Case Number

CA 4525/08

Date Decided

12-15-2010

Decision Type

Appellate

Document Type

Full Opinion

Abstract

Facts: The Tel Aviv District Court granted a petition for the recognition of a judgment rendered by an English court, which had declared that an insurance policy issued by the respondent (New Hampshire Insurance) to an Israeli company, Oil Refineries Ltd. – the appellant – was void on the grounds that a substantial matter had not been disclosed to the issuer. The respondent brought the action in the English court after its sibling company (AIG Europe, which had underwritten the policy) had been served a third party notice in an Israeli proceeding brought against the appellant. The District Court ruled that the foreign judgment in favor of the respondent should be recognized pursuant to s. 11(a) of the Foreign Judgments Law, which provides for the direct recognition of foreign judgments under specified conditions. Oil Refineries Ltd. appealed, on the grounds that the foreign judgment was issued in a proceeding initiated at a time that a parallel proceeding between the same parties had been pending in Israel.

Held: (Justice Arbel) The Foreign Judgments Law establishes a track for the recognition of foreign judgments (including sub-tracks for direct and indirect recognition) as well as a track for the enforcement of such judgments. The relevant track here is the direct recognition track (s. 11(a)), but the Foreign Judgments Law stipulates (in s. 11(a)(3)), with regard to such recognition, that the relevant treaty must allow only the recognition of judgments that are enforceable pursuant to Israeli law, thus requiring the court to determine which of the conditions for enforcement are to be applied to the direct recognition track. The best possible interpretation, based on a purposive reading of the statute’s language, is to adopt an intermediate view of the interaction between the enforcement requirements and the direct recognition track. According to this view, not all the enforcement track conditions are to be applied, and only those that constitute the threshold requirements for enforcement under Israeli law – i.e., those conditions that further the purpose that underlies the stipulation of requirements for enforcement – are to be applied with respect to the judgment for which recognition is sought.

Pursuant to this interpretation, the provisions of s. 6(a)(5), denying enforcement to a judgment rendered in a foreign court in which an action was brought while a parallel proceeding between the same parties was pending in an Israeli court, will apply here to the recognition of the English court’s judgment. The sub-section should be applied to the direct recognition track – both because logic dictates that section 6(a) should be applied as a whole, and because its purpose – to prevent abuse of the ability to initiate a second proceeding in another country in order to avoid an Israeli court’s judgment – conforms to the overall purpose of that track. Once the District Court had found that the foreign judgment had been rendered in a proceeding initiated while a parallel proceeding was pending in Israel, it should have applied s. 6(a)(5) and refused to recognize the English court’s judgment.

(Vice President Rivlin, concurring). Section 11(a)(3) of the Foreign Judgment Law allows for recognition of a foreign judgment when the relevant treaty does not obligate Israel to recognize judgments in a manner that deviates significantly from Israeli law; the statute requires that in order to be recognized, the foreign judgment must qualify under the provisions of the relevant treaty. Nevertheless, the Israeli court retains discretion in terms of its ability to determine whether the recognition of the judgment is in compliance with treaty provisions. With respect to the pending proceeding provision of s. 6(a)(5), the statutory language does not grant the court discretion with regard to the non-enforceability of judgments rendered in actions brought while there is a parallel pending proceeding in an Israeli court, but the relevant treaty leaves the matter of enforcing such judgments up to the deciding court’s discretion, Nevertheless, the treaty cannot be said to be one that deviates significantly from the relevant Israeli law. Pursuant to the statute, the Israeli court must take as its starting point the rejection of the judgment, while allowing the party seeking recognition to prove that circumstances justify a change from that initial position. Here the appellant has not met that burden, and the foreign judgment should not be recognized.

(Justice Rubinstein, concurring). The impact of the pending proceeding will be determined in accordance with the language of the treaty, rather than the language of the local statute. Although the treaty here confers discretion upon the court in this matter, that discretion should have been exercised so as to deny the judgment’s recognition, based on considerations of the litigant’s lack of good faith. Furthermore, the stipulation in s. 11(a)(3) that the treaty require only the recognition of judgments that “are enforceable pursuant to Israeli law” is a reference to s. 3 of the Foreign Judgments Law, the specific section establishing the requirements for allowing foreign judgments to be enforced, and not to s. 6, dealing with defenses against enforcement.

Keywords

Administrative Law -- Discretion, Courts -- Extra-territorial Jurisdiction, Insurance -- Insurance Contract, International Law -- Relevance of foreign law in judicial decisions

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