How a Swiss Supplier Turned a Zurich Arbitration Award Into Cash in Israel

Result: Zurich arbitral award confirmed as an Israeli judgment and NIS 5.1M collected · Timeline: 11 months from instruction · Challenge: A paper award against a debtor quietly moving money · Authority: Tel Aviv District Court and the Execution Office (Hotzaa LaPoal) · Financial Impact: NIS 5.1M recovered and about NIS 140,000 in Israeli court fees avoided

Background

Our client is a family-owned specialty chemicals trading house near Basel that had supplied an Israeli importer in Ashdod for nine years. The relationship ended the way these usually do, with four shipments delivered, three invoices unpaid, and a quality dispute raised for the first time after the money was already overdue. The supply contract carried a Swiss Rules arbitration clause seated in Zurich. The tribunal issued its award in March 2025: USD 1.42 million in principal, plus contractual interest and a costs order, roughly NIS 5.6 million once converted.

The Israeli company did not appeal, did not negotiate and did not pay. It also did not close. It kept importing, kept filing with the Companies Registrar, and kept selling to two national retail chains. What the Swiss board could not understand was why an award that everyone agreed was final left them with nothing to enforce. Their first Israeli advice made it worse: sue again in Israel on the unpaid invoices, budget eighteen months, and expect a fight about the goods.

The Challenge

That advice would have cost the client a fortune and thrown away the only real asset it held. An arbitral award is not a debt claim to be relitigated. It is an instrument that Israeli law converts into a judgment on a short list of questions, and the conversion route is statutory.

Section 29A of the Arbitration Law 5728-1968 provides that an application to confirm or to set aside a foreign award governed by an international convention to which Israel is a party is filed and decided under that convention. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards has bound Israel since 7 June 1959, and the Regulations for Implementation of the New York Convention (Foreign Arbitration) 5738-1978 set out the mechanics. Confirmation under Section 23 gives the award the standing of a final Israeli judgment. Resistance is deliberately narrow: the respondent has to land one of the Article V grounds, which track the ten grounds in Section 24 of the Arbitration Law, and none of them invites an Israeli judge to disagree with a Zurich tribunal about the quality of a chemical consignment.

Two traps sit either side of that route. The first is statutory: the Enforcement of Foreign Judgments Law 5718-1958 governs foreign court judgments, not arbitral awards, and an application filed under it is sent back. The second is tactical. Section 27 gives an Israeli respondent 45 days from delivery of the award to apply to set it aside, and the court may extend that period for special reasons, which it treats more generously where the award is foreign. A debtor who understands that arithmetic can buy months, and a debtor buying months is usually doing something with its bank balance in the meantime. Our client's real exposure was never the legal argument. It was the gap between filing and confirmation.

In Practice: Section 29A of the Arbitration Law 5728-1968 routes a New York Convention award to the Israeli District Court under the convention, and Section 23 gives a confirmed award the force of a judgment enforceable through the Execution Office (Hotzaa LaPoal). Because the application is a motion rather than a fresh money claim, it escapes the ad valorem court fee of 2.5% of the sum claimed under the Courts Regulations (Fees) 5767-2007, a saving of about NIS 140,000 on a NIS 5.6 million award. Section 27 allows the debtor 45 days from delivery of the award to seek a set-aside, extendable for special reasons, and confirmation typically takes 4 to 10 months where the debtor contests and a few weeks where it does not.

What We Did

We filed the attachment before we filed the confirmation, and that decision is the whole case.

Day 4: the freeze. Regulation 103 of the Civil Procedure Regulations 5779-2018 lets a court grant a temporary attachment before judgment where it is satisfied that enforcement of any eventual judgment would otherwise be materially prejudiced. These applications are heard ex parte, which is exactly what makes them work. We filed at the Tel Aviv District Court with the award, the arbitration agreement, the tribunal's procedural orders and an affidavit from the client's finance director, sworn before a notary in Basel and apostilled by the cantonal chancellery. The order issued the next morning against the company's bank account at a Tel Aviv branch and against receivables owed by two named retail customers. The court required an undertaking in damages and a bank guarantee of NIS 120,000, deposited within seven days.

Day 6: the confirmation application. Filed under Section 29A, with the original award authenticated in accordance with Israeli law and the arbitration agreement, as the 1978 Regulations require. One point saved our client several weeks and about NIS 30,000. The Regulations call for translation only where the documents are not in Hebrew, Arabic, English or French. The award, the contract and the Swiss Rules clause were all in English, so none of it needed translating, and we said so in the application before anyone could demand otherwise. Foreign claimants routinely commission a full Hebrew translation nobody asked for.

Week 3: security for costs. The debtor did what every Israeli defendant does to a foreign claimant and applied under Regulation 157(a) for security for its costs, on the footing that a Swiss company with no Israeli assets would leave any costs order unenforceable. It asked for NIS 250,000. The court fixed NIS 60,000. Non-residents should budget for this application in every Israeli proceeding they bring rather than treating it as an ambush.

Months 2 to 7: the Article V attack. The debtor sought an extension of the Section 27 window and ran a single ground, Article V(1)(b), claiming it had not been given proper notice of the appointment of the tribunal. It was not a frivolous argument on its face, because the notices had gone to the address in the contract rather than to the company's registered office. It failed on the documents. The debtor had nominated its own arbitrator, had filed a statement of defence, and had appeared at the procedural hearing. A party that participates cannot later say it was never told. The court declined to look at the quality dispute at all, which is the point of the convention.

Month 8: confirmation and execution. The award was confirmed and became an Israeli judgment. We opened an Execution Office file the same week, and the attachment we had obtained in the first week converted into collection rather than having to be created from scratch against an emptied account.

Nobody from the client's side set foot in Israel at any stage. Everything ran on an apostilled power of attorney and two video calls. The wider procedure is set out in our answer on enforcing a foreign arbitration award against an Israeli company, and the contract drafting that makes this stage easier is covered in our answer on securing payment from an Israeli buyer as a foreign supplier.

In Practice: Regulation 103 of the Civil Procedure Regulations 5779-2018 allows a temporary attachment before judgment, granted ex parte on affidavit evidence, and here produced an order within 24 hours of filing against a bank account and two named receivables, against an undertaking in damages and a NIS 120,000 bank guarantee deposited within 7 days. Regulation 157(a) then let the Israeli debtor apply for security for the foreign claimant's costs; the Tel Aviv District Court fixed NIS 60,000 against the NIS 250,000 sought. The frozen bank balance stood at NIS 1.9 million on the day of service, and had fallen to NIS 240,000 by the confirmation hearing seven months later, which is what the attachment was for.

The Outcome

The Execution Office collected NIS 1.9 million from the attached bank balance and a further NIS 1.4 million from the two garnished receivables inside ten weeks of confirmation. With enforcement running and its customer relationships exposed, the debtor came to terms on the remainder and paid NIS 1.8 million over four instalments backed by a director's personal guarantee. Total recovery reached NIS 5.1 million against a NIS 5.6 million award, eleven months from the day the Swiss board instructed us.

The difference between that and the alternative is worth stating plainly. A fresh Israeli claim on the invoices would have carried a court fee of roughly NIS 140,000, reopened a quality dispute the tribunal had already decided, and given the debtor eighteen months to empty the account we froze in four days. The award was always worth NIS 5.6 million. What made it collectible was filing the freeze first and the confirmation second.

Key Takeaways

What this case illustrates for foreign businesses holding awards against Israeli counterparties:

1. File under the right statute. Section 29A of the Arbitration Law 5728-1968 and the New York Convention govern a foreign arbitral award. The Enforcement of Foreign Judgments Law 5718-1958 governs foreign court judgments, and an application filed under it is returned, costing weeks a dissipating debtor will use.
2. Freeze before you confirm. Confirmation takes 4 to 10 months against a contesting debtor. Regulation 103 of the Civil Procedure Regulations 5779-2018 can produce an ex parte attachment within a day or two, and the balance you catch on day four is rarely there on month seven.
3. Confirmation is a motion, not a claim. That single characterisation avoids the 2.5% ad valorem court fee, worth about NIS 140,000 on a NIS 5.6 million award, and it also keeps the Israeli court away from the merits the tribunal already decided.
4. English documents need no translation. The 1978 Regulations require translation only where documents are not in Hebrew, Arabic, English or French. Say so in the application rather than commissioning a translation nobody asked for.
5. Budget for security for costs. A foreign claimant with no Israeli assets should expect a Regulation 157(a) application in every Israeli proceeding, and should treat the figure as negotiable rather than as a reason not to file.

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Facing a Similar Situation?

If you hold an arbitral award or a contractual debt against an Israeli company that has stopped paying but has not stopped trading, the question worth asking first is not how strong your case is. It is what the debtor's Israeli bank balance looks like this week, and how quickly it can be frozen.

Contact us for a confidential consultation about your Israeli legal matter.