Israel updates

Aviation

Contributed by Levitan, Sharon & Co
Direct flight to final destination instead of delay in first segment not considered cancelled flight
  • Israel
  • 04 March 2020

The Tel Aviv District Court recently approved an appeal filed by Ukraine International Airlines and determined that the provision of alternative flight tickets resulting in a delay of less than eight hours following a delay in the first segment of a journey did not constitute the cancellation of a flight under the Aviation Services Law. The decision overturned a Small Claims Court decision and provides clarity on the meaning of a 'cancelled flight' under Israeli law.

Lightning damage to aircraft on incoming flights – Aviation Services Law special circumstances
  • Israel
  • 13 November 2019

In most cases, flights are operated by aircraft that arrive at an airport from a previous flight. As such, flights are sometimes delayed or cancelled due to a delay or cancellation of the previous flight. The Tel Aviv District Court recently denied a motion for leave to appeal filed by a passenger whose claim regarding the cancellation of his flight due to lightning damage to the aircraft which had occurred during the previous flight was denied by the Tel Aviv Small Claims Court.

What is considered a cancelled flight under the Aviation Services Law?
  • Israel
  • 14 August 2019

The Small Claims Court recently rejected two passengers' claim that their flight should be considered a cancelled flight under the Aviation Services Law. The case examined whether an airline should pay compensation for a missed connecting flight when passengers book two flights from the same company with a short connection time.

Courts underline passengers' duty to arrive at departure gate on time
  • Israel
  • 29 May 2019

Under the Aviation Services Law (Compensation and Assistance for Flight Cancellation or Change of Conditions), passengers who are denied boarding are entitled to compensation. However, in two recent district court judgments concerning passengers that were denied boarding, the courts found that passengers must arrive at the boarding gate on time. As this duty had not been fulfilled in either case, the airlines were not obliged to pay compensation.

When are technical malfunctions considered special circumstances?
  • Israel
  • 27 February 2019

The Beit Shean Small Claims Court recently declined a claim for compensation under the Aviation Services Law due to a delayed flight. The plaintiff had booked a return flight from Tel Aviv to Amsterdam with Arkia Airlines, which arrived in Amsterdam late after a nine-and-a-half-hour delay due to a technical fault. The court dismissed the claim and found that Arkia had proved that the technical malfunction had been caused by a fault in the aircraft's wing shelving, which had been beyond the airline's control.


Banking & Financial Services

Initial public offerings – an overview
Fischer Behar Chen Well Orion & Co
  • Israel
  • 02 July 2019

The second half of 2018 was characterised by a sharp decrease in the number of equity and debt initial public offerings in Israel and a significant rise in bond yields. The Tel Aviv Stock Exchange (TASE) and the Israeli Securities Authority continue to promote various initiatives to encourage non-Israeli issuers to list on the TASE, including the publication of a bulletin clarifying the rules that apply to the public offering of securities, listing and delisting and ongoing disclosures by dual-listed companies.

New bulletin aims to clarify dual listing process
Fischer Behar Chen Well Orion & Co
  • Israel
  • 15 January 2019

The Corporate Finance Department at the Israel Securities Authority recently issued its Staff Legal Bulletin on dual-listed companies. The bulletin is a summary of the most up-to-date information on the issuance, reporting, listing and delisting of dual-listed companies and is intended to clarify and reflect these processes for dual-listed companies and companies considering dual listing.

Law for the Reduction of Cash Use introduced
Fischer Behar Chen Well Orion & Co
  • Israel
  • 11 January 2019

The Law for the Reduction of Cash Use, which came into force on 1 January 2019, imposes certain restrictions on the use of cash and cheques that do not name the payee. The law aims to reduce cash transactions in an effort to fight financial crime and money laundering and foster the use of more modern and efficient payment methods. Violation of the law may constitute a criminal offence, resulting in financial penalties and imprisonment.

Committee report on promotion of publicly traded infrastructure investment funds
Fischer Behar Chen Well Orion & Co
  • Israel
  • 04 December 2018

An inter-ministerial committee was recently set up to promote the establishment of publicly traded funds for investment in infrastructure. The committee was formed to examine and recommend measures and actions that would encourage the establishment of traded infrastructure funds in order to increase the availability of financing sources for infrastructure projects, reduce the financial costs of these projects and enable small investors to directly participate and own these projects.

Supreme Court reaffirms application of foreign law to dual-listed companies
Fischer Behar Chen Well Orion & Co
  • Israel
  • 06 November 2018

The Supreme Court recently confirmed that the liability for breaches of reporting obligations in the secondary market by dual-listed companies is governed by the securities laws of the foreign trading jurisdiction. The governing law with respect to the liability of a dual-listed company's external auditors is also the law of the foreign jurisdiction in which the company's shares are traded.


Competition & Antitrust

Contributed by Tadmor Levy & Co
Attorney general takes cautious and restrained approach regarding excessive pricing
  • Israel
  • 25 June 2020

The attorney general (AG) recently submitted his opinion regarding the applicability of the excessive pricing prohibition under Israeli law and the appropriate test for its application. Adopting the Israeli Competition Authority's current opinion regarding excessive pricing while opposing the broad approach taken by the court in the Central Bottling Company case, the AG maintained that the Supreme Court should determine that the Competition Law prohibits monopolists from setting unfairly high prices.

ICA addresses application of Economic Competition Law during COVID-19 crisis
  • Israel
  • 09 April 2020

The Israeli Competition Authority recently published several clarifications regarding the application of the Economic Competition Law 5748-1988 in light of the COVID-19 pandemic. The clarifications refer to three main issues – namely, collaboration arrangements between competitors, gun-jumping rules in merger cases and postponement of reports required under the Law for the Advancement of Competition in the Food Sector 2014.

ICA updates methodology for determining monetary penalties
  • Israel
  • 19 December 2019

In February 2019 the Israel Competition Authority (ICA) published for public consultation a draft amendment to Public Statement 1/16: Considerations of the Competition Commissioner in Determining the Amount of a Monetary Penalty. Following public comments on the draft amendment, the ICA has now published a final amended statement. As such, the ICA's new methodology for imposing monetary penalties has taken full effect.

Competition authority initiates wide-reaching reform of merger reporting regulations
  • Israel
  • 15 August 2019

The Israel Competition Authority recently published a draft amendment to the Antitrust Regulations (Registry, Publication and Reporting of Transactions) for public consultation. The draft includes significant and far-reaching changes regarding the scope of the transactions that will require merger approval by the competition commissioner, as well as the extent of the disclosure that will be required when filing merger notifications.

Draft guidelines on competition law amendments published
  • Israel
  • 30 May 2019

In January 2019 Parliament passed a comprehensive amendment to the Economic Competition Law 1988. Among other things, the amendment introduced an alternative definition of a 'monopoly' based on a market power test rather than market share and significantly increased the maximum cap for monetary administrative penalties which can be levied on corporations. To put the new rules into practice, the Israel Competition Authority recently published draft guidelines on both of these matters.


Corporate & Commercial

Coronavirus and contract law
  • Israel
  • 23 March 2020

The ongoing global outbreak and spread of novel coronavirus 2019 (COVID-19) is a dramatic event of global proportions, with far-reaching implications for a wide range of areas. The spread of COVID-19 directly affects many aspects of commerce and business – both domestic and international. Contract law in Israel provides several tools for dealing with such situations, including the doctrine of frustration, force majeure clauses, 'approximate' or 'cy-pres' performance and consumer protection legislation.


Corporate Tax

Contributed by Fischer Behar Chen Well Orion & Co
Recent tax ruling provides for priority technological enterprise status for cloud services
  • Israel
  • 25 September 2020

The Tax Authority recently published a tax ruling addressing priority technological enterprise status with respect to an Israeli company that engages in the development and provision of cloud service platforms. The ruling provides that, subject to the Investment Law, income derived from the right to use a company's cloud platforms will be classified as income generated by a technological enterprise and, therefore, will be entitled to the Investment Law's reduced tax rates.

Intercompany transactions – burden of proving arm's-length pricing
  • Israel
  • 26 June 2020

The Israel Tax Authority (ITA) recently published a tax circular to clarify cases in which a transfer pricing study filed by a taxpayer will be considered to fulfil legal requirements and thus shift the burden of proof in the assessment process framework to an ITA inspector, in contrast to the general rule that the burden of proof rests with the taxpayer.

Zero-rate VAT on services to foreign residents – fact or fiction?
  • Israel
  • 08 May 2020

The Value Added Tax (VAT) Law sets out that zero-rate VAT applies to the export of services to a foreign resident. However, recent judgments have interpreted such relief in a narrow manner and have significantly reduced the ability to charge zero-rate VAT on services rendered to foreign residents.

District court clarifies status of Section 102 shares held in trust
  • Israel
  • 13 March 2020

On 16 December 2019 the Haifa District Court determined that so long as shares awarded pursuant to Section 102 of the Israeli Income Tax Ordinance (New Version) are held by a trustee for the benefit of a grantee, they confer no shareholder rights on the grantee. The judgment also reinforced the practice of requiring Section 102 grantees to sign an irrevocable proxy.

Tax implications of sale of functions, assets and risks to affiliates
  • Israel
  • 17 January 2020

In a recent decision, a district court in Israel ruled in favour of Broadcom Semiconductor Ltd and rejected the Israeli Tax Authority's claim that Broadcom Semiconductor was required to pay additional taxes of NIS100 million due to the deemed sale of its main functions and assets to affiliated companies. In its decision, the court ruled that a change of a company's business model would not necessarily be deemed as a sale of its assets (and, in particular, a sale of its intellectual property).