You won in arbitration — what now? Enforcing an arbitral award

Service page: Commercial contracts lawyer: drafting, review and enforcement.

What is an arbitral award, and when can it be appealed?

You won the arbitration. The arbitrator ruled in your favor. The other side does not intend to pay. What now? An arbitral award is binding, but binding does not mean that someone will enforce it automatically. You need to go to court. Under section 23(a) of the Arbitration Law, 5728-1968, an arbitral award confirmed by the court has, for all purposes except appeal, the same effect as a court judgment, and it is enforced with the tools of enforcement proceedings (Execution Office): attachments (liens), receivership, a stay of exit from Israel. The award can be appealed only if the parties agreed to this in the arbitration agreement: an appeal before an arbitrator (section 21A), or, when the arbitrator must decide according to the law, an appeal with leave to the court over a fundamental error in applying the law (section 29B).

When the losing side doesn’t comply: what do you do?

File an application to confirm the award with the court that has jurisdiction, under any law, to hear the matter that was agreed to be referred to arbitration, which is not necessarily the District Court (section 1 of the Arbitration Law). The filing procedure is set by the Arbitration Procedure Regulations, 5729-1968 (תקנות סדרי הדין בעניני בוררות, התשכ״ט-1968), and there is no need to prove that the other side did not comply with the award (section 23(a)). The court does not re-hear the questions decided in the arbitration: it entertains an objection to confirmation only through an application to set aside (section 23(b)), and it checks only whether a ground for setting aside exists, not whether the arbitrator was right. If the application to set aside is dismissed, the court confirms the award (section 28).

What can the losing side argue against enforcement?

The party against whom enforcement of the award is sought is not entirely without means, but the defenses are very limited. An objection is heard only through an application to set aside (section 23(b)), and only on one of the ten grounds in section 24: among others, that there was no valid arbitration agreement; that the arbitrator was not lawfully appointed, acted without authority or exceeded their authority; that the party was not given a proper opportunity to present its arguments or bring evidence; that the arbitrator did not decide a matter referred to them; that the award was given after the deadline; that its content is contrary to public policy; or that there is a ground on which a final judgment would also be set aside. This is a closed list: “I did not agree with the decision” or “the arbitrator was wrong” are not grounds, and the court may dismiss the application even when a ground exists, if no miscarriage of justice was caused (section 26(a)).

Setting aside an arbitral award: when is it possible?

An application to set aside is not a route separate from the objection to confirmation: the court entertains an objection to the confirmation of an arbitration award only through an application to set aside (section 23(b)), and it must rely on one of the grounds in section 24; as a rule, it must be filed within 45 days of the award being given or delivered (section 27(a)). A legal error by the arbitrator, even an obvious one, is not a ground for setting aside; it is examined only on appeal, and only if the parties agreed to an appeal in advance (sections 21A and 29B). This is the point that most people who lost an arbitration do not want to hear.

In an international arbitration in a commercial matter that began on or after 14 February 2024, other rules apply: the International Commercial Arbitration Law, 5784-2024 (חוק הבוררות המסחרית הבין-לאומית, התשפ״ד-2024), and not the 1968 Law (sections 3(a) and 48). When the seat of the arbitration is in Israel, an objection to the award is by an application to set aside only, on the grounds in section 43(b), and as a rule within 90 days of the date on which the applicant received a copy of the award (section 43(a) and (c)). Recognition and enforcement are on a written application, regardless of where the award was given, and the court may refuse only on the grounds in section 45 (section 44). The details are in the guide International arbitration: what really applies in Israel.

You won in arbitration, but the other side is abroad. What then?

If the party that won an arbitration in Israel needs to enforce the award outside Israel, the main tool is the 1958 New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards), which Israel has joined. The Convention requires its member states, and there are more than 170 of them, to recognize foreign arbitral awards and enforce them, subject to certain conditions. The New York Convention is the reason international commercial arbitration is so popular: a single arbitral award may be enforceable in dozens of countries at the same time.