Trade arbitration project 'building peace from bottom up'

Jerusalem Arbitration Center will boost bilateral commerce, create jobs for Israelis and Palestinians, planners say.

December 23, 2011 01:47
3 minute read.
Israeli-Palestinian trade arbitration project

Israeli-Palestinian trade arbitration project_311. (photo credit: International Chamber of Commerce Israel)


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The peace process may be stalled, but Israeli and Palestinian business leaders are determined to improve bilateral trade links, International Chamber of Commerce Israel chairman Oren Shahor told The Jerusalem Post on Thursday.

Set to launch in May, the Jerusalem Arbitration Center (JAC) – a joint venture between ICC Israel and Ramallah-based ICC Palestine – will be “an apolitical, efficient, fair, impartial and professional body that will help build trust by settling disputes between Israeli and Palestinian trading partners,” according to Shahor.

First Palestinian-Israeli arbitration center to run in 2012

Initial funding for the project, which will be based in Jerusalem and will operate under the auspices of the ICC headquarters in Paris, has been secured from the Swedish-based Palestine International Business Forum.

JAC will also have two “back offices” in Tel Aviv and Ramallah, staffed by Israeli and Palestinian professionals.

Israeli, Palestinian and international arbitrators will hear disputes, and their decisions will then be approved in a JAC court, which will also comprise experts from Israel, the Palestinian Authority and abroad.

The project has the support of senior ICC officials, including British attorney John Beechey, chairman of the ICC’s Court of Arbitration, who will oversee the JAC’s legal department.

Although the center is not a government or political initiative, Shahor believes it could boost the peace process by improving business relations between Israelis and Palestinians.

He says the center could even become a model for conflict resolution in other parts of the region.

As evidence of how trade brings people together, Shahor notes that he is sharing responsibility for the project with Nablus-born businessman Munib R. Masri, chairman of ICC Palestine.

According to Shahor, Israeli-Palestinian trade, currently worth around $4 billion annually, could be worth even more if the trading partners had a real solution to resolve trade disputes.

“That is a surprising amount of trade, but it could be a whole lot higher,” he said, adding that a major obstacle to bilateral trade was the lack of any real process to resolve trade disputes.

While commercial disputes are an unavoidable part of international trade, there are specific difficulties in settling disagreements between Israelis and Palestinians, according to JAC legal adviser Daniel Reisner, a partner at leading law firm Herzog Fox Neeman.

One difficulty is the unequal balance of commercial power between Israeli and Palestinian trading partners, which occurs because most bilateral trade consists of Israeli companies selling goods to Palestinians.

When trade partners sign an agreement, it is usually easy for the Israeli side to compel Palestinians to agree that the contract will come under the jurisdiction of Israeli law. If a dispute arises, it will be heard before an Israeli court – which Palestinians see as biased.

However, even if the Israeli side does win the dispute, Israeli court rulings are impossible to enforce in the PA, notes Reisner.

The only other solutions currently available are either for Israelis to accept the jurisdiction of Palestinian courts – which Reisner says never happens - or for both sides to forgo signing a contract and hope that nothing goes wrong.

“JAC solves the problem, because it gives the Palestinian side an objective arbitration court supported by the ICC in Paris, and it will also be relatively inexpensive,” Reisner said.

JAC is equally attractive to Israeli companies, Reisner says, because if they win a dispute, the court’s ruling will be enforceable in the PA.

Reisner, who in the past acted as legal adviser to the government during the peace process, dubbed JAC “an attempt to build peace from the bottom up after top-down approaches failed.”

“It’s a win-win solution for Israelis and Palestinians,” he concluded.

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