Posted by: Gadi Ouzan & Dani Rinot
A Delaware court, a German defendant and a tower in the middle of Tel Aviv – it is just the time to enforce
Good luck. Two years ago you had entered into a share purchase agreement with a German company, which was later breached by it and caused you substantial damages. Your US lawyers filed a claim to a Delaware court and received a judgment in your favor. You discovered that the defendant owns a nice building in Tel Aviv.
Naturally, you may consider enforcing the Delaware judgment in Israel, in order to put your hands on the valuable building.
How is this done?
The Israeli Foreign Enforcement Law sets forth the terms for enforcing a foreign judgment in Israel. In general, it enables the courts in Israel, provided certain conditions are met, to declare a foreign judgment (in a civil matter) as enforceable in Israel, thus transforming it into an exercisable judgment and conferring upon it such status so that it can be enforced and executed in Israel.
If the conditions under law are met, the court may declare such Foreign Judgment as enforceable in Israel. The conditions are as follows:
(i) The court that issued the judgment was competent to do so, according to the laws of the state in which the judgment was given;
(ii) The judgment is not subject to an appeal;
(iii) The obligation in the judgment is enforceable under the laws for enforcement of judgments in Israel and its content does not contradict public policy; and
(iv) The judgment is enforceable in the state in which it was given.
The intention is that a Foreign Judgment not be granted any greater standing than its standing in its country of origin (for example, if the Foreign Judgment cannot be enforced in the foreign country, due to the Statute of limitations it will not be valid in Israel).
The burden to prove the existence of the accumulative conditions above is on the applicant requesting the enforcement of the Foreign Judgment.
The Foreign Judgment Law specifies a number of circumstances in which despite the existence of the aforementioned conditions, an Israeli court will be reluctant from declaring a Foreign Judgment as enforceable:
(i) Reciprocity –The Foreign Judgment was issued in a country in which its laws do not permit the enforcement of judgments of Israeli courts.
(ii) Period of enforcement – If the application to enforce a Foreign Judgment is filed after more than five years from the date in which such Foreign Judgment was rendered (unless Israel and the other country in which the Foreign Judgment was given agree to a different period of time, or if the Israeli court finds special reasons that justify the delay in the filing of the application).
(iii) Prejudice to Israel – If the enforcement of the Foreign Judgment may prejudice the sovereignty or security of Israel.
Moreover, according to the Foreign Enforcement Law, a Foreign Judgment will not be decaled as enforceable if the opposing party proves any one of the following defenses:
(i) The judgment was obtained by fraud;
(ii) The Israeli court resolved that the defendant was not afforded a reasonable opportunity to argue his case and bring before the court evidence prior to the issuance of the judgment;
(iii) The court which issued the judgment was not competent to do so under the rules of private international law applicable in Israel;
(iv) The Foreign Judgment contradicts another judgment given in the same matter between the same litigants and is still valid; or
(v) At the time the action was filed in the court of the state in which the Foreign Judgment was given there was a pending action on the same matter and between the same litigants before a court or tribunal in Israel.
According to the Foreign Enforcement Law, a Foreign Judgment that is declared by a competent Israeli court as enforceable is considered for all execution purposes valid as if such judgment has been rendered in Israel. Namely, it can be enforced by the Execution Office in Israel.
Congratulations, your foreign judgment was enforced by the Israeli court and your Israeli lawyers will be able to impose the necessary pledge or attachment on the defendant’s real estate property for your benefit.
Based on the courts’ precedents, the defendant should be aware that the court will only examine whether the foreign judgment meets the requirements of the law with respect to enforcement in Israel and will be reluctant from reviewing the judgment as a court of appeal.
