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Conflict of Laws in Torts
Preface
Israeli Courts have dealt with the issue of "Conflict of Laws" in numerous cases, mainly due to the geographic proximity between the State of Israel and the West Bank, and the interdependency of Palestinian and Israeli markets. Until the year 2000 tens of thousands of Palestinians were employed in the West Bank (where Jordanian law applies) by Israeli Companies, and in Israel (where the Israeli law applies). Hence, the Court has often been called upon to decide which law is properly applicable to the accident, and accordingly, what reliefs are available to the parties.
The definitive importance of the issue of Conflict of Laws is expressed in the question of scope of compensation, which according to Jordanian law is typically far lower than that awarded under Israeli law, which in turn is lower than that typically awarded according to European or American standards.
Our firm has been involved over the past few years in a number of cases in which conflict of laws issues have been dealt with, both in cases of claims held in foreign Courts filed by Israelis who were injured outside of Israel, or foreign citizens injured in Israel, and who filed their claims in Israel.
Israeli Court Rulings on the Issue of Conflict of Laws
General
The Conflict of Laws is one of the most complicated issues in Israeli Law.
Until recently, the position of Israeli Law was ambiguous, and was based on different interpretations adopted from various legal systems, with no Supreme Court precedent.
In C. A. 1432/03 Yinon Food Products Producing and Marketing Ltd. v. Magda Kar'an Tak - Supreme 2004(3)88, the Supreme Court dealt with this issue directly, and made a thorough review thereof, reviewing various law systems worldwide.
The Claim
A Palestinian woman living in Kalkilia (in the West Bank), employed by an Israeli company, was injured at her work place (an Israeli settlement in the West Bank). Which law should be applied to a claim in torts filed by the injured: the Jordanian Law (which applies in the West Bank), according to which the injured should be compensated regardless of proof of liability up to a limited amount, or the Israeli Law, which was applied in this case by the District Court?
The difference in the amounts involved was between $43,000 - according to Jordanian Law, and on the other hand, $360,000 -according to Israeli Law (i.e. in the District Court judgment).
Supreme Court Ruling
The Israeli Supreme Court, following a thorough review of legal systems around the world (Common Law, Continental Law, American Law, Canadian Law, Australian Law, etc.) determined that in cases where an international element is involved, as a basic rule, the Law of the country where the tort occurred should apply unless there are considerations justifying the deviation from this rule.
When the element of the geographic place of the tort is purely incidental and most linkages lead to another country, the Court will have to decide to which country most of the linkages lead and which Law should be applied.
In this case, the fact that the woman was injured in the West Bank where Jordanian Law applies was purely incidental, since she was injured on Israeli premises owned by an Israeli employer. Therefore it will be justified to apply Israeli Law, even though the injured herself was Palestinian.
Should the Court apply common Israeli Standards to non-Israeli Plaintiffs?
General
After the Court has dealt with the issue of applicable law, the next stage is to reach a decision regarding the extent of compensation.
According to Israeli Court judgments based on American and English judgements, the extent of damages to which a person injured in Israel is entitled should be made, in principle, according to standards which apply to an Israeli injured.
However, since the compensation is intended to reinstate the situation prior to the accident as far as possible, and this may be done by compensating the insured for his actual damage, the domicile of the injured has a direct influence on the extent of damages.
The following cases demonstrate the situation more clearly.
1. C.A. 702/87 The State of Israel v. John Cohen P.D. 48(2)705
The Claim
John Cohen, an American boy visiting Israel, participated in a tour to the Ramat Hagolan region together with a group of youngsters from the U.S.A.
The guide from of the Nature Protection Society did not warn the group concerning the route of the trip and did not explain the risks involved due to the absence of safety arrangements along the path.
John slipped into an abyss and sustained severe injuries.
The claim was filed in an Israeli Court , which had to deal with the question of the appropriate standards for quantum of damage.
The Supreme Court Ruling
According to the Supreme Court ruling, the assessment of damages should, as a general rule, be made in accordance with the standards applied to an Israeli injured.
However, since the compensation is intended to reinstate the previous situation as far as possible, and this may be done by compensating the injured for his actual losses as incurred in his place of domicile, the assessment of compensation for medical expenses and loss of earnings should be calculated according to a reasonable level of expenses and earnings in the U.S.A.
The Court applied the same reasoning to additional future expenses, such as travel expenses, third party assistance, etc., which will obviously be incurred abroad.
However, regarding additional heads of damage, such as pain and suffering and legal fees, the Court ruled that they should be awarded according to Israeli standards.
2. D.A. 1314/94 (Haifa) Muhammad Sultan v. Sallah Nabil
The Claim
An 8 year old Palestinian resident of Saudi Arabia was severely injured in a car accident while visiting Jericho, a city located in the West Bank. As a result of the accident, he suffered permanent severe disability, partial paralysis and brain damage. The boy himself and his parents are Jordanian citizens.
District Court Ruling:
Although the boy and his parents do not have and apparently will not have Saudi Arabian citizenship, it can be presumed that the family will continue to live in Saudi Arabia.
Based on the Supreme Court ruling in the John Cohen case, the compensation amount should be assessed, in principle, according to the standards applied to an injured Israeli. However different factors linked to his place of residence (i.e. Saudi Arabia ) which can influence the compensation amount, should be taken into consideration, and thus the compensation award was lower in comparison to the Israeli standards.
Conclusion
When a foreign citizen is injured in Israel, he will be compensated according to the standards applied to an Israeli injured, except for those heads of damages which reflect his actual expenses incurred, or will be incurred abroad, and loss of earning which is calculated according to the standards of his domicile.
In the opposite situation, where an Israeli is injured overseas and the claim is filed to a foreign court, the same principle should apply, and his loss of earnings, etc. should be assessed in view of Israeli standards.
It should be emphasized that the John Cohen precedent is based, inter alia, on American and English judgments, which were cited in the Supreme Court judgment.
Recently, a multinational company was sued in U.S.A. by a family member of an employee who drove a car belonging to the company during a visit in the U.S.A. The claim was filed in an American court, and Plaintiff argued that American Law and standards should be applied, especially regarding the 4 main heads of damage, i.e. Third Party Assistance, Non-pecuniary Loss (pain and suffering), medical expenses and loss of earnings.
In light of the Supreme Court's ruling in the Cohen case, our legal opinion regarding the extent of damage was that Israeli standards should apply with regard to loss of earnings, medical expenses and Third Party assistance heads of damage, which led to a settlement in an amount substantially lower than that offered originally.
Aspects which should be taken into Consideration while Applying Israeli Law Standards regarding Compensation Amounts for Bodily Injuries
Israeli standards of compensation amounts for bodily injuries are characterized by two additional features.
First, the National Insurance Institute, which provides indemnification for every injured person who suffers from permanent disability as the result of a work
related injury or illness.
Naturally, the amount of indemnification received from the NII is deducted from the general compensation amount awarded by the Court .
Second, the National Health Insurance which covers most medical expenses. Therefore, since the State covers most of the medical expenses, the compensation amount for this head of damage will be negligible.
Israeli Standards Applied to Several Heads of Damage
1. Non-pecuniary loss:
The Israeli standards regarding pain and suffering have been recently changed and increased, however, they are still much lower than American or European standards.
The highest amounts awarded by the Court for permanent disability of an injured party are in the region of $150,000 to $200,000. For example, in C.A. 5145/02 Debora Gross v. Paz Gaz Marketing Ltd. the Supreme Court awarded NIS 750,000 (approximately $167,000) for pain and suffering and shortening of the life span in the case of a 3 year old girl who died as the result of breathing toxic smoke.
2. Third Party Assistance:
The highest payments awarded by the Court are in the region of $2,500 - $3,000 per month.
In C.A. 3613/99 Arie Axelrod v. Tzur-Shamir Insurance Company and Others, these amounts were awarded to an 18 year old injured in a road accident, totally paralyzed, unable to control his needs, is 100% disabled and requires a caregiver for 24 hours a day, and an additional caregiver for several hours daily.
3. Medical Expenses
As mentioned above, all medical expenses of every Israeli citizen are covered, in principle, according to the Health Insurance Law and therefore, the amounts the Court awards for even severely injured parties are negligible (for the few medical expenses which are not covered, private doctors, etc).
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