Legal Updates

An arbitration clause does not apply to parties that have not signed it even if they are involved in a dispute that is subject to arbitration

April 28, 2021

The Verso glasses brand contracted a company held by Israeli singer Omer Adam, to sell the brand in Israel and later opened negotiations for the joint contracting of the Opticana eyewear franchise. The negotiation ended with motions for temporary ordered in Israel and arbitration in Florida, United State of America, opened by Verso and legal proceedings opened against it in Israel. Verso sought to stay the proceedings in Israel due to the arbitration in Florida.
The Court rejected the motion and held that there is no place to stay the proceedings. Israeli Law enables stay of legal proceedings due to an arbitration clause, with the stay of proceedings the rule and continuing the proceedings the exception. The guidelines are respecting the agreements of the parties as they are reflected in practice, including after the execution of the agreement. Here, although there is an arbitration clause stipulated in the agreement, the entry of Opticana to the relationship was made after the agreement, Opticana is not a signatory to the arbitration agreement and it does not apply to it. Thus, the proceedings between the parties cannot stay.