Haifa Court Rejects NIS 1.2 Billion Payment Demand From Rafael to Kiryat Yam Municipality

The Haifa District Court has annulled a payment demand of approximately 1.2 billion shekels issued by the Kiryat Yam municipality to Rafael Advanced Defense Systems, the manufacturer of the Iron Dome. Additionally, the court ordered the municipality to pay Rafael 100,000 shekels in legal costs. However, the court rejected Rafael's claim that the municipality lacks legal authority to impose mandatory payments such as development levies on the company. The judge ruled that the municipality may reassess the matter and issue a new payment demand based on accurate calculations.

The dispute began in April 2022 when Rafael filed a petition against Kiryat Yam municipality, challenging what it described as an unprecedented levy demand on the long-established "David Institute" defense complex. Rafael argued that the demand came as a complete surprise since the complex is a separate area nearly one and a half times the size of Kiryat Yam itself, where Rafael has operated independently for over 70 years. Until late July 2018, most of the complex was not under any municipal jurisdiction.

The municipality contended that the payment demand was lawful, citing municipal bylaws and court precedents that infrastructure work performed by the municipality justifies levying fees on Rafael. The court found that Rafael's complex spans about 6,800 dunams, with roughly 6,000 dunams within Kiryat Yam's jurisdiction. The judge concluded that the payment demand contained significant calculation errors and ordered the municipality to revise it accordingly.

The ruling does not prevent Kiryat Yam from issuing a new demand in the future, but it must be based on proper and precise calculations. The municipality stated that Rafael is not a separate entity within Kiryat Yam and that even a large, unique complex must contribute to the city's development and infrastructure costs.