Legal Updates

Unless written otherwise, a foreign jurisdiction clause applies also to company organs

February 2, 2022

A manager of a non-Israeli company refused to be party to proceedings opened in Israel against him due to an exclusive jurisdictional clause in the agreement with the company in which he is a manager, which stipulates that the Courts in Belgium will have the exclusive jurisdiction to hear any dispute arising from the agreement.

The Supreme Court held that no legal proceedings may be taken in Israel against the manager of the foreign company because the parties agreed that any dispute arising from the agreement will be held in Belgium. The wording of an agreement has special importance when it comes to an agreement between two sophisticated business parties and especially when it comes to the interpretation of foreign jurisdiction clauses, in order to establish certainty in international trade matters. When a foreign jurisdiction clause exists, a party seeking to deprive the other party of the right to litigate in the agreed forum should state this clearly in the agreement. Here, the agreement with the foreign company sets an exclusive jurisdiction to the Courts of Antwerp, Belgium, and according to its wording the jurisdiction clause applies in relation to any service provided by the foreign company and any dispute arising from the agreement, without stating that it does not apply to company organs. Therefore, it means that any dispute arising out of the agreement, directly or indirectly, must be held in Belgium and it applies to both direct parties to the agreement and indirect parties, including the company managers.