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The Jerusalem Arbitration Center
By NADIA DARWAZEH
18/12/2013
A breakthrough for Israelis and Palestinians.
 
Despite their long-standing political conflict, Israeli and Palestinian businesses engage in a significant amount of economic trade. The estimated annual total of $5 billion in trade may surprise a lot of people. But that sum may be just the proverbial tip of the iceberg. A new mechanism that launched very recently may be the key to unlocking the potential for a lot more commerce between the two parties, while strengthening ties between them.

The Jerusalem Arbitration Center has been mutually formed by the Israelis and Palestinians as the first neutral body in the region with authority to resolve commercial disputes between the two parties.

A major impediment to trade between Palestinians and Israelis, apart from the political conflict, has been the lack of a neutral and reliable mechanism for resolving their business disputes.

Where there is trade, there will always be disputes, even among long-standing allies. Israeli and Palestinian businesses both face the question of what happens if a dispute arises out of their commercial dealings: which forum can they go to in order for their dispute to be resolved fairly? The prospect of Palestinians submitting a dispute with their Israeli counterparts to an Israeli court – and vice-versa – is, unsurprisingly, not appealing, and also may not be legally and economically feasible. Will the local court be biased? Will it provide a fair process? For a relatively small dispute, will the extra expenditure of hiring a local lawyer who knows the system and can plead in the local language be worthwhile? Will the court from one jurisdiction enforce a judgment rendered by a court from the other jurisdiction? These concerns, whether perceived or real, exist on both sides.

Businesspeople who are active internationally are often faced with those very same questions in their cross-border transactions and have to undertake a risk-benefit analysis. But these concerns are even more pronounced in the Israeli- Palestinian context because of the long-standing political conflict. The fact that there has been no attractive way of resolving business disputes, therefore, has adversely impacted trade.

The Israelis and Palestinians both felt this void and decided to work together, rather than separately, to create a solution.

In early 2009, a retired Israeli general- turned-businessman, Oren Shachor, the chairman of ICC (International Chamber of Commerce) Israel, and one of Palestine’s leading businessmen, Samir Hulileh, who heads up PADICO, one of the largest Palestinian holding companies, recognized that in order to increase bilateral trade, they needed a neutral, reliable and professional dispute resolution mechanism that could be trusted. They needed a legal framework that would be easily accessible to both Israelis and Palestinians. The idea of creating the Jerusalem Arbitration Center, to be based locally in east Jerusalem, was born.

The JAC, due to the intensive efforts of Shachor and Hulileh, gained the backing of a key international institution, the ICC in Paris.

On an ICC mission to Ramallah and Tel Aviv during the nascent stages of the JAC, I met with representatives from both business communities to get their input. I was rather surprised by the passion with which senior business leaders who, far from being naïve, advocated the necessity for making this initiative work.

It became clear that the JAC had the support of the people who matter most and that establishing an impartial, speedy and cost-efficient dispute resolution mechanism is a key catalyst to increase trade between these historical political adversaries.

With the help of that grass-roots support, the JAC also has managed to earn the support of the relevant ministries of both Israelis and Palestinians, again an uncommon feat.

The true inspiration for now, as we launch the JAC, and for the future, as the two states create a stronger economic bond, is how the Israelis and Palestinians both worked side-by-side from the very beginning to make the JAC happen.

While there were disagreements at times during the formative process, as happens for virtually any such venture, the two sides worked truly as a team, convincing the ICC to provide its critical backing and striving to overcome any obstacle that presented itself on the way to the JAC’s launch.

A few months ago, in preparation for the launch, the leaders of the JAC gathered in Jerusalem for a working session.

In the early evening, just as the sun was setting, a dinner was organized on the rooftop of one of the hotels overlooking the old city. The 20 or so high-level attendees included Israelis and Palestinians, as well as a few internationals from the respective business and legal communities.

They had worked hard towards the establishment of the JAC, which was finally within easy reach. The attendees naturally mixed; the atmosphere was very relaxed and amicable. The dawn of the Jerusalem Arbitration Center had produced mutual trust and a common goal enabling Israelis and Palestinians to push aside historical differences to come together to take a chance on investing in economic cooperation.

The author is the international secretary general of the Jerusalem Arbitration Center and counsel in the international arbitration group at Curtis, Mallet-Prevost, Colt & Mosle LLP.
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