Legal Updates

A company filing a claim will usually be required to deposit a guarantee for the expenses of the defendant

July 16, 2019

An Israeli company provided commercial services to a foreign public company traded on the London Stock Exchange, which is currently engaged, among other things, in developing technologies related to the diamond online trading scene, as well as a software provider for projects related to the blockchain worlds. The company demanded a commission for fundraising carried out by the public company but the public company demanded as a prerequisite for managing the procedure that the Israeli company provide a guarantee of its expenses.
The Court held that the company must deposit a guarantee for expenses as a condition precedent for holding the proceeding. The default in Israel is that a claiming company, whose shareholder liability is limited, must deposit a guarantee for the defendant's expenses unless it proves to be financially robust or the Court considers that the circumstances do not justify it. The question of the chances of the procedure may also be considered by the Court, but this will have an effect only in case of very high or very low odds. Here, the plaintiff has not shown financial robustness and it is not possible to say that the prosecution's chances are very high and therefore a condition for holding the proceeding is the deposit of a guarantee.