Legal updates

A foreign company filing a claim in Israel will be obligated to deposit a security for the expenses of the defendant

November 29, 2019

Following an accident between a fuel tanker and two Turkish barges in the port of Haifa, the two barges were damaged and the lawsuit filed against the port also included the Romanian insurer, by virtue of the right of subrogation.
The Court held that the insurer may file the claim by virtue of the right of subrogation but is obliged to deposit a guarantee for the expenses of the port because it is a foreign company with no assets in Israel. The right of subrogation is the right of an insurer to "get into the insured's shoes" and claim in its place for funds paid to the insured. Israeli law prohibits assignment of rights for remedies for torts the related liability, but there is an exception that enables an insurer to file a subrogation claim by virtue of funds paid to the insured. This exception should be applied not only to Israeli insurers but also to insurers in marine insurance, as in this case, and therefore the Romanian insurance company may file the claim. When a plaintiff is a foreign company with no assets in Israel, there it will be obligated to file a security for the defendant's expenses, and so will be the case when there is a real concern that the state's debts collection mechanisms will not be available to the defendant for the purpose of realizing the expenses ordered to its benefit. Only where it is clear that the claimant's chances of winning the claim are particularly high will the Court avoid such an order. For this reason, the insurance company was obliged to deposit ILS 75,000 to secure the expenses of the port in the defense of the claim, as a pre-condition for the proceeding.