Legal Updates

A non-Israeli who sues in Israel but has no assets in Israel may be ordered to post a security as a pre-condition for managing the proceedings

May 18, 2021

A non-Israeli sought to revive a company that was liquidated a few years earlier, contending that he had fallen victim to a case of fraud in the field of "binary options" in which the company was involved (although the date of the contended fraud was after the company ceased operation and commenced voluntary liquidation proceedings). The former shareholders, who opposed the revival of the company, demanded that a security be posted as a pre-condition for the managing of the proceedings.
The Court held that the non-Israel claimant must deposit a security. When deciding on the deposit of a security for costs, the right of access to the Courts must be balanced against the prevention of filing of frivolous claims and securing the other party's expenses. The considerations which may be reviewed contain the chances of the proceedings, its complexity, delay in filing the claim, the identity of the parties, etc. Another key consideration is the lack of an address of a party to the proceedings in Israel, in which case there is a concern that it may not be possible to be paid by such party at the end of the proceedings, including through verdict execution mechanisms. Here, the non-Israeli claimant lacks property in Israel, and admitted to file the motion only after raising the necessary funds, but on the other hand did not demonstrate financial robustness. Therefore, he was ordered to deposit a security as a pre-condition for the continuance of the proceedings.