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A new bill memorandum published by the Israeli Ministry of Justice proposes to codify and expand upon recent court rulings by formally applying Israeli laws to foreign companies that direct their business activities toward customers in Israel. The bill establishes a clear “directing activities” test, lists the specific Israeli laws that would apply (such as consumer and privacy protection laws), and introduces new obligations for foreign companies, including the requirement to provide a local address for service of legal documents.
Further to our previous client updates from September 2022 and June 2024 regarding the evolving trend in Israeli case law, a new bill memorandum has been published by the Israeli Ministry of Justice. This bill, titled “Applicability of Laws to a Foreign Dealer Directing its Activities to Customers in Israel, 2026”, proposes to formally apply Israeli law to foreign companies that direct their business activities toward customers in Israel.
This development follows a series of Supreme Court decisions that have increasingly challenged the validity of choice of law clauses in standard form contracts between foreign corporations and Israeli consumers. In one of these cases, the Supreme Court established that when a foreign company actively and intentionally targets the Israeli market, a contractual clause stipulating that a foreign law will govern the agreement is likely to be deemed a “depriving condition” under the Standard Form Contracts Law, and therefore void. The primary reasoning in these cases is that such clauses unfairly disadvantage Israeli consumers by stripping them of the protections afforded by Israeli laws.
The new bill seeks to formalize this judicial principle by establishing a clear statutory framework. A central element is that a foreign dealer (an entity whose central activity is outside of Israel) will be considered to be “directing activities” toward Israel if it takes proactive measures to operate in or promote its business within the Israeli market. In such a case, several key Israeli laws – including the Consumer Protection Law, Privacy Protection Law, and Standard Form Contracts Law – will automatically apply to the transactions with Israeli customers. However, the bill seeks to grant Courts discretion, in exceptional cases, to rule that these laws will not apply if their application would significantly harm the public interest.
Furthermore, the bill proposes to amend the Standard Form Contracts Law to explicitly state that a condition determining that the governing law is foreign, or granting the supplier the exclusive right to choose the governing law, is presumed to be a depriving condition.
In addition to codifying the principles from recent case law, the bill introduces several new requirements. Notably, it proposes that a foreign dealer targeting Israel must prominently publish, on its website, an official address of its representative in Israel or an email address for the purpose of receiving legal documents and claims.
Our firm has extensive experience in handling consumer protection claims and cross-border litigation, providing tailored legal solutions to businesses facing such challenges and effectively navigating the complexities of dispute resolution.
For further information, please contact Ran Sprinzak or Tomer Weissman, our Dispute Resolution Department heads, or Hadas Bekel, our Dispute Resolution partner and class actions specialist.
