A bank refused its customer's request to transfer funds from his Russian VTB bank account to his account in Israel, due to international sanctions imposed on the foreign bank and despite the fact that no directive was given on the matter by Israeli regulator.
The Court held that this was not an unreasonable refusal as it was done within the framework of the bank's risk management and in the absence of a contradictory regulatory directive. Under the provisions of Israeli law, a banking corporation may not unreasonably refuse to grant various services, including receiving a financial deposit. This is partly because the right to provide these services has been reserved for banking corporations and taking into account the power disparities between the customer and the bank. However, the prohibition is on an 'unreasonable refusal', while the adoption of a sanctions regime in its entirety, and consequently refusing to provide a service, is a reasonable refusal even in the absence of regulatory guidance by the Israeli regulator, provided that no contradictory regulatory directive was given. Here, a customer who requested to transfer funds from a bank that was included in the sanctions regime imposed by the United States of America and the European Union, which the bank chose to adopt, and in the absence of any directive from the Israeli regulator, the bank's refusal is a reasonable refusal and the customer cannot obligate the bank to act contrary to its policy on the matter.