An international arbitration clause will be honored by a Court in Israel in almost every case

October 2, 2019

As part of an investment agreement and a founders agreement in a company, it was stated that all disputes between the parties will be settled only in arbitration in Cyprus under Cypriot law, which arbitration will commence within 30 days of demand. The company and one of the shareholders and the investor were parties to legal proceedings and only after a period of time moved to delay them in order to open arbitration proceedings.
The Court held that the proceedings in Israel would be delayed and the case transferred to an arbitration in Cyprus. Where an international arbitration clause exists in the agreement, the provisions of the New York Convention require accepting a request to delay proceedings unless one of three exceptions exists: The arbitration agreement is null and void, inoperative or incapable of being performed. Only in special and rare cases will a Court in Israel not delay proceedings before it and transfer them to arbitration. A party’s delay in opening arbitration proceedings may be considered a waiver of arbitration proceedings, but when it comes to international arbitration, as opposed to arbitration in Israel, this does not constitute grounds for ignoring the arbitration agreement.