Bank Leumi to Transfer $3 Million in UNRWA Funds to Jerusalem Municipality
Translated & summarized from Bizportal by baba
Jerusalem District Court Judge Hana Sandberg ruled that Bank Leumi must transfer 11 million shekels from UNRWA's account to the Jerusalem Municipality to cover property tax debt for 2024-2025. The ruling follows Knesset legislation in October 2024 to end UNRWA's operations in Israel, making the agency liable for taxes. UNRWA did not appeal the tax notices or claim immunity in legal proceedings, leading the court to reject its arguments against the fund transfer. The decision allows the municipality to collect the outstanding taxes from UNRWA's frozen assets.
The story in 5 lines · by baba
- Bank Leumi ordered to transfer 11 million shekels from UNRWA to Jerusalem Municipality for tax debt.
- The ruling follows Knesset legislation in October 2024 to end UNRWA's operations in Israel.
- UNRWA's property tax exemption ended, making it liable for taxes from 2024.
- The court rejected UNRWA's claims of immunity and its challenge to Israeli law.
- UNRWA did not appeal tax notices or claim immunity during objection proceedings.
Bank Leumi will transfer 11 million shekels (approximately $3 million) from UNRWA's account to the Jerusalem Municipality to cover its property tax debt for 2024-2025. The ruling was made by Jerusalem District Court Judge Hana Sandberg.
Bank Leumi froze UNRWA's account in February 2024, following Israeli intelligence indicating infiltration of Hamas and other terror group operatives into the agency. In October 2024, the Knesset passed legislation to cease UNRWA's operations in Israel and prohibit contact with it. Previously exempt from property taxes, UNRWA became liable following this legislation, prompting the municipality to pursue collection for 2024 and 2025. The state seized UNRWA's assets in Jerusalem in 2026.
UNRWA did not appeal the tax notices, which became final. The agency operated in Israel under a 1967 agreement with the Israeli government, which was temporary and revocable. The October 2024 laws effectively canceled this agreement. While other parties petitioned the High Court of Justice against the laws, they were advised against pursuing their petitions due to a lack of grounds for judicial review and the petitions were withdrawn.
Judge Sandberg stated that UNRWA did not claim immunity during the property tax objection proceedings and therefore cannot indirectly challenge the seizure of its funds by opposing the bank's actions. Diplomatic correspondence with the Foreign Ministry does not substitute for proper legal objection procedures. Sandberg further clarified that UNRWA lacks diplomatic immunity, as its tax exemption expired with the 1967 agreement. She rejected the claim of UNRWA being an auxiliary body of the UN, noting that if this were true, the 1967 exchange of letters would have been unnecessary. The absence of the Attorney General's representative in the proceedings also suggested a lack of diplomatic immunity.
Sandberg emphasized that UNRWA's central argument, that the court should disregard Israeli legislation aimed at ending its operations, contradicts established legal principles. She cited Supreme Court precedents stating that domestic Israeli law supersedes claims regarding the application of international agreements. The judge also noted that while the 1967 letters were canceled in October 2024, UNRWA could be liable for property taxes from January 2024, and retroactively charged as long as the fiscal year had not ended. UNRWA did not contest this charge. Sandberg ordered Bank Leumi to place the lien on UNRWA's account for the Jerusalem Municipality and then transfer the funds.
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