Introduction
In February 2024, Israel enacted the International Commercial Arbitration Law, 5784–2024, a landmark piece of legislation that constitutes a significant reform in the field of international arbitration in Israel.
Since the enactment of Israel’s old Arbitration Law in 1968, no adjustments were made to address the unique needs of arbitration in international disputes, despite globalization and Israel’s growing involvement in international trade. As a result, although Israel is an economy deeply engaged in global commerce and arbitration is the preferred method of resolving commercial disputes worldwide, very few international arbitrations have actually been conducted in Israel.
Accordingly, new legislation was advanced to place Israel on par with leading jurisdictions in the field of international arbitration. This article presents the objectives of the new law, its main provisions and principles, and examines its international significance, particularly in relation to the UNCITRAL Model Law.
Objectives of the Law
The objective of the Law – as stipulated in Section 1 – is “to create a legal framework and rules for the conduct of international commercial arbitration in accordance with the principles established in the Model Law on International Commercial Arbitration.” In other words, the Israeli legislature sought to incorporate into domestic law the global standards governing international commercial arbitration.
The Law was designed to enhance Israel’s attractiveness as a seat of international arbitration and to strengthen the confidence of the international business community in arbitration conducted in Israel. It was advanced specifically to adopt the principles of the UNCITRAL Model Law, with necessary adjustments to Israeli reality.
This created two separate tracks:
- Domestic arbitrations – governed by the old 1968 Arbitration Law.
- International arbitrations – governed by the new 2024 Law.
Main Provisions and Core Principles
Scope and Definitions
The new Law applies to arbitrations of an international character concerning commercial matters. An international arbitration is defined in the Law as one with a cross-border dimension – for example, when the parties’ places of business are in different states; when a substantial part of the obligations (or the location most closely connected to the dispute) is in another country; or even if the parties explicitly agree that the dispute is international in nature.
The Law applies only to matters of a “commercial nature” (Section 3(a)). According to the explanatory notes, this term is to be interpreted broadly to include any dispute arising out of a relationship of a commercial character, whether contractual or not.
The Law applies principally when the seat of arbitration is in Israel. However, it also applies when the seat is abroad if Israeli court assistance is sought in the arbitration (for example, to stay court proceedings in favor of foreign arbitration or to grant interim relief in Israel in connection with a foreign arbitration).
An important interpretive principle (Section 2(e)) provides that the Law must be interpreted with regard to its international character and the need to promote uniformity of interpretation worldwide, as well as in good faith. This ensures that Israeli courts will apply the Law consistently with other jurisdictions that have adopted similar frameworks.
Party Autonomy and Limited Judicial Intervention
A central principle of the new Law is limiting judicial intervention in arbitral proceedings. Courts may only intervene in instances expressly provided by law. For example, a court may appoint an arbitrator where the parties cannot agree on one (Section 12(b)); grant interim relief in appropriate cases (Section 26); or recognize and enforce an arbitral award (Section 44).
The purpose of restricting judicial involvement is to strengthen party autonomy and the efficiency of the arbitral process. Accordingly, the parties are free to design the procedure to suit their needs: they may agree on procedural rules and evidentiary standards, determine the seat of arbitration, select the language, decide on the number of arbitrators and the method of their appointment, and more. This principle mirrors international norms and the UNCITRAL Model Law, reflecting the understanding that flexibility and party-tailored procedures are key to successful arbitration.
Arbitrators’ Powers and Interim Measures
The Law explicitly regulates the powers of arbitrators, including the authority to grant interim measures during the proceedings. Previously, there was uncertainty in Israel about whether arbitrators could issue temporary orders such as injunctions or mandatory orders, and often parties were forced to resort to courts. Now, similar to the Model Law, arbitrators in international cases may grant interim measures to preserve the status quo and protect rights during the process.
Courts, in turn, may assist in enforcing interim measures granted by arbitrators, or grant such measures themselves in appropriate cases, subject to the restrictions set forth in the Law.
Awards, Annulment and Enforcement
The Law also contains detailed provisions regarding arbitral awards and their enforcement. Importantly, arbitral awards – whether rendered in Israel or abroad – are enforceable in Israeli courts.
Applications to enforce a foreign award are filed with the court, and the respondent may object only on the limited grounds specified in the Law. The grounds for refusing enforcement (Section 43) directly mirror those in the New York Convention (1958): incapacity of a party or invalidity of the arbitration agreement; lack of proper notice or denial of the right to be heard; excess of jurisdiction; procedural irregularities in the composition of the tribunal; non-arbitrability under Israeli law; or violation of Israeli public policy.
This alignment ensures Israel’s compliance with its international obligations and harmonization with global standards. The Law also makes clear that it does not detract from the force of other international treaties on recognition and enforcement of arbitral awards to which Israel is a party.
The Law further regulates the possibilities of annulment or appeal of an arbitral award. While giving weight to the principle of finality, it allows for limited review. The Law provides for an appeal as of right to another arbitrator (if the parties have agreed or the Law so provides). A further appeal to the courts is permitted only in narrowly defined cases – specifically: (1) appointment of arbitrators; (2) dismissal of an application to disqualify an arbitrator; (3) issues of arbitrator incapacity or failure to act; and (4) jurisdiction of the tribunal.
Thus, the Israeli law adopts the international approach of minimal judicial intervention, with only limited “safety valves” to prevent injustice.
International Significance and Comparison to Global Norms
The Israeli Law is part of a global trend toward adopting uniform standards in arbitration. In 1985, UNCITRAL published the Model Law on International Commercial Arbitration, revised in 2006, which provides states with a comprehensive legislative template covering all stages of arbitration – from the arbitration agreement to enforcement of awards.
Over the years, the Model Law has become the global benchmark, adopted in about 100 jurisdictions worldwide, thereby creating a shared legal language in international arbitration. Until 2024, Israel was notably absent from this list, with outdated domestic law deterring foreign parties from choosing Israel as a seat of arbitration.
With the enactment of the 2024 Law, Israel now joins the community of Model Law jurisdictions. The Israeli statute is largely based on the Model Law and reflects its principles, with some necessary local adaptations. This alignment is highly significant: it ensures that foreign lawyers and parties will find Israel’s framework familiar and predictable.
Although some deviations exist – most notably the possibility of an arbitral appeal to another arbitrator (a feature not found in the Model Law, which prefers absolute finality subject only to annulment) – these adaptations are modest and context-driven. Overall, the Law firmly positions Israel within the international arbitration community, ensuring that Israeli awards are recognized and enforced abroad on the same footing as awards from other modern jurisdictions.
Contribution to Israel’s Legal and Commercial System
The expected contribution of the new Law to Israel is substantial.
- Commercial and economic impact: The Law enhances Israel’s standing as a desirable seat of arbitration – an objective recognized as strategically important by the government. More international disputes with Israeli connections will now be heard in Israel, rather than abroad. This will foster confidence among foreign investors and trading partners, reduce costs for Israeli parties, and contribute to the growth of international arbitration practice in Israel.
- Legal clarity and certainty: The Law codifies and modernizes key issues previously uncertain under Israeli law, including appointment and powers of arbitrators, disclosure obligations, procedure, validity of arbitration agreements, interaction with courts, grounds for annulment, and enforcement procedures. This provides clarity and predictability for parties opting for arbitration in Israel.
- Judicial efficiency: As more complex commercial disputes are diverted to arbitration, the burden on Israeli courts is reduced, allowing them to focus on cases requiring judicial resolution.
The enactment of the Law, even in times of political and security turbulence, also signals Israel’s strong commitment to legal stability and commercial confidence.
The Israeli Institute of Commercial Arbitration (IICA) and the Law
The Israeli Institute of Commercial Arbitration (IICA) played a significant role in the legislative process and is expected to benefit from it. Operating under the auspices of the Israeli Chamber of Commerce, and named after Prof. Smadar Ottolenghi – a pioneer of arbitration in Israel – the IICA has been central to arbitration and mediation in Israel for nearly four decades.
During the legislative process, the Ministry of Justice consulted with the IICA and other experts in drafting the bill in line with the UNCITRAL Model Law. The Institute’s President, Dr. Menashe Cohen, appeared before the Knesset Constitution, Law and Justice Committee, emphasizing the opportunity to transform Israel into a “global arbitration hub” given its advanced infrastructure and professional expertise. He noted that Israel possesses all the necessary components – modern infrastructure, established arbitral institutions, experienced lawyers, and a sophisticated business community – and that “there is no reason why Israeli companies should not conduct their arbitrations here in Israel.”
Even prior to the Law, the IICA had taken steps to strengthen its international profile, signing Memoranda of Understanding with leading arbitral institutions worldwide to facilitate joint proceedings and exchange of expertise. With the new Law in force, the IICA has already issued rules for international arbitration consistent with global standards and is prepared to administer cross-border disputes.
For Israeli businesses, the Institute now represents a reliable and internationally aligned venue for dispute resolution. For foreign companies, the updated legislative framework makes it far easier to agree on arbitration in Israel under the auspices of the IICA. Thus, the Law not only modernizes the statutory framework but also strengthens an existing institution and its capacity to attract international arbitration to Israel.
Conclusion
The International Commercial Arbitration Law, 2024 marks a pivotal step in the modernization of Israeli law and its integration into the international legal order. It fills a long-standing gap and allows Israel to realize its potential as both a commercial hub and a credible venue for international dispute resolution.
By adopting the UNCITRAL Model Law and the New York Convention standards, the Law provides a modern, efficient, and fair framework for cross-border arbitration. For legal practitioners and the business community in Israel and abroad, the message is clear: Israel adheres to the international rules of the game – arbitral awards will be respected and enforced, parties will enjoy maximum autonomy and legal security, and courts will intervene minimally, only to safeguard fairness and due process.
Together with the proactive role of institutions such as the IICA, this Law is expected to bolster the rule of law, promote trade and investment, and place Israel among the leading jurisdictions in international arbitration. It turns Israel into a more attractive destination for international arbitration and builds a bridge between Israeli law and the global business community – a bridge of common legal language, trust, and partnership.