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Commercial Litigation in Israel

When no written contract exist between the parties, the explicit intentions of the parties as well as their actual conduct may be regarded as a binding agreement, allowing the aggrieved party to receive a remedy in case of violation by the other party.

The Israeli judicial practice provides incentives for effective conflict resolution such as directing the parties to a process of mediation or toward a mutually beneficial settlement. Thus, a significant portion of legal actions in Israel are resolved by voluntary settlements, which saves the parties both time and money.

There are several common misconceptions when facing a legal conflict with a party located in a foreign jurisdiction:

Litigation Misconception Nº1

when filing a lawsuit in your native jurisdiction rather than a foreign jurisdiction you have a “home advantage” over your counterparty- this is not necessarily true. One might be able to obtain a court ruling in his favor in his home state however, to implement this ruling against an Israeli entity or in regard to an asset located in Israel, one will need to obtain further confirmation ruling from an Israeli court. Only then will he be able to approach the Israeli legal execution authorities to collect the debt or to otherwise to implement the home state court decision. Overall, this process will usually take more time and require more costs than initially taking legal action in Israel.

Moreover, taking legal action against a party that is trying to avoid payment, struggling with other creditors or refusing to release an asset may usually require obtaining temporary relief, such as an attachment over the contended funds or assets located in Israel. Such temporary relief against an Israeli entity is only available through the Israeli judicial system, while taking an action in a foreign jurisdiction will allow the debtor to drive away his limited funds and assets and thus to avoid payment.

Litigation Misconception Nº2

international litigation is costly and therefore better to agree to painful concessions or to withdraw altogether to avoid litigation- this is also not necessarily true. Hiring legal representation in Israel does not always mean engaging in a lengthy legal procedure. Sometimes a mere letter of demand from a respectable Israeli law firm sends your counterparty a clear message, that you are determined to stand up for your rights and ready to engage in a legal struggle, if necessary. Such a message sets up better ground for further negotiation, thus allowing to resolve the conflict without any litigation.

In summary, when facing a commercial conflict with an Israeli entity, make sure that you obtain preliminary advice from an Israeli attorney before deciding on your legal strategy.

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