Israeli Court Orders Bank to Refund Overcharged SWIFT Fees

A Haifa District Court has ordered the International Bank for Foreign Trade to refund large business clients for overcharging on SWIFT messages used for international money transfers. Senior Judge Ron Sokol ruled on October 18 that the actual cost of a SWIFT message is 5.7 shekels, significantly less than the $13 fee the bank had been charging. The refund applies to payments made from March 31, 2015, to June 2024, with added linkage differentials and interest.

The class-action lawsuit was filed by CyberLogic, a company with an annual turnover exceeding 5 million shekels, classifying it as a large business. CyberLogic argued that the bank should only charge the actual cost of the message, which they calculated to be as low as 0.025 shekels per message.

The bank contended that SWIFT message transmission is a separate service for which it can charge a fee, citing regulatory requirements and system maintenance costs. They also pointed to a previous ruling in March 2024 where a similar request by CyberLogic against other banks was dismissed, and noted that clients sign agreements explicitly consenting to the SWIFT fee. The bank further argued that even if only costs were to be charged, their calculated average cost was 10.34 shekels per message, resulting in only a 2,650 shekel overcharge in total.

However, Judge Sokol based his ruling on the bank's own submitted affidavit from Moran Stark, Head of International Trade and Payments, which stated the service "is intended to ensure that the instruction is received, identified, and processed by the receiving party." The judge interpreted this to mean the message is not a separate service but an integral part of the money transfer itself. He also noted inconsistencies in the bank's own fee schedule, where SWIFT messages were sometimes listed as a fee and other times as an expense or under "mail."

Judge Sokol determined the actual cost by excluding employee salaries for tasks also related to money transfers and correspondent bank fees, focusing only on SWIFT corporation payments and computing costs. Dividing these expenses by the number of messages sent during the period resulted in the 5.7 shekel per message cost. The ruling also cited Israel's Banking Law, which prohibits misleading customers about the nature or price of services, and the principle of interpreting ambiguous contracts against the drafter.

Eligible for refunds are large business clients who paid more than 5.7 shekels per SWIFT message for foreign currency, trade, and diamond transactions. Those who received discounts will only be reimbursed for the difference between their actual payment and 5.7 shekels. The bank has until November 15 to announce if it will appeal the ruling. CyberLogic will receive 5% of the refunded amount as compensation, and its lawyers will receive 20% plus VAT.