Israeli court refuses to enforce €20m ruling against Spanish gov’t

German company Sunflower cannot enforce in Israel a binding arbitration award requiring the Spanish government to pay it €18.4 million plus €1.5 million in costs. Tel Aviv District Court Judge Judith Shevach ruled that Israel is not the proper forum for enforcing the award.

Sunflower and Israeli company Shikun & Binui Energy sued the Spanish government for €78 million, claiming Spain had reduced electricity prices in three solar energy projects established by the two companies, and subsequently sold. Both companies argued that they relied on the terms set by Spain in 2007, and that Spain had no authority to alter them between 2010 and 2014.

The award was issued by the International Centre for Settlement of Investment Disputes (ICSID), operating in Paris under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The arbitration was held pursuant to the Energy Charter Treaty (EST), which regulates international investments in the energy sector.

Spain argued that Israel is not the appropriate forum for enforcing the award: Unlike Shikun & Binui, no Israeli party was involved in the dispute between Spain and Sunflower; the parties had no expectation of litigating in Israel; Spain has no assets in Israel; and Sunflower should appeal to a German court instead. Sunflower argued that the ICSID Convention obligates the Israeli court to enforce the arbitration award because award beneficiaries are entitled to enforce it in any country they choose.

Judge Shevach accepted Spain’s position and said, “It is easy to see that there is no connection between the Sunflower-Spain dispute and Israel. Sunflower is a German company incorporated in Germany; the photovoltaic fields were built on Spanish soil; the investment was made in Spain; the applicable law is European law; the subsidy decree is a Spanish one; and the arbitration proceedings were conducted in France.”

Judge Shevach further pointed out that Sunflower’s chairperson, Navot Bar, did not address in his affidavit the existence of Spanish assets in Israel or any expectation that the award would be enforced in Israel.

“Sunflower does not deny its ability to file these proceedings in Germany, its country of incorporation, or in Spain, where the dispute arose, or in other EU countries. It did not do so not because it feared unfair proceedings in those countries, but because it knew its request would be rejected,” Shevach added. Israel has no interest in adjudicating disputes at the expense of local litigants, and granting such a request would impose a real burden on the courts.

Judge Shevach further dismissed the claim that the ICSID Convention deprives the court of any discretion: “This sweeping claim, which would completely deny a court any discretion and turn it into an administrative body, or a kind of clerk, required to rubber-stamp every recognition and enforcement request for an ICSID arbitration award, does not align with the essence of the judicial function, nor with the spirit of the law.”

Judge Shevach insisted, “It is inconceivable that Israeli courts shall become a global receptacle for recognition and enforcement proceedings from litigants in distant countries with no connection to Israel other than its membership in the Convention, at the expense of the regular administration of justice”

This is especially problematic since applications for enforcement of arbitration awards are not subject to court fees.

“The State of Israel should not lend itself to a possible attempt by a successful arbitration party to harass its opponent, who lives on the other side of the continent, where all his assets are located, by dragging him into legal proceedings in Israel with no connection to the country other than its Convention membership,” Shevah added.

Judge Shevach noted that Israeli courts have already ruled that they retain discretion in enforcing such awards. In this case, she concluded, “Refraining from engaging in the proceedings out of public interest, for the sake of proper order, to avoid embroiling ourselves in a matter with no connection to Israel. Exercising discretion here calls for non-intervention, for preserving the principle of international courtesy and for mutual respect toward the hierarchy of norms accepted within the EU legal system.”

Sunflower was represented by Advs. Eli Cohen, Nir Kedar, Nuna Lerner and Nathan Rothstein of the Gornitzky GNY law firm. The Spanish government was represented by Advs. Yossi Markovich, Ittai Gross and Nathaniel Agou of the Pearl Cohen law firm. The European Commission was represented by Advs. Jonathan Berman and Uri Edelstein of the law firm of Rhahan Har-Zahav, Edelstein, Berman law firm, and the Israeli government’s Attorney General was represented by Adv. Iris Gilbard.

Published by Globes, Israel business news – en.globes.co.il – on September 4, 2025.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.