The Shape The second, which is sometimes referred to as "inverted" or "simulated" lifting of the veil (section 6(b) of the Law), is a softer measure than a full lifting of the veil, in the sense that it does not completely eliminate the separation between the company and the shareholder or the limitation of liability, but rather allows the lifting of the corporate veil for a specific purpose (High Court of Justice 7871/07 Rafael Authority for the Development of Weapons in Tax Appeal v. Minister of Finance, paragraph 4 of the judge's judgment Y. Danziger [Nevo] (6.2.2011); High Court of Justice 823/90 Bat Yam Faction 1 v. State Comptroller, IsrSC 44(2) 692, 696-697 (1990) (hereinafter: the Bat Yam faction); Interest Moverman, p. 362; Goshen & Eckstein, p. 147). This type of lifting of the veil works in the opposite direction from that in which a full lifting of the veil operates, in two senses: in the direction of reference (from a shareholder to a company) or in the object of reference (right and not debt). Thus, section 6(b) of the Law allows the Feature, Privilege or A must of Shareholder 30Company, as well as attributing Privilege of The Company 30Shareholder (See also: Interest Agrisco, paragraph 3 of the judge's judgment A. Grosskopf). This lifting of the veil does not require proof of all the conditions specified in section 6(a) of the Law, and it is sufficient to show that "it is just and correct to do so in view of the intention of the law or the agreement that applies to the matter" (see, for example: the Kreuzer, paragraphs 16-19; Interest Texas Entrepreneurship, paragraph 4).
And the form The third, "partial" lifting of the curtain (Section 6(IIIto the law), allows the execution of Debt Deferral of a shareholder, that is, to suspend his right to repay his debt to the company until it repays its debts to its other creditors. This form is also considered a softened measure in relation to a full lifting of the veil, since its results are limited (and see: Matter Crispy p. 129; Interest The Chicks of the North, p. 631; Uriel Procuse'ya "'Thin financing', Raise the curtain and limitation of liability in corporate law" Law Studies 6, 526, 558 (5738-5739)). At the same time, according to the language of the Section 6(III) of the law, its use is conditional on the fulfillment of the same conditions for the full lifting of the veil that are specified In the section 6(A) to the law, although there are those who believe that there is room to interpret it more broadly (see in this regard: The Chicks of the North, pp. 581 and 631; Goshen & Eckstein, pp. 143-147; Licht, pp. 86-91).
- The question asked in our case, therefore, is which of the alternatives of section 6 ofthe Companies Law can be used for the limited and focused purpose of adding a party to an arbitration proceeding. In the Ronen case , this question was not clarified in depth, and a review of the case law of the various courts reveals that with the exception of a few cases in which an attempt was made to trace the appropriate alternative (such as the District Court's decision in our case; see also: Civil Case (Jerusalem District) 65669-06-21 Rahat v. Amrani, paragraphs 13-15 [Nevo] (June 2, 2022)), the tendency is as a rule not to adhere to the grammar of the provisions of section 6 of the law. Instead, the prevailing approach focuses on the question of whether the nature of the relationship between the requested party and the arbitration agreement or the relevant dispute justifies its joining, based on the extent of the holding in the company's shares and the shareholder's involvement in the management of the company (see, for example, the case law of the District Courts: Civil Case (Haifa District) 31885-01-22 Setzer Construction Products Industries in a Tax Appeal v. Topolsky & Co. Ltd., Paragraph 20 [Nevo] (May 29, 2022); Stimulus to Open Arbitration (Tel Aviv District) 39306-10-14 Nova Diamonds in Tax Appeal v. David James Ltd., para. 16 [Nevo] (February 8, 2015); Opening Arbitration Stimulus (Tel Aviv District) 32177-05-13 Regev v. Taquet Computers and Systems Ltd., para. 14 [Nevo] (August 11, 2013); Civil Case (Tel Aviv District) 54797-06-23 Rosenstein v. Neot Herzliya Hadar 19 Ltd., paragraph 10 [Nevo] (August 20, 2023); Civil Case (Central District) 47052-01-24 Yishai v. Lipsky Boutique Ltd., para. 27 [Nevo] (April 1, 2024); the aforesaid approach did not skip this court either: Civil Appeal Authority 150/24 Neot Herzliya Hadar 19 in Tax Appeal v. Rosenstein [Nevo] (January 21, 2024); Civil Appeal Authority 7089/20 Shaike Ivri Holdings in Tax Appeal v. Lehi Schwartzman-Keiser, para. 8 [Nevo] (November 19, 2020)). Although this approach is consistent with the desire to look at the relationship between the various parties as it exists and to prevent manipulations intended to enable evasion of an agreement to resort to arbitration, there is a certain tension between it and the basic concepts detailed above - both arbitration and corporate law.
- First, from the perspective of arbitration law, it was already clarified in the Ronen case that the source of justification for the third extension circle is the consent of the parties (ibid., paragraph 14). This was also emphasized in the Brimer case, where it was stated that:
"We are dealing with the third circle of expansion, the justification of which is not the necessity of the third party, but its consent. As noted above, the purpose of this extension circle is to prevent a third party from evading - using formalistic arguments - from participating in an arbitration proceeding to which it has substantially agreed [...]. Let us not forget that the third circle of extension is 'the most far-reaching in terms of the basic principle of the parties' consent to arbitration' (ibid., paragraph 14), and therefore we must act with caution when we come to include parties that were not included in the first circle of expansion, lest we violate the principle of consent that underlies the arbitration proceeding" (ibid., para. 18; emphases in original).