Israeli Supreme Court Lost between the Israeli Arbitration Act and the New York Convention
Kluwer Arbitration Blog
2 Pages Posted: 16 Nov 2014 Last revised: 10 Jul 2017
Date Written: November 14, 2014
Abstract
The dispute in Siemens AG and Siemens Israel Ltd. v. Israeli Electric Cooperation Ltd. (3331/14, Supreme Court of Israel Judgment, 13 August 2014) arose out of a request for tenders for the purchase and maintenance of gas turbines issued by the Israeli Electric Cooperation (IEC), following which it entered into several contracts with Siemens Israel and Siemens AG. All of the contracts contained an identical arbitration clause providing for arbitration “to be held as promptly as possible at such place in Israel as may be mutually agreed upon between the parties”. In 2013, IEC commenced an action against Siemens in the Israeli District Court, claiming that the contracts were signed as a result of a bribe paid by Siemens to one of IEC’s directors. Siemens applied to the District Court to stay the proceedings pursuant to the Israeli Arbitration Act, 1968 (IAA) and the arbitration clause contained in the contracts. The District Court refused to grant a stay of proceedings and Siemens applied for leave to appeal to the Supreme Court of Israel.
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