Beit Midrash

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based on ruling 75123 of the Eretz Hemdah-Gazit Rabbinical Courts

Interpreting an Arbitration Clause

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Beit Din Eretz Hemda - Gazit

Sivan 8 5781
Case: The plaintiff (=pl) rented out his apartment to the defendant (=def), and a dispute arose between them. Pl decided to sue def at Eretz Hemdah-Gazit, which def opposes. The contract includes a clause that "conflicts will be decided in Beit Din X or in any beit din that the landlord decides." Def understands this as giving authority to pl to choose the beit din only if Beit Din X is unable or unwilling to adjudicate. Def also claims that this is not a valid arbitration clause because it is not identified in the contract as such. Def also raised the possibility that this part of the contract is forged because it is among the pages of the contract that is not initialed. Furthermore, the question of deciding how to interpret an arbitration agreement should be adjudicated in the beit din of def’s choice. Pl counters that since the clause is clear, if def refuses to submit to Beit Din Eretz Hemdah’s jurisdiction, as pl wants, beit din should adjudicate in abstentia or allow pl to sue in secular court. Def argues that it is illegal to rule in abstentia.

Ruling: There is no need, according to neither Halacha nor secular law, for an arbitration clause to be labeled as such if its content indicates that this is the clause’s function. Def’s claim of possible forgery is a serious one. Def should have a copy of the rental contract. If it is different from the one that pl sent to beit din, this supports the claim of forgery, but def did not present such an alternative contract, making it wrong to propose the claim with scant basis.

Def’s claim that beit din categorically cannot rule in abstentia is incorrect. If it is determined that beit din has jurisdiction and the defendant consciously refused to come without justification and does not give in to pressure (see Shut Maharil Diskin, P’sakim 52), beit din may hear the plaintiff’s claims, investigate the matter, and rule (Maharam Shick, Choshen Mishpat 2; Guidelines of the Israeli Rabbinical Courts). On the other hand, this is an unusual step that is contemplated only when there is no choice. In this case, def has an argument over jurisdiction and is not outright refusing to adjudicate. Therefore, ruling in abstentia is not currently "on the table."

The correct reading of the arbitration clause is not a trivial matter. According to the laws of arbitration, a court is incapable of making a binding determination (when one is needed) about its own jurisdiction. According to law, the jurisdiction is adjudicated by the governmental courts. However, since both sides are G-d-fearing people who agree to go to beit din, it is proper that another beit din determine it. Def is correct that as the defendant, he gets to choose the venue (Shulchan Aruch, CM 14), and therefore they should bring their preliminary dispute to Beit Din X to rule on jurisdiction. If Beit Din X rules that the adjudication should be by us, then even according to def’s reading of the arbitration agreement, they must do so.
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