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.
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
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
The Israelis and Palestinians both felt this void and decided to
work together, rather than separately, to create a solution.
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
The JAC, due to the intensive efforts of Shachor and Hulileh,
gained the backing of a key international institution, the ICC in
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
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
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
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.
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.