Judge Overturns Arbitration Award Over Public Policy Violation

A Tel Aviv District Court judge has overturned a portion of an arbitration ruling, citing a violation of public policy. Judge Yehudit Shevah ruled that the part of the award by retired Judge Dania Kert-Meir, which extended compensation payments for delayed construction by 11 years, was contrary to public policy. The original dispute stemmed from a 2009 "combination agreement" for a construction project in Afula between developers Uziel Neeman and A.D.A. Tamir Entrepreneurship and Construction, and landowners Ezra Shalom, Yael Shalom, Gil Sofer, Erez Sasson, and Shi Sasson. Only one of the three planned buildings was completed.

The landowners sued for NIS 2.7 million and sought to have the developers removed from the land, while the developers counter-sued for NIS 9 million. The initial arbitrator, Adv. Ofir Shear, awarded the landowners NIS 500,000 for the delay. Both parties appealed to Kert-Meir, who then canceled the agreement and ruled that the developers must pay an additional $150,000 in agreed-upon damages, with compensation to be paid until the date of her arbitration award.

The developers petitioned the court to overturn Kert-Meir's ruling, arguing she interfered with factual findings and ruled against fundamental contract law principles. Judge Shevah largely rejected this, noting Kert-Meir's thorough review of the initial arbitration. However, Shevah agreed that extending the compensation period until the arbitration award date (January 2026), rather than the original arbitrator's proposed end date (December 2015), created an incentive for prolonging arbitration proceedings and thus violated public policy.

Shevah reinstated Shear's decision that compensation for the delay would be paid only until the date the lawsuit was filed. The landowners were ordered to pay NIS 20,000 in legal costs.