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| Jan/Feb 2010 |
| Forign Collections |
TEN QUESTIONS AND ANSWERS TO A FOREIGN
COLLECTION LAWYER: Israel
1 Are there any problems with a U.S. claimant
pursuing a claim against a debtor on your country?
With few exceptions, Israeli law and civil procedure make no distinction between local and foreign claimants (litigants). A foreign plaintiff without income or assets in Israel may be required to post a bond with the court clerk to assure payment of any court costs and legal fees that may be imposed against the claim, if its action is rejected. This requirement can be satisfied by a third-party guarantee of an Israeli resident with income and/or property. Otherwise, a bank guarantee will be required.
2 If the outstanding invoices are in dollars, can the claim made in court proceedings be in dollars?
All monetary claims must be equivalent to Israeli currency – the New Israel shekel (NIS), which, per the current official rate of exchange, is (approximately) 3.8 shekels per U.S. dollar. The exchange rate is subject to minor daily fluctuations.
Following collection in settlement or judgment, a shekel payment can be converted to dollars, Euros and other foreign currencies at any large bank.
3 If there is no contractual right to interest, can interest nonetheless be claimed – and if so, at what rate?
If there is no contractual right, interest will be granted per Israeli law — which determines the rate (percentage) using periodic rates set by the Accountant General. The rate may range anywhere from 3 to 14 percent; currently, it is approximately 4 percent. Due to fluctuating rates of exchange, the court will also link the shekel judgment to the cost of living index.
4 Can lawyers in your jurisdiction work on a contingency-fee basis, and if so, what are the typical rates?
Attorneys in Israel can process a collection and handle other cases on a contingency-fee basis. The percentage depends on the circumstances. Pre-litigation is almost always on contingency. A negotiated (nonrefundable) suit fee will be requested, along with a negotiated contingency. There may be another fee, if an appeal is filed by either party or for processing a successful judgment at the execution of judgment (bailiff) office.
5 How do court costs compare with the U.S.?
Court costs are relatively high, since Israeli courts do not receive full government budgeting. You are required to pay a fee that is 2.5 percent of the sum that is being sued for in the case. The fee is payable in two stages: Half (1.25 percent) is due when the action is filed, and the balance (1.25 percent) is due before the first hearing. An additional 2 percent fee is required if the judgment is not paid and an execution of judgment file is opened. These costs can be added to a successful judgment.
6 What language would the court proceedings be in, and do documents
have to be translated?
Court proceedings are in Hebrew and documents submitted in a foreign language must be translated to Hebrew. A witness may testify in a foreign language — including English — and the testimony will be translated simultaneously by a court-appointed interpreter.
7 Will witnesses be required to visit your country for depositions or at trial?
Except for summary judgment cases, such as suits for payment of a check or promissory note, a defendant is entitled to cross-examine a plaintiff in court, including a foreign resident. Sometimes, testimony can be given from abroad through audio or video depositions.
8 What are the rules regarding enforcement of a judgment obtained against a debtor in the U.S.?
Foreign country money judgments in civil cases may be enforced under Israeli law — if the court had substantive jurisdiction of the subject matter and personal jurisdiction over the defendant, the defendant had a reasonable opportunity to appear and defend and the judgment is final and isn’t contrary to public policy.
9 What personal liability exists for officers of a corporation who issued checks that have not been honored?
Personal liability may occur under the “pierce the corporate veil” principle (in Israel, it is called “raising the curtain”). A defendant must produce credible evidence, not necessarily in writing, showing that a corporate officer and/or shareholder guaranteed payment of a check and/or promissory note and/or contractual obligations — or that, on the date of payment, the corporation was unable to or did not intend to make payment.
10 What liability do officers of the corporation have if the corporation
goes into bankruptcy?
Personal liability can be imputed to a corporate officer or shareholder in bankruptcy if the officer or shareholder committed fraud or gross mismanagement. |
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