawsuit in this case which deals with a legal interpretation of the agreement and a request for declaratory relief.  Clause 28 of the agreement stipulates that there will be matters in which the arbitration institution will not be authorized to hear and then the court hearing will take place in a civil case - Jaffa and thisis the case before us.  The Arbitration Institute's statutes define the arbitration issues, and of all its minor clauses, only section 9 deals with disputes between teams in matters that do not relate to registrations, transfers and loans of players.  The intention of section 9 is to disputes between associations and not to the subject of declaratory relief, which by its very nature is not suitable for clarification in arbitration.  An analysis of section 2 in its entirety also shows that it refers to an institution for arbitration in sports matters and not to a legal battle over definitions and rights; Several members of the Ramat Gan City Council are involved in the dispute, and the dispute is at the center of the public's interest ahead of the upcoming municipal elections.  Since this is a discussion of public importance and fundamental aspects, it should be held under the watchful eye of the court; The Applicant attributes to the Respondent and anyone on her behalf a lack of good faith, concealment of facts, misrepresentations and fraud, these denied claims should be clarified before the court.
5. In response to the response, the Applicant reiterates her arguments and adds that it is not clear how the Respondent claims that according to Section 2H of the Arbitration Institute's Regulations (such, in the original, apparently referring to subsection 9, the beginning of which is identical to the beginning of section H), the claim is not suitable to be clarified within the framework of the Arbitration Institute, when the section explicitly states that the Arbitration Institute will hear "a dispute of any kind and type....". According to her, the exception to the rule does not exist in our case, since it is a matter of contract interpretation with respect to contractual relations relating to the operation of basketball teams.  Moreover, Section 3 of the Arbitration Institution's Regulations stipulates that any dispute as detailed in Section 2 shall be brought to arbitration only in the framework of arbitration.  The Applicant again refers to clause 28 of the agreement and to the transfer of a hearing in the Katz case.  The Respondent did not present reasons and references supporting the fact that the claim is not suitable for clarification in an arbitration framework in accordance with the Arbitration Institute's Regulations, and did not present a reason, supported by legislation and case law, that the court should not respect the consent of the parties under clause 28 of the agreement; The Applicant denies the Respondent's claim that the parties to the dispute are not only the associations but also political parties, and argues that the parties to the claim are the parties to the dispute, and that it is also possible to summon the members of the city council to testify at the Arbitration Institute, and in any event, this does not affect the determination of where the claim will be clarified.  Moreover, the Respondent goes so far as to give the meaning it gives to the dispute and forgets that it is essentially a financial dispute and that it should not be attributed a public importance that exceeds its actual significance.  The allegations of fraud are attributed to the authorized signatory of the respondent, Mr. Erlich, and therefore, in accordance with the Basketball Association's regulations, any claim directed against him must be clarified by the arbitration institution when he is not a party to the action.  The Arbitration Institute clarifies dozens and even hundreds of cases a year and has the required knowledge and professionalism, and the Respondent's claim that these claims have no place to be clarified by the Arbitration Institute is not clear.

Discussion and Decision

6. Having examined the application, the response, the response to it, I am of the opinion that it should be accepted, as will be detailed below.
7. Section 5 The Arbitration Law 5728 - 1968 Regulates the issue of stay of proceedings and transfer of the claim to arbitration: “)a) If a claim is filed with the court in a dispute that has been agreed to be submitted to arbitration and a party who is a party to the arbitration agreement requests to delay the proceedings in the action, the court will delay the proceedings between the parties to the agreement, provided that the applicant was willing to do everything necessary for the arbitration to take place and continue the arbitration and is still willing to do so. (b) A request for a stay of proceedings may be filed in the statement of defense or in some other way, but no later than the day on which the applicant first argued on the merits of the claim.  (c) The court may not delay the proceedings if it sees a special reason that the dispute should not be heard in arbitration."
8. The Sports Law, Retrial - 1988 establishes a statutory obligation to conduct arbitration proceedings and stipulates that the court shall stay proceedings where a claim is filed to it that the Sports Law applies to it and which meets the conditions of the bylaws (Civil Appeal Authority 2186/12 Moshe Amar v. Maor Malikson [published in Nevo], section 20).  Section 10 provides: “)a) An association or association shall promulgate bylaws regulating the proper management of the sport or of the sports that it is a center, including regulations regarding discipline, internal judgment, including the internal judicial institutions and the procedures according to which they shall be discussed - subject to section 11, transfer of athletes - subject to section 11a, As well as salaries and payments to athletes, coaches and other officials.  (b)...  (c) The said regulations shall be binding on the sports associations, athletes and officials in that branch or in those sports." Section 11 provides: "The exclusive authority to discuss and decide matters related to activity within the framework of an association or association shall be in the hands of the internal judicial institutions set forth in the Articles of Association under Section 10, and in accordance with the provisions set forth in the Articles of Association under that section; The decisions of the highest internal court of justice in disciplinary matters shall be final and shall not be appealed before a court."
9. According to the Arbitration Institute's bylaws, which are defined as "the law of an arbitration agreement for all intents and purposes" (section e), it applies, inter alia, to all groups registered or were registered with the association (section c). Section 2 of the Regulations determines what the arbitration issues are, including (emphases are not in the original - H.F): "Any dispute relating to the contractual relationship between a team and/or a player and/or a player's agent and/or representative between themselves and between each or more of them to the other" (section 2g) Alternatively, "any dispute of any kind and type, including a financial dispute between a team and/or association and a group and/or any other association except for a dispute under criminal appeal, section 3(c) of the rules of the Supreme Court" (section 2i).  According to Section 3 of the Arbitration Institute's Regulations, which is titled "Mandatory Arbitration", any dispute as detailed in Section 2 will be brought to the arbitration "only" in the framework of arbitration.
10. It appears from the compilation that both by virtue of section 2G and by virtue of section 2T (each of which is sufficient in itself), the arbitration institution is granted the substantive jurisdiction to hear this action, which concerns a contractual-financial dispute relating to the operation of a basketball team. As stated above, arbitration according to the Arbitration Institute's regulations is a statutory arbitration that originates in legislation and not in the parties to the claim, for this reason alone the application is lawful to be granted.  I will note that I have not found any substance in the claim that declaratory relief is sought and therefore the claim is not suitable to be clarified in the framework of arbitration.  Section 2G states that "any dispute" regarding a contractual matter will be adjudicated by an arbitration institution and Section 2T states that "any dispute of any kind, including a financial dispute" will be resolved by an arbitration institution.  The sections do not limit the authority with regard to the relief sought.
11. In addition and alternatively, the parties agreed to refer the matter to arbitration. Clause 28 of the agreement states: "Claims involving or arising from this agreement shall be submitted only to the arbitration institution of the Israel Basketball Association, unless the association does not have substantive jurisdiction to hear the dispute, and in such a case, the agreed local authority is the court in Tel Aviv-Jaffa ." If and to the extent that there is a dispute between the parties regarding the scope of the clause 28, it is appropriate to refer to a quote in the Katz case (section 12) that was also brought by the Applicant in her application: "...A well-established rule is that an arbitration clause that requires arbitration in any dispute relating to the contractual relationship between the parties...  It should be interpreted broadly in such a way that all disputes that arose between the parties and that relate to or derive from those contractual relationships, including disputes on the tort level, will be clarified in the framework of the arbitration proceeding."
12. It is also worth quoting the lineof transfer of the venue of the hearing mentioned in paragraph 19 of the Applicant's request in the matter of Civil Appeal 463/90 Israel Basketball Association v.20.For the Promotion of Women's Basketball, PD 44 (2) 806: "In matters of sports associations and associations, the legislature has considered it necessary to instruct that in matters related to activity within the framework of an association or association - without distinction between a matter that is 'constitutional' or 'internal' - the authority to discuss and decide on this is in the hands of the internal judicial institutions, which were determined in the bylaws of that association or sports association. In view of the legislature's explicit words on this matter, it is appropriate that the dispute we are dealing with first find its way to the internal judicial institutions of the Association.  In this context, it is worth mentioning that despite the discretion given to the court in section 5 of the Arbitration Law, the court cannot refrain from transferring a matter to arbitration, when arbitration is mandatory arbitration under the law (see Dr.  S.  Ottolenghi's book, Arbitration in Law and Procedure (Faculty of Law Publications, Tel­Aviv University, 2nd edition, 1980) 79).(my emphases).  In other words, first of all, the authorized institutions must also examine the question of authority, and not the other way around.
13. It should also be noted that the authority of the internal judicial institutions of the Sports Association, including the internal arbitration institutions, was interpreted in the case law at length based on the rationale that these are voluntary bodies that are well aware of the needs of their members and how their affairs should be managed. These bodies reduce the workload in the court and reduce the costs involved in "regular" legal proceedings (Katz, section 13).  I will note that I did not find any substance in the respondent's claim of special public importance due to alleged political involvement that could influence the determination of the substantive authority in our case, as well as in the claims relating to lack of good faith and fraud.
14. Therefore, the request is granted without the need for a hearing, since it is mainly based on legal arguments. I hereby order a stay of proceedings and the transfer of the claim for clarification within the framework of the arbitration institute of the Israel Basketball Association.  The hearing scheduled for October 15, 2013 is canceled.

The Respondent will pay the Applicant expenses in the sum of ILS 2,500 within 30 days from the date of the decision.