Legal Updates

When the balance of power between the parties to an agreement is similar, an international jurisdiction clause outside of Israel is not discriminatory

August 28, 2018

An Israeli cooperative association and a Dutch company entered into an agreement for the supply of goods, which included a foreign jurisdictional stipulation according to which disputes between the parties are to be resolved in the Hague (the Netherlands) Courts and under Dutch law.

The Haifa Court rejected the claim and held that the case is to be adjudged before the Court of the Hague, the Netherlands.  A standard contract is a contract that is often formulated in an uniform form by one party for the purpose of many engagements with it. A restriction on approaching the Courts outside the jurisdiction of the party that did not formulate the standard contract may be considered discriminatory and thus of no effect.  Here, the parties' bargaining power were of equal power during the negotiations and in relation to the engagement's terms between them. This is not a case of unbalanced powers and therefore the agreement signed between them is not a standard contract with a foreign judgment stipulation that discriminates the Israeli side. The jurisdiction clause simply expresses the supplier's desire not to be drawn into all countries where its goods are marketed and its desire to concentrate all disputes in one place that is the supplier's home location. This is a legitimate desire and the Israeli Courts' policy is to respect such stipulations, because they are part of an agreement between the parties themselves and a Court will not take an active part in breach of agreements.