In short
How do you resolve a business dispute between partners in Israel?
Start with the partnership agreement or the company's articles, which usually set the exit route and the dispute mechanism. Without agreement, the options are negotiating an exit, arbitration if it was agreed, or asking the court for relief, including dissolution.
Resolving a Dispute Between Partners
A business partnership usually begins with trust, and not always with a written agreement. When a dispute arises over profit sharing, investment, withdrawals of money or a partner leaving, the starting point is the agreement between the partners. Where there is no agreement, we look at the Partnerships Ordinance [New Version], 5735-1975, and at what the partners actually did over time.
When the partners cannot continue together, the options are examined: buying out a partner's share, dividing the assets and the customers, or dissolving the partnership. From the start of the dispute it is advisable to document the state of the accounts, the inventory and the customer databases, so that the business is not harmed while the dispute goes on.
Company Law Disputes: Shareholders and Oppression Claims
In a private company, a shareholder whose company is being run by the majority at his or her expense, for example by withholding information, diluting the holding or spending money for the benefit of the controlling shareholders, may apply to the court with an oppression claim under section 191 of the Companies Law, 5759-1999. The court may give directions to remove the oppression, including an order to buy the shares of the oppressed shareholder.
A founders' agreement or shareholders' agreement, with a mechanism for resolving disagreements and an exit mechanism, prevents many of these disputes. It is easier to sign one while relations are good.
Suppliers, Customers and Debts
A customer who does not pay, a supplier who delivered defective goods or delivered late, a subcontractor who did not finish the work: in most cases we begin with a well-prepared demand letter that sets out the contract, the invoices and the correspondence. Such a letter often leads to payment or a settlement without proceedings.
When there is no other choice, we file a claim in court. When there is a real concern that the debtor will hide assets, a temporary attachment can be requested at the outset of the proceedings.
Arbitration and Mediation
Many business contracts contain an arbitration clause, in which case the dispute is heard before an arbitrator rather than in court. Arbitration can be faster and more discreet, but the ability to challenge an arbitration award is limited. Mediation and structured negotiations resolve a large share of business disputes, provided the case is fully prepared when they begin.
What the service includes
- Partner disputes and dissolving a partnership
- Oppression claims and disputes between shareholders
- Founders' agreements and shareholders' agreements
- Collecting debts from customers
- Disputes with suppliers and subcontractors
- Representation in arbitration and in court
When to contact us
- A partner wants to dissolve the partnership or leave
- The controlling shareholders are making decisions at your expense
- A customer is not paying invoices
- A supplier or subcontractor did not meet its obligations
What to bring to the meeting
- The partnership agreement or shareholders' agreement
- The company's articles of association and minutes
- Invoices, work orders and bank statements
- Correspondence between the parties
Business Disputes and Partnerships throughout Israel
The firm represents clients from all over Israel: Jerusalem and the Shfela, Be'er Sheva, Ashdod and Ashkelon, Haifa and the North, the Sharon and Gush Dan. Meetings take place at our two Modiin branches, at the WE Towers branch in Tel Aviv or by video call, and documents can be sent in advance on WhatsApp. We represent clients in the courts, the Labor Courts and before planning committees throughout Israel. How we work with clients across Israel.
Frequently asked questions
What happens when there is no written partnership agreement?
We look at what the parties actually did: how they shared profits, who invested and who worked, and what the correspondence says. The Partnerships Ordinance sets out rules that apply where the partners did not agree otherwise.
What is an oppression claim?
A claim by a shareholder when the company's affairs are being conducted in a way that oppresses him or her. It is filed under section 191 of the Companies Law, and the court may give directions to remove the oppression, including an order to buy the shareholder's shares.
Can a business dispute be resolved without going to court?
In many cases, yes: through a demand letter, structured negotiations, mediation, or arbitration where the contract contains an arbitration clause. It is worth preparing the case as if it were going to court, because that is what gives weight in negotiations.
How do I protect the business during a dispute with a partner?
Document the state of the accounts and the inventory and check who has signing authority on the accounts. When there is a real concern that money or assets will be moved away, ask the court for a temporary order or an attachment.
