Labor Dispute (Nazareth) 15884-05-26 Noam Cohen – Ituran Sport Kiryat Shmona (2001) Ltd.

Decision

1. We have before us the defendant's motion to stay proceedings and transfer the claim to the Arbitration and Mediation Institute of the Israel Football Association (hereinafter - the Arbitration Institute).
2. As part of the motion, the defendant requested the inclusion of the Israel Football Association (hereinafter - the Association) as an "amicus curiae" or as a party to the proceeding.

Factual Background

1. The defendant is an association that operates the Hapoel Kiryat Shmona soccer team in a league that is one of the various leagues of the Football Association.
2. The plaintiff is a professional soccer player registered with the Football Association, who was employed by the defendant during the 2022/2023,2023/2024,2024/2025 seasons, from July 1,2022 to May 31,2022.  2025.
3. On May 6,2026, the plaintiff filed a claim in the total amount of ILS 284,730.20.  According to him, when the contract for the 2024/2025 season expired on May 31,2025, the defendant did not approach him with an offer to renew the engagement, and therefore the termination of his employment is dismissal in accordance with section 9 of the Severance Pay Law, 5723-1963.  In addition, the plaintiff claims that the defendant systematically breached its obligations, in bad faith, in fundamental breaches of the fixed-term contract and various rights of the protective legislation.  The plaintiff petitioned for financial relief for contributions to the pension fund, compensation for failure to hold a hearing, advance notice pay, severance pay, work pay on the day of rest, payment for winning a championship, payment for retirement pay, payment for rent and compensation for breach of the duty of good faith.

Summary of the parties' arguments

The defendant's arguments -

1. The defendant claims that by virtue of the Sports Law, 5748-1988 (hereinafter - the Sports Law), the Football Association has enacted the Regulations of the Arbitration Institute (hereinafter - the Regulations), which stipulate mandatory arbitration in relation to the matters specified in section 2 of the Regulations.  In addition to the binding provisions of the Regulations, in clause 7 of the employment agreement between the parties, which is based on a uniform version of the Football Association, there is an explicit arbitration clause according to which any dispute relating to the employment agreement will be heard before the Arbitration Institute.
2. The defendant reviewed the trend that has occurred in case law, according to which most disputes in the field of sports should be transferred to the arbitration institutions, since they possess the unique tools to discuss disputes in the world of sports, and that in cases where the claim is mainly of a contractual nature in terms of its financial scope, the rule will apply according to which "the treatment follows the main thing" and the arbitration institution will also discuss the question that is incidental to the contractual issue.  It was also claimed that in recent years the Football Association has carried out a comprehensive reform of the bylaws in order to make it suitable for hearing claims involving cogent components, and retired Labor Court judges have also been appointed as arbitrators for the purpose of hearing cogent claims.  Since then, the Arbitration Institute has routinely discussed claims involving cogent components.
3. The defendant referred to a decision made after the reform came into effect in a labor dispute (Haifa) 61319-10-25 Sharabi - Maccabi Netanya Football Club (2016) Ltd.  (hereinafter: the Sharabi case), which received a request for a stay of proceedings and the claim was transferred to an arbitration institution with respect to the period of employment prior to the date of the amendment of the bylaws, where, according to the defendant, the substantive authority to hear claims for cogent rights of a footballer is uniquely vested in the arbitration
4. The Ottoman Settlement [Old Version] 1916 The defendant further claims (in response to the plaintiff's response) that the amendments made to the bylaws were made in cooperation with the players' association and received the blessing of the National Court.  The defendant noted that a request for leave to appeal in relation to that decision is still pending before the National Court, but according to her, the principles and reasons determined by the National Court are clear and it is doubtful that they will be changed.
5. 12-34-56-78 Chekhov v. State of Israel, P.D. 51 (2) In addition, the defendant claims that the plaintiff himself recently filed a claim that includes cogent components to the Arbitration Institute, and attached to her reply a copy of the claim bearing the date of April 12,2026 - a fact that she claims was concealed from the court.  The defendant also presents a decision of the Arbitration Institute dated June 22,2026, which reviews the process that the Articles of Association underwent and states that the authority to hear cogent claims in football matters is currently vested in the Arbitration Institute.

The plaintiff's arguments -

1. The plaintiff argues that the amendment to the bylaws or the provisions of the employment agreement does not nullify the court's authority to hear the claim.  In addition, he argues that the alleged reform does not lead to a deviation from the case law according to which claims in relation to cogent rights cannot be stipulated and cannot be transferred to arbitration, since the substantive and unique authority therein is vested in the labor courts.
2. The plaintiff argues that accepting the defendant's position will lead to an amendment to the bylaws, which was made after the termination of the employment relationship and after the formulation of the causes of action, will retroactively expropriate an employee of his right to clarify protective rights before the statutory court authorized to do so by law, and this is inconsistent with the public nature of the protective rights and with the provisions of section 24 of the Labor Court Law, 5729-1969, and section 3 of the Arbitration Law, 5728-1968.
3. According to the plaintiff, this is not a binding arrangement, and the decision given in the Sharabi case is a decision of a regional court and does not constitute a binding precedent, and that an application for leave to appeal is pending in the National Court in relation to it.  It was further argued that the amendment to the bylaws was made in cooperation with the Histadrut or with its consent does not give it binding validity that overrides the provisions of the Cogent Law, and that agreements between bodies in the sports industry do not override the provisions of the law.
4. The plaintiff further argues that although the defendant tries to present the proceeding as a proceeding that is primarily contractual and commercial, the claim deals mainly with cogent rights that cannot be stipulated, alongside components such as grants and premiums by virtue of the contractual engagement.  According to him, the latter are in the category of care, and the main thing in the action is his cogent rights, and the contractual components do not nullify the authority of the Labor Court.

03The Association's position

1. The Association specifies that in accordance with Section 11(a) of the Sports Law, it has enacted the Arbitration Institute's bylaws, which stipulate that disputes of a civil-financial nature among the main parties in the industry will be clarified before it.  In addition, soccer players in the professional leagues in Israel are required to sign an agreed arbitration clause every season, which grants the Arbitration Institute unique authority to discuss disputes betweenthem and their team.  This is a standard agreement signed by each player each season, which is an appendix to the Association's budgetary control regulations.
2. In recent years, the question of the Arbitration Institute's authority to hear players' claims arising out of cogent labor law has been examined, and the issue was discussed in the framework of Leave to Appeal (National) 19063-02-21 Babayev et al.  - A.G. Beitar Jerusalem Football Club (2001) Ltd.  et al.  (dated March 18,2025) (hereinafter - the Babayev case).  Following lengthy and in-depth negotiations between the Association, the Leagues Administration and the Histadrut, which was accompanied by the National Court in the framework of the proceedings in the Babayev case, the Arbitration Institute's bylaws were amended so that it would be possible to clarify claims concerning cogent labor rights.  It was agreed that claims of a cogent nature would also be clarified by the Association's arbitration institution, subject to agreed changes in the bylaws and the appointment of arbitrators who are retired judges of the Labor Court, the conduct of the proceedings according to the substantive law, the conduct of an evidentiary proceeding as is customary in the labor courts and with the reasoning of the decisions, and that it would be possible to file an appeal with the authority to the Labor Court.  Following the judgment in the Babayev case, the association completed the approval procedures of the amendment to the bylaws, and on July 7,2025, the association's management approved the updated version of the arbitration institution's bylaws.  Subsequently, a partisan committee, which also included a representative of the players' association, appointed three retired judges of the Labor Court as arbitrators in cogent matters.
3. The Association added that as of the date of writing its position (September 17,2026), the Arbitration Institute in the Cogent Track is active and functional, and it has 82 cases before it, and it has already issued many judgments.  According to the Association, the new arrangement has been properly absorbed and provides an efficient and professional response to disputes, and as of today, the Arbitration Institute is the appropriate and appropriate forum for clarifying legal disputes in the football industry, including cogent components.
4. Therefore, the Association is of the opinion that there is no impediment to further clarification of the dispute within the framework of the Arbitration Institute.  Thus, the Association confirmed the defendant's claim that the plaintiff himself filed a claim with the Arbitration Institute and that the arbitration proceeding is pending.

Discussion and Decision

1. After considering the arguments of the parties, we found that the application should be granted, as will be detailed below:
2. Section 24(a) of the Labor Court Law, 5729-1969, states that the Labor Court has exclusive jurisdiction to hear claims "between an employee or his successor and employer or his successor arising out of an employment relationship, including the question of the very existence of an employment relationship and with the exception of a claim arising inthe Torts Ordinance [New Version]" as well as claims arising "in negotiations prior to the conclusion of a contract for the creation of an employment relationship, In a claim that arose in such a contract before the employment relationship was created or after such a relationship was terminated, or in an action that arose in the acceptance or non-acceptance of a person for employment ...  ".
3. Section 10(a) of the Sports Law, 5748-1988 (hereinafter - the Sports Law) establishes the authority of the Association to enact bylaws: "An association or association shall enact bylaws that will regulate the proper management of the sport or of the sports that are central, including regulations regarding discipline, internal jurisdiction, including the internal judicial institutions and the procedures according to which they shall be discussed - subject to section 11, the transfer of athletes - subject to section 11a, as well as regarding salaries and payments to athletes, coaches and other officials." Section 11(a) of the Law further states: "The exclusive authority to discuss and decide matters related to activity within the framework of an association or association will be in the hands of the internal judicial institutions set out in the bylaws under section 10, and in accordance with the provisions set forth in the bylaws under that section; The decisions of the highest internal court in disciplinary matters shall be final and shall not be appealed before a court."
4. Section 5 of the Arbitration Law, 5728-1968 (hereinafter - the Arbitration Law), establishes the conditions for stay of proceedings:

")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 stay the proceedings in the action, the court shall 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 prepared to do so.