Originally from Arbitration in the MENA

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[1] INTRODUCTION

In recent years arbitration has gained prominence in Israel as an alternative method of dispute resolution to public court litigation. However, arbitration is not as widely used as it should, especially considering the fact that Israeli courts are among the most overloaded in the world. According to a report published by the Israeli Courts Research Division in 2011, Israeli Courts are understaffed with judges, with only 8.1 judges per 100,000 residents in 2010, whereas the average in 55 countries surveyed is 18.9 judges. Interestingly, the number of lawyers per 100,000 residents in Israel was the highest in the world, with 585 lawyers in 2010, with the average being 138 lawyers. Thus, with a large number of lawyers, a relatively small number of judges and a litigious culture, it comes as no surprise that Israeli courts are over-burdened. Israeli courts have one of the highest ratios of filed cases per capita in the world, and judges have an inordinately heavy caseload, far in excess of their European or American counterparts, with an average of 300 cases per judge. While court litigation is not expeditious, but rather may take years, courts and judges are well respected and esteemed in Israeli society. Thus, notwithstanding the time and costs associated with public adjudication, disputing parties tend to favor public adjudication over arbitration. This tendency is well reflected in domestic commercial contracts, in which parties prefer to opt for exclusive jurisdiction clauses, rather than for arbitration clauses. It should be noted that one of the reasons that Israeli parties to commercial contracts avoid opting for arbitration is the fact that Israeli arbitration legislation does not allow parties to appeal an arbitration award before the court as of right. In Israeli society, where judges are well respected, the ability to have a judicial decision reviewed on legal points by a court is perceived by some as a benefit and not as a detriment.

In Israel, ad hoc arbitration plays a more prominent role than institutional arbitration. While there are some arbitration institutions, they are not widely used by disputing parties. It should be noted, however, that in some sectors, such as the diamond sector, there are specialized arbitration institutions that have their own set of arbitration rules, according to which disputes between the members of the sector are settled exclusively through arbitration.