Ra’aretz (Petah Tikva) 41866-12-23 Bizi Finance Ltd. v. Execution Office – Enforcement and Collection Authority

Judgment

Can a promissory note bearing an electronic signature be executed at the Writ of Execution Offices in the procedure prescribed in Chapter 9 of the Writ of Execution Regulations, 5740-1979 (hereinafter: the Writ of Execution Regulations)?

What is the relationship between the Banknotes Ordinance [New Version] (hereinafter: the Banknotes Ordinance or the Ordinance), which originated in the English Banknotes Act of 1882, the Electronic Signature Law 5761-2001 (hereinafter: the Electronic Signature Law), and the digital age in which we live? Can the two legal systems coexist, and is the time to recognize digital banknotes?

These are the questions before me.

The Facts in Summary

1. We are dealing with an application for leave to appeal filed by the Applicant on December 20, 2023 against the decision of the Honorable Registrar Schachner of November 12, 2023 to reject an appeal against the decision of the Secretariat of the Execution Office (hereinafter: the Execution Office). The latter refused the Applicant's request to open a deed execution proceeding in accordance with Chapter 9 of the Execution Regulations, in respect of a promissory note signed by respondent No. 2, on the grounds that the signature on the deed is a digital signature.

The Applicant is a fintech company, supervised by the Capital Market Authority, and provides credit lines to small and medium-sized businesses through a digital platform (see the Applicant's website: https://www.bizi.co.il).  It should already be said that the Applicant's business model is based, inter alia, on electronic signature on promissory notes.

2. The Applicant's appeal was rejected, after the Honorable Registrar was convinced that there was no flaw in the decision of the Execution Secretariat. Inter alia, the Registrar referred to the fact that the Secretariat acted in accordance with the procedures of the Execution Bureaus and on equality, and adopted in its decision the position of the Respondent's Legal Advisor, which was forwarded to the Registrar, according to which it is not possible to recognize a promissory note signed electronically.  In this position, the position of the Ministry of Justice was detailed according to which there is difficulty in obtaining a digitally signed deed for execution, since the legislature's basic assumption in the Banknotes Ordinance relates only to the physical world, and the decision recognizing the electronic signature on a promissory note has lateral implications, inter alia in relation to checks.
3. On January 22, 2024, the Respondent's position on the application was submitted. At the beginning of her response, the Respondent noted that it is not possible to file an application for leave to appeal an appeal, and therefore the State does not need to be a respondent in such a proceeding, but most of her response related to the substantive issue at hand, and this was also the case in her other responses.

On September 19, 2024, a hearing was held on the application, at the end of which it was proposed that the parties reach agreements, if only for a temporary transition period until the state regulates the issue of electronic signature on a deed as a whole.  Subsequently, the respondent announced in a detailed response that she could not accept the offer.