Arbitration center for Israeli-Palestinian business disputes launches

Jerusalem Arbitration Center aims to boost Israeli-Palestinian economic ties with agreed upon commercial dispute mechanism.

By
November 18, 2013 18:26
2 minute read.
Founders of Palestinian-Israeli arbitration center.

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 JAC.

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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 guarantees.

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 said.

“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.

The presence of an agreed-upon arbitration committee will comfort investors as well.

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 sides.

“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.

“I 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 somewhat differently.

“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.


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