Commercial mediation: how to settle a business dispute, and what makes the settlement enforceable

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What mediation is, and how it differs from arbitration and from a settlement

The definition in section 79C(a) of the Courts Law [Consolidated Version], 5744-1984 is short and precise. Mediation is “a process in which a mediator meets with the parties in order to bring them to an agreement to settle the dispute, without having the power to decide it”. A mediation settlement is “an agreement between the parties on settling a dispute between them, reached at the end of a mediation process”.

Everything else follows from this. The mediator does not find facts, does not decide legal questions and does not write a decision. The mediator’s role is set by regulation 2 of the Courts Regulations (Mediation), 5753-1993 (תקנות בתי המשפט (גישור), התשנ״ג-1993). It is to clarify the issues in dispute, bring out the necessary information and suggest possible solutions. An arbitrator, by contrast, decides. The arbitration award is binding and can be confirmed under the Arbitration Law, 5728-1968 (חוק הבוררות, התשכ״ח-1968). The full comparison is in mediation vs arbitration.

In a business dispute, this difference is usually the advantage, not the drawback. A court can award money. Only the parties can agree to continue working together, change a pricing mechanism, set a payment schedule, return goods or settle intellectual property. In other words, they can agree on everything that is not a remedy you can sue for.

How to get into mediation: three ways

1. By agreement, with no case filed. The parties choose a mediator and approach them directly. This option is open at any stage, even before a warning letter has been sent.

2. Under a mediation clause in the contract. Many commercial contracts include a tiered dispute-resolution mechanism: negotiations, mediation, and then arbitration or a claim. This is worth checking before you file a statement of claim. Going to a court or tribunal in breach of an agreed mechanism can lead to a stay of the proceedings. Checking this mechanism is the first step in enforcing a breached contract.

3. By referral from the court. Section 79C(b) states that the court may, with the parties’ consent, refer a claim to mediation. Under regulation 3 of the Mediation Regulations, the proposal can be made at any stage of the hearing. The court explains to the parties in advance that things said in the mediation will not be used as evidence. It also explains that not agreeing, or stopping the process, will not affect the outcome of the case.

Who will the mediator be? The parties may agree on this between them. If they do not agree, they are referred to the mediation unit of the Courts Administration. The unit presents names from the list of mediators. The choice follows the mediator’s practice areas, regions of activity and languages, and special features the case requires, provided that the fee of at least one mediator does not exceed the maximum fee. Regulation 3(e) makes clear that this does not affect the parties’ right to choose a mediator who is not on the list.

What it costs: the number that is fixed

In private mediation, the fee is set by agreement. What the law does set (regulation 7 of the Mediation Regulations) are the rules:

• the fee will not be calculated by the value of the dispute and will not depend on the outcome; it is paid whether or not a settlement was reached;
• the mediator states at the start of the process what the fee is and how it is paid, and the fee will not include out-of-pocket expenses;
• the parties agree in advance how to share the mediator’s pay and the expenses, and if there is no agreement, they bear them in equal shares;
• the court may set an advance deposit on account of the fee, and decide disagreements about the fee.

There is also an express cap, but it applies in one track only. It is set by regulation 12 and the First Schedule to the Courts Regulations (List of Mediators), 5778-2017 (תקנות בתי המשפט (רשימת מגשרים), התשע״ח-2017). The maximum fee for an hour of mediation held following a MAHUT meeting is, in the amounts updated for 2026, NIS 478 + VAT per party per hour. It is no more than NIS 1,434 + VAT if more than three parties take part in the mediation. The amounts are linked to the index and updated on 1 January.

MAHUT meeting: what is really mandatory before the case moves on

The common confusion is between “mandatory mediation” and what the law really requires. Mediation itself is a consensual process: section 79C(b) makes the referral subject to the parties’ consent. What is mandatory is a MAHUT meeting: an information, introduction and coordination meeting, under regulation 37 of the Civil Procedure Regulations, 5779-2018. Its main points:

• it applies to a claim whose amount or subject value exceeds NIS 40,000, except claims for bodily injury and claims under the Compensation for Road Accident Victims Law, 5735-1975 (חוק פיצויים לנפגעי תאונות דרכים, התשל״ה-1975);
• the official in charge appoints a MAHUT mediator no later than 45 days after the last pleading;
• the meeting is held at no cost, no later than 30 days after service of the notice of appointment; an invitation to it has the same status as a summons to a court hearing;
• within 14 days of the meeting, the mediator informs the official in charge whether the parties agree to refer the dispute to mediation;
• a party who did not attend will be ordered to pay the costs of the MAHUT mediator and the costs of the parties who attended;
• the meeting is held at the Magistrates’ Courts listed in the Second Schedule to the Regulations (regulation 37(k)).

Alongside this, regulation 35 requires represented parties to hold a preliminary meeting within 30 days of the last pleading. At it they must discuss, among other things, “the possibility of resolving the disagreement through an alternative dispute-resolution mechanism”. Regulation 36 requires them to report this to the court on a dedicated form. If these provisions are breached, regulation 38 allows the court to order that they be fulfilled and to stay the proceedings. For special reasons it can even strike out the claim. It can also order costs. This mechanism is explained in detail in mandatory mediation and a MAHUT meeting.

What happens in the room, and how confidential it is

Regulations 5 and 6 of the Mediation Regulations set the rules of conduct. The mediator may meet with the parties together or separately, and, with a party’s consent, even without that party’s lawyer. The mediator will not disclose information given to them to anyone who is not a party to the process. A party can give information and ask to keep it secret. The mediator must then keep it secret from the other party too, unless the person who gave it waived confidentiality. This is the legal basis for the “separate rooms” method used in most commercial mediations.

Above all stands section 79C(d): things said in a mediation process will not be used as evidence in civil legal proceedings. This protection lets a party put forward a real number without fearing that it will count against them if the process fails. Note its limits: it applies to things said within the process, and it does not make a document that exists anyway privileged.

The mediator is also limited in the other direction. Under regulation 5(g), the mediator will not advise on a professional matter outside their field. They will also not give a professional opinion on a question of expertise that arose in the mediation, even if it is within their field. Under regulation 5(h), the mediator will not be a party to the settlement. Only after the mediation has ended may the parties agree that the mediator gives an opinion or is appointed as arbitrator.

When the process stops

Each party may stop the mediation at any time, after giving written notice to the other parties and to the mediator (regulation 8(a)). The mediator may also stop it. Among other cases, this applies when: in the mediator’s view, the matter is not suitable for mediation; a party does not act fairly or in good faith, or does not disclose the necessary information; there is no reasonable chance of a settlement; or the emerging settlement is unlawful, immoral or contrary to public policy, clearly unfair, or likely to cause real harm to a third party.

When the mediator stops the process, they inform the court of the decision. But they do not give their reasons and do not express an opinion on any matter relating to the mediation. The court orders the hearing to resume, and the hearing date is set with regard to the date the claim was filed. In other words, the attempt does not push the case to the back of the queue.

The settlement: how to turn an agreement into a judgment

When the parties reach a settlement, they or the mediator put it in writing with all the terms for settling the dispute. The parties sign it (regulation 9). From here there are three options that give the settlement very different force:

• An ordinary agreement. It is binding as a contract. If it is breached, a new claim for breach of contract is needed.
• The effect of a judgment in a pending case (section 79C(g)). The mediator informs the court of the settlement, and the court may give it the effect of a judgment. From then on, it can be enforced through enforcement proceedings (the Execution Office).
• The effect of a judgment even without a claim (section 79C(h)). When parties reach agreement in a mediation held under the Law, the court with jurisdiction over a claim on the subject of the dispute may give the settlement the effect of a judgment, even if no claim was filed. This option makes early mediation a practical tool: you can settle the dispute before a case is opened, and still come away with an enforceable document.

What to prepare for an application under section 79C(h), when no claim was filed (regulation 10 of the Mediation Regulations):

• the application is filed by way of an originating motion, by the parties who signed the mediation settlement or by one of them;
• the application sets out the facts of the dispute and the details of the mediation settlement;
• attach the mediation settlement, the agreement signed between the parties and the mediator, and an affidavit verifying the facts on which the application is based;
• file with the court that has subject-matter and territorial jurisdiction over a claim on the subject of the dispute;
• for this purpose, a “dispute” is a situation in which there is a cause of action for claiming a right (regulation 10(d)).

In an international dispute there is another layer. Section 79C(i) was added to the Law. It regulates an application to give the effect of a judgment to a mediation settlement covered by the Singapore Convention on International Settlement Agreements Resulting from Mediation (signed on 7 August 2019). It also regulates recognizing such a settlement as a defense, provided that the parties agreed to apply the Convention. The Convention is implemented by the Courts Regulations (Implementation of the Singapore Convention on International Settlement Agreements Resulting from Mediation), 5785-2025 (תקנות בתי המשפט (יישום אמנת סינגפור בדבר הסדרי גישור בין-לאומיים), התשפ״ה-2025). In a cross-border deal, an express reference to the Convention in the dispute-resolution clause makes a real difference. It is the difference between an enforceable settlement and a settlement you will have to sue on again.

Two practical traps

The limitation period does not stop running. The Prescription Law, 5718-1958 lists grounds for suspending the limitation period (prescription): minority, mental disability, guardianship relations, wrongful conduct by the defendant and more. Mediation is not one of them. A person who enters long negotiations when the claim is close to becoming time-barred can find that they have lost it. Section 19 of the Law allows the parties to agree, in a separate written contract, on a limitation period longer than the one in the Law. That is the right solution: arrange it before you enter the room, not after.

A mediation clause in a contract should be limited in time. “The parties will go to mediation before going to court” with no time limit is a tool for delay. A better wording sets a defined period, a mechanism for appointing a mediator if there is no agreement, and how costs are shared. It also makes clear that at the end of the period the way to the courts is open.

Frequently asked questions

Can what was said in mediation be used as evidence against me?

Not in civil proceedings. Section 79C(d) of the Courts Law [Consolidated Version], 5744-1984 states that things said in a mediation process will not be used as evidence in civil legal proceedings. The court explains this to the parties in advance under regulation 3 of the Courts Regulations (Mediation), 5753-1993. The mediator is subject to broad confidentiality under regulation 5. The mediator will not disclose information to anyone who is not a party to the process. Information given to the mediator with a request to keep it secret will be kept secret from the other party too. The protection applies to what was said within the process, and it does not make a document that exists anyway privileged.

How do you turn a mediation settlement into an enforceable judgment?

The settlement is put in writing and sets out all the terms for settling the dispute, and the parties sign it (regulation 9 of the Mediation Regulations). Under section 79C(g), when the parties have reached a settlement, the mediator informs the court, and the court may give the settlement the effect of a judgment. Section 79C(h) extends this: the court with jurisdiction over a claim on the subject of the dispute may give the settlement the effect of a judgment even if no claim was filed. A settlement that has been given the effect of a judgment can be enforced through enforcement proceedings, without filing a new claim for breach of contract.

How much does mediation cost, and who pays?

Regulation 7 of the Courts Regulations (Mediation) sets the rules. The fee will not be calculated by the value of the subject of the dispute and will not depend on the outcome. It is paid whether or not a settlement was reached. The mediator states at the start of the process what the fee is and how it is paid, and the parties agree in advance how to share it. If there is no agreement, they bear the cost in equal shares. An express cap applies to a mediation session held following a MAHUT meeting. It is set by regulation 12 and the First Schedule to the Courts Regulations (List of Mediators), 5778-2017. In the amounts updated for 2026, it is NIS 478 plus VAT per party per hour. It is no more than NIS 1,434 plus VAT when more than three parties take part.

Does a mediation process stop the limitation period from running?

No. The Prescription Law, 5718-1958 lists the grounds for suspending the limitation period. They include minority, mental or intellectual disability, guardianship relations, and wrongful conduct by the defendant. They also include being in the territory of a state where the legal case could not be pursued because of its conditions or its relations with Israel. Mediation is not among them. So long negotiations while the claim is close to becoming time-barred can cost you the cause of action. Section 19 of the Law allows the parties to agree, in a separate written contract, on a limitation period longer than the one set in the Law. This is why it is usual to arrange it in writing before entering the process.