In the past, we have dealt with various issues relating to arbitration, for example, Enforcement of arbitration awards in courts or Annulment of an arbitrator's award.
This time I would like to discuss another and equally interesting issue: the existence of arbitration present Its combination of party third not underwriter on agreement Arbitration.
Yaakov and Rachel purchased an apartment from the company 'Boni Haaretz' (pseudonyms). In the purchase agreement, the parties agreed that any dispute between the parties would be decided by an arbitrator, who was agreed upon in advance. They also agreed that the law applicable to the arbitration proceedings would be Torah law.[1]
Later, disputes arose between Yaakov and Rachel and the 'Boni Haaretz' company, due to a delay in the delivery of the apartment and due to additional claims. Yaakov and Rachel sued the 'Boni Haaretz' company for arbitration before the arbitrator specified in the agreement.
The company refused to appear at the arbitration and acknowledge their satisfaction with it, claiming that given the involvement of third parties who are not signatories to the agreement and, in any case, the arbitration clause, the agreement should not be applied to the relationship between 'Builders of the Land' and Yaakov and Rachel.
•
According to Israeli law, arbitration is voluntary and a party cannot be forced into arbitration proceedings unless they have signed an agreement requiring them to do so, or an arbitration deed.
Therefore, a third party that has not signed an agreement that includes an arbitration clause cannot be held liable, even if it has signed an agreement with one of the parties, which stems from the original agreement or has a connection to the original agreement - for example, the 'Boni Haaretz' company with a construction contractor.[2]
The question arises, is there a place to oblige the party claiming that, in view of the involvement of a third party who did not sign the arbitration clause, to honor the agreement he signed and hold arbitration in the relationship between him and the contracting party - Jacob and Rachel and the 'Boni Haaretz' company - and independently and to the extent that the party claiming third party liability, that party will be forced to litigate with a third party - for example, the 'Boni Haaretz' company and the operating contractor - separately?
•
As a general rule, civil law seeks to be just, but also efficient.
According to settled jurisprudence in Israeli law, weight should be given to the existence of a single proceeding in which several parties are involved over its division.
In a trial, the defendant has the option of joining the claim to a third party - through a third-party notice.[3] Given the lack of the possibility of forcing a party that is not a party to an agreement that includes an arbitration clause to litigate within this framework, the defendant in the arbitration cannot chain his claim and force a third party to litigate the original plaintiff's claim within the framework of the arbitration, unless that third party voluntarily agrees to do so.
It follows that one proceeding could have been conducted between the plaintiff and the defendant - Yaakov and Rachel against the "Boni Haaretz" company - within the framework of arbitration and an additional lawsuit in court between the defendant who would become the plaintiff and a third party as a direct defendant - "Boni Haaretz" against the performing contractor.
If so, there is a duplication of jurisdiction in a dispute whose essence is in a complex factual tract.[4]
On the other hand, within the framework of arbitration, parties can agree on the law applicable to the arbitration, for example, Torah law or any other law, or even not obligate the arbitrator to rule according to law, but rather according to his common sense.
It follows that the direct parties to a contract with an arbitration clause determining the applicable law may be obliged - if the case is heard in court and they have chosen to litigate according to a legal system other than that of that court - to litigate according to a law other than the one they chose, or to resort to a long and complex procedural hearing on the applicable law prior to the hearing on the merits of the matter. This is because the party that is not a signatory to the arbitration agreement will claim that it did not undertake to litigate according to a specific law stipulated in the arbitration agreement, but rather according to the applicable law, the law of the state.[5]
•
The above considerations and deliberations were well described by the Honorable Justice Cheshin in the Alrina case:[6]
"And here it is." they The interests The attractive ones sideways In question if Will delay house sentence Procedures In front of him on behalf of this of "Split" discussion": transition From this, The desire And the need respect you The agreement between My husband The law that In conflicts Let them emerge Among them On the subject certain Will be decided In the procedure of arbitration Exactly, and beyond From this some And how many Considerations these Bala: The desire prevent multiplication-discussion to bring To honor on My husband-The law and on The system; The need The built-in In the system The trial bring To be decided In conflict At one And in the process one; The desire And the need prevent possibility of Decisions Contradictions; and more etc. Bala Considerations The grandparents you carrier efficiency The discussion and its comfort, And in a sense certain even The need And the will prevent non-respect, not Yaona bad and system The trial Sing On the second Voices In disharmony.
here that yes, In our parents' on Transfer discussion Arbitration nee sentence, like We added And we said Whose rights The parties And their hiddenness We will change.; Mother barrel house sentence permission change so Rights and hidden Materiality on way of Transfer discussion From a forum To the forum.
instead of Shreuven And Simon Agreed that Method The trial The Frenchman priming on system Their rights and their duties Reciprocity - and method The trial Israeli sale By consent this As agreed daughter validity - The mountain on The mind that house sentence Will ignore From the same agreement, and that Yahil you The trial The Israeli on Their rights and their duties of The litigants…
house sentence not Will know agreement between The parties - not directly and not indirectly - And anyway will receive And will you The trial Private that the parties Determined For themselves. house sentence not Will force on Arguing agreement not object In; so In a pattern The trial The Frenchman And so, As a principle, In all matter other. nothing escape From this: instead of that Procedures Arbitration supposed occur "the best "His judgment" of The switch and trial The country Ino Binding him, Transfer The procedure Arbitration nee sentence Considerate against Change In rights The parties, And we must we To give Our opinion talk.
My opinion she that Applying "sentence private" on Procedures arbitration - distinguish From the trial The country Starting In my house sentence - constitutes Consideration liver-weight to-Very much, almost Consideration crucial The teacher With a finger to-past Delay Procedures At home sentence and the appeal carrier For arbitration, as who agreed My husband The law Among them in advance."
It should be noted that the court will examine the merits of the matter not only the aforementioned, but also whether the attempt to add a party is solely to prevent the arbitration process and that party is not truly necessary:[7]
"beginning, examine you "The necessity The discussion", Namely, if jeweler To the lawsuit who that is not party To the agreement Arbitration, Attachment of truth, or only To Will be In my hands The plaintiff Cause evade From his commitment To settle you The conflict In arbitration (digit of Prof. S. Otlangy, arbitration, law and procedure, edition Third Expanded, On page 138). In phase The second To examine "The necessity "The essential", In existence process one At home The trial against The defendants everybody. Namely, if essential he, To Will be In my hands The plaintiff win In relief effective, that The discussion not Will be split And it will be conducted As a difficulty one".[8]
It seems that, despite the fact that at that time the Honorable Justice Cheshin was in a minority position in this specific case, his principled position deserves to be given respectable weight, decisive weight.
These things are said even in isolation from the issue of consideration of any law in general, and even more so when it comes to Torah law, a different legal system, as well as the preference for justice over efficiency in the various legal systems in general and Torah law in particular, issues that are not needed at this time.
In conclusion
beginning - It is not necessary for any arbitrator to consider the aforementioned issues, and only the court may need to do so after the fact, or during the arbitration, when an appropriate request is submitted to it.
again - It must be carefully examined - by the arbitrator, if he wishes to take the above into account, or by the court when discussing the issue of a stay of proceedings or a consolidated hearing - whether the addition of the party is intended to hinder the hearing within the framework of arbitration and without there being a real need for it.
Third - The legal system is interested in directing proceedings that reach the court to mediation or arbitration proceedings. Therefore, similar to the rule according to which a court will tend not to annul an arbitration award and will do so only in exceptional circumstances[9] And as a counterweight to the desire to unify discussions, there is room to give systemic weight to the need and desire to encourage arbitration procedures, and not to lightly pass over the "direction of movement.".
It should be noted that, given this trend, the court may even pressure the third party that did not sign the arbitration agreement to join the hearing within this framework.
quarter - Great weight should be given to the parties' agreements on individual freedom and freedom of contract, and the exception to their neutralization, by not transferring the arbitration hearing to the court.
Therefore, and in light of all the above considerations, it is appropriate that an arbitrator not allow a party who has signed an arbitration agreement/deed to "escape" on a whim. It is presumed that the court will also do so.
---
• The lawyer Tsiki (Zvi) Wolfson – is the founder and managing partner ofWolfson Weinstein & Co.', and it frequently appears in arbitrations and courts on issuesCommercial businesses.
[1] Parties often agree in this way when it comes to parties to a contract who are religious, but the agreement regarding the issue under discussion can also be on any other law.
[2] There are exceptions in which a party may be added to the arbitration process, but we will not discuss them in this context.
[3] The option is limited by conditions that are mainly procedural but exist as a right.
[4] As a general rule, an arbitrator cannot decide, and the arbitration award will not apply, to a third party who was not a party to the arbitration, and such a decision has no effect on him.
[5] The opposite of the above, but with the same meaning, will apply to the extent that the case is heard within the framework of arbitration.
[6] RA 985/93 Alrina Investment Corporation v. Barki Peta Infringers (Israel) Ltd. There, a ruling was made against staying proceedings and waiting for the conclusion of one proceeding before discussing another, and Justice Cheshin's opinion was in the minority opinion that there was room for preference for the split, but the principles are presented by him there and must be used according to each case.
[7] See the opinion of Justice Goldberg there.
[8] The situation is also good when the defendant seeks to join the defendant as a third party.
[9] See previous articles regarding the annulment of an arbitration award.
Join the Haredim 10 Facebook page >>
Join the X page of Haredim 10 >>
Want more news, videos and stories? Join the Haredim 10 WhatsApp channel >>
