Log In   | Sign up
Arbitration Arbitration- Judgment Arbitration- A new horizon
A new era in Arbitration the change
By Dr. Israel Shimony, Adv.

Last November, the legislature passed the Arbitration Act Amendment (No.2), 2008 (hereinafter: "the amendment"). The Amendment added two consensual routs for appeal. Due to Dr. Shimony`s initiative and relentless efforts, the bill was finally brought to the Parliament floor and thus the law has changed.


The initiative stemmed from the dire situation arbitration proceedings were in Israel, being inapt to put up with the dynamic changes taking place in the legal/business realm. The law bestowed upon the arbitrator the authority to determine fates and even cause the collapse of an individual or corporation, without providing the opportunity to appeal.

Arbitration proceedings did not provide the basic right for the legal/business community: the right to criticize decisions made by arbitrators.

A new path in arbitration
The situation called for a change, insofar as to suite litigants and provide them, through legislation, a basic right of appeal. According to the Second Amendment, the new path varies from the traditional arbitration, by being better suited to the present, by allowing the right of appeal and by obligating the arbitrator to explicate the verdict. Notwithstanding the improvements, arbitration proceedings do not change, and Section 24 of the Act remains, with an addition to obligate arbitrators to explicate their verdict.

Section 21a- Appeal before an Arbitrator
The first path for appeal, according to the Second Amendment is expressed in Sec.21a of the Act, under the heading "Appeal before an Arbitrator". This path allows the appeal to be heard before an arbitrator, as opposed from appealing to the courts. The sole requirement for this path is for the parties to include in the arbitration agreement that the arbitrator`s decision will be subject to appeal before a different arbitrator. In this path, the arbitrator is obligated to explain his decision. To further optimize the proceedings, a Second Schedule was added to the Act, which includes the duty to document all arbitration proceedings, namely, keeping minutes of hearings, determining terms for appeal, the manner by which appeal will be submitted, the response for the appeal and counter appeal, the proceeding under which the appeal will be heard, the date by which the verdict in the appeal will have been submitted, and explication of the verdict.

In order to prevent over proceedings, the right to revoke a verdict by an arbitrator (either in first instance or the appeal) was reduced to two causes, stated in Section 24 (9)-(10):
24(9) the verdict contradicts public policy; and 24(10) there is a cause by which the court would have annulled a final verdict that cannot be appealed.

Section 24b- Appeal the arbitration judgment by leave of the court.
In the Second Amendment, the legislature added another path to appeal, which was named "Appeal the arbitration judgment by leave of the court ". This Section was legislated for the purposes of allowing the state to re-enter arbitration proceedings. This path allows the parties to ask permission from the court to appeal the arbitration outcome, under the following conditions: Firstly, agreement by the parties that that arbitration will be subject to Sec.24b and that the arbitrator must decide according to the law; Secondly, agreement by the parties that the outcome will be subject to appeal by leave of the court, in case it was inconsistent with the law-a fact which may cause injustice. The appeal will be brought before a single judge, who will be obligated to explicate the verdict. In addition, there will be an obligation to document all hearings by protocol (minutes), as stated in Sec. 24b of the Act.

Section 24- Revocation of the Arbitration Verdict and the addition of a Clause obligating the Arbitrator to Explicate.
Traditional arbitration, with the right to revoke arbitration verdict according to Sec.24, without the right for appeal has remained unchanged. Nevertheless, in light of the importance of the obligation to explicate the verdict as a tool to ascertain whether or not the verdict is correct, in the Second Amendment, Sec. 15 of the First Schedule, states that even if the parties have not agreed that the verdict is subject to an appeal, the explication obligation will still apply, unless the parties have expressly agreed to give up this requirement.

The implication of choosing the path stated in Sec. 24 is that there will be no right of appeal, other than for reasons concerning the manner in which proceeding were conducted. There will be no right for appeal on grounds of mistake by the arbitrator. Now, after the Amendment, a judge who will dismiss a request to appeal under Sec.24 could do so wholeheartedly, since he can be certain that the appellant had his day, both during the arbitration proceedings and during the appeal- since the explication obligation ensures the arbitrator`s ruling can be examined thoroughly.

The obligation to explicate arbitration ruling
The Second Amendment has added the obligation to explicate the arbitration verdict in all instances. The obligation is Mandatory in Section 21a and in Section 29b of the Act. However, in the traditional arbitration proceedings this obligation is stated in the Schedule, which may render it void if the parties had expressly agreed upon it.

The shift from non-explicated to explicated verdict, decided upon sound legal and business grounds, elevates the quality of the outcome; One may agree or differ with the outcome, however, they will be able to understand the reasoning behind it. One may seek an appeal under the recent amendment, alongside its risks and costs, and the appellant instance will be able to get an impression of the ration behind the decision and its quality. The obligation to explicate the verdict is essential, when an option of appeal is possible.

The Arbitration Act opens a whole new leaf in our law books. The instances of appeal, described in Sec. 21a and in Sec.29b of the Act as amended and the obligation to explicate the verdict, will enable the parties to criticize the arbitration ruling and in case a mistake was made, the parties will have an option to receive their day in court, with complete legal proceedings, an option they did not have before the amendment.

The amendment establishes a balance between a proper right of appeal and the proper manner by which it can be used. The amendment also create an alternative dispute resolution, for individuals who seek an out of court settlement.

 |  Home |  Site Map  |  Favorite  | 
Israel Shimony-A New Horizon and the initiator of the Arbitration Law- www.en.shimony-law.co.il All Rights Reserved
Dr. Israel Shimony
  InterDeal Development