Background
Giveon, a practicing attorney, had a business arrangement with attorney G’aver under which G’aver referred potential clients to Giveon in exchange for a percentage of attorney fees collected. In the course of their relationship, G’aver filed a monetary claim against Giveon in Jerusalem Small Claims Court for approximately 1.4 million NIS (Israeli Shekels). The Jerusalem court entered judgment in G’aver’s favor on October 12, 2018.
Before the judgment became final, on July 4, 2018, G’aver assigned 17.55% of his rights to recover from the judgment to two attorneys, Van-Amadan and Harel-Schwartz. After judgment was entered, G’aver assigned additional portions of the judgment proceeds to the same two assignees. When Giveon refused to pay the assigned amounts, Van-Amadan and Harel-Schwartz sued in Herzliya Small Claims Court for approximately 330,000 NIS, representing their share of the judgment proceeds.
The Court’s Holding
The Supreme Court denied Giveon’s petition for further appeal, affirming the lower courts’ judgments. The Court recognized that Giveon’s arguments raised potentially important legal questions about the timing of notice in assignments of future rights and what defenses a debtor may assert against an assignee. However, the Court held that these questions have no practical effect on the outcome of this case because Giveon failed to identify any valid set-off claim that arose between the date he learned of the assignment and the date the underlying judgment became final and enforceable.
Giveon claimed one debt—arising from a separate case (Ploni)—was created during the relevant period. However, he admitted in his own submission that he had already collected this debt directly from G’aver before the assignment dispute was resolved. Since a debt may be collected only once, this debt cannot now serve as a set-off against the assigned rights. Accordingly, even if Giveon’s legal arguments were accepted, the judgment against him would remain unchanged.
Key Takeaways
- Under Israeli law, an assignment of rights does not require the debtor’s consent; a creditor may assign future rights to judgment proceeds before the judgment becomes final.
- A debtor may assert set-off rights against an assignee only for obligations of the original creditor that arose before the debtor learned of the assignment.
- Once a debt is collected directly from the creditor, it cannot later be used as a set-off against an assignment of the same creditor’s rights.
- The Supreme Court will not grant a petition for further appeal when accepting the appellant’s legal position would not change the judgment’s outcome.
Why It Matters
This decision clarifies the mechanics of debt assignment in Israeli commercial practice and the scope of defenses available to debtors. While the Court left open important unresolved questions about the precise timing of notice in future-rights assignments, the decision makes clear that debtors cannot escape assigned obligations by pointing to general legal principles if they cannot demonstrate a concrete, currently collectible claim. The ruling protects assignees’ interest in the enforceability of assigned rights while maintaining the debtor’s traditional set-off protections for obligations that predate notice of assignment.
For practitioners, the decision underscores that the assignment of future rights—even before a judgment is final—is a valid and enforceable practice under Israeli law. Debtors who discover an assignment must act promptly to identify and preserve any available set-off claims, as delay or admission of collection through other means will forfeit those defenses.