THE LAW COURTS. In The Tel Aviv-Jaffa Magistrates Court MCA /04. Before: His Honour Haggai Brenner Date: 27/01/2005.

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1 REF: F:/LeviJoel/Rubin_Decision/SJE/ [TRANSLATED FROM THE HEBREW] [Emblem of the State of Israel] THE LAW COURTS In The Tel Aviv-Jaffa Magistrates Court MCA /04 Before: His Honour Haggai Brenner Date: 27/01/2005 In Re: Arnon Rubin The Respondent - against - Conference on Jewish Material Claims Against Germany Inc. The Applicant DECISION 1. The Applicant filed a pecuniary claim against the Respondent, whose corporate seat is in Germany, in the sum of NIS 226,000. The Applicant applied for and received leave to serve the process abroad. The Respondent filed an application to set aside the leave for service. The Applicant replied to the application and the Respondent answered the reply. 2. The Respondent is a corporation incorporated according to the laws of New York and operates as an international roof organisation established by 23 central Jewish organisations. The Respondent s declared object is to deal with compensation for the Jewish people for part of the damages caused to it by the Nazi regime during the Holocaust. 3. The Applicant asserts in his statement of claim that monies are due to him in respect of a house in a certain street in a town in Germany (the Applicant does not state in which town) (hereinafter: the property ) that belonged to Karl Birnbaum deceased, one of whose heirs is the Applicant. The property was expropriated by the Nazi regime in WORD POWER LTD, THE PROFESSIONAL LEGAL TRANSLATORS, TEL ; FAX

2 He asserts that he was unlawfully deprived of these monies by the Respondent. According to him, the Respondent withheld from him details and documents pertaining to the expenses and income of the property during the period of the Claims Conference s self-administration and refused to account with him with regard to the monies due to him for the property. In addition, the property was managed in a deficient and unsuccessful manner and from the outset the Respondent intentionally refrained from discharging two mortgages in order not to pay him his share. The Applicant further asserts that he was compelled to pay blackmail to a group of swindlers who attempted to prevent the sale of the property and according to him it was the Respondent that planned the extortion act. 4. The dispute started with a contract dated 2nd April 1999 between the Applicant and the Respondent, pursuant whereto the Applicant warranted that the Respondent was entitled to collect the compensation due to him in respect of the property. The Respondent undertook to pay the Applicant 50% of the receipts with which it would be left after realising the property, less various expenses. Clause 9 of the contract provides that disputes between the parties as to the interpretation of the contract would be brought before an interpreter, Mr Michael Schneider (who resides in New York). 5. To establish the service overseas the Applicant asserts that the contractual relationship between him and the Respondent was made in Israel. The Applicant further asserts that the contract was breached in Israel, since the monies in respect of the property should have been paid to him in Israel. Thus, the Applicant has a cause for service overseas pursuant to Rule 500(4)(a) of the Civil Procedure Rules, (hereinafter: the Rules ) and also pursuant to Rule 500(5) of the Rules. 6. The Respondent submits that Rule 500(4) of the Rules does not apply since it is a German court that is required to determine which law governs the contract. There is no substance in this submission. The law of the contract alternative is established in Rule 500(4)(c), while we are dealing with Rule 500(4)(a) that applies when the action is in respect of a breach of contract and the contract was made within the territory of the State. In such context the Applicant s assertion that the contract was only made when he added his signature in Tel Aviv to the form of wording of the contract that had previously been made in Frankfurt by a representative of the Respondent, and hence the contract was in fact made within the territory of the State, was not refuted. WORD POWER LTD, THE PROFESSIONAL LEGAL TRANSLATORS, TEL ; FAX

3 7. With regard to Rule 500(5), the Respondent asserts that the acts of breach that are attributed to it were all committed in Germany and the place of payment pursuant to the contract - Israel - is not sufficient to bring the case within the ambit of Rule 500(5). I do not accept this submission. Rule 500(5) defines a cause for service overseas where: a claim is made for breach of contract within the territory of the State, regardless of where the contract was made, and notwithstanding that prior to or simultaneously with such breach a breach occurred outside the territory of the State which negated the possibility of performing that part of the contract which should have been performed in the territory of the State; Failure to make the payment to which the Applicant is entitled (if he is in fact entitled to payment, and on this issue there is no need or ability to make any finding at this stage) certainly comes within the ambit of Rule 500(5), even if all the other breaches that are asserted by the Applicant were committed in Germany. 8. The Respondent s more serious submission is that the Court is given discretion not to grant leave for service overseas where all the relevant connections lead to the German court. Indeed, it was recently held in Civ.App. 4601/02, Rada Electronic Industries Ltd v. Bodstray Company Ltd et al, PD 58(2), 465, at pages , that: As aforesaid, the journey that the court makes when coming to decide whether to permit service out of the jurisdiction does not end, even when it transpires that the circumstances in one of the sub-rules of Rule 500 have been fulfilled. The court is still granted discretion as to whether to permit service and it must exercise it carefully. The principal ground that forms the basis of the caution approach is that by its nature the grant of leave for service constitutes imposing the authority of an Israeli court on a defendant who is not in Israel. This extension of the court s jurisdiction, beyond the territory of the State, can result in a clash of jurisdictions and impairment to international etiquette..., within the context of its discretion that is exercised within the ambit of the application for leave to serve, the court usually examines the question as to what is the forum conveniens for hearing the dispute that has arisen before it. WORD POWER LTD, THE PROFESSIONAL LEGAL TRANSLATORS, TEL ; FAX

4 9. On this issue one can identify a change of tendency in case law of the Supreme Court. In the past the view that any doubt would operate in favour of the foreign defendant ruled the roost. This view inter alia found expression in Civ.App. 74/83, Haim Sarpasta Rad v. Yaakov Hai, PD 40(2) 141, at pages : As is usual, the jurisdiction power of the Israeli court derives from serving a summons on a defendant within the borders of the State. If he is outside its borders, the plaintiff requires leave for service pursuant to the terms and conditions of Rule 500 of the [Civil] Procedure Rules and even if the terms and conditions set forth therein are fulfilled, the presiding judge still has discretion as to whether in view of the circumstances it is appropriate to issue the leave, which obliges meticulous and cautious consideration; Civ.App. 98/67 (Livhar v. Gazit & Shacham Construction Co. Ltd et al, PD 21(2) 243, at page 250. If there is a doubt in the judge s heart, he should refuse to grant the leave: Civ.App. 433/64, Navrom Maritime v. Hassneh Israeli Insurance Co. Ltd et al, PD 19(1) 159, at page (emphasis not in the original). And also see ALA 210/81, Holtz & Zohn v. Zaid Saeen et al, PD 36(3), 633, at pages : To all this I would further add that when a doubt arises in respect of an application of this type, it should be interpreted in favour of the foreign defendant and the grant of the leave should be refused. See also A. Goren s book, Issues in the Civil Procedure, page 542. On the other hand, according to the prevailing tendency, the court is under a duty to start with an assumption that it is vested with jurisdiction to hear the matter and only if the balance of connections lean significantly in the direction of the foreign forum, will it be appropriate not to grant leave for service overseas. This tendency is inter alia reflected in ALA 2705/97, Hageves A. Sinai (1989) Ltd v. The Lockformer Co. et al, PD 52(1) 109, at pages : When the Israeli court, in which a proceeding has been filed, comes to consider whether the proceeding should be conducted before it according to the majority of the connections, or that it should rule that it is not the forum conveniens, it must start with the assumption that it has been vested WORD POWER LTD, THE PROFESSIONAL LEGAL TRANSLATORS, TEL ; FAX

5 with jurisdiction to hear the matter. Only if the balance between the connections with the Israeli forum and the connections with the foreign forum clearly lean towards the foreign forum, will it decide that it is not the forum conveniens. The Court explained the rationale that forms the basis of this approach: This rationale is based upon the developments that have occurred in communications and the modern modes of transport. In the past, difficulties that were caused to defendants if they were required to litigate before a foreign forum were many and real. These derived both from the difficulties of communications and also their great cost. In our days, in the era of jet aircraft, cellular telephones, facsimile and the Internet, these difficulties have lost a considerable part of their intensity. The entire world is becoming one large village, in which there is no longer the same onerous significance as in the past to distances between one place and another. Accordingly, one should not overstate the weight given to a defendant s difficulties in coming with his witnesses to another country, and hence it is also called for that the tendency to uphold a submission of forum non conveniens will be less (ibid, at pages ). 10. Guidelines for operating the prevailing test can be found in LCA 9141/00, Franz Lang v. Yaron Marks, PD 56(1) 118 at pages : This question, of the lack of the forum s convenience, will be decided on the basis of all the circumstances, including the majority of the connections - that are the objective facts that attest to the connections of events and the parties with each of the competing forums - having regard to the parties reasonable anticipations. We must therefore locate the connections that lead in the direction of one of the competing forums - the German one on the one hand and the Israeli one on the other hand. 11. The Respondent asserts that all the connections lead to the German forum: the place of the property in dispute, the manner of its registration, its transfer to the Respondent, the place of making the accounting in respect of its sale and the like. The Respondent further asserts that conducting the trial in Israel will oblige many witnesses who reside in Germany to come to Israel and accordingly the German court is the forum conveniens to hear the claim. WORD POWER LTD, THE PROFESSIONAL LEGAL TRANSLATORS, TEL ; FAX

6 12. The Applicant asserts that the Israeli forum is the forum conveniens. According to him, the contract the subject of the claim was made in Israel; the contract does not contain a jurisdiction provision and in any event the referral is to an arbitrator who resides in New York; universal ingredients can be found in the Applicant s charter of incorporation, since section 3 of the charter provides that the Respondent shall operate in the USA, Europe and Israel; the breach of the contract was committed in Israel since the payments due to the Applicant should have been paid in Israel; there will be no need to bring witnesses from abroad, since the letters that the Respondent s representatives sent are self-explanatory; the Respondent, by virtue of its being an international body, should have taken into account the possibility that it would be sued in Israel; the proceeding in Israel is not vexatious and is not an abuse of court proceedings. 13. Having again perused the Applicant s many assertions (his reply to the application to set aside the leave for service comprises no less than 37 pages), I am not persuaded that the majority of the connections relating to the dispute lead to the Israeli forum. The opposite is the case: the balance of connections clearly and conspicuously leans in fact in the direction of the German forum. In practice, the sole connections with Israel are the Applicant s place of residence, the place where the contract was made in the sense that the Applicant signed it in Israel, and the place where he was to have received the payments pursuant to the contract. Apart from these connections, which are fundamentally technical, all the other material connections lead to the German forum, save for one connection that leads to the forum of the State of New York (the arbitrator s place of residence). To what does this refer: we are dealing with a real estate property that is situated on German land. The claim for restitution of the property was made in Germany pursuant to German law. The litigation with regard to the fate of the property was conducted in the Administrative Court in Berlin. Delivery of possession to the Respondent and collection of the rent in respect of the property from a German management company were effected in Germany. All the operations relating to transferring the property from the Respondent s name to the purchaser s name were effected in Germany. The payment of the loan to the banking institution pursuant to the decision of the Property Arrangements Office, which was established pursuant to the German property law, were effected in accordance with German law. The appointment of a trustee for the purpose of paying a mortgage was made by the court in Berlin. All the relevant witnesses, save for the Applicant, are German residents and they are German speakers (in any event even if they are conversant with English, as the Applicant states, they certainly do not speak Hebrew). WORD POWER LTD, THE PROFESSIONAL LEGAL TRANSLATORS, TEL ; FAX

7 At the time of the trial it will be necessary to prove the German law, since the Respondent s operations were effected in accordance with German law. Many of the documents relating to the dispute are written in German and it will be necessary to translate them into Hebrew. To this one must add that all the tort acts that the Applicant attributes to the Respondent were, without exception, committed in Germany. It is therefore clear that in the circumstances of the case there will be great difficulty in conducting an efficient legal proceeding in Israel. Even if I assume that Israeli law governs the contract between the Applicant and the Respondent - and in my opinion there is great doubt whether this is in fact the situation, this is not sufficient, since the very core of the dispute is the operations that the Respondent carried out in Germany in order to obtain and realise the property, which are all operations that are governed by German law. Even the place of signing of the contract is not a connection of weight in the circumstances of the case, since the Respondent signed the contract in Germany and the Applicant only added his signature in Israel. The contract was indeed made formerly in Israel, but not more than that. 14. There is no substance in the Applicant s assertion that it will not be necessary to bring witnesses from abroad. In his pleadings the Applicant casts very serious accusations against the Respondent and its representatives. These accusations oblige an answer through witnesses. Even if it were not for the seriousness of the accusations that the Applicant casts against the Respondent, documents cannot generally be a substitute for oral testimonies and it is not always possible to rule in accordance with documents alone. It is the Respondent s right to defend itself through flesh and blood witnesses and not only through documents. 15. The Applicant asserts that it has not been proved that the proceeding in Israel will vex the Respondent. On this issue the Applicant applies the test that previously was customary with regard to a forum non conveniens plea, but this test only applied where due service was made on a defendant who was outside the borders of Israel, and then it is justified to make the onus on a party seeking to be released from the burden of the Israeli forum difficult, and not when one is dealing with service out of the Israeli jurisdictional territory on a defendant who is abroad. In any event, the vexation requirement as a condition for staying the proceeding in Israel is not rigid as it was in the past and the Supreme Court cited with approval English case law on this issue: WORD POWER LTD, THE PROFESSIONAL LEGAL TRANSLATORS, TEL ; FAX

8 Since this rule of law was laid down, changes have been made to it in England itself, with it being held that once more one should not insist on the requirement regarding oppression or vexation and even a claim that does not oppress or is not vexatious may be discontinued, provided that the plaintiff is under a duty to prove that there is another forum in which justice will be done between the parties with materially less inconvenience and all without impairing a legitimate advantage, personal or legal, that the plaintiff has in litigating in the local forum... (Civ.App. 300/84, Iman Ali Abu Attia v. Issa Yusuf Arbatisi, PD 39(1) 365, at pages ). On the merits of the matter as well, and if we apply the requirement that the defendant must show that the proceeding in Israel is vexatious, having regard to all the connections that lead to the German forum, I maintain that conducting the proceeding in Israel will amount to vexing the Respondent. 16. I considered whether it is appropriate as a matter of policy to allow the leave for service to remain in force in view of the fact that the Respondent is an organisation whose entire object is the return of property stolen during the Holocaust, and a considerable part of the Holocaust survivors reside in Israel. I also considered the assertion that the Respondent should have anticipated a situation in which claims would be filed against it in Israel. Notwithstanding this, the weight of the connections that lead to the German forum is so decisive to the degree that it would be artificial and clearly unreasonable to conduct the claim in the Israeli forum. I also do not believe that a person filing a claim in Germany for the restitution of his property develops an anticipation interest that disputes that shall arise in consequence thereof shall be heard in Israel. 17. Having come to the conclusion that according to the majority of connections test, the scale leans conspicuously and unequivocally in the direction of the German forum, there is no alternative but to set aside the leave for service overseas that was granted to the Applicant. Accordingly, the leave for service is set aside. In consequence thereof, this Court does not have international jurisdiction to have recourse to the claim and it is therefore struck out. I shall not make an order for costs in the circumstances of the case. 18. The Secretariat shall send the decision to the parties. Given this 17th day of Shevat, 5755 (27th January 2005), in the absence of the parties. (Signed and stamped) Hagai Brenner, Judge, Tel Aviv-Jaffa District Court [Stamp - certified true copy] WORD POWER LTD, THE PROFESSIONAL LEGAL TRANSLATORS, TEL ; FAX

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