Government measures in key jurisdictions 5th edition - Flipbook - Page 72
Israel
Furthermore, additional reliefs were introduced during this period, such as a reduction of
the monthly payments due by debtors under receivership and temporary exemptions from
these payment obligations. However, all such reliefs were provided on a case-by-case
basis, and not as a change to legislation.
Contractual
Issues
The Israeli government has not implemented any specific measures to reinforce contracts.
In Israel, the "freedom of contract" principle is very dominant. Thus, any enforcement of
contracts is considered a commercial issue between the parties.
What measures
have been taken
to reinforce
contracts?
However, a special inter-office governmental team has issued a legislation proposal with
respect to specific arrangements regarding certain industries including the entertainment
industry, event halls as well as private kindergartens, while noting that they do not believe
that they should interfere with all other industries. They recommended that all parties in
other industries apply the “good faith” principle when looking to enforce or amend a
contract.
Furthermore, while the force majeure principle exists under Israeli contract law, it has been
greatly minimized by the courts, and is even deemed by some as a dead letter. A recent
decision of the Tel Aviv district court has reinforced this position, as the court failed to see
the Covid-19 pandemic as a force majeure event. However, a separate decision by the
same court in a different matter did recognize that the Covid-19 pandemic could be
deemed a force majeure event in certain circumstances, creating more uncertainty, which
shall only be resolved if and when such questions reach the Israeli Supreme Court. That
said, the parties are free to agree on any force majeure provisions between themselves,
and in such event the contractual agreement would prevail.
Property
Have any changes
been made to
the laws around
property, rent and
enforcement?
An inter-ministerial committee has been set up to examine the impact of the Covid-19
pandemic on general contract law. In particular, the committee considered if the pandemic
constitutes a force majeure event that justifies the breach or cancellation of a contract by
one party without the payment of compensation to the other.
According to the committee’s report from July 2020, the epidemic and especially its
consequences could not have been foreseen and it created exceptional circumstances,
which materially impaired the possibility of fulfilling contracts as the parties agreed upon.
However, the committee determines this does not allow the parties to a contract to waive
their contractual obligations and they must make every effort to continue to abide by the
contracts they have entered into, and negotiate with good faith in order adapt the contract’s
terms to the current circumstances.
Furthermore, the committee recommends to legislate individual arrangements for contracts
in the field of shows, banquet halls and private kindergartens, and on the other hand it
recommends to not interfere with such legislation for complex markets, such as the business
rental market.
In due course and according to the committee’s conclusions and recommendations, the
laws relevant to property and rent may be amended according to the conclusions and
recommendations of the committee.
In addition, according to the Israeli Rent Law, tenants might be exempted from rent
payment, provided their premises cannot be used due to a reason related to the premises or
the access to it. Nevertheless, these provisions are not mandatory for non-residential lease
agreements. Many rental agreements for premises serving retail or leisure purposes (which
were completely closed due to government orders) do not apply the Rent Law, but even if
the Rent Law does apply, most Israeli courts’ rulings so far, do not tend to approve such
exemption under the Rent Law because of the Covid-19 pandemic and its consequences.
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Government measures in key jurisdictions
