founders of arbitration center 370 370.
(photo credit: Eliran Avital)
As peace negotiations with the Palestinians sputter, the creation of an
“economic” peace took a step forward Monday with the launch of the Jerusalem
Arbitration Center, a commercial dispute mechanism meant to boost Israeli-Palestinian trade.
“Wherever there is more economy there are fewer
rockets and shooting,” said Oren Shachor, chairman of Israel’s branch of the
International Chamber of Commerce, the organization that set up the
Until now, commercial disputes between Israelis and Palestinians
were relegated to inefficient Oslo Accord-era mechanisms. Israeli businesses
could not be sure that court decisions would be enforced in Palestinian areas,
while Palestinians felt disadvantaged by Israeli law, especially when up against
larger, more powerful businesses. With Palestinian courts generally hostile to
Israelis, they made a poor alternative.
“There was no arrangement, and
most of the deals were done in cash money,” said Shachor.
Because of the
lacking legal mechanisms, businesses relied on cash on delivery and bank
The new system will allow people to take their disputes to
binding arbitration, and is expected to open the doors to other kinds of
contracts, credit and business arrangements.
“Trade between Palestinians
and Israelis currently amounts to over $4 billion each year, giving rise to
thousands of cases of commercial disputes,” ICC chairman Harold McGraw
“The JAC will bring fair, expeditious and cost-efficient dispute
resolution to the region and is expected to help rectify ties between
Palestinian and Israeli business people, opening room for new markets,
attracting local and foreign investments and bringing long-term benefits to the
legal profession here,” he said.
In the past, if, for example, a
Palestinian believed he received faulty goods from an Israeli manufacturer – or
vice versa – there was little effective recourse. The JAC decisions, on the
other hand, will be recognized by judicial authorities that are legally
coordinated, and enforceable on both sides.
“Now there’s an international
recourse with a larger partner, because Israel is by far the stronger party,”
said Zahi Khouri, a Palestinian businessman and JAC board member.
presence of an agreed-upon arbitration committee will comfort investors as
In May, US Secretary of State John Kerry unveiled a
$4b. plan to boost the Palestinian economy, hoping it would spur greater
success in peace negotiations.
A World Bank report issued last month
found that Israeli restrictions cost the Palestinian economy some $3.4b.
annually – about 35 percent of its GDP.
Khouri says the JAC is unrelated
to the peace talks, and is simply a tool that will benefit both
“It has nothing to do with any economic peace or Kerry plan – it’s
purely an arbitration center to serve the private sector,” he said.
wish we had something like that to judge the Oslo agreement. That was the
biggest failure. There was no accountability,” he said.
Shachor sees it
“The positivity that comes from economic
cooperation will neutralize the violent situation, which is an outcome of
poverty, anger and plenty of other things,” he said.