Ortam Sahar’s claim rejected against the developers of the prestigious Sea One Tower in Tel Aviv

Three years ago the Court rejected Ortam Sahar’s request to appoint an arbitrator because it did not to meet the conditions required for his appointment. The company did not appeal and turned to the Court, so its path to filing a lawsuit was blocked. The current judgment strengthens the institution of arbitration

17.02.19 | Moshe Goraly

The Tel Aviv District Court last week rejected the claim of construction company Ortam Sahar against Electra Real Estate and Oranim, developers of Sea One, the luxury tower on the Tel Aviv shoreline. Ortam Sahar, the executing company of the tower, claimed “a debt and cumulative damages” of ILS 43.6 million.

Judge Naftali Shilo rejected the claim because the parties chose a different dispute resolution mechanism – to apply to the construction supervisor and thereafter to an arbitrator-engineer. “The claims of the plaintiff (Ortam Sahar – M.G.) are not to be accepted since in addition to the unique arbitration route, it also has the option of appealing via the court,” the judgment stated. In other words, in the absence of the special circumstances that appear explicitly in the agreement between the companies, they must follow an exclusive arbitration mechanism.

Three years ago, Judge Yehudit Shevach rejected Ortam Sahar’s request to appoint an arbitrator because it did not meet the conditions required for such an appointment. Ortam did not contest that decision, and thus, according to the judgment, its option for suing in court was blocked.

“It is not possible to appeal to the court while bypassing the terms agreed upon in the agreement,” wrote Judge Shilo. “The plaintiff’s failure to comply with the preconditions prevents it from exercising both the arbitration mechanism and the right to appeal to the court. The court will not award a prize for abandoning the arbitration path and its conditions”.

The judgment strengthens the arbitration mechanism. “To agree to the plaintiff’s request to clarify the action in the court,” wrote the Judge, “would create an opening for any party that does not wish to carry out arbitration set forth in preconditions, to avoid fulfilling the conditions, abandon the arbitration process to which it committed in an agreement, and conduct proceedings in court. This should not be permitted”.

Ortam Sahar was represented by Avi Weinroth & Co. and Electra Real Estate was represented by Hamburger Evron & Co.