Gill Nadel, Goldfarb Seligman, Israel

As a rule, when a claim is filed, the plaintiff is required to send a copy of the claim to the defendant’s domicile, and to provide them to the prosecutor in person.

As we know, when it comes to matters related to international trade and shipping goods, there are many entities that are linked to the claim (carriers, freight forwarders, foreign suppliers) who do not reside in Israel. In such a situation, the plaintiff must prove to the Court that the dispute is linked to the State of Israel, in order for the Court to acquire jurisdiction to hear the case in Israel.

Recently, the Tel Aviv Magistrates Court and the Tel Aviv District Court differed over the question whether to summon to court in Israel an American international freight forwarder who had handled the containerization of goods outside Israel. While the Magistrates Court held that the freight forwarder should be summoned to court in Israel, the District court pondered the question, overturned the Magistrates Court’s decision and returned the matter to the Magistrates Court for another hearing.

The Case Facts:

An importer of energy bars sued an Israeli forwarding company that had handled all the proceedings related to importing a shipment from the U.S. on its behalf. The energy bars arrived by ship and were containerized in the same container along with hazardous materials. Therefore, when the energy bars arrived in Israel, the Israel Ministry of Health ordered their destruction. As a result, the importer of the energy bars sued the Israeli forwarding company.

The Israeli forwarding company argued that there was no call to destroy the energy bars, even if they were containerized together with hazardous materials. Yet the Israeli forwarding company argued that even if the claim is accepted, it is entitled to indemnification from third parties in the U.S., among them the American forwarding company that carried out the containerization of the cargo in the U.S. along with the allegedly hazardous cargo, which led to its destruction.

The American forwarding company argued that the State of Israel is not the proper forum for carrying out the claim, but rather the State of New Jersey in the U.S., in light of the fact that the bill of lading contained a jurisdiction clause stipulating that all disputes shall be determined by the courts of the U.S. The American forwarding company added that the lawsuit should be determined in the U.S. also because the container was containerized in the U.S. by a company and workers from the U.S., who are subject to U.S. law and regulations.

The Magistrates Court Decision:

The Court considered whether determining the case in a U.S. court would be justified, in light of the jurisdiction stipulation in the bill of lading. In this matter, the importer is at one end of the spectrum as the client who ordered the cargo, and at the other end is the Israeli forwarding company with which the energy bar importer contracted and which is currently turning to the American forwarding company for indemnification. The Court noted that the presence of the American forwarding company is important for inquiring into the proceeding, as it was the one to actually provide the containerization services for the cargo, and so it can be summoned to court in accordance with Regulation 500(10) of the Civil Procedures Regulations.

The Court repeated the Supreme Court of Israel’s decision that in the case of a combination of parties only one of whom is linked with a foreign jurisdiction, there are circumstance that justify ignoring the jurisdiction stipulation, in order to avoid splitting discussions between different countries.

In this case, the Court decided that the jurisdiction stipulation in the bill of lading applied to third parties – the American forwarding company and its agent – and did not obligate the importer-plaintiff and the Israeli forwarding company that was sued, who did not sign that bill of lading.

As to the question whether Israel is the proper forum to hold a legal discussion of the matter – the Court noted that although the containerization of the cargo took place in the U.S., the cargo was destined for export to Israel, and upon arrival was examined and found unfit for marketing by the Israeli authorities. Therefore, it was decided that the linkage was mostly to the territory of the State of Israel, more than to that of the U.S.

In light of the above, the American forwarding company’s request not to hold the discussion in Israel was rejected – and it was obligated to pay expenses totaling 2,000 NIS.

Ref:Civil Suit (Tel Aviv Magistrates Court) 34968-11-13. Verdict given by Justice Noa Grossman on December 8, 2014. Parties’ representatives: For the American forwarding company – Adv. Nachitz. For the Israeli forwarding company – Adv. Asher.

The District Court’s Decision on the Appeal:

The District Court ruled that the Magistrates Court’s decision is lacking with regard to the question whether there is a serious cause of action in this case. It noted that the Magistrates Court had not considered the fact that there is no prohibition on shipping food together with hazardous materials, and that no shipping instructions were given by the American forwarding company or by the supplier. Also, the District Court noted that the American forwarding company could not be held liable for the Israel Ministry of Health’s decision, which allegedly was made arbitrarily and with no reason, as the energy bars were not damaged, were not contaminated in any way and were not tested in a proper laboratory.

In addition, a document from the Israel Ministry of Health was shown, according to which the energy bars apparently were destroyed not because they were containerized with hazardous materials, but because they were not stored under appropriate conditions for food.

Furthermore, the District Court ruled that the Magistrates Court had not dealt appropriately with the argument regarding the jurisdiction stipulation in the bill of lading, and ordered it to hold another discussion on the subject, as there is a ruling that decreed that a jurisdiction stipulation obligates the importer and the forwarding company even if they did not sign the bill of lading.

In light of the above, the District Court overturned the Magistrates Court’s ruling, ordered that the request be discussed again and charged the Israeli forwarding company with expenses totaling 10,000 NIS.

Ref: Civil Appeal (Tel Aviv District Court) 150-01-15, Verdict given by Justice Ofra Cherniak on February 25, .2015. Parties’ representatives: For the American forwarding company – Adv. Nur. For the Israeli forwarding company – Adv. Chen Levitt.