Background
Elias Matanes, who operates a dental clinic in Haifa, negotiated with Aplident Ltd. to acquire a dental scanner. Aplident sent him a draft agreement under which he would receive the scanner, order laboratory work from Aplident, and make monthly payments financed by a loan from Payment Financial Technologies Ltd. The draft contained an exclusive clause requiring disputes between Matanes and Aplident to be heard in the Tel Aviv District. Although Matanes did not sign the draft, the scanner was delivered, and he signed a loan agreement with Payment, which transferred the loan proceeds to Aplident. Matanes later returned the scanner and sought to cancel the transaction, but Payment continued debiting his account.
Matanes sued both companies in the Haifa Magistrates’ Court, seeking cancellation of the loan and a declaration that no transaction with Aplident had been formed. Aplident invoked the forum clause; Payment did not contest jurisdiction in Haifa. The Magistrates’ Court transferred the entire action to the Tel Aviv District, and the Haifa District Court denied leave to appeal. Relying in part on the Supreme Court’s 1992 Amidar precedent, the District Court held that the clause required the claim against Aplident to proceed in Tel Aviv and that the claim against Payment should accompany it to avoid fragmented litigation.
The Court’s Holding
The Supreme Court unanimously granted leave to appeal, allowed the appeal, and ordered the entire action returned to the Haifa Magistrates’ Court. Justice Gila Canfy-Steinitz, joined by Justices David Mintz and Yael Wilner, held that the 2018 Civil Procedure Regulations displaced Amidar’s rule that an exclusive forum clause prevails over the rule governing multiple defendants and may require claims to be split between courts.
Under Regulation 7, the ordinary territorial connections and the contractual forum rule now appear together in Regulation 7(a), while Regulation 7(c) provides that a court competent as to any one defendant may hear a multi-defendant action. The Court therefore held that Regulation 7(c) applies to every jurisdictional basis in Regulation 7(a), including a forum-selection agreement. A combined action may consequently be filed either in the contractually selected court or in a court having territorial jurisdiction over another defendant, with the choice ordinarily belonging to the plaintiff.
That choice is subject to good faith: an additional defendant must be joined for substantive reasons rather than tactically to evade a forum clause. Payment’s joinder was not tactical because the loan and scanner transactions were intertwined. Since the Haifa Magistrates’ Court undisputedly had jurisdiction over Payment, it also had jurisdiction over the claim against Aplident. The Court did not resolve whether the unsigned Aplident agreement or its forum clause was valid, and it made no order for costs.
Key Takeaways
- Israel’s current multi-defendant rule applies even when the plaintiff has an exclusive forum-selection agreement with one defendant.
- The plaintiff may select any court that has local jurisdiction over one defendant, including either the contractually chosen court or a court connected to another defendant.
- A plaintiff may not manufacture jurisdiction through tactical or bad-faith joinder; the additional defendant must be joined on substantive grounds.
Why It Matters
The ruling expressly ends Amidar’s approach under the former procedural regulations and removes the presumptive need to split related claims merely because one defendant has an exclusive forum clause. It aligns local-jurisdiction doctrine with the current regulations’ emphasis on efficiency, conserving resources, and avoiding inconsistent judgments.
For contracting parties, an exclusive Israeli forum clause remains controlling in litigation solely between its parties, but it may not determine venue when a legitimately joined additional defendant supplies a different territorial basis for jurisdiction.