We therefore find that even section 6(b) of the Law cannot serve as a suitable hostel for lifting the veil for the purpose of joining a party to an arbitration proceeding.
- The result of all the foregoing is, therefore, that none of the alternatives detailed in section 6 ofthe Companies Law can serve as a hostel for the purpose of attributing an arbitration agreement signed by a company to its shareholders, or for the purpose of attributing an arbitration agreement signed by a shareholder to the company itself. In other words, where a party has not signed an arbitration agreement, Section 6 of the Companies Law cannot provide relief to the party seeking to be joined in the proceeding. Indeed, this result is inconsistent with the observation of this Court in the Ronen case, as detailed above, but it seems that there is no escape from it in view of the provisions of section 6 of the Law, which, as stated, have not been fully examined.
- In addition, I will note that although at first glance it may be believed that this result may open the door to exploitation of the company's separate legal personality for the purpose of evading an agreement to resort to arbitration, I do not believe that this is the case. Given that the source of justification for the third circle is the consent of the parties as aforesaid, insofar as there are indications of personal consent on the part of the party who did not sign the arbitration agreement, its addition to the proceeding can be done by virtue of the first circle (see also the words of Justice Danziger in the Ronen case, paragraph 17). To this, it should be added that it is not impossible that in certain circumstances other legal tools can lead to a party who is not a signatory to an arbitration agreement being obligated to join the arbitration proceeding, such as the law of agency (see: the Ronen case, para. 17; Civil Appeal 65/85 Netanya Municipality v. Netanya Ltd., IsrSC 40(3) 29, 48 (1986); Licht, pp. 80-82) as well as estoppel and impediment (see and compare: Civil Appeals Authority 5394/09 Mediterranean Car Agency in Tax Appeal v. Kia Motors Corporations, para. 14 [Nevo] (June 27, 2012); Civil Appeal 7660/21 DCS Reinforcement of Buildings in Tax Appeal v. Yosef, paragraphs 2-5 and 11 of the [Nevo] judgment (June 19, 2023)). In any event, even if despite the aforementioned tools, there may still be cases in which a particular party will be able to evade joining an arbitration proceeding, even though it has substantially agreed to it, joining it based on the consent of another party to the proceeding, while ignoring the principle of separate legal personality, raises even more significant difficulties, in my opinion.
- Nor is it superfluous to note that the fact that the same party will not be joined to the arbitration proceeding as a party does not mean that the party seeking to be joined will be placed before a broken trough, since the way is open for him to initiate an independent proceeding against him in the appropriate court. There is no denying that conducting two parallel proceedings, which may raise common questions of fact and law, entails a certain inefficiency. However, the solution to this does not lie in "skipping" the corporate veil, but rather in appropriate procedural tools such as delaying proceedings by virtue of the doctrine of "pending proceeding" (Civil Appeals Authority 2812/13 Colombia Equipment and Photographic Supplies in a Tax Appeal v. Delta Digital inTax Appeal [Nevo] (July 11, 2013)) or even an award on costs. To this, it should be added that the non-inclusion of that party does not preclude the possibility of summoning him as a witness in the proceeding, where it is required (section 13 ofthe Arbitration Law; see also: Civil Appeal Authority 2870/24 Kiryat Sanz Children's Daycare Center v. Yachin Group CEO, Shai Reicher [Nevo] (April 8, 2024)).
- In summary, therefore, in my opinion, there is no room to make use of section 6 of the Companies Law for the purpose of adding a party that has not signed the arbitration agreement to an arbitration proceeding, when it is clarified that this does not have implications for other cases that fall within the scope of the third extension circle that was determined in the Ronen case.
From the general to the individual
- Implementation of the aforesaid in our case leads to the conclusion that there was no reason to order Lifshitz's inclusion in the arbitration proceeding by virtue of the Third Expansion Circle, based on the provisions of section 6(b) ofthe Companies Law.
- Indeed, alongside the addition of Lifshitz by virtue of the Third Circle, the Respondents argued before the District Court that his addition should also be ordered by virtue of the First Expansion Circle and the Second Expansion Circle. However, the court rejected these arguments, and there is no room to intervene in this conclusion. As to the first circle of expansion, it was held, as stated, that it has not been proven that there exist in our case circumstances from which it is possible to conclude that Lifshitz took personal liability or the intention to bind him as a party to the arbitration proceeding, in a manner that justifies his joining. This is a factual determination that was made after the court heard the testimonies of the parties in the hearing before it and was impressed by them in an unmediated manner, and as is well known, there is no reason to intervene in such determinations (Civil Appeals Authority 4541/20 Freind v. Yaakov Popovich Rabbi, para. 6 [Nevo] (July 8, 2020); Civil Appeal Authority 7421/18 Aharon v. Roni Engineering (T.N.P.) Ltd., para. 15 [Nevo] (December 16, 2018)). With regard to the second round of expansion, given that Tai is part of the arbitration proceeding, Lifshitz cannot be recognized as her substitute for the purpose of joining the proceeding (see: Ronen case, para. 13; Civil Appeal 10892/02 Neot Oasis Hotels in Tax Appeal v. Zisser, para. 16 [Nevo] (June 6, 2005)), and therefore there was no flaw in the District Court's conclusion on this matter as well.
Conclusion: I would suggest to my colleagues that we accept the appeal and order the cancellation of the District Court's decision regarding Lifshitz's inclusion in the proceeding. I will also suggest that in the circumstances of the case, we order the cancellation of the expenses for which Lifshitz was charged by the District Court, and that each party bear its expenses in this instance.