Terms

Nahmani v. Nahmani

Case/docket number: 
CFH 2401/95
Date Decided: 
Thursday, September 12, 1996
Decision Type: 
Appellate
Abstract: 

Facts: Ruth and Daniel Nahmani, a married couple, were unable to have a child because of an operation that Ruth underwent. They therefore decided to try in-vitro fertilization of Ruth’s ova with Daniel‟s sperm, with a view to implanting the fertilized ova in a surrogate mother. Under Israeli law, surrogacy was not permitted and in-vitro fertilization was only permitted for implantation in the woman from whom the ova were taken. Because of the great expense of the in-vitro fertilization procedure in the United States, the couple petitioned the Supreme Court, sitting as the High Court of Justice, to allow the in-vitro fertilization procedure to be conducted in Israel, for the purpose of surrogacy in the United States. In that proceeding (HCJ 1237/91), a consent judgment was given allowing the in-vitro fertilization procedure to be done in Israel. The procedure was carried out at Assuta Hospital. Subsequently, Daniel left Ruth and went to live with another woman, who bore him a child. Ruth applied to Assuta Hospital to release the fertilized ova into her possession for the purpose of the surrogacy procedure in the United States, but Daniel opposed this. Assuta Hospital therefore refused to release the fertilized ova. Ruth applied to the Haifa District Court for an order against the hospital to release the fertilized ova, and in its judgment the District Court gave such an order.

 

Daniel appealed the judgment of the District Court to the Supreme Court. In the appeal (CA 5587/93), the Supreme Court, with a majority of four of the five justices that heard the case, allowed the appeal of Daniel Nahmani and reversed the order of the District Court. Ruth petitioned the Supreme Court to hold a further hearing of the appeal, and this further hearing was subsequently held before a panel of eleven justices.

 

Held: A majority of seven of the Supreme Court justices reversed the judgment in the appeal, with four justices dissenting.

 

(Majority opinion — Justice Ts. E. Tal) The husband was estopped from opposing the continuation of procedure by promissory estoppel, since he gave his consent, his wife reasonably relied on this consent, and she did so irreversibly, by fertilizing her ova with her husband’s sperm. Furthermore, Jewish heritage, which is one of the fundamental principles of the Israeli legal system, considers having children an important value, whereas not having children is not considered a value at all.

 

(Majority opinion — Justice D. Dorner) The liberty of not having unwanted children is in essence secondary compared to the right to have children. Subject to this principle, the balancing between the rights of the parties is made by taking into account the current stage of the procedure, the representations made by the spouses, the expectations raised by the representations and any reliance on them, and the alternatives that exist for realizing the right of parenthood. In this case, the basic principles and considerations lead to a preference of the wife to be a parent over the right of the husband not to be a parent.

 

(Majority opinion — Justice E. Goldberg) In the absence of any normative arrangement, the case should be decided according to the basic value of justice. The just solution is the one that results in the lesser of evils. Justice demands that we do not, retroactively, undermine the position of someone who was entitled to rely on a representation of another, as the petitioner was entitled to do in this case.

 

(Majority opinion — Justice Y. Kedmi) Before fertilization, each spouse can change his decision to be a parent, and his basic right not to be a parent prevails over the contractual right of his partner to demand performance of the agreement between them. After fertilization, the right of the spouse wishing to complete the procedure of bringing the child into the world and to become a parent is strengthened by the fertilization of the ovum. From this point onward, the right of the spouse wishing to complete the process of bringing the child into the world overrides the right of the one wishing to destroy the fertilized ovum.

 

(Majority opinion — Justice Y. Türkel) The ethical weight of the right to be a parent is immeasurably greater than the weight of the right not to be a parent. Doing “ethical justice” compels us to prefer the former right to the latter.

 

(Majority opinion — Justice G. Bach) Where there is no express statute to guide us, we must avail ourselves of our sense of justice, and make our ruling according to what seems to us to be more just, in view of all the circumstances of the case before us. Even if the scales of justice were evenly balanced, then the fact that preferring Ruth’s position created the possibility of granting life and bringing a living person into our world, would tip the scales.

 

(Majority opinion — Justice E. Mazza) The restriction that Daniel wishes to impose on Ruth’s right to be a mother, although it appears to be a specific restriction, is really a quasi-general one, since Ruth has no real alternative to becoming a mother other than by use of her ova that were fertilized with Daniel’s sperm. The restriction that Ruth wishes to impose on Daniel’s right not to be a father against his will is a specific restriction. Imposing a specific restriction on Daniel’s right is preferable to imposing a quasi-general restriction on Ruth’s right to be a mother. The violation caused by the specific restriction to Daniel’s right is, necessarily, less than the violation caused by the quasi-general restriction to Ruth’s right. Where all other factors are equal, justice requires us to prefer the lesser violation to the greater violation.

 

(Minority opinion — Justice T. Strasberg-Cohen) Consent is required for each stage of the in-vitro fertilization procedure up to the point of no-return, which is the implantation of the ova in the woman’s body. In the absence of such consent, Daniel cannot be compelled to consent to Ruth’s aspiration against his will by means of a judicial order, either in the name of the law, or in the name of justice or in the name of life.

 

(Minority opinion — Justice T. Or) The consent of the parties to cooperate towards realization of an in-vitro fertilization procedure is a framework consent. It is founded on the basic assumption that the marital relationship between the parties will continue. But it does not include consent, ab initio, to all the stages and aspects of the fertilization procedure. The consent is based on the understanding that at each stage of the procedure the joint consent of both spouses will be required.

 

(Minority opinion — Justice I. Zamir) If, before the procedure began, Daniel were asked whether, if he separated from Ruth, he would consent to implantation of the ovum, which would make him and Ruth joint parents of a child, his answer, as a reasonable person, would be no. His initial consent to the procedure should therefore not be regarded as consent even in the circumstances of a separation. For the same reason, Daniel is not estopped from opposing the continuation of the fertilization procedure, since he never represented that he consented to the continuation of the procedure even if he separated from Ruth.

 

(Minority opinion — President A. Barak) Continuing consent is required for every stage of the fertilization procedure. This cannot be waived ab initio for reasons of public policy. Justice requires equality between the spouses in decision making. Refusing to give consent to the continuation of the fertilization procedure because the relationship has ended does not constitute bad faith.

Voting Justices: 
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majority opinion
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concurrence
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concurrence
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concurrence
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concurrence
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concurrence
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concurrence
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dissent
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dissent
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dissent
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dissent
Full text of the opinion: 

 

 

Ruth Nahmani v

1.            Daniel Nahmani

2.            Attorney-General

3.            Assuta Ltd

 

CFH 2401/95

 

 

The Supreme Court sitting as the Court of Civil Appeals [12 September 1996]

Before President A. Barak and Justices G. Bach, E. Goldberg, T. Or,

E.            Mazza, Y. Kedmi, I. Zamir, T. Strasberg-Cohen, D. Dorner, Ts. E. Tal,

Y. Türkel

 

Further Hearing of Civil Appeal 5587/93 on the judgment of the Haifa District Court (Justice H. Ariel) on 2 September 1993 in OM 599/92.

 

Facts: Ruth and Daniel Nahmani, a married couple, were unable to have a child because of an operation that Ruth underwent. They therefore decided to try in-vitro fertilization of Ruth‟s ova with Daniel‟s sperm, with a view to implanting the fertilized ova in a surrogate mother. Under Israeli law, surrogacy was not permitted and in-vitro fertilization was only permitted for implantation in the woman from whom the ova were taken. Because of the great expense of the in-vitro fertilization procedure in the United States, the couple petitioned the Supreme Court, sitting as the High Court of Justice, to allow the in-vitro fertilization procedure to be conducted in Israel, for the purpose of surrogacy in the United States. In that proceeding (HCJ 1237/91), a consent judgment was given allowing the in-vitro fertilization procedure to be done in Israel. The procedure was carried out at Assuta Hospital.

Subsequently, Daniel left Ruth and went to live with another woman, who bore him a child. Ruth applied to Assuta Hospital to release the fertilized ova into her possession for the purpose of the surrogacy procedure in the United States, but Daniel opposed this. Assuta Hospital therefore refused to release the fertilized ova. Ruth applied to the Haifa District Court for an order against the hospital to release the fertilized ova, and in its judgment the District Court gave such an order.

Daniel appealed the judgment of the District Court to the Supreme Court. In the appeal (CA 5587/93), the Supreme Court, with a majority of four of the five justices

 

 

 

that heard the case, allowed the appeal of Daniel Nahmani and reversed the order of the District Court.

Ruth petitioned the Supreme Court to hold a further hearing of the appeal, and this further hearing was subsequently held before a panel of eleven justices.

 

Held: A majority of seven of the Supreme Court justices reversed the judgment in the appeal, with four justices dissenting.

(Majority opinion — Justice Ts. E. Tal) The husband was estopped from opposing the continuation of procedure by promissory estoppel, since he gave his consent, his wife reasonably relied on this consent, and she did so irreversibly, by fertilizing her ova with her husband‟s sperm. Furthermore, Jewish heritage, which is one of the fundamental principles of the Israeli legal system, considers having children an important value, whereas not having children is not considered a value at all.

(Majority opinion — Justice D. Dorner) The liberty of not having unwanted children is in essence secondary compared to the right to have children. Subject to this principle, the balancing between the rights of the parties is made by taking into account the current stage of the procedure, the representations made by the spouses, the expectations raised by the representations and any reliance on them, and the alternatives that exist for realizing the right of parenthood. In this case, the basic principles and considerations lead to a preference of the wife to be a parent over the right of the husband not to be a parent.

(Majority opinion — Justice E. Goldberg) In the absence of any normative arrangement, the case should be decided according to the basic value of justice. The just solution is the one that results in the lesser of evils. Justice demands that we do not, retroactively, undermine the position of someone who was entitled to rely on a representation of another, as the petitioner was entitled to do in this case.

(Majority opinion — Justice Y. Kedmi) Before fertilization, each spouse can change his decision to be a parent, and his basic right not to be a parent prevails over the contractual right of his partner to demand performance of the agreement between them. After fertilization, the right of the spouse wishing to complete the procedure of bringing the child into the world and to become a parent is strengthened by the fertilization of the ovum. From this point onward, the right of the spouse wishing to complete the process of bringing the child into the world overrides the right of the one wishing to destroy the fertilized ovum.

(Majority opinion — Justice Y. Türkel) The ethical weight of the right to be a parent is immeasurably greater than the weight of the right not to be a parent. Doing „ethical justice‟ compels us to prefer the former right to the latter.

(Majority opinion — Justice G. Bach) Where there is no express statute to guide us, we must avail ourselves of our sense of justice, and make our ruling according to what seems to us to be more just, in view of all the circumstances of the case before us. Even if the scales of justice were evenly balanced, then the fact that preferring

 

 

 

Ruth‟s position created the possibility of granting life and bringing a living person into our world, would tip the scales.

(Majority opinion — Justice E. Mazza) The restriction that Daniel wishes to impose on Ruth‟s right to be a mother, although it appears to be a specific restriction, is really a quasi-general one, since Ruth has no real alternative to becoming a mother other than by use of her ova that were fertilized with Daniel‟s sperm. The restriction that Ruth wishes to impose on Daniel‟s right not to be a father against his will is a specific restriction. Imposing a specific restriction on Daniel‟s right is preferable to imposing a quasi-general restriction on Ruth‟s right to be a mother. The violation caused by the specific  restriction to Daniel‟s  right is, necessarily, less than the violation caused by the quasi-general restriction to Ruth‟s right. Where all other factors are equal, justice requires us to prefer the lesser violation to the greater violation.

(Minority opinion — Justice T. Strasberg-Cohen) Consent is required for each stage of the in-vitro fertilization procedure up to the point of no-return, which is the implantation of the ova in the woman‟s body. In the absence of such consent, Daniel cannot be compelled to consent to Ruth‟s aspiration against his will by means of a judicial order, either in the name of the law, or in the name of justice or in the name of life.

(Minority opinion — Justice T. Or) The consent of the parties to cooperate towards realization of an in-vitro fertilization procedure is a framework consent. It is founded on the basic assumption that the marital relationship between the parties will continue. But it does not include consent, ab initio, to all the stages and aspects of the fertilization procedure. The consent is based on the understanding that at each stage of the procedure the joint consent of both spouses will be required.

(Minority opinion — Justice I. Zamir) If, before the procedure began, Daniel were asked whether, if he separated from Ruth, he would consent to implantation of the ovum, which would make him and Ruth joint parents of a child, his answer, as a reasonable person, would be no. His initial consent to the procedure should therefore not be regarded as consent even in the circumstances of a separation. For the same reason, Daniel is not estopped from opposing the continuation of the fertilization procedure, since he never represented that he consented to the continuation of the procedure even if he separated from Ruth.

(Minority opinion — President A. Barak) Continuing consent is required for every stage of the fertilization procedure. This cannot be waived ab initio for reasons of public policy. Justice requires equality between the spouses in decision making. Refusing to give consent to the continuation of the fertilization procedure because the relationship has ended does not constitute bad faith.

 

Basic Laws cited:

Basic Law: Administration of Justice, 5744-1984, ss. 6, 15(c).

 

 

 

Basic Law: Human Dignity and Liberty, 5752-1992, s. 1.

 

Statutes cited:

Administrative Courts Law, 5752-1992, s. 22.

Contracts (General part) Law, 5733-1973, ss Administrative Courts Law, 5752-1992, s. 22. 14(b), 25, 30, 31, 61(b).

Contracts (Remedies for Breach of Contract) Law, 5731-1970, s. 3(4). Criminal Procedure Law [Consolidated Version], 5742-1982, s. 3.

Foundations of Justice Law, 5740-1980, s. 1. Immovable Property Law, 5731-1971, s. 10.

Labour Court Law, 5729-1969, s. 33.

Land Law, 5729-1969, s. 10.

Penal Law, 5737-1977, ss. 314, 316, 316(a), Chapter 10, Article 2.

Surrogacy Agreements (Approval of Agreement and Status of the Child) Law, 5756- 1996, ss. 2, 2(1), 5, 5(c), 7.

Tenant‟s Protection Law [Consolidated Version], 5732-1972, s. 132(a). Torts Ordinance [New Version], s. 84.

Unjust Enrichment Law, 5739-1979, s. 2.

 

Regulations cited:

Civil Procedure Regulations, 5744-1984, r. 524.

Public  Health  (In-vitro  Fertilization)  Regulations,  5747-1987,  rr.  2,  2(a),  3,  8,

8(b)(1), 8(b)(2), 8(b)(3), 8(c)(3), 9, 11, 14, 14(c).

 

Israeli Supreme Court cases cited:

[1]          CrimA 95/51 Podamski v. Attorney-General [1952] IsrSC 6 341.

[2]          CA 451/88 A v. State of Israel [1990] IsrSC 44(1) 330.

[3]          CA 614/76 A v. B [1977] IsrSC 31(3) 85.

[4]          CA 5464/93 A v. B (a minor) [1994] IsrSC 48(3) 857.

[5]          CA 577/83 Attorney-General v. A [1984] IsrSC 38(1) 461.

[6]          BAA 663/90 A v. Bar Association Tel-Aviv District Committee [1993] IsrSC 47(3) 397.

[7]          HCJ 4267/93, Amitai — Citizens for Good Government v. Prime Minister

[1993] IsrSC 47(5) 441.

[8]          CA 488/77 A v. Attorney-General [1978] IsrSC 32(3) 421.

[9]          CA 413/80 A v. B [1981] IsrSC 35(3) 57.

[10]        CA 623/80 A v. Attorney-General [1981] IsrSC 35(2) 72.

[11]        HCJ  702/81  Mintzer  v.  Israel  Bar Association  Central  Committee  [1982] IsrSC 36(2) 1.

[12]        FH 22/73 Ben-Shahar v. Mahlav [1974] IsrSC 28(2) 89.

 

 

 

[13]        CA 461/62 Zim Israeli Shipping Co. Ltd v. Maziar [1963] IsrSC 17 1319; IsrSJ 5 120.

[14]        LCA 4298/92 Ezra v. Tel-Mond Local Council [1993] IsrSC 47(5) 94.

[15]        CA 518/82 Zaitsov v. Katz [1986] IsrSC 40(2) 85.

[16]        CA 398/65 Rimon v. Trustee in bankruptcy of Shepsals [1966] IsrSC 20(1) 401.

[17]        CA 214/89 Avneri v. Shapira [1989] IsrSC 43(3) 840.

[18]        FH 4/82 Kut v. Kut [1984] IsrSC 38(3) 197.

[19]        HCJ 200/83 Wathad v. Minister of Finance [1984] IsrSC 38(3) 113.

[20]        HCJ   4712/96   Meretz   Democratic   Israel   Party   v.   Jerusalem   District Commissioner of Police [1996] IsrSC 50(2) 822.

[21]        CA 499/81 Odeh v. Haduri [1984] IsrSC 38(4) 729.

[22]        CA 506/88 Shefer v. State of Israel [1994] IsrSC 48(1) 87; [1992-4] IsrLR

170.

[23]        HCJ 73/53 Kol HaAm Ltd v. Minister of Interior [1953] IsrSC 7 871; IsrSJ 1

90.

[24]        HCJ 153/83 Levy v. Southern District Commander [1984] IsrSC 38(3) 393;

IsrSJ 7 109.

[25]        HCJ 292/83 Temple Mount Faithful v. Jerusalem District Commissioner of Police [1984] IsrSC 38(2) 449.

[26]        MApp  298/86  Citrin  v.  Tel-Aviv  District  Disciplinary  Tribunal  of  Bar Association [1987] IsrSC 41(2) 337.

[27]        CA 496/88  Henfeld  v.  Ramat  Hasharon  Sports Association  [1988]  IsrSC 42(3) 717.

[28]        HCJ 1601/90 Shalit v. Peres [1991] IsrSC 45(3) 353; IsrSJ 10 204.

[29]        HCJ 4112/90 Association of Civil Rights in Israel v. Southern Commander

[1990] IsrSC 44(3) 353.

[30]        HCJ 3412/91 Sufian v. IDF Commander in Gaza Strip [1993] IsrSC 47(2) 848.

[31]        CA 105/92 Re‟em Contracting Engineers Ltd v. Upper Nazareth Municipality

[1993] IsrSC 47(5) 189.

[32]        CA 2266/93 A v. B [1995] IsrSC 49(1) 221.

[33]        HCJ 753/87 Borstein v. Minister of Interior [1988] IsrSC 42(4) 462.

[34]        HCJ 721/94 El-Al Israel Airlines v. Danielowitz [1994] IsrSC 48(5) 749;

[1992-4] IsrLR 478.

[35]        CA 154/80 Borchard Lines Ltd, London v. Hydrobaton Ltd  [1984] IsrSC 38(2) 213.

[36]        CA 554/83 Atta Textile Company Ltd v. Estate of Zolotolov [1987] IsrSC 41(1) 282.

 

 

 

[37]        CA 275/83 Netanya Municipality v. Sahaf, Israeli Development Works Co. Ltd

[1986] IsrSC 40(3) 235.

[38]        HCJ 846/93 Barak v. National Labour Court, Dinim 37 823.

[39]        HCJ 932/91 Central Pension Fund of Federation Employees Ltd v. National Labour Court [1992] IsrSC 46(2) 430.

[40]        CA 4956/90 Paz-Gas Marketing Co. Ltd v. Gazit Hadarom Ltd [1992] IsrSC 46(4) 35.

[41]        CA 248/86 Estate of Lily Hananshwili v. Rotem Insurance Co. Ltd [1991] IsrSC 45(2) 529.

[42]        CA 840/75 Jewish National Fund v. Tevel [1976] IsrSC 30(3) 540.

[43]        CA 555/71 Amsterdramer v. Moskovitz [1972] IsrSC 26(1) 793. [44]            HCJ 5087/94 — unreported.

 

Israeli District Court cases cited:

[45]        CC (TA) 3021/84 Apple Computer Inc. v. New-Cube Technologies Ltd [1987] IsrDC 5747(1) 397.

 

Australian cases cited:

[46]        Mount Isa Mines Ltd v. Pusey (1970) 125 C.L.R. 383.

 

American cases cited:

[47]        Davis v. Davis 842 S.W. 2d 588 (1992).

[48]        Griswold v. Connecticut 381 U.S. 479 (1965).

[49]        Eisenstadt v. Baird 405 U.S. 438 (1972).

[50]        K.S. v. G.S. 440 A. 2d 64 (1981).

[51]        Kass v. Kass WL 110368 (1995).

[52]        Skinner v. Oklahoma 316 U.S. 535 (1942).

[53]        Roe v. Wade 410 U.S. 113 (1973).

[54]        Planned Parenthood of Missouri v. Danforth 428 U.S. 52 (1976).

[55]        Lochner v. New York 198 US 45, 25 S.Ct 539, 49 L.Ed 937 (1905).

[56]        In re Baby M 525 A. 2d 1128 (1987).

 

English cases cited:

[57]        Layton v. Martin [1986] 2 F.L.R. 227 (Ch.).

 

Jewish Law sources cited:

 

 

 

[58]        Rabbi  Moshe  ben  Maimon  (Maimonides),  Mishneh  Torah, Hilechot Ishut

(Laws of Marriage), 15, paras. 2, 5.

[59]        Rabbi Yaakov ben Asher, Arba‟ah Turim, Even HaEzer, 1. [60]     Rabbi Yosef Karo, Shulhan Aruch, Even HaEzer, 1, 1; 154, 4.

[61]        Mishnah, Tractate Yevamot 6, 6.

[62] Dr Avraham Steinberg ed., Encyclopaedia of Jewish Medical Ethics, vol. 2, the entry „In-vitro fertilization‟, at p. 115 et seq.; vol. 4, Responsum of Rabbi Shaul Yisraeli pp. 28, 41.

[63]        Responsum of Rabbi Shalom Shalush, „Fertilization in a Surrogate Womb‟, in

Orchot, the magazine of the Haifa Religious Council, no. 39, p. 31. [64]    Deuteronomy 4, 42; 16, 20; 19, 2-5.

[65]        Genesis 1, 28; 30, 1.

[66]        Bereishit Rabba 79, 9 on Genesis.

[67]        Jeremiah 22, 10.

[68]        Babylonian Talmud, Tractate Moed Katan, 27b. [69]         Mishnah, Tractate Gittin, 4, 5.

[70] Babylonian Talmud, Tractate Yevamot, 63b, 65b. [71] Babylonian Talmud, Tractate Berachot, 3b, 10a. [72]    II Kings 20, 1.

[73]        Rabbi Yaakov ben Asher, Arba‟ah Turim, Hoshen Mishpat, 1. [74]             Babylonian Talmud, Tractate Shabbat, 10a.

[75]        Rabbi Yehoshua ben Alexander HaCohen Falk, Drisha, on Rabbi Yaakov ben Asher, Arba‟ah Turim, Hoshen Mishpat, 1, 2.

[76]        Babylonian Talmud, Tractate Nedarim, 64b. [77]                Babylonian Talmud, Tractate Makkot, 10a.

[78]        Rabbi Moshe ben Maimon (Maimonides), Mishneh Torah, Hilechot Rotzeah uShemirat Nefesh (Laws of Homicide and Preservation of Life), 7, 1.

[79]        I Samuel 1, 27.

[80]        II Samuel 19, 1.

 

For the petitioner — Z. Gruber.

For the first respondent — D. Har-Even.

 

 

 

JUDGMENT

 

 

Justice T. Strasberg-Cohen

Introduction

1.            The Nahmani case, which was considered on appeal (CA 5587/93 Nahmani v. Nahmani IsrSC 49(1) 485), now comes before us for a further hearing. For the purposes of this hearing we shall briefly review the facts. After several years of marriage without children, and after Ruth Nahmani underwent surgery, as a result of which she lost the ability to conceive naturally, the Nahmani couple decided to have children by means of in-vitro fertilization. Ova taken from Ruth‟s body were fertilized with Daniel‟s sperm, frozen and stored at the hospital. The couple entered into a contract with an institute in the United States to find a surrogate who would bear their child. But before this stage of the procedure had been reached, Daniel Nahmani left home, established a new family and fathered a daughter, while he was still married to Ruth, who refused to be divorced. Ruth contacted the hospital and asked for the fertilized ova in order to continue the procedure, and when she was refused, she filed suit in the Haifa District Court, which ruled in her favour. This court allowed the appeal of Daniel Nahmani, by a majority decision with Justice Tal dissenting, and this led to the further hearing.

2.            The emotions, morals and norms associated with this issue naturally lead to a lack of consensus. Differences of opinion concerning a problematic issue such as this are to be expected and are legitimate, and are reflected in both the decision on appeal and this decision (see also Ch. Gans, „The Frozen Embryos of the Nahmani Couple‟, 18 Tel-Aviv Uni. L. Rev., 1994, at p. 83; Dr

A. Marmor, „The Frozen Embryos of the Nahmani Couple: a Response to Chaim Gans‟, 19 Tel-Aviv Uni. L. Rev., 1995, at p. 433; and Ch. Gans, „The Frozen Embryos of the Nahmani Couple: a Reply to Andrei Marmor‟, 19 Tel- Aviv Uni. L. Rev., 1995, at p. 453). The problem before us has two diametrically opposed solutions. We must choose a solution that is consistent with both the law and the fundamental principles of our legal system, and that is based upon the values and norms of our society.

I have re-examined the matter before us with an open heart and mind. I again reviewed the appeal judgment, the opinions of my colleagues in this proceeding and the erudite articles published after judgment was given. I have reconsidered and re-examined my earlier position and tested it against the opposing position, and in the final analysis, I do not see any reason to change it.

 

 

In the judgment on appeal, I discussed at length the nature, novelty and difficulty of the matter before us, and I shall not repeat myself. Nonetheless, it is appropriate that what was covered extensively in that decision should be referred to in this. Moreover, I shall make clarifications to my position, which will constitute an integral part of my remarks in the judgment on appeal. The two opinions should be regarded as one.

In the first opinion, the issue was examined and analyzed from every possible angle. In it I concluded, after having examined and analyzed the fundamental rights of the individual, that a spouse does not have an enforceable right, where that right would lead to imposing parental status on an „objecting‟ spouse. It was held that there is no basis in the various areas of private law, whether in law, statute or case-law, for granting shared genetic material to one of the spouses without the consent of the other. The opinion concluded that the fertilized ova — which are pre-embryonic — have no independent „right‟ to life, nor have they any kind of status that would give precedence to someone interested in the continuation of the procedure over someone who does not wish this. Comparative law was brought to show that the majority of countries in the enlightened western world — whether in statute or as a result of recommendations made by commissions that considered the issue — require both spouses to consent to each stage of the procedure, including the stage of implantation, and without consent from both spouses, the procedure cannot continue. This can also be seen in the Public Health (In-vitro Fertilization) Regulations, 5747-1987, and it was also the recommendation made by the Professional Public Commission for Examining the Issue of In-vitro Fertilization, 1994, whose members included renowned experts from several relevant fields. It can also be seen from the recently enacted Surrogacy Agreements (Approval of Agreement and Status of the Child) Law, 5756-1996.

Court intervention

3.            It has been argued that the appeal decision avoided intervention in the case or taking a stand, and that the outcome was a matter of chance resulting from the status of the litigants, with the stronger party having the advantage. These claims have no basis. I too am of the opinion that there should be legal intervention, even in cases involving normative value judgments, as well as in matters ruled by emotion; indeed, the appeal decision did just that. It did not refrain from taking a stand or from intervening, as suggested by Dr. D. Barak-Erez („On Symmetry and Neutrality:  Reflections on the Nahmani Case‟, 20 Tel-Aviv Uni. L. Rev. (1996) 197). The decision adopted a position

 

 

by refusing to force parenthood on a person. This constitutes ethical, normative and legal intervention. It is not avoiding making a decision. It is a decision made responsibly. The outcome was not a matter of chance resulting from the status of the litigant, as plaintiff or defendant (as claimed by Dr Barak-Erez, ibid.). The outcome would have been identical had a suit been filed by Daniel Nahmani for an injunction preventing the ova from being given to Ruth Nahmani, or had a suit been filed by the institution where the ova are stored because it had been given conflicting instructions. The decision does not give legitimacy to the maxim „might is right‟, but instead it applies the law in its wider sense. It does so in a way that reflects the legal policy outlined by the principles and norms that are fundamental to our legal system, a policy that recognizes the basic rights of the individual, his freedom of choice, and a refusal to force on him a status that he does not agree to take upon himself.

Indeed, 1e have not been called upon to interpret a particular statute, and we are not required to implement any such statute. In this case, as in others, we are called upon to decide issues that are not governed by any special statute. We must establish a legal norm that has ethical significance. In doing so, we are not operating in a vacuum. We have at our disposal the rich world of existing law with all its branches that affect the issue under discussion.

The case as an exception

4.            The matter before us is exceptional in that it is the first and only case being litigated. But it is not exceptional with regard to the situation that it presents to us. What do I mean by this? As science presents us with new, previously-unknown possibilities, and as more and more couples use in-vitro fertilization, the problem before us will take on an increasing general importance. Quarrels and  separations  between  spouses  are — unfortunately — a common phenomenon in our society. Whenever a couple quarrels about the use of fertilized ova, it occurs between spouses who have separated, and one of them does not agree to continue the procedure. The rule established by this court will have implications for all of these people, and the question of whether consent is required by each spouse to every stage in the in-vitro fertilization process prior to implantation in the womb must receive a clear, principled answer. The same is true of the question whether a spouse who refuses to continue the procedure that will lead to his becoming a parent against his will should be compelled to do so. Our determination in this case is likely to have implications that go beyond the specific circumstances in this instance, and affect every field where an individual has

 

 

rights that have no corresponding obligations, and where the consent of those involved is required to achieve a common goal.

As I said in the judgment on appeal, foremost in my mind has been Ruth Nahmani‟s longing for motherhood, her anguish and frustration at not being able to achieve it, and the improbability that she will become a biological mother. But we should not consider only the specific case before us, and sympathy and understanding for Ruth Nahmani‟s aspiration is insufficient for giving rise to a legal remedy to her problem. This issue cannot be decided on the basis of the wishes of one of the parties; it must be decided according to the rights and duties  of the parties  vis-à-vis  one  another, and these are enshrined in our legal system and provide the basis for an answer.

The right of parenthood

5.            It would appear that no one disputes the status and fundamental importance of parenthood in the life of the individual and in society. These have been basic  principles of  human  culture throughout  history. Human society exists by virtue of procreation. Realizing the natural instinct to be fruitful and multiply is a religious commandment of the Torah (see Rabbi Moshe ben Maimon (Maimonides), Mishneh Torah, Hilechot Ishut (Laws of Marriage), 15, 2 [58]; Rabbi Yaakov ben Asher, Arba‟ah Turim, Even HaEzer, 1, 1 [59]; Rabbi Yosef Karo, Shulhan Aruch, Even HaEzer, 1, 1 [60];

H. H. Cohn, HaMishpat (Bialik Institute, 1991) 579, 580). This is a basic need for ensuring the continuation of society and the self-realization of the individual. The importance of parenthood and its status as a basic constitutional right has found expression in American case-law, see: K. D. Alpern ed., The Ethics of Reproductive Technology, New York, Oxford, 1992,

p. 252, and the decisions cited there. With respect to the status of this right, the Court of Appeals of the State of Tennessee said in Davis v. Davis (1990) [47] at pp. 4-5:

„The United States Supreme Court in Skinner v. Oklahoma… recognized [that] the right to procreate is one of a citizen‟s “basic civil rights”. Conversely, the court has clearly held that an individual has a right to prevent procreation. “The decision whether to bear or beget a child is a constitutionally protected choice.” Cary v. Population Serv. Int‟l, … Eisenstadt v. Baird … see Griswold v. Connecticut … Matter of Romero…‟

The dispute is not about the importance of parenthood and the status of the right to be a parent. That is not the question at issue. In principle, the

 

 

relevant question is: is it possible, because of the great importance of parenthood, to force parenthood on someone who does not want it, and to use the machinery of the legal system to achieve such coercion? In order to answer this question, it is first necessary to make a correct classification of parenthood as a value, in the relationship between the potential parents.

Classification of rights

6.            The classification of norms that regulate activity in relationships between man and his fellow-man has not infrequently occupied legal scholars and academics in various fields. The scholar Dias deals extensively with what is sweepingly called „rights‟, and indicates the lack of clarity that prevails on this issue and on the distinctions gradually reached by scholars.

„Claims, Liberties, Powers and Immunities are subsumed under the term “rights” in ordinary speech, but for the sake of clarity and precision it is essential to appreciate that this word has undergone four shifts in meaning. They connote four different ideas concerning the activity, or potential activity, of one person with reference to another‟ (R. W. M. Dias, Jurisprudence, London, 5th ed., 1985, at p. 23).

Dias presents a list of thinkers and jurists (Sir Edward Coke, Hobbes, Bentham and others) who contributed to the conceptual classification of

„rights‟, and he mentions the American jurist Hofeld, who revised and completed a table made by the scholar Salmond, and prepared a table known as the Hofeld Table, which categorizes the claims, liberties, powers and immunities that are called „rights‟, according to their status, substance and implications (ibid., at p. 23).

In CrimA 99/51 Podamski v. Attorney-General [1], Justice Agranat — with regard to the classification of rights — gives a summary of several principles that he says are derived from the writings of recognized legal scholars, who classified rights into rights entailing legal obligations or legal liberties or legal privileges. Legal rights, in the narrowest sense, are interests that the law protects by imposing duties on others with regard to those interests. By contrast, legal rights in the widest sense also include interests that are recognized by the law but do not entail a legal duty. These are the liberties (see Salmond, On Jurisprudence, London, 11th ed., by G. Williams, 1957, at pp. 269, 273). Where a person has a right that is a liberty or a privilege, he is under no duty toward either the State or another to refrain from carrying out the act, just as he is under no duty to carry out an act that

 

 

he is free not to do. A right that is a freedom or a liberty cannot impose a duty on another and require him to perform an act that he is free not to do.

„Sometimes a right takes the form of a “liberty” or a “privilege”: in such a case, the duty that we are obliged to uphold is not to interfere with, or disturb, the exercise of the right…‟ (H. H. Cohn, HaMishpat, supra, at p. 512).

Moreover, at p. 513:

„“Basic rights”, or “human rights”, or “civil rights” are rights to which a person is entitled by law, as a human being. Some say that these rights were born with us, or are inherent in us; but whatever may be the case, we are concerned, as stated, not with “natural” rights but with legal rights.‟

Below the freedom to be a parent will be called a „right‟.

Classification of the right to parenthood

7.            The right to be a parent is, by its very nature, essence and characteristics, a natural, innate right, inherent in human beings. It is a liberty that does not entail a legal obligation, either in relations between the State and its citizens, or in relations between spouses. The right not to be a parent is also a liberty. It is the right of the individual to control and plan his life. Indeed, non-parenthood in itself is not the protected value. The protected value in non-parenthood is the liberty, privacy, freewill, self-realization and the right to make intimate decisions without interference. These are protected basic values of supreme importance, from which the liberty not to be coerced into parenthood is derived (see also: CA 451/88 A v. State of Israel [2], at

p. 337; H. Fenwick, Civil Liberties, London, 1993, at p. 295). Regarding freewill as a liberty leads to the conclusion that every person is free to choose and decide whether or not to be a parent, and a person wishing to be a parent cannot coerce another into becoming one in order to become a parent himself. This also means that the State may not impose parenthood on a person, either directly or through the courts. Consequently, I do not accept the position of those who consider the right not to be a parent as a right of less value than the right to be a parent.

The right to be a parent and the right not to be a parent are two rights which, although they are two sides of the same coin, have different characteristics. Each in itself can be found within the framework of civil liberties; the distinction between the two levels of rights does not lie in the one being a positive right and the other a negative right, but in the right to

 

 

parenthood belonging to the group of rights requiring cooperation of another individual in order to achieve it, whereas the right to non-parenthood does not extend beyond the particular individual (see Ch. Gans, „The Frozen Embryos of the Nahmani Couple‟, supra, and Ch. Gans, „The Frozen Embryos of the Nahmani Couple: a Reply to Andrei Marmor‟, supra). This distinction affects the question of the limits of proper legal intervention.

Had the right to be a parent been a right in the narrow sense, entailing an obligation, consent ab initio would not theoretically be needed, since when the obligation exists, all that remains is to examine what is the proper relief. Since the right is a liberty that does not entail an obligation but entails an opposing right, and since it requires two persons to achieve it, the person needing cooperation must obtain it from the other by receiving his consent throughout the procedure.

The right to be a parent — when the spouse refuses — requires a coercive, positive judicial act, whereas the right not to be a parent requires no intervention or interference in the freedom of the person who is unwilling to undertake parenthood. Since the „refusing‟ parent has a right not to be a parent, such a coercive order should not be made against him. Realizing the right of someone who wants parenthood by imposing an obligation on someone who does not want it conflicts with the essence of the freedom and deals it a mortal blow.

Non-coercion of parenthood

8.            In the sphere of liberties, the law refrains from forcing someone to do what he is not obliged to do, and this is also the case in other contexts within the sphere of inter-personal relationships. Every person has a right to marry. Nonetheless, no-one disputes that a person to whom a promise of marriage is made and breached will not receive from the court a relief of enforcing the promise. Every person has a right to establish a family and have children. Nonetheless, no-one disputes that the State — directly or  through  the court — may not coerce a person to have children if he does not want to, even if he promised his spouse to do so, and even if the spouse relied on this and maybe even entered into the marriage by relying on this and with an expectation that this is what will happen. Why do we not do this? Not merely because a mandatory injunction cannot compel performance (other than perhaps by way of contempt of court proceedings until the „refuser‟ wants to do it), but because of the fundamental and normative reason for this, namely the refusal of the law to employ coercive measures to realize the wishes of one  of  the  spouses  contrary  to  the  wishes  of  the  other  (Griswold  v.

 

 

Connecticut (1965) [48], at pp. 1688-1689; Eisenstadt v. Baird (1972) [49], at

p. 1038; P. Shifman, „Parent against one‟s will — false representation about use of contraception‟, 18 Mishpahah 1988, at p. 459).

9.            Refraining from forcing parenthood on someone who is not prepared to undertake it is especially important in view of the nature and significance of parenthood. Parenthood involves an inherent restriction on future freedom of choice, by imposing on the parent an obligation that encompasses most aspects of life. Entering into the status of parent involves a substantial change in a person‟s rights and obligations. When a person becomes a parent, the law imposes on him an obligation to care for his child. We are not talking of a mere concern, but of an obligation to place the best interests of the child as his foremost concern. A parent cannot deny the needs of his child merely because it is inconvenient for him to fulfil them. A parent‟s responsibility for his child‟s well-being also has a tortious and criminal aspect. This responsibility embodies the normative expectation that our social values and legal system have of the individual, with respect to his functioning as a parent. The very significant implications deriving from this status necessitate that the decision to be a parent is made only by the person concerned (see also P. Shifman, Family Law in Israel, vol. 2, The Harry Sacher Institute for Research of Legislation and Comparative Law (1989), 174; CA 614/76 A v. B [3], at p. 93; CA 5464/93 A v. B [4]).

There are some who consider the paternity of Daniel Nahmani —should the procedure continue and result in the birth of a child — as merely an economic burden of which he can rid himself. There are some who hold that when Daniel gave his consent to begin the procedure, he need not be consulted again and the procedure may be continued, irrespective of his wishes. This is the opinion of some of my colleagues, as well as Dr Marmor in „The Frozen Embryos of the Nahmani Couple: a Response to Chaim Gans‟, supra, with which Prof. Gans disagrees in „The Frozen Embryos of the Nahmani Couple: a Reply to Andrei Marmor‟, supra). Dr Marmor holds that the procedure can be divided into two: the technical stage — when the husband gives over his genetic material — and the „parental‟ stage — the continuation of the procedure to its end. In his view, when the husband gives over his genetic material, the husband‟s role is ended, and this should be sufficient for continuing the procedure without him. His cooperation is not needed for continuing the procedure. Since he is not liable to raise the child that will be born, his right to personal autonomy is not affected. In his opinion, the right of a woman to carry out an abortion derives from an

 

 

unwillingness to  impose on her options that will be very  limited if she becomes a mother in such a way that her right to an autonomous life is nullified. This is not the case — in his opinion — with respect to the husband.

10.          I find it difficult to agree with such theses. I do not accept that the consent of a married couple to the fertilization procedure with a view to parenthood is completed by giving over the genetic material which ends in fertilization. The two decisive stages in the fertilization treatment are: first, in-vitro fertilization of the woman‟s ova with the man‟s sperm; and second, the implanting of these in the body of a surrogate mother. The two stages are different in nature and they are carried out on different dates. The two spouses are partners in all the stages of the procedure, and they should not be regarded as having done their part when they have given over the genetic material. This material is part of its owners and continues to be so even after it has been separated from them. The interest of each of the spouses in the procedure is existential, and it has lifelong implications. I do not think that the husband can be considered merely a technical means for realizing the wife‟s motherhood. Bringing a child into the world without the father‟s consent should not be regarded solely as an economic burden from which he may exempt himself — moreover, under the law he cannot exempt himself from it. A decision to bring a child into the world is a joint decision of supreme importance in the lives of both parents. The great importance of parenthood as a value, the obligation it imposes on both parents, and the expectations that society has of the parents and of each one of them to their children are the factors that should give full weight to the husband‟s right — as well as the wife‟s — not to bring a child into the world against their will. The special status of parenthood in the field of the basic rights of the individual and the burden of obligations that it involves is the source for the principle that parenthood should not be forced upon someone who does not want it.

11.          Recognizing the need for ongoing consent in order to bring a child into the world creates equality, which is a fundamental value in our legal system. Giving the wife the possibility of terminating an unwanted pregnancy, and giving the husband — as well as the wife, if she wishes it — the possibility of stopping the in-vitro fertilization procedure is an expression of this value. The possibility of stopping the procedure is blocked only when a right that takes precedence comes into the picture; this, in the case of pregnancy, is the wife‟s right not to become a mother against her will and her

 

 

right over her body. These two rights give her the right to have an abortion without the husband‟s consent. The wife‟s right over her body derives from the same fundamental values of personal liberties and personal autonomy, which are the basis of a person‟s right not to be a parent against his will. Only when a third factor enters the picture, such as the right of the wife over her body, which takes precedence, does the right not to be a parent give way to it.

The nature of consent

12.          An examination of the issue before us from the perspective of basic rights is an examination of one of the many aspects of this issue, and as I said in the judgment on appeal*:

„… consideration of the question before us from the viewpoint of human rights is insufficient to decide it, for we are not concerned with a couple where one of the spouses wishes to bring children into the world and the other opposes this, and the law does not force itself on the “objector”; we are concerned rather with spouses who have gone a long way together and given their genetic material from which ova were fertilized and put in frozen storage, in order to bring a child into the world with the help of a surrogate mother. Should the husband be forced to continue the procedure even in this situation? I suspect that he should not. The reasoning for this position requires consideration of the nature of the consent of the spouses and the legal regime within which it operates.‟

13.          The fertilization procedure for joint parenthood embodies, by its very nature and as an essential condition, the consent of both spouses. What is the nature of the consent on a crucial, sensitive, and intimate subject such as having a child? Generally, consent is an accord of the wills of two or more persons, which makes their individual wills into a common will. Consents between married spouses can be distinguished into two categories: a general, main and central consent, which is a consent to live together as a couple, and goal-oriented consents for achieving a specific goal within the framework of married life, of which the most important is the consent to bring children into the world. The specific consent is reached within the framework of the main consent, and it is entitled to exist only within that framework and as long as it continues, unless the spouses have decided otherwise. When there is a main consent to a joint relationship, any decision that is of major significance to

 

 

*             Ibid., at p. 503 {20}.

 

 

both parties to the relationship and that derives from that relationship, cannot be made by one of the partners. A consent of a married couple to a procedure leading to parenthood, which is the most important of the goal-oriented consents, requires the procedure to be begun with consent and to be continued with consent. Both spouses will face the consequences of such a consent together. Therefore, someone who agrees to fertilization but does not agree to implantation cannot be bound by his consent to the first stage of the fertilization. Each spouse has the right to withdraw his consent when the marriage has been undermined and the main consent has collapsed. Consent to the in-vitro fertilization procedure — from a theoretical and conceptual perspective — is like consent to the natural procedure of fertilization. Just as someone who has agreed to bring children into the world naturally can withdraw his consent, so too someone who began the in-vitro fertilization process can refuse to agree to continue the procedure or withdraw his consent. I am aware that in the first case the „objector‟ who withdrew his consent cannot be „compelled‟, whereas in the second case there is no such problem, since the fertilized ova are situated outside the bodies of the two spouses; but the question and the answer thereto lie in the normative, theoretical, conceptual sphere and not in the practical sphere. The question is whether it should be done, and not whether it can be done. My answer is that it should not be done; rather, we need the consent of both spouses throughout the procedure.

14.          Admittedly, the right to withdraw the initial consent creates a degree of uncertainty, but this exists in many spheres of married life, and it does not deter people from entering into it. A decision to bring a child into the world by means of in-vitro fertilization is a serious and momentous one. The difficulties and risks involved in this procedure far from guarantee success. The refusal of a spouse to continue the procedure is merely one of the possible risks. A couple starts the procedure against a background of a working marriage, notwithstanding the risks and uncertainty as to the success of their marriage and the success of the procedure. It can be said that a situation in which, after the in-vitro fertilization, there is no right to withdraw on any condition or in any case, may deter spouses from entering into a procedure from which there is no way out, no less that the fear that that the procedure will be stopped as a result of the collapse of the marriage, something that is feared by my colleague Justice Tal.

The consent of the Nahmani couple

 

 

15.          ‟What is the status of the consent that was given; what is its scope, what is its nature? Is it subject to any legal framework, and if so, what is that framework? Was an agreement made between the parties, and if so what is its basis and what are its implications? What are the ramifications of the change of circumstances that occurred subsequently on this agreement? Is the person who gave his consent entitled to revoke it and what is the remedy that can be granted, if any?‟* I answered these questions extensively in the judgment on appeal, where I emphasized  the problematic status  of an undertaking to change personal status, where I said:

„In our case the agreement was made in special circumstances, on an intimate, personal and sensitive matter that lies within the sphere of the human psyche. Notwithstanding, I do not think that this case does not involve any agreement whatsoever. The Nahmani couple expressed consent, determination and resolve with regard to a very serious matter and they took steps to carry out their consent. When two persons continue to give their consent and do not revoke it, their wishes should be respected and the agreement should be acted upon in so far as it concerns matters that they have agreed (provided that they indeed agreed them). Such an agreement — as long as the parties still agree with regard to it — is valid vis-à-vis third parties such as the medical institution or other parties involved in the in-vitro fertilization procedure, and these should respect the joint wishes of the parties (within the framework of the law). Notwithstanding, we are not concerned with an ordinary contract but with an unique contract. It certainly does not fall into the category of “perfect” contracts. Since it has contractual elements, it can be classed among the “weak” contracts. Therefore the legal framework that applies to it will also not be the framework of the laws of contract in the strict and narrow sense.‟†

16.          My colleague Justice Tal holds that we are dealing with an unenforceable extra-contractual agreement, but in his opinion Ruth does not require anything of Daniel, and his consent is not needed for the implantation. Is it really the case that Ruth is making no demands of Daniel?

 

 

 

*             Ibid., at p. 507 {26}.

†             Ibid., at pp. 509-510 {29}.

 

 

I suspect that the opposite is true. She demands that his opinion should not be taken into account, that he should be removed from the picture and that his refusal should be ignored. She demands that she should be allowed use of the genetic material against his will in order to bring a child into the world. She demands that the court should give consent instead of Daniel and instruct the hospital to give her the ova so that she can continue a procedure that will lead to the birth of her and Daniel‟s joint child, without his consent. To this end she asks that his consent to fertilization should be interpreted as consent to bringing a child into the world against his will, even if he will not raise the child.

Against this background, what is the significance of my colleague‟s determination that Ruth does not require anything of Daniel and that his consent is unnecessary at the time of implantation? The significance is that Daniel‟s consent is frozen in time and place, and constitutes a firm resolve at a given moment — the moment of fertilization — exactly as in a regular contract. From this moment onwards — which in our case is the period from the time when the procedure was started until the implantation of the ova — the spouses are „bound‟ by their consent and each can do as he pleases with the other‟s genetic material without the other‟s consent and against his will. This is a rigid and narrow statement, even within the framework of the laws of contract themselves, and all the more so in the special and sensitive

„contract‟ before us, in which the laws of contract should not be applied strictly, but in keeping with the nature, background and circumstances of the relationship. The contractual aspect does not operate in a legal vacuum of its own. It constitutes part of the laws of contract in their wider sense, and it should not be severed from them absolutely. It follows that we must examine the consent of the couple and each one of them and their implications, by using the tools available to us, which we must borrow from the sphere of law that is closest to the matter, namely the contractual sphere in its wider sense, adapted to the sensitive material with which we are dealing. In this framework, the agreement between Ruth and Daniel is a special agreement built on the foundation of a functioning married life. It anticipates a joint future, and the birth of a child wanted by both into the family unit. It is unenforceable and ought not to be enforced in the absence of a joint will of both parties throughout the process.

Agreement, representation and estoppel

17.          In order that the consent should have legal effect, the law makes certain requirements, some formal and some substantive. These requirements

 

 

are not mere obstacles. Underlying them are normative, social and ethical ideals that require the existence of certain elements or a certain form of elements, in order to create a binding legal obligation. They are all needed to create reliability, stability, clarity and certainty and to ensure that the person making the commitment knows what he can expect, and understands the significance of expressing his will. This is the case with every consent, but all the more so with regard to „informed consent‟, which requires awareness of the circumstances in which the consent will operate. The consent required for bringing a child into the world in this way is „informed consent‟ at each stage of the procedure. Consent at the stage of fertilizing the ova cannot be used to infer „informed consent‟ to the continuation of the procedure in circumstances that are totally different to those that  prevailed when the procedure began.

18.          Was there any express or implied consent or promise on the part of Daniel to continue the procedure in any circumstances and under any conditions, and is he estopped or prevented from changing his mind? My answer to these questions is no. Within the framework of the main consent to a joint lifestyle, the Nahmani couple reached a joint decision to bring a child into the world. They began the procedure and carried out the first stage of fertilizing the ova and freezing them. Before the consent had matured and before the joint goal was achieved, the family unit fell apart and the main consent collapsed. From a factual perspective it is clear that, from this stage onwards, there no longer existed the main consent to a joint lifestyle, and there was no consent to bring a child into the world outside this framework. The court is asked to give the goal-oriented consent that never reached fruition an existence of its own, even though the main consent, within which framework it operated, has broken down and no longer exists. I suspect that this should not be done, and without consent to the continuation of the procedure, parenthood should not be forced on Daniel against his will.

19.          The law recognizes the right of a person who gave his consent to change his mind in circumstances that are different from those in which the consent is supposed to be realized. For example, consent to give a child up for adoption, which was given before the child was born, is a consent without awareness of the circumstances that will exist when the adoption will take place. It is specifically for this reason that the law allows the person who gave his consent to change his mind. „If consent was given before the birth of the adoptee, the court may invalidate it for this reason only, namely because of the date when it was given…‟ (CA 577/83 Attorney-General v. A [5], at p.

 

 

484). In this matter also consent may be withdrawn, until a third factor enters the picture — the best interests of the child — which is a higher value that overrides the right to withdraw the consent. In this way the principle that I wish to apply in our case is applied.

20.          Both from a factual and a legal perspective, there was no consent, and certainly no informed consent, on the part of Daniel to continue the procedure in the circumstances of a breakdown of the family unit. It is reasonable that when the couple began the procedure by consent, they assumed that their marriage would continue, and in this framework their joint child would be born. Reality has dealt them a hard blow. The circumstances have changed utterly, and although Daniel created the change —

„We are not sitting in judgment on the acts of Daniel Nahmani in the moral sphere and “punishing” him for his behaviour. These are not the criteria for deciding the question whether he has a right to object to the continuation of the procedure. The relationship between spouses is not static. It is by nature dynamic and subject to crises. The feelings of spouses are not always stable. They may change even without any connection to a complex procedure such as in-vitro fertilization. An initial consent to this procedure is not an informed one in the full sense of the word because of the inability to foresee — emotionally and psychologically — what will happen in the future. Spouses do not always deal successfully with the difficulties in their lives together, especially when they are faced with a procedure such as in this case, with its emotional, physical and economic difficulties and the subjective and objective problems that it involves.‟*

21.          Daniel did not promise Ruth that the procedure would continue whatever the conditions or circumstances, and such a promise cannot be inferred from his consent to begin the procedure when their family life was intact. The learned District Court judge did not reach any finding of fact that Daniel promised Ruth to continue the procedure even without the joint family unit and, indeed the evidence does not show that Daniel made such a promise or representation. The learned judge inferred from the initial consent a continuing and irrevocable consent. As I have explained both in the judgment on appeal and in this opinion, I do not accept this position. It is not required

 

 

*             Ibid., at p. 512 {33}.

 

 

by the facts of the case, it is inconsistent with our experience of life and it is incompatible with recognized and accepted principles of law. What can be seen from the evidence and is plausible from the circumstances is the absence of a promise to bring a child into the world even if the marriage collapsed and the family unit broke up. The absence of such a promise is inherent in the circumstances surrounding the goal-oriented consent to joint parenthood of the couple within the framework of the main consent to married life.

22.          Daniel did not make any representation upon which Ruth could rely, and in practice Ruth did not rely on any representation, and did not begin the procedure on the basis of such a reliance. She did not adversely change her position by relying on any representation. The only representation that can be inferred from the circumstances is a limited representation of consent within the framework of the existing family unit, assuming that it will continue to exist. The procedure began when their family life was functioning, with expectations that it would continue to be so, and that the child that would be born would become a part of it. The expectations proved vain and the main consent, and consequently the goal-oriented consent, no longer exist. An initial consent given to begin the in-vitro fertilization procedure is not a promise to bring a child into the world in any circumstances whatsoever. It is a promise that is limited to the conditions and circumstances in which it is given.

It follows that Ruth‟s expectation that she could bring Daniel‟s child into the world notwithstanding his opposition, against his will and not into a family unit jointly with him is a wish but not an enforceable right; but not every wish of one person imposes an enforceable legal obligation on another; not every desire of one person constitutes a basis for a judicial order against another. Not all walks of life should be controlled by court orders. There are spheres — and marriage and family planning are some of the most obvious — where judicial enforcement halts at the threshold of the litigants. When a couple enter into a marriage, each promises the other that they will live together forever. This promise, which no-one thinks is enforceable, exists on the level of good intentions, expectations, hopes and desires. There is no remedy in the law that can guarantee its existence, nor should there be. The same is true also of a promise for joint parenthood. Enforcing parenthood is not a legitimate option when we are speaking of actions that require the consent of both spouses. As I stated in the judgment on appeal:

„The relationship between spouses should be based on love, friendship,  understanding,  support,  trust  and  consideration.

 

 

Sometimes this relationship collapses, expectations fade, hopes vanish and  dreams are shattered.  Not in  every case can the victim find a remedy for his injuries in court orders, where enforcement is impossible, is improper in view of the circumstances and under the law, and is inconsistent with the basic rights of the individual in our society.‟*

23.          Consent loses its significance only when the fertilized ova have been implanted in the woman‟s body. Then the body of the surrogate mother enters into the picture — and no interference can be allowed to this without her consent. It may be that one day, when science allows even pregnancy to take place outside the woman‟s womb, we will be confronted with a new problem that must be faced. Who can foresee the future? At present, we reach the point of no return only when the ova are implanted in the body of the surrogate mother, when the value of the woman‟s right to protection of her body, control of her body and non-interference with her body takes precedence. The relevant considerations for fixing the point of no return at the latest time and place in the procedure derive from a balance between the conflicting rights and interests. Until the stage of implantation, the value of free choice takes precedence and consent is required. From that moment onwards, rights and interests that override the interests protected by the principle of consent enter the picture. In a natural pregnancy, the point of no return is reached when the pregnancy begins, because from which point onwards the woman does not need her  partner‟s consent to perform an abortion because of her control over her own body and her right that it should not be interfered with. With in-vitro fertilization, this point is reached upon implantation of the ova in the woman‟s body, since then the woman‟s right over her body enters the picture, and this overrides the need for consent to the continuation of the procedure.

The need for consent in different legal systems

24.          Most western countries, Europe, England, the United States, Canada and others, require continuing consent throughout the procedure, for each stage. I discussed this extensively in the judgment on appeal, so I will say nothing more. In all of those countries, each spouse may withdraw consent at any stage of the procedure. In some of the countries, there is legislation to this effect, such as, for example, in England: the Human Fertilization And Embryology Act, 1990 (Schedule 3, sect. 4). Pursuant to this law, effective

 

 

*             Ibid., at p. 522 {48}.

 

 

consent is required, and this incorporates the possibility of a change and withdrawal of consent at any time before use of the fertilized ova. The withdrawal of consent by one of the parties obliges the authority storing the fertilized ova to destroy them. This is also the case in Western Australia: the Human Reproductive Technology Act, 1991 (ss. 22(4) and 26(1)(a)(i)).

In the United States, Canada and other Western countries, the issue is not regulated by legislation, but rather by the recommendations of commissions that were appointed to investigate the issue. In some of these countries — because of the great importance attributed to consent in  such  a  fateful matter — it was recommend that the couple should agree between themselves in advance as to the fate of the ova in the event of a separation, and their agreement would then be honoured (there was no such agreement in our case). The vast majority of these countries give the couple the prerogative of making a joint decision whether to continue the procedure or terminate it, and they require the express consent of both to each stage of the procedure, which will be stopped if one of the parties expresses opposition to its continuation (for the position of legislation and the recommendations of the various commissions in the various countries, see the judgment on appeal).*

The American Medical Association submitted recommendations according to which continuing consent is required, and it did not accept the view according to which consent at the time of fertilization only is sufficient (see: American Medical Association, Board of Trustees Report, JAMA, vol. 263, no. 18, 1990, at p. 2486).

In the surrogacy agreements that are common in the United States, among bodies that deal with them, there is a section that requires the consent of both spouses to implantation in the womb of the surrogate, and the signature of both of them on a surrogacy agreement. This was also the case with the agreement which was supposed to be signed by the Nahmani couple but which was never signed. In a judgment of the United States Federal Court

K.S. v. G.S. (1981) [50], the court expressed the opinion that once consent is given, it is deemed to continue; but the court further held that as soon as the consent is expressly terminated, the procedure cannot continue. The petitioner refers to the judgment in Kass v. Kass (1995) [51], (See New York Law Journal, 23 January 1995), where the written agreement between the parties was interpreted as providing for the continuation of the procedure in the event that the couple separated, and the court honoured this agreement

 

 

*             Ibid., at p. 503 {20}.

 

 

and gave it validity. Here there is no such agreement. Consequently, this decision has no bearing on our case.

In Israel, the issue has not been regulated in direct legislation. The Public Health (In-vitro Fertilization) Regulations, which I considered extensively in the judgment on appeal, require consent of the husband at all stages of the in- vitro fertilization.

The public commission established in Israel to examine the issue of in- vitro fertilization and to submit its recommendations, unanimously recommended that:

„… in the absence of joint and continuing consent, no  use should be made of the fertilized ova that were frozen until the end of the freezing period agreed by the spouses but consent that was given at the beginning of the treatment shall be deemed to continue as long as neither of the spouses revokes it in writing‟ (emphases supplied).

„The Commission considered the possibility that the genetic mother or the genetic father would have no other way of realizing genetic parenthood. But giving permission to have a child in such a situation, without joint consent, means forcing fatherhood or motherhood, both from the legal viewpoint and from the emotional viewpoint, in that there will be a child who is born without their consent. The commission was of the opinion that a man or woman should not be forced to be a father or mother against their will, even if they initially consented to this‟ (see the Report of the Professional Public Commission for Examining the Issue of In-vitro Fertilization (1994), 36).

On 7 March 1996, the Knesset passed the Surrogacy Agreements (Approval of Agreement and Status of the Child) Law. Section 2(1) of this law requires written consent between the surrogate mother and the parents availing themselves of her services. The conditions and the procedure for approving the agreement are set out in the law, which stipulates in section 5(c) that „the approvals committee may reconsider an approval that was given if the facts, circumstances or conditions that served as a basis for its decision have undergone a substantive change, as long as the fertilized ova have not been implanted in the surrogate mother in accordance with the surrogacy agreement‟ (emphasis supplied). The point of no return is the moment of implanting the ova. Until this point, the continuing consent of both partners to the procedure is required. This issue was expressly included on the agenda

 

 

of the Knesset Committee, when the first draft law contained the words „as long as the fertilization has not been carried out in accordance with the agreement, the committee may reconsider…‟ was changed in the law to „as long as the fertilized ova have not been implanted…‟ (see the discussions of the Knesset Labour and Social Affairs Committee on 9 Jan 1996, at p. 14, 17). The aforesaid approach derives from the basic ethical recognition that regards parenthood as a journey taken by two people together — a journey that can only begin by virtue of consent between them, and that can only continue by virtue of continuing consent between them.

25.          In all the countries that require the continuing consent of both spouses, the ova can be destroyed either by joint agreement of the couple or due to the passage of time. In Israel, too, the ova are destroyed after five years (regulation 9 of the Public Health (In-vitro Fertilization) Regulations), unless both spouses request an extension of the period. This is a result of the outlook that regards the consent of both spouses throughout as essential and imperative, and from the outlook that the ova are the „quasi-property‟ of the two owners of the genetic material and they do not have, in themselves, a

„status‟ worthy of protection (see also Gans, „The Frozen Embryos of the Nahmani Couple‟, supra, at p. 86). Their status is pre-embryonic.  With regard to the status of the ova, as regarded in the western world, in Israel and in Jewish law, I can only refer to what I wrote in the judgment on appeal, and I will not expand on it.*

26.          My colleague Justice Tal sees support for his approach in Jewish law; but it is very questionable whether my colleague‟s position reflects  the approach of all aspects of Jewish law. „Even Jewish law, which imposes a commandment to be fruitful and multiply on the man, but not on the woman (Mishnah, Tractate Yevamot 6, 6 [61]), does not see fit to compel him if he does not fulfil his obligation. The refusal gives the woman a ground for divorce but not a ground for enforcement and coercion (Maimonides, Mishneh Torah, Hilechot Ishut (Laws of Marriage), 15, 5, [58]; Rabbi Yosef Karo, Shulchan Aruch, Even HaEzer, 154, 4 [60]). See the responsum of Rabbi S. Yisraeli, „On Consent and Retraction in Pregnancy and Birth by In- vitro Fertilization‟ in Encyclopaedia of Jewish Medical Law, Dr A. Steinberg ed., vol. 4, p. 28, 41 [62]; ibid., vol. 2, under „In-vitro fertilization‟, p. 115 [62], the responsum of Rabbi Shalom Shalush, „Fertilization in a Surrogate

 

 

 

 

*             Ibid., at p. 519-520 {44-47}.

 

 

Womb‟, Orchot, the magazine of the Haifa Religious Council, no. 39, p. 31 [63] (see also the judgment on appeal).*

Before I end  this opinion,  I would like to associate myself with the remarks of my colleagues Justices Or, Zamir and President Barak. I would also like to add some remarks with regard to what is stated in the opinions of some of my colleagues whose positions are different from mine, and which came to my attention after writing this opinion.

The right to life

27.          My colleagues, Justices Goldberg and Kedmi discussed the biological aspect of parenthood and the transfer of the genetic material from generation to generation. My colleague Justice Türkel granted Ruth Nahmani‟s wish by emphasizing the „right to life‟ and the enormous value of „human life‟. The

„value of life‟ and the „right to life‟ cannot be belittled, for we hold them to be amongst the most exalted and sacred rights, if not the most sacred right of all. But the fertilized ovum is not a living creature. The fertilized ovum is genetic material of both spouses in a pre-embryonic state, frozen soon after fertilization. It is composed of several separate cells, without any distinction between what will become a foetus and what will become a placenta. We are not dealing with preservation of existing life, but with advancing the potential for life. We are not speaking of preserving life that has been created, but with the creation of life ex nihilo. A society in which the individual is entitled to  plan his family and have children, a society  which does not compel someone to create life, not even as a moral injunction (except as a religious injunction), cannot force someone to create life against his will, in the name of the right to life. The creation of life is a totally separate issue from the preservation of existing life. Every enlightened society struggles with the question whether to create life at any cost. Medicine and technology allow for the creation of life by means that are becoming more and more removed from the natural means of creation it. The day may not be far off when it will be possible to replace the mother‟s womb with an artificial one that will carry the foetus and the whole process of creating life can take place in laboratories. The moral questions will continue to reverberate in the air and will become even more acute. Most of the states of the United States and most European countries that venerate the sanctity of life prohibit the creation of life by means of a surrogate mother, for moral, ethical, ideological,   sociological,   medical   and   other   reasons.  Various   bodies,

 

 

*             Ibid., at pp. 500, 506 {15, 24}.

 

 

including the „Israel Women‟s Network‟, regard surrogacy as immoral and encouraging a type of female slavery, which offers the womb for hire. The topic of in-vitro fertilization involves existential questions concerning the nature of life. One cannot find in the sacred and supreme value of life a reason or justification for forcing either of the spouses to create life by means of an in-vitro fertilization procedure; the consent of each of the spouses to the implanting of the frozen ova in the surrogate cannot be waived. The procedure cannot be continued without the consent of the two spouses that donated their genetic material. The sanctity of life has nothing to do with considerations for continuing the fertilization procedure, by coercion, at this early stage prior to the creation of life.

„Justice‟

28.          It is only natural that in the case before us, which has existential, emotional and normative human aspects, opinions are divided and there is no single solution. But recruiting „justice‟ for one view, thereby negating it from the opposing view, is to do an injustice to the opposing view, and possibly even to justice itself.

Man is commanded to pursue justice: „Justice, justice you shall pursue‟ (Deuteronomy 16, 20 [64]); the law strives to do „justice‟; but the difficult and paramount question has always been, what is „justice‟, what is its meaning, what are its characteristics, how is it defined and how is it attained. These questions have occupied the greatest scholars of the Bible, the Talmud, philosophy, literature, law and religion in all generations and cultures. Justice has many aspects and many facets: social, personal, political, national, economic, legal, etc.. Some see in human justice an attempt to imitate divine justice (imitatio Dei); some regard equality as the embodiment of justice. Others regard the dispensing of just law as compliance with the rules that fall within the scope of the „rules of natural justice‟.

The difficulty in defining and discovering justice is discussed by Justice Cohn, HaMishpat, supra, at p. 84:

„… Justice is not a science that can be discovered or defined: it is an attribute of the soul; and the fact that it is beautiful and humane, does not make it easier to define. It can be compared to the beauty of a Beethoven symphony or of a Gothic cathedral that one cannot prove… It is usually the case, for example, that each of the litigants who stands before a judge genuinely feels and believes that justice is on his side; the sense of justice of the

 

 

successful litigant is satisfied, whereas the sense of justice of the losing litigant is severely injured, and he is convinced that an injustice has been done to him… So it can be seen that the human sense of justice cannot serve as a yardstick for an objective party, in addition to the fact that it cannot even be defined or measured. Moreover, one cannot know, and one certainly cannot determine, whether one person‟s sense of justice is more reliable or trustworthy than that of another: from its subjective perspective, each of them is right, but even from an objective point of view, each of them may be right, or partially right.‟

Concerning the many and vague connotations of the term „justice‟, the scholar C.K. Allen says:

„Ever since men have begun to reflect upon their relations with one another and upon the vicissitudes of the human lot, they have been preoccupied with the meaning of justice… I choose at random a miscellany of the adjectives which, in my reading, I have found attached to different kinds of justice — distributive, synallgamatic, natural,  positive,  universal,  particular, written, unwritten, political, social, economic, commutative, recognitive, juridical, sub-juridical, constitutional, administrative, tributary, providential, educative, corporative, national, international, parental.

A very little ingenuity would extend the vocabulary indefinitely. There seems to be no end to this classification and sub- classification and its instructiveness is not always proportionate to its subtlety. There is a danger of the cadaver being so minutely dissected that little of its anatomy is left visible to normal sight‟ (C. K. Allen, Aspects of Justice, London, 1958, at pp. 3-4).

In recent decades, we find scholars that have given up trying to find an exhaustive and uniform definition of the nature of „justice‟. In this regard Ronald Dworkin says:

„In the end, however, political theory can make no contribution to how we govern ourselves except by struggling against all the impulses that drag us back into our own culture, toward generality and some reflective basis for deciding which of our

 

 

traditional distinctions and discriminations are genuine and which spurious, which contribute to the flourishing of the ideals we want, after reflection, to embrace, and which serve only to protect us from the personal costs of that demanding process. We cannot leave justice to convention and anecdote‟ (Ronald Dworkin, A Matter of Principle, Cambridge, 1985, at p. 219) (emphases supplied).

29.          „Justice‟ for one person may be „injustice‟ to another, or an „injustice‟ to society; the exercising of a right by one person may involve a violation of the right of another, which will prevent him from exercising his own right; every litigant believes that justice is on his side, and that feeling stays with him even when he has lost the case, and then he feels that he has suffered an

„injustice‟. Socio-economic „justice‟ in a certain society may be perceived as

„injustice‟ in another society. Is not the repair of a wrong to one person at the expense of another, merely because the first person was harmed and even if he has no right against the other, an „injustice‟ to the other? Is the granting of compensation to a person who was injured, without him having a cause of action to receive relief, by making another  person liable, because he is injured and the other person can pay, doing „justice‟? The law does not require a person who has promised marriage to fulfil his promise, and it does not compel him to do so. The relief granted is compensation. The law does not require a person to have children with his spouse even if he promised to do so and changed his mind. A person who breaks a promise causes disappointment and frustration to the other. His behaviour is not „just‟, but the law will not require him to keep his promise in the name of „justice‟. The law does not intervene when a woman aborts a foetus against the father‟s will: is that „just‟ to him? According to his feeling of frustration, unfairness and loss, it is not just; notwithstanding, the law will prevent the man from interfering and will protect another interest which it regards as preferable; autonomy over the body.

30.          The scholar Hare said that not only do people disagree as to the just solution to a particular problem, but it is possible that there is no completely

„just‟ solution to a particular problem:

„By this I mean not merely that people can disagree about the just solution to a particular dilemma, but that there may be no completely just solution‟ (R. M. Hare, Moral thinking, Oxford, 1981, at p. 158).

 

 

Doing justice in a trial cannot be fully expressed in a formula. It is a complex process of finding a balance between various factors, including equality. The scholar Dias says:

„Justice is not some “thing”, which can be captured in a formula once and for all; it is a process, a complex and shifting balance between many factors including equality. As Freidrich observed “Justice is never given, it is always a task to be achieved”.‟ (Dias, Jurisprudence, supra, at p. 66).

31.          Notwithstanding the difficulty in discovering and defining justice, the desire to do justice is an inner imperative of every judge. The exercising of judicial discretion constitutes an effort to achieve justice. The judge‟s subjective sense of justice guides his judicial discretion to achieve legal justice, which is an integral part of the law. In his aforementioned book, Cohn says at pp. 93-94:

„… One must not distinguish between the nature and purpose of the law and the „legal justice‟ in its application. We have already seen that people are different from one other, also in that each of them has his own sense of justice, and an individual sense of justice is, to some degree or other, a function of individual interests. Should every person exercise his own sense of justice and act accordingly, then I fear that the world would revert to utter chaos. By upholding the law, man makes his contribution towards the existence of the world… This is what we have said: if statute and the law is upheld, social justice will be done, and the purpose of this is merely to foster peace between men.

… Legal justice is always manifested in acts and omissions that comply with the norms that bind everyone and apply equally to everyone…‟ (emphases supplied).

He also says:

„Of the many meanings of justice, which we have already discussed, we have chosen very specific meanings in which we see “justice” that constitutes an integral part of the “law” as we have defined it. This “justice” is consistent, to a large degree, with what Pound termed “the philosophical, political and moral ideas” that — as we have seen — also in his opinion constitute an integral part of the law.‟ (H. H. Cohn, HaMishpat, supra, at p. 83; emphasis supplied).

 

 

32.          Justice, as an abstract concept, is neutral in our case. A finding in favour of Daniel Nahmani is doing an „injustice‟ to Ruth Nahmani, and a finding in her favour is doing an „injustice‟ to him. We must seek „justice‟ that is consistent with the „philosophical, political and moral ideas‟ that are an integral part of the law.

My decision in the matter before us, that the implantation process should not proceed without Daniel‟s consent, is a decision of justice in law. It is not a random or partisan decision. It is not an intuitive decision based merely on subjective feelings and an inner voice. It is a decision based on the values of justice of the legal system, which are incorporated in it and are its very essence: the rights of the individual, personal autonomy, relationships between spouses in the field of fertility, the result of a joint decision which requires two people to carry it out, the establishment refraining from forcing parenthood on someone, the need for cooperation and consent between spouses on a subject hidden in the recesses of the human soul and inherent in the delicate fabric of intimacy and parenthood. The decision that I have reached is the result of a process of various balances between values, rights and desires that conflict with one other. It represents — to the best of my understanding and feeling — the dispensing of legal justice, in its complete and coherent sense. Loyalty to the basic norms, to the fundamental principles of the legal system, to basic human rights, to the liberties of the individual and equality in exercising and realizing these rights and applying the law in its wider sense, will ensure that a just trial that is normative, ethical, principled and worthwhile. „Gut feelings‟ or „subjective feelings‟ are likely to lead us on the path of granting a right to someone who does not have one and forcing the will of one person — by means of the law — on another, so that duties that he does not have will be imposed on him, and this coercion constitutes a violation of his basic rights, which we are mandated to safeguard. All of the aforesaid emphasizes the difficulty inherent in attaching the label of „justice‟ to one of the two possible solutions.

Conclusion

33.          I am aware of Ruth‟s distress and frustration, of which I have been mindful throughout. I am aware that Ruth‟s harm from the non-realization of her parenthood is greater than Daniel‟s harm if parenthood is imposed on him: Ruth‟s contribution to the fertilization involved suffering and effort beyond those involved in Daniel‟s contribution; Daniel left the home, established a new family, achieved parenthood, while for Ruth this is apparently the last chance to realize biological motherhood. Daniel should be

 

 

mindful of this balance and consider whether as a result he ought to consent to allow Ruth to try to realize her aspiration. No-one can, or should, consent in his stead, and he should not be forced to consent by means of a judicial order that will replace his consent. Such a balance does not replace the required consent, and it does not create a legal right capable of judicial enforcement. Such a balance cannot avail us when a right is a liberty without a corresponding duty and when there is no basis for establishing a right to force parenthood on someone against his will.

34.          In summary of my position I will say that, in my opinion, a person has the liberty to be a parent and thereby fulfil a basic human yearning, but he does not have a right that imposes on another a duty to make him a parent, and to make himself a parent. In the absence of mutual consent to bring a child into the world, the right to be a parent — as part of the right of self- realization — cannot limit the autonomy given to another person and the freedom of choice given to him to direct and plan his life. Two people are needed to bring a child into the world, and this implies a need for continuing consent of both of them to achieve this purpose. Without joint consent, a person should not be obliged to continue a procedure that is likely to result in an unwanted parenthood. Consent to begin a procedure of  in-vitro fertilization within the framework of a main agreement for a joint life and joint parenthood cannot be considered sufficient consent or continuing consent, and even if it can be considered as such, each party is entitled to retract it when there is such a drastic change of circumstances as in our case. Consent is required for each stage up to the point of no return, which is the implantation of the ova in the woman‟s body. In the absence of such consent, Daniel cannot be compelled to consent to Ruth‟s aspiration. Daniel did not agreed to bring a child into the world in all conditions, circumstances and frameworks. He made no such promise, made no such representation, and when the framework within which the original consent of the two spouses operated fell apart, the procedure cannot be continued without obtaining Daniel‟s consent or by ignoring his refusal to consent to the continuation of the procedure. Parenthood cannot be forced upon him against his will by means of a judicial order, neither in the name of the law, nor in the name of justice nor in the name of life.

Therefore my opinion remains as before, that the petition should be denied.

 

 

 

Justice Ts. E. Tal

The case of the Nahmani couple is again placed before this court for its decision, pursuant to the decision of President Shamgar, who ruled that a further hearing should be held on the judgment of the Supreme Court in CA 5587/93.*

Let us briefly review the main facts and proceedings of the Nahmani case. The couple married in 1984, and after three years the wife was compelled to undergo a hysterectomy. In 1988 the couple decided to try and have a child by means of in-vitro fertilization of the wife‟s ova with the husband‟s sperm, and implantation of the fertilized genetic material in the womb of a surrogate. Surrogacy was not permitted in Israel at that time, and so they decided to carry out the fertilization stage in Israel and implantation in the United States at a surrogacy centre there. After the fertilization took place, but before the implantation stage was carried out, disputes arose between the couple. The husband left home and went to live with another woman, who became pregnant and bore him a child.

The wife applied to Assuta Hospital, where the fertilized ova were deposited in cold storage, and she asked to receive it in order to carry out the implantation. The hospital refused, because of the husband‟s objection, both in a letter to the hospital and in a letter to the surrogacy centre in the United States. The wife applied to the Haifa District Court, where his honour Justice

H. Ariel ruled that she was entitled to receive the fertilized ova.† Among the

reasons given by the judge, a central role was given to the consent between the spouses, and to the fact that the husband could not withdraw his consent. The husband filed an appeal on the judgment, and the appeal was allowed by majority opinion.

I have once again studied the matter, as well as the remarks of my colleagues both in the appeal and in this proceeding, and I have not changed my opinion,  which was the minority opinion  in  the aforementioned  CA 5587/93.

My opinion was based on the principle that we do not listen to a man who wants to terminate a pregnancy, even when the pregnancy was obtained by deception and fraud, because we do not interfere with a woman‟s body

 

 

*             IsrSC 49(1) 485; [1995-6] IsrLR 1.

†             IsrDC 5754(1) 142.

 

 

against her will. Similarly, a man should not be heard with regard to termination of a fertilization procedure, when such a termination — retroactively — makes the interference in the woman‟s body futile, and her dignity and modesty are violated. Also, the man is estopped from withdrawing his consent, by virtue of the principle of reasonable reliance, when the woman has adversely and irrevocably changed her position. As explained there, estoppel by virtue of reliance is no longer merely a defence argument, but also constitutes a cause of action and a ground for enforcement.

I reaffirm what I wrote there, and I would like to add a few remarks. We do not have any provision in the law according to which we can solve the dispute before us. Even the Surrogacy Agreements (Approval of Agreement and Status of the Child) Law, which recently came into force, contains no provision that regulates a situation like the one before us. The silence of the legislator can be interpreted in several ways. See BAA 663/90 A v. Bar Association Tel-Aviv District Committee [6], at p. 404; HCJ 4267/93, Amitai — Citizens for Good Government v. Prime Minister [7], at p. 457.

It cannot be said that the silence of legislation amounts to a negative arrangement. The issue is too important, problematic and complex for an arrangement to be derived from silence.

It would seem that the silence of statute derives from the disparity that always exists between the rate of development in the fields of science and technology, and the ability of the law to absorb these changes and embody them in legislation. The Supreme Court of Australia described this disparity in Mount Isa Mines Ltd v. Pusey (1970) [46]:

„Law, marching with medicine, but in the rear and limping a little.‟

The law is silent in our case because it is „limping behind medicine‟, and consequently we have before us a field of medical law that has not yet been regulated by the legislator.

Development of the law

A lacuna in the law imposes on the court the duty to develop the law in order to provide a response to cases brought before it. It may not sit idly, as if it were better not to take any positive action. See in this regard J.C. Gray, The Nature and Sources of the Law, New York, 2nd edition, 1948, at p. 302:

 

 

„When a case comes before a court for decision, it may be that nothing can be drawn from the sources heretofore mentioned; there may be no statute, no judicial precedent, no professional opinion, no custom, bearing on the question involved, and yet the court must decide the case somehow; the decision of cases is what courts are for… And I do not know of any system of Law where a judge is held to be justified in refusing to pass upon a controversy because there is no person or book or custom to tell him how to decide it. He must find out for himself; he must determine what the Law ought to be; he must have recourse to the principles of morality.‟

In what manner and with what tools should we develop the law? Prof. Barak distinguishes between different types of legal creation, and in our case, it is important to distinguish between the following two: filling a lacuna and developing the law. In his article, „Types of Legal Creation: Interpretation, Filling a Lacuna and Development of the Law‟, 39 Hapraklit, (1990) 267, 269-270, he said the following:

„The second way in which a judge determines the law is by filling a lacuna… a lacuna exists where a legal norm or legal arrangement is incomplete, and this incompleteness conflicts with the purpose of the norm or the purpose of the arrangement. Just as there exists a gap in a stone wall, where the builder forgot to put in one of the stones needed to complete the wall…

The third way in which a judge determines the law is by developing the law… central to this is the judge‟s activity as a creator of a new legal norm, which is required by the needs of life, other than by interpreting an existing normative text, or creating a new normative text in order to fill a lacuna in an existing normative text.‟

Prof. Barak repeated these remarks in his book Interpretation in Law, vol. 1, The General Theory of Interpretation, Nevo, 1992, at p. 609, where he says:

„Development of the law is a judicial activity, in which framework the judge creates a new norm or declares an existing norm to be invalid… this activity is based on the need to adapt the law to the reality of life. Legal institutions and arrangements,

 

 

which served society in the past, may no longer be consistent with the needs of the present and the future.‟

According to this distinction, the case before us belongs to the field of development of the law, and not the field of filling a lacuna, since there is no defective or inadequate norm before us. Because of the rate at which life has developed, the legislator has not yet addressed all of the questions in the field of fertilization and genetics, and therefore we must create a proper norm to apply to the case before us.

In doing so, we must: a) consider the conflicting interests; b) determine the legitimate expectations of both parties; c) weigh up the proper legal policy considerations.

The conflicting interests

There are two main rights competing with one another: the right to be a parent and the right not to be a parent. However, since there is no provision in the law that applies to the case, it would be more precise to say the interest in being a parent and the interest in not being a parent. What is the nature of these interests? The interest in being a parent is one of the most basic aspirations of man, and needs no explanation. In CA 488/77 A v. Attorney- General [8], at p. 441, it was said:

„In general, a person has no more precious possession than the emotional bond between parents and their natural child, in which they see the fruit of their love, their own flesh and bone, and the succeeding generation that bears their genes.‟

And in CA 451/88 A v. State of Israel [2], at p. 337, it was said:

„The right to parenthood is a basic human right to which everyone is entitled…‟

The Supreme Court of the United States, in Skinner v. Oklahoma (1942) [52], considered the question whether the right to parenthood is a protected constitutional right, and it concluded that the right to parenthood is „one of the basic civil rights of man‟ and that this right is „fundamental to the very existence and survival of the race‟ (ibid., at p. 541).

Against this existential interest lies the opposite interest, not to be a parent, or, to be more precise, not to be a parent against one‟s will. When we come to balance these conflicting interests, we should remember that despite the symmetrical forms of speech, „to be a parent‟ and „not to be a parent‟, these interests are not equal. The interest in parenthood constitutes a basic

 

 

and existential value both for the individual and for the whole of society. On the other hand, there is no inherent value in non-parenthood. The value that is protected in the interest of non-parenthood is the value of privacy, namely the freedom and right of the individual not to suffer interference in his intimate decisions. See in this regard the article of Dr Barak-Erez, „On Symmetry and Neutrality: Reflections on the Nahmani Case‟, supra, at pp. 198-200:

„It is not at all clear whether the right to be a parent and the right not to be a parent should be discussed on the same level merely because they are prima facie symmetrical. In other words, we cannot assume the existence of symmetry between the two rights just because they hold two ends of the cord of parenthood.

As a rule, the right to “something” and the right to “nothing” are not always equal. Is the right to life entirely equivalent to the right to die? Indeed, a moral position whereby every person has a right to live and a right to die, and the two of these are rights of equal weight, is possible. Whoever accepts this outlook will support full recognition of realizing the right to die, even by means of active “euthanasia”. But another, asymmetrical, position is possible. Thus, for instance, the “equivalent” approach to life and death has been rejected in Jewish thought. From CA 506/88 Shefer v. State of Israel we can see the approach of the court that the right to life has a higher status, and therefore, at most, it is possible to recognize passive “euthanasia” (in certain circumstances). In other words, the something and the nothing are not always of equal weight.

… Even were we to regard the right to parenthood and the right not to be a parent merely as derivatives of the autonomy of the will, there would not necessarily be symmetry between them. We do not respect every desire, and not every desire should be respected to the same extent. Moreover, the main criticism is directed against the narrow view of the judgment regarding the right to  parenthood.  Is it correct to  see in it a right that is “derived from the right to self-realization, liberty and dignity”? Is that all that it involves? In my opinion, we can find many other facets to it. The right to be a parent is an independent right, and not just an expression of the autonomy of the private will. Realizing the option of parenthood is not merely a possible way

 

 

of life, but it is rooted in human existence. There are some who will regard it as cure for loneliness; others will use it to deal with the thought of death. Indeed, the choice of refraining from parenthood is a possible way of life, which society and the law must respect. However the choice of parenthood is not just a decision concerning a way of life; it has much greater significance for human existence. It expresses a basic existential need. Moreover, the decision to become a parent also has an element of self-realization, particularly in modern society, which emphasizes self-realization as a value. But the right to parenthood does not derive only from self-realization. The right to life is an independent basic right, and it is not a derivative of the autonomy of the will; the same is true of the right to parenthood. From this perspective, the symmetry created by the judgment between the right to parenthood and a decision (legitimate, in itself) not to be a parent (as an expression of personal freedom) is undermined, or at least requires further consideration.‟

Let us turn to our case. First, we are not speaking of forced parenthood. We are speaking of a person who gave his consent to parenthood, but who wants his consent to be required also during the continuation of the procedure. The interest of society in non-forced parenthood does not necessarily lead to the conclusion that his consent is required over an extended period. The interest in preventing parenthood against a person‟s will is satisfied by requiring a one-time irrevocable consent.

Secondly, for the woman, it can be assumed that that this is her only possibility of realizing her parenthood.

The cumulative weight of these two factors leads to a clear conclusion that the interest of being a parent takes precedence. We can reach the same conclusion by comparing the damage that is likely to be caused by denying the rights. If you take parenthood away from someone, it is as if you have taken away his life. In the Bible we find the desperate cry of our ancestress Rachel, „Give me children, else I die‟ (Genesis 30, 1 [65]). Similarly, from the teachings of the Rabbis we learn that „whoever has no children is considered as a dead person‟ (Bereishit Rabba 79, 9 on Genesis [66]). Similarly, they interpreted the verse in Jeremiah 22, 10 [68]: „“Do not weep for the dead, nor bemoan him; weep indeed for him who goes” — Rabbi Yehuda  said:  for  him  who  goes  without  children‟ (Babylonian  Talmud,

 

 

Tractate Moed Katan 27b [69]). By contrast, denying the interest of non- parenthood amounts to no more than imposing burdens that may not be desirable to that person. Without belittling the weight of these burdens, they are not equivalent to „taking the life‟ of the spouse.

Even in Davis v. Davis [47] the court decided in favour of the husband‟s position, only because at that stage the wife was not asking for the fertilized genetic material for herself, but for another woman. The court said there that had the wife wanted the fertilized material for herself, and had the situation been such that she had no alternative for realizing her right to motherhood, the court inclined to the opinion that the wife‟s right to motherhood should take precedence over the husband‟s right not to become a father.

In summary of this point, I will say that the woman‟s interest in motherhood is greater, and overrides the man‟s opposite interest.

The legitimate expectations of the parties

One of the tasks of a judge, when engaging in judicial legislation, is to realize the legitimate expectations of the parties. When we say „legitimate‟, we do not mean expectations embodied in the law, for if there were a statute or precedent in our case, we would not need to resort to judicial legislation;

„legitimate‟, in the sense of expectations that merit protection according to the system of values accepted by society.

The importance of this task was discussed by Prof. Barak in his article

„Judicial Legislation‟, 13 Mishpatim, 1983, 25, at p. 71:

„…We should refrain… from choosing that option that harms reasonable expectations. The reasons for this are many. Harm to a reasonable expectation harms the sense of justice, disrupts proper social life, harms the public‟s faith in the law, and denies any possibility of planning behaviour.‟

Realization of the parties‟ expectations is important in every sphere of judicial legislation, but it has special importance in our case. The development of fertilization and reproduction techniques requires the law to recognize the importance of the emotional aspect of the persons involved in these techniques. See in this respect A. E. Stumpf, „Redefining Mother: A Legal Matrix For New Reproductive Technologies‟, 96 Yale L. J. (1986-7), 187.

The case before us concerns two spouses who travelled a long distance in each other‟s company. It is true that one cannot know with certainty what the

 

 

spouses originally thought about a situation in which they might separate. But this uncertainty is not characteristic merely of  family  law. The law reconstructs a person‟s intentions in two ways; presumed intention and imputed intention: presumed intention, according to experience of life and common sense, and according to the special circumstances of each case; imputed intention, when there is no way of assessing the presumed intention of the parties, and the law — for its own purposes — attributes to someone an intention without his knowledge, and maybe even against his will.

Our case involves a woman who underwent gynaecological surgery and was forced to undergo complex, invasive and painful procedures in order to extract the ova, in the knowledge that this was almost certainly her last opportunity to bring a child of her own into the world. It is difficult to assume that she would have agreed to undergo these treatments in the knowledge that her husband could change his mind at any time that he wished. It is inconceivable that someone should agree that her last and only glimmer of hope should be dependent on the whim of her spouse, who might change his mind at any time.

It can therefore be said that the presumed intention of the woman was that a change of mind on the part of the man would not affect the procedure that had been begun.

And what is the husband‟s position? He was required at the outset to make a decision to agree to fertilize the ova with his sperm. Can it be presumed that he would have refrained from this had he known that he could not subsequently change his mind? Not necessarily. Husbands do not refrain from having sexual relations merely because their wishes will not be consulted later with regard to an abortion (following CA 413/80 A v. B [9]).

It therefore seems to me that we should assume that the presumed intention of both parties in this case was that neither party has a right to stop the continuation of the procedure.

With regard to „imputed‟ intention, an intention can be imputed for considerations of justice or considerations of policy. The considerations of justice have already been set out above, and we will mention them briefly. Giving a right to the husband to destroy the ova (or to prevent their use — which is the same thing) will deprive the woman of her only chance of having a child, while he has had children by another woman. On the other hand, giving the wife the ability to continue the procedure will impose on him undesired burdens. There is no basis whatsoever for comparing these

 

 

evils. Moreover, we are speaking of a man who gave his consent, and in reliance on this the woman consented to interference in her body and painful treatments, and also adversely and irrevocably changed her position. She did so by relying on a representation that the procedure would continue; thus the criteria for „promissory estoppel‟ were met, as I explained in CA 5587/93.* Now, after all of this, the husband wants to change his mind. Of cases such as this, it is said that „whoever changes course has the disadvantage‟. And when we consider whether to impute to the husband an intention that he could change his mind whenever he wanted, it seems to me undesirable to do so.

Another of the considerations of justice is that neither party should be given an unfair advantage. Saying that, in the absence of express consent, either party may change his mind whenever he wishes, disturbs the equilibrium and equality  between the parties. A need for the continuing consent of both spouses throughout the procedure gives the party wanting the procedure to be stopped a right of veto over the other party. This right leaves the party that wants to continue the procedure entirely at the mercy of the other party, who may consent and change his mind a moment later. This result is unacceptable. Instead, it should be held that in the absence of explicit consent with regard to a case of separation, an intention should be imputed to the parties that no party can change his mind.

In this matter also let us turn to the legal literature concerning Davis v.

Davis [47] for the purpose of comparison and inspiration.

The consideration that the party uninterested in implantation should not be given „control‟ over the other party was discussed in detail in the article of

A.            R. Panitch, „The Davis Dilemma; How to Prevent Battles Over Frozen Preembryos‟, 41 Case W. Res. L. Rev. (1991) 543, 572-573.

„One approach would be to require mutual spousal consent as a prerequisite to implantation of all preembryos created through IVF. This approach would require obtaining consent twice from each spouse — once when the IVF procedure is initiated and again before each implantation.

This rule would also have disadvantages, however. Most significantly it would grant tremendous power to one spouse over the other. It would mean that even though both spouses

 

 

*             Ibid..

 

 

initially consented to having a child through IVF, neither could proceed with certainty that the other would not truncate the process. Such an outcome would surely  frustrate the spouse seeking implantation, who will have invested large financial expense, time, energy, and, in the wife‟s case, physical pain. The required second consent for implantation could become a tool for manipulation and abuse between spouses, especially under circumstances of a pending divorce. Any spouse ultimately denied the chance to have a child through IVF would probably suffer considerable emotional stress‟ (emphases supplied).

After the author considers the advantages and disadvantages of this approach, she reaches the conclusion that the consent given at the time of fertilization should be sufficient, on the basis of the laws of estoppel:

„Fairness considerations require a determination of whether it would be more equitable to allow the spouse who wants to prevent the possibility of a birth to prevail, or instead to allow the spouse who wants to continue the process of procreation to prevail. One fact is of vital importance in making this judgment; the spouse who opposes implantation wanted a child at one time and submitted to the IVF process with that end in mind. The two spouses once agreed on this issue and initiated the IVF procedure in reliance on that mutual wish. Given this background, the greater injustice would be to deny implantation to the spouse who detrimentally relied on the other‟s words and conduct.

Protection against this sort of injustice is recognized by the well established doctrine of estoppel…

The elements of estoppel are satisfied in a dispute such as Davis. The knowing action of the objecting spouse is the undertaking of IVF for the purpose of producing a child. The prejudice to the other spouse consists of money, time and the psychological commitment necessarily expended in pursuing the full procedure. The injury would include not only the time and money spent, but also the last opportunity to have a child‟ (at pp. 574-575; emphases supplied).

 

 

See also B. L. Henderson, „Achieving Consistent Disposition of Frozen Embryos in Marital Dissolution under Florida Law‟, 17 Nova L. Rev. (1992) 549.

The conclusion arising from all of the aforesaid is that in the absence of an express stipulation between the parties concerning the fate of the ova in a case of separation, it should be presumed that their intention was that one party would be unable to stop the procedure against the will of the party interested in the implantation. And if their intention cannot be presumed, this intention should be imputed to them. According to weighty considerations of justice, the right of reliance and legitimate expectations, these expectations should be fulfilled without the need for continuing consent in order to continue the procedure once the fertilization was carried out by consent.

Policy considerations

Besides the abovementioned considerations, there are additional policy considerations according to which it should be held that consent of the parties only at the time of fertilization is sufficient.

First, legal stability and legal certainty demand that the period of time during which the consent of the parties is required should be reduced to a minimum. Apart from the two spouses, additional parties and bodies are involved in the procedure, including the surrogate mother and the medical institution. Allowing the possibility of unilateral cancellation is likely to increase the number of cases in which there are fluctuations and reversals, and it will make it more difficult to carry out the procedure.

This consideration has been mentioned in the context of adoption, and it was said that the court should restrict the number of cases where parents are allowed to withdraw their consent. In CA 623/80 A v. Attorney-General [10], at p. 77, Justice Shamgar said:

„… The results of the described approach, as established in Israel, are also dictated by logic and life experience: it will be very difficult to complete the adoption of a minor if,  even though the parents gave their consent, it would be necessary to fear or expect, each morning of the months that necessarily pass between the parents giving their consent and the granting of the adoption order, that perhaps the natural parents will suddenly change their minds, of their own initiative or through the influence of others, whatever their considerations or reasons may be.‟

 

 

Another consideration is that we should seek for an arrangement that will encourage couples that are unable to conceive naturally, to make use of methods of artificial insemination, and we should refrain from an arrangement that is likely to deter and prevent couples from using such methods. The determination that each party can change his mind whenever he so desires will certainly serve as a deterrent. This is true of both spouses, but especially of the woman who must undergo long and complex treatments. This is especially so when, as in the case before us, a single and last opportunity is involved.

On the other hand, there is no reason to believe that a determination that consent at the time of fertilization is irreversible will serve as a deterrent. The couple will consider all the factors before carrying out the fertilization, in the knowledge that they are irrevocably bound by their consent, unless the change of heart is a joint one. We have already pointed out above that the inability of husbands to demand that their wives have abortions does not constitute a deterrent to starting the process.

Considerations of proper legal policy, together with the ethical considerations and considerations of justice enumerated above, all combine to point to a clear and unequivocal conclusion: we should reaffirm the result reached by the District Court, and order the hospital to allow the woman to carry out the continuation of the treatment required for the purpose of surrogacy.

The right to abort

We can compare the question in this case to a similar issue, namely the issue of abortions.

The right of the woman, in certain circumstances, to abort a pregnancy is recognized in our legal system, even though there is public debate as to the grounds that justify an abortion, as reflected in statute (see chapter 10, article 2, of the Penal Law, 5737-1977). Exercising this right may harm the interests of the man; notwithstanding, it has been established that there is no need for his consent, and he even does not have any standing before the „abortions committee‟ under section 316(a) of the Penal Law (see CA 413/80 A v. B [9]).

In an article devoted to our case, Prof. Chaim Gans sought to reach the conclusion that:

„I said, that if women have the right to abort at the beginning of their pregnancy on the basis of their right to control their lives, Daniel Nahmani ought to have a right to stop the proceedings

 

 

leading to surrogacy of the ova impregnated with his sperm. Since I have shown that women have such a right, Nahmani also has such a right‟ (Gans, „The Frozen Embryos of the Nahmani Couple‟, supra, at p. 91).

However, the conclusion reached by Gans does not stand up to scrutiny. The preference that the law gives to the woman to decide about an abortion, while discriminating against the man and despite his objection, derives solely from the fact that we are speaking of a decision concerning her body. The woman alone carries the embryo, and therefore the decision to abort is hers alone. The symmetrical analogy regarding a similar right for the man is merely an imaginary and spurious analogy.

In an article that was published after the decision in Roe v. Wade (1973) [53], which developed the right of abortion, it was said that:

„Allowing women the exclusive right to decide whether the child should be born may discriminate against men, but at some point the law must recognize that there are differences between men  and  women,  and   must   reflect   those   differences‟ (R. A. Gilbert, „Abortion: The Father‟s Rights‟, 24 Cin. L. Rev. (1973) 443).

Indeed, the Supreme Court of the United States so held in Planned Parenthood v. Danforth (1976) [54], at p. 71:

„We recognize, of course, that when a woman, with the approval of her physician, but without the approval of her husband, decides to terminate her pregnancy, it could be said that she is acting unilaterally. The obvious fact is that when the wife and the husband disagree on this decision, the view of only one of the two marriage partners can prevail. Inasmuch as it is the woman who physically bears the child and who is the more directly and immediately affected by the pregnancy, as between the two, the balance weighs in her favor‟ (emphasis supplied).

Even under our law the principle that the husband has no right to oppose the abortion derives from the same reasons. The learned Prof. Shifman summarized the matter as follows:

„The main emphasis on the woman‟s right to control her body has led to the man having no standing in decisions regarding the termination of pregnancy. Thus it has been held in Israel, following similar rulings in the United States and Britain, that

 

 

the man is not entitled to prevent the woman from terminating her pregnancy, just as he is not entitled to demand that she abort if she wishes to continue the pregnancy. The woman‟s decision to terminate her pregnancy may harm the man‟s expectations of being a father, i.e., of the birth of a child originating in their joint genetic material, whose creation was, perhaps, the result of their joint decision. If the man is married to the woman, the woman‟s decision to abort might constitute a breach of legitimate expectations created by the marriage, which is conceived as a framework whose purposes include the bringing of children into the world.

Nonetheless, these considerations do not give the man, even if he is married to the woman, a right equal to hers in making the decision concerning termination of the pregnancy. The woman‟s preference derives from her interests in control over her body. These interests give her absolute discretion whether to initiate a termination of a pregnancy or not‟ (Shifman, Family Law in Israel, vol. 2, at p. 213).

It follows that, were it not for the decisive factor — the embryo being part of the woman‟s body, or in the words of the Rabbis: „An embryo is an organic part of its mother‟ — the woman would not have a right to destroy the embryo against the wishes of her spouse. Therefore, the logical conclusion from the laws of abortion is the opposite of the one that Gans sought to deduce. When not speaking of interference in her body, the woman is not entitled to destroy the embryo without her spouse‟s consent; in exactly the same way, the man is not entitled to destroy the ova against the woman‟s wishes (and is not preventing the use of them the same as destroying them?).

We should decide that the husband is not entitled to destroy the ova against the wife‟s wishes. On the contrary, the wife is entitled to continue the implantation procedure, notwithstanding the husband‟s opposition.

Equality

A substantial part of the majority opinion in CA 5587/93,* the subject of this hearing, was devoted to the principle of equality between the sexes. This is a fundamental legal principle, and therefore we must consider whether the solution proposed here stands up to the test of equality. In other words, do the

 

 

 

*             Ibid..

 

 

considerations and principles proposed hitherto remain unchanged in the opposite case, where the woman is the one who wishes to destroy the fertilized genetic material, and the husband is the one who wishes to continue the implantation process in the womb of a surrogate mother?

Admittedly, there was someone who argued that the advantage that the law gives the woman in the laws of abortion also exists in disputes over the fate of fertilized ova. However, as has been explained above, this position cannot be accepted. The woman‟s advantage in the laws of abortion derives solely from the fact that the embryo is a „part of its mother‟, and where this factor does not exist, there is no reason to depart from the principle of equality.

The answer to our question is clear and unequivocal. In the „opposite‟ case, when the man wishes to continue the procedure by means of another surrogate mother, the woman cannot object. The same considerations apply to the same extent, and it should be held that consent given at the time of fertilization is sufficient, and therefore the husband is entitled to continue the procedure even against the wife‟s wishes, and it need not be said, when this is his only opportunity to bring children into the world. The considerations of justice and proper legal policy then work in favour of the husband:

„There are several forms which a disagreement between progenitors could take. The woman may want the embryo to be brought to term, and the man may want the embryo terminated. In that case, it would seem appropriate for the woman to be allowed to gestate the embryo. The Supreme Court‟s abortion and contraception decisions have indicated that the right of procreation is the right of an individual which does not require the agreement of the individual‟s partner. In particular, the woman has been held to have a right to abort without the husband‟s consent and the right not to abort over the wish of the husband that she abort.

But what if the positions were reversed and the woman wished to terminate the embryo and her male partner wished to have it brought to term? When an embryo conceived naturally is developing within a woman during the first two trimesters, it is clear that the woman‟s decision whether or not to terminate it takes precedence over the desires of the man who provided the sperm… it is at least arguable that the man‟s wishes should be honored when the embryo‟s continued existence need not be

 

 

balanced against the physical and psychological needs of the woman carrying it. The man clearly would not have the right to force the female progenitor to gestate the embryo, but there seems to be no reason not to give him custody of the embryo for gestation in a surrogate mother‟ (L. B. Andrews, „The Legal Status of the Embryo‟, 32 Loy. L. Rev. (1986-87) 357, 406-407).

It follows that the proposed solution stands up to the test of equality and does not discriminate at all between the sexes. On the contrary, it limits the discrimination between the sexes in the laws of abortion merely to those cases where it is relevant, i.e., where the woman‟s autonomy over her body is concerned. But in the field of in-vitro fertilization absolute equality should be applied, and it should be held that the party interested in the implantation of the ova is entitled to do this, notwithstanding the opposition of the spouse.

Jewish heritage

There is no doubt that the fundamental principles of our legal system, according to the Foundations of Justice Law, 5740-1980, include Jewish heritage (see A. Barak, Interpretation in Law, vol. 1, The General Theory of Interpretation supra, at p. 616). Notwithstanding his criticism of the Foundations of Justice Law, Prof. Barak says that the arrangement prescribed therein is preferable to the arrangement that preceded the statute. In his words, „an arrangement that refers to Jewish heritage, which is our heritage, is preferable to an arrangement that refers to a foreign heritage‟ (ibid.).

It should be pointed out that reference to Jewish heritage comes after defining the legal question that requires decision, and the inspiration comes within the framework of this question. In our case, we have defined the question as follows: how should we balance between the value of parenthood and the value of non-parenthood?

Our heritage regards parenthood and having children as one of the highest values. In the Bible, we see that man was blessed:

„And God blessed them and God said to them: be fruitful and multiply, and fill the earth and subdue it…‟ (Genesis 1, 28 [65]).

This value is emphasized many times in the sayings of the Rabbis, and we will limit ourselves to one reference from the Mishnah (Gittin 4, 5 [69]): „The world was created only for being fruitful and multiplying, as it is said (Isaiah 45, 18): “He did not create it empty, he made it to be inhabited”.‟

 

 

It need not be said that non-parenthood is not one of the values of Jewish heritage. On the contrary, we find among the sayings of the Rabbis that:

„It has been taught: Rabbi Eliezer says: whoever does not engage in the commandment of being fruitful and multiplying is as if he spills blood‟ (Babylonian Talmud, Tractate Yevamot 63b [70]).

The Rabbis also explained in the Talmud (Babylonian Talmud, Tractate Berachot 10a [71]), with regard to Isaiah‟s prophecy to King Hezekiah (II Kings 20, 1 [72]): „Give instructions to your house for you are dying and you shall not live‟ that he would die in this world, and he would not have life in the world to come, because he had not engaged in the commandment of being fruitful and multiplying.

In relations between spouses, Jewish law holds that the husband has an obligation to his wife, to help her bring children in to the world. Admittedly, this obligation is not enforceable, but a lack of enforcement is not relevant in our case, since the question of enforcement does not arise at all. The husband is liable to help, and he most certainly is not permitted to sabotage the process. In the judgment in CA 5587/93,* I cited the source for the existence of this obligation, which is in the Talmud (Babylonian Talmud, Tractate Yevamot 65b [70]), to which I refer.

Conclusion

The outcome of this case stems from its beginning. In his decision to hold a further hearing, President Shamgar said that:

„I think, with all due respect, that the questions that arose in Civil Appeal 5587/93 were examined thoroughly, comprehensively and in an illuminating manner, both in the majority opinion and the minority opinion. But the matter is novel and original, and without doubt of special importance in our world which is changing its appearance from a scientific and social perspective.‟

Now, after considering the issues in breadth and depth, it can be seen that the „novelty‟ of the matter did indeed justify a further hearing. It is the nature of a novel and original issue that one cannot understand it fully without revision and additional study.

 

 

 

*             Ibid..

 

 

After such study, I have reached the conclusion that ideally decisions concerning fertilized ova should be made by both spouses and with the consent of both. However, where there is no consent between the parties, as in the case before us, the spouse wishing to continue with the implantation procedure should be allowed to do so, notwithstanding the opposition of the other spouse.

 

Justice D. Dorner

1.            In this dispute between Ruth Nahmani (hereafter — the wife) and her husband Daniel Nahmani (hereafter — the husband) over the fate of their joint genetic material — the fertilized ova — the wife‟s right, in my opinion, take precedence.

The facts

2.            The couple married about twelve years ago. Like most couples, they wanted children. But the wife contracted a dangerous illness, and she was compelled to undergo a hysterectomy. Nevertheless, the couple did not give up their hope of children, and they decided to try in-vitro fertilization. The wife agreed that during the surgery to remove her womb, the surgeon would not harm her ovaries, and he would move them aside in such a way that they would not be damaged by the radiation that was to follow. By doing this, the wife — who fully consulted her husband in her decision — endangered her health.

The surgery was successful. The couple began to search for a „surrogate‟ mother in whom the ova, which would be taken from the wife and fertilized with the husband‟s sperm, could be implanted. But this search failed. The couple discovered that in view of the Public Health (In-vitro Fertilization) Regulations, 5747-1987, it was prohibited to implant fertilized ova in the womb of a „surrogate‟. For lack of any other option, the couple decided to carry out the whole procedure in the United States. For this purpose they flew to the United States and even succeeded, with considerable effort, in raising approximately 30,000 dollars. However, they soon discovered that this amount fell far short of the amount required. This economic obstacle left them with only one possibility. The couple began a legal battle. Their plan was that the fertilization should take place in Israel, whereas the implantation and „surrogacy‟ stages should take place in the United States. When they tried to carry out their plan, Assuta hospital made the fertility treatment conditional on the consent of the Ministry of Health. When this consent was

 

 

not given, the couple petitioned the High Court of Justice. After more than three years, in the middle of 1991, the battle ended. The Ministry of Health agreed to the petitioners‟ plan, and the consent was given the force of a judgment.

Immediately following this, the couple began to carry out their plan. Over eight months, the wife underwent a series of difficult medical procedures, in which ova were removed from her body. Eleven of these were successfully fertilized with the husband‟s sperm, and they were frozen for the purpose of their future implantation. Throughout this entire period, the couple went through the procedure together and the husband supported, encouraged and helped his wife. At the same time, the couple began the procedures for making a contract with a „surrogacy‟ institute in the United States. At the end of January 1992, the wife and the husband signed an agreement with the institute, which dealt with the financial aspects of the procedure. The couple also made payments necessary for the procedure.

While the spouses were at the crucial stage of the procedure, in March 1992 — two months after signing the agreement with the „surrogacy‟ institute — the husband decided to leave home and to move in with his girlfriend. A daughter was also born. He refused to give his consent to the continuation of the procedure and to the implantation of the fertilized ova. The wife has no practical possibility of repeating the procedure.

3.            On the basis of these facts, my colleague Justice Strasberg-Cohen held, in paragraph 33 of her opinion, that there is no doubt that in the balance of harm, the harm to Ruth from not realizing her parenthood is greater than the harm to Daniel if parenthood is forced on him. It would appear, therefore, that even the majority in the judgment that is the subject of this further hearing (hereafter — the Nahmani appeal) do not dispute that in this case the scales of justice in the struggle between the parties are tipped in favour of the wife. But the conclusion of Justice Strasberg-Cohen is that „we should not consider only the specific case before us, and sympathy and understanding for Ruth Nahmani‟s aspiration is insufficient for giving rise to a legal remedy to her problem‟ (paragraph 4), and that there is no proper basis that gives the court power to force parenthood on a person against his will (paragraph 33).

Even Prof. David Hed, who teaches the philosophy of morality at the Hebrew University of Jerusalem, reached the conclusion that in this case a rift exists between the moral duty and the legal duty. He said the following in a newspaper interview:

 

 

„He [the husband] agreed to in-vitro fertilization with his wife. This decision required her to undergo painful treatments that endangered her health, treatments that also gave her great expectations. The price that she paid for the fertility treatment was immeasurably higher than the price that he paid, and this fact imposes on him a moral duty to let her complete the procedure, even if he lives apart from her. That is, so to speak, the price of the divorce. True, the price is enormous, but from a moral perspective I would expect him to bear it. In addition, her chance of having a child, if this ovum is not fertilized, is low… [nonetheless] the law cannot oblige  a  person to be a father against his will… since half of the genetic material of that ovum is his‟ (square parentheses supplied) (Hebrew University of Jerusalem Graduate Newspaper, 1996, 26).

The question that arises before us is whether the husband‟s right not to be a parent, based on his „ownership‟ of half of the genetic material of the ova fertilized with his sperm, really takes precedence over the right of Ruth, who also contributed half of the genetic material of these ova, to be a parent.

4.            Indeed, not every moral duty is a duty in law. But the law must lead to a just result. Prof. Dworkin, who denies the existence of judicial discretion, believes that the court should decide difficult cases on the basis of principles, morality and justice. He wrote as follows:

„I call a “principle” a standard that is to be observed… because it is a requirement of justice or fairness or some other dimension of morality‟ (R. Dworkin, Taking Rights Seriously, London, 1979, at p. 22).

Even according to the approach that advocates the existence of judicial discretion, legal norms must be interpreted on the basis of the principles of morality, justice and human rights. In cases where fundamental principles conflict with one other, the conflict will be resolved by a proper balance between the conflicting values. See Barak, Interpretation in Law, vol. 1, The General Theory of Interpretation, supra, at p. 301. See also D. Lyons, Moral Aspects of Legal Theory, Essays on Law, Justice and Political Responsibility, Cambridge, 1993, at pp. 64-101.

Referring to the relationship between justice and law, Cohn wrote in

HaMishpat, supra, at p. 83:

 

 

„… The law must include an inventory of standards that take their place when other sources of law are insufficient. This does not necessarily concern considerations “beyond the letter of the law”. It would be more accurate to say that justice is a subset of the law, one of its limbs. It falls within the raw material available to the judge when he comes to determine the “law”; and subject to the supremacy of legislation, it influences — and it must influence — not only the creation of the “law” as part of the general law, but also the dispensing of justice between litigants.‟

5.            The aspiration to do justice lies at the basis of the law. This was already discussed by Aristotle, when he wrote:

τὸ γὰρ ἁμάρτημα οὐκ ἐν τῷ νόμῳ οὐδ᾽ ἐν τῷ νομοθέτῃ ἀλλ᾽ ἐν τῇ φύσει τοῦ πράγματός ἐστιν... ὅταν οὖν λέγῃ μὲν ὁ νόμος καθόλου, συμβῇ δ᾽ ἐπὶ τούτου παρὰ τὸ καθόλου, τότε ὀρθῶς ἔχει, ᾗ παραλείπει ὁ νομοθέτης καὶ ἥμαρτεν ἁπλῶς εἰπών, ἐπανορθοῦν τὸ ἐλλειφθέν... διὸ δίκαιον μέν ἐστι, καὶ βέλτιόν τινος δικαίου, οὐ τοῦ ἁπλῶς δὲ ἀλλὰ τοῦ διὰ τὸ ἁπλῶς ἁμαρτήματος.

„… for the error is not in the law nor in the legislator, but in the nature of the case: … Whenever at all events the law speaks in a generality, and thereafter a case arises which is an exception to the generality, it is then right, where the legislator, by speaking in a generality, makes an omission or an error, to correct the omission… Therefore it [equity] is just and better than some justice, not better than the generality, but better than the error resulting from the generality‟ (Aristotle, Nicomachean Ethics, 5, 10, translated by the editor).

Aristotle solved the dilemma by holding that when equity is done by the judge in a case that comes before him, this is a part of justice, even if this is not expressly stipulated in statute.

Sometimes, when it turns out that the law does not achieve justice, the law is changed or adapted to the circumstances that have arisen, in a way that a just outcome is obtained. Thus, for example, the English rules of equity were developed as a result of the need to soften the rigidity of the rules of the common law, which in certain cases led to unjust results. The rules of equity

 

 

allowed a degree of flexibility in implementing the rules of the common law while taking account of the circumstances of each specific case, and they gave relief that was unavailable under the common law.

The doctrine of estoppel is associated with the rules of equity. This doctrine was intended to prevent an unjust result that would apparently be required by the law, by estopping litigants, in certain circumstances, from making in the court legal and factual arguments that are in  themselves correct. See H. G. Hanbury & R. H. Mausty, Modern Equity, London, 13th ed., by J. E. Martin, 1989, at pp. 5-51; G. Spencer Bower and A. K. Turner, The Law Relating To Estoppel By Representation, London, 3rd ed., 1977, at p. 4.

The rules of equity also exist in Jewish law sources. Justice Elon discussed this in HCJ 702/81 Mintzer v. Bar Association Central Committee [11], at p. 18:

„… the principled approach of Jewish law regarding the need for fixed and stable criteria and standards as a rule did not prevent it from requiring the judge trying a case to endeavour to find a solution for an exceptional case, if and when such a solution was required according to the criteria of justice…‟

Rabbi Yaakov ben Asher (Arba‟ah Turim, Hoshen Mishpat 1 [73]) cited the saying of the Rabbis (Babylonian Talmud, Tractate Shabbat 10a [74]) that

„any  judge  who  judges  according  to  the  absolute  truth…‟.  This  was interpreted by Rabbi Yehoshua Falk as meaning:

„Their intention in saying the absolute truth was that one should judge the matter according to the time and place truthfully, and one should not always rule according to the strict law of the Torah, for sometimes the judge should rule beyond the letter of the law according to the time and the matter; and when he does not do this, even though he judges truly, it is not the absolute truth. In this vein the Rabbis said (Babylonian Talmud, Tractate Bava Metzia, 30b) “Jerusalem was only destroyed because they based their rulings on the law of the Torah and not beyond the letter of the law”.‟ (Rabbi Yehoshua ben Alexander HaCohen Falk, Drisha, on Rabbi Yaakov ben Asher, Arba‟ah Turim, Hoshen Mishpat 1, 2 [75]).

The close relationship between the law and justice also finds expression in our case-law. In FH 22/73 Ben-Shahar v. Mahlav [12], at p. 96, it was held —

 

 

contrary to the law in England and the United States — that a litigant should be exempted from complying with his undertaking under a consent judgment, as long as he is in a condition of helplessness. This is what Justice Berinson wrote:

„In Israel, perhaps more than with any other people, law and justice are synonyms, and the concept of just law is very deeply rooted in the nation‟s conscience…

Counsel for the petitioner also referred to the well-known expression that “hard cases make bad law”, since, according to him, in this case, in order to grant relief to the respondent who is in distress, the court innovated a far-reaching rule giving it discretionary power far beyond what courts have appropriated for themselves hitherto, or what has been given to them under any legislation. To this a reply can be made in the words of Lord Blackburn in River Wear Commissioners v. Adamson (1877) 2 App. Cas. 743, 770, that “this is a bad law making hard cases”. I cannot believe that our law is so bad that it cannot help a respondent in great distress that befell him after judgment was given.‟

And in his remarks when retiring from the judiciary, Justice Berinson emphasized:

„… The law and justice are one, if you make proper use and interpretation of the law. Law is law if it is just law… and I have always found that justice is within reach if you wholeheartedly wish to reach it…‟ („Remarks made by Justice Berinson on his Retirement from the Judiciary‟, 8 Mishpatim (1977) 3, 5).

See also I. Zamir, „In Honour of Justice Zvi Berinson‟, 2 Mishpat Umimshal (1994) 325, 327-330.

6.            The issue before us arises because of scientific advances. Human biology, on one hand, and the right of a person to control his body, on the other hand, had hitherto established clear limits for the rights of husband and wife. Until the stage of pregnancy, each of the spouses is free to engage in sexual relations for the purpose of procreation or to refuse to engage in such relations, but from that stage on, the right of the wife carrying the embryo in her womb overrides the right of the husband, in so far as this concerns the relationship between them, and the decision to continue the pregnancy or terminate  it  is  hers,  and  the  husband —  unlike  the  statutory  committee

 

 

empowered to approve the termination of pregnancy — is not entitled to force his will on her. See sections 314-316 of the Penal Law; CA 413/80 A v. B [9], at p. 67.

Scientific-technological advances today allow couples that cannot have children naturally to bring children into the world. The ability of the spouses to interfere in the procreation process, which is being carried out with innovative methods, to influence it and even to stop it has increased. In consequence, the position of the law and its involvement in the disputes surrounding the  use of the  new procreation techniques are sought  more frequently. New areas have even been created where the intervention of the law is required.

The legal issues that are arising are new and fundamental. They involve many principles and factors, from which we must, in a careful process of evaluation, ascertain the correct and fair rules that should be applied. In the words of Justice Witkon in CA 461/62 Zim Israeli Shipping Co. Ltd v. Maziar [13], at p. 1337 {138}:

„… As with most problems in law and in life in general, it is not the choice between good and bad that makes our decision difficult. The difficulty is in choosing between various considerations, all of which are good and deserving of attention, but which conflict with one other, and we must determine which will take precedence.‟

Had the matter before us been governed by an established rule of law, the court would be obliged to interpret it in a way consistent with other principles of the legal system and consistent with the demands of justice. When no such rule exists, the principles of law and justice can operate together to establish the appropriate rule.

7.            In the case before us, we need to balance between the right to be a parent and the right not to be a parent. Today, in cases where couples require a „surrogate‟ mother who will carry their embryo in her womb, the balance is achieved within the framework of the Surrogacy Agreements (Approval of Agreement and Status of the Child) Law (hereafter — „the Agreements Law‟). The Agreements Law restricts the couple‟s autonomy and allows a

„surrogate‟ to be used only if a written agreement is made between the woman intended to carry the embryo and the prospective parents, and that agreement is approved by the Statutory Committee (section 2(1) of the Agreements Law).

 

 

A „surrogacy‟ agreement is therefore not absolutely binding. An agreement made under the Agreements Law is not an ordinary contract. As long as the fertilized ovum has not been implanted in the body of the woman intended to carry the embryos, she is entitled, and the two spouses (jointly) are entitled, to be released from the agreement. Even the statutory committee may stop the fertility procedure as long as the ovum has not been implanted. Nonetheless, neither of the spouses — without the consent of the other — has the power to prevent the implantation after the ovum has been fertilized. Stopping the procedure at this stage requires approval of the statutory committee.

8.            The Agreements Law, which, as aforesaid, was enacted only recently, does not apply to the case before us. The parties also did not make a formal agreement between them. But this has no significance, since, in my opinion, even according to the legal position before the Agreements Law, an agreement with regard to having children is not a contract. Couples are presumed not to be interested in applying the law of contracts to matters of this kind. This presumption has not been rebutted in our case. In any event, even were it proved that the parties had such an intention, they still did not have the power to give the agreement between them the force of a contract, since making a contract to have children is contrary to public policy. Therefore, the contract is void under sections 30 and 31 of the Contracts (General Part) Law, 5733-1973. Note that there is nothing improper in the purpose of the agreement — bringing children into the world — or the means of carrying out the agreement. The impropriety lies in the application of the law of contracts to the agreement, which is contrary to public policy. See and compare D. Freedman, N. Cohen, Contracts, Aviram, vol. 1, 1991, at p. 326;

A. Bendor, „The Law of Political Agreements‟, 3 Mishpat Umimshal (1995) 297, 316.

However, the fact that an agreement to have children is not a contract does not entirely negate the legal significance of the agreement or even of a representation with regard to consent. This is because, within the framework of balancing between the rights of the parties, there are reasons to take into account also the existence of an agreement between them or the existence of a representation with regard to consent. An agreement, like a representation, may lead to expectations and even reliance. These must be taken into account among the other factors affecting the balance. Cf. A. Barak, „Protected Human Rights and Private Law‟, Klinghoffer Book on Public Law (The

 

 

Harry  and  Michael  Sacher  Institute  for  Research  of  Legislation  and Comparative Law), I. Zamir ed., 1993) 163, 169.

It would seem that this principle also applies today with regard to the discretion of the committee acting under the Agreements Law to prevent implantation of a fertilized ovum in the body of a „surrogate‟. We may assume that in many cases the committee will consider the matter at the request of one of the spouses. By exercising the discretion given to it, the committee will take into account, inter alia, any expectation or reliance that the agreement created in the other spouse.

9.            In a conflict between the right of the husband and the right of the wife, the two have equal status with regard to their relationship to the fertilized ova, which contains their joint genetic material. Moreover, I do not think that we should distinguish between a man and a woman with regard to their yearning for parenthood. The proper balance between the rights of the two is therefore unaffected by the sex of the spouse who wants the ova be implanted, or of the spouse opposing this.

One can conceive of three main ways of balancing between the rights of the spouses after the woman‟s ovum has been fertilized with the man‟s sperm and they do not agree upon its implantation in the womb of a „surrogate‟ mother. These are as follows:

The first way, which was the majority opinion in the Nahmani appeal, is to prefer always the spouse who does not want to be a parent. This absolute preference is based on the principle of the autonomy of the individual, which rejects the coercion of parenthood. According to this principle, an agreement to bring children into the world should be regarded as a weak agreement, whose existence — until the implantation of the ova — is conditional on the consent of both spouses. Enforcement of such an agreement will violate a basic human right, and therefore is contrary to public policy. This position has some support in one of two judgments in the United States that considered the issue before us. In Davis v. Davis [47], where the judgment was given by the Supreme Court of the State of Tennessee, it was held that, as a rule, the right not to be a parent should be preferred. Nonetheless, it was held that this rule would not apply in a case where preference of the right not to be a parent would deprive the other spouse absolutely and finally of the possibility of being a parent. Justice Daughtrey wrote as follows, at p. 604:

„Ordinarily,  the  party  wishing  to  avoid  procreation  should prevail,   assuming   that   the   other   party   has   a   reasonable

 

 

possibility of achieving parenthood by means other than the use of the preembryos in question. If no other reasonable alternatives exist, then the argument in favor of using the preembryos to achieve pregnancy should be considered…

… the rule does not contemplate the creation of an automatic veto…‟.

The second way, upon which the approach of my colleague, Justice Kedmi, is based, supports a preference, in all circumstances, of the right to parenthood. This approach is based on the outlook that the point of no-return is not implantation of the ovum in the body of the „surrogate‟, but fertilization of the ovum, which is what creates a new entity. This approach has support in the second American ruling that exists on the question before us, Kass v. Kass [51], which was given by a trial court in the State of New York. In this judgment it was held that a stipulation in an agreement made by the spouses, which said that if they did not reach agreement on how to deal with the fertilized ova they would be used for research, should not be regarded as a waiver by the woman of her right to parenthood. The court disagreed with the ruling in Davis v. Davis, and it held that there was no basis for distinguishing between in-vitro fertilization of an ovum and fertilization of the ovum in the body of the woman, and in both cases, once fertilization has occurred, the husband cannot impose a veto on the continuation of the procedure. Justice Roncallo wrote as follows:

„In my opinion there is no legal, ethical or logical reason why an in vitro fertilization should give rise to additional rights on the part of the husband. From a propositional standpoint it matters little whether the ovum/sperm union takes place in the private darkness of a fallopian tube or the public glare of a petri dish. Fertilization is fertilization and fertilization of the ovum is the inception of the reproductive process. Biological life exists from that moment forward… To deny a husband rights while an embryo develops in the womb and grant a right to destroy while it is in a hospital freezer is to favor situs over substance.‟

The third way, which my colleague Justice Tal advocates, is to balance the rights of the specific parties. In my opinion, this is the correct way, because balancing rights on an abstract level may lead to unjust results. This was discussed by Justice Holmes of the Supreme Court of the United States in Lochner v. New York (1905) [55], at p. 547:

 

 

„General propositions do not decide concrete cases. The decision will depend on a judgment or intuition more subtle than any articulate major premise.‟

Of course, even a balancing of this kind is not an ad hoc balancing without any guiding principles, but it is made on the basis of rules that are applied to the special circumstances of each case.

This method of balancing — according to which, in our case, the woman‟s right is preferable — was proposed also in three articles written as a result of the Nahmani appeal. See Marmor, „The Frozen Embryos of the Nahmani Couple: a Response to Chaim Gans‟, supra; Barak-Erez, „On Symmetry and Neutrality: Reflections on the Nahmani Case‟, supra; S. Davidov-Motola, „A Feminist Judgment? A Further Aspect of the Nahmani Case‟, 20 Iyunei Mishpat (1996) 221.

10.          Freedom in it fullest sense is not merely freedom from external interference of the government or others. It also includes a person‟s ability to direct his lifestyle, to realize his basic desires, and to choose from a variety of possibilities by exercising discretion. In human society, one of the strongest expressions of an aspiration without which many will not regard themselves as free in the fullest sense of the word is the aspiration to parenthood. We are not speaking merely of  a natural-biological need. We are speaking of a freedom which, in human society, symbolizes the uniqueness of man. „Any person who does not have children is considered as a dead person‟ said Rabbi Yehoshua ben Levi (Babylonian Talmud, Tractate Nedarim, 64b [76]). Indeed, whether man or woman, most people regard having children as an existential necessity that gives meaning to their lives.

11.          Against this basic right, which constitutes a central element in the definition of humanity, we must consider the right not to be a parent. The basis of the right not to be a parent is the individual‟s autonomy not to suffer interference of the government in his privacy. This was discussed by Justice Brennan in Eisenstadt v. Baird [49], at p. 453:

„If the right of privacy means anything, it is the right of the individual, married or single, to be free from unwarranted governmental intrusion into matters so fundamentally affecting a person as the decision whether to bear or beget a child.‟

In the conflict of rights before us we are not speaking of relations between the individual and the government, but of relations within the framework of the family unit. Although the autonomy of the individual is also recognized

 

 

within the framework of the family, it seems to me that the right of privacy from the government is in general of greater weight than the right of privacy in the family. In the case before us, the husband does not even insist on his right for reasons of principle that oppose bringing children into the world. After all, he has a daughter from another woman, and he wanted that daughter. His argument is against a parenthood specifically with regard to an embryo created in the fertility procedure that the parties underwent. Moreover, the husband has declared that his objection to parenthood does not derive from a fear of the personal and financial burdens involved. Therefore, the interest not to be liable for personal and financial obligations towards a child born against the parent‟s wishes, which might be a relevant consideration when balancing the interests as a rule, is not relevant in this case.

What, then, is the importance of the freedom expressed in a person‟s knowing that he does not have in the world a child that he does not want? It seems to me that for both men and women this freedom is regarded as limited, conditional, and in essence secondary compared to the right to have children and to create the next generation.

In so far as a man is concerned, once a woman has been impregnated by a man, he has no power to force her to have an abortion even when he is not interested in a child. In so far as a woman is concerned, as a rule she is not entitled to have an abortion. Abortion is permitted only on the basis of a permit from a statutory committee given according to a closed list of grounds. The mere fact that the woman does not want a child is not one of the reasons on the list. A fundamental principle, which applies to both women and men, is therefore that once a woman becomes pregnant, neither she nor her spouse have a right not to be parents.

Another basic principle is that the right of a man or a woman to be a parent does not override the right of the spouses to control over their body, and it does not impose on them positive duties to participate in a procedure that may lead to parenthood.

Subject to these fundamental principles, the balance between the rights of the spouses will be made in each case by taking into account the current stage of the procedure, the representations made by the spouses, the expectations raised by the representations and any reliance on them, and the alternatives that exist for realizing the right of parenthood. I will discuss these considerations in this order.

 

 

12.          The current stage of the procedure: The more advanced the stage of the fertilization procedure, the greater the weight of the right to be a parent. As aforesaid, the right to be a parent and the right not to be a parent are subject to a person‟s right over his body, and in no case can one spouse be compelled to undergo a physical act to realize the right of the other spouse. The situation is different in circumstances where the realization of the right to be a parent does not involve a violation of the other spouse over his body. In our case, it can be said that the right to be a parent has begun the journey from theory to practice, and it is not merely a yearning. On the other hand, the ovum has not yet been implanted, and there is no absolute obstacle to terminating the procedure.

13.          Representations, expectations and reliances: Estoppel by representation prevents a party from denying a representation that he made to another party, if that party relied on the representation reasonably and in good faith and in consequence adversely changed his position. In Israeli law, the doctrine of estoppel — which we received from English law — can be regarded as a facet of the principle of good faith, which is a basic principle in our legal system. See LCA 4298/92 Ezra v. Tel-Mond Local Council [14]. In this regard, the following remarks were written in a review of the judgment in Davis v. Davis:

„… the doctrine of reliance should be applied to resolve a dispute between the gamete providers. The consistent application of a reliance-based theory of contract law to enforce promises to reproduce through IVF will enable IVF participants to asset control over their reproductive choices by enabling them to anticipate their rights and duties, and to know with reasonable certainty that their expectations will be enforced by the courts.‟ (C. D. Ahmen, Comment, „Disputes Over Frozen Embryos: Who Wins, Who Loses, and How Do We Decide?‟ 24 Creighton L. R. (1990-91) 1299, 1302, 1303).

Nonetheless, in my view, the decision between the rights of the parties is not be based on estoppel alone. Representations made by one spouse to another (including their making an agreement) may be a factor in the balance between the rights of the parties, when they created reliances and sometimes even mere expectations. A similar position was adopted in another article reviewing the judgment in Davis v. Davis [47], where it was written:

„One fact is of vital importance in making this judgment: the spouse who opposes implantation wanted a child at one time and

 

 

submitted to the IVF process with that end in mind… the greater injustice would be to deny implantation to the spouse who detrimentally relied on the other‟s words and conduct‟ (Panitch,

„The Davis Dilemma; How to Prevent Battles Over Frozen Preembryos‟, supra, at p. 547).

In our case, as a result of the husband‟s consent to the procedure, including his encouraging the wife to undergo the limited surgery and the fertilization, the wife underwent difficult fertility treatment with his sperm and did not need, for example, an anonymous sperm donation. In his article

„The Frozen Embryos of the Nahmani Couple: a Response to Chaim Gans‟,

supra, Dr. Marmor discusses this, at p. 445:

„By agreeing to begin the fertility and surrogacy procedures, and even more by his conduct during the initial stages of the procedure, there is no doubt that Daniel Nahmani made a representation towards his wife, from which she could conclude that he had no intention of stopping them; there is also no doubt that as a result of this representation, and relying on it reasonably and in good faith, Ruth adversely changed her position, by beginning the procedures with him (and not, as aforesaid, with an anonymous sperm donation).‟

Similar comments were written by Dr Barak-Erez, „On Symmetry and Neutrality: Reflections on the Nahmani Case‟, supra, at p. 215, and Ms Davidov-Motola, „A Feminist Judgment? A Further Aspect of the Nahmani Case‟, supra, at p. 299.

This adverse change in the wife‟s position is a major consideration in the balance of interests between the spouses, even if it has not been proved that the husband wanted to become the father of the wife‟s child even if they separate.

14.          Possible Alternatives: A case of refusal to continue a fertility procedure when the spouse can perform it with another partner is not the same as a case where refusal will doom the other spouse to childlessness. The fewer the alternatives available to the spouse wishing to become a parent, the greater the need to protect his right to parenthood, even at the expense of trespassing on the rights of the other spouse. As stated, this was the approach of the court in Davis v. Davis [47]. Prof. Robertson adopted a similar approach:

 

 

„If the right to reproduce and the right to reproduction are in conflict, favoring reproduction is not unreasonable when there is no alternative way for one party to reproduce‟ (J. A. Robertson,

„Prior Agreements for Disposition Of Frozen Embryos‟, 51 Ohio St. L. J. (1990) 407, 420).

This consideration in our case has an additional weight of justice, since the spouse who is not interested in continuing the procedure — the husband — has been blessed with a daughter of his own in another family that he has established.

15.          In our case, the basic principles and considerations which I have mentioned therefore lead to a preference of the wife to be a parent over the right of the husband not to be a parent. As stated, I do not believe that women and men attach different degrees of importance to having children. Therefore, were the positions reversed and were the man, in similar circumstances, to want to continue the procedure and were the woman to refuse, the result I have reached — namely, allowing the implantation of the frozen ova in the womb of a „surrogate‟ mother — would not be different.

I have read the opinion of my colleague Justice Goldberg, and I agree with his remarks (except for what he says in paragraph 5 of his opinion with regard to the scope of the powers of the committee acting under the Agreements Law, a question that does not need to be decided in this case).

My opinion, therefore, is that the petition should be granted, the judgment in the Nahmani appeal should be cancelled, and the judgment of the District Court should be reinstated.

 
full text (continued): 

Justice E. Goldberg

1.            The process of creating man was, in the past, solely governed by the forces of nature. Conception was the result of intimate acts, which were entirely in the realm of the privacy of the individual. Medical-technological advances have  changed the methods of creation, and  made  inroads into nature‟s sole dominion over the secret of creation. Against this background the dispute between the Nahmani couple has arisen and come knocking at the doors of the court. This dispute does not essentially fall within the framework of an existing legal norm. It cannot be fitted into the legal frameworks of a contract or quasi-contract. It lies entirely in the realm of emotion, morality, sociology and philosophy. This explains the normative void and the inability

 

 

of accepted legal rules to provide a solution to the dispute. But since the case has arrived on the threshold of the court, it cannot avoid deciding it.

2.            In the dispute before us a positive right and a negative right are opposed to one another. Ruth Nahmani (hereafter — Ruth) wishes to exercise her positive right  to be a parent, whereas Daniel Nahmani (hereafter — Daniel) insists on his negative right not to be a parent. The right to be a parent is based on the autonomy of the will that respects, inter alia, the choice of the individual to establish a family unit. The other side of the coin, as stated, is the right not to be a parent, which is also based on the autonomy of the will that respects the desire of the individual to control the course of his life and his commitments.

Both of the aforesaid rights have their source in the right to liberty. As Thomas Hobbes said: „A free man is he that… is not hindered to do what he has a will to‟ (Hobbes, The Leviathan, ch. 21). The scholar Isaiah Berlin discussed the positive meaning of this concept in his essay „Two concepts of liberty‟:

„The “positive” sense of the word “liberty” derives from the wish on the part of the individual to be his own master. I wish my life and decisions to depend on myself, not on external forces of whatever kind. I wish to be the instrument of my own, not of other men‟s, acts of will. I wish to be a subject, not an object; to be moved by reasons, by conscious purposes, which are my own, not by causes which affect me, as it were, from outside‟ (I. Berlin, Two Concepts of Liberty, 1958).

Indeed, there is a strong connection between the right of liberty, and its derivative the autonomy of the will, and human dignity. This was discussed by President Barak in Interpretation in Law, vol. 3, Constitutional Interpretation, Nevo, 1994, at p. 426, where he says

„A central component of human dignity is the freedom of will of the individual. Human dignity is expressed in the freedom of choice of the individual and his power to develop his personality and to decide his fate.‟

The right to be a parent and the right not to be a parent therefore derive their existence from the same basic values of liberty and human dignity, which are now protected in the Basic Law: Human Dignity and Liberty.

Even though the basic laws may be used to determine criteria for exercising judicial discretion, which would serve as „a workshop for a new,

 

 

concrete law, according to the changing needs of life‟ (A. Barak, „Judicial Case-law and Social Reality: The Connection with Basic Principles‟, The Sussman Book, Daf-Hen, 1984, 71, 85), this path is, in my opinion, unavailable to us in this case, where two rights of equal value and status compete with one another.

3.            What are the legal tools that a court will use to make a decision in this position of „stalemate‟ between the rights, when the right to be a parent and the right not to be a parent are mutually exclusive, and a clear decision is required in the dispute, in the absence of a compromise path that will bridge between them.

4.            In so far as termination of a pregnancy is concerned, this involves an incursion into the woman‟s body, and her freedom over her body implies a duty to obtain her consent before such an incursion. It is „the basic right of every person to protect his body from an unwanted incursion, not merely because of the physical discomfort, but mainly because of the invasion of his privacy, his unique existence and the foundation of his being‟ (Davidov- Motola, „A Feminist Judgment? A Further Aspect of the Nahmani Case‟, supra, at p. 234). The need for the consent of the woman to terminate the pregnancy, which is derived, as stated, from the value of the woman‟s liberty over her body, gives her a „right of veto‟ over the pregnancy. This conclusion, in deliberations about the termination of pregnancy, makes it unnecessary to decide whether the woman‟s right to be a parent overrides the man‟s right not to be a parent. This is not so in our case, when realizing Ruth‟s right to be a parent does not require an invasive incursion into Daniel‟s body, just as realization of his own right not to be a parent does not require an incursion into Ruth‟s body. It follows that there is no basis for drawing an analogy in our case from the case-law relating to the right of abortion.

5.            Until recently the legislator refrained from regulating the sensitive and complex question of fertilization and surrogacy in legislation. The first direct legislation in this sensitive field has now been introduced in the Surrogacy Agreements (Approval of Agreement and Status of the Child) Law (hereafter — the Law). It should be emphasized that the Law does not apply directly to the case of the Nahmani couple, who did not, from the outset, follow the path that it outlines. Nonetheless, we should consider whether the position adopted by the legislator can serve as a source of inspiration for solving the dispute before us.

The Law focuses mainly on the relationship between prospective parents and a surrogate mother. It  stipulates several conditions for implanting a

 

 

fertilized ovum in the body of a surrogate mother, which include, as stated in section 2(1) of the Law, the need for „a written agreement between a surrogate mother and prospective parents, which has been approved by an approvals committee pursuant to the provisions of this law‟. Section 5(c) of the Law provides that:

„The approvals committee is entitled to reconsider an approval that it gave if a significant change has occurred in the facts, circumstances or conditions that underlay its decision, as long as the fertilized ovum has not been implanted in the surrogate mother in accordance with the surrogacy agreement.‟

As can be seen from the deliberations of the Knesset‟s Welfare Committee (on 9 January 1996), this section was mainly intended for cases where it is discovered, after approval of the agreement, that the surrogate mother has contracted an illness that affects her ability to bring a healthy child into the world. During the deliberation it was said:

„With regard to the question of withdrawing from an agreement before implantation: the authority of the committee is merely to approve an agreement. The committee does not need to approve a withdrawal from, or a breach of, an agreement. An agreement is an agreement like any other agreement… [the] committee is not supposed to give approval for one side to withdraw from the agreement. What we have provided in sub-section (c) refers only to one situation: the committee gave approval and afterwards it was informed that a change occurred which could cast doubt on the approval that it gave. It can be presumed that it gave approval on the basis of the assumption that the surrogate mother was healthy, and afterwards the surrogate mother contracted AIDS or another disease that may affect her ability to bring a healthy child into the world. This is the situation in which the committee will be entitled to reconsider the matter, and, if it sees fit, to cancel the approval that it gave. If, as a result of a dispute between the parties, they decide to cancel the agreement, or one party decides that he no longer wishes it… for this the committee is not needed. It is not a court and it will not adjudicate legal disputes‟ (at page 17).

If a danger arises to the welfare of the unborn child, the tendency to push the „point of no return‟ as far back in time as possible is obvious. On the other hand, there is an obvious fear of establishing the „point of no return‟

 

 

after the implantation of the ovum, when cancelling the approval of the agreement involves intrusive interference in the body of the surrogate mother. The proper balance between the welfare of the child and the liberty of the surrogate mother is what led to establishing the „point of no return‟ at the implantation of the ovum. This point of balance does not necessarily reflect the proper point of when an internal dispute arises between the prospective parents, and the decision then, as stated, is between the right to be a parent which conflicts with the right not to be a parent. The solution to such a dispute cannot be derived from the Law, which refers even a dispute between the prospective parents and the surrogate mother to the court.

6.            The possibility of „involving‟ the fertilized ovum in the dispute in order to decide the matter, namely „that one should not allow the birth of children where there is a dispute‟ (see the Report of the Professional Public Commission for Examining the Issue of In-vitro Fertilization (1994), at page

36) is also, in my opinion, improper.

Certainly, one cannot deny that it is preferable for a child to grow up in a warm and loving home, where the parents behave with emotional and economic responsibility towards him. But can it be said that, where the

„father‟ is uninterested in facing his parental responsibility, destruction of the ovum is preferable to it being allowed to develop into a child? In this regard, the rhetorical questions of Prof. Shifman with regard to the best interests of the child in an one-parent family are relevant, by way of analogy:

„… With artificial insemination we are concerned with planning to bring an unborn child into the world in order to realize peoples‟ expectations of becoming parents. Can it be said categorically that such a child would be better off not being born than being born? Will the child‟s situation necessarily be so wretched, merely because he is born into a single-parent family, that we have a duty ab initio to prevent his being brought into the world?‟ (Shifman, Family Law in Israel, supra, vol. 2, at p. 156).

The answer to the question whether destruction is preferable to existence lies in the expanses of philosophy and the depths of morality, and the court is clearly unable to provide an answer. In this context it has been said that:

„Existing rules of court do not incorporate the hidden world, and we cannot find in them an answer to the existence of the right not  to  be  born  that  the  child  claims.  The  abstract  ethical

 

 

approach concerning the nature of creation and life, which is determined according to the critic‟s outlook on life, is insufficient for the creation of a criterion for the existence of the legal right. The crux of the problem before us concerning the “nature” of non-existence lies entirely in the field of speculation about the secrets of creation and not in the field of practical law…

… Since the theory raised by the child with regard to his right to non-existence does not lie in the field of human criticism, as long as the legislator has not established such a right, even the “reasonable man” (on whom we frequently rely) will not help us, since the secrets of the universe and the mysteries of every living thing are hidden from him also. Therefore we cannot provide an answer as to the existence or non-existence of a right not to exist in rational terms of the “reasonable man”, when we are concerned with a decision in a world of ethics in which the concept of “rationality” has no part‟ (CA 518/82 Zaitsov v. Shaul [15], at pp. 127-128).

7.            The sub-classification of the conflicting rights in our case into rights not to be harmed (negative rights) that „do not impose a duty on another, except for the demand to refrain from violating this freedom (or liberty)‟ (Barak, Interpretation in Law, vol. 1, The General Theory of Interpretation, supra, at p. 362) and positive rights, which „are rights that have a corresponding duty of another (usually the State) to act to protect them…‟ (Barak, ibid., at p. 364), also does not further us in solving the dispute. The question whether the State has a duty to help an individual to realize his desire to be a parent does not arise at all in this case. But whether or not such a duty exists cannot decide the interpersonal dispute between the spouses. Defining the right of the individual as positive vis-à-vis the State cannot, in itself, be of decisive weight in the conflict between the right of that individual and the right of another individual, whereas classifying Ruth‟s right as positive vis-à-vis Daniel‟s right is impossible as long as we have not first decided the question whether the initial agreement of the spouses to begin the in-vitro fertilization procedure also includes the power to continue the procedure until its completion. If we say that the consent of each spouse is required for each stage, then it follows that Daniel should be regarded as enjoying  a  „right  of  veto‟,  and  it  becomes  unnecessary  to  classify  the

 

 

conflicting rights. By contrast, if Daniel‟s consent is not required for implantation of the ova, there is no basis for saying, as we have already explained, that his liberty takes precedence over Ruth‟s liberty.

8.            The Nahmani  couple did  not think of determining expressly what would happen to the ova if their marriage broke down. In so far as Ruth‟s expectations are concerned, it is hard to determine that she actually ruled out the possibility that her right to be a parent would be realized within the framework of a one-parent family, if the marriage should break down. With regard to Daniel‟s expectations, it can be said, on the one hand, that he took part in the in-vitro fertilization process only in order to establish a family home together with Ruth. The threat of childlessness did not hang over his head, and he knew that he could fulfil his aspiration to be a parent even if he separated from her. But on the other hand, is it clear that this would also have been his position had the „officious bystander‟ troubled him at that time to consider the question of the fate of the ova, should he become infertile for any reason and his relationship with Ruth deteriorate? Is it not more reasonable to assume that his answer would be that in such a case the procedure should continue?

The couple‟s silence should be interpreted as a repression of the possibility that the marriage would break down. This pessimistic scenario is contrary to the spirit of union implied by the very decision to travel together along the hazardous road of the in-vitro fertilization procedure. In my opinion, at that time the couple‟s horizon extended only as far as the possibility of joint parenthood. They did not consider the possibility of continuing the procedure and the single parenthood of one of them, should they separate from one other. Attempting to fill this lacuna will not, in my opinion, be successful. It cannot be established that when the ova were fertilized, the couple mutually discounted the possibility of single parenthood, just as it cannot be established that their consent to fertilization of the ovum incorporated consent of both of them to single parenthood.

9.            Application of the rule that prohibits harming someone without his consent is also not without its difficulties. The answer to the question whether a status quo has been adversely affected requires a determination as to what the status quo is. If we say that the status quo is the procedure in its entirety, then Daniel is the one seeking to change the status quo in that he wants to stop the procedure, thereby adversely affecting Ruth‟s position, in that she will lose the experience of parenthood. If we say that the procedure should be divided into stages, then it is Ruth who wishes to change the status

 

 

quo by trying to move on to the next stage of the procedure — the stage of implanting the ova —thereby changing the status quo for Daniel, who will become a father against his will. The answer to the question whether the initial consent includes agreement to the entire procedure cannot be  no merely because moving from one stage to another adversely affects Daniel, when we have already established that refraining from moving from one stage to another adversely affects Ruth. This problem of the scope of the initial consent cannot be solved by an abstract analysis of rights. Such an analysis involves a circular argument, in the sense that classifying Ruth‟s right vis-à-vis Daniel as a „positive‟ right can only be done after determining the scope of the original consent.

10.          We can summarize thus far as follows: we are dealing with a normative lacuna. Resorting to the basic principles of the legal system does not provide a solution, for if we limit ourselves to a preliminary classification of the rights, then we are dealing with an internal conflict between two derivatives of the same right, the right to dignity and liberty. Because the type of basic value being harmed is identical, the scales are balanced. The sub- classification of the conflicting rights as „negative‟ rights and „positive‟ rights also does not help solve the conflict. Defining the right of an individual as positive vis-à-vis the State cannot, in itself, be decisive in a conflict between the right of an individual and the right of another individual. Classifying Ruth‟s right as positive vis-à-vis Daniel‟s right requires a prior determination of the question whether the initial consent to the procedure has the strength to move the process on to its conclusion. If the consent of both spouses is required for each stage of the procedure, then Daniel has a „right of veto‟, and holding Ruth‟s right to be conditional on Daniel‟s consent makes it superfluous to classify the conflicting rights. If Daniel‟s consent to the implantation of the ova is not required, there is no basis for saying that Ruth‟s liberty is inferior to his.

11.          In the absence of any legal norm, which is either a rule or a standard (for the difference between the two, see M. Mautner, „Rules and Standards: Comments on the Jurisprudence of Israel‟s New Civil Code‟, 17 Mishpatim (1988) 321, at p. 325), the court must „formulate its own criterion‟ (see G. Tedeschi, „The Problem of Lacunae and section 46 of the Palestine Order In Council‟, Research in Israeli Law, Newman, 2nd ed., 1959, 132, at p. 180). The court must (unwillingly) carry out a legislative function that does not apply existing legal norms, but creates a norm based on the general principles of the legal system.

 

 

Note that we are not speaking of filling a lacuna in an existing legal norm, which requires the application of the Foundations of Justice Law. Indeed, in my opinion there exists no legislative arrangement that we can use to solve the dispute, and we are certainly not speaking of an incomplete arrangement that the court would be justified in filling. We are dealing with a need for creation ex nihilo — by filling an extra-legislative lacuna through creating a norm which is required not by a defective norm but by a total „legislative silence‟.

12.          Since, in my opinion, we have no „conventional‟ tools to solve the dispute, we must search for an alternative to these, which is founded on a basic value that governs our legal system. A fitting basic value is justice.

Justice is the essence of Israeli law. It is the abstract ideal to which the legal system aspires. It —

„… expresses the ideal arrangement vis-à-vis the law as a system of interpersonal rules. It is the ethical yardstick of the law‟ (I. Englard, Introduction to Jurisprudence, Yahalom, 1991, at p. 42).

Legislation also contains many provisions in which justice has been translated from a supreme principle governing the legal system into a specific legal norm. Thus, for example, the fundamental principles clause enshrined in section 1 of the Basic Law: Human Dignity and Liberty, states that „Basic human rights… will be honoured in the spirit of the principles in the Declaration of the Establishment of the State of Israel‟, according to which the State of Israel is to be founded, inter alia, on the principle of justice.

When deciding a dispute between the citizen and the government, the court is empowered not to grant relief to an injured party even when he has a cause of action, if it thinks it just to do so. In this spirit, section 15(c) of the Basic Law: Administration of Justice states that the Supreme Court, sitting as a high court of justice, „shall hear matters in which it sees a need to grant equitable relief and which are not within the jurisdiction of another court or tribunal‟.

The branches of private law are based on justice. In the law of contracts, justice and fairness play a major part. Section 31 of the Contracts (General Part) Law empowers the court to exempt a party to an illegal contract from the duty of restitution „if it thinks it just to do so‟. Section 14(b) of the Contracts (General Part) Law authorizes the court to void a contract in which there was a mistake unknown to the other party „if it thinks it just to do so‟.

 

 

Section 3(4) of the Contracts (Remedies for Breach of Contract) Law, 5731- 1970, does not allow the remedy of enforcement when „enforcement of the contract is unjust in the circumstances of the case‟. Justice makes its mark also in the other branches of private law. In the law of torts, the contributory payments between joint tortfeasors are determined according to criteria „of justice and equity‟ (section 84 of the Torts Ordinance [New Version]). Justice naturally governs the laws of unjust enrichment. Section 2 of the Unjust Enrichment Law, 5739-1979, states that the court may exempt a beneficiary from restitution if it thinks there are circumstances that „make restitution unjust‟. The principles of justice can also be found in property law. Section 132(a) of the Tenant‟s Protection Law [Consolidated Version], 5732-1972, provides that „notwithstanding the existence of a ground for eviction, the court may refuse to give a judgment ordering eviction if it is persuaded that in the circumstances of the case it would be unjust to give it‟. Section 10 of the Land Law, 5729-1969, and section 10 of the Immovable Property Law, 5731-1971, provide that the court may order the severance of joint ownership of a property notwithstanding that the parties contracted out of the right to sue for severance of the joint ownership, if „it is just in the circumstances of the case‟. Even in the field of family law justice has a place. Section 9 of the Family Law (Maintenance) Amendment Law, 5719-1959, provides that „the court may, if it thinks it just and equitable to do so, exempt someone from an obligation of maintenance…‟.

In the procedural sphere, the legislator instructed the judge sitting on the bench to fill a lacuna in the field of procedure in the way that seems to him just in the circumstances of the case. Section 3 of the Criminal Procedure Law [Consolidated Version], 5742-1982, states that „in any matter of procedure where there is no provision in legislation, the court shall act in a manner it considers best for doing justice‟. In the same vein, see also section 33 of the Labour Court Law, 5729-1969; section 22 of the Administrative Courts Law, 5752-1992; and regulation 524 of the Civil Procedure Regulations, 5744-1984.

In the Foundations of Justice Law, the „principles of freedom, justice, equity and peace of Jewish heritage‟ were determined as supplementary legal sources where there is a lacuna.

This survey does not purport to exhaust all the cases where the aspiration for justice is reflected in Israeli legislation. It merely serves to show that there are cases where the legislator stipulated a just solution to be a goal in itself, wherever he saw justice as a fitting mechanism for a solution, even though

 

 

the court must then interpret the value of justice in accordance with its meaning in that piece of legislation, and in the specific context.

13.          The aspiration for a just solution influences judicial discretion, and it serves as a guide for the judge searching for a way to decide a conflict. It has been said that „the task of translating legislation into an act of justice is entrusted to the judge, and thus he is given the ultimate opportunity of doing justice between the parties‟ (CA 398/65 Rimon v. Trustee in bankruptcy of Shepsals [16], at p. 408). Indeed, this aspiration cannot bring about creation ex nihilo. Where the law, which dictates a certain outcome, departs from justice, the court may not assume a discretion that has not been given to it. But where the judge has been granted discretion, then „the law and justice, whose paths often diverge, meet at the convergence of judicial discretion‟ (Barak, Interpretation in Law, supra, vol. 1, at p. 194). The judge on the bench committed himself to aspire to this convergence when he swore to

„judge justly‟. This was well expressed by President Barak when he said:

„In my opinion, justice has an additional normative force that we can call a “residual” force, which is the following: assuming that in the initial balancing the scales are balanced, and the various considerations, including the considerations of justice, balance once another, then the judge faces a true dilemma. The discretion is his. The different values, including the value of justice, conflict with one another, and are equally balanced. How will the judge exercise his discretion in such a case? He is not entitled to toss a coin, even though by doing so he would realize the value of judicial neutrality and a lack of judicial bias. How shall he solve the problem that confronts him? He must exercise his discretion in a way that will provide the solution he thinks best. But what is this solution?

Different judges may have a different approach in this area. In my opinion, the best solution is the just solution. Indeed, when all criteria have been exhausted and no solution has been found, the judge should aspire to the most just solution‟ (A. Barak, „On Law, Judging and Justice‟, 27 Mishpatim (1996) 1, at p. 7).

14.          It follows that, in the absence of another criterion for solving the dispute, the court has the power, and it is also obliged, to provide the best solution, which is the just solution, not by interpreting this value in specific legislation, but as a value in itself.

 

 

A just legal determination, based on the judge‟s sense of justice, is albeit not a neutral determination. But it is also not arbitrary. Although it is the judge‟s feeling that ultimately tips the scales, nonetheless, before the judge listens to the dictates of the sense of justice, he undergoes a process of reasoning, consciously and subconsciously, in which all the circumstances are considered, and different values are balanced.

15.          When every decision in a dispute between two individuals will harm one of them, the just solution is the solution that is „the lesser of two evils‟, and as has been said in this respect, „the “balance of convenience” of which the courts speak is a balance of justice‟ (CA 214/89 Avneri v. Shapira [17], at

p. 870). Therefore, it is proper to consider whether the harm to Ruth, should she be prohibited from using the ova, is greater than the harm that Daniel will suffer if he becomes a parent against his will, or vice versa.

When examining the harm to Ruth, it should be remembered that the biological aspect of parenthood, namely the transfer of the genetic material from one generation to another, has great importance from an emotional viewpoint. Therefore it is clear why „Ruth insists on her right to be a mother of children who will be her children in the biological sense‟ (Marmor, „The Frozen Embryos of the Nahmani couple: A Response to Haim Gans‟, supra, at pp. 448-449). The individual‟s aspiration to realize biological parenthood emanates from the source of human existence. The parental experience is considered the essence of life, in the sense of „Give me children, else I die‟ (Genesis 30, 1 [65]). This was discussed by Professor Shifman who said:

„Man‟s desire to have children, and in this way to ensure continuity for himself after his death, no less than the hoped for satisfaction from raising children in his lifetime, is  without doubt a basic psychological fact‟ (Shipman, Family Law in Israel, supra, vol. 2, at p. 151).

In this regard, the remarks of Daphna Barak-Erez are also relevant:

„Realizing the option of parenthood is not merely a possible way of life, but it is rooted in human existence. There are some who will regard it as cure for loneliness; others will use it to deal with the thought of death… It expresses a basic existential need‟ (Barak-Erez, „On Symmetry and Neutrality: Reflections on the Nahmani Case‟, supra, at p. 200).

Losing the opportunity of biological parenthood is, in effect, missing out on the opportunity for self-realization in the family sphere.

 

 

We must adopt this premise — namely that the biological aspect of parenthood has great importance — also when examining the harm to Daniel. Coerced biological parenthood, like the deprivation of biological parenthood, involves emotional harm. There is no doubt that Daniel will suffer a feeling of distress from knowing of the existence of a child, whom he does not want, that carries his genetic material. It is therefore clear why Daniel „also insists on his right not to be connected, even if only biologically, with a parenthood that he does not want‟ (Marmor, „The Frozen Embryos of the Nahmani Couple: a Response to Chaim Gans‟, supra, at p. 449).

16.          Indeed, Daniel will suffer more than just emotional harm. The status of parenthood involves many duties, including in the economic sphere. But the practical duties involved in the status of parenthood cannot tip the scales in Daniel‟s favour. Since the couple has separated, Daniel‟s main obligations towards the child who will be born are in the economic sphere. His economic harm resulting from the duty of maintenance that he bears can be mitigated by making the use of the ova conditional upon an undertaking on the part of Ruth to indemnify him, and the date of realizing this undertaking will be subject to the principles developed in case-law relating to divorce agreements (see FH 4/82 Kut v. Kut [18]). In these circumstances, the reversible nature of the economic damage that Daniel will suffer deprives it of decisive force.

17.          Here we come to the hardest question of all, whether Ruth‟s suffering as a childless woman against her will is preferable to Daniel‟s suffering as a parent against his will, when the scales for weighing the force of these emotional injuries have not yet been created. On the altar of justice, we can sacrifice the expectations of whoever was not entitled to rely on the other‟s consent. But justice demands that we do not, retroactively, undermine the position of someone who was entitled to rely on a representation of another.

The reasonableness of Ruth‟s reliance on Daniel‟s consent to begin the procedure jointly must necessarily be considered together with the question of the existence of other possibilities available to her for realizing her desire to be a parent, other than implantation of the fertilized ova. The fact is that at the time the ova were removed, Ruth did not have any reasonable alternative. From a medical viewpoint, it is not possible to freeze an ovum that is not fertilized (see the aforementioned Report of the Professional Public Commission for Examining the Issue of In-vitro Fertilization, at p. 118), and from a legal and emotional viewpoint, Ruth was inhibited, as a married woman, from freezing an ovum fertilized with the sperm of another, especially when her husband was not infertile. The possibility of separating

 

 

from Daniel and fertilizing an ovum with the sperm of another man was also not reasonable. The callousness emanating from this possibility is contrary to the spirit of intimacy implied by the decision to walk together along the hazardous path of the in-vitro fertilization procedure. Moreover, when the dispute broke out and Daniel objected to the implantation of the ova, Ruth was no longer able, from a physiological viewpoint, to undergo another fertilization procedure, since her medical condition resulted in her losing her fertility and her ability to bring children into the world.

In such circumstances, Ruth‟s reliance on Daniel‟s initial consent should be regarded as reasonable. This reasonability of her reliance on the path that she and Daniel chose to pursue require, in this case, the just conclusion that there is no going back, and whoever wishes to make a change is at a disadvantage.

I would therefore grant the petition.

 

Justice Y. Kedmi

I have studied the illuminating opinions of my colleagues, Justice Strasberg-Cohen and Justice Tal, and I support the conclusion reached by Justice Tal. The following, in brief, are the reasons underlying my decision:

1.            Indeed, it is a basic human right — for men and women — to choose whether to be a parent or not; and a mere contractual obligation must give way before this right. Nonetheless, it is not an absolute right, nor even an equal right. When a woman becomes pregnant, her spouse may no longer go back on his choice and force her to undergo an abortion, whereas the woman is entitled to terminate the pregnancy, by virtue of her „prevailing‟ right to the integrity of her body.

2.            The practical question that requires a decision in this case is whether, even in so far as in-vitro fertilization is concerned, the „point of no return‟ from the decision to realize the right to parenthood is the time of fertilization (as the equivalent of the time of conception), or whether this point is pushed back over time to the moment when the fertilized ovum is implanted in the body of the surrogate mother (so that only from this stage onwards, the woman‟s right to the integrity of her body prevails, and the right not to be a parent yields to it).

3.            (a) Were we speaking of such circumstances, of a conflict between the right to parenthood (or not to be a parent) and the right to the integrity of the

 

 

body of the „pregnant‟ woman only, then the answer required under the current legal position to the aforesaid practical question would be yes. In other words, as long as the fertilized ovum has not been implanted in the body of the surrogate mother, the right not to be a parent prevails, and each of the spouses is entitled to turn the clock back and demand the destruction of the fertilized ovum.

(b)          However, in my opinion, one should not, in this context, ignore the fact that „fertilization of the ovum‟ is not merely one of the stages in the development of the embryo, but it is the act that „creates‟ it and turns the ovum and the sperm into a new „entity‟, consisting of the two entities that created it and that can no longer be separated. Just as the sperm and the ovum have been assimilated into one other and become one, so the rights of the man and his spouse — the „owners‟ of the ovum and the sperm — have assimilated into one another and become a „joint right‟ in so far as the fate of the fertilized ovum is concerned. This „joint right‟ is identical in its nature and status to the parental right that each of its creators had, with one difference: each of the owners of the right has a right of veto over a decision by the other, so that only a „joint decision‟ can be carried out and enforced.

(c)           In order to remove doubt, I should clarify:

(1)          Before the date of the actual fertilization, each of the spouses can change his decision to be a parent, and his basic right not to be a parent prevails over the contractual right of his partner to demand performance of the agreement made between them in this regard. This is the position only until fertilization; this is so because the fertilization changes the position, and creates new circumstances that do not allow „going back‟ and returning to the original position. Until fertilization, each of the spouses can be given back what is „his‟: the man can be given back his sperm and the woman can be given back her ovum. But after fertilization, restitution is impossible, as this involves an injury to the right of the other over his share.

(2)          After the fertilization, the man and the woman continue to control jointly — and only jointly — the fate of the fertilized ovum, until it is implanted in the body of the surrogate mother; on implantation, the surrogate mother acquires the basic right to the integrity of her body, as if she had

„conceived‟ naturally, and her right takes precedence over the joint right of the couple to the fertilized ovum.

(3)          Fertilization of an ovum — whether inside or outside the body of a woman — amounts to a „fait accompli‟ from which there is no return, if only

 

Justice Y. Kedmi

 

for the simple reason that the original position can no longer be restored and what the man and woman concerned invested of themselves in the „new entity‟ — the fertilized ovum — cannot be returned. It is true that we can turn the clock back by destroying the „fertilized ovum‟. But since it is no longer possible to separate the sperm from the ovum, the spouse wishing to withdraw and to destroy his „contribution‟ to the fertilized ovum does not have a right to destroy also the „contribution‟ of the other. Destruction of the fertilized ovum requires the consent of both spouses, and each of them has a right of veto over the other‟s decision.

In these circumstances, a spouse‟s right to change his mind and „not to be a parent‟ is, after fertilization, opposed by the „strengthened‟ right of the other spouse to complete the procedure of bringing the child into the world and

„becoming a parent‟. The act of fertilization sets the „right of changing one‟s mind‟ against the „right to complete the procedure‟; in my opinion, in view of the new situation that has been created, the „right of changing one‟s mind‟ is of lesser force than the „right to complete the procedure‟ that has just been created.

The new reality created by fertilization of the ovum therefore changes the balance of rights: the right „not to be a parent‟, which was weakened by the fertilization agreement, is now opposed by the right „to be a parent‟, which has been strengthened by the right „to complete the procedure‟ created by the fertilization.

4.            (a) This is similar (but not identical, of course) to two people who agreed to create a work of art together, which requires „firing‟ in a kiln to be preserved; after the work has been completed and all that is left is to put it in the kiln, one of the two changes his mind and wants to prevent his companion from putting the work in the kiln, thereby causing it to be destroyed. According to my opinion, it is inconceivable that after the joint work has been completed, one of the partners will be entitled to destroy it against the wishes of the other partner who wants to complete the creation process. It may be that each of the partners will retain a right to change his mind as long as the work has not been completed. But when the work has been completed, each of the partners has an identical rights with regard to its „fate‟; and the right of the person wishing to preserve it overrides the right of the one who wants to destroy it.

(b) Bringing the work of art to the stage of processing in the kiln is equivalent, if we like, to the fertilization of the ovum, which is the first and decisive stage in the development of the child; just as the right of the partner

 

 

wishing to complete the „creation‟ of the work of art overrides the other‟s right to destroy it, so too the right of the spouse wishing to complete the process of bringing the child into the world overrides the right of the one wishing to destroy the fertilized ovum.

 

Justice Y. Türkel

1.            In this difficult case, I choose life; the life — in the metaphorical sense — of Ruth Nahmani, and the „life‟ — or the potential for life — of the fertilized ova.

2.            When I considered the matter, I had before me the opinions of my colleagues, Justice Goldberg, Justice Kedmi, Justice Strasberg-Cohen, Justice Tal and Justice Dorner, who considered every aspect and facet of the subject under discussion so well that no aspect was left for me to elucidate or illuminate. I would add, therefore, but a small embellishment of my own, a few of the reasons for my decision.

3.            Elsewhere I have said:

„The enormous progress that has occurred in our times in all the fields of science and technology (and mainly the advances in medicine and the development of medical technology) have created problems that were unknown to us … and have made problems that we did know more difficult. The classic story of those two persons walking in the desert where only one of them has a flask of water — a flask capable of keeping only one of them alive — has changed from a theoretical Talmudic proposition into a very painful and pressing reality, and the question it raises has become a relevant issue demanding a solution. This progress has erased the clear boundaries and blurred the well-used paths trodden by the scientist, the doctor and the jurist, and defined areas have become unbounded and awesome expanses. Tension, and maybe even a rift, has been created between the achievements of science and medicine and the values that have been developed over the course of human history‟ („Tikkun Halev‟, 40 Hapraklit (1992), 34).

In these unbounded and awesome expanses, the law has no power to set our course. Like my colleague, Justice Goldberg, I too believe that  the dispute before us —

 

 

„… does not essentially fall within the framework of an existing legal norm. It cannot be fitted into the legal frameworks of a contract or quasi-contract. It lies entirely in the realm of emotion, morality, sociology and philosophy. This explains the normative void and the inability of accepted legal rules to provide a solution to the dispute.‟

The answer will be found, therefore, in the inner world of values of each of us. I would even not hesitate to say that it is permitted to be found in the wealth of emotions in the heart of each of us.

The main question to be decided in this dispute is which of the rights is preferable: the right to be a parent or the right not to be a parent, or, if you wish, as my colleague Justice Strasberg-Cohen further clarified the question:

„is it possible, because of the great importance of parenthood, to force parenthood on someone who does not want it, and to use the machinery of the legal system to achieve such coercion?‟

4.            The majority opinion in the appeal was, in essence, that recognizing the autonomous will of the individual requires us to prefer the right of the spouse who does not wish to be a parent. I disagree with this. In my opinion, once the act of in-vitro fertilization has occurred, the positive right to be a parent prevails, as a rule, over the negative right not to be a parent. I will explain my main reasons.

The modern social and legal view recognizes the autonomous will of the individual. From this are derived the prima facie conflicting rights of being a parent and not being a parent (see, in this regard, the interesting analyses of the issue in the articles of Gans, „The Frozen Embryos of the Nahmani Couple‟, supra; Marmor, „The Frozen Embryos of the Nahmani Couple: a Response to Chaim Gans‟, supra; Gans, „The Frozen Embryos of the Nahmani Couple: a Reply to Andrei Marmor‟, supra; Barak-Erez, „On Symmetry and Neutrality: Reflections on the Nahmani Case‟, supra; Davidov-Motola, „A Feminist Judgment? A Further Aspect of the Nahmani Case‟, supra, cited in my colleagues‟ opinions). Indeed, according to the remarks of Yosef Raz, cited in the articles of Prof. Gans and Dr Marmor: „An autonomous person is a person who writes the story of his life on his own‟. However, to use this analogy, is there really symmetry between the rights of each of the spouses to write the story of his life on his own?

In my view, there is no symmetry between the rights, despite the „external‟ similarity between them, and the right to be a parent should not be viewed

 

 

simply as a derivative of the autonomy of the will, a counterpart of the right not to be a parent. However, even if we view the two rights as derivatives in this way, they are not of equal value and status, as if existence and destruction were equal to each other and as if they were the symbols 1 and 0 in the binary code of a computer (I accept the remarks made by Dr Barak- Erez in this respect, in her article „On Symmetry and Neutrality: Reflections on the Nahmani Case‟, supra, that were cited in the opinion of Justice Tal).

5.            It seems to me that no one would disagree that the right to life is a basic right that has been sanctified in Jewish history and the history of mankind in general:

„Judaism has always exalted and glorified the enormous value of human life. Jewish law is not a philosophical system of opinions and beliefs but a law of life — of life and for the sake of life‟ (in the words of the honourable Justice Silberg in Zim Israeli Shipping Co. Ltd v. Maziar [13], at p. 1333 {132}).

This has been the case since antiquity.

Alongside the right to life, as understood in Jewish sources, additional rights were created that were deemed equal to it, and without which human life is meaningless. This we can learn, for example, from the law of the person who kills negligently, who is condemned to flee to one of the cities of refuge „that he may live‟ (Deuteronomy 4, 42; 19, 2-5 [64]), and if he is a student then „his rabbi is exiled with him‟ and if he is a rabbi then „his school is exiled with him‟. The reason for this is: „that the Bible says “and he shall live” — do for him whatever is necessary so that he may live, and the life of those who have wisdom and those who seek it without the study of the Torah is considered as death‟ (Babylonian Talmud, Tractate Makkot, 10a [77]; Maimonides, Mishneh Torah, Hilechot Rotzeah uShemirat Nefesh (Laws of Homicide and Preservation of Life), 7, 1 [78]). Even the right to be a parent should be regarded in this way. Alongside the right to life — which is the right to a full and meaningful life — or as a part of it, the right to be a parent is also worthy of recognition as an independent basic human right and not merely as a derivative of the autonomy of the will.

The cry of our ancestress Rachel, „Give me children, else I die‟, (Genesis 30, 1 [65]), mentioned by my colleague Justice Tal in his opinion, the silent cry of Hannah „speaking in her heart, only her lips moved, but her voice was not heard‟ (I Samuel 1, 13 [79]) and praying „for this child‟ (I Samuel 1, 27 [79]) and countless other cases in our literature and that of other nations are a

 

 

striking expression of the force of the yearning for a child, which is unrivalled in its intensity. This yearning encompasses man‟s will to continue, through his descendants, the physical and spiritual existence of himself, his family and also his people. It reflects his aspiration to realize himself and even to fulfil his dreams that have not yet been realized. It contains his love for his descendants, those who have been born and those as yet unborn; a love of „would that I had died in your stead‟ (II Samuel 19, 1), which overrides a person‟s desire for his own life, and also a yearning that holds out hope for comfort and consolation in his loneliness, old age and on his death bed. It has been said that „When your parent dies, you have lost your past… When your child dies, you have lost your future‟ (Dr Elliot Luby, quoted in

H. S. Shiff, The Bereaved Parent, 1978). The child is the future and his existence gives the lives of most people special meaning, and perhaps their main meaning.

In my view, the ethical weight of this right is immeasurably greater than the weight of the right not to be a parent, which is the right not to be burdened with the emotional, moral and economic burdens that parenthood imposes. Doing „ethical justice‟ (HCJ 200/83 Wathad v. Minister of Finance [19], at p. 121) compels us to prefer the former right to the latter.

6.            However, even if we regard the right not to be a parent as equal to the right to be a parent, there is another fact that tips the scales in favour of the latter right: the life potential of the fertilized ova. Here I would like to emphasize that I do not intend to adopt any position on the difficult philosophical questions: when does life begin? When does a person become entitled to a moral status? From what moment in his development does his life become sacred and protected as a natural right? The biological sense as contrasted with the moral sense of human existence; or to express an opinion about the different approaches on these issues, including the  legal conclusions that can be derived therefrom (see in this regard the lectures of Prof. D. Hed, Medical Ethics, in the chapter „Embryos as Humans‟, Ministry of Defence, 1990, at p. 51 et seq.). These and other associated questions, such as the right of abortion, in the context of this case have been discussed by Prof. Gans, „The Frozen Embryos of the Nahmani Couple‟, 18 Tel-Aviv Uni.

L. Rev., 1994, at p. 86 and by Dr Marmor, „The Frozen Embryos of the Nahmani Couple: a Response to Chaim Gans‟, 19 Tel-Aviv Uni. L. Rev., 1995, at p. 437, where ultimately they reached different conclusions.

As stated, I do not intend to adopt a position on the different approaches. I also do not know whether it is at all possible to ascribe to the fertilized ova

 

 

an interest to be born, which merits moral recognition, and whether it prevails over the interest of Daniel Nahmani. However my moral sense leads me to the conclusion that the very existence of this life potential, whatever its weight, tips the scales in Ruth Nahmani‟s favour.

7.            I intended to be brief and I fear that I have overstepped the mark. After writing my opinion, I saw the opinions of my colleagues Justices Bach, Or, Mazza and Zamir, as well as additions and corrections to the opinions written before my opinion. I will also add another small embellishment to some of their remarks.

8.            Justice Zamir distinguishes between law and justice:

„My Maker is the law… my inclination is justice.‟

He also says that „it happens to a judge that the law and justice struggle within him, each pulling in different directions, and he cannot reconcile one with the other‟ (paragraph 1 of his opinion). According to him, it is possible to distinguish between the two and thereby also to find the path that should be followed:

„The court must seek its path in order to reach this norm… Jurisprudence guides it on its way and gives it tools in order to determine the law…

… From a practical viewpoint, and maybe even from a theoretical viewpoint, it is inconceivable that the court will not find a legal norm somewhere along this path. In any case, the court is not entitled to say, before it has traversed the whole length of this path, that there is no legal norm in the matter under consideration, and therefore it is entitled to decide that matter according to justice‟ (paragraph 4 of his opinion).

Justice Or made similar remarks in paragraph 13 of his opinion:

„It [the court] must ascertain the law and decide accordingly… When I reached the conclusion that there is a legal solution to this problem, as I have sought to clarify above, this solution should apply in our case, even if its result is inconsistent with Ruth‟s expectations, and the situation in which she finds herself arouses sympathy.‟

In my opinion, in a matter as difficult and complex as the one before us, which involves and combines moral, social, philosophical and legal questions that cannot be separated from one another and that raise strong emotions, it is

 

 

impossible to distinguish between the dictates of the „law‟ and the „justice‟ of the judge. The one is bound up in the other. The one stems from the other. Their existence is interconnected, like fire in a coal.

It should also be said that some believe that a decision according to the

„law‟ is an „objective‟ decision, that should be discovered and revealed in the way outlined by jurisprudence. By contrast, a decision according to „justice‟, as described by Justice Zamir, is like a decision of a person „searching for the proper path, wandering…‟ — it is analogous to a subjective decision — each person according to the spirit within him. In my opinion, even a decision according to the „law‟, in the case before us, is essentially a subjective-value decision, each judge according to the tune played on the harp hanging above his window (see: „a harp was suspended above David‟s bed, and when midnight arrived, a north wind came and blew on it, and it played on its own‟, Babylonian Talmud, Tractate Berachot, 3b [71]). Objectivity, in a case like ours, as the historian Peter Novick said in his book That Noble Dream: The Objectivity Question & the American Historical Profession, Cambridge, 1993), is a myth and nothing more.

9.            At the end of his decision, Justice Zamir candidly says the following:

„In this case, I have not tried to take a shortcut. I have followed the main road, although it was arduous, and have reached this conclusion: between Ruth and Daniel, the law is on Daniel‟s side. I suppose that another path could have been chosen among the paths of the law, and that perhaps a different result could have been reached by that path. However, the important point in my opinion is that the court must follow one of the paths of the law. I concede that had I seen that the path was leading me to a result of injustice, I would have stopped along the way and sought out another path, from among the abundance of legal rules, that might lead me to a just result. Moreover, even at the end of the path I am still ready and prepared to look and see whether I have reached an unjust result. For if so, I am prepared to retrace my steps and start the journey over again in an attempt to reach a more just result. But have I really, in the result that I have reached, not dispensed just law?‟

In a similar vein, Justice Tal also said in the appeal that is the subject of this further hearing:

 

 

„But there is not always only one legal solution. Sometimes different potential solutions compete with one another. This is particularly the case with a painful human problem like the one before us. And where there is such a competition, we should, in my opinion, prefer the solution that appears to be more just.‟

See also paragraphs 3 and 4 of the opinion of Justice Bach; paragraphs 11 and 12 of the opinion of Justice Goldberg; paragraph 21 of the opinion of Justice Mazza; paragraph 6 of the opinion of Justice Dorner.

After all this, I wonder what is the point in trying to weigh the competing values in the scales of the law, or in trying to follow „one of the paths of the law‟, when the weight of the values changes according to the person applying the law, when it is possible to choose between several paths and when one path may even lead to different results. Even in the opinions of those of my colleagues who are of my opinion, more than one „legal path‟ is presented whereby  one  may  reach  the  result  that  they  reached,  which  is  no  less

„legalistic‟ than the paths followed by those who disagree with them. If this is the case, what did those who followed this path achieve thereby?

10.          Moreover, if there is indeed more than one „legal path‟, how does one choose between the different paths and the different destinations to which each path leads? Is this choice also dictated by „the law‟? In complex issues, like the one before us, there is no legal geometry that necessitates unequivocal results. Unlike my colleagues who think this, I cannot point to one solution, or to a „more correct‟ solution, that can be applied in the case before us. The opinions before us illustrate well how different values can be put in place of each variable in the chosen formula. Instead of the findings on which judges espousing one  viewpoint rely, one  can reach the  opposite findings. Instead of the finding that there is no agreement between the parties, one can reach the opposite finding. Instead of the rule that contracts should be honoured, one can rely on the rule in section 30 of the Contracts (General Part) Law, according to which there are contracts that are void because they are contrary to public policy. Instead of the balance between (positive and negative) liberties, a balance can be made between (general and specific) rights. Legal geometry allows both the one and the other. There is no single solution, no single path and no single „law‟ (see M. Mautner, The Decline of Formalism and the Rise of Values in Israeli Law, Ma‟agalei Da‟at, 1993, at pp. 13-23; G. L. Coleman and B. Leiter, „Determinacy, Objectivity and Authority‟, 18 Iyunei Mishpat 1994, 309; R. M. Cover, Justice Accused, New Haven, 1975). In such a chaotic legal world, if we may call it that, the judge

 

 

needs an external, extra-legal norm — call it what you will — in order to choose between the range of solutions that „the law‟ allows. If so, it would appear that in resorting directly to „justice‟ no greater „shortcut‟ was made that the one taken by the minority-opinion judges in this further hearing when they chose, for example, the legal rule that „where there is no representation, there is no argument of estoppel‟ (paragraph 16 of the opinion by Justice Zamir).

This is what we have been saying. When there is no legal determinism (as the scholar Cover calls it in Justice Accused) with regard to the case, requiring one outcome, there is, in my opinion, no reason to try to follow ab initio the „path of law”, which has no advantage over the „path of justice‟.

11.          Furthermore, a solution that depends upon an external authority that is

„forced‟ on the judge (see the analysis of „the can not argument‟ in Cover‟s book Justice Accused) is a tempting solution, but that is not the position here. The case before us is one of those difficult cases where the judge alone must bear, on his own shoulders, full personal responsibility for his decision, without relying on the support of another authority, because of the absence of any norm that regulates the issue (in this regard, see also R. W. Gordon,

„Critical Legal Histories‟, 36 Stan. L. Rev. (1984) 57).

I have no hesitation in saying that the result I have reached is not merely the result of legal analysis but also of intuition and internal feeling (see my article, „Tikkun Halev‟, 40 Hapraklit (1992), 34, at p. 41). I think that in a special case like the one under discussion there is nothing wrong in this. As President A. Barak wrote in his book Judicial Discretion, Papyrus, 1987, at p. 197:

„Indeed, intuition plays a role in judicial discretion. The judge is a human creature, and intuition plays an important role in the activity of every person.‟

Ultimately, in a case such as this, every path towards a solution passes through an intersection of value judgments, and it makes no difference whether we call it the path of the law, or the path of justice. In HCJ 4712/96 Meretz Democratic Israel Party v. Jerusalem District Commissioner of Police [20], I said, at p. 835:

„Not every dispute, even if it is justiciable, has a legal solution; and not every legal solution, even if there is one, is the true solution of every dispute.‟

 

 

The case before us is an example of a justiciable dispute, which the court is obliged to decide, but which has no „pure‟ legal solution, and it is doubtful whether it has a true solution.

12.          I will permit myself to quote additional remarks that I said elsewhere:

„Like the prophet, the judge seeks to find a path among all these, for the public and for himself. He enters the hidden parts of the orchard, with a torch in his hand — his small torch — and all its paths  are  hazardous,  deep  abysses   and   tall   mountains (C. N. Bialik, „He looked and was injured‟).

What is justice, what is equity, what is liberty, what criteria will he adopt to measure these? When will he wield the iron sword of justice and when he act gently with the full measure of compassion?… When will he apply the standard of truth? And when will he apply the standard of stability?

Between all of these, as between poles of many magnets, the judge tries to find his way. In his hand he holds a measure of law, with innumerable half-measures. In every case he judges himself, in every case, consciously and unconsciously, he decides the law and the characteristics of the law, both in his image and likeness, and in the image and likeness to which he aspires…‟ (Y. Türkel, „Humility, Awe and Love‟, 23 The Judicial Authority — Israeli Judges Circular (5756), 12).

We carry a heavy burden of responsibility on our shoulders. The light that guides us is neither the light of the sun nor the light of the stars, which are the property of all. It is merely the light of the small torch in the hand of each one of us, lighting up the way.

13.          I began my remarks by saying that I choose life; I intended thereby to hint also at something else. According to my approach, the justice done and radiated by the court must be human justice, which is not only the result of logical analysis, but which must also flow from the depths of the heart. A decision in favour of Ruth Nahmani is, in my opinion, such a decision. Indeed, the human approach was also in the minds of those holding the majority opinion in the appeal, who did not ignore the yearning of Ruth Nahmani for motherhood, but nonetheless they reached a conclusion different from mine. These matters follow after the heart, and my heart has led me to the conclusion that I have reached. For these reasons, and for some of the

 

 

reasons of my colleagues, Justice Bach, Justice Goldberg, Justice Mazza, Justice Kedmi, Justice Tal and Justice Dorner, I will join myself with them.

In my opinion, the petition should be granted.

 

Justice G. Bach

1.            After studying the judgment of this court in CA 5587/93,* the subject of this further hearing,  the arguments of the parties, the opinion of my esteemed colleague, Justice Strasberg-Cohen, which supports the majority opinion in the aforementioned judgment, namely the position of the respondent, Mr Daniel Nahmani, as well as the opinions of my esteemed colleagues, Justices Tal, Kedmi, Goldberg, Dorner and Türkel, who propose that we grant the application of Mrs Ruth Nahmani to reverse the original judgment and to accept the dissenting opinion in the original judgment, I have reached the opinion that I must join with the opinions of my five colleagues and support Ruth‟s position with regard to the problem that we must decide.

2.            This is not a conclusion that I have reached lightly. As can be seen from the opinions of my colleagues, who also had difficulty in deciding the issue under discussion, I too have experienced many serious reservations in this matter.

We have here a situation in which not only can we understand the feelings of each of the litigants, but each of them is also entitled to a large measure of sympathy.

Sympathy for the situation in which Ruth finds herself stands out in the opinion of all the judges. Even my esteemed colleague, Justice Strasberg- Cohen, emphasizes this, and she also agrees with the assessment that the emotional suffering caused to Ruth as a result of denying the right of parenthood exceeds that which will be caused to Daniel if the parenthood will nonetheless be realized.

But even the dilemma in which Daniel finds himself is deserving of understanding and empathy. It is hard to find fault with him when he is not interested in having a child jointly with a woman after their family unit has split, and he has since begun a relationship with another partner and intends to develop a family life with her and with their children only. Even if Daniel

 

 

 

*             IsrSC 49(1) 485; [1995-6] IsrLR 1.

 

 

does not emphasize the economic factor in raising the child, this factor nonetheless exists. The child‟s right to economic support will not be prejudiced even as a result of Ruth‟s promise that she, for her part, will not make any financial claims. But the emphasis is placed without doubt on the emotional, psychological and family factor, and we can understand Daniel‟s objection to the creation of the additional dependence that is expected if a child is indeed born from these parents.

For this reason, I have difficulty in agreeing with that part of the reasoning of my esteemed colleague, Justice Kedmi, in which he compares the position of the litigants in our case to a case in which two people have agreed „to create a work of art together, which requires “firing” in a kiln to be preserved; after the work has been completed and all that is left is to put it in the kiln, one of the two changes his mind and wants to prevent his companion from putting the work in the kiln, thereby causing it to be destroyed‟. In my opinion the two cases are not similar. One cannot compare the preservation of a work of art, whatever the value and reputation involved in its ownership may be, with the change of status involved in parenthood, and with the emotional baggage and material and moral obligations that arise when a person becomes a parent.

In other words: in my opinion, I cannot decide this appeal because of a clear disapproval of the behaviour of one of the parties to the dispute.

3.            I also believe that a solution will not be found to the problem that we are considering by relying on specific legislation, or the interpretation of such legislation. The Surrogacy Agreements (Approval of Agreement and Status of the Child) Law is albeit relevant to the case, but it gives no real answer to the difficulty before us. Admittedly section 5(c) of that law does stipulate that the approvals committee may reconsider an approval that it gave „… as long as the ovum has not been implanted‟, but I share the view that this provision refers mainly to the relationship between the prospective parents and the surrogate mother, and does not determine the period in which one of the prospective parents still has a „right of veto‟ over completion of the parenthood procedure.

A study of the laws of contract also cannot help to provide a proper solution. We are not dealing here with an ordinary contract that can be enforced, or with a contract where an attempt to enforce it is doomed to failure.

 

 

But these factors are insufficient to exempt us from the duty of deciding this difficult question.

4.            Here I agree with the opinion of my colleagues, who believe that in the situation before us, where there is no express statute that can guide us, we must avail ourselves of our sense of justice, and make our ruling according to what seems to us to be more just, in view of all the circumstances of the case before us. I expressed my view as to finding a just solution in the absence of legislation that dictates an express solution, in my opinion in CA 499/81 Odeh v. Haduri [21], at pp. 739-740.  My opinion  in that judgment  was admittedly in the minority, but my remarks regarding the issue of considerations of justice remain unchanged. I wrote there, inter alia:

„It is clear to us all that the application of the provisions of statute to the specific facts of a particular case does not always lead to a result that satisfies our sense of justice. There are many cases — some would say too many — in which the court is compelled by statute or by case-law, established in authorities that bind it, to make decisions whose outcome in practice conflicts with the rules of logic and reasonableness and is outrageous from the viewpoint of the sense of justice that beats in the heart of the judge.

This is mainly the result of the fact that even the most talented legislator does not foresee all the situations that may arise; life is more diverse than even the richest imagination of the parliamentary draftsman. And as for the judge, he is unable to depart from the clear language of the statute or from sacred case- law rules, lest he cause chaos and uncertainty with regard to the legal position on a specific issue, and thereby public crisis, which is worse even than the injustice caused to one of the parties in a particular case.

But awareness of the fact that such situations cannot entirely be prevented does not need to lead us to the conclusion that we must resign ourselves to this phenomenon, and that we are exempt from making maximum efforts to minimize the cases in which such a conflict arises between application of the statute and the requirements of justice.‟

And further on, at p. 740:

 

 

„Lord Denning, in his book The Road To Justice, London, 1955, discussed the approach of many jurists, who make a clear distinction between the law and its principles and the demands of justice, and who believe that the legal system should engage in interpreting the existing law only, and not look for ways to make it more just. Lord Denning writes, on p. 2:

“Lawyers with this cast of thought draw a clear and absolute line between law and morals, or what is nearly the  same  thing, between law  and justice. Judges and advocates are, to their minds, not concerned with the morality or justice of the law but only with the interpretation of it and its enforcement…

This is a great mistake. It overlooks the reason why people obey the law”.‟

Justice Strasberg-Cohen doubts the effectiveness of this test as a decisive factor. She points to the difficulty in determining what is the just solution and what is the unjust path. What seems just in the eyes of one observer may appear an outrageous injustice in the eyes of another.

This difficulty exists, but it is not the only one confronting the judge. When a judge must decide the question what is reasonable behaviour or reasonable care, or how the reasonable person would react in a given situation, these questions may have different and conflicting answers, and such are even given by different judges. Therefore on these issues there are majority and minority opinions, and sometimes the decisions of judges are reversed by higher courts. None of this prevents the court from deciding such questions. The judge must decide in accordance with his logic, life experience and conscience, and where there are differences of opinion, as there are in this case, the majority opinion is decisive.

As to the legitimacy of considerations of justice, let it be said that this factor constitutes an element in many statutes, which were cited in the opinion of my esteemed colleague, Justice Goldberg, such as section 31 of the Contracts (General Part) Law, which empowers the court to exempt a party to an illegal contract from the duty of restitution „if it thinks it just to do so‟, or section 3(4) of the Contracts (Remedies for Breach of Contract) Law, which allows non-enforcement of a contract when „enforcement of the contract is unjust in the circumstances of the case‟, or section 132(a) of the

 

 

Tenant‟s  Protection  Law  [Consolidated  Version],  according  to  which,

„notwithstanding the existence of a ground for eviction, the court may refuse to give a judgment requiring eviction if it is persuaded that in the circumstances of the case it would not be just to give it‟.

First and foremost in this context we should mention section 15(c) of the Basic Law: Administration of Justice, according to which the Supreme Court, when sitting as the High Court of Justice, shall „hear cases in which it thinks it necessary to grant relief for the sake of justice…‟

In each of those cases, there are differences of opinion on the questions whether justice requires or justifies the intervention of the court, and on the side of which party justice lies. But this is insufficient to prevent us from stating our position on the subject, even if the matter often involves serious reservations.

This consideration  has  therefore been, in this unique case, a guiding principle for me.

5.            I have already said that I feel a large degree of sympathy for the two adversaries in this tragic dispute. But ultimately, when I consider the facts of this special case as a whole and I try to weigh them in the scales of justice, I feel, like my five colleagues mentioned above, that Ruth‟s right is weightier and will tip the scales in her favour.

I reach this conclusion on the basis of the cumulative weight of the following considerations and facts:

(a)          Not only did Ruth and Daniel agree to bring a child into the world by this method of fertilizing the ova and availing themselves of a surrogate mother, but they went to the extent of realizing this plan. Daniel contributed his sperm and caused the fertilization of the ova with full consent.

(b)          The procedure adopted involved serious physical suffering for Ruth. Because of her state of health, this even involved a risk to her life.

(c)           Originally, Ruth could have achieved the same result with the sperm of another man, but she preferred the partnership with Daniel for obvious reasons, by relying on his full consent to the joint plan.

(d)          Ruth is no longer capable of repeating this attempt, because of her age and her state of health. Consequently, this is her only and last chance for her to realize her brave aspiration of parenthood.

(e)          By contrast, Daniel, who has become a parent, can experience this wonderful experience in the future.

 

 

(f)           Were we to encounter the opposite situation, i.e., a situation where the man was incapable of fathering children, and his only chance to become a parent would be by implanting the ovum of his spouse, fertilized by him in her body, in a surrogate mother, then I think it would be right to reach the same conclusion, whereby the woman who provided the ovum should not be allowed to oppose the completion of the process.

(g)          It should be noted that, in view of the need to consider all the relevant facts as a whole, my conclusion in this appeal might have been different, had it transpired, for example, that Daniel had found out that it was intended to implant the fertilized ovum in the body of a surrogate mother suffering from a terrible disease, or had it suddenly been discovered that because of the rare blood types of Daniel and Ruth, there existed a danger, from a genetic viewpoint, to the health or physical integrity of the foetus. But in the absence of such exceptional circumstances, the requirements of justice demand that Daniel should not be allowed to frustrate the completion of the procedure under discussion, merely for the reason that, in the meantime, there has been a change in his desire of being a father.

(h)          The fact that, in certain circumstances, we recognize the right of a woman to terminate her pregnancy by means of an abortion, and that the man cannot compel her to continue the course of the pregnancy or to terminate it, makes no contribution towards solving the present problem. The decisive factor with regard to the question of abortions concerns the fact that the embryo is a part of the mother‟s body, and therefore the mother has control over the embryo‟s fate.

(i)            My esteemed colleagues have extensively discussed the right and liberty of every person to achieve parenthood, and about the corresponding right and liberty of a person not to become a parent against his will.

My esteemed colleague, Justice Strasberg-Cohen, writes:

„Realizing the right of someone who wants parenthood by imposing an obligation on someone who does not want it conflicts with the essence of the freedom [i.e., the freedom of someone who is not prepared to undertake parenthood] and deals it a mortal blow‟ (parentheses supplied).

This might have been the position had the intention been to impose an obligation on the respondent to further the realization of parenthood. But no such demand is currently being made of Daniel. The active contribution required of him in this matter has already been performed by him, of his own

 

 

free will, in the past, before there was a change in his position. Today, no-one wishes to impose on him an obligation to do anything, and he is merely denied the right to frustrate Ruth‟s ability to make use of her ova, which were fertilized previously by the respondent‟s sperm with his full consent.

Justice Strasberg-Cohen does not agree with this approach. In her opinion, Ruth is demanding of Daniel acts that are of significance. My colleague says as follows:

„Is it really the case that Ruth is making no demands of Daniel? I suspect that the opposite is true. She demands that his opinion should not be taken into account, that he should be removed from the picture and that his refusal should be ignored. She demands that she should be allowed use of the genetic material against his will in order to bring a child into the world. She demands that the court should give consent instead of Daniel and instruct the hospital to give her the ova so that she can continue a procedure that will lead to the birth of her and Daniel‟s joint child, without his consent. To this end she asks that his consent to fertilization should be interpreted as consent to bringing a child into the world against his will, even if he will not raise the child.‟

In so far as these remarks indicate the serious dilemma in which Daniel Nahmani currently finds himself, I can only agree with them, and I have emphasized this in my remarks above. But this cannot obscure the practical and basic difference between imposing a duty on someone to perform an active deed to further parenthood, against his will, and not recognizing his right to do something that is intended to prevent his spouse from completing her realization of parenthood.

In other words: were the court now to be asked to order the respondent to cooperate actively with the continuation of the fertilization procedure, by contributing sperm or by participating in any medical tests or treatments, or by making payments to a surrogate mother or to other parties for procedures that have not yet been carried out, then there would be a basis to  the argument that making such an order would infringe upon a protected liberty of the respondent. But this is not the position in our case. Daniel is not currently being asked by Ruth to do anything, but he is seeking to prevent the hospital, by means of an active instruction on his part, from delivering the fertilized ova to the applicant, and he is seeking in this way to frustrate the

 

 

realization of the parenthood that was planned in the past by the two spouses jointly.

I have, in the meantime, had the opportunity of reading also the opinion of my esteemed colleague, Justice Zamir. With the intention of showing that, even after the husband consented to the fertilization of the ovum and the completion of the acts required for this end, of his own free will, the husband is still required to perform a positive act with regard to the additional steps connected with the implantation of the ova, Justice Zamir refers mainly to the Public Health (In-vitro Fertilization) Regulations (hereafter — the regulations). Under regulation 14 of those regulations, the husband‟s consent is required for any act involved in in-vitro fertilization of the woman, and under regulation 9 of the regulations, the consent of both the wife and the husband is required to extend the freezing of the ovum beyond five years.

These provisions are insufficient to obscure the major difference between imposing a duty on someone to carry out a positive act and a decision that merely neutralizes the opposition of that party to the act of the other party. With regard to what is stated in regulation 14 of the regulations, I am of the opinion that Daniel should be regarded as someone who not only agreed to the in-vitro fertilization, but even carried out all the acts required on his part to realize the fertilization. And with regard to what is stated in regulation 9 of the regulations, I will make two observations:

(1)          The problem concerning an extension of the freezing of the ovum in excess of five years was created only because Daniel refused to agree to the ova being delivered to Ruth, and as a result of the protracted legal proceedings, of which the current proceeding, it is to be hoped, is the last. In these circumstances, a decision by the court, which will invalidate Daniel‟s objection, should not be regarded as forcing Daniel to perform a positive act against his will, thereby violating one of his basic liberties.

(2)          In any case, when the court decides to accept Ruth‟s claim, according to the opinion formed by a majority of the judges on this panel of the court, the meaning of this is that the court is deciding, instead of the husband, to consent to implantation of the ovum, and it is instructing the hospital to deliver the fertilized ovum to Ruth in order to continue the activity required for carrying out the implantation. Again, Daniel is not required to take any tangible step as a result of this judgment. The power is now being transferred to Ruth to take, on her own, all the steps required for completion of the procedure involved in the implantation of the fertilized ovum.

 

 

(j)           In these circumstances, it is my opinion that the respondent‟s right to carry out an act to undermine the procedure must yield before the right of the applicant to realize her right to parenthood. On this issue, my colleague Justice Strasberg-Cohen writes:

„The law does not require a person to have children with his spouse even if he promised to do so and changed his mind. A person who breaks a promise causes disappointment and frustration to the other. His behaviour is not “just”, but the law will not require him to keep his promise in the name of “justice”.‟

But, in my opinion, we must distinguish between someone‟s spoken promise to have children with his spouse, and such a promise which, from his point of view, has already been carried out by fertilization of the wife‟s ova, with all the associated circumstances in the present case.

(k)          In this regard, I will not repeat the citations of judgments and learned opinions that were cited by my esteemed colleagues Justices Tal and Dorner, which point to the factor of estoppel that exists in the present circumstances, at least from the moral perspective. In order to illustrate the principle which seems to me persuasive, I will merely cite once again a short passage from the aforementioned article of Panitch, „The Davis Dilemma; How to Prevent Battles Over Frozen Preembryos‟, 41 Case W. Res. L. Rev. (1991) 543, at

p. 574, upon which Justice Tal relies:

„One fact is of vital importance in making this judgment; the spouse who opposes implantation wanted a child at one time and submitted to the IVF process with that end in mind. The two spouses once agreed on this issue and initiated the IVF procedure in reliance on that mutual wish. Given this background, the greater injustice would be to deny implantation to the spouse who detrimentally relied on the other‟s words and conduct.

Protection against this sort of injustice is recognized by the well established doctrine of estoppel…‟

(l)            To all of these we must add another consideration, which was also discussed by my esteemed colleague, Justice Türkel, that preferring the position of Ruth involves the possibility of granting life and bringing a living person into our world. Even were the scales of justice balanced (and this is not the case), even this thought would have tipped the scales.

 

 

6.            Conclusion:

For the reasons set out above, I share the view of my five colleagues, who think that Ruth‟s application in this further hearing should be granted, and that it should be held that she is entitled to continue her efforts to bring about the birth of a child by implanting the fertilized ova in the body of a surrogate mother.

 

Justice E. Mazza

Ruth Nahmani wants to become a mother, and justice is on her side. Daniel Nahmani does not want to be a parent of joint children with Ruth, and justice is on his side too. But the justice on Ruth‟s side is greater than that on Daniel‟s side, and the law is therefore on Ruth‟s side.

Deciding between rights

Are the right to be a parent and the right not to be a parent two facets of the same right? This is not an easy question. But even is we assume that the answer to this question is yes — i.e., that we are dealing with „opposing‟ rights — we cannot easily prefer one to the other. Possibly the intensity of the rights is equal and possibility it is not equal; deciding this question requires a value judgment (see D. Barak-Erez, „On Symmetry and Neutrality: Reflections on the Nahmani Case‟, 20 Tel-Aviv Uni. L. Rev. (1996), 197, at pp. 198-200). Indeed, not always do the positive right and its opposing negative right have the same status. Thus, for example, the right to speak and the right to remain silent are not necessarily equal rights. When the positive and negative aspects of the same right conflict with one another, a judicial determination is required. Sometimes there is no escaping a value judgment that determines the rank of the competing rights and accords them different statuses. Thus, for example, it was held (in CA 506/88 Shefer v. State of Israel [22]) that the right to die is not equal to the right to live. It seems to me that in our case we are not required to make such a value judgment of this kind. A decision in favour of Ruth‟s right to parenthood is not contingent on a determination that the right to be a parent, in itself, is stronger than the right not to be a parent. The reason for this is that in our case there is a clear and major gap, not between the inherent weight of the conflicting rights as such, but rather in the intensity of the manifestation of each of them in the circumstances of the specific case. It follows that, while the right to be a parent is manifested here in one of its strongest forms, the right not to be a parent is manifested here in a form that is relatively weak. Indeed, a just

 

 

decision in the matter of the Nahmani couple must be based on a proper balance between their conflicting rights. But this balance cannot be based merely on a feeling of justice. It must be made with an objective criterion. The criterion required, in the absence of a recognized legal norm that regulates the issue, is the doctrine of rights. As with any decision based on a comparison between conflicting rights, our decision will also be a value judgment. But in the circumstances of the case, as I have already said, we can exempt ourselves from the value judgment between the conflicting rights as such (as in Shefer v. State of Israel), and it is sufficient for us to compare the relative intensity of the rights as manifested and expressed in the concrete dispute. As a premise we can therefore assume that Daniel‟s basic right not to be a father to Ruth‟s children is equal to Ruth‟s right to be a mother to these children. However even with a premise that assumes the existence of absolute equality in the intensity of the conflicting rights, Daniel‟s case is weaker.

„Fundamental‟ rights, „general‟ rights and „specific‟ rights

3.            The term „right‟ has different meanings. In the discussion below we will seek to recommend a distinction between the following three meanings:

„fundamental‟ right, „general‟ right and „specific‟ right. A „fundamental‟ right reflects the norm and constitutes a part of the legal system. A „general‟ right is the right of a specific person to have the „fundamental right. A

„specific‟ right is the right of a person to a certain application of his general right. Take, for example, the freedom of speech. There is, in our legal system, a basic right of freedom of speech. This right, whose existence reflects the constitutional norm underlying it, is a fundamental right to the freedom of speech. The right given to the individual to express himself as he wishes is a general right of freedom of speech. It is „general‟ in that it gives the individual the fundamental right in principle. However, the right of the individual to a particular application of his right to freedom of speech, such as his right to express a particular idea or to do so in a particular way (by publishing an article, orally, etc.) is a specific right. As distinct from his having the general right, which derives from the fundamental right, his right to a particular implementation of the general right constitutes a „specific‟ right.

The distinction between a „general‟ right and a „specific‟ right focuses on two aspects of the right: the object to which the right relates, and the interest that is protected by the right. A right is general if the object of the right is the person having the right himself, and the protected interest is the very existence  of  the  fundamental  right  for  the  person  having  the  right.  By

 

 

contrast, if the object of the right is one of those objects with regard to which it is possible to implement a particular general right, and the interest protected by the right is the implementation of the said general right vis-à-vis that object, then the right is specific. For example: someone who opposes any restriction of his freedom of movement is in practice insisting that the fundamental right of freedom of movement applies to him too; his demand is for a general right of freedom of movement. By contrast, someone seeking to be released from a restriction preventing him from entering a specific place is seeking a specific freedom of movement, and the same is also true of someone seeking permission to leave the country. Note that a specific right does not need to relate to one specific object, but may relate also to a specific group of objects, as distinct from objects not included in that group. Thus, for example, a person who demands to be given the right to leave the country is asking for himself a specific right of freedom of movement, even though exercising the right may be expressed by travelling to several countries. All foreign countries to which he may wish to travel constitute potential objects for the exercise of his specific right. Travelling to other places that are inside the country, even though these are also possible objects for exercising the right of freedom of movement, are not objects for exercising the specific right of leaving the country. On the other hand, for someone asking to be released from arrest or from another restriction imposed on his freedom of movement, so that he may travel to specific places inside the country, only the places to which he wishes to travel will constitute objects for the exercise of the specific right of freedom of movement inside the country.

A comparison with the accepted distinction between absolute rights and relative rights

4.            I would like to emphasize that our distinction between a general right and a specific right is different from the accepted distinction in our legal system between an „absolute‟ right and a „relative‟ right. The distinction between an absolute right and a relative right focuses on the weight of the right, whereas the distinction between a general right and a specific right focuses on other questions: identification of the object to which the right relates and defining the interest which the right is intended to protect. Note that even the distinction between a general right and a specific right may influence the weight given to that right. But the weight of the right is not one of the characteristics of this distinction. The characteristics of this distinction are the identification of the object to which the right relates and defining the interest protected by it.

 

 

The distinction between an absolute right and a relative right combines a theoretical approach and a practical approach, which are like two distinctions existing alongside one another. The premise for the theoretical approach is definitional: an absolute right is a right that is protected absolutely against infringement, whereas a relative right may yield to conflicting interests and considerations. Professor Dworkin says that whoever has an opinion that a right is absolute is bound to hold that the right must always exist, and there can be no justification for restricting it (see R. M. Dworkin, Taking Rights Seriously, supra, at p. 92). The theoretical approach guiding the case-law of this court holds that the rights recognized in our legal system are never

„absolute‟, but are always „relative‟. This is the case with regard to the right of freedom of speech (HCJ 73/53 Kol HaAm Co. Ltd v. Minister of Interior [23], at page 879 {99}); the right of holding a demonstration and procession (HCJ 153/83 Levy v. Southern District Commissioner of Police [24], at p. 399

{115}); the right of assembly and demonstration (HCJ 292/83 Temple Mount Faithful v. Jerusalem District Commissioner of Police [25], at p. 454); the right of a journalist to refuse to answer a question regarding the source of his information (MApp 298/86 Citrin v. Tel-Aviv District Disciplinary Tribunal of Bar Association [26], at p. 347); the freedom of occupation (CA 496/88 Henfeld v. Ramat Hasharon Sports Association [27], at p. 721); the right to receive information (HCJ 1601/90 Shalit v. Peres [28], at p. 366 {223}); the right of being heard (HCJ 4112/90 Association of Civil Rights in Israel v. Southern Commander [29], at p. 638); and the right of a suspect to meet with a lawyer (HCJ 3412/91 Sufian v. IDF Commander in Gaza Strip [30], at p. 848).

The practical approach deals with determining the weight of a particular right. According to this approach, the weight of a right is never determined by the actual recognition of the right‟s existence, but derives from the balance between it and the interests competing with it in a particular situation. The meaning of this is that the weight of any right cannot be expressed by indicating its place on any scale. All that can be said is that, in one or other set of specific circumstances, the right prevails over, or gives way to, a conflicting interest. In practice, the practical approach deals with relative rights, and in this way it realizes the ideological approach. It assumes a premise that we should not recognize a right as „absolute‟ (i.e., as reflecting an objective value that is absolutely independent of other values). Thus it provides an independent yardstick for distinguishing between „absolute‟ rights (in the primal-hypothetical sense) and „relative‟ rights, which alone

 

 

have a practical legal significance. Case-law also contains reference to the distinction between absolute rights and relative rights in this sense (see, mainly: CA 105/92 Re‟em Contracting Engineers Ltd v. Upper Nazareth Municipality [31], at p. 205; CA 2266/93 A v. B [32], at p. 266; cf. also what is stated in HCJ 753/87 Borstein v. Minister of Interior [33], at p. 474, and HCJ 721/94 El-Al Israel Airlines Ltd v. Danielowitz [34], at p. 760 {488}. In its operation, the practical approach proves the correctness of the ideological approach, and works jointly with it: in the absence of a „moral‟ possibility of determining the weight of any right in objective-absolute values, the necessary conclusion is that no right is absolute and that all rights  are relative.

5.            We have discussed the distinction between general rights and specific rights. If we wish to describe these rights in terms familiar to us from the field of distinguishing between absolute rights and relative rights, we will quickly discover that general rights and  specific rights are both relative rights. Someone claiming a general right of freedom of speech does not claim that his right must prevail over every conflicting right. The difference between him and someone claiming a specific right of freedom of speech is merely that the first demands a right to say anything that he wants to say, whereas the second demands that he be allowed to say something specific. But both of these have only a relative right, whose weight is determined by the existence of conflicting interests. The right is relative also in the sense of the practical approach. The weight of the right of freedom of speech is not fixed and absolute in either case, but it is determined in relation to other values that conflict with it. This conclusion also passes the definition test, that an absolute right is a right that must never be harmed. At any rate, for our purposes, both a general right and a specific right will always be (in the words of Dworkin in Taking Rights Seriously, supra, at p. 92) „less than absolute‟.

A comparison with other accepted distinctions

6.            Additional distinctions are recognized in jurisprudence with regard to rights. Hohfeld‟s distinction between a   „right in the strict sense‟ and a

„liberty‟, a „power‟ and an „immunity‟ is well-known. In our case, it is important to distinguish between a right in the strict sense and a liberty. Hohfeld characterizes rights according to the relationship between them inter se and between them and the existence of duties: the existence of a right in the strict sense, for a specific person with regard to a specific object, means the existence of a corresponding duty for someone else with regard to that

 

 

object, whereas the existence of a liberty for a specific person with regard to a specific object means the absence of a duty for that person with regard to that  object  (W. N. Hohfeld,  Fundamental  Legal  Conceptions,  1919,  at

p. 1923). In the terms of this distinction, both the general right and the specific right can be either a right in the strict sense or a liberty. It is possible, therefore, to speak of the general right of freedom of movement, which is a liberty, as well as of a person‟s specific right to go out of his home, which also is a liberty; and by contrast, it is possible to speak of an employee‟s general right to receive his wages on time, which is a right in the strict sense, and of that employee‟s specific right to receive his wages for the month of May at the beginning of June, which is also a right in the strict sense.

7.            Professor Dworkin (in Taking Rights Seriously, supra, at p. 93) distinguishes between an „abstract‟ right and a „concrete‟ right. According to this distinction, a concrete right is a determination concerning the real entitlement of a person to act in a certain way in a particular situation, whereas an abstract right is the actual idea according to which a certain right ought to be given preference. Thus, for example, the declaration that everyone has a right of freedom of occupation merely expresses an abstract right; but when the court determines that a specific person is entitled to establish a business that will compete with the business of his former employer, despite his contractual undertaking not to do this, the court is ruling that the person has a concrete right to realize his freedom of occupation in this specific way. If we try to characterize the general right and the specific right in terms of the distinction between the abstract right and the concrete right, we will find that both of them — both the general right and the specific right — are abstract rights. It need not be said that the general right does not determine that there is an entitlement to act in a certain way in a particular situation. However even the specific right does not do this: it too merely outlines the principles that lead to a concrete decision, but it does not, in itself, embody a decision. The decision must be made separately. In reaching it, the court must take account of the existence of the specific right, but it is likely and entitled to take into account also the existence of contradictory interests and additional considerations.

8.            Of particular importance for our case is the comparison with several distinctions made by Professor Raz (see: J. Raz, „On the Nature of Rights‟,

93 Mind (1984) 194). His first distinction is between   „core‟ rights and

„derivative‟ rights. Raz says that sometimes the justification for recognizing a right derives from another right. He calls rights, whose justification derives

 

 

from another right, „derivative‟ rights, whereas he calls the rights that are not derivative „core‟ rights. However, Raz emphasizes, not every right that from a logical viewpoint has its source in another right is a derivative right; for a right to be considered „derivative‟, there must be a justification relationship between it and the core right. In other words, it is the core right that justifies recognition of the existence of the derivative right (ibid., at p. 197). In the absence of a justification relationship, there is no basis for the distinction. Consider a person who bought a house containing several apartments. His right of ownership in a particular apartment in that house derives from his right of ownership in the whole building; and since the justification for his right of ownership in the apartment derives from his right of ownership in the whole house, the right of ownership in the apartment is a derivative right. By contrast, consider a person who bought all the apartments in the house, but who did so in separate transactions: one apartment after another. He too, at the end of the process, has become the owner of the whole house. Despite this, it cannot be said that his right of ownership in a particular apartment in that building derives from his right of ownership in the whole building, since in this case the justification relationship works in the opposite direction: his ownership of the whole house derives from his ownership of each apartment in this house.

A general right always incorporates the specific right. But the relationship between a general right and a specific right does not require a justification relationship. It follows that a specific right cannot always be regarded as a derivative right, within the meaning of this term in Raz‟s distinction. In addition, the condition of the unidirectional derivation is unimportant here. Therefore, it is unavoidable that a general right is created as a result of the existence of several specific rights. The example of the owner of the house, who is also the owner of the apartments in the house, emphasized to us the distinction between a core right and a derivative right. But for the distinction between a general right and a specific right, we do not attribute any importance to the question which of the rights came into existence first. The general right will incorporate all the specific rights even if these came into existence, one by one, before it.

9.            In his article „On the Nature of Rights‟, supra, Raz refers to the nature of the relationship between a „right‟ and a „duty‟. He disagrees with Hohfeld‟s   assertion   concerning   the   existence   of   a   relationship   of

„correspondence‟ between rights and duties. In his opinion, the relationship between rights and duties is also a relationship of „justification‟, and not one

 

 

of correspondence. One person‟s right constitutes a basis that makes it possible to justify imposing a duty on another person, if the weight of the opposing considerations does not outweigh them (ibid., at p. 199). Further on, Raz distinguishes between a „general‟ right and a „particular‟ right. A general right means that a certain person has a right, but it does not necessarily follow from this right that another person has a duty. In every set of circumstances we must consider the fact that there is an opposing right and the considerations that conflict with the realization of the right in those circumstances. If this set of considerations leads to the conclusion that the right should be realized, then we will say that in these circumstances there is a particular right, which is accompanied by a duty of another person. The general right is the basis upon which, in appropriate circumstances, particular rights are founded (ibid., at p. 211).

Notwithstanding the similarity in the terms, it seems to me that there is an important difference between Raz‟s distinction (general right as compared with a particular right) and the distinction proposed by us: a general right as opposed to a specific right. To the best of my understanding, Raz‟s intention in the term „particular right‟ is similar to Dworkin‟s intention in the term

„concrete right‟, namely — this is an assertion as to the existence of a de facto entitlement. This assertion means that the general right overrides the opposing interests, and it should be realized. This is not the case according to our distinction: a specific right — like a general right — can be denied by virtue of the greater strength of conflicting interests. The existence of a specific right is not the end of the matter, but merely one consideration in the equation which serves as the basis for the decision. Moreover, a general right (according to our definition) includes many specific rights, some of which may never be exercised in practice, because of the existence of conflicting considerations. This classification is incompatible with Raz‟s approach: he defines as particular rights only those specific rights that ultimately have been realized, whereas specific rights that have not been realized, in his view, are not rights at all (see ibid., at p. 211).

10.          Another distinction of Professor Raz is between a „morally fundamental right‟ and a right that is not such. What justifies the existence of a right, according to Raz, is the interest that the right is intended to protect (see ibid., at p. 195). If the interest of the person having the right is in his actually having the right, and it does not derive from any other interest, then the right is „basic‟ (ibid., at p. 214). It follows that a right that is not basic is of two kinds: a right that derives from a basic right, and a right whose

 

 

justification derives from other or additional interests, apart from the interest of the person having the right in his actually realizing the right.

Professor Raz‟s definition of a basic right is similar, from the viewpoint of the structure of the definition, to our definition of a general right: as we said, a right is general, if the interest that it is intended to protect is the very existence of a fundamental right for a person who has the right. However, despite the similarity in wording, there is no similarity in meaning. First, Raz‟s definition refers to a person‟s interest in his having that right, and it can be any right. By contrast, our definition of a general right in based on a person‟s interest in his having the fundamental right. Second, Raz‟s theory is based on the concept of interest, and when he defines a right as „basic‟, his intention is to distinguish between this right and other rights on the level of the interest that justifies the existence of the right. Our distinction between a general right and a specific right does not focus on the interest in the existence of the right, but in identifying the object: is the object the person having the right, or is it one of those objects vis-à-vis whom the person having the right is likely to implement his right. A person claiming a general right is making a claim with regard to himself: he is demanding for himself the fundamental right. A person claiming a specific right is making a claim with regard to objects that are extrinsic to himself: he is seeking to apply his general right to (one or more) objects from amongst the objects to which it can be applied.

Restrictions on rights

11.          We have reviewed some of the better-known ways of distinguishing between rights. This review is certainly not complete, but I think that it should be sufficient to clarify somewhat the uniqueness of the method proposed by us for distinguishing between a general right and a specific right. We will seek, below, to rely on this distinction, but first let us consider briefly also the classification of restrictions on rights. This too will be required for our case, since the balance between conflicting rights is based, inter alia, also on the definition of the nature of the restriction that each of the rights imposes on the conflicting right.

The recognized restrictions are of several types. We will follow our method and assert that the main classification of the restrictions — like the main  classification  of  the  rights —  is  into    „fundamental‟  restrictions,

„general‟ restrictions and „specific‟ restrictions. The first type need not trouble us: a fundamental restriction is a restriction imposed by law on a fundamental right, and like the right to which it applies it is part of the law,

 

 

from which the general and specific rights are derived. By its nature the restriction may be general or specific. It is general when it relates to a general right. It is specific when it relates to a specific right. That it is fundamental merely identifies the normative source of the restriction; in other words, that its application derives from the law. But balancing and deciding between conflicting rights are only required for general restrictions and specific restrictions. The normative source, from which the imposition of the restriction (whether general or specific) is derived, makes no difference: the source may be a fundamental restriction — i.e., a prohibition prescribed by the law — and it may derive from another binding norm: a court order, an agreement or another legal relationship. The classification of the restriction as general or specific derives from its content. A general restriction, which can relate only to a general right, deprives the person who has the right of the ability of making any use of his right; thereby it de facto negates the very existence of the right. A specific restriction may be imposed on a general right or on a specific right. Its imposition prevents the person who has the right from implementing his (general) right only with regard to some of the potential objects. It should be said that the overwhelming majority of fundamental restrictions are specific. The right of freedom of movement is limited by the road traffic laws, the criminal prohibition against trespass and laws regulating leaving and entering the country. These are specific restrictions, subject to which the (fundamental or general) right of freedom of movement is retained. Even the restrictions on the right of freedom of speech are specific, and subject to the prohibition of libel and laws whose purpose it to protect essential interests such as protecting State security and maintaining public order, the general right is retained.

12.          For the purpose of our deliberation we would like also to classify two additional   types   of   restrictions,   which   are   derived   from   the   main classification: a „de facto general‟ restriction and a „quasi-general‟ restriction.

A „de-facto general‟ restriction is a restriction that prima facie can be classified as specific, or which ostensibly appears to be specific, whereas it is, de facto, general. Take, for example, the case of the prisoner imprisoned in his cell. Someone looking at him is liable to receive the impression that the restriction on his freedom of movement is specific, because it prevents him merely from leaving his cell, whereas all other movement is ostensibly permitted to him. But clearly presenting the nature of the restriction in this way distorts the reality. The real restriction imposed on the prisoner is not limited to a prohibition against leaving his cell, but it includes all the possible

 

 

expressions of freedom of movement outside the walls of the cell: the prisoner cannot go home, he cannot walk in the city streets, he cannot travel to another city, or leave the country. Indeed, at this moment the only restriction imposed on his freedom of movement is a specific restriction (preventing him leaving the cell) but this specific restriction places on his freedom of movement a general restriction. The restriction on the freedom of movement of that prisoner is therefore a „de facto general‟ restriction, and a restriction of this type is equivalent, as its consequences require, to a general restriction.

I am aware that attempting to classify a de facto general restriction as a special type of restriction is not without difficulties from a theoretical perspective. Someone will say, justifiably, that the restriction on the freedom of movement of a prisoner is, essentially, a general restriction. On the other hand, it may possibly be argued that a sentence of imprisonment for a very short period (e.g., one day) imposes only a specific restriction on the freedom of movement. These potential objections do not worry me. The classification of a de facto general restriction is not intended to add to the main classification of general and specific restrictions, or to subtract from the validity of either of these types. The sole purpose of this classification is to provide a diagnostic for deciding borderline cases. In other words, even when according to the basic definition we should, or can, classify a restriction on a right as a specific restriction, but its consequences are like those of a general restriction, then for the purposes of deciding a dispute, we should treat it as a general restriction. Note that the definition of a restriction as a de facto general one may be of use not only in cases where there the difficulty in classifying the restriction as general or specific derives from the factual circumstances of a particular situation, but also in cases that give rise to a theoretical dispute with regard to the normative classification of the restriction. Take, for example, the restriction embodied in the prohibition against incitement to racism. Some will say  that we are dealing  with a specific restriction on the freedom of speech, since subject to the prohibition against incitement to racism, the right is retained. Others will say that we are dealing with a general restriction, which means that the „right‟ of freedom of racist speech has been utterly excluded from the fundamental right of freedom of speech. For the purposes of a practical decision, this theoretical argument may be resolved by adopting the definition according to which the restriction against racist speech is a de facto general one: this means that even if it is found that there is a theoretical justification for including it in the

 

 

category of specific restrictions, for the purposes of the decision it should be treated as a general restriction. In summary, since its de facto consequences are the same as the consequences of a general restriction, it should be treated de facto as a general restriction.

13.          The classification of a quasi-general restriction seeks to establish an intermediate level, situated between the general restriction and the specific restriction. This classification will be appropriate in a case where the restriction imposed on the person having the right albeit leaves him potential ways of realizing his right, but from his point of view all the possibilities that the restriction leaves him are very unattractive, either because realizing them involves special risks, great inconvenience or an investment of huge resources, or because the way in which they allow him to realize the right is substantially different from the way in which the person having the right would have wanted to realize it had it not been for the restriction. From a technical-formal viewpoint, the restriction imposed on the person having the right is merely a specific restriction, since in theory he retains the possibility of realizing the right; but from a substantive-functional perspective, such a restriction is closer to a general restriction. The fact that all the possibilities of exercising his right are unattractive gives the person having the right a negative incentive to realize his right, and also very substantially reduces the chance that he will succeed in realizing it de facto. In such circumstances, the restriction on the right is „quasi-general‟, and a quasi-general restriction should also be treated as a general restriction.

It should be noted that a quasi-general restriction is substantively different from a de facto general restriction. Consider the right to eat, which is one of the derivatives of the human right to preserve his physical existence. If a person is deprived of all food, the restriction on his right to eat is general. If he is deprived only of one type of food, but that type is the only food available, the restriction is de facto general. But if he is offered to eat rotten food, which has a bad taste and little or no nutritional value, and he is deprived of any other food, then the restriction on his right is „quasi-general‟.

The extent of the violation of the right

14.          On the basis of these principles, we would like to lay down some basic premises for the extent of the anticipated violation of a person‟s right as a result of restrictions imposed on his right.

Our first premise is that imposing a general restriction on any right will violate that right more than imposing a specific restriction on it. The reason

 

 

for this is simple and obvious: a general restriction ipso facto includes all the possible specific restrictions. Thus, for example, a general restriction on someone‟s freedom of occupation means that he is prohibited from engaging in any occupation whatsoever. Such a restriction will violate his general right of freedom of occupation more than a specific restriction that will prohibit him from engaging in a specific profession or vocation, but will not restrict his right to engage in other professions or vocations. Note that not all specific restrictions on a particular right are of equal status. Imposing a specific restriction on a particular right may violate that right more than imposing another specific restriction on that right. But both of these will violate that right less than if a general restriction had been imposed on it. Thus, for example, an order prohibiting a resident of Haifa from entering the municipal boundaries of Tel-Aviv imposes a specific  restriction on his freedom of movement. But the violation caused by such an order to the person‟s freedom of movement will be less than that caused by an order prohibiting him from leaving the municipal boundaries of Haifa, which also imposes a specific restriction. However, even the violation caused by an order of the latter type is still more moderate than that caused by an order which prohibits the person from leaving his home and imposes a general restriction (or at least a de facto general restriction) on his freedom of movement.

The second premise is that the violation of a right that derives from imposing a de facto general restriction on it will be, in most cases, equal to the violation caused to the person having the right as a result of imposing a general restriction. A de facto general restriction does not leave the person having the right with a real possibility and a de facto ability to realize his right. The practical result of a de facto general restriction classifies the violation of the right as equivalent to the violation of a general restriction. That is usually the case, but there may be exceptions, since, although the results are the same, the type of restriction may indicate a difference in attitude to the protected social value. The very imposition of a general restriction may sometimes indicate a relative decrease in the value of the protected right. Thus, for example, the prohibition against incitement to racism (assuming that it is a general restriction) indicates a negative social attitude towards the existence of the freedom of racist speech. Even imposing a de facto general restriction may sometimes indicate a decrease in the value of the protected right (once again, consider the prohibition against incitement to racism, against the background of the assumption that the restriction it incorporates is not general but de facto general). But imposing a de facto

 

 

general restriction (as distinct from imposing a general restriction)  may derive also from circumstantial constraints, and it will not always indicate a decrease in the value of the right. Subject to this qualification, which requires caution in special cases, it can be established that a de facto general restriction violates the right to the same extent as the violation deriving from imposing a general restriction on that right.

Our third premise proposes that imposing a quasi-general restriction on a right violates that right less than imposing a general restriction or a de facto general restriction. The reason for this is clear: imposing a quasi-general restriction does not prevent realization of the right. By contrast, the violation to the right caused by a quasi-general restriction cannot be estimated as if it were a specific restriction. It has already been explained that a quasi-general restriction makes it difficult to realize the right to a greater extent than a specific restriction. It follows from this that even its violation of the right on which the restriction is imposed is greater than that caused as a result of imposing a specific restriction.

Classification of the competing rights in the Nahmani case

15.          Ruth Nahmani wants to be a mother. Her right to realize her desire derives from the fundamental right, and it follows that her right is a general right. But Ruth is also claiming a specific right. Ruth is focusing her struggle on the ova fertilized with her husband‟s sperm. She claims that she has no other ways in which to realize her desire to be a mother. The fertilized ova — her and Daniel‟s joint genetic material — are the object vis-à-vis which Ruth wishes to realize her specific right. Daniel Nahmani does not deny Ruth‟s general right to be a mother. Notwithstanding, he wishes to prevent her from realizing this right by using ova fertilized with his sperm. The restriction that he wishes to impose on Ruth‟s right to parenthood is, prima facie, a specific restriction. According to him, Ruth may realize her right to parenthood in any way she sees fit, provided that she does not make use of those ova. But is this restriction, which Daniel wishes to impose on Ruth‟s right, really — as it seems — only a specific restriction? In order to answer this question, we must consider the two other methods, apart from using the fertilized ova, that it is argued against Ruth are still available to her for realizing her aspiration and her right to be a mother: another in-vitro fertilization, and adoption. Consideration of the circumstances leads to the conclusion that neither of these two methods is an available alternative that reduces the extent of the anticipated violation from the restriction that Daniel wishes to impose on Ruth‟s right.

 

 

The possibility of another in-vitro fertilization is vague. First, it is not at all clear whether, from a medical perspective, this option indeed exists. It may be that the chance of this attempt succeeding is negligible, or will involve an unreasonable risk to Ruth‟s health. Second, as long as Ruth is bound to Daniel by marriage, fertilization with the sperm of another man may make the children bastards.* Third, in order to carry out the additional in- vitro fertilization, Ruth will again have to undergo great physical and emotional suffering. It follows that even if the option of in-vitro fertilization exists, it is clearly an unattractive option. Even the option of adopting a child, or children, does not offer a solution that Ruth can accept. First, it is questionable whether, according to the accepted order of precedence, Ruth is entitled to adopt a child. In this regard, we must not ignore Ruth‟s age and her stated intention of raising her children alone (and we do not express here any opinion as to the correctness or justification of the order of priorities accepted by the competent authorities). Second — and  this  is  the  main point — adoption does not fulfil Ruth‟s desire and right to be a biological parent. It follows that this option also is clearly unattractive.

It transpires that of the three methods available to Ruth for realizing her general right to be a mother — using the fertilized ova, resorting to a new in- vitro fertilization procedure and submitting an adoption application — only the first method gives Ruth a possibility that can be regarded as a real one, whereas the other two methods are clearly unattractive. It follows that the restriction that Daniel wants us to impose on Ruth‟s right, even though prima facie it is only a specific restriction, is in fact a quasi-general limitation.

16.          Daniel Nahmani does not insist on his general right not to be a father. Had this been his position, we would have had to decide which of the restrictions on the rights of the spouses is more severe: the quasi-general restriction on Ruth‟s right  to  be  a mother,  or  the general restriction on Daniel‟s right not to be a father. But Daniel does not base his case on his general right not to be a father. On the contrary, Daniel has already willingly become a father, together with his new partner. The implication is that he does not object to the very idea of being a father, but he wishes not to be the father of the specific children that may develop from the fertilized ova which are the subject of the dispute. The right not to be a parent, for which he is

 

 

 

*             Editor‟s note: the Hebrew term is mamzerim. The significance of this status under Jewish law is that a mamzer is not permitted to marry within the Jewish community: see Deuteronomy 23, 3.

 

 

fighting, is expressed here in a specific right: the right not to be a parent of these specific children. The restriction that Ruth wishes to impose on Daniel‟s right, not to be a parent against his will to her children, is also a specific limitation.

Deciding between the rights

17.          Deciding between Daniel‟s right and Ruth‟s right is not simple. A decision in Ruth‟s favour restricts Daniel‟s right not to be a father, since this decision forces him to be a father of children whom he does not want to father. A decision in Daniel‟s favour restricts Ruth‟s right to be a mother, since after such a decision all the options that remain to her for realizing her right to become a mother are, from her viewpoint, slight or very unattractive. Both restrictions are serious, but they are not equal. A decision in favour of Ruth imposes on Daniel‟s right not to be father a specific restriction, whereas a decision in favour of Daniel imposes on Ruth‟s right to be a mother a quasi- general restriction.

We have already explained that, as a rule, imposing a quasi-general restriction on any right violates that right more than imposing a specific restriction. In other words, a quasi-general restriction is more serious than a specific restriction. Admittedly, it does not necessarily follow from this that in every case where the court is faced with conflicting rights (whether they are opposing rights or whether they are different rights), it is sufficient for it to base the findings that must be balanced on this premise. When the rights are not equivalent, the premise may be false. Thus, for instance, in a situation where there is a difference between the inherent weight of the conflicting rights, it is possible that a balance between them will require a determination that a violation caused by imposing a quasi-general restriction on an insignificant right of one person is less serious than the violation involved in imposing a specific restriction on an important right of another person. It follows that a classification of the restricting causing the violation — as general, de facto general, quasi-general or specific — is merely one of the factors affecting the determination of the extent of the violation; when determining the extent of the violation — as required for making the balancing — we must take account not only of the classification of each of the restrictions violating the rights, but also of the „absolute‟ inherent weight of each of the violated rights. However, it is not always necessary to define exactly the absolute inherent weight of the conflicting rights in order to determine whether imposing a specific restriction on one of them is preferable to imposing a quasi-general restriction on the other, or vice versa.

 

 

In many cases we will be able to adopt the balancing formula outlined in our premise, even without a determination as to the strength of each of the conflicting rights. This is the case, for example, when it is clear that the inherent weight of the two rights is equal, or almost equal. In such a case, it is correct to adopt the premise that imposing a quasi-general restriction on one of the rights will harm the person who has that right more severely than the harm caused to the person who has the opposing right as a result of imposing a specific restriction on his right. But this rule is valid and logical not only for deciding between equivalent rights. This rule will also apply when the rights are not of equal weight, but it is clear that the right which is subject to the more severe restriction — even if not preferable to the opposing right — is certainly not inferior to it.

18.          These rules lead me to a decision in the case of the Nahmani couple. I accept that a person has a right not to be a parent against his will. This right is not stronger that a person‟s right to be a parent. It may be equal to it, or the latter may be stronger; but I have no doubt that the former right is not stronger. In the present case, the restriction that Daniel wishes to impose on Ruth‟s right to be a mother is a quasi-general restriction. The restriction that Ruth wishes to impose on Daniel‟s right not to be a father against his will is a specific restriction. Since we are required to make a decision, we must prefer imposing a specific restriction on Daniel‟s right not to be a father against his will, to imposing a quasi-general restriction on Ruth‟s right to be a mother. The violation caused by the first restriction to Daniel‟s right is, necessarily, less than the violation caused by the second restriction to Ruth‟s right. In circumstances where all other factors are equal, justice requires us to prefer the lesser violation to the greater violation. This is my reason for preferring the justice of Ruth‟s case to the justice of Daniel‟s case.

19.          I would like to emphasize that the decision that I have reached is based on the distinction between the different intensity of a quasi-general restriction as opposed to a specific restriction imposed on conflicting rights which are (in the case that is more favourable from Daniel‟s point of view) of equal weight. My determination that the restriction on Ruth‟s right is quasi- general is based on the proven premise that apart from her possibility of using the fertilized ova, Ruth has no alternative method (apart from possibilities that are clearly unattractive from her perspective) to realize her right to motherhood. Let it not be understood from this that had I  not accepted this premise, my conclusion would have been different. It is possible that even then I would have found a justification for accepting

 

 

Ruth‟s position, on the basis of a different reason, but I see no need to expand on this point.

A decision where there is no norm and no fault

20.          In the legal dispute between Ruth and Daniel Nahmani, two elements, which both exist in the overwhelming majority of legal disputes, are absent. One element is a recognized legal norm that regulates the subject of the dispute. The absence of a legal norm has made our decision difficult and provided ample opportunity for different opinions and reasonings. The second element whose absence is felt in this case is the existence of fault on the part of one of the parties. At first I feared that the absence of fault, together with the absence of a binding norm, would make it difficult for us to decide the dispute. But ultimately I am satisfied that the absence of the element of fault was a blessing. Thus we have been able to rule on the dispute itself instead of dealing with the persons in dispute.

21.          The absence of a legal norm — or at least the lack of consensus among the judges as to the existence of such a norm — is a rare phenomenon. Nonetheless, it is not an impossible phenomenon. Even when the court is called upon to decide a dispute of novel character, for which there is no established legal norm, it is not exempt from making a decision. Where there is a right, there is also a valid right to be granted relief. In such circumstances, the court faces the necessity of creating the legal norm on the basis of which it will decide the dispute. Usually it does not do this by means of creation ex nihilo. There are cases where existing arrangements that relate to a similar field may provide a norm that, mutatis mutandis, can be adapted to decide also the concrete dispute. Thus for instance, when the court was required to classify computer software, for the purpose of deciding whether its owner had a protected copyright, it held that software was equivalent to a literary creation (CC (TA) 3021/84 Apple Computer Inc. v. New-Cube Technologies Ltd [45]). Thus the court applied to a modern invention a legal norm based on legislation from the beginning of the century. In our case, too, technological development has preceded development of the law. But for deciding the matter before us, we did not find any recognized norm upon which we could build, even taking account of any necessary modifications. In such circumstances, there was no alternative to a decision based on a balancing between the conflicting rights. I personally believed that relying on a sense of justice alone is uncertain and therefore undesirable. In searching for a normative source, I resorted to the doctrine of rights. Indeed, had there existed a legal norm dealing with the matter in dispute we would have had to

 

 

decide the case accordingly, and the value analysis that we set out above would have been inapplicable. But in the absence of such a norm, I believe that the objective criterion that we created in our analysis establishes a proper basis for a just decision in the painful dispute between the spouses.

22.          The second element that is absent in our case is the element of fault. I do not believe that any blame can be levelled at Daniel Nahmani. At no stage were his actions tainted by bad faith. Admittedly he reversed his decision to bring children into the world together with his wife, but in the circumstances in which this was done, his withdrawal of his consent did not involve any improper behaviour. His refusal to cooperate with Ruth in continuing the procedure that they began together also did not derive from bad faith. When considering the matter from Daniel‟s viewpoint, the obvious conclusion is that justice is on his side. But justice is not on his side only. Justice is also on Ruth‟s side; and the justice on her side is greater. Indeed, Daniel cannot expect Ruth to give up her just desire to exercise her right merely because he is justified in having a right that conflicts with her right. But there was also no reason to expect that Daniel would regard the justice of Ruth‟s case as superior to his. There is also no fault on Ruth‟s side. She did not begin the fertilization procedure without Daniel‟s consent or against his will. On the contrary, at the beginning of the procedure Daniel gave her his blessing. She received his full cooperation, which derived from his consent and his desire to bring children into the world together with her. But the absence of fault in our case, unlike the absence of a norm, make the decision easier, rather than harder. I suppose that had I found that one of the parties had acted improperly towards the other, I would have tended to give this weight also in reaching my decision. Fortunately I am not required to take such considerations into account. Thus I can be more certain and confident that my conclusion, namely that the law is on Ruth‟s side in this dispute, is based solely on the objective balancing between their conflicting rights, as expressed in the circumstances of the concrete case.

Qualification of the decision

23.          My decision in the dispute between the Nahmani couple is based on a balance between Ruth‟s desire and right to be a mother and Daniel‟s desire and right not to be the father of the children that will develop from the fertilized ova. But the work of properly balancing between the spouses is not yet complete. Filling the lacuna justifies imposing a qualification on the implications of our decision.

 

 

Two assumptions underlie the balancing upon which the decision is based: first, that Ruth‟s genuine desire is to be a mother, and no more. Second, that both parties are acting in good faith. Both these assumptions will be proved wrong if and when Ruth turns to Daniel with financial demands. Had Ruth declared to us her intention to file such a claim, this might have been sufficient to lead to a contrary decision. But if she files such a claim, after giving birth to the child or the children, it will not be possible to turn the clock back and decide the dispute in Daniel‟s favour. As a solution to this dilemma, I agree with the proposal made by my colleague, Justice Goldberg, in paragraph 16 of his opinion, that we should make Ruth‟s use of the ova conditional upon her giving an undertaking not to demand any amount whatsoever from Daniel, for the children or for herself, and to indemnify Daniel for any payment that he shall be made liable to pay her, or to her children, as a result of an action filed against him notwithstanding the undertaking.

24.          My opinion, therefore, is that we should grant the petition, reverse the appeal judgment and reinstate the judgment of the District Court, together with the condition stated in paragraph 23 supra.

 

Justice T. Or

1.            Daniel and Ruth Nahmani were married in 1984. They had no children. Because of a hysterectomy she underwent, Ruth could not herself become pregnant. Against this background, the couple turned to the path of in-vitro fertilization under the Public Health (In-vitro Fertilization) Regulations (hereafter: the In-vitro Fertilization Regulations). The aim of the procedure was to fertilize Ruth‟s ova with Daniel‟s sperm, and to implant the fertilized ova in the womb of another woman („a surrogate mother‟). Ova were removed from Ruth‟s body. Eleven of these were fertilized with Daniel‟s sperm. The fertilized ova were frozen. They were stored in this state at Assuta hospital. The couple entered into a financial agreement with an institution in the United States, which assists in making an agreement with a surrogate mother and carrying out the various aspects of the implantation procedure and the pregnancy of the surrogate mother. No agreement was made with a surrogate mother. A surrogate mother had not yet been found. Before a surrogate was found and implantation took place, a dispute broke out between the couple. Daniel left the home. He established a new family. He and his new partner had a daughter. Ruth approached the hospital with a

 

 

request to receive the ova. Her request was refused. Therefore she began proceedings in the District Court.

The District Court granted her request. It ordered the hospital to allow Ruth use of the fertilized ova, in order to continue the implantation procedure in a surrogate mother. It ordered Daniel to refrain from interfering with the continuation of the procedure.

Daniel‟s appeal against the judgment (CA 5587/93*) was allowed, and the judgment was reversed. In this further hearing, we must decide whether to uphold the appeal judgment, or whether, as Ruth argues, we should change the result and reinstate the judgment of the District Court.

2.            This opinion is being written after most of the justices on the extended panel considering this case have expressed their opinions. Their opinions are before me. My basic position on this case has been expressed in the comprehensive, illuminating and profound opinions of my colleague Justice Strasberg-Cohen, both in the aforementioned appeal (CA 5587/93†) and in this further hearing. I agree with large parts of these opinions. I agree with the analysis of the constitutional rights made in these opinions. I also agree with the main points of the opinion of my colleague, Justice Zamir. Like my two colleagues, I believe that the law in this case is on Daniel‟s side. Like my two colleagues — and this is the main point in my opinion — I do not think that in the circumstances of this case the court is faced with a normative vacuum and that it must create law ex nihilo in order to solve the dispute between the parties. I also believe that the decision in this dispute should be based on a general norm, which is based on the unique nature of the issue under discussion. Like my two colleagues, I do not believe that this dispute should be decided on the basis of deciding the question which of the two litigants — Daniel or Ruth — will suffer greater anguish or harm depending on the results of this litigation. Like them, I also believe that before comparing the harm that each party is liable to suffer, and deciding accordingly whose case is more just, we must first consider whether Ruth has a cause of action in law against Daniel. My conclusion, like theirs, is that the answer to this is no. Notwithstanding this, my method is different, in certain ways, from the method of my colleagues. I will set out below the main points of my outlook on this matter.

 

 

 

*             IsrSC 49(1) 485; [1995-6] IsrLR 1.

†             Ibid.

 

 

3.            Several years ago, Daniel and Ruth started out on the path of in-vitro fertilization. This step was carried out by mutual consent. In my opinion, the key to solving the dispute before us will be found by considering the scope and content of the agreement between Daniel and Ruth. This agreement was not put in writing. It did not go into the fine details. It was based on the fabric of Daniel‟s and Ruth‟s life together. The couple did not need to translate it into a legal document. They did not express it as a defined set of mutual obligations and rights. They did not provide an arrangement for possible future events. As a married couple, life partners, it can be assumed that they saw no need for this.

Against this background the question arises whether the agreement between Daniel and Ruth is a binding agreement from the legal viewpoint. Justice Scott discusses the difficulty that arises in such situations in Layton v. Martin (1986) [57], in remarks cited in M. Parry‟s book, The Law Relating To Cohabitation, London, 1993, at page 234:

„In family or quasi-family situations there is always the question whether the parties intended to create a legally binding contract between them. The more general and less precise the language of the so-called contract, the more difficult it will be to infer that intention.‟

Notwithstanding these remarks, I believe that Ruth and Daniel intended to create a legally valid agreement. The consent between them did not remain a private one between them. It formed the basis for the contract made by Daniel and Ruth with third parties, such as the hospital that performed the fertilization, and the surrogacy institute in the United States. Moreover, vis-à- vis these parties this consent even received formal expression. Thus, for example, this consent was expressed in the forms that the couple signed at Assuta Hospital, where the fertilization was performed. It received similar expression in the Retainer Agreement that the couple signed with the Surrogacy Institute in the United States.

Despite this, in my opinion this consent is not a regular contractual consent. I agree with the position of my colleagues, Justices Strasberg-Cohen and Zamir, that we are dealing with a special type of consent. This conclusion is implied, in my opinion, by the context and the circumstances in which the consent was made. It derives from the special and emotional nature of the relationship between the parties as a married couple. This relationship, which I will discuss later, constitutes the basis of the consent and its purpose. In any case, and this is the main point, there is no doubt that the procedure that the

 

 

couple agreed to begin was based on this consent. Therefore, I base my opinion in this case on the content of the consent that was reached, without needing to define and classify, from the viewpoint of the legal classification, the special legal character of this consent.

4.            What, therefore, is the content of the consent? No direct evidence was brought as to the content of the consent. As stated, the consent was not put in writing. In such a situation, the court must try to derive the content of the consent from the circumstances of the case. This act of construction will be governed by the basic principles that apply to the construction of contracts (see section 61(b) of the Contracts (General Part) Law).

In trying to establish the intentions of the spouses, we must try to identify their intentions as reasonable people. In this way, we can identify the joint purpose of the consent, and deduce from it the content of the consent. Justice Barak discussed this in CA 154/80 Borchard Lines Limited, London v. Hydrobaton Ltd [36], when he said, at p. 223:

„… We must take account of the intentions that can be attributed to the parties, acting as reasonable people. The reason for this is that it can be assumed that, as long as the contrary is not proved, the intentions of the parties to the contract are the intentions that they would have had, had they acted as reasonable people in the circumstances of the case.‟

See also CA 554/83 Atta Textile Company Ltd v. Estate of Yitzhak Zolotolov [36], at p. 305; CA 275/83 Netanya Municipality v. Sahaf, Israeli Development Works Co. Ltd [37], at pp. 241-243.

This joint contractual purpose derives, inter alia, from the nature of the issue that is the subject of the consent, the character of the consent and its characteristics. As held in HCJ 846/93 Barak v. National Labour Court [38]:

„Similarly the purpose of the contract is comprised of an objective purpose, which reflects the aims and goals that the parties to the contract, as reasonable people, can be presumed to have wanted to realize. This is “the goal or purpose, which it is reasonable to assume that the parties, as reasonable persons, would have adopted in the circumstances of the case”. This purpose is naturally determined according to the substance of the matter regulated, the nature of the arrangement and its characteristics.‟

 

 

We can also learn of the content of the consent from the parties‟ behaviour after the consent was reached. „Such behaviour can indicate their intentions at the time of signing the agreement‟ (HCJ 932/91 Central Pension Fund of Federation Employees Ltd v. National Labour Court [39], at p. 437). Moreover, in the case before us, the consent is based mainly on the behaviour of the parties. In these circumstances, the court must „interpret the behaviour of the parties and give meaning to it‟ (CA 4956/90 Paz-Gas Marketing Co. Ltd v. Gazit Hadarom Ltd [40], at p. 42).

5.            Where do these rules lead to in this case? It seems to me that, from the circumstances of this case, it transpires that the intentions of the parties, as reasonable parties, was consent to cooperate towards realization of an in-vitro fertilization procedure. This consent is a framework consent. It is founded on the basic assumption that the marital relationship between the parties would continue. But, in my opinion, this consent does not include consent, ab initio, to all the stages and aspects of the fertilization procedure. This is a consent that is based on the knowledge and understanding that at each future stage of the in-vitro fertilization procedure, the joint consent and cooperation of both spouses would be required. In other words, according to this consent, each of the spouses knows and accepts that the continuation of the procedure is dependent on the ongoing consent of the couple to continue the procedure with all its stages.

This conclusion is based on the nature of the in-vitro fertilization procedure and the framework in which the parties acted and in which the agreement between them was made and implemented.

First, we are dealing with a lengthy procedure. The procedure is comprised of several stages: providing the sperm and ovum, fertilization of the ovum, locating and choosing the surrogate mother, carrying out the implantation (see regulation 2 of the In-vitro Fertilization Regulations). When the parties begin the procedure, there is more uncertainty than certainty. Many things remain open and uncertain. Thus, the parties do not know whether the in-vitro fertilization stage will succeed. Even in optimal conditions, the success rate at this stage is between 60% and 75% (see Appendix „B‟ of the Report of  the Professional Public Commission for Examining the Issue of In-vitro Fertilization, supra (hereafter: „the report of the Aloni Commission‟), at p. 114). They do not know if additional medical procedures will be required to facilitate such fertilization. Moreover, they do not know who will be the surrogate mother. They do not know how long the procedure of finding and choosing the surrogate mother will take. They also

 

 

do not know how many attempts will be required to achieve a pregnancy in the surrogate mother. What they should know is that the chances of pregnancy and having a child at this stage are far from certain. The rate of pregnancies per cycle of in-vitro fertilization treatment is only 15%. The rate of childbirth is only 12% (ibid., at p. 114). The rate of miscarriages for in- vitro fertilization is almost double that in a normal pregnancy (22%-26% as opposed to 12%-15%, ibid.). Even in optimal conditions — in which 3-4 embryos are implanted in the womb — the chance of a pregnancy for in-vitro fertilization is approximately one third (34%) (ibid., at p. 116).

Indeed, the surrogacy institute with which Ruth and Daniel made a contract retained for itself (through a doctor on its behalf) the power to rescind the surrogacy agreement, after it was signed, if the procedure did not succeed within a reasonable time. Clause 9 of the surrogacy agreement stipulated as follows:

„In the event that, in the opinion of the center‟s physician, the contemplated pregnancy has not occurred within a reasonable time, this agreement shall terminate by any party or the center‟s physician giving notice to all parties.‟

Therefore there exists, at the outset, great uncertainty with regard both to the success of the various stages of the procedure and the amount of time the procedure will take.

The in-vitro fertilization procedure is not only a lengthy procedure, but it is also a complex procedure. It is an expensive procedure from a financial perspective. The cost of surrogacy services is high, and may reach tens of thousands of dollars. In order to achieve success, in all respects, cooperation between the spouses is essential. Each of the spouses is dependent on the other for this purpose. The spouses need each other for the actual in-vitro fertilization. This is a biological dependence. They are dependent on one another in order to realize the procedure legally. The consent of each of them is required for the different stages of the procedure. Thus, for example, the consent of each of the spouses is required to enter into an agreement with the surrogate mother and the surrogacy institute. The spouses are dependent on one another for the technical realization of the procedure. They need to pool their joint resources in order to meet the financial burden needed. At each of the stages and critical junctures the consent of each of the spouses is required, and it is possible that they will have differences of opinion or disagree as to one matter or another that requires the consent of both of them. Therefore it is certain that the consent between them to undergo in-vitro fertilization was

 

 

accompanied by the knowledge and understanding of both of them that the in-vitro fertilization procedure could only reach its desired conclusion with the ongoing consent of both spouses, consent for each of the critical junctures along the long journey. Both spouses are dependent on one another in order to traverse this difficult procedure successfully.

This is compounded by another important matter. The consensual purpose is a joint purpose. At the heart of the consent we do not find the yearning of one of the spouses for children. The consent focuses on a joint aspiration of both spouses to realize the complete family unit that they wish to create. This unit is the essence of the consent. It is its backbone. The consent is based on this. From this it draws its existence.

All of these characteristics show, in my opinion, that in the absence of an express agreement to the contrary, the intentions of the parties at the beginning of the in-vitro fertilization procedure cannot be regarded as including consent ab initio to all its stages and elements. Such a consent is unsuited to the complexity of the procedure. It is unsuited to the uncertainty that surrounds it. It is also unsuited to the natural sensitivity and fragility of the relationship between the spouses, which constitutes the foundation of the consent between them. It is unsuited to the timetable anticipated by the agreement. Consequently, I do not believe that the intentions of the parties as reasonable people include such a consent. In my opinion, all we can find is the desire and consent of the spouses to cooperate in achieving their common goal. This agreement is a framework consent. It requires the cooperation of the parties at each stage of the procedure for its success, and it is dependent on it. It also requires the consent of each of the spouses for each stage of the procedure, consent which is not guaranteed in advance. It requires, in my opinion, the continued existence of the basic conditions for realizing the consent — the continued existence of their relationship as a couple.

6.            This conclusion as to the content of the consent that can be attributed to the parties as reasonable people, is not only based merely on the nature of the in-vitro fertilization procedure, and its substance as a procedure whereby the couple wish to extend the family unit. It also relies on the specific contexts in which Daniel and Ruth acted, contexts that were anticipated and known to them since the beginning of the procedure.

One aspect concerns the normative framework to which the parties subjected themselves when they began the in-vitro fertilization procedure. Daniel and Ruth knew that these procedures were governed by the In-vitro Fertilization Regulations. They acted in accordance with these regulations at

 

 

the beginning of the procedure. It can be assumed that the parties were aware of their content. Inter alia, these regulations require informed consent — of both spouses — for each stage of performing the in-vitro fertilization procedure (see regulation 14 of the In-vitro Fertilization Regulations). Within this framework, the regulations also require consent to the implantation stage, and I agree in this respect with the remarks of my colleague, Justice Zamir, in paragraph 8 of his opinion. This normative arrangement provides a strong indication of the content of the agreement reached by Ruth and Daniel. It indicates that it should not be said that the initial consent encompassed all the stages of the procedure, with all its obstacles. Upon their initial consent, knowing the requirements of the Regulations, they knew that also in the future the consent of each of them would be required, and they were prepared to begin the procedure in the knowledge that its continuation was dependent on the additional „informed‟ consents of both of them.

Another aspect concerns the manner in which the in-vitro fertilization procedure is realized by implanting the fertilized ova in the body of the surrogate mother. In order to carry out the procedure, Ruth and  Daniel entered into an agreement with a surrogacy institute in the United States. This agreement covered the financial aspects of their contract with the institute. The consent under this agreement is joint. The consent of each of the spouses is required for the proceeding. Thus, one of the paragraphs in the preamble of the agreement provides that:

„… The center is engaged in the practice of arranging surrogate agreements and administration of agreements for couples who are unable to bear their own children…‟ (emphasis supplied).

According to this, the two natural parents — Ruth and Daniel — are a party to this agreement. It calls them, jointly, the prospective parents. It is therefore natural that they are also the ones who are supposed — jointly — to choose the surrogate mother (clause 5):

„Prospective parents shall meet with and have the final decision as to the selection of any potential surrogate…‟.

This is also the case with regard to the agreement with the surrogate mother. As stated, no such agreement has yet been signed. No surrogate mother has yet been located. Notwithstanding, Ruth and Daniel were shown a draft of such an agreement by the surrogacy institute in the United States. They knew the contents of this agreement. This agreement clearly shows the need for the consent of each of the spouses to the implantation: both Ruth

 

 

and Daniel are parties to it, and to all its obligations. It indicates the basic requirement of the existence of a genuine relationship when consenting to the implantation. This can be seen from the preamble to the agreement:

„… are a married couple, living together… and are desirous of entering into the following agreement…‟ (emphasis supplied).

Although Ruth and Daniel were aware of the contents of this agreement, no claim has been heard that either of them had reservations about this content. Moreover, this agreement requires a high degree of involvement from each of them. The agreement imposes obligations on each of them. They both undertake to take upon themselves the legal and parental obligations with regard to the child that will be born (clause 3). They both undertake to undergo physical and psychological examinations for the purposes of the procedure (clauses 5 and 6). The both undertake to provide any assistance that may be needed for the procedure (clause 7). They both undertake to indemnify the surrogate mother for her losses and expenses (clause 18). Moreover, a breach by one of them makes the other liable (clause 27).

It seems to me that this mechanism, by means of which the parties wanted to carry out the fertilization procedure, can also help in determining the contents of their consent. It indicates that the parties knew that the consent of each of them would be required also at the implantation stage. It shows that they regarded the in-vitro fertilization procedure as a joint procedure, and that they knew that at the implantation stage the consent of each of them to all the conditions and details relating to this stage would be required.

The details of the agreement, as stated, and the need to determine a mechanism for the implantation with the consent of each spouse, also show that there is no basis for the finding that at the stage when the dispute broke out between the parties, Daniel is no longer in the picture, so to speak, and is no longer required to perform any further act (see, for example, the opinion of Justice Tal, at paragraph 4; the opinion of Justice Bach, at paragraph 5(e)). His consent is needed not only for the actual use of the fertilized ova, as required by the hospital where they are held, but also for choosing the surrogate mother and for determining the terms of the contract with her, and for determining the details relating to the agreement with the surrogacy institute.

I can add, in parenthesis, that in view of the importance ascribed by surrogacy institutions in the United States to the joint consent and liability of

 

 

parents entering into a surrogacy agreement, I doubt whether, in view of Daniel‟s opposition to the continuation of the in-vitro fertilization procedure, the institution with which Daniel and Ruth entered into a contract, or any other institution, will sign a surrogacy agreement with Ruth alone.

7.            Note that, as can be seen from the above description, this requirement for the consent of both spouses at each of the stages of the procedure is not a formal requirement. This is not an arbitrary conclusion, divorced from the reality of the in-vitro fertilization procedure. This requirement reflects the nature of the in-vitro fertilization procedure. It derives from the importance of the decisions that the parties must make along the way. The same is true of the fertilization. The couple must choose a medical institution where the fertilization will be performed. This choice may have implications for the outcome of the fertilization. It may affect its chances of success. It involves an important choice for carrying out the fertilization procedure. Is it conceivable that a decision of this kind will be made without the consent of one of them?

The situation is similar, and maybe even more complex, when we are dealing with the implantation stage. At this stage, the parties must make a series of important decisions. They must decide where to carry out the implantation. As with the fertilization, this is a decision that is important for the successful performance of the in-vitro fertilization procedure. They must make financial and economic decisions. As stated, entering into a surrogacy contract is an expensive matter. This is clear from the retainer agreement signed with the surrogacy institute. This agreement stated (in clause 16) that:

„The Center has advised prospective parents that surrogate parenting is a very expensive procedure and has many unknown implications.‟

We are speaking of large amounts, in tens of thousands of dollars. Even more important, we have seen that the couple must choose a surrogate mother who will carry their future children. This choice has many aspects that are not simple. The surrogate‟s age may be important. Her medical background may be of importance. So, too, may her social psychological background. We are speaking of a choice whose importance cannot be exaggerated. It may determine the fate of the whole procedure. We need only glance at the serious disputes that have arisen between prospective parents and surrogate mothers in order to understand just how important the correct choice is at this stage (see In re Baby M (1987) [56]). Can we ascribe to the parties, in the absence of an express and clear consent on this issue, ab initio consent on this issue? I

 

 

believe that the answer is no. The parties left this important matter completely open. They knew and understood that an additional special consent of both of them would be required for it.

8.            I reached this conclusion on the basis of the intentions of the parties as a reasonable couple, as it arises from the circumstances of the case and from the behaviour of the parties. I would point out that my conclusion is consistent with the law that governs this issue, in Israel and abroad. Thus the arrangement prescribed in the Surrogacy Agreements (Approval of Agreement and Status of the Child) Law (hereafter — the Agreements Law) requires, as my colleague, Justice Zamir, says (in paragraph 10 of his opinion), the informed consent of the couple to the implantation. Indeed, this provision does not apply directly to the dispute before us. But it shows that there are strong grounds for the conclusion that the consent of both spouses is necessary also for the implantation stage.

The result whereby cooperation and consent of both spouses is required for each of the stages is also supported by another provision of the Agreements Law. The Law revolves around the surrogacy agreement. The agreements is between the prospective parents and the surrogate mother. The prospective parents are the couple who are entering into a contract with the surrogate mother. The agreement requires the approval of a statutory committee. Under section 5(c) of the law, this committee —

„may reconsider an approval that was given if the facts, circumstances or conditions that served as a basis for its decision have undergone a substantive change, as long as the fertilized ova have not been implanted in the surrogate mother…‟.

In my opinion, even this provision shows the legislator‟s policy with regard to the issue before us. It clarifies that the status of a consent — even one that is incorporated in an agreement that received the approval of a special statutory body — is not absolute until the implantation stage. That is the decisive stage. Until this stage, a change in circumstances may lead to a termination of the procedure. In my opinion, the breakdown of the relationship between the two spouses constitutes a significant change in the circumstances for this purpose. The relationship between the two spouses is a fundamental element of the surrogacy agreement. The prospective parents must be „a man and a woman who are spouses‟ (section 1 of the law). The pregnancy of the surrogate mother is done for the „prospective parents‟ (ibid.). The statutory arrangement assumes, therefore, a relationship between the spouses. The breakdown of the relationship before implantation of the

 

 

ovum in the surrogate mother constitutes a change of the circumstances or the facts that formed the basis for the decision of the approvals committee. It may, therefore, lead to a revocation of the approval of the surrogacy agreement and termination of the procedure.

9.            The law in other countries also supports this result. As set out extensively in the opinion of my colleague, Justice Strasberg-Cohen, in tha appeal (CA 5587/93)*, in other countries the effective consent of the spouse is required also for the implantation stage. Until this stage, he has the right to change his mind. In other countries, this is the solution that is proposed by official commissions that were appointed to consider this issue. Incidentally, this is also the approach contained in the report of the Aloni Commission that was appointed by the Minister of Health and the Minister of Justice in June 1991 to consider the issue. The Commission expressed the opinion, on page 36, that:

„… Fatherhood or motherhood should not be forced on a man or woman against their wishes, even if they gave their initial consent thereto.‟

10.          Up to this point, I have discussed my fundamental approach. To summarize, it is my opinion that the in-vitro fertilization procedure is a joint procedure. The intention of the spouses is to bring into the world a child of both of them, so that both of them will be able to raise him within the framework of the family unit. The procedure of in-vitro fertilization is a long one, there are many difficulties along the way, and the couple will in the future be required to make decisions on matters of the utmost importance. Only when both spouses want to carry out the procedure, with the understanding that this joint desire and consent will continue to exist, and only subject to the joint consent of both of them at all stages of the procedure is it possible to realize their ultimate expectations. At the start of the procedure, the spouses presume that they will both continue to have this desire and consent. This assumption was at the basis of the consent that they reached. But it also reflects an assumption that may prove false, and then one of the spouses will not be able to continue the procedure alone. Indeed, each of them expected that they would continue to cooperate with one another throughout the whole procedure.  But  each of  them also understood  and agreed, that only if there would be continuing cooperation and consent on the part of his spouse would the procedure continue and reach its conclusion.

 

 

*             IsrSC 49(1) 485; [1995-6] IsrLR 1.

 

 

When one of the spouses changes his mind before the implantation, there may, possibly, be grounds for the other to feel disappointed and aggrieved, but he does not have a cause of action in law to compel the other spouse to continue the procedure, in view of the contents of the consent between the spouses as aforesaid.

This view leads me to the result that Ruth needs Daniel‟s consent to carry out the implantation. Therefore, she cannot receive the fertilized ova into her possession for the purpose of the implantation that is opposed by Daniel. My conclusion is that, in the circumstances of the case and according to the consent of the parties themselves, Daniel was entitled not to give his consent to the continuation of the procedure. I believe that this result also reflects the proper law. This result gives proper expression to the character of the in-vitro fertilization procedure. It expresses in the proper degree the joint framework of this procedure.

For this reason, Daniel‟s unwillingness to continue the in-vitro fertilization procedure also is not tainted by bad faith. Since the entire procedure is based on the spousal relationship between Daniel and Ruth, when their spousal relationship is no longer intact, and in practice no longer exists, Daniel‟s unwillingness to continue the procedure is self-evident, because of the nature of the consent between the two, as explained above. In any case, bad faith should not be imputed to Daniel in carrying out the consent between him and Ruth, because he refuses to give his consent to the continuation of the procedure.

11.          I have not been persuaded that there is anything that justifies, in the circumstances of this case, a deviation from this result. I have not been persuaded that the parties agreed that the procedure would continue even if Ruth and Daniel ceased to be a couple. I have not been persuaded that Daniel made any representation that he agreed to the continuation of the procedure even if the relationship between the two would collapse. In any event, I have not been persuaded that there was any reliance, or reasonable reliance, by Ruth on such a representation. The procedure is a joint one. As such it requires, as explained above, the consent of each of the spouses at each of the stages.

12.          Indeed, Ruth‟s case arouses sympathy. Her distress is sincere and genuine. But this is insufficient to reverse the consent between the parties. It is insufficient to justify a retrospective change of the rules of the game which, in my opinion, the parties took upon themselves when they started out. It is also  insufficient  to  give  Ruth  a  constitutional  right,  which  requires  the

 

 

granting of relief against third parties for its realization. In this regard, I agree with the analysis in the decision of my colleague, Justice Strasberg-Cohen. I therefore do not agree with the result reached by the majority opinion in this proceeding. In my opinion, Ruth does not have any cause of action that requires the ova to be delivered to her for the purpose of continuing the procedure.

13.          Before concluding, I would like to make an additional remark. This case raises a difficulty. In cases of this sort, there is a temptation to try and adapt the result to the special set of circumstances under discussion, in order not to cause an injustice according to one viewpoint or another. I believe that the court has a duty to resist this temptation. It must ascertain the law and decide accordingly. Therefore, I have tried to ascertain what is the legal result required in all those cases where the couple agreed on a procedure of in-vitro fertilization without making any express stipulation as to the result if one of them is not prepared to continue the procedure. When I reached the conclusion that there is a legal solution to this problem, as I have sought to clarify above, this solution should apply in our case, even if its result is inconsistent with Ruth‟s expectations, and the situation in which she finds herself arouses sympathy.

In my opinion, the correct way of dealing with this kind of problem is not to create a special law intended to solve the particular distress of a specific litigant, even if it is sincere and genuine. This was discussed by Justice Netanyahu in CA 248/86 Estate of Lily Hananshwili v. Rotem Insurance Co. Ltd [41] at p. 558:

„A legal norm must be built on a correct logical legal analysis, while exercising legal policy considerations that will achieve the desired result in most cases. It cannot be determined according to its results in a particular case. Such a norm gives rise to the well-known saying that hard cases make bad law.‟

In a similar vein, see the remarks of Justice Witkon in CA 840/75 Jewish National Fund v. Tevel [42], at page 549; and also the remarks of Justice Y. Cohen in CA 555/71 Amsterdramer v. Moskovitz [43], at pp. 799-800.

I agree with these remarks.

 

 

Consequently, were my opinion accepted, the petition for a further hearing would be denied, and the judgment of the court in CA 5587/93* would be upheld.

 

Justice I. Zamir

On just law

1.            „Alas for me because of my Maker and alas for me because of my inclination.‟ „My Maker‟ is the law, for the court was only established, and only exists, by virtue of the law, and it knows no allegiance other than to the law. „My inclination‟ is justice, for the court wants, with all its soul and might, to do justice. Woe to the judge who administers law without justice, and woe to him if he administers justice without the law. Happy is the judge who administers the law with justice. Indeed, usually the law leads the judge to justice, but if the law and justice do not go hand in hand, the judge may bend the law in the direction of justice, in so far as possible, until they meet.

It happens to a judge that the law and justice struggle within him, each pulling in different directions, and he cannot reconcile one with the other. In such a case, no matter how difficult it is for him, he must not allow his

„inclination‟ to override his „Maker‟. This is the case because the oath of the judge, before it commands him to dispense just law, requires him to keep faith with the laws of the State. See the Basic Law: Administration of Justice, in section 6. Moreover, without law, ultimately there is no true justice.

Therefore, a judge should never jump from the facts to justice, as if there were no law between them. Justice has its place. But it must be based on a foundation of law.

2.            Indeed, there are matters that it is better to decide according to justice, or emotion, or values outside the law, and not according to the law. These often include family matters, such as the relationship between husband and wife, or matters of religious or other faith, and even political matters, such as agreements between parties. It would be best if these matters never came before the court, but were decided within the family, or between a person and his Rabbi, or at the ballot box on election day.

But even these matters may find their way to the court. If such a matter comes before the court, it has two options, according to the nature of the

 

 

 

*             IsrSC 49(1) 485; [1995-6] IsrLR 1.

 

 

case: first, to dismiss the matter in limine, without considering the matter on its merits; second, to consider and decide the matter on its merits.

The court is likely to dismiss the matter in limine if it is unsuited or unlikely to be resolved by the law. Such a case is the famous example of an invitation, for reasons of friendship, to dinner. The same is true of various intimate matters that are resolved between spouses by means of an understanding or consent that has no legal status. In such a case, the court will dismiss the plaintiff from the court, even if justice is clearly on his side, because he has no cause of action in law or because  the matter is  not justiciable.

But this is not necessarily the case. Even complex and emotional matters, in the personal sphere or in any other sphere, including the most intimate matters, may adopt a legal form. Then the court must consider the matter and decide it on the merits: a breach of promise of marriage, custody, education or adoption of children, etc.. When the court considers and decides such a matter, obviously it does not decide it as if it were a marriage counsellor, a religious teacher or a political leader. If it is compelled to decide such a matter, it must decide it as a court, i.e., by dispensing just law. First of all, there is law.

3.            This is also the position in the Nahmani case. There is no doubt that this case arouses problems and difficulties in the spheres of emotion, morality, philosophy, and other spheres outside the law. There is also no doubt that it would have been preferable if this case had been resolved by agreement between Daniel and Ruth, and even if they did not reach an agreement on the merits of the case, if they agreed to settle the dispute in another way, out of court. But this was not how matters developed, and the case came before the court.

Once the case reached the court, it was obliged to decide first if it was prepared to consider it on its merits. The fact that the matter is loaded with emotion and involves important and difficult questions that are outside the law is insufficient for dismissing it. The court is used to cases such as these. The crucial question is, whether the relationship between Ruth and Daniel is a legal relationship.

In principle, it is possible that a couple will agree to bring a child into the world, naturally or by another means, but the consent will not amount to an agreement in law. In such a case, should one of the spouses file an action in court against the other, claiming that he is not upholding the agreement, the

 

 

court will have to rule that the plaintiff has no cause of action in law or that the matter is not justiciable. The action is dismissed, even though it is possible that the plaintiff suffers an injustice, and it is possible that he may also have no redress out of court. But the court is not supposed, nor even is it able, to cure all ills.

But the court did not think this way in the Nahmani case. It agreed to consider the claim and to decide it on the merits. This implies that it thought that the matter is justiciable. If so, the court must decide it in accordance with a legal norm. It cannot say in the same breath that the matter is justiciable and that there is no legal norm for adjudicating it, and therefore it is possible, in the absence of any other choice, to resort to justice. This case must be decided, like every other justiciable case, according to the law, and justice must be done within the framework of the law.

If so, what is the law that applies in this case?

4.            It may be that there is no law, statute or precedent, which gives an express answer to the matter being considered by the court. But even in such a situation, the court does not stare blankly into a normative vacuum. The courtroom is full of legal norms. Even if there is no express norm that applies to the case under consideration, there is certainly an implied norm. The court must seek its path in order to reach this norm, and, if necessary, to adapt it or develop it as required. Jurisprudence guides it on its way and gives it tools in order to determine the law, and even to develop the law from within the law.

The main path is outlined in the Foundations of Justice Law. This path, according to section 1 of this law, is as follows:

„If the court identifies a question of law that requires a decision, and it does not find an answer to it in statute, case-law or by way of an analogy, it shall decide it in the light of the principles of liberty, justice, equity and peace of Jewish heritage.‟

The court is required to take this path, from legislation to precedent, and if it does not find an answer in either of these, it must go on to analogy, and if there too no answer is found, it must go on to the principles of liberty, justice, equity and peace of Jewish heritage. From a practical viewpoint, and maybe even from a theoretical viewpoint, it is inconceivable that the court will not find a legal norm somewhere along this path. In any case, the court is not entitled to say, before it has traversed the whole length of this path, that there is no legal norm in the matter under consideration, and therefore it is entitled to decide that matter according to justice.

 

 

It would not have been necessary to say this, since it is well-known, were it not to appear that it has almost been forgotten by some of the judges in the Nahmani case.

5.            In the Nahmani case, had the court followed the main path outlined in the Foundations of Justice Law, it could not have jumped straight to justice before it enquired properly and determined that there is no answer either in legislation or in precedent, or in analogy, or even in the principles of liberty, justice, equity and peace of Jewish heritage. But some of the judges did not take this path, nor did they stop at any of these points along the way, not even the last, which is Jewish heritage. Admittedly there were judges who mentioned some words of Jewish law, pointing in one direction or the other. All of these are the words of the living God. But they were not mentioned as legal principles that determine the case, but merely in order to derive inspiration, as if they were a scholarly opinion.

Is the conclusion that all along this path there is no legal norm that provides an answer to the Nahmani case, so that it is necessary to make a jump straight to justice? No. There is even no need to go as far along the path, in searching for a legal norm, as Jewish heritage, nor even as far as analogy. The Nahmani case abounds in  legal norms from the first step; regulations on one side and an agreement on the other; the right to be a parent against the right not to be a parent; reliance and estoppel; and more. This is the raw material that the court regularly uses to solve disputes and to construct its judgments. It should be used also in this case. This is the path and obligation of the court, before it reaches the question whether the solution that arises from the law also does justice.

Justice Strasberg-Cohen followed this path when she wrote the majority opinion at the appeal stage of the Nahmani case. I therefore agreed with her path, and together with her I reached the conclusion that the law — first of all, the law — sides with Daniel Nahmani.

I have now read the opinions in the further hearing, which have changed the majority opinion in the appeal into the minority opinion in this hearing. I have not been persuaded. First and foremost, I have not found in them any answers to the legal problems that arise in this case, and at any rate I have not found in them answers that are better than the answers given by Justice Strasberg-Cohen. I have also not been persuaded that justice tips the scales, notwithstanding the law, in favour of Ruth Nahmani. Therefore I remain on the path that I took and I stand by the result that I reached.

 

 

My path is close, but not identical, to the path of Justice Strasberg-Cohen.

I will present it briefly: first — the law; afterwards — justice.

On the law

6.            The legal path in this case is long and arduous. In order to facilitate our progress, I will first present the general direction of the path. Afterwards, I will present it in detail, stage by stage.

The fertilization procedure involving Ruth and Daniel was carried out by the hospital under the Public Health (in-vitro Fertilization) Regulations (hereafter — the Fertilization Regulations). Ruth asked to receive the fertilized ova from the hospital in order to continue the procedure and to implant them in a surrogate mother. But under the Regulations, the husband‟s consent to the fertilization is insufficient; his consent is also required for the implantation. Daniel notified the hospital that he is opposed to the implantation. Therefore the hospital refused to give the ova to Ruth. For lack of any other option, Ruth sued Daniel in court. The central question in the suit was whether Daniel originally agreed also that implantation would be carried out even if Daniel and Ruth were to separate from each other. The answer, in my opinion, is no. Another question is whether Daniel, even though he opposes the implantation, is estopped from arguing this. In my opinion, the answer to this question is also no. The result is that Ruth has no cause of action to force Daniel in court to give his consent to the implantation or to refrain from opposing the implantation. If so, under the law the court must dismiss Ruth‟s action against Daniel, and the hospital is not entitled to give Ruth the fertilized ova, unless and until Daniel agrees to this.

Now I will go into detail.

7.            The first step on the legal path leads to legislation. In-vitro fertilization is now regulated, in part, by the Surrogacy Agreements (Approval of Agreement and Status of the Child) Law. But this law, which regulates in- vitro fertilization vis-à-vis a surrogate mother, did not yet exist when the dispute between Ruth and Daniel began, nor even when the matter came before the court that tried the dispute between them, whether in the District Court or in the appeal before this court. Nonetheless, this law is relevant also to the dispute between Ruth and Daniel, and the court should not ignore it. But everything has its proper place, and I should not begin at the end.

8.            About five years ago, when Ruth and Daniel began the fertility procedure, in-vitro fertilization was governed by the Fertilization Regulations.  These  regulations  do  not  regulate  the  relationship  between

 

 

spouses wishing to carry out in-vitro fertilization in a hospital, but the role of the hospital in carrying out such a fertilization, including the relationship between the hospital and the couple. Under regulation 2(a) of these regulations, in-vitro fertilization may be carried out „only in a recognized ward and pursuant to the provisions of these regulations‟. There is no dispute that the fertilization of Ruth‟s ova with Daniel‟s sperm was carried out by Assuta Hospital under the Fertilization Regulations.

Incidentally, it should be said that the Fertilization Regulations, in their original version, stated (in regulation 11) that a fertilized ovum may only be implanted in the woman who will be the child‟s mother. In other words, these regulations prohibited implantation of an ovum in a surrogate mother. But this court held that this provision was void. See HCJ 5087/94 [44]. This means that the Fertilization Regulations regulate in-vitro fertilization also for implantation in a surrogate mother.

Under the Fertilization Regulations, Ruth and Daniel could not  have begun the fertilization procedure at the hospital without their joint consent. The consent was duly given. But it is questionable whether under these regulations the consent is required only at the first stage of the procedure, which is the fertilization stage, or whether it is also required at the second stage, which is the implantation stage. This question is of critical importance in the Nahmani case, for it is clear that Daniel gave his consent to the fertilization, whereas he now opposes the implantation.

The question arose before the District Court that considered the Nahmani case. Daniel argued that under the regulations, his consent is required also for the implantation of the fertilized ova. The Attorney-General, who was summoned by the court to join the action as the party representing the public interest, supported Daniel‟s argument. But the District Court (Justice Ariel) held that both Daniel and the Attorney-General were mistaken: in its opinion, the regulations provide that for a married woman the husband‟s consent is only required for fertilization of the ovum, and no further consent of the husband is needed for implantation of the ovum. See OM (Hf) 599/92.*

I do not agree. Admittedly, under regulation 3 of the Fertilization Regulations, removal of the ovum may be done solely for the purpose of in- vitro fertilization and implantation after the fertilization. From  this it is possible to deduce that anyone who gave his consent to fertilization also agreed  to  implantation.  Notwithstanding,  the  regulations  do  not  merely

 

 

*             IsrDC 5754(1) 142, 153.

 

 

require consent to the fertilization itself at the start of the procedure. The procedure of having a child by in-vitro fertilization is so complex and sensitive that the regulations insist upon requiring informed and express consent of the husband at each stage of this procedure, including consent to implantation. Regulation 14 of the regulations states as follows:

„(a) Every act involved in in-vitro fertilization as stated in regulation 2 shall be performed only after the doctor in charge has explained to each of those involved the significance and the consequences that may follow from it, and has received informed consent of each of them separately.

(b)          Every act involved in in-vitro fertilization of a married woman shall be performed only after receiving the consent of her husband.

(c)           Consent under these regulations —

(1)          shall not be given for a specific person or for a specific matter;

(2)          shall be given in writing and in the presence of a doctor, provided that the consent of a married couple shall be given on one document.‟

It follows that under the regulations „every act‟ involving in-vitro fertilization „as stated in regulation 2‟ requires „informed consent‟ of the husband „on one document‟. And what is an act involving in-vitro fertilization as stated in regulation 2? Regulation 2(a) gives the following answer:

„A person may remove an ovum from a woman‟s body, fertilize it, freeze or implant a fertilized ovum in a woman‟s body only in a recognized ward and pursuant to the provisions of these regulations.‟

It follows then that in-vitro fertilization comprises several actions, including implantation, and each of these actions requires the husband‟s consent.

9.            If so, how did the District Court hold that the consent of the husband to the actual fertilization is sufficient, and there is no further need for his consent to the implantation? The District Court relied on clause 8(b)(3) of the regulations, which states:

 

 

„If the woman in whom the ovum is supposed to be implanted is divorced, and the ovum were fertilized with the sperm of her husband before her divorce — the ovum shall only be implanted in her after receiving the consent of her former husband.‟

The District Court made a negative inference from the positive one. It is only with regard to a divorced woman that regulation 8(b)(3) makes the express condition that the consent of the former husband is required. It follows, according to the District Court, that no such consent is required for a married woman. And this is the important point in this case: although Ruth and Daniel live separately, they are still married to one another.

But this is wrong. Regulation 14 requires the husband‟s consent for every act throughout the procedure. This is clear and simple. Nonetheless, it was still necessary to add regulation 8, which deals with the procedure for unmarried women: an unmarried woman (regulation 8(b)(1)), a widow (regulation 8(b)(2) and a divorcee (regulation 8(c)(3)). For a divorcee it was necessary to add regulation 8(b(3), and regulation 14 was insufficient, since regulation 14 requires the consent of the husband, whereas clause 8(b)(3) is intended to add the consent of the former husband.

The District Court presents the husband as if he disappears from the picture after fertilization: the husband has done his job; the husband is free to go. What business is it of his to interfere at the implantation stage and to try to prevent the continuation of the procedure? Not only this. The District Court also says that —

„There is a danger in the position that requires additional consent of  the husband  in  cases of  a dispute between them (including a dispute before divorce), as this would give preference to the husband and may lead to major discrimination against the wife…

The consent is required once, and cannot be changed according to this or that passing whim.‟

But under the regulations, the husband stays in the picture. This can be seen not only from regulation 14, which requires the husband‟s consent for every act, but also from regulation 9. This regulation states as follows:

„(a) An ovum, including a fertilized ovum, may be frozen for a period not exceeding five years.

 

 

(b) If a written request is received to extend the freezing period, signed by the woman from whose body it was taken and her husband, and approved by the signature of the doctor in charge, the hospital may extend the freezing period by another five years.‟

It is therefore clear that under the regulations, the husband‟s consent (under regulation 14(c) — written consent in the presence of a doctor) is required, for the purpose of continuing the procedure, five years after the ovum was frozen. It is required even for continuing the freezing. Is it reasonable to say that it is not needed for the implantation? It is required also when the couple is living together harmoniously. Is it reasonable to say that it is not needed when the couple are living apart and there is no peace between them? Just imagine: for five years after the freezing, the husband supposedly does not exist, is like a ghost, and the wife is entitled to take the ova from the hospital unilaterally in order to implant them in another woman at her choice. Time passes, and suddenly the husband is once again important, and it is even impossible to extend the freezing period without his consent! There is no logic in this. Indeed, in my opinion, the husband should not be said to have done his job when he gave his sperm for fertilizing the ovum, and now he is free to go. Such a statement is inconsistent with the Regulations, does not befit the idea of partnership in having children, and is unfair to the husband.

10.          The question whether the husband  must  give  his consent  to implantation was also answered, recently, in the Surrogacy Agreements (Approval of Agreement and Status of the Child) Law. This law regulates the implantation of fertilized ova in a surrogate mother. In this respect the law concerns the case before us, because the fertilization of Ruth‟s ova with Daniel‟s sperm was done for the purpose of implanting the ova in a surrogate mother. The law was enacted only after the fertilization, and it cannot be applied retroactively to the fertilization that was carried out in this case. Nonetheless, the law now allows, for the first time, the implantation of fertilized ova in Israel. This is apparently a possibility from Ruth‟s perspective for various reasons, inter alia because the institute in the United States, with which Ruth and Daniel originally entered into a contract, requires the consent of both of them for an implantation. But the implantation in Israel, under this law, can only be performed (under section 7), inter alia, in accordance with a surrogacy agreement made and approved under this law. The law stipulates various requirements for such an agreement before it is approved. Inter alia, a „written agreement‟ must be made (under section 2)

 

 

between the surrogate mother and the prospective parents. In other words, the signature of the husband is required on the agreement, before the special approvals committee, of his own free will and after understanding the significance and the consequences of the consent (under section 5).

I am not making these remarks to say that, from a practical viewpoint, Ruth cannot carry out the implantation  in Israel under this law without Daniel‟s consent, but to show the policy of the statute, which is now the policy of the principal legislator and not merely of the subordinate legislator. According to this policy, the express and informed consent of the husband is required for the implantation, including the identity of the surrogate mother. It is inconsistent with the policy of the statute that Ruth can receive the fertilized ova and deliver them for implantation in a surrogate mother without Daniel‟s consent.

The court strives to create harmony in the legal system. This is a guiding principle in the interpretation of legislation. Interpretation tries to prevent a conflict between two statutes or between a statute and regulations. Therefore, if the new statute requires the husband‟s consent for implantation, it is not desirable to interpret the regulations (or to develop the law) in a way that makes the husband‟s consent unnecessary.

Incidentally, I would also like to raise the question whether, under the Surrogacy (Approval of Agreement and Status of the Child) Law, a woman may carry out in-vitro fertilization in Israel and then perform the implantation of the fertilized ova in a surrogate mother outside Israel, other than under the terms of the statute. Section 7 of the Law states that „In-vitro fertilization and implantation of a fertilized ovum shall be carried out only in a recognized ward and on the basis of a surrogacy agreement that was approved as stated‟. According to the language of the law, it appears that even the first stage of in- vitro fertilization should be performed only on the basis of an agreement under the law. And the law, as stated, provides various requirements for such an agreement: consent of the husband to performance of the implantation in a specific woman who is of the same faith as the prospective mother, provided that the agreement does not contain terms that harm the rights of the child that will be born, etc.. This leads to the question: is the prospective mother entitled to carry out in-vitro fertilization in Israel and afterwards, by means of implantation outside Israel, to bypass all the terms that the statute prescribes for the purpose of implantation? But this question was not argued before us, and therefore it should be left undecided. For the purposes of the case before us, it is sufficient to say once again that the new statute does not allow

 

 

implantation to be carried out without the informed consent of the husband to implantation in a specific woman.

11.          Assuta hospital was sued by Ruth to deliver to her the ova fertilized with Daniel‟s sperm for the purpose of implantation in a surrogate mother. However, as stated, the release of the ova from the hospital for implantation is, under the regulations, an act that required Daniel‟s consent. Without consent, the hospital was prohibited from delivering the ova to Ruth. Therefore it refused, and rightly so.

Moreover, the need for Daniel‟s consent to carry out implantation derives not only from the regulations, but also from private law. This is because the fertilized ova do not belong solely to Ruth nor solely to Daniel. After all, each of them gave of himself to the hospital to create the fertilized ova. The hospital received Ruth‟s ova and Daniel‟s sperm under an agreement between Daniel and Ruth on one side and the hospital on the other. Under this agreement, the hospital may not deliver the ova to one of them against the wishes of the other. Let us assume, for example, that Daniel pre-empted Ruth and contacted the hospital first to receive the ova for some reason, whether to transfer them for implantation unilaterally, or to destroy them, or for some other purpose. It is clear, in my opinion, that the hospital would not have been permitted, if only because of the tripartite agreement between Ruth, Daniel and the hospital, to deliver them to Daniel against Ruth‟s wishes.

In any case, whether under the regulations or under the agreement, Ruth is unable to receive the fertilized ova from the hospital without Daniel‟s consent, and Daniel objects. She has no choice: she must present to the hospital Daniel‟s consent or, alternatively, a judgment exempting her, or the hospital, from the need for consent. Consequently, Ruth filed the action against Daniel and against the hospital in the District Court. In practice the action is not against the hospital, since both the regulations and the agreement with the couple prevent it from delivering the ova without Daniel‟s consent, and therefore the hospital is in practice merely a formal defendant. For this reason, the action is not based on the Fertilization Regulations. These regulations lie in the background only as an explanation for the claim: it is they that forced Ruth to sue Daniel. The real claim is against Daniel, in order to establish that he consented, or to compel him to consent, and this action is not based on the Fertilization Regulations, but on the relationship between Ruth and Daniel: in the relationship between him and her, does Ruth have a cause of action against Daniel?

 

 

12.          First, does the right of parenthood give Ruth a cause of action against Daniel? Ruth has a right to be a parent. No one disputes this. The right to be a parent is a basic right. There is no dispute on this. But this is not enough. For the right to be a parent is, by its nature, a liberty, i.e., a negative right. Therefore, the right to be a parent is insufficient to support a court action of a wife against her husband, or against another man, for him to do an act in order to convert the right from theory into practice. The court may oblige a particular man to perform an act to realize the parenthood of a particular woman only if that man has a duty towards that woman: a statutory duty, an agreement, or a duty deriving from another legal source. It follows that in order to find Daniel liable towards Ruth, it is insufficient that Ruth has a right vis-à-vis society, but she also needs to have a cause of action against Daniel.

Indeed, it is an interesting and difficult question, how important is the right to be a parent, and is it more important than the right not to be a parent. But, in my opinion, it has no significance within the framework of the Ruth‟s claim against Daniel. For the purpose of this case we can assume that Ruth‟s right to be a parent is much more important than Daniel‟s right not to be a parent. This is still insufficient to impose a duty on Daniel to do an act that will allow Ruth to exercise her right of parenthood.

Imagine that A sues B for money in the name of the right to life. A will not succeed in the action, although the right to life is ten times more important than B‟s right to the money, unless he can prove that B has a duty in law to give A money.

Consequently, for Ruth to succeed in the action she filed in court, she needs to have a cause of action against Daniel. She does not have a cause of action founded in legislation, since there is no legislation that imposes on Daniel a duty to consent to implantation. Therefore the question is whether she has a cause of action against Daniel by virtue of an agreement.

13.          A preliminary question is whether an agreement between a husband and wife regarding implantation of fertilized ova in a surrogate mother is a legal agreement that can impose a legal duty on the husband. There is a view that agreements between spouses while they are living together are not legal agreements. Indeed, that may be so, but it is not necessarily so. It depends on the circumstances of each case. There is no doubt that business agreements between spouses can be contracts in all respects. And not only agreements of this sort. The law recognizes a contractual claim for breach of promise of marriage. Why, then, should it not recognize other agreements between spouses, according to the subject-matter and the circumstances of each case?

 

 

In this case, I believe that the circumstances show that the agreement made between Ruth and Daniel is a legal agreement. Regulation 14 of the Fertilization Regulations requires „informed consent‟ of each of the spouses,

„after the doctor in charge has explained to each of those involved the significance and the consequences that may follow from it‟, and it further states that the consent „shall be given in writing and in the presence of a doctor, provided that the consent of a married couple shall be given on one document‟. This, it can be said, is a strong consent, like a contract which statute requires to be in writing. Moreover, it is like a contract that must be signed before a notary. In any case, there is no doubt that this consent has a legal consequence in the field of the relationship between the spouses and the hospital: on the basis of this consent, the hospital may perform the fertilization. In my opinion, this consent also has a legal consequence in the field of the relationship between the spouses inter se. The spouses agreed between themselves to cooperate in the fertilization procedure already before they signed the document in the presence of the doctor. It may be that the consent between the spouses had, at this stage, not yet crystallized into a legal agreement. But it is clear to me that, at the latest, when the consent of the spouses found expression in the signature of both of them on one document, after they received from the doctor an explanation of the significance and the consequences that might result from the consent, a legal agreement was created between them. This agreement is a contract. It may be called, as Justice Strasberg-Cohen calls it, a weak contract. It may also be called, as I prefer, a special contract. Either way, the consent of Ruth and Daniel on the document creates a contract, not only between Ruth and Daniel and the hospital, but also, in my opinion, between Ruth and Daniel inter se. This is a contract that was signed after serious consideration, with a genuine commitment and formality that left no doubt as to the seriousness of the occasion: on the basis of the contract, each one of the parties undertook to undergo medical treatment and both of them jointly signed a preliminary agreement with the institute in the United States for carrying out the implantation in a surrogate mother. I see no reason why the mutual consent of Ruth and Daniel should not have legal force. If Daniel had retracted his consent after the ova were removed from Ruth, but before fertilization, would Ruth not have had the right to sue him for damages for the suffering he caused her?

14.          Our conclusion, therefore, is that there is no legal vacuum in the relationship  between  Ruth  and  Daniel.  Therefore  there  is  no  basis  for

 

 

following the path of Justice Tal, i.e., the court developing the law in order to create a legal norm in the relationship between Ruth and Daniel. The norm already exists, and it fills the vacuum: the agreement between them is the law. If so, how can the court force itself into this intimate sphere, and determine by itself legal rules that regulate the relationship between the spouses as the court sees fit, while ignoring the agreement, and maybe even contrary to the agreement between the spouses? The intimate nature of this sphere and the autonomy of the spouses require the relationship between them to be regulated, in so far as possible, in consent between them inter se, without the intervention of an external party, be he the legislator or the court. It is therefore preferable  to give legal validity to the  agreement between the spouses, than to determine for them an arrangement that ignores the agreement. Even if the agreement between the spouses lacks legal validity, this too is law, because it means that they wanted the relationship between them to be regulated outside the field of law. If so, why should the court come and impose its will on their will?

15.          Because the consent between Ruth and Daniel regarding the fertilization, as expressed in the document signed by both of them, created a legally valid agreement, the question is whether Ruth has a cause of action against Daniel by virtue of the agreement.

Daniel and Ruth agreed between themselves to cooperate in a procedure of in-vitro fertilization. Daniel doubtless agreed to fertilization of Ruth‟s ovum with his sperm. But, under regulation 14 of the Fertilization Regulations, this consent is not enough. The husband‟s consent is required for every act involved in the fertilization, including the implantation. Thus we must ask whether Daniel agreed also to the implantation?

The question whether consent to  a procedure of in-vitro fertilization, under the Fertilization Regulations, also includes consent to implantation depends on the circumstances of the case, including the language of the consent. In the normal case, it can be presumed that a husband‟s consent to in-vitro fertilization applies to all the acts involved in the fertilization, including the implantation, since this is the purpose of the  fertilization. Indeed, this is what happened in the case before us. There is no dispute that Daniel‟s consent, when it was given, and in the circumstances at the time, i.e., in the circumstances where Ruth and Daniel were living together, was not limited to the fertilization stage, but referred to the whole procedure, including the implantation stage.

 

 

Nonetheless, even consent to the whole procedure can be qualified. Indeed, this is Daniel‟s argument against Ruth: that his consent, even though it applied to the whole procedure, was qualified. And what is the qualification? That Daniel agrees to begin the procedure, and to continue it until it ends, only on the condition that he and Ruth continue to live together as one family. If, however, matters change and the family breaks up, the consent will automatically expire.

Such a condition can be included in an agreement in an express provision. Let us assume that such a condition was expressly stated in the agreement between the couple when they signed the consent to the fertilization. In such a case, if the condition was fulfilled after fertilization, and the husband gave notice that his consent has expired, the wife would have no cause of action against the husband, and the hospital would have no consent, as required under the regulations, for fertilization.

The agreement between Daniel and Ruth does not contain any such express condition. However, such a condition need not be express. It can also be implied. In order to determine whether there is an implied condition, we must interpret the agreement. The interpretation must be done pursuant to section 25 of the Contracts (General  Part) Law, in accordance  with the intentions of the parties, as is evident from the contract, and to the extent that it is not evident therefrom — from the circumstances. Here Justice Strasberg- Cohen and Justice Tal differ. Justice Strasberg-Cohen relies on statements of Ruth and Daniel written in the court record in order to determine that there was no consent between them with regard to the continuation of the procedure if and when they separated from one another. By contrast, Justice Tal says that we cannot know with certainty what Ruth and Daniel thought at the start of the procedure with regard to the possibility that they might separate before the procedure was completed. Therefore, he tries to establish the presumed intention of Ruth and Daniel, and is even prepared, alternatively, to give the agreement an imputed intention. Either way, he reaches the conclusion that the intention of the parties was that even in the event of separation, Daniel would not have a right to prevent the continuation of the procedure.

I disagree with this conclusion. In my opinion, human experience and common sense say that had we asked Daniel at the start of the procedure whether he would be prepared to continue and complete the procedure of having a child in all circumstances and without any conditions, and even were he to discover new facts or were new circumstances to occur, his

 

 

response would have been no. For it is possible to imagine  new circumstances in which having the child or raising the child would be very difficult, for the child or for the parents. For example, if we take an extreme example, it can be imagined that new facts might suddenly be discovered, which raise a real fear that the child who will be born will suffer from a serious genetic defect; or it is possible that one of the spouses may suddenly discover new details about the other spouse which, had they been known previously, would have prevented any relationship between them. Would the consent to fertilization, even in such cases, necessarily include, without any means of revocation, also consent to implantation? And is this so even if the consent to fertilization was obtained by fraud? But we do not need to go to extremes. Let us assume that before the procedure began, Daniel was asked as follows: if during the procedure, but before implantation of an ovum, a serious dispute will break out between you and Ruth, which will lead you to a complete separation and serious animosity, would you, even in such a situation, consent to implantation of the ovum, which would make you and Ruth joint parents of a child? In my opinion, Daniel‟s answer, as a reasonable person, would be no. And if he were asked before the start of the procedure as follows: assume that after you separate from Ruth, as a result of a serious dispute of this kind, you establish a new family for yourself and even have a child of your own with your new partner. Would you consent to implantation of the ovum, notwithstanding all this? Again, in my opinion, Daniel‟s answer would be: no and no.

Moreover, even if there remained a doubt about Daniel‟s answer, this is not enough to fulfil the requirement for consent, neither under the regulations nor even under the agreement. Under the agreement, consent is required for the implantation, even in the event that the spouses have separated, and possible consent does not constitute consent. According to the regulations,

„informed consent‟ is required for every act involved in the fertilization, including for the act of implantation, after the doctor in charge has explained to each of those concerned „the significance and consequences that might follow from it‟. A doubt is insufficient: informed consent is required. On the evidence, there is no basis for saying that Daniel gave „informed consent‟ at the start of the procedure for the act of implantation, after an explanation as required, with an understanding of the significance and the consequences that might follow from the consent, even in a situation of a separation between the spouses.

 

 

As such, there is no need even to consider what were Ruth‟s intentions at the start of the procedure with regard to the continuation of the procedure in the event of separation. Let us assume that she thought and she wanted the procedure to continue even in the event of separation. Let us go further and assume that she would not have agreed to begin the procedure had she thought that the procedure would be stopped in the event of separation. This does not change anything. This is so because the consent of one spouse is insufficient; the consent of the other spouse is also needed. This is the case under the Fertilization Regulations: the hospital may not carry out any act with the ova at the wife‟s request unless it also has the consent of the husband for that act. The same is true also for the purpose of the litigation in the court: for Ruth to succeed in her action against Daniel, the consent of both parties is required, as in any contract. In the absence of Daniel‟s consent to implantation, and as stated no such consent has been proven, not even according to the intentions of the parties, Ruth has no cause of action against Daniel. Without a cause of action, the action collapses. Therefore, under the law the court must dismiss Ruth‟s action against Daniel in so far as it relies on the agreement between them.

16.          From a legal viewpoint, Ruth is left with only one claim against Daniel: that he is estopped from arguing that he does not consent to the implantation. Admittedly, estoppel is usually used by the defendant and not by the plaintiff; it is a shield and not a sword. But estoppel has developed in several countries, so that it can be used, albeit rarely, also as a cause of action, and this may also be the case in Israel. If so, and at least for the purposes of the case, Ruth should not be denied the possibility of raising estoppel as a cause of action against Daniel, i.e., to claim that Daniel is liable, by virtue of estoppel, to give his consent to implantation notwithstanding the separation.

The claim of estoppel was examined both by Justice Strasberg-Cohen and Justice Tal. I agree with the opinion of Justice Strasbourg-Cohen rather than that of Justice Tal, and I will explain in brief.

The claim of estoppel is based on a representation. Someone who claims estoppel must prove that another person made a representation, that he reasonably relied on the representation, that he did an act on the basis of that representation, and as a result adversely changed his position. Did the elements of estoppel exist in the case before us? Ruth must prove that Daniel made a representation to her that the fertilization procedure, including the implantation, would continue even if they separated from each other. Has it

 

 

been proved that Daniel made such a representation? In my opinion, the circumstances and factors that lead to the conclusion that Daniel did not consent to the continuation of the procedure in the event of separation, also lead to the conclusion that no such representation existed. Indeed, Justice Strasberg-Cohen says, on the basis of her examination of the evidence, that no factual basis was laid before the court from which one could conclude that Daniel did or said something from which Ruth could have understood that separation would not affect the procedure. Moreover, there is not even a factual basis from which one could conclude that Ruth did what she did in reliance on a representation by Daniel, and that had she been aware of the possibility that separation would stop the fertilization procedure, she would not have begun the procedure at all. Indeed, it is most likely that Ruth and Daniel did not consider the question of the continuation of the procedure in the event of separation or, at least, did not consider it as a real possibility. If so, there was in fact no representation on one side nor any reliance on the other. In any event, the representation and the reliance were not properly proved, not even as a defence argument, and certainly not as a cause of action. The conclusion is, in my opinion, that estoppel, in the circumstances of this case, cannot replace the consent required under the law.

In conclusion, no matter how important Ruth‟s right to parenthood is, and no matter how much distress she will suffer, under the law Ruth has no cause of action against Daniel.

And what about justice?

On justice

17.          Greek mythology described justice as a goddess, standing on a pedestal, with her eyes covered. This description, even if it was relevant in those days, is not suitable in the present. I imagine justice as a person searching for the proper path, wandering around with open eyes. He stands before a thick forest of innumerable legal rules, through which there is a main road, but from which side roads, paths and narrow tracks branch off. He must pass through the forest in order to reach his destination: just law. In order to reach it, he is prepared to leave the main road, to seek another path and follow also narrow tracks. But he cannot take a shortcut straight to his destination, without passing through the forest.

In this case, I have not tried to take a shortcut. I have followed the main road, although it was arduous, and have reached this conclusion: between Ruth and Daniel, the law is on Daniel‟s side. I suppose that another path

 

 

could have been chosen among the paths of the law, and that perhaps a different result could have been reached by that path. However, the important point in my opinion is that the court must follow one of the paths of the law. I concede that had I seen that the path was leading me to a result of injustice, I would have stopped along the way and sought out another path, from among the abundance of legal rules, that might lead me to a just result. Moreover, even at the end of the path I am still ready and prepared to look and see whether I have reached an unjust result. For if so, I am prepared to retrace my steps and start the journey over again in an attempt to reach a more just result. But have I really, in the result that I have reached, not dispensed just law?

No-one has a monopoly on justice. It has been said that justice to one person is injustice to another. Justice Strasberg-Cohen shows how many forms and shades of justice there are. No less than the paths of the law. In law, at least, there are pre-established rules, and even if they are sometimes obscure and flexible, they contain a large degree of objectivity. Justice, on the other hand, is an open field, in which everyone can go in whichever direction he sees fit, with a subjective viewpoint, without road markings and without signs. The direction that seems right to me is different from the direction that seems right to my colleagues. Does this mean that they are correct?

About five hundred years ago, the Lord Chancellor of England wished to free himself of the inflexibility of the common law, which not infrequently resulted in injustice, and he chose a new approach: equity. He took it upon himself to decide each case according to his sense of justice. And what did they say of him? That justice depends on the length of the Chancellor‟s foot. Each foot is a different length. What judge is prepared to declare that his foot, and only his foot, has the right length?

Naturally, this does not mean that for this reason the court may ignore justice. On the contrary: the court must consider justice in every case. But it must weigh justice, as it were, in the scales of law. Only in this way can just law be carried out.

18.          Even when the court considers justice, in itself, it must place it on the scales, since justice itself contains various elements and even conflicting directions, and the question is what has greater weight, as a rule or in a particular case.

First, we must distinguish between general justice and individual justice. General justice states that the interpretation or application of a particular

 

 

legal rule in a specific way will not lead to a just result in a class of cases, and therefore a different interpretation or application should be preferred. Individual justice states that the interpretation or application of a legal rule in a particular way will cause injustice in the special circumstances of a specific case, and therefore another path should be chosen. But general justice and individual justice do not necessarily lead in the same direction. It is possible that the path leading to general justice will cause injustice in the individual case, and vice versa. In such a case, the question is which prevails, general justice or individual justice?

In my opinion, it is not proper for the court to do justice in the concrete case before it, before examining and determining what general justice demands in that case. It is only after this that the court can and should consider individual justice, which is the justice of that person whose case the court is required to decide, as opposed to general justice, which is the justice of many others who may be affected by the decision of the court. In general, when there is a conflict between the individual and the public that cannot be reconciled, the public prevails. One should follow the majority. It is not just to do justice in one case if as a result an injustice will be done in many cases. Naturally, this rule also has exceptions, according to the circumstances and considerations in each case. Notwithstanding, no matter what case it is, it is not proper, in my opinion, to decide in favour of individual justice without first ascertaining what general justice says.

19.          What does general justice say? When trying to arrive at general justice, we must take into account the values of society, including values outside the law. Justice is one of the values, and harmony is required between all the values. Among the values, we should mention, in this context, the principle that having children is a matter for the autonomy of the individual, or, to be more precise, of the couple. They, and no others, must act in this sphere with consent and with equality. This is a reason for preventing the forcing of the will of one spouse on the other spouse, or preferring the will of one over the will of the other, by means of a State authority. If matters have gone wrong and there is no longer any consent between the spouses, there is no longer any basis for continuing the process. That is also what has happened here: the relationship has come undone. The common will has split: his will against her will. Should the court intervene and say that her will takes precedence over his will? The court usually avoids intervening in intimate matters, and it leaves them to the couple to sort out on their own, for better or

 

 

for worse. This is the accepted policy. This is also the proper policy. Has the court now decided to depart from this policy?

It is for this and additional considerations that a widespread opinion has developed amongst bodies that have examined this topic throughout the world, whereby in-vitro fertilization should not be performed, and this includes implantation, without existing and continuing consent of the two spouses. As Justice Strasberg-Cohen says —

„In most enlightened countries there can be seen an unambiguous approach that requires the informed consent of the two spouses to performing the fertilization procedure at each stage. Because in-vitro fertilization is a complex procedure that is carried out in stages which may extend over a period of time, if the relationship between the spouses is disrupted and they quarrel about the fate of the fertilized ova, the general tendency is to demand the consent of both parties for the continuation of the procedure.‟*

Have these countries chosen the path of injustice? The same has happened also in Israel. The Minister of Health and the Minister Justice appointed (in July 1991) a public-professional commission to examine the topic of in-vitro fertilization. The members of the commission were diverse and very distinguished: it was chaired by (ret.) Justice Shaul Aloni, and among its members were Rabbi Yisrael Lau, who at the time held the office of Chief Rabbi of Tel-Aviv, and the top specialists in the fields of medicine, philosophy, sociology, etc.. In the Report of the Professional Public Commission for Examining the Issue of In-vitro Fertilization (July 1994) the commission unanimously said, on p. 36:

„The Commission was of the opinion that giving permission for fertilization should not be regarded as consent to implantation, and there must be consent of both spouses to the implantation, for two reasons. First, having children when there is a dispute should not be encouraged. Second, the involvement of the father in making the decision should be encouraged.

The Commission considered another option, that in the absence of joint consent the matter would be referred to a multi- disciplinary statutory committee, which would be authorized to

 

 

 

*             IsrSC 49(1) 485, at p. 503; [1995-6] IsrLR 1, at p. 20.

 

 

approve exceptions to the fundamental requirement of ongoing consent. Notwithstanding, the Commission had difficulty in conceiving of considerations that would justify departing from the aforesaid principle. The Commission considered the possibility that the genetic mother or the genetic father would have no other way of realizing genetic parenthood. But giving permission to have a child in such a situation, without joint consent, means forcing fatherhood or motherhood, both from the legal viewpoint and from the emotional viewpoint, in that there will be a child who is born without their consent. The commission was of the opinion that a man or woman should not be forced to be a father or mother against their will, even if they initially consented to this… Therefore the commission recommends that in the absence of joint and continuing consent, no use should be made of the fertilized ova that were frozen until the end of the freezing period agreed by the spouses, but consent that was given at the beginning of the treatment shall be deemed to continue as long as neither of the spouses revokes it in writing‟.

Did this Commission also choose the path of injustice? And it was not only the Commission. The legislator chose this path. The Fertilization Regulations require the informed consent of the husband to every act involved in the fertilization, including the implantation. And now we have statute, namely the Surrogacy Agreements (Approval of Agreement and Status of the Child) Law, which says that there shall be no implantation without the informed consent of both spouses. Moreover, the Attorney- General, who was summoned by the court to submit arguments on behalf of the public, also expressed the opinion that implantation should not be performed without the consent of the prospective father. Are all of these perverting justice?

In my opinion, all those who require ongoing consent of both spouses as a condition for implantation, whether legislators or experts, are expressing the public interest, and therefore they reflect and serve general justice.

In summary, the legal result, whereby the law is on Daniel‟s side, is consistent with general justice.

20.          My fellow justices, who reached the opposite result, believe that this result is required by individual justice, i.e., by the special circumstances of the Nahmani case. But in my opinion, just as one can only arrive at justice by

 

 

way of the law, so too one can only arrive at individual justice by way of general justice. Individual justice does not exist in a vacuum. It must be considered against the law on one side, and general justice on the other. It is certainly possible that in a particular case, even if individual justice tends in one direction, the pan of the scales containing the law and general justice will tend in the opposite direction. In fact this is an everyday occurrence in every court.

In this case, I do not know for certain what individual justice in itself demands. But I do know this: individual justice for Ruth is not individual justice for Daniel. But am I able to weigh reliably one against the other and determine which weighs more? Indeed, there is no doubt that the medical treatment which Ruth underwent was much more difficult than the medical treatment that Daniel underwent. However, is the medical treatment that was carried out in the past the criterion that should decide the case, as opposed to, for example, the suffering of each party on an aggregate over time? But which of the parties will, on aggregate, suffer more? To this question I have no answer. At most, I can guess how I would feel and how much I would suffer were I in Daniel‟s position or in Ruth‟s position. But in doing so, I would not be doing individual justice, because I am not Daniel and I cannot know what he feels, and I am not Ruth and cannot know what she feels. In order to do individual justice, in a way that will compensate for personal suffering, I would need to enter into the hidden recesses of their personalities and the secrets of their souls. But I can not examine feelings and thoughts. Therefore I have no authoritative answer to the question which of them is more justified on the individual level.

In any event, even if I assume that individual justice tends more in Ruth‟s favour, I do not feel that the difference between Ruth‟s individual justice and Daniel‟s individual justice is so great that it should weigh the scales in favour of a result that is inconsistent with the law and even with general justice.

In principle, one should not depart from the main path of the law except in a case where it is clear that justice, in a proper balance between general justice and individual justice, requires us to follow a different path. This is not such a case.

Alas for me because of my Maker and alas for me because of my inclination? Not in this case. My Maker and my inclination do no conflict. I do not think that I am dispensing law whereas my colleagues, who have reached another result, are dispensing justice. I feel that I, according to my

 

 

approach, am dispensing just law. Therefore I agree wholeheartedly with the opinion of Justice Strasberg-Cohen that Ruth‟s petition should be denied.

 

 

 

 

 

President A. Barak

1.            I agree with the opinions of my colleagues, Justices Strasberg-Cohen, Zamir and Or. Like them, I too think that all decisions concerning the fertilized ova — as long as they are outside a woman‟s body — must be made with the joint consent of the spouses. In the absence of joint consent, there is no possibility at all of continuing the stages of the in-vitro fertilization procedure. This conclusion of mine reflects existing law. It is consistent with the requirements of justice. Law and justice go hand in hand. Underlying my opinion concerning law and justice there is a simple and basic proposition: parenthood is a singular and special status. It involves human existence. It involves duties and rights. It is built on a partnership. It is based on going hand in hand. It relies on love and mutual respect. When the partnership dissolves, when separation occurs, when the love and mutual respect disappear, the one and only basis that allows decisions with regard to the fertilized  ova disappears. Without  consent, there is no possibility of beginning the fertilization procedure. Without consent there is no possibility of continuing it. Indeed, there is no possibility of separating between the beginning of the procedure and its continuation. Each of its stages — in so far as it is done outside the woman‟s body — must have the consent of both parties. A unilateral action that continues the procedure of having children is not possible. There is no possibility of separating between one of the parties becoming a parent and the other party automatically becoming a parent. Indeed, we must remember: Ruth Nahmani is not merely asking to be a mother. Ruth Nahmani is asking to be the mother of the child of Daniel Nahmani. For this, the consent of Daniel Nahmani is needed. This consent is needed for the fertilization stage. This consent is needed — as long as the fertilized ovum is not in a woman‟s body — for every stage thereafter, because the parenthood of each of the parties — and the special status that it involves — ensues from the completion of all the stages.

2.            The conclusion that I have reached reflects, in my opinion, existing law. It is required from every possible legal perspective. From the constitutional viewpoint, of course, we recognize the constitutional liberty to be a parent or not to be a parent. This liberty derives from human dignity and the right to privacy. Therefore we recognize Ruth Nahmani‟s constitutional liberty to be a mother, just as we recognize Daniel Nahmani‟s constitutional liberty not to be a father. But Ruth Nahmani‟s constitutional liberty to be a mother does not lead to a constitutional right to be a mother to the child of

 

 

Daniel Nahmani. Therefore we do not have before us any conflict of the liberty to be a parent and the liberty not to be a parent. Just as it is inconceivable that — in the name of Ruth Nahmani‟s constitutional right to parenthood — we should impose a duty on Daniel Nahmani to deliver his sperm for the purposes of fertilization, so too it is inconceivable — in the name of Ruth Nahmani‟s constitutional right to parenthood — to impose a duty on Daniel Nahmani to deliver the fertilized ovum to a surrogate mother. Daniel‟s constitutional status with regard to his sperm is identical to Ruth‟s constitutional status with regard to the ovum. As long as the fertilized ovum is outside a woman‟s body, both of them have an identical constitutional status that requires the continuing consent of each of them. Consent in the past to one of the stages — such as fertilization of the ovum — cannot replace continuing consent, since the whole procedure is a continuing one, and it requires consent at every stage. Indeed, both from the biological viewpoint and from the constitutional viewpoint, there is no possibility of separating the various stages in the procedure of having children. They all require cooperation and consent. This conclusion is required also from the perspective of private law. Underlying the consent between the parties — whether we regard it as a contract, or whether we regard it as a non- contractual agreement, or whether we regard it as joint property or whether we regard it as a „legal phenomenon‟ of an unique kind — there is a basic premise of a joint life. When this basis is removed, the basis on which the relationship between the parties is removed. Had Daniel Nahmani been asked before beginning the fertilization procedure whether he would be prepared to continue it after separating from Ruth Nahmani, his reply would certainly have been no. This too, we may assume, would have been the reply of Ruth Nahmani. Admittedly, they did not consider this question, but the essence of the agreement (or the understanding) between them — an agreement to have a joint child — is based on this premise. This is the legitimate expectation of Ruth and Daniel Nahmani. This is the basis for any act with regard to the fertilized ova. This is the basis for their whole existence. This is the foundation of their parenthood. This is not a „one-family‟ parenthood. The sperm donor is not anonymous. This is joint parenthood in every respect. Indeed, in my opinion, should one of the parties waive ab initio the need for his consent at every stage of the procedure, this waiver would be contrary to public policy. Public policy requires that the procedure — which is an unique and intimate procedure, whose final outcome is the joint child of  the parties — should be born only as a result of joint consent „throughout the whole procedure‟.

 

 

3.            The need for the consent of each of the spouses at every stage is derived from the requirement of justice. Justice, in the context before us, means the realization of joint parenthood. There is no justice in forcing someone to be a parent against his will. Just as justice does not require one of the parties to a relationship to donate his genetic material in order to realize the desire of the other party for parenthood, so too justice does not demand that the only one of the parties should have control over the fertilized ovum. Justice demands equality in the power to make decisions concerning joint parenthood. This is the just decision in the circumstances of the case. Would justice be different if Ruth Nahmani had children of her own (from a previous marriage) and Daniel Nahmani had no children at all? Would justice be different if it transpires — as may very well be the case — that Ruth Nahmani has ova that can be fertilized by another male? Would justice be different if it transpired — and this is merely a hypothetical assumption — that additional ova were removed from Ruth Nahmani that have not yet been fertilized and they may be fertilized by another donor? And would justice be different if it transpired that Daniel Nahmani were seriously ill and the news that he would have a child and the need to care for it might cause him very serious harm? In my opinion, the answer to all these questions, and to many others, is that all these details do not affect the just solution. Justice is equality, and equality is giving a joint power of making decisions to the two parties. Let us assume, for example, that the roles were reversed, and that Daniel Nahmani was the one wanting to continue the fertilization procedure, and Ruth Nahmani was the one refusing to be the mother of their joint child. I suspect that were this the case that we were deciding, then Daniel Nahmani‟s application would be denied. We would say that motherhood should not be forced on a woman who does not want it; that motherhood is a relationship so intimate and natural that it should not be forced on a woman against her will; that just as a woman is entitled to make a decision with regard to the abortion of her child without her husband‟s consent, she is entitled to oppose the continuation of the fertilization procedure being carried out outside her body; that the cry of Ruth Nahmani — like the cry of our ancestress Rachel — „Give me children, else I die‟ (Genesis 30, 1 [8]) is no stronger than the cry of a woman „I cannot be the mother of Daniel‟s child, and if I will be, I will die‟; if we would indeed decide this way, this would indicate that in our deepest feelings we are not treating Daniel and Ruth equally and that justice is compromised. Indeed, I believe that it is not considerations of justice that support Ruth Nahmani‟s suit, but considerations of compassion. I accept that compassion and consideration of suffering are

 

 

important values that should be taken into account. But justice lies not in giving the power of making decisions to one spouse, but in recognizing the joint power of the spouses to decide the fate of the fertilized ovum. Having children is a matter too important, too experiential, too existential, to leave it, at any stage, to one party only. If we do not act accordingly, we will encounter situations that we will be unable to deal with normatively. What will we do, for example, if there is no consent as to the identity of the surrogate mother? What will we do if it transpires that there is a genetic defect — whether serious or not — and there is a recommendation not to continue the procedure of having the child for this reason? What will we do if it transpires that one of the spouses — say, Ruth Nahmani — is very ill to the extent that she cannot care for the child that will be born? What is the normative compass that will guide us? When will we consider the welfare of the child? Will we continue — and if so, to what stage — to give weight to Ruth Nahmani‟s expectations and the great suffering she has undergone in the past? I do not argue that these questions may not have proper answers. I am arguing that the just normative arrangement should be that the answer to all these questions lies in the joint will of the parties. This is the only will that started the procedure. This is the only will that can support its continuation. Without this will, and without a continuing partnership of the parties in the fateful decision that they made, there is no basis — from the viewpoint of justice — for continuing the procedure. Fertilization and creation ex nihilo is a procedure so existential, so natural, so great and powerful that only the continuing and day-to-day will of the parties can serve as a basis for it.

4.            I have discussed how, according to the law — the just law — continuing consent of each of the parties  is required for continuing the fertilization. Non-consent of one of the parties prevents the continuation of the procedure. Notwithstanding, non-consent — like every legal act — requires good faith. The court may determine that consent was given exists where the non-consent is not in good faith. Thus, for example, had it been proven to us that one of the parties — in this case Daniel Nahmani — wished to extort financial benefits as a condition for giving his consent, I would think that this could be regarded as bad faith. But in the case before us, is the non-consent of Daniel Nahmani not in good faith? In my opinion, the answer is — and so the trial court held — that Daniel Nahmani is acting in good faith. Good faith is an ethical objective concept. It is examined according to the conflicting values in the circumstances of the case. Daniel‟s non-consent should  be  examined  in  its  context.  We  are  dealing  with  an  intimate

 

 

relationship between the spouses. We are concerned with a relationship in which love, companionship, mutual respect, partnership and affection are an inseparable part. We are dealing with a relationship based on a continuing emotional bond. In these circumstances, the cooling of relations and severance of the emotional bond are part of the realities of life. Love and friendship cannot be attained by force. Mutual respect, cooperation and affection are emotional matters, which frequently are not governed by logic. Such is our life. This is the destiny that rules us. These are the risks of life. Every couple that marries, at every stage of their marriage, is aware of this possibility. The law provides various tools for solving such difficulties. A separation between spouses because of a rift between them is not a crime. The possibility of a rift occurring is an integral part of intimacy itself. Not giving consent because the feeling of love, companionship, mutual respect, partnership and affection has disappeared is not, in itself, bad faith. This is something that is done without any intention of harming the other party; this is something which is done without the aim of extorting something from the other party; this is something that happens between people who live together. This is the price of partnership in life. I am sorry for Ruth Nahmani, but just as Daniel Nahmani cannot be prevented from ending the relationship with her, and just as it cannot be said that for this reason alone he is acting in bad faith, he cannot be prevented — as part of ending the relationship — from refusing to give his consent to the continuation of the fertilization procedure, and it cannot be said that because of this he is not acting in good faith. Ending a relationship, the dying of love, are part of life itself, just like the creation of the relationship and igniting the spark of love.

5.            Before I conclude, I wish to point out that I have assumed that the fertilized ovum is not an „embryo‟; that it is at the „pre-embryonic‟ stage. As my colleague Justice Strasberg-Cohen, said, „We are not speaking of preserving life that has been created, but with the creation of life ex nihilo‟. We have therefore not considered at all the constitutional status of the embryo, and we have not considered the constitutional aspects from this perspective. The dilemma of life or no-life was not put before us. The only question that we have examined is the relationship between Ruth Nahmani‟s desire to be a mother of Daniel Nahmani‟s child, and Daniel Nahmani‟s opposition to this.

For these reasons, my opinion is that the petition should be denied.

 

 

Petition granted by majority opinion, President A. Barak and Justices T. Strasburg- Cohen, T. Or and I. Zamir dissenting.

28 Elul 5756

12 September 1996.

Safecom, Ltd. v. Raviv

Case/docket number: 
CA 7996/11
Date Decided: 
Monday, November 18, 2013
Decision Type: 
Appellate
Abstract: 

Facts: An appeal against the Haifa District Court's judgment dismissing the Appellants' claim against the Respondent for the infringement of its copyright in technical drawings. At trial, the Appellants argued that drawings used by the Respondent for the registration of a patent in the USA for a voltage backup system for cable systems (a product that competes with a product of the first Appellant (hereinafter referred to as "Safecom") infringe Safecom's copyright in the drawings of its products. There is no dispute that there was a previous business relationship between the Respondent and the Appellants, and the Respondent had access to the Appellants' drawings. The District Court held that Safecom's drawings did amount to a protected work, but in the instant case there had been no copying of Safecom's drawings, or a substantial part of them, and for that reason the claim was dismissed.

 

Held: The Supreme Court (per Justice Y. Danziger, Justices Z. Zylbertal and E. Rubinstein, concurring) granted the appeal and held:

 

The Court took a broad view of copyright law and stated that, under the precedents of this Court, copyright protection of a work requires that an original work is involved. This is established through the analysis of three subordinate elements – the origin criterion, the investment criterion, and the creativity criterion. The presence of just one element is not sufficient for the purpose of proving originality.

 

Another basic principle of copyright law is that the idea underlying a work will not be protected by copyright, and that protection is only afforded to the way in which the idea is expressed. This distinction between idea and expression in certain senses also overlaps the requirement of originality that underlies the copyright protection of works. This overlap is particularly relevant when functional works are involved.

 

In view of the distinction between idea and expression, the approach that has developed that states that when a particular idea can be expressed in only a single way, then a work expressing that idea will not be afforded protection. This approach has been called "the merger doctrine". When there is an absolute merger between the idea and its expression, and when there is only one way to express the idea, it is the accepted view that the work expressing that idea will not be granted copyright protection. However, opinions are divided on the question when there are just a few possibilities of expressing the idea. According to one approach, as held in the American case of Morrisey, copyright protection should not be granted in such a case, while according to another approach, the work will be granted copyright, but that copyright will only be infringed when there is absolute or almost absolute similarity between the works. This controversy is relevant in the instant case because the Respondent asserts that Safecom should have proven exact copying because its drawings constitute an idea that can only be expressed in limited ways. In the opinion of Justice Danziger, in order to decide this issue, reference may be made to the fundamental rule of copyright law presented above – the requirement of originality, in particular when the issue relates to functional works.

 

Functional works raise various difficulties at the stage of analyzing the requisite originality for copyright protection. However, once a functional work has met the originality requirement and the choice criterion, it is a protected work in all respects, substantial parts of which may not be copied.

 

According to the choice criterion, the intended function or purpose of the work should be ascertained, and an examination made as to whether the form of presenting that purpose – the expression – required that the creator choose from among several options that could have achieved the same purpose. When there is a solitary option to achieve that purpose, it is inappropriate to afford protection to that sole method of expression. However, when the creator has a choice among several options, copyright protection should not be denied to the chosen expression.

 

Even if only some of the elements that make up the functional work have passed the "choice filter", that does not prevent them from being work protected against copying. In the opinion of Justice Danziger, The only  consequence of a work being functional concerns the standard for the analysis of copying when the protected elements constitute an idea that can only be expressed in a limited number of ways..

In such a case, a higher threshold will be necessary to establish copying, and almost absolute similarity between the protected elements and the allegedly copied elements will be required in order to establish that substantial similarity.

 

Implementation of that approach in the instant case leads to the conclusion that certain elements of Safecom's drawings do constitute protected work.

 

The Court further held that whether Safecom's drawings in whole constitute a protected compilation, or whether some of the elements are protected separately as artistic work, the number of ways to give expression to a demonstration of the product's electrical process is limited. Nevertheless, even working on that assumption, it would appear from a comparison between Safecom's drawings and the respondent's drawings that 13 of the Respondent's drawings do amount to an identical (or at least almost identical) copy of the Safecom drawings. In this regard it was held, inter alia, that when substantial elements of the work do not gain copyright protection and remain in the public domain, then copying all those protected elements will attest to the copying of a substantial part of the work, a fortiori when there is absolute, or almost absolute, similarity. This is especially so since there is no dispute that the Respondent did have full access to Safecom's drawings. Since the Respondent chose to make exact use of Safecom's protected visual resources, he infringed its copyright in those elements.

 

The use that the Respondent made of the drawings does not amount to a permitted use. In this connection, Justice Danziger was of the opinion that the use of a work in accordance with the uses defined in chapter four of the new law as "permitted uses" does not constitute a contravention of the new law. Permitted use constitutes a right that is granted to the user to make certain types of use of a work (in view of the controversy in the case law in this respect, Justice Danziger is of the view that the time may have come for an extended bench to deliberate this issue). However, the Respondent’s use of Safecom's drawings and their presentation to the American Registrar of Patents for the purpose of the registration of a patent for a product that competes with Safecom's product, is not a permitted use under section 20 of the new law. That use also does not meet the standards that have been established for fair use, as defined in section 19 of the new law.

 

The case was remanded to the District Court for a decision upon the appropriate relief in respect of the infringements.

 

Justice E. Rubinstein, concurring, sought to add another criterion, that of common sense, namely the accumulation of all the overall facts before the court. When a work is involved, appearance is also acknowledged to be a significant parameter in intellectual property law. In the instant case, in preparing the file, when the bench looked at the drawings involved, the great similarity between the drawings was immediately conspicuous. Consequently, the foregoing result was obliged not only by common sense but also by the appearance. In conclusion, Justice Rubinstein refers to several of his  other opinions, in which he considered intellectual property rights in Jewish law.

Voting Justices: 
Primary Author
majority opinion
majority opinion
Author
concurrence
Full text of the opinion: 

In the Supreme Court

CA 7996/11

Sitting as a Court of Civil Appeals

 

 

 

Before:

Justice E. Rubinstein

Justice Y. Danziger

Justice Z. Zylbertal

 

 

 

The Appellants:

1. Safecom Ltd

2. David Zilberberg

 

v.

 

 

The Respondent:

Ofer Raviv

 

 

Appeal against the Haifa District Court's judgment of August 28, 2011 in CF 542-04-09, given by His Honor Judge Dr. A. Zarnakin

 

 

Date of session:

Cheshvan 6, 5774 (October 10, 2013)

 

 

On behalf of the Appellants:

Adv. Nahum Gabrieli

 

 

On behalf of the Respondent:

Adv. Tamir Afori

 

 

     

JUDGMENT

 

Justice Y. Danziger

 

This is an appeal of the judgment of the Haifa District Court (His Honor Judge Dr. A. Zarnakin) of August 28, 2011 in CF 542-09-09, dismissing the Appellants' claim against the Respondent for the infringement of copyright in their technical drawings.

 

Factual Background

 

1.         Appellant 1, Safecom Ltd (hereinafter: "Safecom"), develops and markets products for the electrical backup of cable TV broadcasting systems, and the Appellant 2, David Zilberberg (hereinafter: "Zilberberg") is its manager and one of its shareholders. Zilberberg became acquainted with the Respondent when the latter sought to market Safecom's products to a company for which he worked, and he also connected Zilberberg to an American company, Innovative Solutions 21, Inc. (hereinafter: "the American company"), which led to the marketing of Safecom products in the USA. On June 18, 2002, an agreement was made between Safecom and the American company according to which the American company would be the exclusive distributor of Safecom products (hereinafter: "the Agreement"). The Agreement provided that ownership of all copyright, patents and other intellectual property rights connected with the products, including graphics, sketches and models, that were developed by Safecom would be retained by it. The Respondent had no formal status in the American company, but he was involved in the technical matters associated with marketing Safecom's products in the USA, and, in that context, he also took part in the preparation of technical drawings of Safecom products. In May 2005, the Agreement was terminated by Safecom, and in 2008, it learned of the filing of a patent application in the USA by the Respondent together with the American company's president, which concerned a voltage backup system for cable systems. In view of Safecom's complaint that the drawings underlying the patent application infringed its copyright in the drawings of its products, it filed suit in the District Court. By consent of the Respondent, the court awarded a provisional injunction. An objection filed against the registration of the American patent registration was dismissed.

 

2.         Safecom asserted that the Respondent had copied 14 original drawings that Zilberberg had prepared as part of a presentation for the Safecom products, which was furnished to the Respondent in 2003, when the agreement was still in force. According to it, the drawings that Zilberberg prepared were protected by copyright and owned by it, while the Respondent's drawings were absolutely identical and had been copied "one to one" and, as such, constituted an infringement of its right of reproduction. In order to emphasize the copying, Safecom pleaded that its drawings contained a mistake in the presentation of the switch box, and that mistake had been copied by the Respondent.

 

3.         The Respondent, for his part, asserted that the claim was governed by American law because the alleged infringement had been committed in the USA, and since that law had not been proven, the claim should be dismissed. According to him, under American law the claim would be dismissed because of the applicable American rules of fair use. In regards the very infringement, the Respondent pleaded that since the act was governed by the Copyright Act, 1911 (hereinafter: "the Old Law") it was first necessary to prove that the alleged infringement also constituted an infringement under the Copyright Law, 5768-2007 (hereinafter:  "the New Law"). According to him, under section 21 of the New Law, the copying of a work that is deposited for public inspection constitutes permitted use and no infringement is therefore involved. As regards the alleged copying, the Respondent pleaded that there was no relevant similarity between the Safecom drawings and his drawings, either visual or substantial. According to him, there are approximately 32 elements in the patent application drawings, while in the presentation there are only 19. This is because of the difference between the technology used in order to manufacture Safecom's products and that presented in the patent application. The Respondent further pleaded that the similarity between the drawings lay in their common functionality in a manner that does not afford protection. The Respondent also pleaded that he was party to making the drawings and therefore had a right of ownership in the Safecom drawings, and that the Agreement did not apply to him because he was not an employee of the American company. The Respondent also filed a counterclaim, but since no appeal has been brought in respect of it, we need not refer to it here.

 

The District Court's Judgment

 

4.         The District Court first dismissed the Respondent's claim that the matter is governed by American law. The court held that the Respondent had received the presentation in Israel.  It was therefore reasonable to assume that the act of copying had also been performed in Israel, and it had not been proven otherwise. In any event, the court held that the Respondent did not dispute the court's jurisdiction to try the matter in accordance with domestic law when the provisional injunction application had been considered, and he was therefore estopped from pleading the same. As regards Israeli law, the court held that the Safecom drawings do indeed amount to a protected work, according to both the Old Law and the New Law. The court dismissed the Respondent's claim that the use he had made was permitted use under section 21 of the New Law since the section treats of  the use of works that have already been deposited for public inspection and not use which itself constitutes deposit for public inspection.

 

5.         As regards the alleged copying, the District Court first held that the Respondent was not a joint owner of the rights in Safecom's drawings, because, even if he was not one of the American company's formal officers, he did substantially function as such and the agreement should therefore be applied to him. The court nevertheless dismissed Safecom's claim that the Respondent had admitted copying the drawings. The court emphasized that the Respondent's claim with respect to the difference in the number of elements between Safecom's drawings and the drawings in the patent application had not been rebutted, and a visual similarity had therefore not been established. The court dismissed Safecom's claim with respect to copying the mistake in its drawings because, according to it, no mistake was in fact involved. Finally, the court held that because of the great functionality of the Safecom drawings, some similarity was obliged between drawings that sought to present a similar product, and Safecom's drawings, or a substantial part of them, had therefore not been copied.

 

            Hence, the appeal.

 

The Grounds of Appeal in Brief

 

6.         The Appellants – through their attorney, Adv. Nahum Gabrieli – argue that the District Court erred            when it held that there had been no copying in the instant case. According to them, they did not have to adduce direct evidence of copying the drawings because the law makes it possible to suffice with circumstantial evidence to prove copying. The Appellants assert that the access that the Respondent had to the drawings, which is not in dispute, together with the substantial similarity between their drawings and his, leads to the sole conclusion that there was copying. The Appellants emphasize the identical elements between their drawings and those of the Respondent that do not derive from the functional presentation of the products, like the same twists and turns in the lines that are shown on them. According to them, the Respondent himself admitted that there are many ways to draw the products concerned, and he even showed example drawings of similar systems that were different from the drawings in the instant case. Moreover, in principle it cannot be held that when functional technical drawings are involved, copying cannot necessarily be inferred. The Appellants add that the finding that the similarity between the drawings was not the result of copying is inconsistent with the relationship between the parties, as described above. Finally, the Appellants aver that the court was mistaken when it reviewed the substantial similarity on the basis of the number of elements appearing in each of the drawings, rather than a general impression of the substance of the part copied, which according to them, obliged the conclusion that there had been prohibited copying.

 

The Respondent's Reply in Brief

 

7.         The Respondent – through his attorney, Adv. Tamir Afori – argues that the District Court rightly distinguished between proving a visual similarity and establishing a substantial similarity. According to him, in the instant case there has not been copying, as a matter of fact, because even if it were established that he had access to Safecom's drawings, the court found, as a matter of fact, that there was no visual similarity between the works. According to him, in order to establish such a similarity, the Appellants should have produced an expert opinion insofar as the matter concerns a technical drawing. In any event, the Respondent asserts that there had been no copying of a substantial part that was original to the Appellants, and that the copying of parts of the work that are not original in any event does not amount to copying and to an infringement of any right of the work's owner. According to him, in the instant case works are involved, only parts of which are original, and it is necessary to carefully analyze whether the original parts that were copied constitute a substantial part of the Plaintiff's work. Since, in the instant case, functional works are involved, the respondent argues that only the identical copying of original parts should be regarded as an infringement of copyright. The Respondent emphasizes that after filtering out all the non-original parts of Safecom's drawings, what remains is at most a "copy" of curved lines that do not constitute a substantial part of the work.

 

8.         The Respondent adds that it was inappropriate to deny his rights in Safecom's drawings since he was a joint author of them because of the Agreement between Safecom and the American company to which he was not party, and it should therefore be held that he is a joint owner and joint author of the Safecom drawings. Furthermore, the Respondent asserts that it was inappropriate to hold that the law governing the infringement is Israeli law since the Appellants had not established that the infringement asserted by them was committed in Israel, and that burden rested with them. According to him, his agreeing to the award of a provisional injunction does not attest to his agreeing to conduct the principal case in accordance with Israeli law. Finally, the Respondent argues that even if he is not the owner of the Safecom drawings, he is still their joint author, and the use that he made of them is therefore a permitted use under section 27 of the New Law, which permits the author of an artistic work to make works that constitute a partial copying or derivative of it, even if he is not the owner of the right. Moreover, according to him, the use that he made of the drawings is also protected by virtue of section 20 of the New Law because it was done in legal administrative proceedings or, in the alternative, it was fair use under section 19 of the New Law.

 

9.         In the hearing before us an attempt was made to bring the parties to an overall understanding that would make the need for our ruling unnecessary, but that attempt was unsuccessful.

 

Discussion and Ruling

 

10.       This appeal raises questions at the very heart of copyright law, and that, essentially, address the foundations upon which the protection of works is based, and in particular, the matter of the author's originality; the distinction between idea and expression; and infringement of the right to copy the work. These questions are highlighted with regard to the protection of functional works, and they require elucidation and clarification. Having read the parties' summations and listened to their oral arguments in the hearing before us, I have reached the overall conclusion that the appeal should be allowed and the case should be remanded to the District Court in regard to the matter of relief. I shall also recommend that my colleagues do the same.

 

The Basis of the Protection of Works – Originality

 

11.       The requirement of originality has been recognized by this Court as a threshold for the existence of copyright in a work [for more on the originality requirement, see: Michael Birnhack, “The Requirement of Originality in Copyright Law and Cultural Control,” 2 Alei Mishpat 347, 352-355 (2002) (Hebrew) (hereinafter: "Birnhack")]. The development of the requirement in Israeli case law has been based on the provisions of the Old Law, despite the fact that the Hebrew version did not mention "originality", whereas the binding English version provides, in section 1, that copyright will be granted in respect of:

 

            "every original literary, dramatic, musical and artistic work…" [emphasis added  – YD].

 

            The requirement of originality was anchored in the New Law in section 4(a), which provides:

 

            "Copyright shall subsist in the following works:

            (1) original works that are literary works, artistic works, dramatic works or musical works, fixed in any form"  [emphasis added – YD].

 

12.       This Court reviewed the case law relating to the elements underlying the requirement of originality at length in CA 8485/08 FA Premier League Ltd v.  Israel Sports Betting Regulation Council (March 14, 2010) (hereinafter:  the Premier League case) [http://versa.cardozo.yu.edu/opinions/fa-premier-league-v-israel-sports-b.... It was held that the requirement of originality is analyzed on the basis of two main criteria – investment and creativity.

 

            In the scope of the investment criterion, the author must have invested certain labor in the work in order to gain the right to its rewards, similar to the theoretical basis for recognizing the right to "corporeal" property [see: the Premier League case, para. 26; CA 513/89 Interlego A/S v. Exin-Lines Bros SA, IsrSC 48(4) 133, 164 (1994) (hereinafter referred to as the Interlego case)]. This criterion is based on the labor approach and the theory of natural rights based on the teachings of the philosopher John Locke as theoretical justification for the grant of property rights generally and copyright in particular [for a broader discussion, see: Birnhack, pp. 373-375; Guy Pesach, “The Theoretical Basis for the Recognition of Copyright,” 31 Mishpatim 359, 386-391 (2001) (Hebrew) (hereinafter: "Pesach"); Justin Hughes, “The Philosophy of Intellectual Property,” 77 GEORGETOWN L.J. 287, 297-98, 302-10 (1988); Wendy J. Gordon, “A Property Right in Self-Expression: Equality and Individualism in the Natural Law of Intellectual Property,” 102 YALE L.J. 1533 (1992)].

 

            In the context of the creativity criterion, which is based on the rationale according to which the purpose of copyright law is to enrich the creative world and the range of expressions available to the public, the nature of the investment, independently of its quantity, must be considered in order to show that it contributes to that purpose [see: Premier League, para. 27; Interlego, pp. 164-165]. This approach is based on a more social concept of copyright but, nevertheless, also on a utilitarian-economic approach, according to which a balance should be made between the cost – the incentive to be given to the author in the form of the monopoly granted to him in respect of the use and control of his work -- and the benefit of safeguarding the public domain for future work [see: Pesach, pp. 361-374; William M. Landes & Richard A. Posner, “An Economic Analysis of Copyright Law,” 18 J. LEGAL STUD. 325 (1989)].

 

            I would add that, in my opinion, in the scope of the originality requirement three subordinate elements should be identified, and in addition to the investment criterion and the creativity criterion, the origin criterion should be analyzed. By this I mean a requirement that the work should originate in the author and that it should not be based on another work – or in the words of my colleague Justice E. Rubinstein "original, meaning independent" [see: CA 3422/03 Krone AG v. Inbar Reinforced Plastic, IsrSC59(4) 365, 378 (2005); CA 360/83 Strosky Ltd. v. Whitman Ice Cream Ltd., IsrSC 40(3) 340, 346 (1985) (hereinafter: the Strosky case). For further on originality as origin, see Birnhack, p. 355-372].

 

13.       This Court has also considered the question of the nature and quantity of the originality requirement's elements that suffice to realize it. In respect of the investment criterion, it has been held that all that needs to be proven is a minimal investment of some human resource [see: Interlego, p. 173; Premier League, para. 34]. On the other hand, a quantitative definition of the requisite creativity is somewhat more complex and it appears that this Court has not yet fashioned a single formula for its realization.  Nevertheless, the definition of the requisite creativity for the protection of a work has been delineated in case law by a process of elimination. Thus, it has been held that the creativity criterion does not impose a particularly high threshold for the author, and that slight and even worthless creativity might sometimes suffice [see: Interlego, p. 173; CA 23/81 Hirschco v. Orbach, IsrSC 42(3) 749, 759 (1988) (hereinafter: the Hirschco case); CA 2687/92 Geva v. Walt Disney Co., IsrSC 48(1) 251, 257 (1993) (hereinafter: the Geva case)]. It has also been held that the work need not be novel in comparison with existing works in the same sphere [see Strosky, p. 257; Geva, p. 257].

 

14.       Because of the lack of any cohesive definition of the creativity requirement, and because of the absence of any controversy with regard to the definition of the investment necessary for the protection of a work, the possibility has been raised that a substantial investment in a work can compensate for a lack of creativity in such a way as will meet the requirement of originality and establish protection for the work. However, that approach was rejected by this Court long ago in Interlego, in which the approach of American law was adopted, as expressed in the American Supreme Court's judgement in Feist Publications, Inc. v. Rural Telephone Service Company, Inc., 499 US 340 (1991) (hereinafter: the Feist case), according to which mere investment is not sufficient for the copyright protection of a work [see: Interlego, p. 165, 169; Premier League, paras. 36-38].

 

15.       To sum up the foregoing, the case law laid down by this Court is that for the grant of copyright protection in respect of a work, it must be established that an original work is involved, three subsidiary elements being analyzed – the origin criterion, the investment criterion and the creativity criterion – the existence of only one element being insufficient for the purpose of establishing originality.

 

The Protected Part of the Work – The Idea/Expression Dichotomy

 

16.       Before I move on to discuss the originality required for the protection of functional works, I wish to consider another basic rule concerning the copyright protection of works – the distinction between idea and expression. A basic principle of copyright law is that the idea that underlies a work will not be protected by the right, and that the protection is afforded only to the way in which it is expressed. This rule is embodied in section 7B of the Copyright Ordinance, which governs the instant case, and was subsequently anchored in section 5 of the New Law, which provides:

 

            "Copyright in a work as provided in section 4 shall not extend to any of the following, but copyright shall apply to the way in which they are expressed:

 

            (1)       an idea …"

 

17.       This Court has consistently emphasized the said distinction in its case law [see, for example: CA 10242/08 Mutzafi v. Kabali, (October 10, 2012), para. 24 (hereinafter:  the Mutzafi case); CA 2173/94 Tele Event Ltd. v. Golden Channels & Co., IsrSC 55(5) 529, 544 (2001) (hereinafter: as the Tele Event case); Strosky, p. 346; CA 139/89 Harpaz v. Achituv IsrSC 44(4) 16, 19 (1990)]. This distinction is based on the concept that the grant of protection to mere ideas would frustrate one of the major purposes of copyright law – the encouragement of creation and leaving sufficient "raw material" in the public domain [see: Tony Greenman, Copyright, vol. I, 75 (second ed., 2008) (hereinafter:  "Greenman")]. The distinction between idea and expression, in the context of textbooks for example, has sometimes led to the conclusion that the author's right has been infringed because of the fact that the expression of the method of study created by him (which constitutes a mere idea) has been copied [see, for example: Hirschco], but also sometimes to the opposite conclusion that all that has been "copied" is the actual idea that underlies the work [see, for example: Mutzafi].

 

18.       The rule that an idea is not protected and only the way in which it is expressed is protected overlaps the rule that facts per se are not protected. This rule finds expression when compilation works are involved, and it has been held that such works will only be protected insofar as the choice and arrangement of the raw materials – which constitute unprotected facts – meet the requirement of originality (see: Interlego; CA 2790/93 Eisenman v. Kimron, IsrSC 54(3) 817 (2000); Tele Event]. This requirement is  expressed in section 4(b) of the New Law, which provides:

 

            "… originality of a compilation means the originality of the selection and arrangement of the works or of the data embodied therein".       

 

            However, in view of the rising status of the creativity requirement and the determination that investment does not suffice to prove originality, it has been held that, in certain cases, a "compilation work" will not be sufficiently original and will therefore not gain protection [see: Premier League, paras. 51-54]

 

19.       We can see that the distinction between idea and expression is of major importance in copyright law, and that, in certain senses, it also overlaps the requirement of originality that underlies the copyright protection of works. The overlap between these two basic principles of copyright law is particularly relevant when functional works are involved, as will be explained below.

 

The Merger Doctrine and Functional Works

 

20.       Having regard to the distinction between idea and expression, the concept has developed whereby, insofar as a particular idea can be expressed in only a single way, then protection will not be given to a work that constitutes that expression. This concept has been called the "merger doctrine". The merger doctrine has received little reference in the case law of this Court [see: Geva, p. 262; CA 2682/11 Petach Tikva Municipality v. Zissu (May 20, 2013), para. 49]. The doctrine originates in American law, and its application in modern case law is based on the judgement in Baker v. Selden, 101 US 99 (1880) (hereinafter: the Baker case). In the Baker case, consideration was given to whether a book that presents a new method of bookkeeping and also includes blank forms that make it possible to implement the method, grants its author an exclusive right to use the actual method. The American Supreme Court laid down a rule in that case for use in analyzing works, the only or main use of which is utilitarian. The Court in that case held that:

 

            "… where the art it teaches cannot be used without employing the methods and diagrams used to illustrate the book, or such as are similar to them, such methods and diagrams are to be considered as necessary incidents to the art and given therewith to the public" [ibid., p. 103].

 

            The federal courts in the USA have relied on this statement in order to develop the merger doctrine. The best-known judgment, which most broadens that doctrine, is Morrisey v. Procter & Gamble Co., 379 F.2d 675 (1st Cir. Mass. 1967) (hereinafter: the Morrisey case). In that case, it was held that when a single idea has a very narrow range of possible expressions, a work that constitutes one of the expressions is not to be granted copyright protection (ibid., pp. 678-679)]. Numerous federal courts have supported the rule in Morrisey, but dissenting opinions have also been aired [see: Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 2.18[C] (2002) (hereinafter: Nimmer)].

 

21.       Baker and its development in case law have been strongly criticized [see: Nimmer, § 2.18[C]. Firstly, it has been argued that in Baker itself, the American Supreme Court restricted the rule cited above solely to the right to use the method or idea given expression in the work, and that the use of the expression in order to present the method will constitute an infringement of the copyright, or in the words of the American Supreme Court:

 

            " The use by another of the same methods of statement, whether in works or illustrations, in a book published for teaching the art, would undoubtedly be an infringement of copyright" [ibid., p. 103].

 

            Secondly, it has been argued that the distinction between copying the expression for the purpose of using the method (or idea), compared with copying the expression for the purpose of showing the method (or idea) is artificial. It has therefore been proposed to determine that copying for the purpose of using the idea will also constitute copyright infringement, and that all that should be permitted is the use of the method or idea for functional needs [see: Nimmer, § 2.18[C]-[D]]. This proposal is based on the understanding that copyright does not preclude reliance upon a work that constitutes a certain expression of an idea and presents a particular method in order to turn the method into a product. Such protection is only granted by patent law. For the purpose of demonstration, let us assume that a company manufactures a particular electrical product that is not per se protected by copyright. For the purpose of manufacture, the company produces drawings that constitute a protected work (as detailed at length below). In view of the proposition presented above, a competing company will not be able to copy the drawings, but assuming that the product itself is not protected by a patent or design, the competing company will be able to manufacture the product on the basis of the drawings without infringing copyright. I would immediately say that I accept this latter distinction, and in my opinion, it should be adopted.

 

22.       Despite the criticism that has been presented, it does appear that when there is a complete merger between the idea and its expression, and when there is only one way to express the idea, a consensus does exist that the work that gives expression to that idea will not gain copyright protection [see: Greenman, p. 83; Nimmer § 2.18[C][2]; Paul Goldstein, Copyright § 2.3.2 1 (1989)]. However, opinions are divided on the question when there are just a few possibilities of expressing the idea. According to one approach, as held in Morrisey, in such a case, copyright protection should also not be granted, but according to another approach, the work will be granted copyright, but it will only be infringed when there is absolute or almost absolute similarity between the works [see: Greenman, p. 83; Geva, p. 262]. This controversy is relevant, because, in the instant case, it is asserted by the Respondent that Safecom should have proven exact copying because its drawings constitute an idea that can only be expressed in limited ways (para. 12 of the Respondent's summations). In order to decide this controversy, in my opinion, reference may be made to the fundamental rule of copyright law presented above – the requirement of originality.

 

23.       Issues concerning the merger doctrine arise in many cases in respect of certain types of work. Thus, in the modern era, the question arises in respect of computer programs [see: Greenman, p. 81]. In addition, it has been asserted that the courts in the USA are expanding the application of the doctrine to visual works [for more on this, see: Michael D. Murray, “Copyright, Originality and the End of the Scenes a  Faire and Merger Doctrines for Visual Works,” 58 BAYLOR L. REV. 779 (2006)]. Another area in which the work, by its nature, raises issues concerning the merger doctrine is that of functional works. The instant case involves a functional work that is also a visual work. In fact, the merger doctrine can be well understood not only on the basis of the distinction between idea and expression, or to be more accurate, the merger between them, but also on the basis of the originality requirement, in particular insofar as it concerns functional works.

 

24.       In Interlego, President M. Shamgar considered at length the difficulties that the requirement of originality raises as regards functional works. One of President Shamgar's most important findings in this respect was that, in principle, a work is not to be denied copyright protection merely because it is functional [ibid., p. 160]. Nevertheless, President Shamgar held that in respect of these works the Old Law applies a filter in addition to the requirement of originality, which he called "the artistry criterion" [ibid., p. 173]. I would immediately explain that President Shamgar based the reference to that criterion on section 35(1) of the Old Law, which defines artistic work as works of painting, drawing, sculpture and artistic craftsmanship, and architectural works of art, and engravings and photographs [emphasis added – YD]. In the instant case, Safecom's drawings meet the exact definition of a "drawing" as an artistic work in accordance with section 35(1) of the Old Law, and on the face of it, the artistry criterion therefore does not apply to them directly. However, in my opinion, inspiration may be drawn from that criterion in order to interpret the application of the merger doctrine to Safecom's drawings, and to analyze their originality as a functional work.

 

25.       In Interlego, the difficulty that functional works pose for the requirement of originality was described in a way that very much brings to mind the principles of the merger doctrine. In President Shamgar's words:

 

            "When the form is dictated by the function, namely when the function limits the possible forms in which the product can be designed, then there is no justification for granting copyright to the form that is a product of functional-artistic judgement, since the protection that is given protects the function, not the author's original choice of the specific form. This is a circumstance in which the product's form is determined because of its functional task" (ibid., p. 177) (emphasis original – YD).

 

In fact, the words "function" and "form" can be substituted for the words "idea" and "expression". In order to resolve this problem, President Shamgar proposed six possible criteria for identifying the "artistry" of a work: the choice criterion; the author's intention criterion; the public acceptance criterion; the public's willingness to pay criterion; the minimal aesthetic standard criterion; and the art for art's sake criterion (ibid., p. 179). After a detailed discussion, President Shamgar proposed the "choice criterion" as the test appropriate to the examination of whether or not a work's expression derives solely from its functionality. He defined the criterion as follows:

 

            "The choice criterion: one of the characteristics of art is that it reflects the ability to express an idea in a variety of ways. As far as we are concerned here, this is a very broad criterion since it will be fulfilled whenever the creator of the functional product has the ability to choose between several options (ibid., p. 179).

 

            And following:

 

                        "It appears that in view of the purposes of copyright as indicated, and in light of the principles for the solution as formulated, the choice criterion should be regarded as a proper one in the context of examining the final product. That is to say, as long as the form obtained is one of several alternatives. The alternatives should be effective. An effective alternative is one that not only performs the functional task of the product but also meets the limited options of form existing in respect of future works deriving from the connection between function and form. There should be alternatives which, in addition to the functional task, meet the restriction of form that derives from the product's functional task or in other words, there should be several alternatives that all meet the restrictions of form that derive from the functional task" (ibid., p. 181).

 

26.       Applying the choice criterion can be of help in determining the proper protection of work regarding which it is asserted that its great functionality limits the ways for expressing the idea it represents. According to the choice criterion, the function or purpose for which the work is intended should be sought and an examination made as to whether the form of presenting that purpose – the expression – is accompanied by the author's choice from among several options that could achieve the same purpose. The application of this criterion might certainly lead to different conclusions with regard to different elements of the work. One can think of a functional work, some of the elements of which constitute essential expression of the purpose for which it has been created and therefore do not require the author to choose from alternatives when creating them, while at the same time, other elements are not dictated by its purpose, and it is clear that the author had a large range of possible choices with respect to the mode of expression. In view of this, one can again enquire into the controversy existing with regard to the relevance of the merger doctrine. As aforesaid, in my opinion when there is a solitary option for the expression of a particular idea, it is inappropriate to grant protection to that solitary mode of expression. However, when there are several possible expressions of a particular idea, even if they are very few, then in my opinion, having regard to the choice criterion, the author does have a choice among those possible expressions, and it is therefore inappropriate to deny copyright protection to the expression chosen. Nevertheless, I am willing to accept the approach that in such cases, when the number of options is very limited, then in order to prove copyright infringement, it will be necessary to apply the copying criteria strictly, and require that the work that is alleged to be an "infringing work" be almost absolutely the same as the protected work [see: Geva, p. 262; Strosky, p. 357; Greenman,  p. 83].

 

Copying a Functional Work

 

27.       The question of the criteria for copying in copyright law is an elusive one. Nevertheless, in the early 1970s, this Court laid down standards for the test in CA 559/69 Almagor v. Godik, IsrSC 24(1) 825 (1970) (hereinafter:  the Almagor case). The standards that were laid down in Almagor are still in use and were recently summed up by Justice Y. Amit in Mutzafi as follows:

 

            "(–)     It has to be proven that the defendant copied real and substantial parts of the plaintiff's work, the quality rather than the quantity being decisive.

            (–)       Copying can be inferred when the defendant had access to the plaintiff's work and the similarity between the works is of such an extent that it is unreasonable to suppose that it is the hand of chance.

            (–)       The accumulation of points of similarity is of importance. The more there are, the greater the concern that copying is involved.

            (–)       The question whether the similarity between the two works is sufficient to determine that copying of a real and substantial part is involved is one of fact and degree. The answer to the question should be given not on the basis of a mechanical comparison of a number of words or lines that are similar in the particular works, but in accordance with the judge's impression of the works as a whole" (ibid., para. 26).

 

28. Do these standards change when the protected work is a functional one? In my opinion, that question should be answered in the negative. As I have described above, functional works raise various difficulties at the stage of analyzing the requisite originality for the purpose of recognizing them as copyrighted works. However, once a functional work has passed the originality requirement stage and the choice criterion, it is a protected work in all respects, and substantial parts of it may not be copied. In this respect, even if only some of the elements that make up the functional work have passed the "choice filter", that does not affect their being work protected against copying.

          The only consequence of a work being functional concerns the standard for the analysis of copying when the protected elements constitute an idea that can only be expressed in a limited number of ways.. In such a case, a higher threshold will be necessary to establish copying, and almost absolute similarity between the protected elements and the allegedly copied elements will be required in order to establish that substantial similarity.

 

 

Were Safecom's Drawings Copied?

 

29.       Having considered the elements necessary to establish the protection of a work and prove its protection when the emphasis is on functional works, I shall now analyze whether, in the instant circumstances, Safecom's drawings amount to protected works, and whether the use that the Respondent made of them amounted to copying in infringement of the copyright.

 

30.       Firstly, it should be noted that drawings do generally meet the definition of an artistic work under section 35(1) of the Old Law, and, in any event, the Respondent does not assert that Safecom's drawings do not fall within the scope of the works to which protection is granted. Consequently, an analysis has to be made of whether the drawings meet the requirement of originality and, in such event, because they are functional works, whether they also meet the choice criterion. It is not without reason that it is said that a picture is worth a thousand words, and I shall therefore first present one of the parties' drawings as they appear in the comparative table that the Appellants filed (Exhibit 1 of their exhibits).

 

*  On the left – the Safecom drawing; on the right – the respondent's drawing

 

            The Safecom drawings portray an electrical product whose purpose is to provide electrical backup when there is a malfunction. The drawings show an illustration/photograph of the product with boxes at its sides in which there is text that expresses some electrical function, each of the drawings showing – on the product and between it and the boxes – lines and arrows that describe the electrical function that the drawing seeks to describe by visual expression. I would first state that I accept the Respondent's argument that the boxes, per se, like the text within them, do not amount to protected works. I also accept his argument that his drawings show a photograph of a product that is different from Safecom's, and that it is therefore not a copy. Nevertheless, that does not suffice as regards the question of the drawings' originality and the question of copying.

 

31.       It should first be noted that even if each of the elements of the Safecom drawings does not, per se, amount to an original work, that does not negate the possibility that the combination of the elements into a single visual work does amount to a compilation that affords protection to the way in which the elements are arranged, as opposed to the protection of each element individually [see: Greenman, pp. 119-124]. Nevertheless, even without finding that the Safecom drawings amount to an original compilation, in my opinion it can be found that they do constitute a sufficiently original artistic work.

 

32.       From looking at Safecom's drawings there appears to be no doubt that their purpose is to demonstrate the electrical process and the functions performed by the product that it manufactures. For the purpose of that demonstration, there is no doubt that it is necessary to use predefined expressions, such as the text that describes common electrical functions and such as showing the actual product to which the text relates. Together with that, Safecom's drawings also include lines and arrows that demonstrate the flow process described in the drawing. From looking at the drawings, it appears that this demonstration, which has a functional task, can be expressed in a large number of ways that can achieve the purpose, while Safecom chose a particular means of expression according to which the lines and arrows would be of a certain length and certain thickness, taking a winding course appropriate to the way in which it chose to position the product and the text boxes on the drawing. It is my opinion that Safecom's said choice affords it copyright protection in respect to the particular visual element that seeks to "correspond" with those elements that do not amount to a protected work.

 

33.       Having found that some of the elements of Safecom's drawings do amount to copyrightable artistic work, it remains to determine whether the Respondent's drawings constitute a reproduction of its drawings. I stated above that when a functional work is involved, insofar as there is a limited number of ways in which to express the underlying idea, it will be necessary to show that the work that is allegedly an infringement is almost completely the same as the protected elements in the functional work. I am prepared to assume, for the purpose of the discussion, that whether Safecom's drawings in whole constitute a protected compilation, or whether some of the elements are protected separately as an artistic work, the number of ways to give expression to a demonstration of the product's electrical process is limited. Nevertheless, even working on that assumption, from a comparison between Safecom's drawings and the respondent's drawings it appears that as regards the drawings marked Fig. 2 to Fig. 13, and Fig. 15 and Fig. 16 (Exhibit 1 of the Appellants' exhibits), the Respondent did make an identical (or at least almost identical) copy of the protected elements of the Safecom drawings in the form of the lines that describe the flow process.

 

34.       The Respondent asserts in this regard that filtering out the photograph of the product that was not copied and the elements that are not protected in the form of the boxes and the text on them, "at most what are left are… certain curved lines that describe the connections between the parts of the system. Curved lines in a drawing are not a 'substantial part' of the work. Real de minimus is involved" (para. 14 of the Respondent's summations). I cannot accept that argument. The fact that certain elements of the work are not copyrighted, whether because they are unprotected works, mere ideas or a complete merger between idea and expression, leaves those elements in the public domain and thereby permits their free use by anyone so desirous. However, when other elements of the work are copyrighted, it cannot be said that the fact that other elements of the work are not protected makes copying them insubstantial. Such a finding would negate the very protection of those elements, and that cannot be accepted. In my opinion, specifically when substantial elements of the work do not gain copyright protection and remain in the public domain, then copying all those protected elements will attest to the copying of a substantial part of the work, a fortiori when there is absolute, or almost absolute, similarity [on the substantiveness of the reproduction having regard to the amount of the copying, see Mutzafi, para. 91). This is especially so since there is no dispute that the Respondent did have full access to Safecom's drawings. It should be borne in mind that the Respondent could have made use of those unprotected elements of Safecom's drawings and added different visual descriptions to them that demonstrate the functionality of the drawings, and he could also have arranged the elements of the drawing differently, which would have achieved the functional purpose as well. Since the Respondent made exact use of Safecom's protected visual resources, he infringed its copyright in those elements.  Justice's Netanyahu's statement in Strosky is apt in this regard:

 

            "A general inverse relationship equation may be appropriate inasmuch as the less originality and intellectual effort in the work, the more exact the copying that is needed for its copyright infringement. According to this equation, it can be said that the originality and effort in the sign are modest, while the copy is almost exact. That suffices for infringement" (ibid., p. 357).

 

Permitted Uses

 

35.       Having found that the Respondent did infringe Safecom's copyright in its drawings, it remains to discuss the Respondent's arguments that his actions and the drawings that he made constitute permitted use according to the New Law and therefore do not amount to infringement. The Respondent bases his arguments on section 78(c) of the New Law, according to which an act that does not constitute an infringement of copyright in accordance with that Law will not constitute an infringement of copyright under the Old Law, despite its application in the circumstances. In view of that argument, it should first be determined whether the use of the work, in accordance with the uses that are defined in chapter four of the New Law as "permitted uses", constitutes copyright infringement. In my opinion, the answer to that is in the negative. In CA 5097/11 Telran Communications (1986) Ltd v. Charlton Ltd. (September 2, 2013) (hereinafter referred to as "Telran"), my colleague Justice Z. Zylbertal expressed the opinion that use in accordance with the uses defined in chapter four of the New Law cannot amount to a contravention of that law (ibid., paras. 28-30). That opinion is based both on the wording of the Law and on the perception that there are certain uses that, according to the purposes underlying copyright, amount to a right of the user and not merely a defense against contravention of the Law [for further, see Niva Elkin-Koren, “Users' Rights,” in Michael Birnhack & Guy Pesach, eds., Copyright (2009) 327 (Hebrew)]. I accept this position both as regards the finding that permitted use, as defined in chapter four of the New Law, does not constitute a contravention of the law, and as regards the finding that permitted use in fact constitutes a right that is granted to the user to make certain types of use of a work. I am conscious of the fact that this position is contrary to the holding of Deputy President E. Rivlin in CA 9183/09 Football Association Premier League Ltd. v. Anonymous (May 13, 2012) (hereinafter: the Anonymous case), para. 18 of his opinion, and in view of the existing disagreement, the time may have come for an extended bench to address this issue.

 

36.       Having found that permitted use does not amount to a contravention of the New Law, consideration should be given to the types of permitted use that are asserted by the Respondent in the instant case.

 

            Firstly, the argument Respondent raises avers that his use of Safecom's drawings is permitted use under section 20 of the New Law, which permits the use of a work in legal administrative proceedings to the extent justified having regard to the purpose of the use. I cannot accept that argument. I am prepared to assume for the purpose of the discussion that using the work for the purpose of presenting it to the registrar of patents in a particular country does constitute use in legal administrative proceedings, despite the fact that such a finding is not free of difficulties. However, the main element of this permitted use is the extent of the use, having regard to its purpose. In the instant case, the purpose of using Safecom's drawings and presenting them to the American Registrar of Patents in the patent registration application was the registration of a patent in respect of a product that competes with the one that Safecom markets. My opinion is that such use by a direct competitor, using the copyrighted work for the purpose of direct competition with the owner of the work, cannot amount to permitted use under section 20 of the New Law.

 

37.       Secondly, the respondent raises an argument that the use that he made of Safecom's drawings amounts to fair use, as defined in section 19 of the New Law. Section 19(a) of the New Law comprises an open list of types of use of protected works that will be permitted and fair. Section 19 (b) of the New Law enumerates four non-exclusive factors that are to be considered in order to determine whether a particular use amounts to fair use, including:

 

            "(1) the purpose and nature of the use;

            (2) the nature of the work of which use is made;

            (3) the extent of the use, qualitatively and quantitatively, in relation to the work as a whole;

            (4) the effect of the use on the value of the work and its potential market".

 

            This Court has held that "these are not essential or cumulative factors but a non-exhaustive list of parameters that might indicate the fairness of a particular use that is made of a protected work" [Anonymous, para. 19 of the opinion of Deputy President Rivlin].

 

            The four subordinate criteria listed in section 19(b) of the New Law are based on the subordinate criteria that have been laid down in the American Copyright Act [see: 17 USC § 107]. Empirical research that has been conducted attests that although the fourth subordinate criterion – the effect on the potential market – is most often mentioned as the decisive factor regarding the fairness of use, the first subordinate criterion – the purpose and nature of the use – does in fact have the most marked effect on the decision, the most influential factors being the commerciality and transformativeness of the use [see: Barton Beebe, “An Empirical Study of US Copyright Fair Use Opinions,” 1978-2005, 156 U. PENN L. REV., 549 (2008); Neil Weinstock Netanel, “Making Sense of Fair Use,” 15 LEWIS & CLARK L. REV. 715 (2011)]. It appears that these factors were also the most influential in this Court's ruling in Anonymous [ibid., para. 20].

 

            In the instant case, it appears that the use that the Respondent made of Safecom's drawings did not meet the standard of fair use. Thus, in the scope of the first subordinate criterion, it is clear that the Respondent's use was commercial because its whole purpose was to bring about the registration of a patent in respect of his product that competes with Safecom's product. Moreover, on analyzing the question of transformative use, it does not appear that the Respondent's use of the Safecom drawings led to the creation of a new expression, different from the original expression embodied in them. As regards the third subordinate criterion – the extent of the use – I have already found above that the Respondent made an exact, or almost exact, copy of Safecom's drawings, and the extent of the use is therefore full. Finally, having regard to the fourth subordinate criterion, it is clear that since the product marketed by the respondent directly competes with Safecom's product, there is no doubt that the use affects the potential market for Safecom's drawings.

 

            Incidentally, I would mention that I cannot accept the Respondent's argument that the American Patent Office has expressed its opinion that the use of a protected work for the purpose of a patent application amounts to fair use. From studying the opinion (which was annexed as Appendix J to the Respondent's volume of supporting documents), it appears that the American Patent Office means that the use of protected works that the Office itself makes in its relationship with those filing patent applications amounts to fair use [see: United States Patent and Trademark Office, USPTO Position on Fair Use of Copies of NPL Made in Patient Examination (January 19, 2012)].

 

38.       Thirdly, the Respondent contends that the use that he made of Safecom's drawings is permitted in accordance with section 27 of the New Law. Section 27 of the New Law provides:

 

            "Making a new artistic work which comprises a partial copying of an earlier work, or a derivative work from an earlier work, as well as any use of the said new work, are permitted to the author of the said earlier artistic work even where said author is not the owner of the copyright in the earlier artistic work, provided the new work does not repeat  the  essence  of  the  earlier  work  or  constitute  an  imitation thereof".

 

            In order to fall within the scope of the section, the Respondent must show that he was at least a joint author of the Safecom drawings. The District Court found that the Respondent had waived his rights in the drawings in favor of Safecom in the scope of the Agreement. The Respondent argues in this connection that even if he had waived his rights in the drawings, as regards the New Law he is still the first joint author of them. In my opinion, there is no need to rule on this issue because even if the respondent is a joint author of Safecom's drawings, section 27 of the New Law does not work in his favor in this case because the use that he made of Safecom's drawings amounts to an absolute, or almost absolute, copy of them. It cannot, therefore, be said that "partial copying" of Safecom's drawings, or a work deriving from them, is involved, and it can easily be found that the Respondent's drawings "repeat  the  essence  of  the  earlier  work  or  constitute  an  imitation thereof".

 

39.       Before concluding, I shall briefly consider the Respondent's argument concerning the law governing this case. According to the Respondent, copyright law is naturally territorial, as is the application of the Old Law. Since Safecom's drawings were copied in the USA, the Respondent asserts that the law governing the case is American law, which was not proven by the Appellants, and the appeal should therefore be dismissed. The District Court considered the Respondent's said argument and held that the drawings were not only copied in the context of filing the patent, but that the Respondent had received the presentation containing Safecom's drawings in Israel and copied them on the computer at his home in Israel. Consequently, the District Court held that Israeli law could be applied to the case. Those findings of the District Court are findings of fact, in which I have not found it appropriate to intervene at the stage of appeal. I would merely state that even were it appropriate to find that this case is governed by American law, that would not necessarily lead to the dismissal of the appeal in the absence of proof of the foreign law. This is particularly so when a sphere is involved that is regulated by numerous international conventions, which lead to relatively great conformity among the different state laws [see, for example: CA 169/94 Werner v. Amorim, IsrSC 50(3) 119, 124 (1996); CA 1227/97 Red Rock Quarry and Stone Works Ltd. v. Ibrahim IsrSC 53(3) 247, 259 (1999); CA 7687/04 Sasson v. Sasson (February 16, 2005), para. 10].

 

40.       In conclusion, I would recommend to my colleagues that we find that certain elements of Safecom's drawings amount to protected work, that 13 of the Respondent's drawings amount to an absolute, or almost absolute, copy of Safecom's drawings, and that the use that the Respondent made of the drawings does not amount to permitted use. I would also recommend to my colleagues that we remand the case to the District Court for ruling on the appropriate relief in respect of those infringements, and that the Respondent pay the Appellants' costs in the amount of NIS 40,000.

 

 

 

Justice Z. Zylbertal

 

            I concur.

 

 

 

Justice E. Rubinstein

 

A.        I concur in the illuminating opinion of my colleague, Justice Danziger.

 

B.        My colleague gave thorough consideration to a broad picture of copyright law, with regard to originality as a condition for the protection of a work, the protection of the way in which an idea is expressed, as opposed to the idea itself, and the criteria concerning works of a functional character, which is a complex matter in itself.

 

C.        I would like to add another criterion to all these – the common sense criterion, which might sound too broad because it can be said that common sense should guide us in every case, and on the other hand it is not necessarily the same for everyone in individual matters. However, by saying "common sense" in the instant case, I mean the accumulation of all the overall facts before the court.  When a work is involved, appearance or the sight of the eyes ("better is the sight of the eyes than the wandering of the desire", Ecclesiastes 6:9) is also acknowledged to be a significant parameter in intellectual property law (and see: CA 3422/03 Krone v. Inbar, IsrSC 59(4) 365, in respect of drawings as well. See also, inter alia, CA 7125/98 Mipromal v. Kalil, IsrSC 57(3) 702, 710 et seq.). Incidentally, the expression "the criterion of common sense" (in a slightly different sense) can be found in case law. See the statement by then Justice Grunis in ALA 5454/02 Taam Teva v. Ambrosia, IsrSC 57(2) 438, 453 (2005) citing this criterion per the learned commentator Seligson (Trademarks and Similar Law, (5733), 80-81 (Hebrew)) as regards the comparison of a conceptual message. And in the instant case, in preparing the file, when we – the bench – inspected the drawings involved, in our eyes there was a great similarity that was immediately conspicuous. Consequently, as I see it, the result that we have reached was required not only by common sense but also by the sight of our own eyes.

 

D.        Intellectual property law does, indeed, in many cases involve subtle nuances in respect of which it is frequently difficult to separate the wheat from the chaff, and much has been written about the difficulties of litigation in this sphere (see: D. Freiman, Patents (second printing, 2008) 7); but in my opinion, the case before us is not one of the difficult ones and anyone looking at the drawings that my colleague presented in his opinion (para. 30) needs no arcane language and can take them at face value, almost like the well-known definition by US Supreme Court Justice Potter Stewart concerning pornography, who said that it is perhaps difficult to define but "I know it when I see it".

 

E.         As aforesaid, I concur with my colleague's review, together with his cataloguing and arrangement of the matter.

 

F.         Before concluding, I would mention that Jewish law, especially in its modern embodiment, but even long ago, has considered the matter of intellectual property rights; see my opinion in CA 9191/03 V&S Spirt Aktiebolag v. Absolute Shoes, IsrSC 58(6) 869, 888-892, which also discusses (at p. 890, para. 18(3)) the Jewish law foundations of enforcement in intellectual property matters, and I would here emphasize the approaches of Jewish law that concern a another’s craftsmanship, trespass and theft, and more; in Krone, supra (at p. 379), I also considered the matter of a graphic pattern (or drawings) as a cause of action in Jewish law, and also see my opinion in ALA 7774/09 Weinberg v. Weisshof (2012) paras. 9 to 12 and the authorities cited there.

 

 

 

            Decided as stated in the opinion of Justice Y. Danziger.

 

Given this 15th day of Kislev 5774 (November 18, 2013)

 

 

 

Justice

Justice

Justice

 

 

 

 

 

            

Amir v. The Great Rabbinical Court in Jerusalem

Case/docket number: 
HCJ 8638/03
Date Decided: 
Thursday, April 6, 2006
Decision Type: 
Original
Abstract: 

[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.] 

 

This petition puts to the test the question of the Rabbinical Court's authority to adjudicate a property dispute between a couple after the divorce proceeding between them has been completed, and it focuses on an alleged breach of the divorce agreement by one member of the couple. Is the matter within the jurisdiction of the Rabbinical Court or is it within the power of the civil judicial instance; and if the Rabbinical Court does indeed have authority to adjudicate the matter, what is the source of the authority and from where does this authority derive? Is it from the law; is it from the parties' agreement in arbitration or otherwise? And what is the nature of this authority?

 

The Supreme Court, sitting as the High Court of Justice, granted the petition and held (per Her Honor Justice A. Procaccia, with the concurrence of His Honor Vice President (Ret.) M. Cheshin and His Honor S. Joubran) that –

 

The High Court of Justice's intervention in religious court decisions is limited to extreme cases of ultra vires, infringement of the principles of natural justice, departure from the provisions of law aimed at the religious court or when equitable relief is necessary where the matter is not within the jurisdiction of another court or tribunal.  The subject matter of the petition justifies this Court's entertaining the matter on grounds of the Rabbinical Court's exceeding the jurisdiction vested in it.

 

The Rabbinical Court is a state judicial instance, which was established by virtue of the Rabbinical Courts Jurisdiction (Marriage and Divorce) Law, 5713-1953 (hereinafter: "the Rabbinical Courts Jurisdiction Law"), and it derives its power and jurisdiction therefrom, and it has only those jurisdictional powers that the state law has given it.

 

The original powers of the Rabbinical Court were set in the Rabbinical Courts Jurisdiction Law and they are built of exclusive powers by virtue of the law and powers that are parallel to the civil court and the Rabbinical Court that are vested by virtue of the parties' agreement. The case law has recognized the existence of the judicial instance's inherent ancillary power that derives from the original power of the Rabbinical Court by virtue of the law, and in special circumstances grants it jurisdiction to again hear a matter upon which it has ruled in the past.

 

Is the Rabbinical Court vested with jurisdiction to decide a dispute by virtue of the parties' agreement, where such jurisdiction is not in the scope of the statute that empowers the Rabbinical Court or within the ancillary powers that are vested in it? The parties' agreement to vest jurisdiction in the Rabbinical Court might take on two guises: one, simple agreement, irrespective of the provisions the Rabbinical Courts Jurisdiction Law; the other, agreement intended to empower the Court to deliberate and decide on a dispute as an arbitrator. A court's jurisdiction is vested by law and it has no power to derive it from the parties' agreement except were the law itself has seen fit to recognize such agreement in certain circumstances as the source of jurisdiction. A similar approach is also taken with regard to the judicial instance's power to adjudicate by way of arbitration. Since the state judicial instance merely has the subject matter jurisdiction conferred to it by statute, it is not vested with power to deliberate and adjudicate a matter as an arbitrator by virtue of the parties' agreement, unless it has been expressly given that power by statute. The Rabbinical Court does not have power to hear and decide a matter that is not one of those that is within its exclusive jurisdiction in accordance with the statute or within its parallel jurisdiction, even if the parties have given their agreement to its jurisdiction. According to the same way of thinking, the Rabbinical Court has no power to decide a dispute as an arbitrator by virtue of an arbitration agreement between the parties in a matter which by its nature is not within its legal jurisdiction.

 

Is the respondent's answer against the petitioner within the bounds of the Rabbinical Court's subject matter jurisdiction? The respondent's cause of action is the enforcement of a contractual indemnity provision concerning property in the divorce agreement that obtained the force of a judgement of the Rabbinical Court, further to which the parties' divorce was completed. The source of the Rabbinical Court's exclusive jurisdiction in matters of marriage and divorce in accordance with the Rabbinical Courts Jurisdiction Law does not apply because the subject of the claim is a property matter after the dissolution of the parties' marriage and a matter of "marriage and divorce" is not involved. Nor is it a matter "connected with a divorce suit". The respondent's cause of action is a new one, the subject of which is the enforcement of a divorce agreement or an application for the enforcement of a divorce award, based on a divorce agreement. The Rabbinical Court does not have jurisdiction either by virtue of the parties' agreement pursuant to section 9 of the Law, which deals with the Rabbinical Court's parallel jurisdiction that is vested by virtue of the parties' agreement in matters of personal status according to article 51 of the Palestine Orders in Council or the Succession Ordinance. Subject matter jurisdiction under section 9 is limited solely to the matters mentioned in it – matters of "personal status" as defined in the Palestine Orders in Council or the Succession Ordinance. In a dispute that does not relate to those matters, even the parties' agreement cannot vest jurisdiction in the Rabbinical Court. The Rabbinical Court therefore has no original jurisdiction to hear the respondent's claim.

 

The Rabbinical Court does not have "ancillary" inherent jurisdiction to try the respondent's claim. In the instant case, the Rabbinical Court's ancillary jurisdiction, insofar as it relates to setting aside a divorce award by reason of a defect in making the divorce agreement, that might have given the Rabbinical Court ancillary jurisdiction to try its revocation, is of no relevance. Similarly, the Rabbinical Court has not acquired ancillary jurisdiction by virtue of a material change in circumstances after making the divorce award that justifies setting aside the divorce agreement and the divorce award since the respondent's claim is for the specific performance and enforcement of the divorce agreement. Again, the Rabbinical Court's ancillary jurisdiction to retain jurisdiction in a matter pending before it until the proceedings conducted before it are concluded will not vest it with jurisdiction. The second respondent finally and unconditionally adjudicated herein and awarded the force of judgement to the divorce agreement. A property dispute that has arisen between the parties after the award of judgement gives rise to a new cause of action and necessitates the institution of new proceedings in accordance with the jurisdictional framework prescribed by law.

 

Nor does the Rabbinical Court have jurisdiction to hear the matter by virtue of the doctrine of "continuing jurisdiction". Continuing jurisdiction is vested where an instance has tried a particular matter in the past and in special circumstances need has arisen to set aside or modify an earlier decision due to a material change that has occurred in the circumstances upon which the original decision was based.  The claim seeks to enforce the agreement and has no place in the continuing jurisdiction vested in the Rabbinical Court.

 

The Rabbinical Court does not have ancillary jurisdiction to try the new cause arising further to the divorce agreement in order to interpret the agreement. Having completed and exhausted its power to rule on the matter of divorce, it no longer has ancillary power to interpret the divorce agreement or the divorce award. Moreover, in the instant case no question of interpreting the divorce agreement has arisen and a claim for its enforcement has been brought instead.

 

A rabbinical court cannot be empowered to decide a dispute between litigants in arbitration, in a matter that is not within its subject matter jurisdiction according to the statute. In the instant case, it also appears from the divorce agreement that its contents cannot be construed as an arbitration clause, equal to "an arbitration agreement" between the parties. The power of an arbitrator to decide a dispute between parties derives from an arbitration agreement. The condition precedent for arbitration is the existence of an agreement to refer a dispute to arbitration. If parties have agreed to refer disputes between them to the decision of some entity but it is not clear that a decision in arbitration is involved, then there is no arbitration agreement.

 

By deciding the respondent's lawsuit against the petitioner for the enforcement of a contractual indemnification provision in the divorce agreement, the Rabbinical Courts exceeded the power vested in them by law. Consequently, the decisions of the first and second respondents are void.

 

 

 

Voting Justices: 
Primary Author
majority opinion
majority opinion
majority opinion
Full text of the opinion: 

In the Supreme Court

Sitting As the High Court of Justice                                             HCJ 8638/03

 

Before:

His Honor, Vice President (Ret.) M. Cheshin

Her Honor, Justice A. Procaccia

His Honor, Justice S. Joubran

 

 

 

 

 

 

 

 

The Petitioner:

Sima Amir

 

 

 

 

v.

 

 

 

The Respondents:

1. The Great Rabbinical Court in Jerusalem

 

2. The Regional Rabbinical Court in Jerusalem

 

 

3. Yoseph Amir

 

 

 

 

 

 

 

On Behalf of the Petitioner:

Adv. Michael Korinaldi

 

 

 

 

On Behalf of the Third Respondent:

Adv. Nechama Segal

 

 

 

 

On Behalf Of the Rabbinical Courts System:

Adv. S. Jacoby

 

 

 

 

 

JUDGEMENT

 

Justice A. Procaccia

 

1.         This petition puts to the test the question of the Rabbinical Court's authority to adjudicate a property dispute between a couple after the divorce proceeding between them has been completed, and it focuses on an alleged breach of the divorce agreement by one member of the couple. Is the matter within the jurisdiction of the Rabbinical Court or is it within the power of the civil judicial instance; and if the Rabbinical Court does indeed have authority to adjudicate the matter, what is the source of the authority and from where does this authority derive? Is it from the law; is it from the parties' agreement in arbitration or otherwise? And what is the nature of this authority?

 

2.         The petition concerns the petitioner's motion to vacate the decisions of the Great Rabbinical Court in Jerusalem – the first respondent – of May 4 and June 9, 2003, which dismissed the petitioner's appeal against the judgment of the Regional Rabbinical Court of Jerusalem – the second respondent – of May 27, 2002, and its decisions of March 5, 2001 and June 18, 2002.

 

Background and Proceedings

 

3.         The petitioner and the third respondent (hereinafter: “the respondent") were married in 1980 and have three children. Their relationship became unstable and they motioned the Regional Rabbinical Court of Jerusalem in 1992 in order to arrange for divorce proceedings. As part of that proceeding, the couple requested the Regional Rabbinical Court to approve a divorce agreement that they had made. In the agreement, the couple agreed on the act of divorce, the custody and support of the children, and various financial and property arrangements, as follows: the three children would be in the custody of the wife until reaching the age of 18 (clause 3); the husband would pay child support in the sum of NIS 1,000 per month for all three of the children until they reach the age of 18; the sum of the child support as set in the agreement would not be increased, and in exchange, the husband would transfer his share of the couple’s apartment to the wife, including his share of the apartment’s contents and the gold objects, ownership of which would all be transferred to the wife (clauses 4(a) and (b)); the husband also undertook to discharge the balance of the mortgage loan each month (clause 6(c)). The agreement also included a condition whereby the wife undertook not to sue the husband in any court for an increase in child support, either directly or indirectly, and if the husband were sued, the wife would compensate him in such a way that he would receive half of the apartment, half of its contents and half of the gold (clauses 4 and 5 the agreement). Taking out a stay of exit order inhibiting the husband's departure from the country would also be deemed a breach of the agreement and lead to the same result (clause 13). In order to secure the wife's obligation in accordance with the agreement, a cautionary note would be registered against the apartment, pursuant whereto one half of the apartment would be transferred into the husband's name if he were sued to increase child support. The relevant provisions of the agreement are as follows:

 

                        "4.       Child Support

 

                                    (e)       For the avoidance of doubt and without prejudice to the generality of the aforegoing, child support under the agreement shall unequivocally cover all the children's needs without exception… until the children reach the age of 18.

 

                                    The mother undertakes not to sue the father in any legal instance for an increase in child support or for the satisfaction of any of the children's needs without exception beyond what the father has undertaken in this agreement, either directly (herself) or indirectly (through any institution, entity, authority, person and/or in the name of the minor and/or anyone who now and/or in future has an interest), and if the husband is sued, the wife shall compensate him and he shall receive one half of the apartment, one half of its contents and one half of the gold. The obligation is in perpetuity.

 

                                    …

 

                        5.         Indemnification

 

                                    (a)       The mother undertakes and takes it upon herself not to sue the father in any legal instance whatsoever for an increase in child support or for the satisfaction of any of the children's needs without exception beyond what the father has undertaken in this agreement, either directly (herself) or indirectly (through any institution, entity, authority, person and/or in the name of the minor and/or anyone who now and/or in future has an interest).

 

                                    (b)       If, contrary to the abovementioned, the father is sued for an increase in child support and/or satisfaction of any of the children's needs, whether the lawsuit is brought by the mother and/or the mother in the name of the children or by an entity, authority, institution and/or anyone who now and/or in future has an interest, beyond what the father has undertaken in this agreement, then the mother undertakes to transfer one half of the apartment into the father's name and one half of its contents and one half of the gold. The obligation is in perpetuity.

 

                                    (c)       To secure the wife's obligations in this agreement, a cautionary note shall be registered, pursuant whereto one half of the apartment shall be transferred into the husband's name if the husband is sued to increase child support…"

 

            The agreement also includes a provision with regard to the exclusivity of the Rabbinical Court's jurisdiction in the event of a dispute between them after the divorce, in the following terms:

 

                        "9.       Cancellation of Mutual Claims And/or Complaints

 

                        …

 

                        10.       …

 

                        11.       If after the divorce, differences arise between the couple, they undertake to file the lawsuit solely in the Rabbinical Courts.

 

                        12.       …

 

                        13.       The wife undertakes not to take out a stay of exit order preventing the husband's departure from the country, and taking out such an order shall constitute a breach of this agreement, and the husband shall be entitled to obtain one half of the value of the apartment, of the contents and of the gold.

 

                        …"

 

            The divorce agreement was given the effect of judgement by the Rabbinical Court, and on May 26, 1992 the couple was divorced.

 

4.         About five years later, in June 1997, the couple's children (through the petitioner) filed a child support motion against the respondent in the Jerusalem Family Court (FC 10330/97). The motion was mainly intended to increase the child support upon which the couple had agreed in the Rabbinical Court to NIS 6,700. This was, inter alia, due to the petitioner's claim that the respondent was not paying the mortgage payments as undertaken by him in the divorce agreement. In the answer of defense, the respondent defended the claim on its merits. According to him, he was living off a general disability pension of NIS 1,200 per month, from which he was paying child support. The Family Court (per Judge N. Mimon) held in its judgement that the children's monthly support should be increased to a total of NIS 2,000 for both minor children together, and the sum of NIS 500 for the other child until his enlistment to the IDF; with respect to the minors, it was further held that from the time they reached the age of 18 until they completed their service in the IDF, the child support for them would be reduced by NIS 700, and upon completion of their military service the liability for their support will be terminated; if they do not enlist, the liability for them would be terminated when they reach the age of 18. With regard to the other child, upon his enlistment to the IDF and until his discharge, support of NIS 300 would be payable for him.

 

            On September 20, 1997, about three months after the motion to increase child support was filed in the civil court, the respondent filed a motion in the Regional Rabbinical Court of Jerusalem "for a declaratory judgement and specific performance" of the divorce agreement. In the motion, he pleaded that the petitioner had breached the divorce agreement several times and in several different aspects, as follows:

 

                        "8        (a)       The defendant (the petitioner – AP) filed a motion to increase child support in the name of the minors before this Honorable Court on February 28, 1993 – a motion that was dismissed by the Court

 

                                    (b)       The defendant filed another motion on November 6, 1994 and at the end of that motion the wife again applied for an increase in child support.

 

                                    (c)       The defendant motioned for a stay of exit order that was cancelled on July 21, 1997.

 

                        9.         (a)       The defendant went further, and when she saw that her motions were being dismissed by the Honorable Rabbinical Court, she  filed a motion to increase the child support in the name of the minors in FC 10330/97 in the Jerusalem Family Court.…

 

                                    (b)       As part of the motion in Family Court, the wife applied for a stay of exit order that the Court approved.

 

                                    (c)       Moreover, at about the time she filed the motion, the defendant filed a motion for a stay of exit order on July 22, 1997, after the previous order inhibiting departure from the country had been set aside, and the Chief Execution Officer approved it".

 

            He pleaded that the wife had therefore breached clauses 5 and 13 of the divorce agreement. On the basis thereof, the respondent sued the wife for one half of the apartment and its contents and one half of the gold.

 

5.         After filing his motion to the Regional Rabbinical Court, the respondent traveled abroad for more than two years and abandoned his motion. After returning to Israel, he renewed the motion in the Rabbinical Court. The petitioner pleaded in her defense, that the subject of the motion was " breach of a divorce agreement" and according to the law laid down in HCJ 6103/93 Sima Levy v. The Great Rabbinical Court in Jerusalem, PD 48(4) 591 (hereinafter: "Sima Levy Case") the Rabbinical Court did not have jurisdiction to adjudicate the motion. As for the merits of the motion, the petitioner argued that the respondent had come to court with unclean hands because he had breached the divorce agreement by not paying the mortgage payments as he had undertaken in the divorce agreement. The Regional Rabbinical Court, in its decision of February 25, 2001, referred the issue of jurisdiction raised by the petitioner to the Rabbinical Courts' then legal counsel on rabbinical jurisdiction, Adv. E. Roth, for his opinion.

 

            During the same month (February 2001) the petitioner filed a lawsuit in the Jerusalem Family Court against the respondent for "declaratory judgement as to the revocation of the indemnity provision in the divorce agreement" (FC 10331/97). This was based, inter alia, on the argument that the respondent breached the divorce agreement by not paying the mortgage payments as he had undertaken in the divorce agreement. The petitioner further requested that the Court declare the revocation of clauses 11 and 13 of the divorce agreement, pleading that they were "contrary to public policy and the law". The respondent argued in his defense that the claim should be summarily dismissed due to the proceedings conducted on the same issues in the Rabbinical Court.

 

            On March 4, 2001, and before the Family Court had awarded its decision on the respondent's motion for the summary dismissal of the petitioner's claim, the opinion of the legal counsel on rabbinical jurisdiction, Adv. Roth, was filed in the Rabbinical Court. In his opinion, with reference to clause 5(b) of the divorce agreement, the Rabbinical Court did not have jurisdiction to adjudicate the respondent's motion after the divorce. Nevertheless, he believed that clause 11 of the divorce agreement could be treated as an arbitration clause in accordance with the Arbitration Law, 5728-1968 (hereinafter: "the Arbitration Law"). By virtue of the rules of arbitration, the Rabbinical Court is empowered to adjudicate the suit as an arbitrator in accordance with the rules and restraints governing an arbitrator. He further added that, in his opinion, it was unnecessary for the couple to sign an arbitration deed, since clause 11 of the divorce agreement constituted an arbitration deed in all respects.

 

            Following the opinion of the legal counsel, Adv. Roth, the Regional Rabbinical Court decided on March 5, 2001 that it was vested with jurisdiction to adjudicate the respondent's suit "since in the Court's opinion clause 11 constitutes an arbitration deed".

 

            On May 14, 2002, and before the Regional Rabbinical Court's judgement had been awarded in the respondent's suit, the Family Court awarded its decision in the respondent's motion for the summary dismissal of the petitioner's suit. It reviewed the question of the Rabbinical Court's jurisdiction to try the respondent's claim, whether as a court empowered by virtue of statute or as an arbitrator, but it decided to stay the award of its decision on jurisdiction on the ground that:

 

                        "Mutual respect of legal instances requires that after a decision has been awarded by the Rabbinical Court holding that it has jurisdiction to adjudicate the suit that has been filed with it as an arbitrator, the award of a decision on jurisdiction should be stayed until the proceedings in respect of jurisdiction have been exhausted by the plaintiff, who will perhaps wish to act by applying on appeal to the Great Rabbinical Court or by applying to the High Court of Justice to clarify whether her position with regard to jurisdiction will be allowed, or even by motioning to vacate an arbitral judgment as provided in section 24 of the Arbitration Law…"

 

            On May 27, 2002, the Regional Rabbinical Court awarded its judgement in the respondent's motion. The court was divided in its opinion between the three judges, and the decision was made, in the words of the judgement, in accordance with –

 

                        "the third opinion, which was the decisive one of the three, since there are several doubts regarding the interpretation of the agreement, and there is a doubt as to whether it constitutes a breach according to Halachic authorities and the circumstances. Therefore, the case should be decided according to the law, and if the apartment has already been transferred into the wife's name, it is not possible to take away her ownership of the apartment because of a doubt, and of course the wife is liable to comply with all of the obligations in the divorce agreement.... If the apartment has not yet been transferred, it is not possible to order the plaintiff ... to transfer his share of the apartment into the wife's name ....

If the plaintiff has already signed a power of attorney and delivered it to the wife, it would appear that the wife cannot be precluded from exercising the power of attorney in order to transfer the plaintiff's share of the apartment into the wife's name…. On the other hand, if the husband still needs to sign transfer documents and the like, he should not be made to help transfer the dwelling into the wife's name in any way whatsoever….

With regards to the gold objects that the wife has received, it would also appear that she cannot be made to return them to the husband because they are in her possession and in this way her possession is valid…"

 

            As mentioned above, according to the Rabbinical Court's decision of March 5, 2001 it decided the respondent's suit as an arbitrator, but on June 18, 2002 it awarded another decision that was headed "Clarification", according to which:

 

                        "The Rabbinical Court makes it clear that it was the Rabbinical Court that approved the agreement and that there was an undertaking that all matters involved in the agreement would be tried solely by the Rabbinical Court. Therefore, since both parties undertook in the agreement, and the Rabbinical Court also approved the agreement, the Rabbinical Court consequently has jurisdiction to hear and adjudicate the matter, and the Rabbinical Court awarded the judgement by virtue of its jurisdiction, and there was no need for the Rabbinical Court to adjudicate the same as arbitrator, and although the Rabbinical Court could also adjudicate the matter as an arbitrator, the Rabbinical Court also had jurisdiction to try the matter as an adjudicating court in accordance with the aforegoing".

 

6.         The petitioner appealed to the Great Rabbinical Court against the Regional Rabbinical Court's judgement of May 27, 2002. Her main plea in the appeal was that the Regional Rabbinical Court did not have jurisdiction to adjudicate the respondent's suit, either as a competent court by virtue of the law or as an arbitrator, and its judgement is therefore void. As to the actual merits, she argued that the Regional Rabbinical Court had made an error "of judgement" and "disregarded facts" by not giving proper weight to the fact that it was the respondent who was in breach of the divorce agreement by not making the mortgage payments as he had undertaken in the divorce agreement. Consequently, on that ground too, on the merits of the case, the Regional Rabbinical Court's judgement should be vacated. The respondent also appealed to the Great Rabbinical Court against the said judgement.

 

            The Great Rabbinical Court, in its decision of May 4, 2003, dismissed the petitioner's appeal with respect to jurisdiction and held that the interpretation of the divorce agreement indicated that it concerned the couple's agreement for "property in consideration for child support". That interpretation affects the substance of the complaint that the respondent filed to the Rabbinical Court, and it demonstrates that it is a suit to revoke the divorce agreement as opposed to a motion for the enforcement of an indemnity provision. That being the case, the Rabbinical Court had jurisdiction to adjudicate the respondent's motion by virtue of its original (primary) authority because "indemnification was not involved, but property and child support and the connection between them, and those matters of property division and child support are certainly matters of personal status that are governed by section 9 of the Rabbinical Courts Jurisdiction Law". The Rabbinical Court was also vested with original (primary) jurisdiction to adjudicate the suit in view of clause 11 of the divorce agreement, which provides that if differences arise between the petitioner and the respondent after the divorce, the two undertake to file the motion solely to the Rabbinical Courts. The Rabbinical Court mentions that at the hearing, the respondent also pleaded avoidance of the Get and the divorce because according to him the Get had been given by mistake. Consequently, on that ground too, the Rabbinical Court had original (primary) jurisdiction to adjudicate the claim. According to the Rabbinical Court, it also had jurisdiction by virtue of its "continuing" jurisdiction, because the respondent was "applying expressly for the revocation of the property arrangement as a result of a change in circumstances concerning child support". Finally, the Great Rabbinical Court held that the jurisdiction to adjudicate the respondent's suit was vested in the Regional Rabbinical Court, when "the jurisdiction is the essential jurisdiction vested in the Rabbinical Court, rather than jurisdiction by virtue of the Arbitration Law". The Great Rabbinical Court adjourned the deliberation on the appeal itself to a later date.

 

            On June 9, 2003 the Great Rabbinical Court awarded another decision, this time with regard to the respondent's appeal against the Regional Rabbinical Court's judgement. In its decision, the Great Rabbinical Court ordered the matter to be remitted to the Regional Rabbinical Court for it to try the argument, which had not been tried in the Regional Rabbinical Court, that the petitioner had breached the divorce agreement by suing for increased child support in the Regional Rabbinical Court in 1993.

 

The Petition

 

7.         In her petition before us, the petitioner seeks to set aside the decisions of the Great Rabbinical Court and the Regional Rabbinical Court, according to which the Rabbinical Court had jurisdiction to adjudicate the respondent's motion, both as original (primary) jurisdiction and by virtue of an arbitration clause.

 

            This Court issued an order nisi in the petition.

 

The Parties' Arguments

 

8.         The petitioner's essential argument in her petition herein is that the Rabbinical Court lacks jurisdiction to adjudicate the property dispute that has arisen between her and the respondent in respect of the divorce agreement that was made between them. According to her, the Rabbinical Courts are not vested with original (primary) jurisdiction to adjudicate the suit. Moreover, they do not have continuing jurisdiction to hear the respondent's suit. The respondent's motion to obtain one half of the property, which was transferred to the wife, is based on the cause of enforcing an indemnity provision in the divorce agreement. This cause is based on a plea of breach, if one occurred, after the divorce agreement was made and the judgement of the Rabbinical Court giving it force and effect was awarded, and after the couple had been duly divorced. A subsequent breach of the divorce agreement in respect of property after the parties' divorce cannot be bound in retrospect with the divorce agreement and the judgment that materialized in the past. From the divorce and onwards, motions that relate to the breach of the divorce agreement are not a part of matters of personal status. The Rabbinical Court therefore lacks jurisdiction to adjudicate them, and jurisdiction in respect of them is vested in the civil court. Moreover, it was argued that the respondent himself breached the divorce agreement by not paying the mortgage payments as he had undertaken to do in the divorce agreement. His breach of the agreement has civil-financial character, which also demonstrates that his suit after the divorce is subject to the jurisdiction of the civil, rather than religious, court. The petitioner further pleads that clause 11 of the divorce agreement does not amount to an arbitration clause and does not purport to establish an agreement for arbitration. Instead, its wording and contents merely demonstrate its determination, by agreement of the parties, to which court the couple's motions after the divorce should be filed. This agreement, per se, does not vest jurisdiction in the Rabbinical Court. In view of all of this, and based on other grounds too, upon which we shall not focus, the Rabbinical Courts' decisions on jurisdiction are void.

 

9.         The respondent's position in his petition is that the Rabbinical Court is vested with jurisdiction to adjudicate the suit he filed to it. In this respect, he relies on the provision of the divorce agreement, according to which the parties expressly agreed to vest the Rabbinical Court with jurisdiction to try any future dispute between them concerning the agreement. He pleads that, according to case law, a matter that can be bound from the outset with the divorce suit, such as property matters, and it was agreed in the divorce arrangement to vest jurisdiction in the Rabbinical Court in respect to them, is also within its jurisdiction after the divorce. He further asserted that the meaning of the cause of the action that he filed was the revocation of a conditional undertaking given under the agreement, as opposed to the enforcement of a contractual indemnification arrangement. That is to say that the respondent entered into a conditional undertaking to transfer property to the petitioner in consideration for the child support being set in a binding amount and not being increased, and for motions not to be brought in this matter. Since that condition had not been fulfilled, the property undertaking that he had given is void. A contractual indemnification provision is not to be treated in the same way as a conditional property undertaking, with regard to which the Rabbinical Court has continuing jurisdiction even after the divorce. Alternatively, it is argued, the Rabbinical Court has jurisdiction to entertain the respondent's suit according to the law of arbitration, by virtue of clause 11 of the divorce agreement, which constitutes an arbitration agreement, even if the word "arbitration" is not mentioned in it.

 

Judgment

 

10.       This Court's intervention in the decisions of religious courts is limited to extreme cases of ultra vires, infringement of the principles of natural justice, departure from the provisions of law aimed at the religious court or when equitable relief is necessary where the matter is not within the jurisdiction of another court or tribunal (sections 15(c) and (d)(4) of the Basic Law: the Judiciary; HCJ 323/81 Vilozni v. The Great Rabbinical Court, PD 36(2) 733; HCJ 1689/90 E'asi v. The Sharia Court, PD 45(5) 148, 154-155; HCJ 1842/92 Blaugrund v. The Great Rabbinical Court PD 46(3) 423, 438; HCJ 5182/93 Levy v. The Rehovot Regional Court PD 48(3) 1, 6-8).

 

            The subject matter of the petition herein justifies this Court's entertaining the matter on grounds of the Rabbinical Court's exceeding the jurisdiction vested in it for the reasons explained below.

 

The Question

 

11.       The couple signed a divorce agreement containing property and child support arrangements. In the scope of the property arrangements, they agreed to limit and not increase child support. They added a condition according to which if motions to increase child support were filed by the wife, directly or indirectly, or if she took out stay of exit orders, these actions would have certain property consequences. The parties further agreed that if differences arose between the couple after the divorce, they undertook to conduct the claims solely in the Rabbinical Courts. Indeed, after the divorce, disputes did arise between the parties following motions to increase child support that were brought against the husband, and stay of exit orders were taken out. Further thereto, the husband filed a suit in the Rabbinical Court claiming a breach of the divorce agreement by the wife and requesting to receive one half of the property because of that breach. In those circumstances, after the couple's divorce, is the Rabbinical Court vested with jurisdiction to adjudicate the husband's property suit, which is based on an alleged breach of the divorce agreement by the wife? Or is the exclusive jurisdiction to deliberate and adjudicate that claim vested in the civil court?

 

            The subsidiary questions that are to be decided can be divided into two:

 

            First is whether the Rabbinical Court has jurisdiction by virtue of the law to adjudicate a property claim based on a breach of the divorce agreement after the divorce has been completed, by virtue of one of the following:

 

            (a)       Original-primary jurisdiction by virtue of statute to hear and adjudicate issues pertaining to the divorce;

 

            (b)       the Court's "ancillary" jurisdiction to adjudicate matters connected with the divorce after its completion, as interpreted and expanded by case law.

 

            The Second is whether the Rabbinical Court has jurisdiction to decide a property claim based on the breach of a divorce agreement by virtue of the parties' agreement, and what legal significance is to be given to this agreement.

 

            We shall consider these questions.

 

The Starting Point

 

12.       The starting point underlying the analysis of the Rabbinical Court's scope of jurisdiction is based on several fundamental assumptions:

 

            First, the Rabbinical Court is a state judicial instance, which was established by virtue of the Rabbinical Courts Jurisdiction (Marriage and Divorce) Law, 5713-1953 (hereinafter: "the Rabbinical Courts Jurisdiction Law"), and it derives its power and jurisdiction therefrom. As such a state judicial instance, the bounds of the Rabbinical Court's powers are defined and fashioned in accordance with the state law.

 

            Second, every state judicial instance, including the religious court, has merely those jurisdictions that the state law has granted it; it is the statute that established it, and it is the one that defined its powers and assigned them to it. In doing so, the statute assumed, as part of the basic concept of democratic government, that in the granting of judicial powers also lay judicial limitations. Anything that has not been granted to the judicial instance is outside and beyond its power, and it must not surpass its acknowledged boundaries and into areas that have not been entrusted to it and go beyond its responsibility. That is the principle of legality that characterises the structure of democratic government, upon which rests the perception of the status of the government authorities, including the courts. It is on the basis of this principle that the realm of jurisdiction that is vested in the state judicial instances, of which the Rabbinical Courts form part, extends.

 

            Third, the definition of the judicial powers of the various different courts, including the Rabbinical Courts, derives from statute, and statute is subject to interpretation by case law. The case law's interpretation of the extent of the powers vested in the judicial instance is intertwined with the provisions of the statute as the primary source of the power vested in the judicial instance, and it is intended to serve its purpose. In reviewing the boundaries of the religious court's power we shall therefore assume that the religious court is vested with the powers that have been granted to it by the statute, as they have been interpreted by case law, and it has only what the law has given it. As the Court stated (per Justice Landau) in HCJ 26/51 Menashe v. The Chairman and Members of the Rabbinical Court in Jerusalem, PD 5 714, 719:

 

                        "The Rabbinical Courts of our country exist in accordance with the general law, which determines their place in the state courts system, and the questions relating to the spheres of their jurisdiction should generally be resolved in accordance with the same principles as govern other courts".

 

            This is what distinguishes Rabbinical Courts from arbitrators, internal tribunals and voluntary tribunals, which are not established by virtue of statute but mainly by virtue of contract or regulations, and the scope of their jurisdiction is determined pursuant thereto. These entities are essentially governed by the principles of the private law that creates them and they are not part of the country's state judicial system.

 

            As Justice Zamir stated in HCJ 3269/95 Yosef Katz v. The Jerusalem Regional Rabbinical Court, PD 50(4) 590, 602:

 

                        "The Rabbinical Court is established by virtue of statute and its jurisdiction derives from the statute. Its budget comes from the State Treasury and its judges receive salaries like state employees; it sits in judgement beneath the symbol of the State and it writes its judgements on State paper; the orders that it issues speak in the name of the State and are enforced by the State. The Rabbinical Court is not a private entity but a state institution. It is therefore subject to public law and review by the High Court of Justice. Amongst other things, the Rabbinical Court is obliged to respect and observe the fundamental principle that governs every government agency, namely the principle of legality. According to that principle, the Rabbinical Court has nothing other than the power granted to it in accordance with the statute" (emphasis added).

 

            In this respect Justice Cheshin stated in the Sima Levy Case (ibid, p. 616):

 

                        "The legal system takes a grave view of a judicial entity acting beyond the bounds set for it by the law; hence, the case law holds that a lack of subject matter jurisdiction plea stands out and the court will consider it at any stage of the litigation, even where a party first raises it on appeal".

 

            (See also HCJ 816/98 Eminoff v. Eltalaff, PD 52(2) 769, 796-7; HCJ 512/81 The Hebrew University Archaeology Institute v. The Minister of Education, PD 35(4) 533, 543-4; HCJ 30/76, MF 150/76 Siho v. The Karaite Jewish Community Religious Court, PD 31(1) 15, 17-18.)

 

            The state judicial system, and its various different courts, both civil and religious, is built on common norms that govern all its agencies. Thus, for example, it has been held in the past that the fundamental principles that govern civil judges also apply to rabbinical judges. The rabbinical judge, like the civil judge, is part of the judicial authority and in his position he is subject to the same basic rules as obligate any judicial officer:

 

                        "He is not an arbitrator between parties who voluntarily apply to him. He operates by virtue of state law and his authority extends over the whole public with all its diversity, opinions and views. Like a civil judge, a rabbinical judge enjoys independence in matters of judgement. The laws concerning conditions of service, immunity, appointment, discipline and the like that govern the rabbinical judge are very similar to those that govern a civil judge. Like the civil judge, so too the rabbinical judge must, by his action, ensure the public's trust in his judgement. The public is not only the religious public. The rabbinical judge deals with the whole people and he must by his conduct ensure the trust of the whole people, both secular and religious". (Per Justice Barak in HCJ 732/84 MK Tzaban v. The Minister of Religious Affairs, PD 40(4) 141, para. 16.)

 

            In this context, case law has also drawn a clear distinction between a person's fitness as a rabbinical judge of the Israeli Rabbinical Court and his fitness as a community rabbi. On enactment of the Dayanim (rabbinical judges) Law a clear separation was created between judicial and rabbinic functions, and a mix between the two in judicial work is no longer consistent with the concept of state law. In the words of the Minister of Religious Affairs Warhaftig, when he presented the Dayanim Law draft on first reading in the Knesset, as cited in the Tzaban Case:

 

                        "With the establishment of the State of Israel we adopted this course. We distinguished between those functions and separated between rabbis and rabbinical judges" (Knesset Proceedings Session 5457, 1954, p. 2182).

 

 

 

            As Justice Goldberg added on this subject in the Tzaban Case:

 

                        "The main power of the Rabbinate rests in its traditional authority over those who come 'to seek God', whilst the rabbinical judges' authority when sitting in judgement does not depend on the wishes of the litigants but is enforced in the context of the judicial system prescribed for it by the legislature. In this sphere, the rabbinical judges perform the function of 'judging the people', with its varied opinions and views".

 

 

            The religious function of the rabbinical judge as rabbi is not intertwined with the judicial function that he performs as a rabbinical judge and is separate from it. The Rabbinical Court cannot therefore rely on its religious power in order to assume jurisdiction in a matter that exceeds its powers and authorities in accordance with state law (Schiffman, Family Law in Israel, 5755, Vol. I, p. 42).

 

            Against this background there is difficulty with the argument that is sometimes made that the Rabbinical Court might perform a dual function: on the one hand, a state judicial function imposed upon it by virtue of state law, and on the other hand, a religious court in monetary matters by virtue of the parties' agreement. Like any public entity that performs a function in accordance with the law, so the Rabbinical Courts, which operate by virtue of statute must also discharge the responsibility owed by them by virtue of statute and decide the matters entrusted to them. As part of the state judicial system, they possess only the jurisdiction that the statute has placed in their hands. That is the essence of the principle of legality that underlies public administration and the judicial system (Katz Case, ibid, p. 607); hence, even if Jewish law and tradition permit a Rabbinical Court to adjudicate and decide disputes in a certain manner, that does not suffice to authorize it to do so because "the Rabbinical Court, as a state institution, must act within the authority vested in it by state law" (Katz Case, ibid, p. 607). To the same extent, a civil court, which is part of the judicial authority, may not assume an authority or function that does not derive from state law (Tzaban Case, ibid, p. 152).

 

            It is against this background that we shall examine the question of the Rabbinical Court's jurisdiction to decide the respondent's property suit against the petitioner based on a breach of the divorce agreement, and the relief deriving therefrom. A comprehensive analysis of the issue of jurisdiction in a similar context can be found in the judgement of Justice Cheshin in the Sima Levy Case and it will guide and direct us.

 

The Rabbinical Court's Original – Primary Jurisdiction

 

13.       The original primary powers of the Rabbinical Court were set in the Rabbinical Courts Jurisdiction Law and they are built on two tiers: exclusive powers by virtue of the statute; and parallel powers of the civil court and the Rabbinical Court that are vested by virtue of the parties' agreement. The exclusive powers comprise matters of marriage and divorce, as well as matters that are duly bound up in the motion for divorce, including wife and child support. Parallel jurisdiction that is vested by agreement relates to matters of personal status in accordance with article 51 of the Palestine Orders in Council and the Succession Ordinance. The relevant provisions are as follows:

 

                        "1.       Jurisdiction in matters of marriage and divorce

 

                        Matters of marriage and divorce of Jews in Israel, nationals or residents of the State, shall be under the exclusive jurisdiction of rabbinical courts.

 

                        …

 

                        3.         Jurisdiction in matters incidental to divorce

 

                        Where a suit for divorce between Jews has been filed in a rabbinical court, whether by the wife or by the husband, a rabbinical court shall have exclusive jurisdiction in any matter connected with such suit, including support for the wife and for the children of the couple.

 

                        …

 

9.         Jurisdiction by consent

 

In matters of personal status of Jews, as specified in article 51 of the Palestine Orders in Council, 1922 to 1947, or in the Succession Ordinance, in which a rabbinical court does not have exclusive jurisdiction under this Law, a rabbinical court shall have jurisdiction after all parties concerned have expressed their consent thereto."

 

The Rabbinical Court's powers – both the exclusive ones (marriage, divorce and matters bound with divorce) and the jurisdiction in accordance with the parties' agreement in matters of personal status – are original-primary powers by virtue of the statute to hear and rule on the matters that fall within the scope of those powers.

 

Power Ancillary to Original Jurisdiction

14.       The Case law has recognized the existence of a judicial instance's inherent ancillary power that derives from the original power of the Rabbinical Court by virtue of the statute and in special circumstances grants it jurisdiction to again hear a matter upon which it has ruled in the past. Such is, for example, the jurisdiction of the civil and religious courts to vacate a judgement awarded by them that is based on an agreement between the parties, in the making of which there has been a defect. Such a material defect might lead to the revocation of the agreement and therefore also to revocation of the judgment that rests upon it, and the instance empowered to decide its revocation is the one that rendered the judgment (HCJ 124/59 Glaubhardt v. The Haifa Regional Rabbinical Court, PD 13 1490; CA 151/87 Artzi Investment Co. v. Rachmani PD 43(3) 489, 498-500). Additional expression of such ancillary jurisdiction occurs when there is a material change in the circumstances of the matter, that has occurred after the award of judgement by consent, which makes its continued performance unjust (Sima Levy Case, ibid, pp. 605-6; CA 442/83 Kam v. Kam PD 38(1) 767, 771; CA 116/82 Livnat v. Tolidano PD 39(2) 729, 732; CA 219/87 Rachmani v. Shemesh Hadar, Building Company Ltd et al. PD 43(3) 489, 498-500). The recognition of this ancillary jurisdiction is intended to bring about a proper balance between the judgment’s finality on the one hand, and the interest not to leave in effect a judgment, the enforcement of which has become extremely unjust due to a change in circumstances. Inherent jurisdiction is also vested in the judicial instance, including the Rabbinical Court, to retain jurisdiction in respect of a matter that is pending before it until the proceedings have been completed. So long as final judgement has not been awarded, jurisdiction continues until the judicial court has completed its work. Once a final, unconditional judgment has been awarded, the work is completed (Sima Levy Case, p. 607; CA 420/54 Ariel v. Leibovitz PD 9 1337; ALA 2919/01 Daniel Oshrovitz v. Yael Lipa (Fried) PD 55(5) 592; J. Zussman, The Civil Procedure (seventh edition, 5755) 550).

One of the expressions of ancillary jurisdiction relates to the existence of the Rabbinical Court's "continuing jurisdiction", the essence of which is that, under certain conditions, where the Rabbinical Court has in the past heard a particular matter, its continuing jurisdiction to hear it again will be recognized. The continuing jurisdiction also derives from the inherent power of the judicial instance. Its basic purpose is to give expression to the duty of mutual respect and the need for harmony between judicial instances where there is parallel jurisdiction between them, and in order to avoid parties running from one judicial instance to another. It has nevertheless already been explained that continuing jurisdiction is not intended to undermine or derogate from the original powers vested in the judicial instances in accordance with statute. Its purpose is essentially "to vest power to vacate or modify an earlier decision due to a change that has occurred in the circumstances upon which the first decision was based" (per Justice Cheshin in the Sima Levy Case, ibid, p. 608, 610). Such are matters of child support and custody, which by their nature are subject to material changes of circumstance, and the original judicial instance therefore has inherent jurisdiction to reconsider them when the appropriate conditions arise.

It should be made clear that no inherent power has been recognized for a civil or religious court to exercise its original authority again in order to interpret a judgement awarded by it. Hence, a Rabbinical Court that has granted a divorce does not have inherent jurisdiction to interpret the divorce agreement and the judgement that awarded it force and effect (Sima Levy Case, ibid, pp. 612-13).

These are the characteristics of the original jurisdiction that is vested in the Rabbinical Court in accordance with the statute, alongside its ancillary powers that are sparingly exercised in special circumstances by virtue of its inherent jurisdiction, in order to complete the judicial act and make it a complete and just deed.

We shall now examine the question of whether the Rabbinical Court has jurisdiction to adjudicate a dispute by virtue of the parties' agreement, where such jurisdiction is not set in the statute empowering the Rabbinical Courts, and is not within the scope of the ancillary jurisdiction vested in it.

The Rabbinical Court's Jurisdiction by Virtue of the Parties' Agreement

15.       The parties' agreement to vest jurisdiction in the Rabbinical Court might take on two guises: one, simple agreement to grant the Court jurisdiction in a particular case, regardless of the provisions the Rabbinical Courts Jurisdiction Law; second, agreement intended to empower the Court to hear and rule on a dispute as an arbitrator. Can such agreement by the parties vest power in the Court that is not granted to it by the empowering statute or embodied in its ancillary powers?

The Israeli state judicial system and the various different judicial instances, derive their powers from statute. It is the statute that establishes them, it is what delineates the bounds of their activity and it is what defines the sphere of their subject matter and territorial jurisdiction. This is also the case in respect to the civil judicial instances; and so it is with respect to the special judicial systems, including the courts of Israel's different religious communities. These include the Rabbinical Courts in Israel.

By defining the powers of the various different judicial instances in Israel, the statute intended not only to delineate the function and responsibility of the system and its various different arms. It also sought, at the same time, to deny the power of a judicial instance to hear and adjudicate a matter which it was not charged with by the statute and which is not within its inherent jurisdiction. The definition of the judicial instances' powers has a dual dimension, both positive and negative: it constitutes a source of power and responsibility on the one hand, while denying the exercise of authority and power that have not been so conferred; the judicial instance has only what the statute that established it has vested in it, and insofar as it has been made responsible to adjudicate disputes within the scope of the power vested in it, it is under a duty that derives from the statute and the concept of democratic government not to try or adjudicate a matter that is beyond its statutory power.

A preliminary and mandatory condition for the satisfactory activity of any judicial system is a clear and exhaustive definition of the framework of powers and the apportionment of functions that rest with its various different instances. Without an exhaustive and specific definition of powers the systemic structure, built in accordance with the statute, is blurred and the stability of its functioning is not secured. The harmony necessary in the area of operation of the different judicial arms and the relationship between them is impaired; the allocation of professional, administrative and budgetary resources to the different instances is disrupted, and direct harm might occur to the efficacy of the judicial system and the level of judicial performance. The uniqueness of the responsibility owed by the judge, which requires the existence of a clear framework of authority, alongside which is the responsibility and duty to rule, becomes blurry. Thus, recognizing the power of a judicial instance to adjudicate matters, the power and responsibility for which have not been legally transferred to it, might materially disrupt the internal balance required in the structure of the judicial system and severely undermine its standing and performance.

A consequence of the aforegoing is that the power of a judicial instance, as such, be it civil or religious, is acquired by law and it has no power to be derived from the parties' agreement, except where the statute itself has seen fit to recognize such agreement in certain circumstances as a source of the power to adjudicate. Thus, for example, with regard to the effect of the parties' agreement, the law has distinguished between the apportionment of subject matter jurisdiction and territorial jurisdiction between judicial instances. It is willing to acknowledge, in certain conditions, the parties' agreement as a valid source for changing the territorial jurisdiction that has been prescribed. Section 5 of the Civil Procedure Regulations, 5744-1984 provides that when an agreement between parties as to the place of jurisdiction exists, the lawsuit will be filed to the court in that area of jurisdiction. The relative flexibility regarding territorial jurisdiction, and the willingness to recognize the parties' agreement as the source of such jurisdiction, stems solely from the statute and derives its power from its provisions. That is not the case in respect of subject matter jurisdiction. Generally, the law does not recognize that the parties' agreement has power to depart from the rules of subject matter jurisdiction, as crafted by state legislation.

A similar approach is also taken with regard to the judicial instance's power to adjudicate by way of arbitration. Since the state judicial instance merely has the subject matter jurisdiction conferred to it by statute, it is not vested with power to hear and rule a matter as an arbitrator by virtue of the parties' agreement, unless it has been expressly given that power by statute. In general, a judicial instance is not supposed to adjudicate a matter that is referred to it as arbitrator. However, in certain circumstances, the law has expressly recognized the power of a civil instance to adjudicate a dispute in departure from the ordinary rules of procedure. Thus, for example, in the area of small claims, section 65 of the Courts Law (Consolidated Version), 5744-1984 provides that if a lawsuit has been filed in the small claims court, the judge may, with the parties’ consent, try the claim as arbitrator, and the provisions of the Arbitration Law will govern the matter, with certain restrictions; in addition, a court hearing a civil matter has been empowered, with the parties’ consent, to decide a matter before it by way of settlement (section 79A of the Courts Law) or to refer a matter, with the parties' consent, to arbitration or conciliation (sections 79B and 79C of the Courts Law). The said authorities are all vested in the court by virtue of statute. They assume that the subject of the dispute is within the subject matter jurisdiction of the court hearing the case and they give it special procedural means that are intended to facilitate and expedite the process of deciding the dispute and bringing about a just result. The various judicial instances have not been generally empowered by law to hear and decide matters that are not included in the scope of their subject matter jurisdiction by virtue of the parties' agreement, either as arbitrators or otherwise. Since such authority has not been conferred to them, it is, ipso facto, denied and does not exist.

The Rabbinical Courts are an integral part of the Israeli judicial system. They were established by virtue of the Rabbinical Courts Jurisdiction Law and they derive their power and authorities from the state statute. They have nothing other than what is vested in them by the statute, and they are subject to the set of powers of the statute in their judicial work, as interpreted over the years by case law. Along those lines, this Court has held in the Katz Case that the Rabbinical Court is not empowered to issue a Letter of Refusal in monetary matters that is intended to compel a party to submit to the Rabbinical Court's jurisdiction by ostracizing and disgracing the recalcitrant party; and in HCJ 2222/99 Gabai v The Great Rabbinical Court PD 54(5) 401, the opinion was expressed that the Rabbinical Court lacks legal authority to issue a forced settlement decision, without the parties' consent, thus forcing a judgment on the parties without determining facts on the basis of evidence, if it is unable to decide in accordance with the law.

It emerges from this that the parties' agreement as such cannot, per se, grant jurisdiction to the Rabbinical Court, unless, it has been recognized by the law as a primary source of authority. Thus, the parties' agreement has been recognized as a source of the Rabbinical Court's jurisdiction pursuant to section 9 the Rabbinical Courts Jurisdiction Law, in matters of personal status of Jews pursuant to article 51 of the Palestine Orders in Council or according to the Succession Ordinance, which are within the parallel jurisdiction of the Rabbinical Court and the civil instance. Nevertheless, the Rabbinical Court does not have power to hear and decide a matter that is not of the kind found within its exclusive jurisdiction in accordance with the statute or within its parallel jurisdiction, even if the parties have given their consent to its jurisdiction. Such agreement does not derive from a legally recognized source of authority in the law and it cannot, per se, vest jurisdiction in a state judicial instance.

The Rabbinical Court's Jurisdiction by Virtue of an Arbitration Agreement

16.       According to the same line of reasoning, the Rabbinical Court has no power and authority to decide a dispute as an arbitrator by virtue of an arbitration agreement between the parties in a matter, which by its nature is not within its legal jurisdiction. The Court has not been vested with jurisdiction by law to decide disputes as an arbitrator and the parties' agreement cannot vest it with such power.

The issue of the Rabbinical Court's jurisdiction to arbitrate financial and other matters that go beyond the powers granted to it in accordance with the Rabbinical Courts Jurisdiction Law has caused consternation and confusion over the years. It appears that, in reality, the Rabbinical Court assumes the role of arbitrating matters that are beyond the scope of its subject matter jurisdiction (Katz Case, ibid, pp. 606-8; CA 376/62 Bachar v. Bachar, PD 17(2) 881, 882, 885; CA 688/70 Doar v. Hamami, PD 25(2) 396, 399; M. Alon, Jewish Law – History, Sources and Principles, third edition, vol. III, 5748, 1529). Justice Barak considered the inherent difficulty of a state judicial instance's need to adjudicate a dispute by arbitration where it was not empowered to do so by law, saying:

"The first possible argument is that the motion to the Rabbinical Court is like that to an arbitrator and embodied in the Arbitration Law, 5728-1968. That possibility – which has used in practice and can be encored as a year-long custom - raises serious problems in principle. Thus, for example, it can be asked whether it is proper for a judicial entity, whose powers are prescribed by law, to assume additional judicial powers, by being empowered as an arbitrator. Is it conceivable that parties would motion the magistrate’s court to try a pecuniary claim, that is outside its jurisdiction, as an arbitrator? From the state's point of view, is it justifiable to use judicial time and tools (whether of the civil or religious courts) for matters outside the jurisdiction that the law has granted the judicial authorities? Is there no fear that the public be confused as to which decisions the judicial instance has awarded as the government and those that it has awarded as arbitrator?"

(HCJ 3023/90 Jane Doe (a minor) v. The Rehovot Regional Rabbinical Court PD 45(3) 808, 813-14; see also S. Ottolenghi, Arbitration, Law and Procedure (fourth edition, 5765) 167-8; Schiffman, ibid, vol. I, 37.)

In HCJ 2174/24 Kahati v. The Great Rabbinical Court, PD 50(2) 214, this Court (per Justice Dorner) once again referred to the practice, adopted from time to time by the Rabbinical Courts, of deciding disputes as arbitrators in matters that are not within their jurisdiction. It expressed skepticism with respect to the validity of the practice. However, as in the previous case, it again left this question open without making any conclusive ruling, since such a ruling was not necessary in that case (cf. Aminoff, ibid, pp. 792-3).

17.       There is indeed an inherent difficulty in recognizing the Rabbinical Court's power to decide a dispute in a matter on which it has not been given jurisdiction by law (cf. Ottolenghi, Dispute Resolution by Alternative Means, Israeli Law Yearbook, 5752-5753, p. 535, 550-1). In the past, the Mandate government empowered the Rabbinical Courts to act as arbitrators by means of section 10(d) of the Israel Knesset Regulations of 1927, but upon the establishment of the State, the “Israel Knesset”, within its meaning under the Mandate, ceased to exist and it was held that those Regulations no longer had any force or effect (Crim. App. 427/64 Yair v. The State of Israel PD 19(3) 402; HCJ 3269/95, ibid, p. 622-3; Schiffman, ibid, p. 39). It cannot therefore be argued that the said section might serve as the source of the Rabbinical Courts' power as arbitrators. Moreover, upon enactment of the Arbitration Law, it was proposed that an arbitration decision made by a religious court when ruling as an arbitrator would in all respects, except with regard to the appeal, be treated as a judgement of the court sitting in accordance with its jurisdiction prescribed by statute, and that the award would not require confirmation under the Arbitration Law. That proposal was not accepted (Knesset Proceedings 5728, pp. 2966-7).

It is indeed difficult to settle the governing perception that views the judicial system as an arm of government, which derives its power and authority from statute, while acknowledging the possibility that the selfsame system can acquire other subject matter authorities deriving merely from the parties' agreement that do not originate from the empowering law. The Israeli Rabbinical Courts, that are part of the Israeli judicial system, integrate with the said perception and, like the other judicial instances, operate in accordance with the principle of legality of the arms of government (see the dissenting opinion of Justice Tal in the Katz Case, distinguishing between the power of religious courts as a state authority and the power they have, in his opinion, by virtue of Jewish law, which is not connected with state law).

18.       Apart from the essential difficulty inherent in the judicial decision of the Rabbinical Court as an arbitrator, which is not consistent with the principle of legality of the government authorities, other difficulties arise from the said procedural practice. The practice blurs the spheres of the Court's own activity in respect of the procedural basis upon which its decision rests: is it a decision within the scope of the Court's state power that is subject to review by the High Court of Justice in accordance with section 15 of the Basic Law: the Judiciary, or is it an extra-statutory power that is built on a different foundation originating from the parties' agreement and subject to review by a different judicial instance, like the District Court, in accordance with the Arbitration Law (cf. Jane Doe Case, ibid, para. 7)? In more than a few cases the parties might misunderstand the nature of their agreement to vest jurisdiction in the Rabbinical Court as they do not always understand the meaning and implications of their consent. Moreover, usually, in the course of such adjudication, strict attention is not paid to enquiring into the existence of an arbitration agreement or the application of the Arbitration Law and the rules pursuant thereto, such, for example, the mechanism for the confirmation and revocation of an arbitral award and the role of the District Court as the competent instance in accordance with the Arbitration Law (Ottolenghi, ibid, p. 168; Dichovski, The Standing of a Rabbinical Court Dealing with Property Law As Arbitrator, The Jewish Law Yearbook 16-17 (5750-5751) 527; MF 268/88 Delrahim v. Delrahim, DCJ 49(3) 428; SC 2329/99 Kfir v. Kfir, PD 55(2) 518, para. 5). An arbitral judgment made by the Rabbinical Court frequently does not undergo confirmation or revocation proceedings in the District Court as required by the Arbitration Law for the purpose of its execution, and the Rabbinical Court has no power to confirm an arbitral judgment (Kahati, ibid, p. 220; HCJ 5289/00 Mograbi v. The Great Rabbinical Court, Takdin Elyon 2000(2) 581; Kfir Case, ibid, para. 5). Furthermore, a situation in which the District Court, by virtue of the Arbitration Law, might oversee the Rabbinical Court's decisions as an arbitrator might harm the proper balance between the instances and aggravate the tension between the civil and religious judicial arms (A. Porat, The Rabbinical Court As Arbitrator, Kiriat Mishpat II (5762) 503, 521-4; Dichovski Case, ibid, p. 529).

The Rabbinical Court, purporting to act as an arbitrator between the parties, still operates under cover, and with the characteristics, of its state role. To that end it makes use of the court's physical and organizational system, which is financed by the state; it adjudicates disputes as an arbitrator in the scope of the court calendar, as part of its ordinary work; the overall services, the organizational and professional arrangement and the government budget are also used by it in that function, which by its nature does not have a state character. The time that it should devote to matters of personal status in its official capacity is partly assigned by it to a different judicial function that is not for the state, despite appearing to carry the state seal in the eyes of the public at large, who finds it difficult to distinguish between the judicial function and the extra-statutory function performed by the Court. This intermingling of functions is inconsistent with the principle of legality and a correct definition of the functions and powers of a state judicial instance (Katz Case, ibid, p. 608; Schiffman, ibid, pp. 37-8).

19.       Mention ought to be made to the approach of Prof. Shochatman in his paper entitled The Rabbinical Courts' Jurisdiction in Matters Other Than Personal Status (Bar Ilan University Yearbook on Humanities and Judaism, vols. 28-29 (5761) p. 437, p. 449 et seq.). As he sees it, the Rabbinical Court might acquire jurisdiction by virtue of the parties' agreement in matters outside its jurisdiction in accordance with the Rabbinical Courts Jurisdiction Law by virtue of section 15(d)(4) of the Basic Law: the Judiciary, thereby acquiring jurisdiction as an arbitrator. According to that Law, which defines the High Court of Justice's power to review religious courts, the question of a religious court's jurisdiction can only be referred to this instance when it was raised at the first opportunity. The author infers from this that where there is prior agreement between the parties to vest subject matter jurisdiction in the religious court, a party who has so agreed may not later dispute jurisdiction. By virtue of that preclusion the religious court acquires subject matter jurisdiction, and the High Court of Justice is itself precluded from intervening therein. According to this approach, such an agreement vests subject matter jurisdiction and is not limited solely to matters of personal status. It might encompass numerous spheres that are beyond the subject matter jurisdiction of the religious court, as defined in the Rabbinical Courts Jurisdiction Law.

I cannot agree with this position. The interpretation expressed by Prof. Shochatman assumes that it is possible to recognize the existence of subject matter jurisdiction of an Israel state judicial instance by means of the parties' consent, combined with the doctrine of preclusion and estoppel that prevents someone who has agreed to jurisdiction from later disputing it. That approach is fundamentally inconsistent with the principle of legality that obligates judicial instances, including the religious courts. It is not consistent with the starting point whereby subject matter jurisdiction is vested in a judicial instance by a positive arrangement, and its existence is not to be inferred by an indirect interpretation of provisions of law concerning estoppel and preclusion. The Rabbinical Court's powers are granted to it by virtue of the Rabbinical Courts Jurisdiction Law and they cannot be added to by an indirect interpretation of statutory provisions, the purpose of which is not the vesting of power. Moreover, it has already been held (in Sima Levy Case, ibid, p. 618-19) that the element of preclusion emerging from section 15(d)(4) of the Basic Law: the Judiciary was not intended to vest in the Rabbinical Court subject matter jurisdiction that is not vested in it by virtue of the Rabbinical Courts Jurisdiction Law. The said preclusion is based on the assumption that the matter being adjudicated by the Rabbinical Court is of the type that are within the parallel jurisdiction of the civil court and Rabbinical Court, and regarding the latter, jurisdiction is conclusively consummated if both parties have agreed to it. In those circumstances, and only in them, a party's prior agreement or silence, or subsequent denial of jurisdiction, might lead to preclusion with respect to a lack of jurisdiction argument in the High Court of Justice - that and nothing more. An interpretation that takes the doctrine of preclusion out of context, and assumes the existence of a potentially unlimited Rabbinical Court subject matter jurisdiction, the final consummation of which is dependent only upon the parties' agreement, is directly opposed to the principle of legality, upon which the concept of democratic government is based. It is inconsistent with the subject matter jurisdictions vested by statute in the arms of government, including the judicial system.

Alternative Decision-Making Systems

20.       The need of various different circles in the religious world to entertain alternative systems for the resolution of disputes is proper and recognized. Indeed, alternative rabbinical judicial systems that are not associated with the state rabbinical judicial system, which decide disputes between litigants in the community, are recognized. They can be granted powers to act as arbitrators by agreement of the parties. The need of different communities for alternative dispute resolution systems specific to them can be met by reference to internal arbitration frameworks that are not part of the state judicial system, within which disputes can be settled by virtue of the parties' agreement. This alternative course to litigation in the state judicial instances can be developed and strengthened in accordance with the different needs and preferences of the communities. This was considered by Justice Zamir in the Katz Case (ibid, p. 606), who stated:

"As is known, there are still observant Jews who prefer to litigate in matters of property according to religious law before a religious court rather than the state court. The state's law does not preclude that, if both parties to the dispute so desire, and it is even willing to give the force of arbitration to such litigation, if the litigants fulfil the provisions of the Arbitration Law. Indeed, in practice, such courts exist in various communities around Israel, not by virtue of state law or as official institutions but as private entities. That is, for example, the case of the rabbinical court of the Edah Chareidis [the Haredi Community] in Jerusalem. However… in these cases we are not dealing with a private entity but a state court, and the law applies to it just as any other of the state's courts. Like any court, in fact, like any government agency, the Rabbinical Court is also subject to the principle of legality, meaning that it has nothing other than what was granted to it by the law… In this respect, the Rabbinical Court in Jerusalem is distinguished from the rabbinical court of the Edah Chareidis in Jerusalem. The Israeli Rabbinical Court, which has jurisdiction in accordance with the Basic Law: the Judiciary, is not like one of the rabbinical courts of the Jewish communities in the Diaspora. Unlike them, it has the power and authority of a government institution. So too, unlike them, it is also subject to the restrictions that apply to any government institution".

Consensual Resolution – Looking to the Future and to the Past

21.       The scope of the Rabbinical Courts' subject matter jurisdiction to decide a dispute by virtue of the parties' agreement outside the framework of the law looks to the past and the future. It calls into question the validity of the Court's rulings based on the parties' agreement outside the scope of the statute, not merely henceforth, looking to the future, but also with respect to the past. The outlook to the future seeks to find a binding definition of the limits of the Rabbinical Court's jurisdiction and to strictly observe those limits hereafter. However, the outlook to the past calls into question the binding legal validity of the Rabbinical Court's decisions that have been made over the years by virtue of the parties' agreement as aforesaid. That issue is far from simple; there is no need to decide it here, and it will wait until its time comes.

From the General to the Particular

22.       Let us return to the respondent's suit against the petitioner in the Rabbinical Court and examine whether it is within the subject matter jurisdiction of the Rabbinical Court; the test of jurisdiction depends on the nature of the cause of action, and whether the cause falls within the jurisdiction of the Rabbinical Court.

The Cause of Action – Enforcement of a Contractual Indemnity Clause

23.       The respondent's cause of action in the Rabbinical Court is the enforcement of a contractual clause concerning property, which is contained in the divorce agreement that was made between the couple for the purpose of the divorce proceedings. It provided that if the respondent were sued for an increase in child support and the satisfaction of any of the children's needs or if a stay of exit order was granted at the initiative of the wife, then the petitioner would compensate him, in the language of clause 4(e) of the agreement, with half the property. That provision is also mentioned in clause 5 of the agreement, which is headed "Indemnification", and according to the substance of the provision, and also its location and wording, it is an indemnity clause. The respondent sues for the enforcement of a property condition for his indemnification due to a breach of contract by the wife, and he gave expression thereto by heading his claim as one for "specific performance". That is to say, we have here a property claim for the enforcement of the contractual indemnity clause in a divorce agreement that received the effect of a judgement of the Rabbinical Court and further to which the parties' divorce was completed.

The Rabbinical Court's Jurisdiction to Adjudicate a Property Claim for the Breach of a Contractual Indemnity Clause in a Divorce Agreement after the Parties' Divorce

Does the respondent's suit, according to its cause, fall within the scope of one of the sources of the Rabbinical Court's jurisdiction? Because of the great similarity between the instant matter and the case of Sima Levy, we shall draw guidance and direction from that case.

 

 

Original – Primary Jurisdiction

24.       The source of the Rabbinical Court's exclusive jurisdiction in matters of marriage and divorce, as provided in section 1 of the Rabbinical Courts Jurisdiction Law, does not apply in the instant case because the subject of the suit is a property matter after the dissolution of the parties' marriage and a matter of "marriage and divorce" is, no longer involved. Nor is it a matter "connected with a divorce suit", including support for the wife and children, within the meaning of section 3 of the Law. After divorce, a property claim in respect of the breach of an indemnity clause is not connected with the divorce suit, which has ended and no longer exists. The respondent's cause of action is a new one, the subject of which is the enforcement of a divorce agreement or an application for the enforcement of a divorce judgment, based on a divorce agreement. The cause is based on the breach of a divorce agreement after the award of the divorce and completion of the couple's divorce, and such a new cause is naturally not to be bound up with the matters that were in the past connected with the divorce suit.

With regard to the property cause of action, which surrounds the breach of an indemnity clause of a divorce agreement, the Rabbinical Court does not have jurisdiction by virtue of the parties' agreement pursuant to section 9 of the Law, which deals with the Rabbinical Court's parallel jurisdiction that is vested by virtue of the parties' agreement in matters of personal status according to article 51 of the Palestine Orders in Council and the Succession Ordinance. Section 9 of the Rabbinical Courts Jurisdiction Law raises the question of whether jurisdiction can be vested in the Rabbinical Court by consent in a matter included in its parallel jurisdiction after completion of the divorce, or whether its jurisdiction pursuant to that provision is limited solely to matters within its parallel subject matter jurisdiction that arise in connection with, and until, the divorce and its completion, but not afterwards. Whatever the answer to this question, it is in any event clear that the subject matter jurisdiction pursuant to section 9 is limited solely to the matters mentioned therein, that is, matters of "personal status" as defined in the Palestine Orders in Council and the Succession Ordinance. In a dispute that is not within the bounds of those matters, even the parties' agreement cannot vest jurisdiction in the Rabbinical Court (Schiffman, ibid, vol. I, p. 37; Jane Doe Case, ibid, p. 812). The power of the parties' stipulation is restricted solely to the matters defined by the statute (MF 358/89 Zalotti v. Zalotti PD 43(4) 41, 42; Porat, ibid, p. 510).

Clause 11 of the divorce agreement in this matter looks to the future, and provides that if differences arise between the couple after the divorce, then they undertake to bring their claims solely in the Rabbinical Courts. That agreement is effective only to vest jurisdiction in the Rabbinical Court pursuant to section 9 of the Law in respect of matters of personal status according to article 51 of the Palestine Orders in Council or the Succession Ordinance. A property claim for the enforcement of a contractual indemnity clause in a divorce agreement is not a matter of personal status within the meaning of the Palestine Orders in Council or the Succession Ordinance, and thus, the parties' contractual agreement in respect of such a dispute cannot vest jurisdiction in the Rabbinical Court pursuant to section 9 of the Law.

The Rabbinical Court therefore does not have original jurisdiction to adjudicate the respondent's claim.

"Ancillary" Inherent Jurisdiction

25.       Does the Rabbinical Court have "ancillary" inherent jurisdiction to adjudicate the respondent's claim? The answer is in the negative.

            In the instant case, the Rabbinical Court's ancillary jurisdiction is irrelevant insofar as it relates to the revocation of a divorce award because of a defect in the making of the divorce agreement. It is not a defect of fraud, mistake, deceit, duress or similar that occurred in the making of the agreement and that might have given the Rabbinical Court ancillary jurisdiction to consider its revocation.

            Similarly, the Rabbinical Court has not acquired ancillary jurisdiction by virtue of a material change in circumstances after granting the divorce judgment that allegedly justifies revoking the divorce agreement and the divorce judgment in order to achieve a just result. On the contrary, the respondent's suit is for the specific performance and enforcement of the divorce agreement, not its revocation. Although, in the Great Rabbinical Court, the respondent pleaded that his suit was to revoke the divorce agreement because, according to him, the Get had been given by mistake (the Great Rabbinical Court's decision of May 4, 2003). These arguments were made as an "embellishment" at a late stage of the trial and do not reflect the real cause of action; the motion to revoke the divorce agreement and the act of divorce is inconsistent with the respondent's claim in his suit to compensate him with half the property (the apartment, the contents and the gold), which is nothing other than a claim for the enforcement of the divorce agreement (cf. CA 105/83 Menashe v. Menashe PD 38(4) 635; Yadin, The Contracts (Remedies for Breach of Contract) Law 5731-1970, Second Edition, 5739, p. 44).

            Again, the Rabbinical Court's ancillary jurisdiction to retain jurisdiction in a matter pending before it until the proceedings conducted before it are concluded will not vest it with jurisdiction in this case. The Regional Rabbinical Court had granted a final and unconditional judgment and awarded the effect of judgement to the divorce agreement. Indeed, the divorce agreement does contain an indemnification provision, which by its nature looks to the future, but this fact cannot transform a judgement that gave effect to a divorce agreement into a judgment that is not final, leaving the Rabbinical Court with jurisdiction that has not yet been exhausted to continue adjudicating with respect to the divorce agreement's future performance in this property matter. A financial-property dispute that has arisen between the parties after the award of judgement gives rise to a new cause of action and necessitates the institution of new proceedings in accordance with the jurisdictional framework prescribed by law (see Sima Levy Case, pp. 607-608; CA 468/85 Dondushanski v. Don PD 40(2) 609; D. Bar Ofir, Execution - Proceedings and Law (Sixth Edition, 2005, pp. 164-5)).

            Nor has the Rabbinical Court acquired jurisdiction to hear this matter by virtue of the doctrine of "continuing jurisdiction". It should be kept in mind, that continuing jurisdiction is vested where an instance has tried a particular matter in the past and, in special circumstances, a need has arisen to vacate or modify an earlier decision due to a material change that has occurred in the circumstances upon which the original decision was based such, for example, in matters of child support and custody. The instant case is fundamentally different. The motion does not seek to modify or revoke the divorce agreement made between the parties. On the contrary, it seeks to enforce the agreement, and such a claim has no place within the continuing jurisdiction vested in the Rabbinical Court. A decision on property matters is a final one and not a matter for continuing jurisdiction, as the Court stated in Sima Levy (Justice Cheshin, ibid, p. 611):

                        "As distinct from decisions concerning the payment of support or child custody – which by their nature are not final and the doctrine of continuing jurisdiction applies to them – a decision on a property matter is in principle a final one" (emphasis added).

            The property aspect of the divorce agreement, including the indemnification clause, and the divorce judgment that gave it effect, are therefore not within the Rabbinical Court's continuing jurisdiction.

            And finally, the Rabbinical Court does not have ancillary jurisdiction to adjudicate the new cause that arose following the divorce agreement in order to interpret the agreement. Firstly, the Rabbinical Court, having completed and exhausted its power to rule on the matter of divorce, no longer has ancillary power to interpret the divorce agreement or the divorce judgment (cf. HCJ 897/78 Yigal v. The National Labour Court, PD 33(2) 6, 7; CA 5403/90 The State of Israel v. RAM Revhiat Ibrahim PD 46(3) 459). Moreover, in the instant case, the question of the agreement’s interpretation hasn’t risen as such, but a claim for its enforcement has been brought instead. Hence, the Rabbinical Court does not have ancillary jurisdiction in this respect either.

            In conclusion: the Rabbinical Court does not have primary original jurisdiction, or ancillary inherent jurisdiction, to adjudicate a property claim for enforcement of a contractual indemnification clause in a divorce agreement that has given the effect of judgement, once the couple's divorce has been completed.

The Rabbinical Court's Jurisdiction by Virtue of Consent

26.       As can be recalled, clause 11 of the divorce agreement provides that differences between the couple after the divorce are to be adjudicated solely in the Rabbinical Courts. The couple's agreement as such cannot vest the Rabbinical Court with jurisdiction where there is no legal source for it. The agreement in this case concerns something that is not a matter of personal status according to section 9 of the Rabbinical Courts Jurisdiction Law, and it was therefore given for this purpose outside the scope of the law, and is ineffective.

            Indeed,

                        "where the subject of the litigation is not within the jurisdiction of a particular judicial entity, no agreement in the world has power to grant the entity jurisdiction that the statute has not given it; it is the statute that gives and it is the statute that takes away" (Sima Levy, p. 617).

            The Regional Rabbinical Court's decision of June 18, 2002 and the Great Rabbinical Court's decision of May 4, 2003, according to which the Rabbinical Courts have jurisdiction in principle to try the claim by virtue of the law, are inconsistent with its provisions.

The Rabbinical Court's Jurisdiction by Virtue of an Arbitration Arrangement

27.       It was further argued that clause 11 of the divorce agreement is an arbitration provision that vests the Rabbinical Court with power as an arbitrator to adjudicate the respondent's claim of a breach of the agreement's indemnification provision. Although not strictly necessary, we have considered the question in principle of whether a Rabbinical Court can be empowered to decide a dispute between litigants in arbitration, in a matter that is not within its subject matter jurisdiction according to the statute. We have answered that question in the negative and the answer is applicable to the case herein.

            In the instant case, the conclusion that the Rabbinical Court lacks jurisdiction to try the matter as an arbitrator is also reinforced by another reason. Studying the contents of clause 11 of the divorce agreement shows that it cannot be construed as an arbitration clause, equal to an "arbitration agreement" between the parties. It is well known that the power of an arbitrator to decide a dispute between parties derives from an arbitration agreement. Without an arbitration agreement, no arbitration arises. An "arbitration agreement", according to the Arbitration Law, is "a written agreement (between parties) to refer to arbitration a dispute that arises between them in the future, whether an arbitrator is named in the agreement or not" (section 1 of the Arbitration Law). The condition precedent for arbitration is therefore the existence of an agreement to refer a dispute to arbitration. If parties have agreed to refer disputes between them to the decision of some entity but it is not clear that a decision in arbitration is involved, then there is no arbitration agreement (ALA 4928/92 Aziz Ezra Haj v. Tel Mond Local Council PD 47(5) 94; Ottolenghi, ibid, pp 9-41).

            In this case, the parties undertook to refer any disputes arising between them after the divorce solely to the Rabbinical Courts. No intention can be inferred from that agreement to refer such disputes to the Rabbinical Court qua arbitrator. In Jane Doe (para. 6 of Justice Barak's opinion), as in the case herein, the couple mistakenly believed that their consent to the Rabbinical Court's adjudicating disputes connected with the divorce agreement could vest it with power to decide as a state judicial instance, rather than as an arbitrator. Indeed, the wording and contents of clause 11 of the divorce agreement do not demonstrate the parties' intention to treat it as an arbitration clause purporting to empower the Rabbinical Court to act as arbitrator. Consequently, even if we assumed that the Rabbinical Court could be empowered to act as an arbitrator in matters in which it has no original or ancillary jurisdiction by virtue of the law, there is still no effective arbitration agreement, as pleaded.

A Note before Closing

28.       The issue of the Rabbinical Court's power to adjudicate by virtue of the parties' agreement, outside the scope of the law, has arisen in earlier contexts in the past, and although different opinions have been expressed in such respect by the courts, no binding decision has been necessary in connection therewith. This absence of a ruling has permitted the continuation of a procedural practice that is inconsistent with the organizational structure of the courts and the division of powers between them in accordance with state law. This custom has enabled a judicial practice that is inconsistent with the principle of the administration's legality and the legality of the judicial system. The time has come to move from the stage of expressing an opinion to the stage of making a ruling, which is necessary to ensure the proper function of the judicial system within the scope of its powers, and thereby to protect the basic foundation that defines the boundaries of its activity based on the principle of legality and the rule of law. This will not harm, in a any way, the need and ability of various social groups to entertain alternative resolution systems outside the state judicial instances, based on the principles of arbitration regulated by law or on the basis of other agreed and recognized rules of procedure. However, at the same time, it is necessary to safeguard, and protect against blurring the boundaries between the state judicial systems and alternative resolution systems that are built on the parties' agreement, in order to protect the proper operation of the different arms of the judicial system and the public's confidence in the way in which its powers are exercised and its judgments.

Conclusion

29.       By deciding the respondent's lawsuit against the petitioner for the enforcement of a contractual indemnification clause in the divorce agreement, the Rabbinical Courts exceeded the power vested in them by law. Consequently, the decisions of the Regional Rabbinical Court and the Great Rabbinical Court in the respondent's claim are void. The result is that the order nisi that has been awarded should be made absolute. The respondent shall bear the petitioner's professional fees in the sum of NIS 12,000.

 

Vice President (Ret.) M. Cheshin

 

            I concur.

 

Justice S. Joubran

            I concur.

Therefore, held as stated in the opinion of Justice Procaccia.

Awarded today, this eighth day of Nissan, 5766 (April 6, 2006).

 

___________________

___________________

___________________

Vice President (Ret.)

Justice

Justice

 

Zim Israel Navigation Co. v. Maziar

Case/docket number: 
CA 461/62
Date Decided: 
Wednesday, June 26, 1963
Decision Type: 
Appellate
Abstract: 

During a voyage between Marseilles and Haifa, the respondent fell ill, apparently from food she had eaten on board, and for three months after arriving in Israel suffered from a stomach infection. She sued the ship owners and the ship's chef for negligence. The appellants pleaded in defence inter alia the exemption clause relieving them from liability which appeared in the passenger ticket sold to the respondent. The District Court found for the respondent on the ground that res ipsa loquitur and held that the exemption clause was null and void.

 

Held (per Silberg, J.): As between the English approach which was cautious in annulling exemption clauses outright, balancing public policy against the freedom of contract, and the American approach which struck down such clauses either because of the absence of real voluntary consent to their inclusion or because of public policy, the latter was to be followed. In so doing Israeli law would not be adopting some alien "creature" but applying in the area of law principles of Jewish ethics which prized human life and well-being highly and giving the concept of public policy a specific Jewish content. All this was warranted by local statutory provision which made contracts contrary to public order and morality unlawful. Generally, the matter raised the whole question of standard contracts and called for legislative regulation.

 

Per Witkon J., it was questionable whether the invalidation of exemption clauses would raise the standard of care expected from the parties concerned in any significant manner. It would be better to impose absolute liability, regardless of fault, and leave it to carriers to cover themselves by insurance. That would also spread the cost among the travelling public at large and ensure that persons injured by some mishap were not left remedyless.

Voting Justices: 
Primary Author
majority opinion
Author
concurrence
Author
concurrence
Full text of the opinion: 

 

C.A. 461/62

 

               

ZIM ISRAEL NAVIGATION CO. LTD. and Another

v.

SHOSHANA (ROSA) MAZIAR

 

 

 

In the Supreme Court sitting as a Court of Civil Appeal

June 26, 1963

Before Silberg J., Landau J. and Witkon J.

 

 

 

Contract - validity of exemption clause in ship-passenger ticket – public policy.

 

               

During a voyage between Marseilles and Haifa, the respondent fell ill, apparently from food she had eaten on board, and for three months after arriving in Israel suffered from a stomach infection. She sued the ship owners and the ship's chef for negligence. The appellants pleaded in defence inter alia the exemption clause relieving them from liability which appeared in the passenger ticket sold to the respondent. The District Court found for the respondent on the ground that res ipsa loquitur and held that the exemption clause was null and void.

 

Held. As between the English approach which was cautious in annulling exemption clauses outright, balancing public policy against the freedom of contract, and the American approach which struck down such clauses either because of the absence of real voluntary consent to their inclusion or because of public policy, the latter was to be followed. In so doing Israeli law would not be adopting some alien "creature" but applying in the area of law principles of Jewish ethics which prized human life and well-being highly and giving the concept of public policy a specific Jewish content. All this was warranted by local statutory provision which made contracts contrary to public order and morality unlawful. Generally, the matter raised the whole question of standard contracts and called for legislative regulation.

 

Per Witkon J., it was questionable whether the invalidation of exemption clauses would raise the standard of care expected from the parties concerned in any significant manner. It would be better to impose absolute liability, regardless of fault, and leave it to carriers to cover themselves by insurance. That would also spread the cost among the travelling public at large and ensure that persons injured by some mishap were not left remedyless.

 

Israel cases referred to:

 

(1)          C.A. 136/56 - Slavko Fox v. Ilan & Etzioni Ltd. (1957) 11 P.D. 358

(2)          C.A. 99/59 - "Shoham" Maritime Services Ltd. v. Ephrayim and Alfreda Feiner (1960) 14 P.D. 1451.

 

English cases referred to:

 

(3)          Redhead v. Midland Rly Co. (1869) 20 L.T. 628.

(4)          Luddit v. Ginger Cove Airways (1947) 1 All E.R. 328: (1947) A.C. 233.

(5)          Peek v. Directors etc. of N. Staffordshire Rly. Co. 11 E.R. 1109 (1863).

(6)          Thompson v. London, Midland and Scottish Rly. Co. (1930) 1 K.B. 41.

(7)          Gibaud v. Great Eastern Rly. Co. (1920) 3 K.B. 689.

(8)          Adler v. Dickinson (1954) 3 All E.R. 397;(1955) 1 Q.B. 158.

(9)          Beaumont-Thomas v. Blue Star Line Ltd. (1939) 3 All E.R. 127.

(10)        Sze Hai Tong Bank Ltd v. Rambler Cycle Co. Ltd. (1959) 3 All E.R. 182; (1959) A.C. 576.

(11) J. Spurting Ltd. v. Bradshaw (1936) 2 All E.R. 121.

(12) Printing etc. Co. v. Sampson (1875) 32 L.T. 354.

 

American cases referred to:

 

(13) The Kensington 183 U.S. 263 (1902).

(14) Baltimore & Ohio Southwestern Rly. Co. v. Voigt 176 U.S. 498 (1900).

(15) New York C.R. Co. v. Lockwood 21 L. ed 627.

(16) Oceanic Steam Navigation Co. v. Corcoran 9 F (2nd) 724 (1925).

 

G. Gordon for the appellant.

P. Maoz for the respondent.

 

SILBERG J.                           This is an appeal against a judgment of the Tel Aviv-Yaffo District Court ordering the appellants to pay the respondent a sum of IL 720 together with interest and costs for injuries sustained by her on a voyage from Marseilles to Haifa.

 

2. It seems that the parties would have reached a settlement but for the baneful fact that the ticket which the respondent bought from the first appellant, a shipping company, contains an exemption clause releasing the company and its employees from all responsibility for injury to the respondent, financial and physical, and the learned judge in an interim judgment declared this clause to be null and void as offending against public order or morality in accordance with section 64(1) of the Ottoman Civil Procedure Law. Hence the keen struggle which Zim has waged against the judgment that requires it to pay the trivial sum above-mentioned.

 

                Let us therefore first examine this important basic question and then, if we find that the exemption clause is in fact unable to exempt, turn to the facts as found by the learned judge regarding the actual negligence of the two appellants.

               

3. Upon deciphering the faulty Hebrew of the exemption clause, we gather that the company and its employees is not to be responsible for any evil that may befall a passenger, be it death, physical injury or financial loss, even if caused by an act of one of the ship's crew and all the more so if "only" the result of negligence. The company declares in the clause that it does not give "any condition of liability or guarantee" regarding "the religious purity, grade, condition, quality or quantity of any food, beverage or medicine" which the passenger might take. That is to say, not only may the food be bad but even any medicine administered to a passenger to counteract the bad food may also be bad. The clear meaning of the entire clause is that a passenger, affected in his body or property by the adventures of a voyage in one of the company's ships, can have no recourse to any law or court.

 

                The question is whether effect should be given to such a draconian clause.

               

4. The legal validity of exemption clauses in contracts of carriage has been discussed in the English decisions at length. The result has been that the strictness with which the matter was originally treated has given place to a more lenient approach. The responsibility of a general (as against a private) carrier and in particular a general carrier of goods (as against a carrier of passengers) was at one time very severe indeed; it covered all injurious events apart from those due to force majeure or enemy action: Readhead v. Midland Rly. Co. (3); Luddit v. Ginger Coote Airways (4). The larger companies therefore began to seek for some "medicament" against the ills of statute and case law, and with the assistance of the wise counsel of erudite lawyers introduced into their contracts of carriage and bills of lading exemption clauses, usually in illegible small print. By such puny-lettered clauses a company would take itself out of the statute and free itself as it desired from the legal responsibility which might threaten it from careless or negligent treatment of the object of the contract. The prospective customer stood helpless and impotent in the face of these clauses. Normally he was not even aware of their presence or had not read them at all and even if he had, did not understand them since few can plumb the mysteries of legal terminology. And should it wondrously happen that the clause was plain and he had read and understood it, there was no option but to accept it since the only alternative was to forgo the journey or the consignment of the goods.

 

5. The attitude of the English courts towards exemption clauses was at first suspicious and cautious. Exactly a hundred years ago in the famous decision of the Court of the Exchequer in Peek v. North Staffordshire Rly. Co. (5) Blackburn J. said that although according to the cases decided between 1832 and 1854 a carrier could make a contract exempting him from all responsibility for damage even if caused by the gross negligence or fraud of his servants, the (Canal Traffic) Act of 1854 changed the situation. The purpose of this Act was to prevent companies "from evading altogether the salutory policy of the common law." ... For this reason he denied validity to an exemption clause which in his opinion was not "just and reasonable". The House of Lords - for various reasons which we need not enter into here - in a majority judgment set aside the decision of the Court of Exchequer but each of the judges supported the view that the conditions of an exemption clause must be just and reasonable, otherwise no benefit can be derived from it.

 

6. Even some 75 years later echoes are still heard in the courts of the doctrine which continues to disregard justness or reasonableness. Thus for instance in Thompson v. London, Midland and Scottish Rly. Co. (6) Lord Lawrence expressed the view that if an exemption clause in a railway ticket is unreasonable, the passenger would not be bound by it. Sankey J. agreed with this view and announced that if the document referred to "imposed such unreasonable conditions that nobody could contemplate that they exist", the passenger would not be deemed bound by them (at pp. 390, 391).

 

                Sankey J.'s observation gives some little opening to the necessity for reasonableness. An unreasonable condition is a "hidden" undisclosed condition and the exemption it accords does not bind the passenger.

               

                A similar notion, but still not very clear, was developed in Gibaud v. Great Eastern Rly. Co. (7) in which Bray J. said:

               

"Every contract is voidable by fraud, and if the condition is so irrelevant or extravagant that the party tendering the ticket must have known that the party receiving it could never have intended to be bound by such a condition, then I should say that the assent of the party receiving the ticket was obtained by fraud, and he would not be bound."

 

But a few lines below he went on to add:

 

"In my opinion, once it is found that a party has expressly or by his conduct assented to the condition, he is bound by these conditions ... and it is no answer to say that they are unreasonable, unless he can prove that his assent has been obtained by fraud."

 

                This is essentially inconsistent. On the one hand, every unreasonable condition is ipso facto a condition obtained by deceit and fraud. On the other hand, the defence of unreasonableness cannot be raised unless deceit and fraud is proved. I wonder whether these two propositions can exist side by side.

               

7. But these ideas which combine unreasonableness and "hiddenness" had their effect and ultimately destroyed the whole doctrine of reasonableness. This doctrine presented in such an attractive form by Blackburn J. in the first Peek decision - that the use of unreasonable exemption clauses frustrates and defeats "the salutory policy of the common law" - became increasingly blurred until it vanished without trace. It was so closely swathed that it ceased to breathe. For if the emphasis is upon the cognitive knowledge of the person purchasing a ticket, then formal reference on the face of the ticket, in red ink, to what is contained in one or another of the "small print" conditions is sufficient to evidence the actual or constructive knowledge of the purchaser so as to render the exemption clause valid, whatever its reasonableness or justness.

 

                This is what Lord Denning said in his new and novel judgment in Adler v. Dickson (8). There a ship passenger was seriously injured by falling off the gangway from a height of 16 feet upon reembarking in Trieste. She sued the ship's master and boatswain and not the shipowners themselves, fearing the effect of an exemption clause in her ticket. One of the defences was that if the shipowners' employees were made personally liable to pay damages, the very purpose of the exemption clause would be defeated.

 

"I pause to say that, if a way round has been found, it would not shock me in the least. I am much more shocked by the extreme width of the exemption clause which exempts the company from all liability whatsoever to the passengers. It exempts the company from liability for any acts, default or negligence of their servants in any circumstances whatsoever, which includes, I suppose, their wilful misconduct. And this exemption is imposed on the passenger by a ticket which is said to constitute a contract but which she has no real opportunity of accepting or rejecting. It is a standard printed form on which the company insist and from which they would not depart, I suppose, in favour of any individual passenger. The effect of it is that, if the passenger is to travel at all, she must travel at her own risk. She is not even given the option of travelling at the company's risk on paying a higher fare. She pays the highest fare, first class, and yet has no remedy against the company for negligence. Nearly one hundred years ago Blackburn J., in a memorable judgment, said that a condition exempting a carrier wholly from liability for the neglect and default of their servants was unreasonable... . I think so too."

 

These incisive observations of a foremost judge such as Lord Denning would lead us to expect that like Blackburn J. he would also pronounce the exemption clause null and void. A contractual condition, shocking in its wickedness, is not worthy of solemn statutory warrant, for can we truly desire that the curse of "in the place of justice, wickedness exists" (Eccl. 3:16) should befall us? But Lord Denning thought otherwise since he regarded himself bound by the recent English case law in the matter. And so he continued

 

"Nevertheless, no matter how unreasonable it is , the law permits a carrier by special contract to impose such a condition: see Luddit v. Ginger Coote Airways Ltd. (4): except in those cases where Parliament has intervened to prevent it. Parliament has not so intervened in the case of carriers by sea (emphasis added). The steamship company are, therefore, entitled to the protection of these clauses, as indeed this court held in Beaumont-Thomas v. Blue Star Line Ltd. (9)."

 

It should be noted that in Luddit the journey was not by sea but by air, but sea and air are the same thing, neither being land. But the very distinction between land travel on the one side and air and sea travel on the other is not very logical. Can we draw any conclusions from the fact that in Blackburn J's time no one dreamed of jet airplanes such as the Boeing 707? It is true that section 7 of the 1854 Act, on which Blackburn J. relied, deals with land carriers, but the idea which that judge culled from it against unreasonable exemption clauses for "... marring the salutory development (that is, the progress) of the common law" is a general moral idea. And if that is so, it applies in equal measure to all forms of carriage, since what difference is there between them? I would almost say that those who follow the Blackburn doctrine are prepared to apply it also to contracts which are not contracts of carriage at all, witness the example of unreasonableness given by Sankey J. in Thompson (6) (at 44).

 

8. The English judges have apparently felt uncomfortable with a punctilious use of extreme exemption clauses; they shocked Lord Denning and he therefore tried to sweeten the pill by another "help¬mate" by a personal touch and extending appreciably the well-known qualification of fundamental breach: Sze Hai Tong Bank Ltd. v. Rambler Cycle Co. Ltd. (10).

 

                In that case a bicycle manufacturer sent its products by steamship to Singapore for sale to its regular customers there. The bill of lading was made out to the order of the seller and indicated the name and address of the prospective buyer. The bill of lading stated that the responsibility of the carrier would cease absolutely after the goods were discharged from the ship. The goods were discharged but the carrier's agents released them not to the seller or to its order under the bill of lading but to the buyer without receiving the price on an indemnity given to the carriers by the buyers' bank. In an action between the bank and the manufacturer arising out of the indemnity the question arose whether the carrier was liable to the manufacturer for the loss in view of the exemption clause in the bill of lading. Lord Denning answered this question in the affirmative. saying

 

"If the exemption clause, on its true construction, absolved the shipping company from an act such as that, it seems that, by parity of reasoning, they would have been absolved if they had given the goods away to some passer-by or had burnt them or thrown them into the sea. If it had been suggested to the parties that the condition exempted the shipping company in such a case. they would both have said: 'Of course not'. There is, therefore, an implied limitation on the clause, which cuts down the extreme width of it; and, as a matter of construction, their Lordships decline to attribute to it the unreasonable effect contended for. But their Lordships go further. If such an extreme width were given to the exemption clause, it would run counter to the main object and intent of the contract. For the contract, as it seems to their Lordships, has, as one of its main objects, the proper delivery of the goods by the shipping company, 'unto order or his or their assigns', against production of the bill of lading. It would defeat this object entirely if the shipping company was at liberty, at its own will and pleasure, to deliver the goods to somebody else, to someone not entitled at all, without being liable for the consequences. The clause must, therefore, be limited and modified to the extent necessary to enable effect to be given to the main object and intent of the contract."

 

The great and broadening novelty of this judgment is the construction of "implied conditions" which reduce the excessive scope of the exemption clause (cf. Spurling v. Bradshaw (11) at pp. 124-25).

 

                Without criticising Lord Denning for containing the jungle of wild exemption clauses, it seems to me, however, that it is at least possible to apply the idea to those clauses also which exempt a carrier for bodily injuries, since is it not possible to "infiltrate" here as well some implied condition to the effect that a carrier assumes the obligation to carry the passenger to his desired destination in hale and hearty condition? The loss of a limb at sea defeats the main purpose of a passenger ticket no less than the delivery to another of goods after discharge defeats the main object of the bill of lading.

               

 9. The approach of the American courts co this question is different. American case law is far more audacious. It does not maintain the plaintive conservative view marked by the lip service of moral indignation on the one hand and resignation co the existing situation on the ocher. The prevailing view in American case law has for a very long time been that a clause exempting a carrier from all liability for his own acts and those of his agents and servants is null and void, either because it lacks in truth the element of willing agreement or because it is contrary to public policy.

 

                Appellants' counsel submitted that the laurel for this liberal doctrine rests on the American legislature and not the courts, but it is not so. In the United States things took the opposite course, the case law preceded legislation and section 1 of the Harter Act of 1893 which makes it unlawful for a carrier to insert in a bill of lading any clause exempting him from liability for damage arising out of negligence, fault or omission (and if inserted, makes it null and void) merely put the statutory seal on a very wide¬spread principle already existing.

               

                Moreover, legislation not only did not give birth to the case law but also did not affect or narrow it (except as expressly provided therein), witness the fact that wherever one cannot rely on the Harter Act because it does not regulate the matter - for instance, in connection with personal injuries co passengers - the courts have applied the much broader pre-Harter rule.

               

"It is settled in the courts of the United States that exemptions limiting carriers from responsibility for the negligence of themselves or their servants are both unjust and unreasonable, and will be deemed as wanting in the element of voluntary assent; and, besides, that such conditions are in conflict with public policy. This doctrine was announced so long ago, and has been so frequently reiterated, that it is elementary... .

 

True it is that by the act of ... 1893 ... known as the Harter Act ... the general rule just above stated was modified so as to exempt vessels, when engaged in the classes of carriage coming within the terms of the statute, from liability for negligence in certain particulars. But while this statute changed the general rule in cases which the Act embraced, it left such rule in all other cases unimpaired. Indeed, in view of the well-settled nature of the general rule at the time the statute was adopted, it must result that legislative approval was by clear implication given to the general rule as then existing in all cases where it was not changed" (The Kensington (13) at pp. 268-69).

 

10.          Why did American Common law "rebel" against its begetter, English Common law, and what ideological basis was there for this change of position? There were two reasons: first, the exceeding concern of American judges for human life and personal safety; second, the profound abhorrence of the social phenomenon of the grinding down of the small man by the large corporations. These are not vague fancies or empty phrases. The ideas they emody are clearly formulated in a Supreme Court judgment at the outset of the present century: Baltimore & Ohio S.W. Co. v. Voigt (14).

 

                This case concerned a passenger injured in a railway accident. The victim was an express messenger who frequently travelled between Cincinnati and St. Louis as an official of the express company, accompanying express parcels, under special contract between the company and the railway. One of the terms of his employment was that he would waive - and indeed did waive - every claim against the railway for injury sustained by him whilst accompanying parcels. The question was whether he should be regarded as a "passenger" in respect of the general rule that treats as a nullity any condition exempting a carrier from liability for injury caused to passengers. In the course of the hearing, the Court explained the scope and reasons of the general rule.

               

                Because of the inherent importance of the ideas voiced in this judgment, it is proper to cite from it in extenso. Justice Shiras brings to light the differences between the English and American judiciary over exemption clauses of carriers. He mentions, on one side, a number of American judgments (of inferior courts) which propound the nullity of such clauses on account of public policy; and then he cites, on the other side, the dictum of Sir George Jessel, that rejects the public policy of avoiding the clauses in favour of "the paramount public policy" of freedom of contract (Printing ... Co. v. Sampson (12) at p.465). Justice Shiras proceeds to ask what principles the American judges chose in dealing with the cases before them.

               

"They were mainly two. First, the importance which the law justly attaches to human life and personal safety, and which forbids the relaxation of care in the transportation of passengers which might be occasioned by stipulations relieving the carrier from responsibility. This principle was thus stated by Mr. Justice Bradley in the opinion of the court in the case of New York C.R. Co. v. Lockwood (15):

 

'In regulating the public establishment of common carriers, the great object of the law was to secure the utmost care and diligence in the performance of their important duties - an object essential to the welfare of every civilized community. Hence the common law rule which charged the common carrier as an insurer. Why charge him as such? Plainly, for the purpose of raising the most stringent motive for the exercise of carefulness and fidelity in his trust. In regard to passengers the highest degree of carefulness and diligence is expressly exacted.'

 

The second fundamental proposition relied on to nullify contracts to relieve common carriers from liability for losses or injuries caused by their negligence is based on the position of advantage which is possessed by companies exercising the business of common carriers over those who are compelled to deal with them. And again we may properly quote a passage from the opinion in the Lockwood Case as a forcible statement of the situation:

 

'The carrier and his customer do not stand on a footing of equality. The latter is only one individual of a million. He cannot afford to haggle, or stand out and seek redress in the courts. His business will not admit such a course. He prefers, rather, to accept any bill of lading, or sign any paper the carrier presents: often, indeed, without knowing what the one or the other contains. In most cases he has no alternative but to do this or abandon his business... .

 

If the customer had any real freedom of choice, if he had a reasonable or practicable alternative, and if the employment of the carrier were not a public act, charging him with the duty of accommodating the public in the line of his employment, then, if the customer chose to assume the risk of negligence, it could with more reason be said to be his private affair, and no concern of the public. But the condition of things is entirely different, and especially so under the modified arrangements which the carrying trade has assumed. The business is almost concentrated in a few powerful corporations, whose position in the body politic enables them to control it.... These circumstances furnish an additional argument, if any were needed, to show that the conditions imposed by common carriers ought not to be adverse (to say the least) to the dictates of public policy and morality.' "

 

                This is indeed a powerfully expressed description - uncommon in any legal literature - of the small man's dependency, standing, as he does, powerless before the mighty machine of profit which crushes him into the dust. Justice Shiras, adopting these ideas, thus formulates accordingly the policy of American case law:

               

"1. That exemption claimed by carriers must be reasonable and just, otherwise they will be regarded as extorted from the customers by duress of circumstances, and therefore not binding.

2. That all attempts of carriers, by general notices or special contracts, to escape from liability for losses to shippers, or injuries to passengers, resulting from want of care or faithfulness, cannot be regarded as reasonable and just, but as contrary to a sound public policy, and therefore invalid" (at pp. 505-507).

 

                In another judgment, the Circuit Court of Appeals in New York (Oceanic Steam Navigation Co. v. Corcoran (16) at 732) cites with approval Shearman and Redfield on Negligence (6th ed.) vol. 2, para. 505c:

               

"In the federal courts, and in Connecticut, Indiana, Wisconsin, Iowa, Missouri, Texas, Utah, Virginia, Michigan, Vermont and other states it is held that such a contract (exempting from liability) as to any degree of negligence is void, at least against a passenger giving any compensation for his journey, because it tends to cheapen human life, and to remove the most efficient guarantee which the Common law has given to society against destruction of its members by negligence... . The state has an interest of the highest degree in the preservation of its citizens' lives, and experience demonstrates that there is no practical safeguard against the destruction of those lives by negligence, except in private actions by the persons injured, or their representatives. The protection thus afforded to the individual is therefore of such value to the state that it should not allow it to be waived."

 

                The theme which runs through all these judgments like a scarlet thread is the vital social need of protecting human life and well-being.

               

11. We have surveyed the English and American case law on the problem before us and seen the basic differences in their moral approach. The question is which path should Israeli judges pursue: are we to follow English case law which in its rigidity holds that the contract must prevail or are we to adopt - at least as regards injury to a person's life or health - the more liberal rule of American case law?

 

                It seems to me that we must take up the American rule because in doing so we are not choosing an alien creature but drawing legal conclusions from fundamentals very deeply rooted in Jewish consciousness.

               

                Should we then be asked how we can legitimize forming our own outlook on a rule which has its source in Turkish legislation, the answer is that whilst the rule that a contract can be set aside for being contrary to public policy is derived from section 64(1) of the Ottoman Civil Procedure Law, what that public policy is must be gathered from our own ethical and cultural conceptions since no other source exists for that.

               

12. Judaism has always extolled and glorified the high value of human life. The Jewish religion is not a philosophical system of opinions and beliefs but a way of life and a way for living "which if a man do, he shall live by them" (Len. 18:5), "live by them and not die by them" (Yoma 85b). The verses are innumerable which stress the causal nexus between the Torah and life: "keep my commandments and live" (Prov. 4:4): "he is just, he shall surely live" (Ezek. 18:9): "who is the man that desireth life..." (Ps. 34:13) and so on.

 

                Clearly Judaism has not regarded life as the supreme value. There are ends which go beyond it and ideals which exceed it, for the sake of which we should - indeed are commanded - to sacrifice life. Myriads of Jews have given their lives in sanctification of the Holy Name in all places and at all times. But in the ordered framework of social life, according to the priorities of the Jewish religion, life is the most sanctified of possessions ousting any other sacred value, including without a doubt the sanctity of contracts. "There is nothing that comes before the saving of life except only idolatry, incest and bloodshed" (Ketubot 19a); "For (the Sabbath) is holy unto you - it is committed into your hands, not you into its hands" (Yoma 85b).

 

                There is nothing in Jewish ethics which is more abominated than the taking of life. King David was punished for that reason: "But God said unto me, 'Thou shalt not build a house for My name, because thou art a man of war and hast shed blood' " (1 Chron. 28:3). "A Sanhedrin that effects an execution once in seven years is branded a destructive tribunal" (Makot 7a). And also in the prophetic visions of Isaiah and Micah of eternal and universal peace, "nation shall not lift up sword against nation, neither shall they learn war any more" (Isa. 2:4: Micah 4:3) are filled with deep revulsion and aversion to the shedding of blood.

               

                It is not easy to mint from these lofty concepts the coinage of actual law but when the decisive question in arriving at some legal conclusion is a question of philosophical outlook - what is "good" and what is "bad", what promotes the public weal and what impairs it - we may and indeed must draw precisely upon our ancient sources for these alone truly reflect the basic outlook of the entire Jewish people.

               

                The voice that calls from the depths of these sources tells us not to commerce in human life, not to act lightly in safeguarding it, for life is of the highest value, not ours to play with. The sanctity of contracts, or the sanctity of the principle of freedom of contract, has its proper place in the order of things but of far greater sanctity is that of life. No weapon that is formed against it shall prosper, and every tongue that shall arise against it in judgment you shall condemn, to paraphrase Isaiah 54:17.

               

13. The conclusion to be drawn from all the foregoing with regard to the case before us is that an exemption clause in the ticket which the respondent bought from the appellant company is null and void, as being contrary to public policy in the sense of section 64(1) of the Ottoman Civil Procedure Law. It is superfluous to emphasise that injury to life and injury to health are the same within the contemplation of the concepts that have their part in this context.

 

                I have not overlooked that rule in Jewish law, "if one said, 'put out my eye, cut off my arm, break my leg' ... on the understanding that the other would be exempt, the latter is nevertheless liable" (Baba Kama 92a], but I have not applied it in this judgment because having regard to the reason assigned to it by Maimonides (Hilkhot Hovel uMazik, V, 11) and the Shulhan Arukh Hoshen Mishpat (421:12) I have grave doubts whether it reflects the idea of prejudice to public policy within the meaning of section 64(1) as above.

               

14. There remains the second and last question of whether the appellants were guilty of negligence in the injury sustained by the respondent. My answer is that they were. The respondent embarked on the "Theodor Herzl" for the journey from France to Israel in good health. The following day after eating the food served to her, she felt unwell, began to vomit and to have diarrhoea. Upon arriving in this country she went down with a stomach infection that lasted some three months. Such physical hurt was caused apparently by the tainted food she had received on board, and the learned judge rightly applied the rule of res ipsa loquitur. Hence, since the appellants did not succeed to rebut the presumption, the company is vicariously liable and the ship's chef (the second appellant) directly liable. The negligence of these two appellants lies in serving tainted food which the respondent ate whilst on board the ship.

 

                In my opinion therefore the appeal should be dismissed.

               

LANDAU J. I agree.

 

                In Fox v. Ilan & Etzioni (1), dealing with restraint of trade, I drew attention to section 64(1) of the Ottoman Civil Procedure Law and mentioned article 6 of the French Civil Code, from which the provision prohibiting contracts that are contrary to public order and morality is drawn. This statutory provision of ours, as well as article 46 of the Palestine Order in Council, 1922, relieves us from the necessity of turning to English case law regarding public policy. When I went on there to express the opinion that it might be more correct to interpret section 64(1) in accordance with French jurisprudence, I did not mean to say that we should adopt the substance of French law in the matter but that we should define the general boundaries of the concept of public order and fill it with content of our own.

 

                French legal scholars construe the term "public order" in article 6 of the Civil Code in broad general terms, in the spirit of the basic concepts on which the entire legal system is based. This approach is fundamentally different from the conservative approach which treats the categories of public policy as being closed, so that creative power has been taken from the courts and there is nothing to add to what earlier courts up to a century ago laid down in the matter. According to the broad French approach, the source of these concepts lies not only in the realm of positive law but also in basic ideas of justice and morality and in the ever-varying needs of the social and economic system: see D. Lloyd, Public Policy, pp. 117 ff. That does not mean that the courts may intervene as they please in contractual relations according to the private view of the judge of what is good and useful in contemplation of these principles but must faithfully interpret them in the light of the opinion common to the enlightened public of which he is a part.

               

                My honourable friend, Silberg J., uncovered the deep roots of the Jewish view about the sanctity of life and all that stems from that. Such a view is not exclusively ours but is common to all other civilized peoples. This is what Josserand, Cour de Droit Civil Positif Francais (1930) vol. I, para. 475, has to say about contractual conditions which exempt from liability for injury caused by negligence:

               

"In my opinion the test must be sought in the nature of the injury; a distinction must be made between injury to persons and injury to property.

 

For injury to persons, it is essential to repair the wrong: physical personality is above private contracts, just as are a person's good name and repute. We cannot confer on another the right to kill us, to injure us or to defame us without punishment."

 

So also Ripert, Droit Maritime (4th ed.) vol. 2, para. 2004, p. 891, cited by the learned judge:

 

"It is in fact possible to lay down that public order prohibits also involuntary injury to a person's physical well-being. What is involved is no longer a matter of financial relations between two people. Monetary compensation is but the lesser of two evils and cannot make up for the damage sustained. Hence the prohibition of the cause of such damage needs to be absolute, not to be evaded by any voluntary act."

 

For the relevant French literature and case law. see also the interesting note by I. Englard in (1961) HaPraklit 219.

 

                I see no need to decide whether moral repugnance to endangering life and health is sufficient to invalidate any condition which a person may voluntarily take upon himself that offends against these values. When, however, a condition of this kind appears in a standard contract, as in the present case, where in fact the passenger has no choice, it must be set aside for being contrary to public order. The reasons for that are convincingly explained by the American judges cited by Silberg J. There is no occasion, in my view, for distinguishing in this matter between serious and minor injury to physical well-being, since every attempt to do so will involve prescribing finely drawn tests, the bounds of which do not lend themselves to clear definition. Nor do I see sufficient reason to distinguish between ordinary and gross negligence, as suggested in the alternative by appellants' counsel.

               

                Nothing in section 55(c)(1) of the Civil Wrongs Ordinance, 1944, is inconsistent with what I have said. That section, which deals with contributory negligence, was taken from section 1(1) of the English Act of 1945 but only preserves the general rule regarding conditions which negative liability in torts; it is not, however, intended to deny the possibility of negating such liability always and in all circumstances by contractual condition.

               

                The conclusion we have reached sits well with the decision of this Court in Shoham v. Feiner (2) which concerned a condition similar to the present one in a claim for repair to damage to property.

               

                Appellants' counsel submitted that to impose liability in tort upon the first appellant as a ship company would lay too heavy a burden upon it since it is not covered against such risks by its general insurance policies. But that is insufficient to justify exempting the appellant from all liability for physical damage caused by it or its employees' negligence. It would be better for the appellant to cover itself against risks such as these and to add the cost of the insurance to the price of the ticket, than to place upon the passenger the concern to insure himself, or leave him without compensation for any physical damage he may sustain.

 

                After writing these lines I read the instructive judgment of my honourable friend, Witkon J., and I wish to express my agreement with his balanced analysis of the various factors affecting the problem before us.

 

WITKON J. It is with much hesitation that I have also come to the conclusion that no validity attaches to the condition exempting the appellant from all liability for the physical injury which its employees have wrongly occasioned the respondent.

 

                I have no intention of placing in doubt our powers to set such a condition aside. I find strong foundation both in section 64(1) of the Ottoman Civil Procedure Law and in article 46 of the Palestine Order in Council, 1922, for the rule that an Israeli court may certainly invalidate a contractual term which in its opinion conflicts with the public good. Even without such statutory provisions I would not contend that the court must give effect and recognition to every harmful and unfair term to which the parties have agreed. For instance, a condition which exempts from liability for killing or wilful wounding, it is unnecessary to say, no court will recognize. And it is also clear beyond all doubt that in adopting this principle - whether from England or from France or as axiomatic of our very judicial functions - we are not dependent upon English or French scholars in deciding what in our contemplation is valid and what invalid from the viewpoint of the public welfare. A condition which is valid in England - will not for that reason alone presumptively be valid with us. As my honourable friend, Landau J., said, we must give our own content to the framework of public order.

               

                When, however, we come to weigh the considerations for or against invalidating any given condition, we immediately become aware that we are faced with a problem that is a cause of concern the world over. The American courts - so my honourable friend, Silberg J., demonstrated in his comprehensive survey - have annulled such a condition and we learn from Landau J. that French legal scholars have trod the same path. In  England as well people are in fact unhappy about conditions in standard contracts which exempt a carrier in a monopoly position from all liability for the physical injuries of his passengers. The sharp complaints voiced by Lord Denning in Adler v. Dickson (8) bear witness to that, and this case is also the source of the rule that the condition will not hold in the event of a breach going to the foundations of a contract. Thus we see that this flinching revulsion is universal, as are also the considerations which demand invalidation of the condition. The starting point of those who would set it aside is undoubtedly their concern for the security of the person who is in need of a public service, that neither his life nor his health should be at the whim of the carrier. Further, such a person also merits protection of the law against exploitation of his weakness, since the two parties are not in the same bargaining position.

 

                The first of these considerations - the sanctity of life - is not disputed and I would say that it is so well-known that it does not call for evidence. Everywhere, irrespective of religion or nationality, human life is regarded as a treasured possession to be guarded at all costs. It is a universal heritage, certainly among the Jewish people, as was shown by Silberg J. in his judgment. The trouble is, however, that this supreme consideration is not the only one which we must bear in mind. Were it possible to be guided solely by the concept which was so warmly expressed by Silberg J., we would arrive at some far-reaching conclusions which he himself does not support. We would have to annul every condition which limits a person's liability to compensate another for negligent physical injury irrespective of the circumstances in which the condition was stipulated, of the party making it and the mutual relationship of the parties concerned. The private carrier - as distinct from the public carrier - indeed everyone who agrees to render a service during which he may err and cause bodily harm to the other, would be prevented from agreeing with the latter to limit his liability. Such a result would certainly not meet with approval. Hence to arrive at a balanced outcome we must weigh all the considerations that pertain to the matter. As in most problems of law and of life in general, it is not the choice between the good and the bad which makes decision difficult. The difficulty lies in the choice between different considerations all of which are good and worthy of attention but inconsistent among themselves and in respect of which we must determine an order of priority. In the present case I have not found the task a simple one.

               

                Doubts over whether it is indeed desirable to annul the given condition stem in the first place from the leading rule that a person has full contractual freedom to ensure rights for himself and to waive rights, all as he pleases. In our own times, this rule may have lost some of its pre¬eminence but in my opinion, subject to certain limitations, this freedom is still a treasured possession and a necessary institution in the life of society. Moreover, if interference with freedom of contract is effected not by way of legislation but judicially, confidence in the law will be shaken. For the rule is that stipulation is permitted in civil law and denial thereof is adverse to the sanctity of contracts.

               

                For that reason, even if we were to say that every exemption clause of the kind in question is likely to render life and health a matter of free-for-all - and I do not join in this extreme view - there is in my opinion still no room to annul, because only of "the sanctity of life", every such condition contractually agreed upon by two individuals in the same position and of the same mind. To annul it, another factor is required, and indeed we are told that a contract between equal parties is unlike one between a powerful public or quasi-public body and a private person - "the small man" - who is in need of some essential commodity or service and is compelled to yield. Here occurs the well-known problem of standard contracts which will in the future occupy the attention also of our legislature. But here also I have reservations and I would not hasten to condemn all standard contracts. They appear to me called for by the realities of life, the outcome of the trend to standardisation that prevails in all areas of the economy. At all events, the courts do not generally incline to assume power to set aside such contracts when it is proved to their satisfaction that the conditions and fiats were brought to the notice of the customer. If need exists to control these contracts, the view is that it is a matter for the legislature (see per Cohn J. in Shoham v. Feiner (2) at p. 1454). Only thus can a supplier submit the reasonableness of his conditions to review, before contracting with his customers; and the proposer of the bill now before the Knesset in the matter has done well to choose this course. Here I wish to sum up by saying that if it is possible at all to regard the case before us as one in which the court may annul a condition agreed upon by the parties, that can only be because of the conjunction of two factors: firstly the contents of the condition are undersirable ethically and socially, and secondly it was stipulated in a contract in which the party at the disadvantage was not free to contest it. In this manner we have restricted the conclusion we have reached in the present case to standard contracts.

 

                Even the combination of these considerations still does not meet all my doubts. We must ask ourselves what is the reason for, what is the significance of, setting aside the exemption clause. Do we thus in truth enhance the degree of care taken by the appellant and all its employees and agents? I am not at all sure of that. The presumption is that a person will not treat another's life lightly. I would think that a person is careful or careless with another (and even with himself) according to his nature, his temperament and his ethical and intellectual standards, but the knowledge that he has to pay - or not to pay - damages for his negligent acts (in contrast to anticipating criminal conviction) has almost no effect in reinforcing - or weakening - his standard of care. If that is so in the case of the direct liability of a person, it is all the more so in the case of his servants and agents. It is common today to treat with doubt every principle of fault as a basis of liability in damages for injury arising out of the use of automobiles. Better, it is said, to proceed on the principle of absolute liability and the reason is that it is not to be presumed that the tortfeasor or victim will be less careful if he knows that in any case the victim will receive compensation, whether the injury was caused by the negligence of the one or of the other or without the negligence of either of them. Just as the expectation of having to pay damages even without fault by the tortfeasor does not render him more indifferent to another's life and health, it may also be assumed that the expectation of being exempted in the event of negligence will not increase his indifference. It is not therefore to be said that annulling the exemption will self-evidently encourage carefulness where before there was scorn, but the result - here as where absolute liability is imposed on car owners

- will be to spread the risk over the whole population by way of insurance.

 

                That in effect is the problem before us. What is displeasing in a case such as the present is that a person injured through negligence is without financial remedy, for remedy is denied him in consequence of the contractual condition which he accepted without having any choice in the matter. If we say that we cannot tolerate such a situation and that the exemption is not to be given effect, it is as if we said that the carrier must insure himself against this risk, and doubtlessly he will effect such insurance at the expense of the passenger by increasing the cost of the service. Theoretically, such compulsory insurance could also be imposed directly on the passenger, but clearly compulsory insurance effected by the carrier is more practical and reasonable. Nevertheless, is it in fact desirable and just to spread the risk of the individual among all passengers? That also will increase prices of commodities and services. One or other passenger may say to us, perhaps justly, that he wants no favours and is prepared to take the risk without paying any supplement to his fare. I can imagine many services, both in the transport area and in other areas, where it would be justified for the supplier to exempt himself from liability for negligent injury to customers and reasonable on the part of the customer to exempt him from this liability and take the risk without any insurance cover. Perhaps our case is such a case.

 

                My learned friends think that in point of public policy it would be better to compel the carrier to bear liability and ensure that the injured passenger receives her compensation. I am ready to join in this conclusion - even if not without hesitation - out of the consideration that what is involved is an essential mass service generally carried out without mishap. The straits of the injured individual, left without remedy, may be hard and in the result offend against the feeling of justice. On the other hand to spread the risk among all passengers cannot involve very large expenditure and the price for the service need not go up appreciably. If the "decree" we issue against carriers and passengers generally is that they shall not abandon the injured individual to his plight, they can bear up under it. Accordingly on balance of the considerations it seems to me also that the law should incline in favour of the respondent. In the result I also agree to dismiss the appeal.

               

Appeal dismissed

Judgment given on June 26, 1963.

Hotels.com v. Zuz Tourism Ltd.

Case/docket number: 
LCA 4716/04
Date Decided: 
Wednesday, September 7, 2005
Decision Type: 
Appellate
Abstract: 

Facts: The applicant and the first respondent entered into an exclusive marketing agreement in February 2000. This agreement contained an arbitration clause stating that disputes between the parties would be resolved by arbitration which shall take place in Texas. In June 2002, the first respondent filed an action in Israel against the applicant and the second respondent, on the grounds that the second respondent was marketing the services of the applicant contrary to the agreement. The applicant filed a motion for a stay of proceedings on account of the arbitration clause in the agreement. The District Court denied the application, and the applicant applied for leave to appeal the District Court’s decision. The application was heard as an appeal.

 

The main question before the Supreme Court was whether the joinder of the second respondent, who was not a party to the agreement containing the arbitration clause, justified refusing a stay of proceedings on the ground that otherwise the litigation would be split between two proceedings. Under Israeli law, the court has discretion to refuse a stay of proceedings in such a case with regard to domestic arbitration agreements. The question before the court was whether the court had such discretion in a case of an international arbitration agreement that is subject to an international convention. The parties agreed that the arbitration clause was subject to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. This convention, known also as the New-York convention, was ratified by Israel in 1959.

 

Held: The Israeli court does not have the same discretion to stay proceedings under s. 6 of the Arbitration Law regarding an international arbitration agreement as it does under s. 5 of the Arbitration Law regarding a domestic arbitration agreement. Under s. 6 of the Arbitration Law together with art. 2(3) of the New York Convention, the court is required to stay proceedings unless it finds that the arbitration agreement ‘is null and void, inoperative or incapable of being performed.’ It cannot refuse a stay of proceedings on additional discretionary grounds. The existence of a litigant who is not a party to the arbitration agreement does not make the agreement ‘null and void, inoperative or incapable of being performed.’ Consequently, the court is required to order a stay of proceedings in such circumstances.

 

Application granted. Appeal allowed.

Voting Justices: 
Primary Author
majority opinion
majority opinion
majority opinion
Full text of the opinion: 

LCA 4716/04

Hotels.com

v

1.       Zuz Tourism Ltd

2.       Hotels Online Ltd (formal respondent)

 

 

The Supreme Court sitting as the Court of Civil Appeals

[7 September 2005]

Before Vice-President M. Cheshin and Justices A. Grunis, E. Arbel

 

Application for leave to appeal the decision of the Jerusalem District Court (Judge M. Drori) on 4 April 2004 in CApp (Jer) 1929/02.

 

Facts: The applicant and the first respondent entered into an exclusive marketing agreement in February 2000. This agreement contained an arbitration clause stating that disputes between the parties would be resolved by arbitration which shall take place in Texas. In June 2002, the first respondent filed an action in Israel against the applicant and the second respondent, on the grounds that the second respondent was marketing the services of the applicant contrary to the agreement. The applicant filed a motion for a stay of proceedings on account of the arbitration clause in the agreement. The District Court denied the application, and the applicant applied for leave to appeal the District Court’s decision. The application was heard as an appeal.

 

The main question before the Supreme Court was whether the joinder of the second respondent, who was not a party to the agreement containing the arbitration clause, justified refusing a stay of proceedings on the ground that otherwise the litigation would be split between two proceedings. Under Israeli law, the court has discretion to refuse a stay of proceedings in such a case with regard to domestic arbitration agreements. The question before the court was whether the court had such discretion in a case of an international arbitration agreement that is subject to an international convention. The parties agreed that the arbitration clause was subject to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. This convention, known also as the New-York convention, was ratified by Israel in 1959.

 

Held: The Israeli court does not have the same discretion to stay proceedings under s. 6 of the Arbitration Law regarding an international arbitration agreement as it does under s. 5 of the Arbitration Law regarding a domestic arbitration agreement. Under s. 6 of the Arbitration Law together with art. 2(3) of the New York Convention, the court is required to stay proceedings unless it finds that the arbitration agreement ‘is null and void, inoperative or incapable of being performed.’ It cannot refuse a stay of proceedings on additional discretionary grounds. The existence of a litigant who is not a party to the arbitration agreement does not make the agreement ‘null and void, inoperative or incapable of being performed.’ Consequently, the court is required to order a stay of proceedings in such circumstances.

 

Application granted. Appeal allowed.

 

Legislation cited:

Arbitration Law, 5728-1968, ss. 5, 6.

 

Israeli Supreme Court cases cited:

[1]  CA 6796/97 Yaakov Berg & Sons (Furniture) Ltd v. Berg East Importers Ltd [2000] IsrSC 54(1) 697.

[2]  LA 201/85 Nitzanei Oz Workers Cooperative Agricultural Settlement Ltd v. Balhassan [1985] IsrSC 39(3) 136.

[3]  LCA 985/93 Alrina Investment Corporation v. Barki Feta Humphries (Israel) Ltd [1994] IsrSC 48(1) 397.

[4]  CA 307/71 Unico Reutman Public Works Co. Ltd v. Shimshon Insurance Co. Ltd [1972] IsrSC 26(1) 368.

[5]  CA 4601/02 Rada Electronic Industries Ltd v. Bodstray Co. Ltd [2004] IsrSC 58(2) 465.

[6]  LCA 1407/94 Mediterranean Shipping Co. S.A. v. Crédit Lyonnais (Suisse) S.A. [1994] IsrSC 48(5) 122.

[7]  CA 778/03 Inter-Lab Ltd v. Israel Bio Engineering Project [2003] IsrSC 57(5) 769.

 

Israeli District Court cases cited:

[8]  CC (TA) 842/87 General Electric Corp. of New York v. Migdal Insurance Co. Ltd (unreported).

[9]  CApp (Hf) 213/99 Egnatia Shipping Limited v. Israel Discount Bank Ltd (unreported).

[10]  CA (TA) 3060/03 University of Leicester v. Cohen (unreported).

 

American cases cited:

[11]  Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974).

[12]  Mitsubishi Motors Corporation. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985).

[13]  Riley v. Kingsley Underwriting Agencies Ltd., 969 F. 2d 953 (1992).

[14]  Intergen N.V. v. Grina, 344 F. 3d 134 (2003).

 

Canadian cases cited:

[15]  City of Prince George v. A.L. Sims & Sons Ltd. (1995) 61 B.C.A.C. 254 (B.C.C.A.).

[16]  BWV Investments Ltd. v. Saskferco Products Inc. [1995] 119 D.L.R. (4th) 577 (Sask. C.A.).

[17]  Kaverit Steel and Crane Ltd. v. Kone Corp. (1992) 120 A.R. 346.

 

English cases cited:

[18]  Lonrho Ltd v. Shell Petroleum Company Ltd, unreported decision of High Court of Justice, Chancery Division, on 31 January 1978; see Yearbook, Commercial Arbitration, vol. IV–1979, 320.

[19]  Etri Fans Ltd v. NMB (UK) Ltd [1987] 2 All ER 763.

 

For the applicant — E.A. Naschitz.

For the respondents — D. Eidelaman, R. Preiss.

 

 

JUDGMENT

 

 

Justice A. Grunis

1.    This is an application for leave to appeal the decision of the Jerusalem District Court of 4 April 2004 (the honourable Judge M. Drori), in which the applicant’s motion for stay of proceedings in an action filed by the first respondent against the applicant and against the second respondent, was denied.

The factual background

2.    The applicant (hereafter — hotels.com) is a foreign company registered in the United States. Its business is marketing tourism services, and especially hotel rooms, on the Internet. It should be noted that the former name of hotels.com was Hotel Reservations Network Inc. The first respondent (hereafter — Zuz) and the second respondent (hereafter — Hotels Online) are Israeli companies that do business in the field of tourism. On 29 February 2000, hotels.com and Zuz entered into an agreement in which it was stated that Zuz would market in Israel the tourism services offered by hotels.com, in return for a certain commission (hereafter — the agreement). Clause 11 of the agreement includes an arbitration clause, according to which disputes between the parties with regard to the agreement shall be decided within the framework of an arbitration proceeding, which will take place in the State of Texas in the United States (hereafter — the arbitration clause). Because of the importance of the arbitration clause for our purposes, we shall cite it in full:

‘The parties agree that any dispute under this agreement will be subject to binding arbitration under the commercial rules of the American Arbitration Association. The arbitration shall be conducted in Dallas County, Texas, before neutral arbitrators.’

The agreement does not include an express provision with regard to the law governing the agreement or the arbitration proceeding, but refers to the rules of the American Arbitration Association. In clause 12 of the agreement, it is stated that the Internet site that Zuz will maintain under the agreement shall be the only site in Israel in the Hebrew language through which hotels.com will market its services during the term of the agreement:

‘Zuz Tourism Ltd will be the only Internet site in Hebrew in Israel that we will sign on to integrate with per length of contract [sic[. This is from date of signed contract 29.2.00.’

3.    According to Zuz, it discovered in May 2002 that the services of hotels.com were being marketed on the Internet site of Hotels Online. Consequently, on 10 June 2002 Zuz filed an action in the Jerusalem District Court against hotels.com and against Hotels Online, in which it petitioned for declaratory relief that the aforesaid marketing activity constitutes a breach of the agreement. Zuz also petitioned for the relief of specific enforcement and for a permanent injunction prohibiting the marketing of the services of hotels.com on any Internet site other than that of Zuz. On the same day, Zuz also applied for temporary relief according to which, inter alia, the marketing of the services of hotels.com on the Internet site of Hotels Online be prohibited. For its part, hotels.com filed an application for a stay of proceedings on account of the arbitration clause in the agreement. On 4 April 2004, the District Court denied both the application for temporary reliefs and the application for a stay of proceedings. In the decision it was stated that a stay of proceedings against hotels.com was likely to result in an undesirable procedural split, in view of the fact that Hotels Online was not a party to the arbitration clause and thus no stay of proceedings could be ordered with regard to it. This split and the concern that conflicting findings would be reached in the two different proceedings, led to the decision of the District Court not to grant the application for a stay of proceedings. Admittedly, the lower court emphasized that the relevant provision of law in this case was s. 6 of the Arbitration Law, 5728-1968 (hereafter — the Arbitration Law or the law). This is because of the application of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, enacted in New York in 1958. Notwithstanding, it was held that, like s. 5 of the Arbitration Law, s. 6 of the law also gave the court discretion not to stay the proceedings in cases like this one. The application for leave to appeal is directed against the denial of the application for a stay of proceedings. Within the application, hotels.com also requested a stay of proceedings against Hotels Online. In August 2004, after the application for leave to appeal was filed, hotels.com applied to the American Arbitration Association in the United States with a request to file an action against Zuz under the arbitration clause (hereafter — the arbitration request). On 19 September 2004, the District Court gave temporary relief, according to which hotels.com was prohibited from continuing the arbitration proceedings in the United States. On 14 October 2004, this court (Justice Y. Türkel) issued an order that the aforesaid relief would remain in force until the decision was given in the application for leave to appeal, and that Zuz’s action would be stayed until then. We decided to hear the application as if leave had been granted and an appeal had been filed pursuant to the leave granted.

The legal framework

4.    The rule is that consent to submit any matter to arbitration does not negate the subject-matter jurisdiction of the court to hear the matter (CA 6796/97 Yaakov Berg & Sons (Furniture) Ltd v. Berg East Importers Ltd [1], at p. 706; LA 201/85 Nitzanei Oz Workers Cooperative Agricultural Settlement Ltd v. Balhassan [2], at p. 139). Notwithstanding, when an action is filed in court on a matter that was the subject of an arbitration agreement, the court has the power to stay the proceedings in the action. Thereby, a breach of the arbitration agreement is prevented. The main provision of the law that governs the issue of a stay of proceedings is found in s. 5 of the Arbitration Law:

‘5. (a) If an action is filed in court with regard to a dispute that it was agreed to submit to arbitration, and a litigant who is a party to the arbitration agreement applies to stay the proceedings in the action, the court shall stay the proceedings between the parties to the agreement, provided that the applicant was willing to do everything necessary to carry out the arbitration and continue it, and he is still prepared to do so.

(b) An application for a stay of proceedings may be filed in a statement of defence or in another way, but not later than the day on which the applicant first argued on the merits of the matter in the action.

(c) The court may refuse to stay the proceedings if it finds a special reason why the dispute should not be adjudicated in arbitration.’

Thus we see that when the conditions included in the section are fulfilled, the court will, as a rule, stay the proceedings between the parties to the arbitration agreement, unless it finds that there is a special reason why the dispute should not be adjudicated in arbitration. When considering whether to order a stay of proceedings in the action, the court may take various considerations into account (for a discussion of these considerations, see S. Ottolenghi, Arbitration — Law and Procedure (third extended edition, 1991), at pp. 126-145). In this context, the question arises as to how the court should act in cases where an application to stay proceedings is filed by some of the defendants who are a party to an arbitration agreement with the plaintiff, when there are other defendants who are not a party to this agreement. The question arises because it is not possible to compel someone who is not a party to the arbitration agreement to take part in the arbitration proceeding. Therefore, granting the application to stay the proceedings in such a case will lead to a split in the proceedings: the dispute between the plaintiff and the defendants who are party to the arbitration agreement will be adjudicated within the framework of an arbitration proceeding, whereas the dispute between the plaintiff and the other defendants (those who are not parties to the arbitration agreement) will be adjudicated before the court. Such a split may lead to conflicting conclusions and findings and is also not desirable for practical reasons. On the other hand, denying the application for a stay of proceedings will allow the breach of the contractual consent between the parties to the arbitration agreement. In the case law of this court, it is possible to find traces of different approaches with regard to this issue. In a decision from 1993 that addressed this issue, it was held, by a majority, that the court should examine the existence of two conditions (which were named ‘the two-stage test’): (a) is the joinder to the action of the defendant who is not a party to the arbitration agreement a genuine one, meaning that it was not done in order to evade the obligation to settle the dispute within the framework of arbitration (procedural necessity); (b) does holding the proceedings within one framework, without a split, constitute a condition for the plaintiff being able to obtain effective relief (substantive necessity). If the court is persuaded that both of the aforesaid questions should be answered in the affirmative, then there exists a special reason not to order a stay of the proceedings (the majority opinion in LCA 985/93 Alrina Investment Corporation v. Barki Feta Humphries (Israel) Ltd [3]; for another approach, see the minority opinion of Justice M. Cheshin in Alrina Investment Corporation v. Barki Feta Humphries (Israel) Ltd [3] and also CA 307/71 Unico Reutman Public Works Co. Ltd v. Shimshon Insurance Co. Ltd [4]; for a similar problem with regard to an exclusionary forum selection clause, see CA 4601/02 Rada Electronic Industries Ltd v. Bodstray Co. Ltd [5], at pp. 478-479).

5.    An additional provision concerning a stay of proceedings on account of an arbitration agreement is found in s. 6 of the Arbitration Law:

‘If an action is filed in court with regard to a dispute that it was agreed to submit to arbitration, and the arbitration is subject to an international convention to which Israel is a party, and the convention contains provisions concerning a stay of proceedings, the court shall exercise its power under section 5 in accordance with those provisions and subject thereto’ (emphasis added).

As can be seen from the wording of the aforementioned section, it does not apply to every case of an application for a stay of proceedings based on the existence of an arbitration agreement. Its application is limited merely to those cases where the arbitration is subject to an international convention to which Israel is a party, and that convention contains provisions concerning a stay of proceedings. With regard to such cases, the section provides that the power of the court vis-à-vis the issue of a stay of proceedings, as set out in s. 5, shall be exercised in accordance with the provisions of the convention and subject thereto. In other words, s. 6 of the law refers to the provisions of the convention concerning a stay of proceedings, and grants them preferential status to the provision of s. 5 of the Arbitration Law.

6.    In our case, there is no dispute between the parties that the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (hereafter — the convention or the New York Convention) applies to the arbitration clause. This convention, which was enacted in New York in 1958, was intended to replace the Geneva Protocol on Arbitration Clauses, 1923 (Treaties 4, p. 67) (hereafter — the Geneva Protocol). The convention was ratified by Israel in 1959 (the text of the convention was published in Treaties 10, p. 1). The relevant provision for our purposes is art. 2 of the convention:

‘Article II

1. Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.

2. The term “agreement in writing” shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.

3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed’ (emphases added).

From the wording of art. 2(3) of the convention it can be seen that the court is required to order the referral of the parties to an arbitration proceeding, unless one of the three exceptions is satisfied: the arbitration agreement is null and void, inoperative or incapable of being performed.

The scope of the dispute

7.    Zuz filed its action both against hotels.com and against Hotels Online. The agreement between Zuz and hotels.com includes an arbitration clause, according to which disputes concerning the agreement will be decided within the framework of an arbitration proceeding that will take place in the State of Texas in the United States. On the other hand, there is no arbitration agreement between Zuz and Hotels Online. The lower court reached the conclusion that the joinder of Hotels Online to the action satisfied the two-stage test adopted in Alrina Investment Corporation v. Barki Feta Humphries (Israel) Ltd [3]. In this respect, it was held that the procedural necessity of joining Hotels Online to the action arose from the fact that it was the party that allegedly violated the exclusive right granted to Zuz under the agreement. The lower court also held that splitting the proceedings — in such a way that the dispute between Zuz and hotels.com would be adjudicated in an arbitration proceeding in the United States, whereas the dispute between Zuz and Hotels Online would be adjudicated before the courts in Israel — may lead to conflicting determinations and thereby prejudice Zuz’s right to obtain effective relief. We are prepared to assume, without ruling on this issue, that the District Court was right in determining that there is both a procedural necessity and a substantive necessity for joining Hotels Online to Zuz’s action. Had the only provision of law relevant to our case been the one in s. 5 of the law, then in view of the aforesaid assumption and on the basis of the case law rule laid down in the majority opinion in Alrina Investment Corporation v. Barki Feta Humphries (Israel) Ltd [3], it would apparently be necessary to reach the conclusion that there is no basis for staying the proceedings against hotels.com. However, in the case before us the provisions included in s. 6 of the law and in art. 2(3) of the convention apply. Consequently, according to s. 6 of the law, the court is required to determine the issue of stay of proceedings in accordance with the provisions of the convention. The question that arises in our case is therefore as follows: in cases where s. 6 of the law and art. 2(3) of the convention apply, is the court competent to refrain from staying proceedings because of the joinder of a defendant who is not a party to the arbitration agreement? In order to answer this question, we are required to consider two secondary questions that are interrelated: first, do the three exceptions included in art. 2(3) of the convention constitute a closed list? In other words, is the court compelled to stay the proceedings in every case where none of the three aforesaid exceptions apply? Second, does the fact that there is a defendant who is not a party to the arbitration agreement fall within one of the three exceptions in art. 2(3) of the convention? Let us now turn to consider these issues.

The scope of discretion given to the court under s. 6 of the law together with art. 2(3) of the convention

8.    The question of the scope of discretion given to the court under s. 6 of the law together with art 2(3) of the convention was considered in the judgment of LCA 1407/94 Mediterranean Shipping Co. S.A. v. Crédit Lyonnais (Suisse) S.A. [6]. According to the approach of Justice M. Cheshin, the referral of the parties to arbitration under the aforesaid provisions is an obligatory referral. This means that when the conditions set out in s. 6 of the law and in art. 2(3) of the convention are satisfied, the court is compelled to stay the proceedings and refer the parties to an arbitration proceeding, unless one of the exceptions set out in art. 2(3) of the convention applies (ibid. [6], at pp. 129-132). On the other hand, Justice T. Strasberg-Cohen questioned ‘whether the interpretation that denies the court discretion is the only possible and proper one’ (ibid. [6], at p. 128). Since it was not necessary to rule on that issue within the framework of those proceedings, she left undecided the question whether the list of exceptions in art. 2(3) of the convention constitutes a closed list (ibid. [6], at pp. 127-128). It should also be noted that there are conflicting decisions of the District Courts on this issue (see CC (TA) 842/87 General Electric Corp. of New York v. Migdal Insurance Co. Ltd [8]; CApp (Hf) 213/99 Egnatia Shipping Limited v. Israel Discount Bank Ltd [9]; for a different approach, see CA (TA) 3060/03 University of Leicester v. Cohen [10]).

9.    In order to establish the scope of the court’s discretion under s. 6 of the law in conjunction with art. 2(3) of the convention, let us first turn to the language of these provisions. Section 6 of the law provides that the power of the court under s. 5 of the law — which deals, as aforesaid, with stay of proceedings — shall be exercised in accordance with and subject to the provisions of the convention governing the arbitration (para. 5 supra). Article 2(3) of the convention provides in mandatory language that the court ‘shall… refer’ the litigants to arbitration, unless one of the three exceptions listed in the article is satisfied (para. 6 supra). It would appear that the manner in which the two provisions are worded leads to the conclusion that if one of the three exceptions mentioned in art. 2(3) of the convention is not satisfied, then as a rule the court is required to order a stay of the proceedings. It should be noted that art. 4 of the Geneva Protocol, which includes a similar provision to the one in art. 2(3) of the convention, is also worded in a way that compels the court to refer the dispute to arbitration when the conditions set out therein are satisfied. Moreover, it appears that, according to the wording of the two aforesaid provisions, a situation in which there is a litigant who is not a party to the arbitration agreement does not fall within any of the three exceptions in art. 2(3) of the convention. As I shall clarify later, I am of the opinion that considerations concerning the purpose of s. 6 of the Arbitration Law and of art. 2(3) of the convention lead to a similar conclusion.

10. One of the main purposes of the convention is effective enforcement of international arbitration agreements, by means of setting uniform standards according to which such agreements will be enforced (A.J. van den Berg, The New York Arbitration Convention of 1958 — Towards a Uniform Judicial Interpretation (1981), at p. 4; regarding the importance of giving a uniform interpretation to the convention, see van den Berg at pp. 1-6). The concern that was expressed in this regard is that courts of the states that are parties to the convention will be deterred from sending local defendants to litigate within the framework of an arbitration proceeding in a foreign state, and for that reason will tend to refrain from honouring international arbitration agreements (see Scherk v. Alberto-Culver Co. [11], at footnote 15, and the references cited there). Such a situation is likely to cause substantial difficulty in achieving certainty, which is an essential component in the realm of international commerce. It is also likely to provide an incentive for parties to turn to the courts in their own country, in order to bring about a situation in which the dispute is adjudicated in the forum that is preferable to them. This ‘competition’ may result in conflicting decisions of courts in different countries, thereby increasing uncertainty and creating an undesirable situation. The aforesaid reasons led the United States Supreme Court to distinguish between international arbitration agreements, at least those that concern the commercial sphere, and arbitration agreements that do not have an international aspect. It was held that there are situations where international arbitration agreements should be honoured, even in cases where there would be no basis for honouring identical domestic arbitration agreements (Scherk v. Alberto-Culver Co. [11]; Mitsubishi Motors Corporation. v. Soler Chrysler-Plymouth, Inc. [12]). Against this background, let us now turn to examine comparative law in so far as it concerns the interpretation of art. 2(3) of the convention.

11. It would appear that there is a real similarity in the way in which art. 2(3) of the convention has been interpreted in many of the common law countries. The rule that has been laid down in this respect is that the clause is of a binding character. This means that if none of the three exceptions mentioned in the article apply, the court is required to stay the proceedings and refer the parties to an arbitration proceeding, without exercising any discretion in the matter (van den Berg, The New York Arbitration Convention of 1958 — Towards a Uniform Judicial Interpretation, supra, at pp. 135-137). The aforesaid rule is followed, inter alia, in the United States (Riley v. Kingsley Underwriting Agencies Ltd. [13]; Intergen N.V. v. Grina [14]), Canada (City of Prince George v. A.L. Sims & Sons Ltd. [15]; BWV Investments Ltd. v. Saskferco Products Inc. [16]) and England (Lonrho Ltd v. Shell Petroleum Company Ltd [18]). We should also point out that until the enactment of the Arbitration Act 1996, there existed in England a clear distinction, for the purposes of the issue of stay of proceedings, between domestic arbitration agreements and international arbitration agreements. Whereas with regard to domestic arbitration agreements the court had discretion not to order a stay of proceedings, with regard to international arbitration agreements the courts were obliged to order a stay of proceedings, unless one of the exceptions mentioned in the convention was satisfied. In 1996 the law was changed and now the English courts do not have discretion on the question of stay of proceedings even with regard to domestic arbitration agreements (D. Sutton and J. Gill, Russell on Arbitration (twenty-second edition, 2003), at pp. 18-19; with regard to the rule in England before the 1996 amendment, see M.J. Mustill and S.C. Boyd, Commercial Arbitration (second edition, 1989) at pp. 462-483).

Moreover, in addition to the rule that art. 2(3) of the convention is of a binding character, it has been held that a situation in which one or more of the defendants is not a party to the arbitration agreement does not fall within any of the three exceptions in art. 2(3) of the convention. In other words, the existence of a litigant who is not a party to the arbitration agreement does not make the arbitration agreement that exists between all or some of the other litigants null and void, inoperative or incapable of being performed. Therefore, in a situation of this kind, the court is obliged to order a stay of proceedings with regard to those litigants who are party to the arbitration agreement (Yearbook, Commercial Arbitration, vol. XXVIII–2003, 637-639; van den Berg, The New York Arbitration Convention of 1958 — Towards a Uniform Judicial Interpretation, supra, at pp. 161-168). This rule is followed, inter alia, in Canada (Kaverit Steel and Crane Ltd. v. Kone Corp. [17]; City of Prince George v. A.L. Sims & Sons Ltd. [15]) and in England (Lonrho Ltd v. Shell Petroleum Company Ltd [18]).

12. We see that considerations of certainty and the fear of international arbitration agreements not being honoured due to a preference for local litigants' interests, have led foreign courts to adopt an interpretational approach that restricts the scope of discretion with regard to a stay of proceedings vis-à-vis international arbitration agreements. In this respect, we should mention two additional considerations that are unique to the situation in which one of the litigants is not a party to the arbitration agreement: first, a significant number of arbitration agreements that stipulate to the holding of an arbitration in a foreign state also include a clause that applies the law of that state (or another foreign law) to the matter. If a stay of proceedings is not given with regard to such agreements because of the existence of an additional defendant who is not a party to the arbitration agreement, a question is likely to arise with regard to the law that should be applied to the dispute between the plaintiff and the defendant who is a party to the arbitration agreement. If we say that the court in Israel is required to apply the foreign law, then there will occur a split of a different kind to the one we mentioned: the dispute between the plaintiff and the defendant who is a party to the arbitration agreement will be decided according to the foreign law, whereas the dispute between the plaintiff and the defendant who is not a party to the arbitration agreement will be decided according to Israeli law. In such a situation there is a concern that conflicting decisions will be made, and therefore the justification underlying the refusal to stay proceedings is significantly weakened. On the other hand, if we rule that the whole matter should be decided in accordance with Israeli law, we shall find ourselves significantly changing the material rights of the parties to the arbitration agreement, in addition to giving judicial approval to the breach of the arbitration agreement. This increases the fear of uncertainty with regard to international arbitration agreements (for a discussion of this issue with regard to internal arbitration agreements, see the minority opinion of Justice M. Cheshin in Alrina Investment Corporation v. Barki Feta Humphries (Israel) Ltd [3], at pp. 406-408). Admittedly, in this case there is no express provision in the agreement concerning the applicable law, but we should remember that our ruling articulates a general principle. Moreover, Zuz does not claim that Israeli law governs the agreement. Even if the claim had been made, it would have been difficult to accept it. Agreeing to hold the arbitration in Texas certainly does not imply that Israeli law is applicable. Second, refraining from staying proceedings despite the existence of an international arbitration agreement, for the reason that one or more of the defendants are not party to the arbitration agreement, may create an additional difficulty. Admittedly, as a result of declining to stay the proceedings, a split of the case will be avoided, in the sense that the plaintiff’s action against the defendant who is a party to the arbitration agreement — which should have been adjudicated within the framework of arbitration — will be decided together with the action against the defendant who is not a party to that agreement. However, this cannot prevent the defendant who is a party to the arbitration agreement from acting under the agreement and filing an action with regard to precisely the same matter before the arbitrator in the foreign country. This is what hotels.com has done in the case before us. The result would be that the dispute between the parties to the arbitration agreement would be split and heard before two different tribunals: the action of the one party will be heard by the courts in Israel, whereas the action of the other party will be decided by the arbitrator abroad. It thus follows that refraining from staying the proceedings, albeit preventing a split in one respect, creates a split of the proceedings in another respect, with all that this implies. In order to prevent this new split, the court in Israel will be required to issue an injunction against the defendant who is a party to the arbitration agreement, prohibiting him from continuing his action before the arbitrator and compelling him to litigate also as a plaintiff before the courts in Israel. This would result in another significant departure from the contractual consent between the parties to the arbitration agreement (with regard to an injunction restraining foreign proceedings, see CA 778/03 Inter-Lab Ltd v. Israel Bio Engineering Project [7]).

13. I am of the opinion that the aforementioned considerations lead to the conclusion that the court’s scope of discretion under s. 6 of the law, together with art. 2(3) of the convention, is significantly narrower than its scope of discretion under s. 5 of the law. When dealing with arbitration that is governed by the convention and the relevant requirements in s. 6 of the law and art. 2(3) of the convention (such as the requirement that the stay of proceedings has been requested by a litigant who is a party to the arbitration agreement) are satisfied, as a rule the court is required to order a stay of proceedings unless one of the three exceptions in the aforesaid art. 2(3) exists (for support for this position, see Ottolenghi, at pp. 150-156; for a discussion of the question of the existence of the requirements listed in s. 6 of the law and in art. 2(3) of the convention, cf. Mediterranean Shipping Co. S.A. v. Crédit Lyonnais (Suisse) S.A. [6]). This result is consistent with the language of the law and with the language of the convention. It is also consistent with one of the main purposes of art. 2(3) of the convention: promoting legal certainty with regard to international arbitration agreements, by removing the concern that courts in the various countries will tend to prefer the interests of the local litigant, and therefore will refrain from honouring international arbitration agreements that stipulate to legal proceedings in a foreign country. I am prepared to assume that there may be exceptional cases in which the court may refuse to stay proceedings, even if none of the aforesaid three exceptions is satisfied. However, these cases will be rare (cf. Etri Fans Ltd v. NMB (UK) Ltd [1987] 2 All ER 763). It should be emphasized that our decision in these proceedings concerns only arbitrations that are governed by the New York Convention. It is possible that in certain cases another international convention will apply. As stated above, s. 6 of the law provides that when the arbitration is governed by an international convention to which Israel is a party, and the convention includes provisions concerning a stay of proceedings, the court shall exercise its authority under s. 5 of the law ‘in accordance with those provisions and subject thereto’.

14. Indeed, no one disputes that there are weighty reasons that support a refusal to stay proceedings in cases where some of the litigants are not parties to the arbitration agreement, at least in certain circumstances (for details of the reasons, see the minority opinion of Justice M. Cheshin in Alrina Investment Corporation v. Barki Feta Humphries (Israel) Ltd [3], at p. 405). These reasons are what led the majority in Alrina Investment Corporation v. Barki Feta Humphries (Israel) Ltd [3] to the conclusion that within the framework of s. 5 of the law, the court may, in circumstances of this kind, refuse to stay proceedings notwithstanding the existence of an arbitration agreement, provided that the two-stage test is satisfied (see para. 4 supra). In any case, it should be remembered that we are concerned with arbitration agreements that are subject to the convention, and are therefore governed by s. 6 of the law, and not with domestic arbitration agreements, which are governed by s. 5 of the law. With regard to international arbitration agreements it should be held that the fact that there is a litigant who is not a party to the arbitration agreement does not fall within any of the three exceptions in art. 2(3) of the convention. In other words, this circumstance does not constitute, as a rule, a reason for the court to refuse to order a stay of proceedings, in so far as arbitration agreements that fall within the scope of s. 6 of the law are concerned. The District Court therefore erred in refusing to stay the proceedings for the reason that Hotels Online, which is one of the defendants in Zuz’s action, is not a party to the arbitration clause.

Additional arguments

15. In its response to the application for leave to appeal, Zuz raises additional arguments that do not concern the question of the interpretation of s. 6 of the law and art. 2(3) of the convention, which we have discussed up to this point. I shall address two of these arguments, which require consideration. According to Zuz, hotels.com acted in bad faith when it submitted the arbitration request in the United States. As aforesaid, this request was submitted in August 2004, after the lower court gave its decision and after the application for leave to appeal was filed before us. Despite this, within the arbitration request hotels.com refrained from mentioning the existence of the proceedings taking place in Israel, including the decision of the District Court. According to the argument, the aforesaid manner of conduct is sufficient to lead to the denial of the application of hotels.com. Admittedly, in certain circumstances the appeals court may take into account events that took place after the decision of the lower court was issued. I am also prepared to assume that the duty of good faith extends also to proceedings under ss. 5 and 6 of the law (see the opinion of President M. Shamgar in Mediterranean Shipping Co. S.A. v. Crédit Lyonnais (Suisse) S.A. [6], at p. 127). Notwithstanding, I cannot accept Zuz’s argument. The subject of the District Court’s decision is the application for a stay of proceedings in an action filed by Zuz, on the grounds that there is an arbitration clause. The decision does not deal with a future action of hotels.com against Zuz. All that was held in the decision is that there is no basis for a stay of proceedings with regard to the action of Zuz against hotels.com. Since this is the case, it cannot be said that the arbitration request filed by hotels.com in the United States is tainted by bad faith. Admittedly, within the arbitration request, hotels.com should have mentioned the proceedings that are taking place in Israel and the decision of the lower court. However, I am of the opinion that the failure to mention this fact does not, in and of itself, justify denying the appeal. I will further add that the concern of a split in the litigation between two different tribunals, which has occurred de facto in this case, is one of the reasons that led me to the conclusion concerning the proper interpretation of s. 6 of the law and art. 2(3) of the convention (see para. 12 supra).

16. Another issue raised by Zuz in the proceeding before us concerns the position of hotels.com with regard to the validity of the agreement. According to Zuz, during the proceeding in the lower court hotels.com tried to advance contradictory arguments: on the one hand, it argued that the arbitration clause in the agreement should be honoured, and on the other hand it refused to admit entering into the agreement. According to Zuz, in these circumstances we should apply the rule determined in Mediterranean Shipping Co. S.A. v. Crédit Lyonnais (Suisse) S.A. [6] and refuse to stay the proceedings. This argument should also be rejected. An inspection of the pleadings filed in the lower court shows that hotels.com did not deny the existence of the agreement, and certainly did not do so expressly. The fact that hotels.com does not deny entering into the agreement is also apparent from the proceeding before us. In any case, the fact that hotels.com itself filed an arbitration request based on the arbitration clause in the agreement shows that it is not seeking to deny entering into this agreement.

17. The result is that the appeal is allowed, and the decision of the District Court, insofar as it concerns the issue of a stay of proceedings, is nullified. The proceedings in Zuz’s action against hotels.com are stayed. Consequently, the temporary relief granted by the District Court on 19 September 2004, is set aside. There is no basis for ordering, within this proceeding, a stay of proceedings against Hotels Online, which is not a party to the agreement. Zuz is liable, with regard to both proceedings, for the legal fees of hotels.com in a sum of NIS 60,000 and for court costs.

 

 

Vice-President M. Cheshin

I agree.

 

 

Justice E. Arbel

I agree with the comprehensive opinion of my colleague Justice A. Grunis and like him I recognize the importance of effective enforcement of international arbitration agreements by adopting uniform and clear rules that will allow the enforcement and implementation of such agreements, including in circumstances where one or more of the litigants is not a party to the arbitration agreement.

 

 

Application granted. Appeal allowed.

3 Elul 5765.

7 September 2005.

 

 

Gazit v. Ports Authority

Case/docket number: 
HCJ 316/63
Date Decided: 
Thursday, January 23, 1964
Decision Type: 
Original
Abstract: 

Whilst the second respondent was building a wharf in Kishon harbour, the first respondent issued a tender for the erection of a warehouse in the same place. The second respondent competed in the tender but its bid was not the lowest. Because, however, of the desire to have the job finished for the coming citrus marketing season and because of the difficulties apprehended if two different contractors worked on the site at the same time, the work was awarded to the second respondent after negotiations for a reduction of the price. Only the second respondent of all those competing knew of the urgency for carrying out the work. The petitioner whose bid was the lowest challenged the award.

 

Held (1) The purpose of a public tender is on the one hand to obtain as many bids as possible from among which the most appropriate one can be chosen and on the other hand to give an opportunity for fair competition on equal terms to all participants.

 

(2) A contract is not to be awarded on grounds not obvious from the nature of things and undisclosed in the tender. Matters which are withheld create from the outset a situation of inequality.

 

(3) It is not proper to issue a tender with the intention of afterwards negotiating a reduction in price with one or other bidder. A bid is to be accepted or rejected as it stands. The desire to save public funds may well be bona fide but that is not the only element in conducting public tenders.

Voting Justices: 
Primary Author
majority opinion
majority opinion
majority opinion
Full text of the opinion: 

H.C.J 316/63

           

           

GAZIT & SHEHEM BLDG. LTD.

v.

PORTS AUTHORITY and others

 

 

In the Supreme Court sitting as the High Court of  Justice

[January 23, 1964]

Before Sussman J.,. Landau J. and Manny J.

 

Public tenders - fair competition and equal terms - undisclosed matters - desire to save public funds.

 

Whilst the second respondent was building a wharf in Kishon harbour, the first respondent issued a tender for the erection of a warehouse in the same place. The second respondent competed in the tender but its bid was not the lowest. Because, however, of the desire to have the job finished for the coming citrus marketing season and because of the difficulties apprehended if two different contractors worked on the site at the same time, the work was awarded to the second respondent after negotiations for a reduction of the price. Only the second respondent of all those competing knew of the urgency for carrying out the work. The petitioner whose bid was the lowest challenged the award.

 

Held (1) The purpose of a public tender is on the one hand to obtain as many bids as possible from among which the most appropriate one can be chosen and on the other hand to give an opportunity for fair competition on equal terms to all participants.

 

(2) A contract is not to be awarded on grounds not obvious from the nature of things and undisclosed in the tender. Matters which are withheld create from the outset a situation of inequality.

 

(3) It is not proper to issue a tender with the intention of afterwards negotiating a reduction in price with one or other bidder. A bid is to be accepted or rejected as it stands. The desire to save public funds may well be bona fide but that is not the only element in conducting public tenders.

 

Israel cases referred to:

 

(1)   H.C. 292/61 - Bet-Ariza Rehovot Ltd. and others v. Minister of Agriculture and others (1962) 16 P.D. 20.

(2)   H.C. 273/60 - B. Givstein and another v. Mayor, Council and Inhabitants of Rishon-le-Zion and another (1961) 15 P.D. 916.

(3)   H.C. 25/63 - Uniko Roitman Ltd. v. Local Council of Kiryat Ono and another (1963) 17 P.D. 1208.

(4)   H.C. 117/63 - A. Zalof v. Mayor, Council and Inhabitants of Kfar Saba and another (1963) 17 P.D. 1278.

(5)   H.C. 210/52 - Rehitei LaKol and another v. Minister of Commerce and Industry and another (1952) 6 P.D. 795.

 

I. Nahshatan for the petitioner

Z. Terlo, Deputy State Attorney, for the first respondent.

R. Nabat for the second respondent.

 

SUSSMAN J. A wharf is in the course of being built in the Kishon area which is under the control of the first respondent. The work was given by the first respondent to the Ports and Foreign Work Co., which is a part of Solel Boneh Ltd. This company is closely linked with the second respondent. Although separate legal entities, the activities of the two companies in Israel are in practice combined and the work in question is being mainly carried out by the personnel and with the equipment of the second respondent.

 

            By notice in the newspaper "Ha-Aretz" of 18 August 1963 the first respondent informed contractors of its intention to publish "a tender for the building of a warehouse of 5,000 square metres adjoining a new wharf (on the north side) which is now being built in the Kishon area of Haifa port" and invited contractors interested in being included in the list of participants in the tender to apply and receive approval of their inclusion. The petitioning company, a building contracting company, which was at its request included in the list, received from the first respondent the information it required to prepare its bid, including technical specifications, and duly put in its bid. The second respondent also submitted a bid and in addition three other bids were received by the first respondent.

           

2. Under clause 7(e) of the Practice regarding Tenders, laid down by the first respondent, it may "enter into a contract without tender if the contract is connected with any one of the following activities: ... (e) in every case ... where the Director of the Authority decides that the circumstances require that execution of the work should be negotiated and not put out on tender." Hence to give out the work on tender is not compulsory. The Director, however, decided not to allot the work to any given contractor by negotiation and accordingly a tender was issued. In accordance with clauses 9 and 20(c) of the said Practice, the tender was to be in the form of "open competition", that is, by publication in two daily newspapers and by personal notice to at least three contractors.

 

3. On 25 October 1963, the offers received were opened by the Central Tenders Committee of the first respondent. It emerged that the lowest bid came to IL 720,790.20 and the highest to IL 1,287,983.40. The identity of the bidders was not then disclosed to the Committee. The Committee decided to pass the offers over to the engineering division and resolved that at its next meeting it would decide who had won the contract and when the work was to begin. In view of this, a technical committee met, which made the following recommendation to the Tenders Committee:

 

"The cheapest bid is that of Competitor No. 3, then comes the bid of Competitor No. 5 and thirdly in the amount of the bid Competitor No. 1.

 

The difference between the three offers is within 4% approximately. On the other hand it is very important to commence putting up the warehouse at the same time as the wharf is built. It appears to us that a decision should be made only after the names of the competitors are ascertained and in the event that the work is given to Competitor No. 3 it should be required to sign an express undertaking not to make any demands over excavation, locksmith and electrical work."

 

The technical committee also did not know who were the participants in the tender.

 

            On 14 November 1963, the Tenders Committee met again, with the recommendation of the technical committee before it. The Committee ascertained at this meeting that the cheapest bid had been submitted by the petitioner, whereas the price proposed by the second respondent was IL 739,339.05. Another bid was for IL 753,909.75. The Committee resolved "to accept the offer of Solel Boneh (that is, the second respondent) provided the company agreed to a reduction of 2.5%". The resolution went on to give the following reason.

 

"Reason: Solel Boneh Ltd. is at present engaged in building wharfs in Kishon harbour. The entry of a second contractor into an area where another is already active necessitates coordination and adjustment of work. In this case that would cause a four months' delay in commencement and since the building work will take 10 months, the warehouse will not be ready by April 1964/65."

 

4. Subsequently, Mr. Laskov (the Director of the Ports Authority) got into touch with the second respondent which agreed to a reduction of 2%. As a consequence, the Central Tenders Committee resolved on 24 November 1963 to give the work to the second respondent. The next day, 25 November 1963, an order was sent to the second respondent to commence work and work in fact commenced on 3 December 1963.

Later, on 10 December 1963, a contract was signed between the two respondents.

 

5. On 12 December 1963 the petitioner applied to this Court for an order nisi and the following day an order issued from the Court, calling upon the respondents to show cause why the said contract should not be set aside and the work not be awarded to the petitioner which had made the lowest bid. Along with the order the Court directed that in the meantime the work should cease until after trial.

 

6. In his affidavit on behalf of the second respondent in answer to the order nisi, Mr. Yaakov Porat, one of its directors, states in clause 7(3):

 

"After learning that the intention was that the work should begin at once in coordination with the main work (the wharf of Kishon harbour) and we could thus save money, we agreed to reduce our bid but only by 2%, and we informed Mr. Laskov accordingly so that he could pass on our amended offer to the Committee."

 

The affidavit also states in clause 6(b)(2)

 

"The said work - erection of the warehouse - must be done in the same area as the main work is being done. A contractor doing the two at the same time can do both and each with greater efficiency, speed and coordination than two contractors, however capable they might be."

 

As we know the Committee approved the bid at its meeting of 24 November 1963.

 

            By virtue of rule 16(a) of the Rules of Procedure in the High Court of Justice we found fit to allow cross-examination on the affidavits in order to do justice in the matter, but Mr. Porat was injured in a traffic accident and could not appear in court. In his place another director of the second respondent, Mr. Tzutzka, was examined by counsel for the petitioner and he confirmed that when the second respondent sent in its bid, it knew that if successful it could commence the work of building the warehouse immediately. It should be added here that the contract fixed a period of "10 calendar months from the day it was decided to commence work". Thus, the date of commencing and of completing the work was left to the bidder; it was, however, clear to the second respondent that if it obtained the work the first respondent would order it to be commenced at once. Petitioner's counsel showed that Mr. Porat's assertion in clause 7(3) of his affidavit cited above contradicted the evidence of Mr. Tzutzka, the former saying that the second respondent only learned of the intention to commence work at once during the conversation with Mr. Laskov after the tender was opened. The question whether or not this is a contradiction no longer needs to be resolved. It is reasonable to assume that the advantage mentioned in clause 6(b)(2) of Mr. Porat's affidavit, that as a contractor already working at the site the second respondent could carry out the two jobs, "both and each of them with greater efficiency, speed and coordination than two contractors", was known in advance by the second respondent. The commencement of the work, however, was not made conditional only upon the readiness of the contractor but mainly on the instructions given by the tenderer, and in this respect Mr. Natan Kaplan testified in his affidavit on behalf of the first respondent that there was no possibility of allowing two contractors to work simultaneously on the site. Therefore, he said, "no company could commence before the wharf was built", meaning obviously no company other than the second respondent which was already engaged in building the wharf, "and this we knew when the tender was published". The wharf was to be finished by 15 March 1964, which meant that no other contractor could commence before 15 March 1964, and, as I have said, Mr. Tzutzka, a director of the second respondent, also knew that his company would receive instructions to commence work at once and would not need to wait until the wharf was finished, provided only it won the contract.

 

            It is reasonable to assume that in negotiating with the second respondent Mr. Laskov emphasised this fact and used it as a reason for reducing the price, and that Mt. Porat's statement in his affidavit is so to be understood.

           

            In spite, however, of the advantage of carrying the two sets of work at the same time, which enabled the second respondent to save on expenses, its offer was not the lowest.

           

7. In clause 11 of the petition, the petitioner sets out its criticisms of the tender. It submits inter alia that the first respondent preferred on the face of it the second respondent "without any justification and not in accordance with the standards of law and equity but out of extraneous considerations, invalid and arbitrary, and out of unfair preference and discrimination" and that "it had made up its mind to hand over the building of the warehouse to the second respondent even before it had published the tender and only published that in order to do its ostensible duty."

 

            We agree with the submission of the Deputy State Attorney that these matters were not proved. These is not an iota of evidence that the tender was a sham. We also agree with the submission of counsel for the second respondent that this conduct was not exceptional. We believe what the declarant on its behalf, Mr. Porat, said, that it knew nothing about the existence of the petitioner and that its existence first came to its knowledge when it read in a newspaper that an order nisi had issued from this Court. Notwithstanding all this, we are of the opinion that the tender does not comply with principles laid down by this Court regarding public authority tenders and must be treated as invalid.

           

8. As I have said, the second respondent had the initial advantage that if it won the contract it could carry out the job, or more correctly the two jobs, "with greater efficiency, speed and coordination than two contractors" and with a saving of costs. Thus far all seems to be fine. since the difference in performance capacity between two competing contractors is not a flaw.

 

            But the first respondent had the intention, not disclosed in the tender, of instructing the second respondent to commence work immediately, which it would not do with any other contractor until March 1964 and make it impossible to finish the work until 15 January 1965, that is ten months after the wharf was finished. Here we come to the matter which was undisclosed to the participants in the tender: the first respondent vitally needed the wharf to be finished, even if incompletely without gates and doors, by October 1964, since otherwise it would be unable to use the structure to market the season's citrus fruit. A building delay would involve the first respondent in losses, estimated by Mr. Kaplan at IL 1,833 a day. Hence the first respondent decided that even if the job done by the second respondent cost more, the loss arising out of delay in erecting the warehouse would be avoided, and as long as the cost outbalanced the loss, the second respondent was preferable to any other contractor.

           

9. The consideration that there was already a contractor on the site with equipment and workers, who could finish the job at an earlier date than any other contractor is certainly a material consideration and there is nothing wrong with it. All the more so when the presence of two contractors working at the same time, each with their own equipment and workers, was likely to create disputes and problems, as Mr. Kaplan explained in evidence before us. For this reason we should not criticize the first respondent had it seen fit therefore to forgo a tender and contract with the second respondent without tender on the basis of clause 7(e) of the Practice. But had it done so, it would presumably have been unable to fix a competitive price and would perhaps have had to pay more to the second respondent. In parenthesis, it is to be observed that before publishing the tender the first respondent estimated the building costs at IL 823,316.50 and as a result of competitive pressure it also obtained a reduction of 2% on the bid made by the second respondent, which was already more than IL 80,000 less than the estimate. The first respondent thus saved public funds, and there is no foundation for the argument that it did not act in good faith. Its intentions were desirable and fair. We also believe the first respondent, that had the difference between the bid of the second respondent and the lowest bid been greater than it was, it would not have been given the job but the lowest bid would have been accepted in view of the fact that the loss entailed by delay in erecting the warehouse till after the commencement of the season of October 1964, would be balanced by the saving in the costs of the building.

 

10. We are prepared to agree with the submission of the Deputy State Attorney that the petitioner as well knew, or should have known, that the second respondent had the said initial advantage, that by already being on the site it was in a better position to carry out the work. The participants in the tender visited the place and the representatives of the petitioner also saw that the wharf was in the course of building. As experts they could not but understand and know what others knew, that a contractor doing other work near to the site would be at an advantage. The petitioner indeed competed in these circumstances with open eyes. But the ability of a competitor to do the work is one thing, and the considerations of the tenderer in choosing a contractor is another. As regards the first, it is natural that one's capacity should differ from another's and nothing rests on that. But all who join in a tender are entitled that the choice between those competing should not fall to be decided by matters not in the nature of things and undisclosed in the terms of the tender. Secret conditions create at once lack of equality between competitors, whilst a contractor submitting his offer and joining in a tender expends money in preparation and expects that he is par inter pares.

 

            The petitioner was not par inter pares. Although the contractor building the wharf would save on expenses by also erecting the warehouse, the petitioner still made a lower bid. The first respondent was interested in having the warehouse ready by 15 October 1974 and for it that was determinative. But nothing was said about that in the tender nor was the petitioner aware of it. The petitioner was prepared to carry out the work during such time as another contractor continued building the wharf. The first respondent was afraid of disturbances in the latter and since these fears were not imaginary its wishes are to be honoured, since if the contract were not awarded to the second respondent work could not commence until that was finished. For this reason the second respondent was instructed to begin at once and the decision went in its favour, but no other bidder was entitled to that, although he was not restrained from carrying out the work because of the presence of another contractor on the site. It follows that every other bidder was disqualified from the start unless his bid was so much smaller as to compensate for the prospective loss resulting from putting off the warehouse from October 1964 until January 1965.

 

11. The purpose of a tender, as this Court ruled in Bet-Ariza Rehovot Ltd. v. Minister of Agriculture (1), is twofold: from the standpoint of the person issuing the tender it is to obtain as many bids as possible from amongst which to choose the most convenient and most appropriate; from the standpoint of the contractors it is that "the tender gives them the opportunity to get the proposed job in fair competition and under conditions of equality."

 

            The first respondent's tender failed in respect of the second purpose. Its interest in having the work completed by October 1964 was of decisive importance and not only was that not disclosed in the tender but a period of ten months was laid down from a date it would decide upon and the fact that the second respondent would be instructed to commence at once whilst any other contractor would only do so after the warehouse was finished was not mentioned. By suppressing this important fact from those participating in the tender - apart from the second respondent which knew, as I have said, that it would be allowed to begin at once - the first respondent was in breach of the principles of equality on which every fair tender is founded. Had the other contractors known of the first respondent's hidden intention, they could have competed more effectively with the second respondent; they could have made bids which because of the difference of cost between them and the second respondent might have gained them the contract even though they did not begin building at once. And it is not impossible that because of this absence of equality, the other contractors might have chosen not to compete in the tender.

           

12. In Givstein v. Rishon-le-Zion (2) this Court nullified a tender drawn up by a public authority because, whilst under the tender it had to chose the most convenient bid within the terms of the tender, it had decided to have regard also to an offer which it had already received outside the tender. Such an act, the Court held, offended the rule of equality in tenders. Although in the present case the first respondent did not deal with any offer outside the tender, it drew up the tender in the knowledge that, when it came to examine the bids put in, it would decide according to a consideration which gave one bidder an advantage. That bidder knew about this but the rest did not. Even if this consideration was valid - and we have already expressed the opinion that the first respondent cannot be said to have acted maliciously and in bad faith - the result was invalid because in fact it led to discrimination and preference. Any one making a bid in response to the tender was entitled to expect that in general the lowest bid would be accepted. Here, on the other hand, the lowest bid would not have been successful unless the difference between it and that of the second respondent would render delay in the commencement of the work worthwhile. In the words of this Court in Uniko Roitman Ltd. v. Kiryat Ono (3) the effect was that "competition among the bidders was not conducted within bounds known to all of them, which they had to keep in mind". And nothing turns on the fact that in that case, the tender suffered from many defects whereas here there is only one ground for disqualifying it.

 

13. We have asked ourselves whether the first respondent could have drafted the terms of the tender it published in such a manner that on the one side disclosed the decisive facts on which it intended to accept a bid and on the other would not deter contractors from participating in the tender and competing with the second respondent when they read that the first respondent wished the warehouse to be finished by October 1964 and that they would not be allowed to commence the work until the wharf was completed. One thing certainly could have been published, that completion of the building by October 1964 was vital for the purposes of the first respondent. As for the date of commencement - as against the necessity to finish by the date mentioned - the first respondent might possibly have maintained equality had it asked for alternative bids based, for instance, on a six or seven or ten month period for the job, provided the warehouse was finished by the date mentioned. We have said "possibly" because we cannot determine what minimum period was required for carrying out the work but, be that as it may, the lack of possibility to issue a fair tender cannot justify an unfair one; it can only justify for objective reasons giving the work to a contractor, capable of doing it, not by way of tender.

 

14. The petitioner voiced another objection to the tender proceedings. It complained that as a result of the decision of the Tenders Committee of 14 November 1963, the Director of the first respondent got into touch with the second respondent, as mentioned in paragraphs 3 and 4 above, and negotiated with it behind the backs of the others. To justify this the first respondent relies on rule 47 of the Practice which prescribes that

 

"Where the Tenders Committee decides to give the work not to the lowest bidder, the chairman of the Committee shall conduct negotiations with the bidder to whom the work has been given for reducing the price bid and adjusting it to the lowest bid."

 

We are afraid that rule 47 creates a difficulty which the Deputy State Attorney did not succeed for all his ability to dispel. If the Committee decided "to give the work not to the lowest bidder", it is difficult to understand what use there is in conducting negotiations "with the bidder to whom the work has been given". Why should this bidder, to whom the work has already been given, agree to lower his price? It is superfluous to say that it is unprecedented to issue a tender in order afterwards to bargain about it with one or another bidder.

 

            In fact the Committee at that meeting only came to a "conditional decision". The condition was actually not fulfilled since the second respondent agreed to a reduction of 2% and not 2.5% asked of it. We assume that had the Director of the first respondent not obtained this reduction in the negotiations he conducted, the Committee at its next meeting would have given the work to the petitioner because its bid was the lowest. There was no final decision not to give it the work. Although the hands of the first respondent were tied since it was interested in the second respondent's bid because it could begin at once, the first respondent had got itself into this difficulty by not disclosing the matter at once in the tender. For this reason the proceedings were invalid, as it was in Zalof v. Kfar Saba (4). There, as here, "(the respondent) did not expressly say 'yea' or 'nay' " but "chose (the second respondent) as the only bidder with whom to negotiate, clearly by intending to obtain a reduction in price. Thus it offended against the principle of equality of opportunity and assurance of fair competition among the various bidders which are the foundation of public tenders" (at 1278). In Rehitei Hakol v. Minister of Commerce and Industry (5) this Court had already held (at 799) that negotiations with one bidder on a matter unbeknown to the others would disqualify a tender.

 

15. With regard also to the negotiations with the second respondent we have no doubt that the first respondent intended saving public funds and that attests to its good faith, but good faith alone, as we know, is not the sole basis on which to conduct a tender. Here the original sin was that because of the factor concealed by the tenderer, the true conditions of competition were unknown to all the competitors. When the bids were received and the second respondent did not make the lowest bid, the first respondent hesitated from paying it - because the work could be carried out more efficiently and perhaps more cheaply - more than that asked by any other bidder and felt itself bound to enter into negotiations. The first respondent's motive was proper and found justification in rule 47 of the Practice. But we are doubtful how rule 47 can be reconciled with the principle of tendering, that a bid is accepted or rejected as it is and no negotiations are conducted.

 

            The cumulative effect of these two defects in the tendering process is that the first respondent used the bids as a means of reducing the demand of one bidder without revealing to the others that because of two considerations - the need to finish the building by October 1964 and the unwillingness to have two contractors on the site - the matter would not be dealt with on the basis of equality among the bids made.

           

16. Having found the tendering process imperfect, the question arises whether to direct the first respondent to give the work of building the warehouse to the petitioner in accordance with its bid.

 

            Counsel for the second respondent stressed that the second respondent had already begun working and expended money in connection therewith. He also submits that no faulty behaviour attaches to his client. We agree to this submission but not for this reason alone can the contract made with it remain in effect. Prima facie invalidation of the tender compels the conclusion that the contract is to be cancelled and that it be given to one entitled to get the job in accordance with the tender, since otherwise there would be no point in this Court intervening in the matter.

           

            Another reason moving this Court to refrain from passing on the contract may be that the contractor who was wrongfully successful has already carried out part of the work. Indeed in Zalof (4), unlike here, a very considerable part of the work had already been done. The value of what has already been done by the second respondent until stopped by the interlocutory order does not, according to Mr. Kaplan's estimate, amount to more than IL 4,000 - "not including organisation". As against the value of the whole tender which is over IL 700.000. this is a paltry sum and the second respondent can be compensated by the first respondent if it so claims. The very day when instructions were given to the second respondent to commence work, the petitioner turned to the first respondent asking why the contract had not been awarded to it. On the petitioner's part there was no delay.

 

            The only doubt in our minds does not concern the rights of the second respondent but the public interest. Since we do not presume to compel the first respondent to allow the work to begin before 15 March 1964 when the second respondent leaves the port, is not the public prejudiced by the fact that the warehouse will not be ready for marketing citrus at the beginning of the season? This Court, needless to say, is enjoined to safeguard vital public interests before which private rights must sometimes yield.

           

            Having reached this conclusion, we invited counsel to find out whether the petitioner is ready to complete the building work by 15 October 1964. Petitioner's counsel informed us today, after consulting with his client, that the petitioner is prepared to do so provided that the first respondent instructs it to commence immediately on 15 March 1964 and that the site will be vacant and made available by that date. The idea is that the petitioner can already now, forthwith upon receiving the order for the job, make the necessary preparations for carrying it out but will not go onto site at the port until 15 March 1964, and will finish on 15 October 1964.

           

            Accordingly we make the order nisi absolute and direct the first respondent to give the work to the petitioner in accordance with the conditions of the tender, subject to the dates for beginning and finishing the work is amended as above.

           

            Order nisi made absolute.

            Judgment given on January 23, 1964.

Dan Bus Urban v. Yehiel

Case/docket number: 
CA 357/56
Date Decided: 
Friday, March 28, 1958
Decision Type: 
Appellate
Abstract: 

A passenger bought at a reduced price a season-ticket good for 23 journeys on the  omnibuses of the appellant cooperative. At the time of purchase of the ticket, the cost of a single fare was 55 prutot. Before the passenger had used up the whole of the ticket, the Ministry of Transport approved a rise in the fare from 55 prutot to 60 prutot. The appellant inserted a notice in the newspapers stating that tickets such as that held by the respondent would remain valid only until November 15, 1955. On the day following that date, November 16, 1955, the passenger sought to use his ticket on one of the appellant's omnibuses, but the ticket collector refused to recognize it.

 

The passenger brought an action in the Magistrate's Court, claiming as damages the value of the remainder of the unused ticket. The Magistrate dismissed the claim. The passenger appealed to the District Court which, by a majority, allowed the appeal.

 

The omnibus cooperative appealed to the Supreme Court.

 

Held: (following Martin-Baker Aircraft Co. Ltd. and Another v. Canadian Flight Equipment Ltd.) that if the appellant cooperative desired unilaterally to change the agreement between itself and the passenger it must give reasonable notice, and in the present case a notice of 19 days was not reasonable. The appeal of the cooperative was accordingly dismissed and the claim of the passenger upheld.

 

 

Voting Justices: 
Primary Author
majority opinion
majority opinion
majority opinion
Full text of the opinion: 

C.A. 357/56

 

DAN BUS URBAN, INTER-URBAN PETAH TIKVA AND GREATER TEL AVIV COOPERATIVE SOCIETY LTD.

v.

YITZHAK YEHIEL

 

 

In the Supreme Court sitting as a Court of Civil Appeal

[March 28, 1958.]

Before Olshan P., Silberg J. and Sussman J.

 

 

Contract - Omnibus season-ticket - Unilateral variation of conditions by bus company - Reasonable notice required - Breach of contract.

 

            A passenger bought at a reduced price a season-ticket good for 23 journeys on the  omnibuses of the appellant cooperative. At the time of purchase of the ticket, the cost of a single fare was 55 prutot.1) Before the passenger had used up the whole of the ticket, the Ministry of Transport approved a rise in the fare from 55 prutot to 60 prutot. The appellant inserted a notice in the newspapers stating that tickets such as that held by the respondent would remain valid only until November 15, 1955. On the day following that date, November 16, 1955, the passenger sought to use his ticket on one of the appellant's omnibuses, but the ticket collector refused to recognize it.

 

            The passenger brought an action in the Magistrate's Court, claiming as damages the value of the remainder of the unused ticket. The Magistrate dismissed the claim. The passenger appealed to the District Court which, by a majority, allowed the appeal.

 

            The omnibus cooperative appealed to the Supreme Court.

 

            Held: (following Martin-Baker Aircraft Co. Ltd. and Another v. Canadian Flight Equipment Ltd.) that if the appellant cooperative desired unilaterally to change the agreement between itself and the passenger it must give reasonable notice, and in the present case a notice of 19 days was not reasonable. The appeal of the cooperative was accordingly dismissed and the claim of the passenger upheld.

           

Israel case referred to:

 

(l) C.A.42/53 A. Yehezkeli v. I. Shaposhnik and Another (1955) 9 P.D. 333.

 

            English case referred to:

 

(2)       Martin-Baker Aircraft Co., Ltd. and Another v. Canadian Flight Equipment Ltd., Martin-Baker Aircraft Co., Ltd. v. Murison. (1955) 2 All E.R. 722.

 

Caspi for the appellant.

Toister for the respondent.

 

SUSSMAN J. This is an appeal from a judgment of the District Court of Tel Aviv-Jaffa sitting as a Court of Appeal which, by a ma­jority, set aside the judgment of the Magistrate's Court of Tel Aviv-Jaffa. The Magistrate had dismissed the claim of the respondent, the plaintiff in the court below, while the District Court gave judgment in his favour. The amount of his claim was for 360 prutot which in the appeal had shrunk in effect to 30 prutot. But the dispute raised a question of principle and in so saying I do not intend to criticise the respondent for considering the matter of sufficient importance to warrant his having recourse to the courts.

 

2. The subject of the dispute is a "season-ticket at reduced price" valid for 23 journeys, which was sold to the respondent by one of the booking clerks of the appellant cooperative which runs a public omnibus transport service in Tel Aviv-Jaffa.

 

            In the Road Transport Rules (Passenger Services), 1954, which were published in "Kovetz Hatakanot" (Official Regulations), No. 463, the Minister of Transport fixed the scale of fares which the cooperative was entitled to charge a passenger using its service. In the addendum attached to the rules it was provided as follows (at p. 1067):

           

            "3. Season-ticket at reduced price.

            (a) ............

The price of season-tickets for 23 journeys is the same as the price of 20 journeys on all routes."

           

            The figure "55" was printed on the season-ticket in question very conspicuously.

           

3. The respondent bought the ticket in question in the month of October, 1955, and managed to use it for 17 journeys. On November 16, 1955, he boarded an omnibus on Route No. 4 of the appellant cooperative, on which the fare until then had been 55 prutot. The ticket collector refused to allow the respondent to travel with the season-ticket which he held. The reason given was that the fare for the journey had gone up in the meantime and that the ticket was no longer valid. Indeed in the schedule of "fares for journeys as from October 28, 1955", which was sent to the appellant by the Ministry of Transport, the fare for the journey on route No. 4, as from that date, was raised from 55 to 60 prutot. On the eve of the increase, on October 27, 1955, the appellant published a notice in the daily newspapers in the following terms: -

 

            "Season-tickets issued at reduced prices that are in the possession of the public will remain valid until November 15, 1955, for use on the same routes on which they  are valid today."

           

            As a result of this notice, the respondent was not allowed to use his season-ticket when he got on bus No. 4 on November 16, 1955. But the ticket collector explained to him that the appellant would be prepared to refund to him the value of the part of the ticket that had not yet been used.

           

4. The respondent sent to the appellant a notarial notice demanding refund of the damage caused to him as a result of the breach of its contractual obligations towards him. In a letter from its lawyer dated December 20, 1955, exhibit P/3, the appellant answered to the effect that the season-ticket did not entitle the respondent "to make so many journeys on a particular bus route" but that the respondent had purchased the right to make a number of journeys the price of each one of which was 55 prutot and that he could still continue to use his ticket even after the increase in the fares on those routes where the fare was 55 prutot. At the same time the appellant offered in the letter to refund the cash value of the unused part of the ticket.

 

5. The respondent refused both offers and lodged a claim for 360 prutot - the price of six omnibus journeys at the increased price - the cause of action being a breach of contract.

 

            The magistrate dismissed the claim on two grounds. Her reasons were that as the price of tickets had been fixed by the authorities the travelling public was protected from arbitrary increases in the fares. "In these circumstances it is possible to plead that the use of the season-ticket as issued was valid only so long as the fare for the journey remained the same as at the time when the ticket was bought; the passenger being a party, as it were, to the change in the fare through the authorities who control fares." In any event. said the magistrate, and this was her second reason - there has been sufficient time until the fifteenth of November for the respondent to use up the ticket in accordance with the original conditions. And the plaintiff himself, in claiming damages, had not done what was necessary to mitigate the loss as he should have done by using up the ticket in full until the date fixed by the appellant.

 

            Before I continue further with the facts of the case I would observe that this contention - that the respondent had failed in his duty to mitigate the loss - was not pleaded in the statement of defence of the appellant and that the magistrate was wrong in raising the point herself (A. Yehezkeli v. I. Shaposnik and another (l).)

           

6. The respondent appealed to the District Court and there the learned judges were divided in their opinion. The majority considered that the appellant had indeed committed a breach of the agreement it had made with the respondent. The minority judge however gave it as his opinion that there was no agreement to transport the respondent in its buses at all, but that the respondent had "converted money which was general legal tender for money of another sort which was legal tender only amongst the ticket collectors" of the appellant cooperative. It was as if for the sum of one pound and one hundred prutot he had purchased 23 tokens each one of which would entitle him in the future when paying his bus fare to the sum of 55 prutot. According to the view of the minority judge, the appellant cooperative had not broken its agreement, for even after the increase in the fares each of the squares in the ticket was still worth 55 prutot which the appellant was willing to return to the respondent in cash. The District Court therefore by a majority entered judgment against the appellant for the sum of 360 prutot whereas the minority judge held that the respondent was entitled to only 330 prutot. Hence the appeal before us.

 

7. I must confess that at first I was almost of the opinion that the minority judge was right.

 

            I was inclined to the view that buying the ticket was like buying so many stamps of 100 prutot each. This would not prevent the Postmaster-General from increasing, on the very next day, the postage rate payable on letters. And a person who bought the stamps could not claim that he was entitled to the right to send his letter to its destination at the old rate on the grounds that he had bought the stamps before the rise in rates. But the "agreement" with the post office is unlike any other agreement because the rights of the post office are statutory and are regulated by the provisions of section 3 of the Post Office Ordinance1). However, the consensual basis notwithstanding, one party may buy in advance a coupon of a certain value which may be given in payment, when occasion arises, while at the time of such purchase no agreement for the sale of an article or the rendering of a service has been created; and the coupon only constitutes a kind of private currency.

 

            When I examined the pleadings, however, it became clear that this contention was not what was pleaded at all in the statement of defence. In Paragraph 9 of that statement the Cooperative pleads "that the ticket must be considered as a pre-payment at the time of its purchase for 23 journeys at a certain price and not for journeys on certain routes." From this it seems to me that the parties agree that a contract had been made between them whereby the appellant undertook to transport the respondent in its omnibuses. And the language of the regulations above mentioned under which the season-ticket was issued supports this view. For the regulations speak of "season-tickets for 23 journeys" that are sold at a reduced price, as if 23 separate tickets had been sold and even in his letter to the respondent, exhibit P./3, the attorney of the appellant took the same point. Even so there remains some doubt regarding the ques­tion - did the appellant undertake to transport the respondent on those routes where at the time of the purchase of the ticket their fare per journey was 55 prutot or on those routes where the fare per journey would be 55 prutot at the time when the plaintiff was transported by the appellant?

           

8. Counsel for the appellant has stressed the point that the ticket had the figure "55" stamped on it and did not contain a description of the omnibus routes and at first glance this fact would seem to support the contention of the appellant. For if it had intended to sell tickets for specific routes, why were these routes in respect of which the ticket was valid not mentioned? But this hypothetical reasoning is contradicted by the language of the regulations under which the ticket was issued and sold, because the regulations provided for the sale of season-tickets of 23 journeys valid for all routes!

I take this to mean that the appellant was selling not a ticket of a certain value that would entitle its holder to transport of a certain value and price whenever required by him but a ticket that would entitle him to the right to make 23 journeys on certain bus routes. Because of the fact that the fare for the bus journey is the same on a number of routes - as for example routes numbers 4 and 5 - the appellant did not bother to print separate tickets for the different routes where the fare for the bus journey was 55 prutot, but issued a season-ticket of one kind that was valid for omnibus travel on all these routes. But there is no doubt that the appellant sold the ticket in compliance with the regulations and for this reason the number "55" was used only as a mark to indicate briefly the various routes - such as numbers 4 and 5 - where the fare per journey was 55 prutot, as if they had been set out on it.

 

9. Even so, did the ticket entitle the respondent to make 23 journeys on the above routes for an unlimited period of time? Although I have said that when the respondent purchased the ticket the parties had at that time made an agreement with regard to the 23 journeys on the omnibus, they did not define all the terms of the agreement except that the respondent was given the right from time to time to get on the bus on the routes indicated and to be taken to his destination. The question then is for how long a period did the respondent have to exercise this right? Suppose, on the one hand, that some one had purchased a ticket which afterwards he kept in his pocket-book for many years and finally just as the appellant had decided to suspend a route in order to keep up with the changing needs of the times - he came and claimed the right to use his old ticket. His claim would be refused. On the other hand, if the appellant had the right to cancel the route the day after it had sold the ticket, then for what purpose did the appellant sell a ticket valid for 23 bus journeys? This too is unlikely.

 

            In a similar matter it was said in Martin-Baker Aircraft Co., Ltd. v. Canadian Flight Equipment Ltd. (2), at page 732:

           

            "It is to be borne in mind that this agreement is an agreement in a commercial or mercantile field... and I do not feel that the law merchant would normally look at such an agreement as this as being an agreement intended to constitute permanent relationships... The Common Law, in applying the law merchant to commercial transactions has always proceeded, when filling up the gaps in a contract which the parties have made, on the basis of what is reasonable, so far as that does not conflict with the express terms of the contract... where the contract makes no provision for fixing either price or premium or time... then the law is that a reasonable price or reasonable premium or reasonable time, will be implied."

 

            The period for which the season-ticket was valid was not endorsed on it and we must impute to the parties that it was their intention that all the 23 journeys would be made within a reasonable period of time and it is the duty of the appellant to put at the disposal of the respondent the services of its buses during the whole of that period.

           

            10. Did the appellant fix a reasonable period when it published in the press on October 27, 1955, a notice giving passengers a period of 19 days during which they could still use their tickets ? I am of the opinion that it did not.

           

            Let us suppose that a ticket was bought a day before the publication of the notice regarding the rise in the fares and that the purchaser of the ticket was in the habit of travelling in the bus twice a day in order to get to his work. Failing something unusual the card would enable him to travel during 12 working days or two weeks. Of course some travel more frequently than twice a day. But when we come to imply a term such as this in a standard contract - which is imposed, after all, by one party unilaterally - we have to interpret the contract strictly against the appellant so that even extreme cases will be reasonably covered thereby.

           

            The respondent gave evidence to the effect that sometimes he bought two season-tickets and although tickets are not for hoarding as the magistrate pointed out, it is not unreasonable to buy two season-tickets at the same time in order to save standing in the queue. Moreover as one of the majority judges of the District Court said there could be times when the ticket is not used either because the owner is ill. away on business or on vacation. and there are other occasions that one can think of as well, such as when one uses a taxi in the rush hour when it is difficult to get into an omnibus.

 

            One has to take all these facts into consideration when one comes to fix the period during which the ticket is valid. I agree with the majority judges that 19 days is too short a period. For this reason the District Court was correct in holding that the appellant had broken its contract and I am of the opinion that the appeal must be dismissed.

           

OLSHAN, P. I concur.

SILBERG, J. I concur.

 

Appeal dismissed.

Judgment given on March 28, 1958.

 

1) The plural of prutah. This was the smallest coin used in Palestine in the early centuries of the present era. It was revived by the State of Israel where 1000 prutot = I.L. 1. It has since been abolished.

1) post office Ordinance, section 3 :

Power to fix rates and charges            3. The postmaster General may prescribe the rates and sums to be charged for such postal and other services as may be undertaken by the Postmaster General and the circumstances according to which those rates and sums are to be charged.

Nahmani v. Nahmani

Case/docket number: 
CA 5587/93
Date Decided: 
Thursday, March 30, 1995
Decision Type: 
Appellate
Abstract: 

Facts: Ruth and Daniel Nahmani, a married couple, were unable to have a child because of an operation that Ruth underwent. They therefore decided to try in-vitro fertilization of Ruth’s ova with Daniel’s sperm and implanting the fertilized ova in a surrogate mother. Under Israeli law, surrogacy was not permitted and in-vitro fertilization was only permitted for implantation in the mother. Because of the great expense of the in-vitro fertilization procedure in the United States, the couple petitioned the Supreme Court, sitting as the High Court of Justice, to allow the in-vitro fertilization procedure to be conducted in Israel, for the purpose of surrogacy in the United States. In that proceeding (HCJ 1237/91), a consent judgment was given allowing the in-vitro fertilization procedure to be done in Israel. The procedure was carried out at Assuta Hospital.

 

Subsequently, Daniel left Ruth and went to live with another woman, who bore him a child. Ruth applied to Assuta Hospital to release the fertilized ova into her possession for the purpose of the surrogacy procedure in the United States, but Daniel opposed this. Assuta Hospital therefore refused to release the fertilized ova. Ruth applied to the Haifa District Court for an order against the hospital to release the fertilized ova, and in its judgment the District Court gave such an order.

 

Daniel appealed the judgment of the District Court to the Supreme Court.

 

Held: (Majority opinion — Justice T. Strasberg-Cohen, Vice-President Barak, Justice D. Levin, Justice I. Zamir) Although a spouse’s right to be a parent is a basic right, this right does not impose a duty on the other spouse to help realize this right. If a spouse does not perform the customary marital duties, these cannot be enforced and the only remedy is divorce. It is not proper legal policy to force someone to be a parent against his will.

 

The consent of Daniel Nahmani to the in-vitro fertilization procedure created a ‘weak’ agreement that cannot be enforced under the strict laws of contract. In addition, the consent to the procedure did not imply consent to continue the procedure even after a separation.

 

(Minority opinion — Justice Ts. E. Tal) The husband was estopped from opposing the continuation of procedure by promissory estoppel, since he gave his consent, his wife reasonably relied on this consent, and she did so irreversibly, by fertilizing her ova with her husband’s sperm.

Voting Justices: 
Primary Author
majority opinion
majority opinion
majority opinion
majority opinion
Author
dissent
Full text of the opinion: 

CA 5587/93

Daniel Nahmani

v

1.     Ruth Nahmani

2.     Assuta Ltd Private Hospital

3.     Attorney-General

 

The Supreme Court sitting as the Court of Civil Appeals

[30 March 1995]

Before Vice-President A. Barak and Justices D. Levin, I. Zamir, T. Strasberg-Cohen, Ts. E. Tal

 

Appeal on the judgment of the Haifa District Court (Justice H. Ariel) on 2 September 1993 in OM 599/92.

 

Facts: Ruth and Daniel Nahmani, a married couple, were unable to have a child because of an operation that Ruth underwent. They therefore decided to try in-vitro fertilization of Ruth’s ova with Daniel’s sperm and implanting the fertilized ova in a surrogate mother. Under Israeli law, surrogacy was not permitted and in-vitro fertilization was only permitted for implantation in the mother. Because of the great expense of the in-vitro fertilization procedure in the United States, the couple petitioned the Supreme Court, sitting as the High Court of Justice, to allow the in-vitro fertilization procedure to be conducted in Israel, for the purpose of surrogacy in the United States. In that proceeding (HCJ 1237/91), a consent judgment was given allowing the in-vitro fertilization procedure to be done in Israel. The procedure was carried out at Assuta Hospital.

Subsequently, Daniel left Ruth and went to live with another woman, who bore him a child. Ruth applied to Assuta Hospital to release the fertilized ova into her possession for the purpose of the surrogacy procedure in the United States, but Daniel opposed this. Assuta Hospital therefore refused to release the fertilized ova. Ruth applied to the Haifa District Court for an order against the hospital to release the fertilized ova, and in its judgment the District Court gave such an order.

Daniel appealed the judgment of the District Court to the Supreme Court.

 

Held: (Majority opinion — Justice T. Strasberg-Cohen, Vice-President Barak, Justice D. Levin, Justice I. Zamir) Although a spouse’s right to be a parent is a basic right, this right does not impose a duty on the other spouse to help realize this right. If a spouse does not perform the customary marital duties, these cannot be enforced and the only remedy is divorce. It is not proper legal policy to force someone to be a parent against his will.

The consent of Daniel Nahmani to the in-vitro fertilization procedure created a ‘weak’ agreement that cannot be enforced under the strict laws of contract. In addition, the consent to the procedure did not imply consent to continue the procedure even after a separation.

(Minority opinion — Justice Ts. E. Tal) The husband was estopped from opposing the continuation of procedure by promissory estoppel, since he gave his consent, his wife reasonably relied on this consent, and she did so irreversibly, by fertilizing her ova with her husband’s sperm.

 

Appeal allowed by majority opinion, Justice Ts. E. Tal dissenting.

 

Basic Laws cited:

Basic Law: Human Dignity and Liberty.

 

Statutes cited:

Adoption of Children Law, 5741-1981, s. 10.

Contracts (General Part) Law, 5733-1973, ss. 25, 26, 28(a), 28(b), 28(c), 39.

Contracts (Remedies for Breach of Contract) Law, 5731-1970, ss. 3(1), 3(2), 3(4), 18(a).

Legal Capacity and Guardianship Law, 5722-1962.

Penal Law, 5737-1977, ss. 361, 362, 363, 365.

 

Regulations cited:

Public Health (In-vitro Fertilization) Regulations, 5747-1987, rr. 8(b), 8(b)(3), 9(a), 11, 14(b).

 

Israeli Supreme Court cases cited:

[1]        HCJ 5688/92 Wechselbaum v. Minister of Defence [1993] IsrSC 47(2) 812.

[2]        CA 413/80 A v. B [1981] IsrSC 35(3) 57.

[3]        CA 391/80 Lasserson v. Shikun Ovedim Ltd [1984] IsrSC 38(2) 237.

[4]        CA 614/76 A v. B [1977] IsrSC 31(3) 85.

[5]        CA 5464/93 A v. B (a minor) [1994] IsrSC 48(3) 857.

[6]        CA 451/88 A v. State of Israel [1990] IsrSC 44(1) 330.

[7]        CA 488/77 A v. Attorney-General [1978] IsrSC 32(3) 421.

[8]        CA 232/85 A v. Attorney-General [1986] IsrSC 40(1) 1.

[9]        CA 577/83 Attorney-General v. A [1984] IsrSC 38(1) 461.

[10]     HCJ 693/91 Efrat v. Director of Population Register at Ministry of the Interior [1993] IsrSC 47(1) 749.

[11]     CA 294/91 Jerusalem Community Burial Society v. Kestenbaum [1992] IsrSC 46(2) 464.

[12]     CA 245/85 Engelman v. Klein [ 1989] IsrSC 43(1) 772.

[13]     CA 427/86 Blass v. HaShomer HaTzair Kibbutz ‘Dan’ [1989] IsrSC 32(3) 323.

[14]     CA 243/83 Jerusalem Municipality v. Gordon [1985] IsrSC 39(1) 116.

[15]     CA 647/89 Schiffberg v. Avtalion [1992] IsrSC 46(2) 169.

[16]     CA 416/91 Maman v. Triki [1993] IsrSC 47(2) 652.

[17]     HCJ 1635/90 Jerzhevski v. Prime Minister [1991] IsrSC 45(1) 749.

[18]     CA 13/75 Blumenfeld v. Hadar Plast Company Ltd [1975] IsrSC 29(2) 452.

[19]     CA 170/74 Hister v. Fleischer [1975] IsrSC 29(1) 132.

[20]     CA 202/92 — unreported.

[21]     CA 154/80 Borchard Lines Ltd, London v. Hydrobaton Ltd [1984] IsrSC 38(2) 213.

[22]     CA 554/83 Atta Textile Company Ltd v. Estate of Zolotolov [1987] IsrSC 41(1) 282.

[23]     CA 528/86 Polgat Industries Ltd v. Estate of Yaakov Blechner [1993] IsrSC 47(3) 821.

[24]     CA 719/89 Haifa Quarries v. Han-Ron Ltd [1992] IsrSC 46(3) 305.

[25]     CA 479/89 Coptic Mutran v. Halamish — Government-Municipal Corporation for Housing Renovation in Tel-Aviv-Jaffa Ltd [1992] IsrSC 46(3) 837.

[26]     CA 256/60 Frankel v. American Overseas Food Centers Inc. [1961] IsrSC 15 442.

[27]     CA 381/75 Berkovitz v. Gavrieli [1976] IsrSC 30(1) 442.

[28]     CA 3833/93 Levin v. Levin [1994] IsrSC 48(2) 862.

[29]     HCJ 243/88 Gonzales v. Turgeman [1991] IsrSC 45(2) 626.

 

Israeli District Court cases cited:

[30]     CC (Jer.) 574/70 Klinger v. Azrieli Avramovitz Co. Ltd [1975] IsrDC 5735(1) 356.

 

Australian cases cited:

[31]     Walton Stores (Interstate) Ltd. v. Maher (1988) 164 C.L.R. 387.

 

American cases cited:

[32]     Davis v. Davis 842 S.W. 2d 588 (1992).

[33]     Roe v. Wade 410 U.S. 113 (1973).

[34]     Griswold v. Connecticut 381 U.S. 479 (1965).

[35]     Eisenstadt v. Baird 405 U.S. 438 (1972).

[36]     Planned Parenthood v. Danforth 428 U.S. 52 (1976).

 

English cases cited:

[37]     Central London Property Trust Ltd v. High Trees House Ltd [1947] KB 130.

[38]     Amalgamated Property Co. v. Texas Bank [1982] QB 84 (CA).

 

Jewish Law sources cited:

[39]     Babylonian Talmud, Tractate Kiddushin 30b.

[40]     Genesis 15, 2; 30, 1.

[41]     Mishnah, Tractate Yevamot 6, 6.

[42]     Rabbi Moshe ben Maimon (Maimonides), Mishneh Torah, Hilechot Ishut, 15, 5.

[43]     Rabbi Yosef Karo, Shulhan Aruch, Even HaEzer, 154, paras. 1, 3, 4.

[44]     Responsum of Rabbi Shaul Yisraeli in Dr Avraham Steinberg ed., Encyclopaedia of Jewish Medical Ethics, vol. 4, pp. 40-41.

[45]     Responsum of Rabbi Shalom Shalush, ‘Fertilization in a Surrogate Womb’, in Orchot, the magazine of the Haifa Religious Council, no. 39, p. 31.

[46]     Rabbi Meir Abulafia, Yad Rama, on Babylonian Talmud, Tractate Sanhedrin, 72b, 91b.

[47]     Rabbi Shelomo Yitzhaki (Rashi), Commentary on Babylonian Talmud, Tractate Sanhedrin, 72b.

[48]     Babylonian Talmud, Tractate Yevamot, 65b, 69b

[49]     D. Sinclair, ‘The Prohibition of Abortion’, Jewish Law Annual 5, 177.

[50]     A. Steinberg, ‘Artificial Abortion according to Jewish Law’, Asia 1, 107.

[51]     Rabbi Ovadia Yosef, ‘Termination of Pregnancy according to Jewish Law’, Asia 1, 78.

[52]     Mishnah, Tractate Bava Metzia, 6, 1

[53]     Babylonian Talmud, Tractate Bava Kama, 100a, 108b.

[54]     Rabbi Yosef Karo, Shulhan Aruch, Hoshen Mishpat, 306, 6.

[55]     Mishnah, Tractate Ketubot, 7, 10.

[56]     Rabbi Moshe ben Maimon (Maimonides), Mishneh Torah, Hilechot Gerushin (Laws of Divorce), 2, 20.

[57]     Rabbi Yitzhak bar Sheshet Perfet (Rivash), Responsa, 127.

[58]     Dr Avraham Steinberg ed., Encyclopaedia of Jewish Medical Ethics, vol. 2, the entry ‘In-vitro fertilization’, at p. 115 et seq..

 

For the appellant — D. Har-Even.

For the first respondent — Z. Gruber.

For the third respondent — M. Rubinstein, Director of Civil Department at State-Attorney’s Office; P. Shretzki, Senior assistant and Director of Civil Matters at Haifa District-Attorney’s Office; Dr K. Shalev.

 

 

JUDGMENT

 

 

Justice T. Strasberg-Cohen

1.    ‘There are three partners in a man, the Holy One, blessed be He, his father and his mother’ (Babylonian Talmud, Tractate Kiddushin 30b [39]). In this case, a rift has occurred between two of the partners, and in an area where spouses have autonomy — the field of family planning and giving birth — the court is asked to intervene and give its opinion. The difficult question on which the court’s decision is required is: does the wife, Ruth Nahmani, have the right to take possession of ova that were removed from her body and that were artificially inseminated with the sperm of her husband, Daniel Nahmani, for the purpose of implanting them in a surrogate mother, when the husband opposes this? (The fertilized ova are frozen and in storage at Assuta Hospital; the procedure is known as in-vitro fertilization — IVF).

We are confronted with a complex and multi-faceted issue whose legal aspect cannot entirely encompass it. The issue is replete with emotional, human, personal and inter-personal, psychological and sociological factors and raises questions of morals, religion, ethics, social values and legal norms. On a similar subject, President M. Shamgar said in his article ‘Questions relating to fertilization and having children’, 39 HaPraklit (1990), 21:

‘These questions are particularly sensitive, for they directly touch the raw nerve of existence. The vast majority of the various legal questions are naturally taken from life, but there are matters that directly attack the problematic nature of our human existence, frontally and not from the side…’

The question before us is one of these, and when considering it we must be extremely cautious, taking special care not to incorporate anyone’s moral or philosophical outlooks, whatever these may be, into the outlook based on the purpose of our legal system (HCJ 5688/92 Wechselbaum v. Minister of Defence [1], at p. 827; CA 413/80 A v. B [2], at p. 80).

Indeed, as the trial judge said, any decision is likely to harm one of the parties, and we must find the ‘most appropriate, correct and just solution in the circumstances of the case’ so that the harm will be less severe; but in doing so, we must find the correct and just solution that is consistent with our approach with regard to basic human rights in our society, their ramifications on the inter-personal aspect of family life and parenthood, the degree of involvement that befits the proper public law policy with regard to State involvement in the legal system on matters of relations between spouses in the complex and sensitive area of having children. Only a consideration of all of these and more can lead us to an ‘appropriate, correct and just solution’. How shall we do this?

Justice Elon said in CA 391/80 Lasserson v. Shikun Ovedim Ltd [3] at p. 264:

‘We have a major rule that a legal system cannot be sustained merely by the body of the law. The body of the legal system needs a soul, and sometimes even an “extra soul”: this soul will be found by the legal system in the form and the image of various ethical norms, which are based upon the supreme principle of doing what is upright and good, and the principle of good faith is one of the most important and special of these ethical norms.’

2.    Because of the public importance of the question, the trial court ordered the Attorney-General to be joined as a party to the action in order that he might express his opinion. The action of the respondent was therefore against the appellant, the hospital in which the fertilized ova are being stored and the Attorney-General.

This is the first case of its kind that has reached the courts in Israel, and even in the Western world there are only a few cases that have been submitted for a judicial decision. Nonetheless, the matter has been discussed by philosophers, researchers, doctors and lawyers, and it has been the subject of research, committees and articles; in several countries it has also been the subject of legislation, and there is also a recent judgment of the Supreme Court of Tennessee in Davis v. Davis (1992) [32].

In that case, in-vitro fertilization was performed for a married couple, who were subsequently divorced. Each of them remarried, and the woman, who initially wanted the ova for implanting in her body, finally sought to donate them to a childless couple. Her request was not granted. The court was confronted with a question similar to ours, and it analyzed it from the viewpoint of the basic rights of the couple, their contractual rights, the ‘status’ of the fertilized ova and a balance between the interests of the parties. In that decision, Justice Daughtrey began by saying that although she does not have any legislation or legal precedent to help her and guide her in the dispute about the right to the fertilized ova of the estranged spouses, there is a large amount of scholarly material proposing various models for dealing with fertilized ova when unexpected events happen, such as divorce, death, economic reversals or the absence of a desire to continue the procedure. The models range between two extremes: at one extreme are those that hold that in such a case all the fertilized ova should be handed over for the use of the donors of the genetic material or to others for the purpose of implantation, and at the other extreme are those who believe that every fertilized ovum should be destroyed automatically. Between these two approaches is a broad range of other proposals, which although they may provide an easy solution — and this is their attraction — it is impossible to adopt any of these as a perfect solution if we consider the relevant constitutional principles, public policy, the outlook on life that has not yet been created, advanced technology and ethical considerations that have developed in response to scientific knowledge. Considering all of these does not leave room for easy answers to the question before us (see: C.M. Browne & B.J. Hynes, ‘The Legal Status of Frozen Embryos: Analysis and Proposed Guidelines for a Uniform Law’, 17 J. Legis (1990), 97; J.A. Robertson, ‘Resolving Disputes over Frozen Embryos’, Hastings Center Report, 1989; L.B. Andrews, ‘The Legal Status of the Embryo’, 32 Loy. L. Rev. 357, 1986-87).

We should therefore focus our consideration of the question with a cautious legal approach, while giving proper weight to all the relevant fields, and without extending the horizon unnecessarily; it would, moreover, be presumptuous to determine rules and norms that affect unforeseen and unexpected situations that the astonishing advances in genetic engineering may bring before us.

Synopsis of the facts

3.    Daniel and Ruth Nahmani were married in March 1984. Three years later, Ruth Nahmani was compelled to undergo an operation and as a result of this she lost her ability to have a normal pregnancy. At the beginning of 1988, the couple decided to try and bring children into the world by means of in-vitro fertilization of Ruth Nahmani’s ova with Daniel Nahmani’s sperm and implanting the ova in the womb of a surrogate mother. Under regulation 11 of the Public Health (In-vitro Fertilization) Regulations, 5747-1987 (hereafter — the Regulations), ‘A fertilized ovum may only be implanted in the woman who will be the mother of the child’, and since it was not possible to implant the ova in the body of Ruth Nahmani, the couple applied to a surrogacy clinic in California, U.S.A., and when they discovered that the cost of the treatment was greater than they could afford, they decided that the fertilization stage would be done in Israel and the surrogacy stage in the United States. This plan also met with difficulties because of the Regulations. The couple then jointly petitioned this court (HCJ 1237/91), and their petition ended in a consent judgment on 6 May 1991, to the effect that the in-vitro fertilization would be done in Israel. Since surrogacy is not permitted in Israel, the couple made an agreement with a surrogacy clinic in the United States, which almost entirely deals with the financial aspect. An additional embryo transfer agreement was supposed to be signed after the surrogate mother was found, but in the end it was not signed because of the rift that developed between the parties. In 1992, Daniel Nahmani left home and went to live with another woman, and in April 1993 she gave birth to his daughter. Since 1992, there has been litigation between the Nahmani couple: maintenance and reconciliation actions on the part of the wife and divorce actions on the part of the husband. The Haifa Rabbinical Court recommended reconciliation, but reconciliation was never achieved. The parties are still married. The family unit has broken up, and they are living separately; Daniel Nahmani has established a new family unit.

When Ruth Nahmani applied to Assuta Hospital and asked for the fertilized ova to be released for the purpose of implanting them in a surrogate mother in the United States, the hospital refused to release the ova because of the opposition of Daniel Nahmani, which he expressed in writing both to the hospital here and to the surrogacy centre in the United States. As a result of this development, Ruth Nahmani filed an action in the Haifa District Court to receive her ova. The learned trial judge, Justice H. Ariel, found in her favour by holding that the hospital must allow here to use the fertilized ova to continue the procedure of implantation in a surrogate mother, and that Daniel Nahmani must refrain from interfering in the continuation of the procedure.

On this decision Daniel Nahmani appealed before us.

The findings of the judgment and the arguments of the parties

4.    The learned judge focused in his decision on the contractual element and reached the conclusion that Daniel Nahmani gave his prior agreement to the procedure of the fertilization for all its stages, including the implanting of the fertilized ova in the womb of the surrogate mother, and that from the moment when the procedure was begun, he could not go back on it, and his further consent was not needed, and he must refrain from interfering in the continuation of the procedure. He cannot rely on a change of circumstances — separation from his wife and establishing a new family unit — as a reason to be released from his consent, since he himself created the circumstances upon which he wishes to rely. The trial judge also added that if the position of the husband were accepted, he would have a ‘trump card’ to obtain unfair advantages in his relationship with his wife with regard to the separation. The learned judge also found support for his position in the Regulations, from which he deduced that there is no need to obtain the consent of the husband prior to the surrogacy procedure when the case involves a married woman.

The arguments of counsel for the parties are numerous and encompass a large number of issues, and they refer to the opinions of scholars, case-law, legislation, analogies from other fields of law and comparative law, which in their opinion have ramifications on the case before us. The arguments encompass the field of basic rights, contracts, torts, property law, the status of the fertilized ova, the question of public policy and proper legal policy. I do not intend to restate all the arguments that were raised; I will mention the main arguments briefly and I shall proceed to try and focus on the most important ones.

The appellant argues that the freedom to decide whether to be a parent is a basic right, and this right should not be denied or restricted. Therefore, parenthood should not be forced on him against his will. In so far as the matter relates to his consent to the procedure, this procedure was based on joint parenthood in the future and he should not be compelled to continue the procedure in the new circumstances that have arisen. He argues that even if his consent should be regarded as an agreement between himself and his wife, it is not enforceable, and his consent is required at every stage, both here and in the United States, and even the Regulations require this, and he should not be compelled to give this consent. Even the balance of convenience works in his favour. With regard to the fertilized ova, they have no independent future right to life without the consent of the two spouses. In any event, the court should not intervene in this sensitive matter which is entirely subject to the autonomy of the individual.

The Attorney-General agrees with the position of Daniel Nahmani and puts the emphasis on basic rights, on the autonomy of the family and the individual, on the need to preserve a person’s freedom and his dignity in so far as this concerns the development of his personality, determining his fate, planning his family and having his children. His position is that Daniel Nahmani should not have parenthood forced upon him and that such coercion is contrary to public policy, the proper legal policy, the principle of equality between human beings and between the sexes, and the basic rights of the individual.

The respondent relies on the judgment given by the District Court and its reasoning, emphasizes the suffering she has endured, the wrong she has been caused, her chances of being a mother that are being taken away from her and her legitimate desire for a child which ought to be protected. According to her, the appellant created the new circumstances which he wants to use in order to be released from the undertaking that he gave previously and on which she relied; as a result of this reliance, she began the whole procedure and carried out her share of it; therefore, he should not be allowed to revoke his consent.

5.    I will first comment on several statements of the trial court.

The learned judge held, inter alia, that ‘when the journey towards birth has begun, the husband should not be allowed to shuffle the cards and drive the wife crazy…’, ‘if he is allowed to do this, he will have control over the woman and at any moment that he wishes… he may change his mind with a unique right of veto’; that if he is allowed to change his mind, this will make the woman putty in his hands, and give him a tool with which to dominate, humiliate and even blackmail her. This is a harsh description which, if it is a true reflection of reality, would be contrary to the principle of equality between people and between the sexes and violate human dignity and liberty, which are fundamental principles of our legal system. But I think that this description of the trial judge, which he regarded as the outcome of a situation in which the husband is allowed a right to revoke his consent, is inconsistent with the facts and with the real legal position. From a factual viewpoint, apart from the actual opposition to the continuation of the procedure, an opposition which undoubtedly causes Ruth Nahmani suffering, grief, frustration and disappointment, the trial judge does not point to any abuse, humiliation, extortion or similar acts on the part of Daniel Nahmani towards his wife, and I too could not find any basis for this in the evidence. The trial judge himself said that ‘the husband’s opposition is not a ruse, he is truly expressing his position that he no longer wants a child from his wife… his position is genuine and principled, and it is consistent with his outlook against the “one-parent” family’. From a legal viewpoint, the case should be examined on the basis of full equality between the sexes. What does this mean? Consider the opposite case; the initial position is the same, but the wife is the one who leaves the husband and begins a new relationship with a companion from whom she has a child. Subsequently, the husband is the one who becomes sterile and wants to achieve parenthood and become a father by means of the fertilized ova, whereas the wife objects to her ova, which were fertilized by the husband’s sperm with her consent, being implanted in a surrogate mother’s womb for the same reasons that the husband raises today to explain his opposition. What would we say then? I think that the correct solution should suit both situations and both sexes and should be considered on the basis of equality in principle, while considering any relevant difference, and without neglecting the harder role — physically and emotionally — of the woman in the procedure of fertilizing the ova.

The question of consent, in every respect, is central to this case, but as will become clear further on, there is no agreement between the parties about the fate of the procedure in the case of separation; therefore, I will first consider the question of parenthood and the constitutional rights of the Nahmani couple from the viewpoint of basic human rights. This question is a dominant factor in deciding the question whether Ruth Nahmani is entitled to continue the fertilization procedure despite her husband’s opposition.

Parenthood and basic rights

6.    Much has been written throughout history about the centrality of parenthood in human life. In the Bible, our ancestress Rachel says: ‘Give me children or else I die’ (Genesis 30, 1 [40]); Abraham our ancestor turned to heaven in his anguish and said: ‘What will You give me, seeing that I am childless’ (Genesis 15, 2 [40]). The first of the 613 commandments of Jewish law is the commandment to be fruitful and multiply. In literature, philosophy, poetry and the other forms of expression in human culture, we find expressions of the force of the desire to bring children into the world as an integral part of self-fulfilment.

Parenthood is a status that involves many rights and duties which can change the personal status of a person and significantly influence his life from psychological, emotional and economic viewpoints. It imposes on the parent a duty to care for the child until he becomes an adult and, more than this, it creates a lifelong psychological and emotional bond with the child and imposes on the parent responsibility for his safety, welfare, growth, education and other needs.

This is discussed by Professor P. Shifman. In describing this responsibility, he says the following:

‘It is long-term, in that it extends over the whole period that the child is a minor, and even more than this, and the concrete characteristics of this responsibility cannot be predicted and defined precisely in advance, since they change according to the development and needs of the child that exist at different times. The duty to the child cannot be discharged by an individual act but it requires continuing and devoted behaviour. This duty is not merely material in essence, i.e., to care for the physical needs of the child, but it is also, and maybe especially, emotional and educational…’ (P. Shifman, Family Law in Israel, vol. 2, The Harry Sacher Institute for Research of Legislation and Comparative Law (1989), 174).

The responsibility of a parent to a child is protected not only by civil sanctions but also by criminal sanctions (see sections 361, 362, 363 and 365 of the Penal Law, 5737-1977); see also the Legal Capacity and Guardianship Law, 5722-1962. With regard to the status of a parent, Justice Shamgar said:

‘… Being included in a social group, or in a defined class of people, sometimes leads to obligations of such critical significance and so crucial from a social and public viewpoint, that it is impossible to allow someone who is included in the group or in the class of people to cast off, by means of a mere contractual arrangement, the burden of an obligation of this kind’ (CA 614/76 A v. B [4], at p. 93).

For the approach of President Shamgar, see CA 5464/93 A v. B (a minor) [5], at p. 863:

‘According to legal and social outlooks, a parent, who is liable for maintenance under the personal law… cannot exempt himself from this duty by contract. In any event, even if he does this, the said contract cannot stop the child from applying to the court in order to sue for his maintenance. However, from the viewpoint of the legal validity and the applicability of section 30 of the Contracts (General Part) Law, such a contract that speaks of an exemption from all responsibility amounts to a gross and unacceptable dereliction of the parental duty towards his child; giving recognition to this dereliction amounts to adopting an approach that violates the human dignity of the child. It, in effect, cancels the basic legal and moral duty of the parent, which reflects our belief that in so far as the living are concerned (as opposed to the dead — see Ecclesiastes 3 19), man is superior to the animal.’

Basic rights

7.    The basic rights that are a normative basis for examining the question before us have been a fundamental element of our legal system for a long time. These are substantive provisions of positive law, some of which are now embodied in the Basic Law: Human Dignity and Liberty. The relevant rights for this case are the human rights protecting a person’s freedom, dignity, body, private life and the freedom to develop personality. The right to parenthood is derived from the right to self-determination, freedom and dignity. ‘The right to parenthood is a basic human right to which every person is entitled’ (CA 451/88 A v. State of Israel [6], at p. 337). In principle, the autonomy to raise a family, family planning and having children is an aspect of privacy. Human freedom includes the freedom of independent decision in matters of marriage, divorce, having children, and every other issue in the field of privacy and autonomy of the individual. This was discussed by Justice Ben-Itto in CA 413/80 A v. B [2] supra, at p. 81:

‘Conception, pregnancy and birth are intimate events, which are entirely within the province of privacy; the State does not intervene in this field except when there are significant reasons, founded on the need to protect the right of the individual or a serious public interest.’

The scholar H. Fenwick writes in this respect:

‘Personal autonomy has been clearly recognized for some time in the USA as strongly linked to privacy; in Doe v. Bolton (1973) Douglas J. said: “The right to privacy means freedom of choice in the basic decisions of one’s life respecting marriage, divorce, procreation, contraception, education and upbringing of children”.’ (H. Fenwick, Civil Liberties, London, 1993, 295 (emphases supplied).

See also Roe v. Wade (1973) [33], at p. 726; M. Shamgar, in his article supra, at p. 27; Davis v. Davis [32], at p. 601:

‘… a right to procreational autonomy is inherent in our most basic concepts of liberty…’

The decision to be a parent is the right of a person by virtue of his being autonomous and responsible for his decision and the results of his actions; therefore the right to decide must, in principle, be his, without any State intervention. See Griswold v. Connecticut (1965) [34], at pp. 1688-1689; Eisenstadt v. Baird (1972) [35], at p. 453:

‘If the right of privacy means anything, it is the right of the individual, married or single, to be free from unwarranted governmental intrusion into matters so fundamentally affecting a person as the decision whether to bear or beget a child.’

Prof. Shifman says in this regard:

‘The basic attitude of Western legal systems is that society may not, in the absence of significant reasons, intervene in intimate questions of having children. The assumption embodied in this approach is that a person is entitled to realize his desire to be a parent or not to be a parent as a personal decision that he may make by virtue of his right to intimacy’ (P. Shifman, ‘Parent against one’s will — false representation about use of contraception’, 18 Mishpahah 1988, at p. 459; emphases supplied).

This approach is enshrined in the recognition that the family is ‘the most basic and ancient social unit in human history, which was, is and will be the element that protects and ensures the existence of human society…’ (Justice Elon in CA 488/77 A v. Attorney-General [7], at p. 434; see also: Davis v. Davis [32], at p. 601 and the citations there; CA 232/85 A v. Attorney-General [8]; CA 577/83 Attorney-General v. A [9].

8.    The right to be a parent does not impose a duty on either of the spouses to be a parent and does not impose a legal duty on one spouse to help the other to be a parent:

‘Even though having children appears to be one of the purposes of marriage, it is not a purpose that can be realized by means of enforcement. Spouses that do not perform their customary duties to one another are not compelled to do so (except with regard to maintenance), and their only remedy is divorce’ (CA 413/80 A v. B [2], at p. 85; emphases supplied).

Even Jewish law, which imposes a commandment to be fruitful and multiply on the man, but not on the woman (Mishnah, Tractate Yevamot, 6, 6 [41]), does not see fit to enforce this if he does not perform his duty. The refusal gives the wife grounds for divorce but not grounds for enforcement and coercion (Maimonides, Mishneh Torah, Hilechot Ishut, 15, 5 [42]; Rabbi Yosef Karo, Shulhan Aruch, Even HaEzer, 154, 4 [43]).

The yearning for motherhood is a deeply and strongly emotional expression of the desire to achieve parenthood. Even if we assume that it is stronger than the yearning for fatherhood (and there are those who dispute this), it in itself cannot impose a duty on the other spouse to help achieve this yearning, except for a moral duty in the inter-personal sphere, which derives from the marriage itself whose purpose is to establish a family and bring children into it.

In contrast to the right to be a parent stands the right not to be a parent, and these two are intertwined and lie at the centre of basic human rights. The right to be a parent and the right not to be a parent are two sides of the same coin, two constitutional rights that are derived from the right to freedom and self-fulfilment (see Davis v. Davis [32], at p. 601). Nonetheless, realizing the right to be a parent involves imposing significant and serious psychological, emotional, moral and economic burdens for one’s whole lifetime, and a person cannot escape them, whereas realizing the right not to be a parent leaves the status quo as it was. It follows that the weight of the demand to refrain from enforcing parenthood is stronger in balancing the right not to be a parent against the right to be a parent. When the freedom to be a parent is set against an unwillingness to be a parent, it would not be proper for the legal system to act to force parenthood on someone who does not want it. This is a violation of human liberty, autonomy and a person’s right to make his own decision not to be a parent if he does not want to be one.

The desire to minimize State intervention in relationships within the family unit, whether directly or through the legal system, emphasizes the right of autonomy of this unit, which is protected against intervention both in the relationship between the family unit and the State and in the relationship between the members of the family unit inter se. The situations that require intervention are usually sensitive and complex, and intervention is required when a crisis occurs in the family unit that needs State intervention through the courts in order to resolve it, in cases where the parties themselves have not succeeded in doing so.

Equality

9.    The principle of equality between human beings, including between the sexes, is one of the basic principles of our constitutional regime. Equality with regard to parenthood is expressed in legislation whose purpose from a social viewpoint is to allocate equal parenting tasks to the two parents (except of course on a biological level) (see F. Raday, ‘Labour Law and Labour Relations — Trends and Changes in 1988’, Labour Law Annual, vol. 1 (1990), 161, 172, and the statutes cited there. With regard to the trend to promote equality in parenting, see also the draft Women’s Employment Law (Amendment — Paternity Leave), 5755-1994 (a private draft law).

A woman is entitled — in certain circumstances — to have an abortion. She does not need her husband’s consent, and she may do it notwithstanding his opposition. The right of a woman to her own body is what gives her the freedom to terminate a pregnancy without the husband’s consent (CA 413/80 A v. B [2] supra. See also C. Shalev, ‘A Man’s Right to be Equal: The Abortion Issue’, 18 Isr. L. Rev., 1983, 381). I accept the position of Prof. Gans who deduces from this the right of the husband to terminate the fertilization procedure without the consent of the wife. According to him, the right of the wife to abort the embryo at the beginning of the pregnancy (according to those who hold that she has such a right) must necessarily be matched by the right of the husband to stop the proceedings leading to the implanting of his wife’s ova that were fertilized by his sperm in a surrogate mother. The source of the right is the man’s control of his life and the right to plan it (see Ch. Gans, ‘The Frozen Embryos of the Nahmani couple’, 18 Tel-Aviv Uni. L. Rev., 1994, at p. 83; see also P. Shifman, Family Law in Israel, vol. 2, at p. 213, whose position is the same as that of Gans).

From the fact that the husband has no right to prevent an abortion that the wife wants, the trial court sought to deduce that Daniel Nahmani has no right to prevent the continuation of the fertilization procedure which the wife wants. It seems to me that the logical deduction is the opposite one, namely: just as the husband cannot oppose an abortion by the wife, so the wife cannot oppose the husband’s demand to stop the fertilization proceedings. It seems to me that the reason for not giving the ‘father’ the right to oppose an abortion lies not merely in the fact that in a pregnancy we are concerned with the woman’s right to her body (a consideration which does not exist in a case of in-vitro fertilization; with regard to this reason, see Planned Parenthood v. Danforth (1976) [36], at p. 2842), but for an equally important reason, which is a refusal to impose parenthood on the wife (see Roe v. Wade (1973) [33], at p. 727).

It can therefore be said that just as it is not possible to impose parenthood on the wife who does not want it, so it is not possible to do this with regard to the husband. Moreover, if during the pregnancy — which is a much more advanced stage than in-vitro fertilization before implantation — the wife may terminate it without the husband’s consent, this is a priori the case with regard to termination of the in-vitro fertilization procedure before implantation. It follows that also by virtue of the principle of equality we should refrain from imposing parenthood.

10. When we speak of equality, we are conscious, aware and sensitive of the more difficult role of Ruth Nahmani — both physically and emotionally — than that of Daniel Nahmani in the in-vitro fertilization procedure and her evident expectations for the conclusion of the procedure and achieving the desired goal. However, this procedure is merely the beginning of the journey on which the couple set out when they made their joint decision, whereas the issue that we must decide is whether to impose the continuation of that journey for the rest of his life on someone who no longer wants it. This coercion exists even if the desired child grows up with the mother without any relationship with the father who will live in another family unit, since the bond of parenthood cannot be severed.

Public policy and proper legal policy

11. The imposition of parenthood is contrary to ‘public policy’ and proper legal policy, in that it is inconsistent with the basic values protected by our legal system, some of which are now enshrined in the Basic Law: Human Dignity and Liberty. ‘Public policy’ means the central and essential values, interests and principles which a given society at a given time wishes to uphold, protect and develop’ (HCJ 693/91 Efrat v. Director of Population Register at Ministry of the Interior [10], at p. 778). ‘ “Public policy” is the result of balancing and considering conflicting values’ (CA 294/91 Jerusalem Community Burial Society v. Kestenbaum [11], at p. 534; see also: CA 245/85 Engelman v. Klein [12], at p. 785; CA 427/86 Blass v. HaShomer HaTzair Kibbutz ‘Dan’ [13], at p. 325). ‘The principle of private law concerning public policy examines these questions by reflecting in essence all the basic outlooks of the society, including the weight and status of human rights’ (A. Barak, ‘Protected Human Rights and Private Law’, Klinghoffer Book on Public Law, The Harry Sacher Institute for Research of Legislation and Comparative Law, I. Zamir ed. (1993), 163, 200). The same is true of legal policy (see CA 243/83 Jerusalem Municipality v. Gordon [14], at p. 131).

Irrevocable consent to being a parent amounts to a full and eternal waiver of the right not to be a parent. Such a waiver is a waiver of a basic right, with regard to which it has been said: ‘Indeed, we allow individuals — in clearly defined areas — to waive to some extent (but not completely and utterly) their basic rights’ (Jerusalem Community Burial Society v. Kestenbaum [11], at p. 535). A complete denial of the right of Daniel Nahmani to revoke his consent to be a parent, by enforcing his undertaking, amounts to the creation of a complete and all-embracing waiver by him of a basic right. In general, giving legal force to this by adopting the enforcement mechanism of the legal system is inconsistent with public policy and with proper legal policy.

The revocability of a ‘waiver’ in the personal sphere can be seen from the question of waivers in adoption. Parents may agree to give up their child for adoption, and their consent is usually irrevocable because of the consideration of ‘the best interests of the child’ and the interest of the parents who are about to adopt him. If the parents gave their consent before the child was born, the court may cancel their consent, because a person cannot be held to a waiver made in such a sensitive and personal field, in the absence of real awareness of the nature of the waiver with regard to a child that has not even been born. If the consideration of ‘the best interests of the child’ leaves the scales balanced, the right of the natural parents will prevail and their revocation of their consent to adoption will be recognized, even if they gave it after the child was born (CA 577/83 Attorney-General v. A [9], at p. 477; see the Adoption of Children Law, 5741-1981, section 10).

From all of the aforesaid it can be seen that from the viewpoint of constitutional rights, a decision with regard to parenthood requires the consent of both parents, and without such consent the court should not compel someone to take a step which will end in parenthood against his will. The court system should not compel someone to be a parent even if originally he agreed to this and then changed his mind. This is the case even if we think that he ought to behave otherwise. Not everything that we expect people to do from the viewpoint of ‘And you shall do what is upright and good’ should be enforced by judicial order. Just as it is unthinkable that parenthood should be imposed by natural methods, so parenthood should not be imposed by technological methods. Not everything that is possible from a technological viewpoint is proper from an ethical viewpoint.

12. Hitherto we have discussed basic rights; but I think that consideration of the question before us from the viewpoint of human rights is insufficient to decide it, for we are not concerned with a couple where one of the spouses wishes to bring children into the world and the other opposes this, and the law does not force itself on the ‘objector’; we are concerned rather with spouses who have gone a long way together and given their genetic material from which ova were fertilized and put in frozen storage, in order to bring a child into the world with the help of a surrogate mother. Should the husband be forced to continue the procedure even in this situation? I suspect that he should not. The reasoning for this position requires consideration of the nature of the consent of the spouses and the legal regime within which it operates.

Before I consider the nature of the consent of the Nahmani couple, I will consider the need for the consent of spouses to in-vitro fertilization in foreign legal systems and in our legal system.

The need for consent to in-vitro fertilization in foreign legal systems

13. The question of consent has been considered in various legal systems, whether in legislation, recommendations of committees or case-law. In most enlightened countries there can be seen an unambiguous approach that requires the informed consent of the two spouses to performing the fertilization procedure at each stage. Because in-vitro fertilization is a complex procedure that is carried out in stages which may extend over a period of time, if the relationship between the spouses is disrupted and they quarrel about the fate of the fertilized ova, the general tendency is to demand the consent of both parties for the continuation of the procedure. In England and Western Australia we find statutes that require a valid consent of the donors of the genetic material before use is made of it and these grant a right to revoke the consent (as long as no use has been made of the fertilized ova). In England, see the Human Fertilisation and Embryology Act, 1990 (Schedule 3, section 4). According to this statute, effective consent is required, and this implies the possibility of changing one’s mind and revoking the consent, at every stage before the fertilized ova are used. Revocation of consent by one of the parties to the agreement requires the institution that is storing the fertilized ova to destroy them. See K. Stern, ‘The Regulation of Assisted Conception in England’, 1 European Journal of Health Law (1994), 60. In Western Australia, see the Human Reproductive Technology Act, 1991, sections 26(1)(a)(i) and 22(4). A similar approach is implied by the Ontario Law Reform Commission. See B. Dickens, ‘Canada: The Ontario Law Reform Commission’s Project on Human Artificial Reproduction’, Law Reform and Human Reproduction, S.A.M. McLean ed., Aldershot (1992), at pp. 47, 69, recom. 27). In Canada and the United States we find another approach that is expressed, according to which the two donors of the genetic material must agree in advance about the future of the fertilized ova in unexpected contingencies such as a dispute or death. See, in Canada, recommendation 5(1) of the report Medically Assisted Procreation — Law Reform Commission of Canada.

This approach was adopted in Davis v. Davis [32], where it was pointed out that agreements with regard to the future of fertilized ova in the event of divorce, death, etc., are valid. The enforcement of agreements that expressly regulate the future of fertilized ova in the event of unforeseen contingencies is also advocated by the American scholar Prof. Robertson, (see J.A. Robertson, ‘Resolving Disputes over Frozen Embryos’, Hastings Center Report, 1989). A similar approach can be seen in the recommendations of the Reform Commission in the State of New South Wales, Australia: C. Corns, ‘Deciding the Fate of Frozen Embryos’, Law Inst. J. (1990), at 272, 275.

The approach of the countries that require consent of the two spouses, allow it to be revoked and regulate the destruction of ova in the absence of consent or at the end of a certain period is derived, inter alia, from their approach to the ‘status’ of the fertilized ova. Those who do not recognize the independent right of the ova to develop towards ‘life’ do not think that the State has an interest in protecting the ‘life’ that they do not have, and they regard the genetic donors as persons with a ‘quasi-property’ right in the joint genetic material. Therefore, according to them, they should be given joint control over the fate of the ova and the use thereof. A different approach can be found in the State of Louisiana in the United States which recognizes the right of the ova to continue to develop. Disputes between the spouses are decided in accordance with the interest of the fertilized ova (La. Rev. Stat. 9:131). The right to the fertilized ova is granted to the spouse who is interested in developing them. The trial court in Davis v. Davis [32] decided similarly. This is an approach that is not adopted by most countries in the Western world, and it has met with harsh criticism from the Court of Appeals in that case, and from scholars (see G.J. Annas, ‘A French Homunculus in a Tennessee Court’, Standard of Care: The Law of American Bioethics, New York (1993), 71, on the status of the fertilized ova, infra).

The Public Health (In-vitro Fertilization) Regulations

14. In Israel the question of in-vitro fertilization has not been regulated by statute, only in regulations. From the relevant regulations, we shall cite in full regulations 8(b)(3) and 14(b), which state:

‘8.          (b) …

(3) If the woman in whom it is intended to implant the ovum is divorced, and the ovum was fertilized with the sperm of her husband before her divorce — the ovum may be implanted in her only after the consent of her former husband has been obtained.’

‘14. (a) …

     (b) Every act involved in the in-vitro fertilization of a married woman shall be done only after obtaining the consent of her husband.’

The trial judge found support in the regulations for his view that the consent of the husband is not needed to continue the procedure, since he held that his consent was given to the whole procedure ab initio. It seems to me that the regulations do not support this position and that the hospital may not deliver the ova to Ruth Nahmani so that she may continue the procedure, when Daniel Nahmani has expressed his vehement opposition to its continuation. Why is this?

We are dealing with subordinate legislation of the Minister of Health which does not purport to regulate inter-personal relationships between spouses. The arrangement in the regulations is designed for the bodies that handle in-vitro fertilization and the manner in which they must deal with this sensitive subject. The question of receiving fertility treatments is complex, and in addition to its medical aspect it has social and moral aspects. The subordinate legislator does not appear to me to be a source of inspiration for resolving these question in a case of a dispute between spouses. The regulations do not have any direct application in our case since surrogacy is forbidden in Israel, and they cannot apply to a situation which they expressly prohibit. Giving the ova to one of the spouses for implantation in a surrogate mother in the United States constitutes a stage in the surrogacy procedure which is forbidden here and which is supposed to carried out there. The regulations also do not purport to regulate a situation in which one of the spouses revokes his consent, even if this was given ab initio. In such a situation, the medical institution does not have the ability to make a decision, and in the absence of an agreement between the spouses with regard to what will be done with the fertilized ova in a case of a dispute, the institution cannot make an immediate decision.

Moreover, the wording of the regulations cannot support the determination of the trial judge. The text of the regulations is not unambiguous. The interpretation of regulations 8(b)(3) and 14(b) as regulations that make the husband’s consent unnecessary is not the only reasonable construction of these regulations. In any event, regulation 14(b) requires every act involved in the in-vitro fertilization of a married woman to be done only after obtaining her husband’s consent. I think that this is a provision that expresses the spirit and purpose of the regulations. Regulation 8(b)(3), which refers to a divorced woman, includes an arrangement that is intended to clarify that despite the severance of the relationship between the couple, the additional consent of the former husband is required. This regulation does not make his consent unnecessary during the marriage. It can also be said that a state of separation is similar to divorce, and that the revocation of the husband’s consent is connected to this separation, and therefore regulation 8(b)(3) should be applied also in such a case. Moreover, regulation 8(b)(3) contains an idea of the impossibility of permanent consent, since a change in circumstances that casts doubt upon the continued existence of consent requires an additional consent. In any event, one should not deduce from regulation 8(b)(3) anything about the right of the husband to revoke his consent even if it was given ab initio. At most it can be said that the regulations do not consider this situation (it should be noted that the legality of the regulations is under review, in another respect, in a petition for a show-cause order that has been filed in this court).

The public commission

15. It is not only in regulations that we find reference to the issue of in-vitro fertilization. A professional public commission was appointed in June 1991 by the Ministers of Justice and Health to examine the question of in-vitro fertilization and it was composed of renowned experts in all the fields relevant to the issue. The commission considered the matter and in July 1994 submitted a report to the Ministers. This report was submitted in this case by the Attorney-General with the consent of the other parties. With regard to consent, the commission unanimously recommended that:

‘… in the absence of joint and continuing consent, no use should be made of the fertilized ova that were frozen until the end of the freezing period agreed by the spouses but consent that was given at the beginning of the treatment shall be deemed to continue as long as neither of the spouses revokes it in writing’ (emphases supplied).

‘The Commission considered the possibility that the genetic mother or the genetic father would have no other way of realizing genetic parenthood. But giving permission to have a child in such a situation, without joint consent, means forcing fatherhood or motherhood, both from the legal viewpoint and from the emotional viewpoint, in that there will be a child who is born without their consent. The commission was of the opinion that a man or woman should not be forced to be a father or mother against their will, even if they initially consented to this’ (see the Report of the Professional Public Commission for Examining the Issue of In-vitro Fertilization (1994), 36).

16. The approach of Jewish law with regard to consent is not uniform. Although in the past there was no direct consideration of the issue of consent in the circumstances before us, there is such consideration in modern times. Rabbi Shaul Yisraeli, who was a member of the Council of the Chief Rabbinate and a member of the Great Rabbinical Court, thought that a husband has the possibility of revoking his consent. He says:

‘Since the husband is separated from the wife and the child who will be born (if at all) will no longer grow up in the joint home of the husband and the wife, we can understand his opposition to giving the fertilized material to a surrogate mother in order that a child may be born as planned. Since a drastic change has occurred, as compared with the position at the time the reciprocal undertaking was made, he should be regarded as being “under duress” when he argues that in such a situation the undertakings can no longer bind him, since he did not give his undertaking for such a case. And he should not be compelled to agree to give over the frozen material so that it may continue to develop, as the wife wants, because she argues that this is her only and last chance whereby she may have a child who will be her child from a biological point of view. Although the wife’s position is understandable, it seems to me that from a legal viewpoint we should not compel the husband — who is the second partner and who also has a share and rights with regard to the fertilized material — to consent to what the wife is asking’ (Responsum of Rabbi Shaul Yisraeli in Dr A. Steinberg ed., Jewish Medical Encyclopaedia, vol. 4, pp. 41-42 [44]).

This was also the opinion of Rabbi Shalom Shalush, a member of the Haifa Regional Rabbinical Court (Responsum of Rabbi Shalom Shalush, ‘Fertilization in a Surrogate Womb’, in Orchot, the magazine of the Haifa Religious Council, no. 39, p. 31 [45]). In discussing the question of a petition made by a husband for an order prohibiting the implantation of ova fertilized by his sperm in a surrogate mother, he held that this fertilization should be prevented and the husband’s petition should be granted, and that preventing such fertilization did not involve a prohibition of killing an embryo.

It follows that most legal systems and our legal system also require in principle the consent of both spouses for performing in-vitro fertilization at every stage. The question is whether Daniel Nahmani gave such consent, and, if so, can he revoke it?

The consent of the Nahmani couple

17. I accept that the Nahmani couple agreed, in the relationship between themselves, to carry out the in-vitro fertilization procedure in order to bring a child into the world. This finding is supported by the evidence, and is implied by the actions done by the spouses towards this goal. The consent was partially implemented, and at the stage before implantation in the surrogate mother, Daniel Nahmani expressed his opposition to the continuation of the procedure. The consent, in so far as it concerns the relations between the spouses, was not directed only at carrying out the technical medical procedures of in-vitro fertilization, but it should be regarded as consent to parenthood, consent to share together, over the years, the feeling of responsibility and commitment involved in the concept of parenthood. Precisely for this reason it should not be said — as is implied by the trial judge — that since for the purpose of the technical procedures no consent is required in addition to that which was given ab initio, it is possible to continue the procedure that will lead to enforced parenthood, notwithstanding the opposition.

What is the status of the consent that was given; what is its scope, what is its nature? Is it subject to any legal framework, and if so, what is that framework? Was an agreement made between the parties, and if so what is its basis and what are its implications? What are the ramifications of the change of circumstances that occurred subsequently on this agreement? Is the person who gave his consent entitled to revoke it and what is the remedy that can be granted, if any?

The status of the consent as an agreement

18. In principle, the autonomy of the human being implies his freedom to act and change his position, whether by way of a disposition in private law or by way of carrying out an act to change his personal status, such as marriage, divorce, having a child, etc.. The question of the status of an undertaking to change one’s personal status is problematic. In analyzing the essence and purpose of the contract, the scholars Friedman and Cohen say that ‘… a benefit to the human psyche — the emotions, dignity, the spirit, entertainment — does not lie within the traditional province of the sphere of contracts’ (D. Friedman & N. Cohen, Contracts, Aviram Press, vol. 1 (1991), 328). These remarks can be illustrated by the status of a promise of marriage in Israeli law, which is a clear example of an emotional partnership. A promise of marriage is a promise to change personal status. It begins with a joint decision that lies within the personal-intimate sphere. In CA 647/89 Schiffberg v. Avtalion [15] and in CA 416/91 Maman v. Triki [16] the problems that arise from classifying a promise of marriage as a binding contract were emphasized. The President mentioned the criticism made by scholars with regard to this classification (see: Friedman & Cohen, supra, at pp. 368-369; N. Cohen, ‘Status, contract and inducing breach of contract’, 39 HaPraklit (1990), 304, 317; P. Shifman, Family Law in Israel, vol. 1, The Harry Sacher Institute for Research of Legislation and Comparative Law (1984), 125-134) and the absolute freedom of a person when deciding whether to enter into marriage was emphasized. The President pointed out that this cause of action is not popular, but uprooting it in its entirety is a matter for the legislator. In several countries the contractual cause of action of breach of promise of marriage has been repealed in legislation. England enacted the Law Reform (Miscellaneous Provisions) Act, 1970, and approximately twenty States in the United States have repealed it. The promise of marriage is therefore, in our legal system, a binding contract, but a breach thereof does not entitle the injured party to enforcement or damages for loss of expectation, merely to compensation for damage suffered. The ideological basis for this can be found in the article of Prof. G. Tedeschi, ‘Some aspects of the concept of contract’, Essays in Law, The Harry Sacher Institute for Research of Legislation and Comparative Law (1978), 54. There we find that the classical contract involves an exchange, and therefore it inherently contains a conflict of interests, whereas in marriage this is not the case. The joint enterprise which is a means in a commercial-economic partnership is the purpose itself of marriage (ibid., at p. 71). See also Shifman, Family Law in Israel, vol. 1, at pp. 131-132, which focuses on the predominantly emotional elements that characterize the promise of marriage. In his opinion, a promise of marriage does not constitute a contract because of its internal content. Living together is the decisive element of the arrangement.

19. It is not merely the promise of marriage that the law regards as a special category of agreement. Even other kinds of agreements fall into a special category; for example, the political agreement. I do not intend to discuss the classification of this agreement, which I believe is disputed (see the opinion of Prof. Cohen, in her article ‘The Political Agreement’, 1 HaMishpat (1993), 59, and contrast with the opinion of Prof. G. Shalev, in her article ‘Political Agreements’, 16 Tel-Aviv L. Rev. (1991), at p. 215). I intend to consider general remarks and questions that were raised by this court with regard to the political agreement, which are relevant to the classification of the agreement before us. HCJ 1635/90 Jerzhevski v. Prime Minister [17] considered the political agreement, which Justice Barak regarded as a binding legal agreement, and he raises — in the course of the legal analysis — general questions that are appropriate in this case:

‘Do the laws of contract apply wherever the parties wish them to apply, or are there perhaps areas that the laws of contract do not reach, despite the wishes of the parties? This question is not new. Thus, for example, in German law it is accepted that certain types of agreements do not fall into the sphere of the laws of contract of private law…

A similar idea is expressed by Flume, who says: “The area of human relations in the family, and the human relationships of love, friendship and social intercourse ‘simply cannot be’ the object of a legally binding agreement” (W. Flume, Allgemeiner Teil des Bürgerlichen Rechts, 82, vol. II, 1965)’ (ibid., at p. 837).

Prof. Cohen, in her aforementioned article with regard to political agreements, also raises questions that are pertinent to our case:

‘… What is the law with regard to these agreements? Is there a duty to uphold them or is there no such duty, and each party may uphold it, if he wishes? Perhaps there is even a duty not to uphold them? If there is a duty to uphold them, what is their scope and what are the remedies available to each party for non-compliance?...’ (ibid., at p. 61).

Contracts are classified by Prof. Cohen as  ‘perfect’,  ‘weak’,  ‘void’,  ‘not binding’ and  ‘unjusticiable’ contracts.

‘The legal system protects an agreement that imposes an obligation recognized by law… the question when the law regards a contract as perfect and when it regards it as weak, void or not binding, depends on a variety of reasons. The main reason lies in the purpose of the laws of contract. The contract is a social mechanism, whose main purpose is the creation and distribution of wealth… for this purpose the laws of contract recruit the enforcement power of the State… what is outside their scope [the scope of the laws of contract] represents change, discretion, choice, freedom. Areas where the law wishes to leave freedom of action or discretion are unsuited to the application of the laws of contract. Other reasons that influence the question whether we are concerned with a contract and what is its degree of validity depend on the intentions of the parties, the amount of benefit from the contract as opposed to the damage that it is likely to cause and the background against which it was made’ (ibid., at pp. 62-63; italics and square parentheses supplied).

English law accepts the approach that an intention to create a binding legal relationship is sufficient to create a contract, but when we are concerned with a social agreement or an agreement within the family, there is a presumption, which can be rebutted by the doctrine of reliance, that there is no intention to create a legal relationship (see the criticism of Friedman and Cohen, Contracts, vol. 1, at pp. 371-373).

20. In our case the agreement was made in special circumstances, on an intimate, personal and sensitive matter that lies within the sphere of the human psyche. Notwithstanding, I do not think that this case does not involve any agreement whatsoever. The Nahmani couple expressed consent, determination and resolve with regard to a very serious matter and they took steps to carry out their consent. When two persons continue to give their consent and do not revoke it, their wishes should be respected and the agreement should be acted upon in so far as it concerns matters that they have agreed (provided that they indeed agreed them). Such an agreement — as long as the parties still agree with regard to it — is valid vis-à-vis third parties such as the medical institution or other parties involved in the in-vitro fertilization procedure, and these should respect the joint wishes of the parties (within the framework of the law). Notwithstanding, we are not concerned with an ordinary contract but with an unique contract. It certainly does not fall into the category of  ‘perfect’ contracts. Since it has contractual elements, it can be classed among the  ‘weak’ contracts. Therefore the legal framework that applies to it will also not be the framework of the laws of contract in the strict and narrow sense.

21. From the little said by the Nahmani couple in their testimony in court, no consent can be deduced with regard to a situation in which the family unit would break up. Daniel Nahmani said in his testimony:

‘There were beautiful moments and because of those moments beautiful things were done, and afterwards things changes and the mere fact that we came to separate… when Ruth started this procedure with me I never said or even hinted that we would separate or stop, but the intention that we had then was valid at that time. I do not agree with you that Ruth knew that this procedure would be completed to its end. There were many times that Ruth and I spoke about a situation that we might have a major dispute and certainly the procedure would be stopped… the consent was given when we lived together and we tried to build a family unit; this consent became void from the moment that we separated’ (pp. 22, 27, 29 of the court record).

Ruth Nahmani says in her affidavit that was submitted as evidence-in-chief:

‘The yearning for children, joint children and the willingness to fight… in order to realize our right to be parents to children and to bring children into the world, was shared by us — my husband and me — throughout the procedure…’ (paragraph 16 of the affidavit).

In her cross-examination she added:

‘What guided me and Daniel was the strong desire to be parents… it does not matter when he did it, out of desire, out of love, the moving force was joint, equal, complete…’; ‘in 1990 the question of divorce never arose’ (pp. 11, 16 of the court record).

Even if what was said reflects the true position from the viewpoint of each of the two spouses, it is totally impossible to derive from this that there was a consent between the parties that the procedure would continue in any event, in any situation and in all circumstances. Certainly we cannot deduce a joint intention and joint consent to continue the procedure after separation. It can even be said that the aforementioned statements have a different tone. It can therefore be said that we are not dealing with a case of consent with regard to the fate of the ova if and when a crisis would happen in the marriage, as it did. Here we should remember that if we were dealing with an agreement with regard to the fate of the ova in the event of separation, we would still have to consider whether this could be revoked and whether it could be enforced. This question does not require a decision in this case.

What is the consequence of the absence of consent in these circumstances?

There are several possibilities: first, to regard the agreement as an agreement whose basis has collapsed or as an agreement which has exhausted itself; second, to fill the ‘lacuna’ in the agreement; third, to deduce an implied consent on the part of Daniel Nahmani to the continuation of the procedure even in a set of circumstances completely different from the one which existed at the time that the consent was given. Below I will consider each of these possibilities as potential mechanisms for deciding the difficult problem before us.

Collapse of the basis of the agreement

22. As stated, the case before us is not one of consent between the parties with regard to the fate of the continuation of the procedure, should the family unit break up. What we know clearly is the background in which consent was given and the circumstances in which the husband revoked it. The consent was given when the married couple were living together and trying to create a larger family by bringing a child into the world. The consent was revoked after the family unit collapsed, Daniel Nahmani left the home and instead established a new family unit.

What are the ramifications of the change in circumstances on the validity of the consent of Daniel Nahmani? The doctrine which is closest to the case before us is the doctrine of frustration, which is expressed in section 18(a) of the Contracts (Remedies for Breach of Contract) Law, 5731-1970. A strict application of the doctrine of frustration in our case raises problems. Section 18(a) gives the person in breach of contract a defence argument when performance of the contract has become impossible or fundamentally different from what was agreed. ‘Only a radical change in circumstances will justify a finding that the party in breach is exempt from the consequences of the breach’ (CA 13/75 Blumenfeld v. Hadar Plast Company Ltd [18], at p. 456). As a rule, an event that frustrates a contract is an event external to the contract, over which the parties to the contract have no control. When the frustration is initiated by a party to the contract, the initiator cannot rely on this protection. In addition, there must be no anticipation of the circumstances that frustrate the contract and also an inability to anticipate them, conditions that have been interpreted very narrowly so that the defence of frustration has to a large extent lost its applicability. Thus Israeli case-law has followed English case-law, in which the scope of the exemption when events that frustrate the contract occur is narrow, in view of the outlook of absolute liability. In German and Continental law, the basic attitude to the rules of frustration is more flexible. These systems emphasize human behaviour and the element of absence of fault as a decisive criterion for granting the exemption. Even American law, whose source of inspiration is English law, mollified the requirement of absolute liability, by basing the doctrine of frustration on the more flexible risk criterion. In Israel, the Codification Committee considered, inter alia, a less strict application of the laws of frustration in the spirit of American law, but its deliberations have not yet been included in the law (for an analysis of the doctrine of frustration in Israeli positive law and different legal systems, see G. Shalev, Laws of Contract, Din, 2nd edition (1995), 497-510; see also D. Katzir, Remedies for Breach of Contract, Tamar, vol. 1 (1991), 210-226).

23. A strict application of the doctrine of frustration makes a decision in this case difficult, and if we were concerned with an ordinary contract it is questionable whether this would be possible. But we are concerned with a special contract, and a strict application of the doctrine of frustration is not necessary and is even undesirable. In this category of contracts, the change in Daniel’s emotional relationship with his wife and his unwillingness to bring a joint child into the world when they are no longer together and after he has established a new family should be regarded as an event that frustrates the contract. Prima facie, an external look at the crisis — Daniel leaving the home and establishing a new family unit — points to Daniel Nahmani as the ‘creator’ of the new circumstances on which he wishes to rely in order to be released from his consent. In this sense, an accusatory finger is directed at him in order to deny him the right to revoke his consent. However, I think that in view of the nature of the relationship we are considering, the case cannot be decided in this way. Support for this can be found in the modern approach of ‘no-fault divorce’, in which consideration of the external symptoms that characterize a family crisis is not a comprehensive one. One of the fundamental ideas on which this outlook is based is that:

‘The belief that it is possible to find fault only with one of the spouses and to place the blame for the crisis having occurred on that spouse alone has also been discredited… Therefore fault as it appears to an outsider, with the court imposing a moral judgment on such a tangled and complex set of relationships, should not be regarded as everything’ (Shifman, Family Law in Israel, vol. 1, at p. 300).

The approach of  ‘no-fault divorce’ is not universally accepted. It is a disputed issue that we are not required to resolve. It is not the framework of our deliberation. We are not sitting in judgment on the acts of Daniel Nahmani in the moral sphere and ‘punishing’ him for his behaviour. These are not the criteria for deciding the question whether he has a right to object to the continuation of the procedure. The relationship between spouses is not static. It is by nature dynamic and subject to crises. The feelings of spouses are not always stable. They may change even without any connection to a complex procedure such as in-vitro fertilization. An initial consent to this procedure is not an informed one in the full sense of the word because of the inability to foresee — emotionally and psychologically — what will happen in the future. Spouses do not always deal successfully with the difficulties in their lives together, especially when they are faced with a procedure such as in this case, with its emotional, physical and economic difficulties and the subjective and objective problems that it involves.

24. In any event, even if the crisis was created by Daniel Nahmani, and even if the Rabbinical Court suggested a reconciliation that he did not accept, and even if I personally have reservations about his behaviour, none of these can deny him the right to revoke his consent as a result of a dramatic change of circumstances as stated. The destruction of the family unit is an undisputed fact, and a child who is born into the world will be born without his father wanting him, to a de facto one-parent family in which only his mother will act as a parent. The consent in this case derived its validity from, and is based on, a functioning relationship. Admittedly the collapse of this relationship is not an external event within the accepted sense in the doctrine of frustration, but in view of the special character of the agreement and the major importance of its foundation built on the depths of human emotion, this collapse is sufficient to amount to an act that frustrates the agreement. Remarks in a similar vein were made by Justice H. Cohn in CA 170/74 Hister v. Fleischer [19], at p. 134:

‘The learned judge held that this agreement was frustrated merely because “the good relationship that prevailed between the plaintiff and the defendant when the agreement was made was a basis for making it”, and the continued existence of this good relationship is “the basis for performing the agreement”. When this relationship was irreversibly undermined, the “basis of the agreement” was undermined, and it should therefore be regarded as frustrated. I agree, with all due respect, that an agreement that provides for the parties to the agreement to live together in one apartment can be regarded as frustrated if the relationship between them collapses to such an extent that they can no longer live together’ (emphasis supplied).

See also CA 202/92 [20] in which it was held that the basis for an undertaking to give a gift is a personal relationship between the donor and the recipient and therefore it is a personal basis, and when it collapses the undertaking is frustrated (in that case the beneficiary of the gift died and his heirs were denied it on the basis of this reasoning). See also Shifman, Family Law in Israel, vol. 1, where he suggests that a fundamental change in feelings should be regarded as an act that amounts to frustration with regard to revoking a promise of marriage. He says:

‘… in the case before us the breach is a result of the subjective will of the man, but it can be said that the individual will that accompanies marriage is a substantial part thereof… when a man marries a woman whom he originally thought he loved but is now hated by him, performance of the contract, even if it is at all possible, is nonetheless fundamentally different from what was agreed’ (ibid., at p. 138).

It can therefore be said that when we are concerned with a special agreement, which is not an ordinary contract and is based on an intimate emotional relationship, fundamental changes in the feelings and emotions that underlie this relationship and dramatic changes in the life of a person as a result should be regarded as changes which can change the performance of the agreement into something fundamentally different or even impossible. Someone who has undergone such changes should not be forced to be bound by his original consent.

A contract that is unenforceable (section 3(1) of the Contracts (Remedies for Breach of Contract) Law)

25. Were it not possible to regard the drastic change in circumstances as frustration of the original agreement, would it be possible to enforce the continuation of the procedure? I think that the answer to this is no, in view of the special character of the agreement before us.

When their life together collapsed, the Nahmani’s original plan became impracticable in the circumstances that had been created, and it is therefore unenforceable. Such a situation is regulated by section 3(1) of the Contracts (Remedies for Breach of Contract) Law, which determines that one of the exceptions to the rule of enforcement exists when ‘the contract is unenforceable’. The agreement before us is unenforceable in the sense that it cannot be carried out within the framework that was intended for its performance, namely the framework of a functioning marriage between the Nahmani couple. Not every agreement that cannot be performed within the framework intended for its performance becomes an ‘unenforceable’ contract, but this is not the case here, where we are concerned with an agreement whose essence, nature and character distinguish it from the ordinary agreement. Admittedly it may be said that the agreement is enforceable in the sense that physically the fertilization procedure can be continued, but because of its special character it cannot be carried out within the framework in which the parties agreed to carry it out, which is a joint family unit into which the child will be born if the procedure succeeds. The agreement is based on an intimate personal relationship and married life. The continued existence of this relationship is the heart and soul of the spouses’ original plan to bring a child into the world by means of in-vitro fertilization. When the relationship was severed, the contract is no longer enforceable within the framework intended for its performance. No enforcement measure of the court can restore the family unit, and in the absence of this unit the original consent that was based on it is unenforceable.

When a contract is unenforceable, the question of responsibility is irrelevant. This has been discussed by Professor Yadin, who said: ‘According to the text of the law, it is irrelevant who or what caused the contract to be unenforceable… it is also irrelevant whether the party in breach — or the injured party — is responsible for the contract being unenforceable…’ (U. Yadin, ‘The Contracts (Remedies for Breach of Contract) Law, 5731-1970’, Commentary on Laws relating to Contracts, G. Tedeschi ed., 2nd edition (1979), at p. 55). These remarks were adopted by Justice Bejski in Lasserson v. Shikun Ovedim Ltd [3] supra, where he clarified that this is also the position in case-law (ibid., at p. 250). The responsibility for the occurrence of the event that makes the performance of the contract impossible is relevant only with regard to the other remedies, but not the remedy of enforcement (Yadin, ibid., at p. 55). When the performance of the contract becomes impossible, there is no longer any basis for the remedy of enforcement.

Filling a lacuna in the agreement

26. The question before us can be examined from another angle. So far we have considered the consent given in a specific set of circumstances, which was frustrated as a result of completely different circumstances. Let us now examine another aspect of the issue, namely the possibility of regarding the agreement as an agreement that has a lacuna in that it does not make any provision for the fate of the procedure in the event of separation. It seems to me that we cannot fill the lacuna by means of a stipulation that gives consent to the whole procedure in a case of separation.

In our case, the consent to the in-vitro fertilization procedure left a lacuna, and the silence of the parties on the question of separation is not in my opinion a ‘negative arrangement’. A lacuna may, in principle, be filled under the Contracts (General Part) Law, 5733-1973 (sections 25-26). In our case, we cannot rely on these sections, even by way of analogy, for the purpose of completing the agreement. We cannot ascertain the intentions of the parties when they made the agreement with regard to the change in circumstances that occurred, and we cannot say that they had common intentions; we cannot ascertain the intentions from the circumstances and certainly we cannot do so according to any practice that prevailed between the parties or any accepted practice in agreements of this sort, since there is no practice in this area. We therefore have a situation in which the parties did not consider a specific interest — the fate of the fertilized ova — in the event of separation:

‘Their silence reflects a lacuna and raises the question: what field of law should properly be applied? Our assumption for this purpose is that it is not impossible that the contract has “run its course” and has now become, in so far as this interest is relevant, merely a historical fact. We now describe as a “lacuna” a situation in which applying the “conventional” rules of interpretation leads to the conclusion that the contract did not consider that interest, and we consider, within the framework of the laws of contract, intervention by means of “recruiting” the techniques that allow formal or informal intervention in the contents of the contract’ (M. Deutch, ‘On Legal Genes and Competition of Rights: The Relation Between the Law of Contract and Unjust Enrichment Laws’, 18 Tel-Aviv Uni. L. Rev. 557 (1994), 566. See also note 41 which refers to intervention in contracts by means of the laws of good faith, implied terms and normative outlooks on fairness).

In our legal system, the judge may, in appropriate circumstances, complete the agreement, when he is satisfied that the parties did not agree with regard to the lacuna (D. Friedman & N. Cohen, Contracts, vol. 1 (1991), 220; CA 154/80 Borchard Lines Ltd, London v. Hydrobaton Ltd [21], at p. 224; CA 554/83 Atta Textile Company Ltd v. Estate of Zolotolov [22], at p. 303). ‘… The court is not authorized to “make a new contract, which is different in its nature, content, scope and application from the one made by the parties themselves” (CA 79/76, at p. 753)’ (CA 528/86 Polgat Industries Ltd v. Estate of Yaakov Blechner [23], at p. 826). The doctrine of the implied term, which we absorbed from English common law, has lost its status since the enactment of the Contracts (General Part) Law. The Contracts (General Part) Law put another tool at our disposal, the principle of good faith stated in section 39 (CA 719/89 Haifa Quarries Ltd v. Han-Ron Ltd [24], at p. 312, and CA 479/89 Coptic Mutran v. Halamish — Government-Municipal Corporation for Housing Renovation in Tel-Aviv-Jaffa Ltd [25], at p. 845. On the question of filling a lacuna and the implied term, see also R. Ben-Natan (Kleinberger), ‘The Law of the Implied Term in Present Law — A further study’, 17 Mishpatim (1987), 571). What is implied by the principle of good faith with regard to filling a lacuna in a contract is that it must be filled in a way that realizes its subjective and objective purpose: E. A. Farnsworth, On Contracts, Bolton, vol. 2 (1990), 305. Good faith was not intended to change a contractual arrangement and does not create a new contract between the parties. Good faith demands that a contract is given a meaning that is consistent with the joint intentions of the parties and with the basic principles of the legal system.

Completing the agreement by means of a stipulation that the consent of the Nahmani couple to adopt the procedure of in-vitro fertilization should be regarded as consent to continue the procedure even after separation does not realize the subjective and objective purpose of the agreement. It cannot be said that continuing the course of action that the parties determined in the agreement leads, according to its internal logic, to a completion according to which the procedure will continue even in a case of separation. It cannot be determined that this is implied by the joint intentions of the parties, and it cannot be said that such a stipulation is implied by the basic principles of the legal system with regard to the basic rights of the parties and each one of them, as set out above. Such a completion cannot counteract a ‘blatant breach of the balance of mutual rights’ (Justice Mazza in Coptic Mutran v. Halamish [25] supra, at p. 846).

Enforcement

27. Even if I thought that the original consent between the spouses was that the procedure should continue even in the new circumstances that have been created (and I do not think this), there still arises the difficulty of enforcing this consent, since the significance of this is not merely enforcing the consent to deliver the ova to Ruth Nahmani, but forcing parenthood on a person who does not want it. I suspect that enforcement of this consent is contrary to sections 3(2) and 3(4) of the Contracts (Remedies for Breach of Contract) Law. Section 3(2) of the law denies an injured party the right of enforcement if ‘enforcement of the contract means compelling someone to do, or to receive, personal work or a personal service’. As Professor Shalev explains, ‘the origin of the rule that denies enforcement of personal work and service lies in the laws of equity, according to which contracts for a personal service should not be enforced. The reason for these laws is to be found in the protection of individual rights’ (Shalev, Laws of Contract, at pp. 528-529). The law is not interested in forcing on someone a relationship that he does not want (see J. D. Calamari & J. M. Perillo, The Law of Contracts, 2nd edition (1977), 677). This enforcement is likely to inflict a real injury on a person’s individual freedom and require an involvement for which the person is unprepared. Moreover, where the relationship requires cooperation and a healthy relationship, the law cannot bring these about by means of enforcement orders (see: CA 256/60 Frankel v. American Overseas Food Centers Inc. [26], at p. 95; CC (Jer.) 574/70 Klinger v. Azrieli Avramovitz Co. Ltd [30], at p. 363; CA 381/75 Berkovitz v. Gavrieli [27]; J. Chitty, On Contracts — General Principles, London, 26th edition (1989), 1212).

The law denies the remedy of enforcement ‘… for work that must be done specifically by the person who made the commitment — whether we are speaking of a singer, an artist or a surgeon, or whether we are speaking of a cleaning lady or a factory worker…’ (U. Yadin, ‘The Contracts (Remedies for Breach of Contract) Law, 5731-1970’, Commentary on Laws relating to Contracts, G. Tedeschi ed., at p. 57).

28. Against this background it can be said that a priori the agreement before us should not be enforced, since its personal elements far exceed the personal elements of any contract for a personal service. It is inconceivable that a writer who breached his undertaking to write a book should be compelled to continue writing the book when he no longer wishes to do so. Once he has breached his undertaking, the other party may avail himself of various remedies, but not the remedy of enforcement. If this is the case with a literary creation, then with the ultimate creation — bringing a child into the world — it should certainly be the case. The future personal involvement of someone who becomes a parent is a very significant and long-term obligation.

Someone may argue that this is not so, for Ruth Nahmani is not demanding that Daniel Nahmani do anything apart from not preventing her from continuing the procedure and from raising the child who will be born, if at all. This argument cannot be accepted, since, when Daniel Nahmani takes on the status of a parent, he will be liable for all the duties of the parent, and he will not have any legal possibility of evading these (CA 5464/93 A v. B (a minor) [5]). Moreover, we cannot know what may happen in the future that will compel Daniel Nahmani to be significantly involved in the raising of the child whom he does not want, with all the commitments and ramifications that this implies. Such an involvement ensues from the very status of a parent even if the child is not brought up by him. Even from a normative viewpoint the law expects that the parent should take an active role in raising his child. It follows that such an agreement is unenforceable.

29. It can also be said that enforcing the consent of Daniel Nahmani to enter into the status of a parent, despite the fact that he has revoked it, is unjust within the sense of section 3(4) of the Contracts (Remedies for Breach of Contract) Law, which provides that a contract should not be enforced if the enforcement is ‘unjust in the circumstances of the case’. Considering whether the enforcement is just or unjust in the circumstances of the case is done on two levels: on a personal level — the relationship between the parties to the agreement — and on a public level — the effect of the enforcement on the public interest and the basic values of society.

Justice Zamir said in CA 3833/93 Levin v. Levin [28], at pp. 877-878:

‘According to its wording, the section does not require a narrow conception of justice, which is limited to the relationship between the parties to the contract, as opposed to a wide conception of justice, which also includes considerations of the public interest. The language of the law also does not require a narrow scope for the circumstances of the case that includes only the situation and behaviour of the parties to the contract. According to the language of the section, the circumstances of the case may also include external circumstances, and these inter alia may include circumstances relating to the public interest. The language of the section does not prevent the court from asking whether enforcement of the contract is unjust in view of the effect of the enforcement, in the circumstances of the case, on the public interest, including the basic values of society.

This is certainly the case when one considers the purpose of the law. “Every legal system tries to uphold the public interest. This consideration constitutes a moving force in the development of common law, and it is a central consideration in the interpretation of legislation”. See A. Barak, op. cit., at p. 524. The public interest also includes the protection of the basic values of the legal system… It should not be assumed that this section was intended to compel the court to order the enforcement of a contract if considerations of justice between the parties so require, even if the enforcement may harm the public interest, such as access to the courts. On the contrary, the interpretation that upholds the purpose of the law, which also includes the public interest, requires that when the court considers whether to enforce a contract, it also takes considerations of the public interest into account… It follows that justice in section 3(4) of the Contracts (Remedies for Breach of Contract) Law is not merely personal justice, but also includes public justice’ (emphases supplied).

I agree with this approach, which is also found in other legal systems where, in an action for enforcement of a contract, the court takes into account considerations of the public interest. I will not repeat the personal circumstances and the constitutional and public aspects that were set out in detail above. On a personal level, our sympathy lies with Ruth Nahmani, but sympathy does not create a right. On a public level, enforcement conflicts with basic human rights, and therefore it is inconsistent with the public interest and proper legal policy, which we considered at length above. For ‘public policy’ in a contractual context, see Jerusalem Community Burial Society v. Kestenbaum [11], at pp. 533-535. It can therefore be said that even within the framework of section 3(4) of the Contracts (Remedies for Breach of Contract) Law, the agreement under consideration should not be enforced.

Several additional issues deserve attention, and I will consider these briefly:

Estoppel

30. An additional argument raised by Ruth Nahmani is the argument of estoppel. This argument has two aspects, the factual aspect and the legal aspect. On a factual level, a person making an argument of estoppel by representation or promissory estoppel must prove that a clear representation was made to him, he acted on it, adversely changed his position and that it was reasonable for him to do so. It follows that there must be a representation or a promise, reliance and a causal relationship between the two (Friedman and Cohen, Contracts, vol. 1 (1991), 91-92; G. Shalev, ‘Promise, Estoppel and Good Faith’, 16 Mishpatim (1986), 295, 296-308). For the requirement of causation, see G. Spencer Bower and A. K. Turner, The Law Relating to Estoppel by Representation, London, 3rd edition (1977), 102-103.

In our case, there is — from a factual viewpoint — no basis for the argument that Daniel Nahmani made a representation or gave a promise that the procedure would continue even in a case of separation. In this context, I have already considered the evidence and the testimonies of the parties themselves, and I will not add anything. It also cannot be deduced that the consent to the procedure, which was given when they were living together, implies consent to the continuation of the procedure even in the event of a separation. Moreover, it is not possible to hold that Ruth Nahmani entered into the process in reliance on such a promise or representation and that she would not have begun the procedure if she had taken into account the risk of separation and refusal. She took into account the risks that the procedure would fail, which she knew, and nonetheless decided to begin it; it can be assumed, a fortiori, that she would not have been daunted from beginning the procedure by a risk of separation and a refusal to continue the procedure which did not exist at all at the time of the consent to begin it. Therefore, I am of the opinion that the factual basis does not exist for applying the doctrine of estoppel. In addition, the legal aspect does not allow us to apply the doctrine. On this level, the existence of a promise and the contents of the promise are of paramount importance, and these are lacking in this case. This doctrine is applied when a promise or a representation exist, but for some reason they are not legally valid (such as non-compliance with a requirement of writing, where such a requirement exists). But in the absence of a promise or a representation upon which one may rely, the doctrine of estoppel should not be applied, since its purpose is to give binding legal force to promises that do have such force (Prof. N. Cohen, ‘Contract Law and Good Faith in Negotiation: Formalism versus Justice’, 37 HaPraklit (1986), 13; see also Shalev, ‘Promise, Estoppel and Good Faith’, 16 Mishpatim (1986), 295, 298-300).

Moreover, estoppel cannot provide more than the laws of contract can provide. The usual remedy under this doctrine is reliance damages and not enforcement, and if it is not possible to compensate, it is still not possible to grant a remedy of enforcement if under the laws of contract this remedy would not have been granted, since there is no basis for granting it as explained above (Friedman & Cohen, Contracts, vol. 1 (1991), 92-93, 637-642). Also from the viewpoint of the public interest, one cannot achieve through estoppel what cannot be achieved under the general law, for reasons of ‘public policy’ (Shifman, Family Law in Israel, vol. 1, at p. 85; A. Bendor, The Doctrine of Estoppel in Administrative Law (doctoral thesis), at p. 45 and the references cited there).

It should be noted that the argument of estoppel is used in English law as a defence argument, whereas in American law it is used also as an argument of the plaintiff. In our legal system the question has not yet been decided, although it has been raised, and it appears that scholars follow an approach similar to the American one, which I tend to adopt in the appropriate circumstances (see Friedman and Cohen, Contracts, vol. 1, at p. 44).

In view of the aforesaid, the argument of estoppel cannot, in my opinion, succeed in this case.

The difficulties involved in the in-vitro fertilization procedure

31. One of the arguments made by counsel for the Attorney-General is that one should take into account the many difficulties still involved in the in-vitro fertilization procedure which is the first stage of bringing a child into the world. I do not consider these difficulties in themselves an obstacle to granting the relief sought by Ruth Nahmani, were she to have a right to receive what she is seeking. We are in the pre-surrogate stages, and the path to completing the procedure is long, arduous and uncertain, from the medical, legal and economic viewpoints. From a medical viewpoint, the success rate is currently low; from a legal viewpoint the institute in the United States requires the consent of both spouses to carry out the implantation, and they must be married and living together (see the unsigned surrogate agreement, plaintiff’s exhibit 3). The problems that arise with regard to the status of the child, the surrogate mother, the need for consent to hand over the child, the factual and legal conflict between the status of the surrogate and the status of the genetic mother with regard to their maternal status and the legal status of the child are complex and cannot be easily solved. All of these are without doubt real problems; but were I to think that Ruth Nahmani had a right to force parenthood on Daniel Nahmani through the court, I would not regard these difficulties as an obstacle in her path to trying to achieve motherhood.

An alternative possibility of achieving motherhood

32. Another argument that was raised was the possibility that Ruth Nahmani could achieve motherhood in another way. I do not accept the argument that Ruth Nahmani could become a mother in a different way, and for that reason she is not entitled to force Daniel Nahmani to continue the procedure. It is almost certain that this is her last chance of achieving biological motherhood. One must take account of her age, her physiological condition, her small chances of success in a new fertilization, the need to find an unrelated donor (when she is still married) or to resort to the adoption of a child that is not hers, the time factor, and the emotional and physical effort involved in all of these. All of these are unattractive alternatives, and they cannot be compared with the use of her ova, fertilized with the sperm of her husband during their married life, which are ready for implanting. Therefore, were I to think that Ruth Nahmani had a right to continue the procedure against the wishes of Daniel Nahmani, I would not regard this argument as an obstacle in her path.

The ‘status’ of the fertilized ova

33. As stated, the status of the fertilized ova has ramifications for the question of consent. I will consider this only from the viewpoint of the question whether their status can support the position of one of the parties. If the approach is — as in most Western countries — that the ova do not have a right to ‘life’, then controlling their fate lies with the two persons who contributed their genetic material; if however the approach is that they do have an independent right to develop into ‘life’, the spouse who wishes to continue the process will have a right to them.

I shall not presume to make a comprehensive analysis of this complex subject to which different societies at different times attribute different elements which are not only in the sphere of law. We are concerned here with the sphere of philosophical, social and theological outlooks on the nature of man and his creation. There are some who try to derive the status of fertilized ova from the status of the embryo. The legal status of these, including their right to continue to develop, is not regulated in Israel by legislation. The Legal Capacity and Guardianship Law does not apply to them, according to the definition of the term ‘man’ in that law. In the aforementioned article of the President (M. Shamgar, ‘Questions relating to fertilization and having children’, 39 HaPraklit (1990) 30), he reviews the question of ‘Who is a man’ in various countries and at various times, beginning with the philosophical school of the Pythagoreans, and he continues through the Middle Ages down to the present day. From this review we see that across a section of human civilization the date on which man begins his existence is recognized to be no earlier than the stage of implantation. This is not the only opinion, and there is another approach that life begins from the moment of fertilization (ibid., at pp. 30-31). We also find a legal survey of the different approaches to this subject, in so far as it concerns abortions, in CA 413/80 A v. B [2], at p. 81 (see also the Report of the Professional Public Commission for Examining the Issue of In-vitro Fertilization, at p. 52). In Davis v. Davis (1992) [32] the issue was considered comprehensively and in depth. The court there reached the conclusion that the fertilized ova are not ‘property’ nor are they a ‘person’ or an embryo, but a ‘pre-embryo’. They belong to an intermediate category, and although they should be treated with dignity because of the potential for life that they contain, the State has no interest in protecting their ‘life’ and in compelling the donors of the genetic material or either of them to continue the procedure against their will. The countries that do not regard the fertilized ova as ‘persons’ require the consent of both donors of the genetic material to all stages of the procedure of fertilization, and they allow each party to revoke his consent. They also order the destruction of the fertilized ova in the absence of consent or at the end of a certain period. This is the law in England, Western Australia, France, the recommendations for reform in Canada, Ontario and New South Wales (the law in these jurisdictions was mentioned above when we considered the law in foreign countries — paragraph 13; with regard to the law in France, see C. Byk, ‘France: Law Reform and Human Reproduction’, Law Reform and Human Reproduction, S.A.M. McLean ed., 131, 160). There are other opinions, and States such as Louisiana and Victoria recognize the right of the fertilized ova to protection of their ‘life’ (see La. Rev. Stat. 9:122, 9:129, 9:130 (Louisiana); the Infertility (Medical Procedures) Act (Victoria); L. Waller, ‘Australia: The Law and Infertility — the Victorian Experience’, Law Reform and Human Reproduction, supra, at 17, 25).

34. The approach of our legal system is like the approach of most Western countries.

In ancient Jewish law sources, a situation of in-vitro fertilization was not considered and could not have been considered. The status of fertilized ova can be deduced from an analogy with the status of the embryo. There is a distinction between the stage from which someone who injures an embryo is like someone who injures a person, and the stage at which this is not the case. In Jewish law, we find a distinction between determining the time when ‘the soul enters from a theological viewpoint’ and the prohibition of abortion from a legal viewpoint. Rabbi Meir Abulafia, one of the leaders of Spanish Jewry in the thirteenth century, writes that the soul enters the body at the moment of fertilization (Rabbi Meir Abulafia, Yad Rama, on Babylonian Talmud, Tractate Sanhedrin, 91b [46]). However, with regard to the abortion of an embryo on account of a danger to the mother’s life, he holds that the embryo is not a person in its own right until it comes out of his mother (Rabbi Meir Abulafia, Yad Rama, on Babylonian Talmud, Tractate Sanhedrin, 72b [46]): ‘But as long as it is inside, it is not a person and the Torah is not concerned about it’ (see also Rabbi Shelomoh Yitzhaki (Rashi), Commentary on the Babylonian Talmud, Tractate Sanhedrin, 72b [47]). Rabbi Hisda says that until the fortieth day of pregnancy, the embryo is ‘mere water’ (Babylonian Talmud, Tractate Yevamot, 69b [48]). According to most contemporary authorities, fertilized ova have not reached the stage where the prohibition of ‘abortion’ applies. Even according to the minority of authorities who hold that the prohibition of abortion applies also to an early stage of the pregnancy, it is doubtful whether this prohibition includes a prohibition of destroying a fertilized ovum before it is implanted in a woman’s womb (with regard to the prohibition of abortion, see: D. Sinclair, ‘The Prohibition of Abortion’, Jewish Law Annual, 5 177 [49]; A. Steinberg, ‘Artificial Abortion according to Jewish Law’, Asia 1, 107 [50], and also a responsum of Rabbi Ovadia Yosef, ‘Termination of Pregnancy according to Jewish Law’, Asia 1, 78 [51]).

The Regulations indicate a similar approach to that of Jewish law and the approach of most countries of the Western world as expressed in legislation, the recommendations of the various commissions and case-law. According to regulation 9(a), the fertilized ovum shall be frozen for a period that does not exceed five years. The commission that examined all the aspects of the issue recommended that after the storage period the ova could be used for research or could be destroyed. It follows that according to their approach, too, the ova do not have a right to ‘life’ that should be protected. In conclusion, for our purposes the fertilized ovum is not at a stage when it should have its ‘life’ protected, since it does not have life in the accepted meaning of this expression (see also Report of the Professional Public Commission for Examining the Issue of In-vitro Fertilization, 1994, at p. 59). There is therefore no basis for recognizing the right of the fertilized ovum as a positive right that imposes a duty on its ‘parents’ to continue the procedure that will lead it to develop into human life, and the State has no interest in protecting its ‘life’ by compelling one of the donors of the genetic material to continue the procedure (it is possible that the fertilized ova will be entitled to protection against genetic manipulations and against trading in them, etc.).

The best interests of the child

35. The Attorney-General also based his position on the principle of the best interests of the child. The need to consider the best interests of the child also arises, in his opinion, from the Regulations that consider, inter alia, problematic situations from the viewpoint of the composition of the family into which the child will be born (regulation 8(b)). According to this argument, the court should not facilitate the birth of a child into a dispute and a one-parent family, when the starting point of the child yet to be born raises so many problems. The factor of the best interests of the child was considered also by the Commission, which recommended that the consent of both spouses should be required for the implanting also for the reason ‘that children being born into a dispute should not be encouraged’ (Report of the Professional Public Commission for Examining the Issue of In-vitro Fertilization, 1994, at p. 36). The best interests of the child as a preferred consideration with regard to the question before us can be seen also in the approach of several European countries such as Germany, Austria, Sweden, Norway and Switzerland, as opposed to approaches that give greater preference to the technical developments and the advancement of these, such as the approach in Spain, England and France (for these approaches, see R. Andorno, ‘Procréation Médicalement Assistée’, Revue Internationale De Droit Comparé (1994), 142, 145).

We are not required to take a principled stand with regard to the question of the weight that should be attributed in general to the best interests of the child for the purpose of making a decision on the variety of questions involved in artificial fertilization in general and in-vitro fertilization in particular. It is sufficient for me to say that in this case I do not think that this aspect has great weight.

Were Ruth Nahmani entitled to have here wishes granted and the procedure were successful, a child would be born to a couple who were married when the child was created, and he would have two parents. According to the finding of the trial judge, on the basis of his impression of Ruth Nahmani, she is a very positive woman who would fulfil her role as a mother in the best possible way. The fact that the child who is yet to be born would grow up with his mother, while his father has a family of his own, is a common phenomenon in Israel. One-parent families are accepted in our society with understanding and are even entitled to various forms of assistance. Unfortunately, there are many children being raised in our society by one of their two parents, whether because of divorce or death or because the family was a one-parent family ab initio. I am not unaware that in all those cases where the separation or death occur after the child is born the starting point of his life is a family unit that appears protected, whereas in our case the starting point begins with a ‘deficit’. Notwithstanding, in view of the reality in our society and the personal details of Ruth Nahmani, I would not attribute weight to the question of the best interests of the child to the point that I would deny her what she wishes for this reason; this, unfortunately, she cannot receive for other reasons set out in this opinion.

Conclusion

36. If I have taken the trouble to consider the problem before us from various starting points and from different legal aspects, this is mainly because I have been mindful throughout of the distress and personal circumstances of Ruth Nahmani; but with every sympathy for her position, we cannot grant her application and force fatherhood on Daniel Nahmani. A person cannot always rely on the court system to help him in times of distress. The relationship between spouses should be based on love, friendship, understanding, support, trust and consideration. Sometimes this relationship collapses, expectations fade, hopes vanish and dreams are shattered. Not in every case can the victim find a remedy for his injuries in court orders, where enforcement is impossible, is improper in view of the circumstances and under the law, and is inconsistent with the basic rights of the individual in our society.

In this respect, the remarks of Vice-President Elon with regard to a similar problem (taking a child from an Israeli couple who wished to adopt her and returning her to her biological parents in Brazil), are apt. In describing the relationship between ‘law and justice, difficulty and pain’ Justice Elon said:

‘The difficulty lies in the pain of loss in the hearts of the respondents. After it became clear to them that they would not bring a child into the world, and after they were told that they would not be placed on the list for adopting a child in Israel, they set all their hopes on what they had been told, that they could adopt a small girl conceived and born in a distant land, in Brazil… It is painful that this has been their fate — the suffering of love, and suffering because of love’ (HCJ 243/88 Gonzales v. Turgeman [29], at pp. 653-654).

For these reasons, I can only recommend to my colleagues to allow the appeal, overturn the judgment of the trial court, and dismiss the claim of Ruth Nahmani, without an order for costs.

 

 

Vice-President A. Barak

I agree.

 

 

Justice D. Levin

I agree.

 

 

Justice I. Zamir

I agree.

 

 

Justice Ts. E. Tal

1.    The couple began jointly and with one mind on the painful path of in-vitro fertilization. Together they struggled against the health authorities to be allowed to have a child through a surrogate mother abroad (HCJ 1237/91).

Subsequently, the husband left the home and established a new family with another woman, who even bore him a child, The wife remained alone, and her only hope was to have a child from her and her husband’s fertilized ova. Therefore she asked Assuta Hospital to give her the ova that were frozen there, in order to continue, on her own, the procedure that they began. The hospital refused because of the husband’s opposition. The wife petitioned the trial court against the hospital and against the husband. The court (Justice H. Ariel) granted her petition and rejected the husband’s opposition. This is the basis for the appeal before us.

2.    The human situation before us lies mostly in the social-moral sphere and only to a small extent in the legal sphere. But society has no tools for making decisions and enforcing them in the moral and social sphere, so it leaves the problem for the court to solve.

I have read the excellent and well-constructed opinion of my colleague, Justice Strasberg-Cohen; in her well-reasoned opinion she suggests that the husband’s appeal should be allowed.

But there is not always only one legal solution. Sometimes different potential solutions compete with one another. This is particularly the case with a painful human problem like the one before us. And where there is such a competition, we should, in my opinion, prefer the solution that appears to be more just.

In our case, by means of the separation that the husband created and his opposition to the wife’s petition, he is trying to extinguish her last spark of hope to be a mother, while he himself has established a new home and has been blessed with a child. If there is a solution that can also give the wife her desire, I think that that is the more just solution, and it should be preferred.

3.    The opinion of Justice Strasberg-Cohen is based — in a nutshell — one two points:

— Fatherhood should not be forced on the husband against his will, since this involves a violation of basic rights.

— A ‘weak’ and essentially unenforceable agreement, an agreement that was made when they lived in harmony and there was no agreement as to what would happen when there was no harmony, should not be enforced against the husband. In such a situation, ‘sitting and doing nothing is preferable’.

In my remarks below, I will try to justify a different approach, which will lead to a different solution.

4.    The right of the husband not to have fatherhood forced on him against his will

It is indeed one of the basic rights, which concerns the protection of human liberty, dignity, privacy and autonomy, to make decisions in the field of family and parenthood. But this right is not absolute, and there are cases where it is overridden by the liberty, dignity, privacy and autonomy of others.

Consider, for example, a person from whom a woman has conceived without his knowledge, as in the Biblical case of Lot, or who was deceived into thinking that the woman was taking effective contraceptive measures, which she did not take. There is no doubt that such a person has a good reason not to have fatherhood forced on him against his will. Nonetheless, his autonomy is overridden by her autonomy and that of her body, his dignity by her dignity, and his privacy by her privacy, and even if, like Job, he will curse the ‘night that gave birth to man’, in the end he will be a father against his will, with all the obligations imposed on a father towards his child, from which none are exempt. This should certainly be the case here, where the husband gave his informed and willing consent to be a father, and only later changed his mind.

One might say that the two cases are different. In the former case the right of the husband is countered by the preferred right not to interfere actively with the body of the wife.

To this we can reply: first, in our case the wife took an additional step and allowed a very serious and painful interference in her body in order to bring about the present position. If we allow the husband to change his mind at this stage, the result is that, from a retrospective viewpoint, the interference in the wife’s body was for nothing, and her dignity and privacy were violated. That is not all. The right of the wife and her desire to be a mother are also basic rights relating to her liberty and dignity, privacy and autonomy, and why should these be secondary to those of the husband? Who has measured parenthood and weighed motherhood? On the contrary, there are indeed reasons why he should be secondary to her, since he changed his mind after a serious violation of her dignity, privacy and body, and ‘anyone who changes his mind has the lower hand’ (Mishnah, Tractate Bava Metzia, 6 1 [52]).

5.    The proper legal policy

My colleague, Justice Strasberg-Cohen, is of the opinion that ‘it would not be proper for the legal system to act to force parenthood on someone who does not want it’.

From the appellant’s viewpoint, we are not concerned with forcing biological parenthood on him. The procedure leading to biological parenthood began willingly. If the court does not intervene — as I indeed propose — the non-intervention will not involve any compulsion. On the contrary, the intervention of the court which leads to the procedure being stopped, is itself biological compulsion, which forces infertility on the wife. Therefore, in a paraphrase of my colleague’s remarks, ‘it would not be proper for the legal system to act to force infertility on someone who does not want it’.

But the crux of the matter is not enforcing parenthood but forcing obligations that derive from fatherhood. In other words, is it proper to allow the biological procedure to continue, when at the end of it, if it is successful, it will impose an emotional burden and financial obligations on the appellant, against his will.

Let us assume that the agreement (by implication and by behaviour) between the spouses is weak and unenforceable and requires renewed consent at every stage — and let us ignore it for a moment as if it had never existed. Does there currently exist any legal norm that can guide us in deciding the said question of enforcing obligations?

Such a norm does not exist, and my colleague’s statement that it would not be proper for the legal system to act to enforce parenthood is in itself the creation of a new norm. We are therefore in the sphere of ‘developing the law’, about which Prof. A. Barak wrote:

‘… In Israel, this activity [of developing law] is regarded as belonging to the judiciary, which acts according to a variety of considerations, some of which are ethical in character and some of which have the nature of legal policy…’ (A. Barak, ‘The Different Kinds of Legal Creation: Interpretation, Filling a Lacuna and Development of the Law’, 39 HaPraklit (1990), 267, 286).

What are the considerations of ethics and legal policy for creating a norm in a situation where the wishes of the husband and the wishes of the wife conflict? On the one hand, we must consider the autonomy of the husband who no longer wants the planned child and also the emotional and financial inconvenience of the husband if the child is born. On the other hand, we must consider the autonomy of the wife, who wants the planned child and her right to be a parent, which is one of the most basic human rights among the existential aspirations of the individual and society as a whole.

In principle, it seems to me that the ethical and the legal-policy considerations tip the scales the other way. For we are not talking of forcing parenthood on a person against his will, as explained above, but of the opposite question, whether we should create a new legal norm that will allow the husband to force infertility on the wife.

The court is obliged to decide between these two evils: ‘forced parenthood’, or more correctly ‘forced obligations of parenthood’, on the one hand, and infertility, also forced, on the other hand. We cannot evade our duty by adopting a policy of ‘sitting and doing nothing’, because both decisions will result in one of these two evils. In the case before us, for the reasons stated above, the norm which does not compel infertility is in my opinion preferable. Moreover, infertility, which is enforced, constitutes the absolute opposite of the most basic and fundamental right of a woman. ‘Forced’ parenthood, on the other hand, imposes emotional burdens and various obligations, which are not to the parent’s liking. In this ‘balance of evils’, the inconvenience of ‘forced’ parenthood is in my opinion insignificant when compared with the absolute denial of the fundamental right to be a parent.

In summary, the husband originally agreed to be the father of the child who would be born to the wife by means of in-vitro fertilization. Now he has changed his mind, but against his right not to continue the procedure that will, possibly, lead to his parenthood, we have the right of the wife which in my opinion is preferable, and his right is set aside in favour of her right.

6.    The contractual aspect

From the contractual aspect, the ‘agreement’ does indeed have the weaknesses that my colleagues listed. It is ‘weak’ and it was made when there was harmony between the spouses, it does not state what will happen if a separation occurs, the agreement is on the borderline between an enforceable and unenforceable agreement, and it has all the other aspects that my colleague attributed to it.

But from the procedural aspect, the trial court was not asked for a remedy of enforcing the agreement. The petition, by means of an originating motion, was directed against the hospital to release the ova and against the husband not to object thereto. In these circumstances, I accept the wife’s argument that the husband is estopped from objecting. When an argument is estopped, we assume that the argument, on its merits, may be a good one. But because of the behaviour of the person making the argument towards the other party, the reliance of the other party on that behaviour and a change in the position of the person so relying as a result, we do not allow the person making the argument to be heard on that argument.

In our case, the wife underwent a serious and painful invasive procedure to her body in order to extract the ova, on the basis of the consent of the husband to fertilize them. When they were fertilized, the wife was deprived of any alternative, such as fertilizing them with the sperm of a ‘donor’. She changed her position irreversibly on the basis of his behaviour. It follows that even if he has good arguments about the unenforceability of the agreement and about the need for renewed consent at every stage on the way to parenthood and all his other arguments, as elucidated so well by my colleague, these may not be heard and we do not allow the husband to make them.

The estoppel we are concerned with is promissory estoppel which was developed in England, and was accepted — in an even wider form — in American law. This estoppel, in recognized circumstances, prevents a person from denying a promise that he gave to another in order that the other would rely on it and act on it, when the other did indeed rely on it and change his position.

The common element in this estoppel and the classic estoppel (estoppel by representation) is the element of reliance. In one case there is a change of position relying on a promise and in the other a change of position relying on a factual representation.

‘From a modern viewpoint it may be said that the two types of estoppel are designed to protect a reliance interest. The common element of reliance provides an ethical basis for the rules concerning the various kinds of estoppel. Indeed, both estoppel by representation and promissory estoppel are based on principles of justice and equity, logic and fairness, and both of these contain elements of proper morality and human relations’ (G. Shalev, ‘Promise, Estoppel and Good Faith’, 16 Mishpatim (1986), 295, 296).

See also M.P. Thomson, ‘From Representation to Expectation: Estoppel as a Cause of Action’, 42 Cambridge L. J. (1983), 257, 277:

‘Equitable estoppel is a rule of fairness by which the courts protect the reliance and expectations of innocent parties from defeat by those who have induced those reliances and expectations.’

Incidentally, it can be said that the modern ‘reliance interest’ was recognized already in Talmudic law. Jewish law holds that someone who gives free advice which turns out to be erroneous is exempt from paying. But if the person asking said to the adviser: ‘See, I am relying on you’, the adviser is liable to pay (Babylonian Talmud, Tractate Bava Kama, 100a [53]. This is also the ruling of Rabbi Yosef Karo, Shulhan Aruch, Hoshen Mishpat, 306, 6 [54]: ‘If a person shows a coin to a dealer and he says it is genuine and it turns out to be counterfeit… he is liable to pay even though it was gratuitous [advice], provided that the person said to the dealer I am relying on you, or there was a statement to the effect that he was relying on his inspection and would not show it to others’.

Whereas in a case of the classic estoppel an element of damage or adversely changing one’s position is required for it to apply, the promissory estoppel is applicable even without this, since it applies, according to Lord Denning, ‘even if there is no damage to the recipient of the promise’ (Shalev, ‘Promise, Estoppel and Good Faith’, 16 Mishpatim (1986), 295, 296). It is universally agreed that it is sufficient that an injustice is suffered by the recipient of the promise (ibid., note 7).

This is not the place to discuss at length the history of this doctrine, and I will satisfy myself with the main points. It began in England, in the opinion of Lord Denning in Central London Property Trust Ltd v. High Trees House Ltd (1947) [37].

Since then this doctrine has become stronger and discarded provisos and restrictions, so that it has become a major and simple rule. Lord Denning, this time as Master of the Rolls, listed many kinds of limitations that formerly restricted the rules of estoppel, such as: it is merely a rule of evidence, estoppel does not create a cause of action, estoppel does not exempt one from the need for consideration, etc.. These limitations were ‘buried’ and the rule was left a simple one:

‘All these can now be seen to merge into one general principle shorn of limitations. When the parties to a transaction proceed on the basis of an underlying assumption — either of fact or of law — whether due to misrepresentation or mistake makes no difference — on which they have conducted the dealings between them — neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands’ (Amalgamated Property Co. v. Texas Bank (1982) [38], at p. 122).

In American law, this rule is expressed in its widest form (Restatement, 2nd, Contracts §90(1)), and it gives the recipient of the promise not only the right of estoppel but also the right of enforcement. In Australia also the High Court has ruled in favour of a recipient of a promise by virtue of promissory estoppel, which served in that case as the cause of action (Walton Stores (Interstate) Ltd. v. Maher (1988) [31]; see also S. Gardner, ‘Equitable Estoppel, Unconscionability and the Enforcement of Promises’, 104 L. Q. Rev. (1988), 362).

In Walton Stores (Interstate) Ltd. v. Maher, the respondent, Maher, erroneously thought that a binding agreement had been made between him and the appellant company, and relying on this he changed his position (he destroyed a building on his land in order to erect a building that would be leased to the company). According to the majority opinion, promissory estoppel applied to this case in Maher’s favour (according to the minority opinion, the classic estoppel applied in this case). Inter alia the court said:

‘In all cases where an equity created by estoppel is raised, the party raising the equity has acted or abstained from acting on an assumption or expectation as to the legal relationship between himself and the party who induced him to adopt the assumption or expectation… Though the party raising the estoppel may be under no mistake as to the facts, he assumes that a particular legal relationship exists or expects that a particular legal relationship will exist between himself and the party who induced the assumption or expectation. The assumption or expectation may involve an error of law. Thus a promissory or a proprietary estoppel may arise when a party, not mistaking any facts, erroneously attributes a binding legal effect to a promise made without consideration’ (Walton Stores (Interstate) Ltd. v. Maher (1988) [31], at pp. 420-421; emphasis supplied).

Similarly, in our case the wife has changed her position, irreversibly, in reliance on the consent of her husband to act jointly with her to bring a child into the world in the way that they began. It is clear that the wife’s reliance was on the husband’s consent to bring a child into the world in the way that they began, and not on his partial consent to the first stage only, with a possibility of changing his mind. If both parties did not think about a possible change of circumstances, this means that they also did not think about stages and changes on the way, but about the final goal. The two parties did not think that the agreement was weak and unenforceable. As in Maher’s case, here too no binding agreement was made, but the wife acted in reliance on what she thought was an agreement ‘to the end’; and the wife changed her position, on the basis of the consent to that final goal.

The essence of estoppel is not the validity or the content of the promise, but the reasonableness of the reliance. When the wife reasonably relied on the husband’s promise, something that the husband should have anticipated — and which he did in fact anticipate — he is estopped even if the exact contents of the promise did not extend to all the circumstances as they turned out. After a reasonable reliance and an irrevocable change in the wife’s situation, the law provides that the extent of the estoppel will be determined in accordance with that reasonable reliance.

The scholars Friedman and Cohen are of the opinion that this principle was absorbed in our law before the Contracts (General Part) Law (D. Friedman & N. Cohen, Contracts, vol. 1, at pp. 531-533). Even ‘today, despite the enactment of the Contracts Law, case-law continues to make use of the doctrine of promissory estoppel, whether independently, or as a part of the principle of good faith…’ (ibid., at p. 533; see also the citations there to the decisions of the Supreme Court).

It seems to me, therefore, that the husband is prevented and estopped from arguing against the wife that he may revoke his consent, even if we are indeed concerned with a ‘weak’ agreement that is, by nature, of doubtful enforceability. We are not dealing with the enforcement of an agreement, but with estopping the husband from objecting to the continuation of the procedure.

It is true that the circumstances have changed, as a result of the separation that has occurred. But the husband is also estopped with regard to this argument, since it is he who has changed the situation. I am not looking to find him ‘guilty’, but someone who effects a change cannot argue that he is entitled to benefit from the change that he himself made, to the detriment of the other party (cf. section 28(a) and (b) of the Contracts Law (General Part); admittedly under sub-section (c) this rule does not apply when that party was free, under the terms of the contract, to act as he did, but the assumption that in the present case the husband was free to change the situation is precisely the assumption we are being asked to make).

7.    Moreover, from the contractual viewpoint, the agreement under discussion is an agreement of behaviour. In the absence of an express agreement, we assume that it did not include an undertaking to continue the procedure even if the spouses would undergo a separation.

This assumption is not necessarily correct. To the same degree we could have assumed that the husband — out of ethical considerations — agreed to fulfil the one and only hope of the wife to become a mother in any situation, even if a separation would occur. This is not a mere speculation. It has strong support in the ‘unwritten terms’ that Jewish law attributes to such a situation. Let me explain.

Jewish law has accepted the doctrine that a husband should not be forced to divorce his wife except in the cases listed in the Mishnah ‘And these are the cases where we compel him to divorce: someone afflicted with boils, etc.’ (Mishnah, Tractate Ketubot, 7, 10 [55]). This is also the rule in Shulhan Aruch (Rabbi Yosef Karo, Shulhan Aruch, Even HaEzer, 154, 1 [43]). But there are also exceptions to this rule. In one of these — where a ‘wife comes with an argument’ that she has been married for ten years and had no children from her husband, and she wishes to be divorced on the grounds that she needs support in her old age and someone who will take care of her funeral arrangements — we compel the husband to divorce her, so that she may marry another, from whom perhaps she may have a child. The Talmud recounts the case of a wife who came to Rabbi Ami and asked to be divorced. He rejected her request and said that a woman is not commanded to be fruitful and multiply. She said to him: ‘In her old age, what will happen to such a woman?’ He said: ‘In such a case, we certainly use enforcement’. Similarly there was a case of a wife who came to Rabbi Nahman and after she argued that she needed a ‘support and someone to bury her’, Rabbi Nahman ruled that in such a case the husband is compelled to divorce her (Babylonian Talmud, Tractate Yevamot, 65b [48]).

However, compelling a divorce in a case where the law does not allow this amounts to an  ‘artificial’ divorce and is invalid. This is stated by Maimonides (Rabbi Moshe ben Maimon, Mishneh Torah, Hilechot Gerushin, 2, 20 [56]):

‘… If the law does not allow him to be compelled to give a divorce and a Jewish court made a mistake or if they were inexpert judges and forced him to divorce her — it is an invalid divorce.’

One might ask the following question: if a ‘wife comes with an argument’ that is not listed in the Mishnah at all and the husband is compelled to divorce her, how do we compel him to divorce her and are unconcerned that the divorce is artificial?

This question was discussed by Rabbi Yitzhak bar Sheshet, one of the most prominent arbiters of the fourteenth century in Spain and Morocco (Rabbi Yitzhak bar Sheshet, Responsa, 127 [57]). He explains that the enforcement applied by the court is not, in fact, for the husband to perform the divorce but for him to fulfil one of his obligations to his wife, such as the duty of marital intercourse. If, however, he is unwilling or unable and he chooses to escape the enforcement by means of divorcing her, this is a divorce of his own free will.

‘And this is like a case of someone to whom money is lent, and he was imprisoned for that debt, and his wife’s relations said to him: if you divorce your wife, we will pay that debt and you will be released from prison. He agrees to this and divorces her willingly. Would anyone say that this is an artificial divorce, because he did it in order to get out of prison? No, since he was not imprisoned in order to divorce her, but on account of his debt, and the divorce is not artificial but voluntary’ (ibid. [57]).

But in a case where he may be compelled to carry out his obligations, such as her maintenance, and she does not want a divorce, we compel him to carry out his obligation to support her.

‘Someone who says that he will not provide food and support is compelled to provide support. And if the court cannot compel him to provide support, such as in a case where he does not have the wherewithal to support her and does not want to work to earn money to support her, if she wishes, he is compelled to divorce her immediately and give her the Ketubah. This is also the law with regard to someone who does not want to have marital intercourse’ (Rabbi Yosef Karo, Shulhan Aruch, Even HaEzer, 154, 3 [43]).

It can therefore be seen that the ‘primary’ enforcement is to carry out the obligation. The enforcement to divorce is merely a ‘secondary’ enforcement.

The secondary enforcement to divorce a ‘wife who comes with an argument’ implies that the husband has the primary duty — above and beyond his obligation under the commandment to be fruitful and multiply — to give a child to his wife if she wishes one, so that she may be able to be supported in her old age and when she dies; and where the primary enforcement to carry out the obligation can be done, he is compelled to carry it out. In summary, the enforcement is to carry out the obligation. And if the performance of the obligation can be achieved by enforcement — such as the obligation to support the wife — he is compelled to perform the obligation. Even an obligation that cannot in practice be achieved by means of enforcement (such as the duty of marital intercourse) is enforced, but if the husband chooses to divorce her with her consent, it is a valid divorce.

This is why I said above that this ‘agreement of behaviour’ between the spouses includes not only a consent to try and bring a child into the world when there is harmony between them, but also an obligation to give her a child to support her, even if they separate.

Admittedly, here the impediment to having a child originates with the wife. Thus it may be argued that in such a case we would not compel a husband to divorce her, since she would not have a child even with a different husband. But after he agreed to enable her to have a child, knowing the true facts, and knowing that the impediment came from her, this consent becomes once again an absolute obligation. It can be proved from the discussion in the Talmud (Babylonian Talmud, Tractate Bava Kama, 108b [53]) that a moral duty that a person undertakes to another becomes a binding legal duty.

In our case we are not concerned with compelling the husband to perform a divorce, since the wife does not want a divorce, but with compelling him to carry out his moral duty to her, and it is similar to a case where we compel him to support her. What is the enforcement here? It is estopping him from objecting to the continuation of the procedure that was begun with consent.

8.    I am not unaware of the responsum of Rabbi Shaul Yisraeli, mentioned in the opinion of my colleague, which concludes that the husband should not be compelled to continue the procedure. The Rabbi considered the matter in detail from the viewpoint of divorce, whereas it is clear that the consent of the husband to the cooperation happened when there was harmony between them and the child that would be born would grow up with both parents in one home. Now that a separation has occurred, it is like being ‘under duress’, and since the circumstances have changed, the husband is entitled to change his mind.

I am not of sufficient stature to disagree with the Rabbi, but even under Jewish law different approaches are possible, and these lead to different solutions. The problem is a new one and was not considered in this form in the responsa of Medieval and Modern scholars. Contemporary scholars are considering this law by means of various analogies, and there are arguments in both directions.

It cannot therefore be said that ‘Jewish law’ has a clear position on this matter.

9.    I will conclude as I began. There are cases where a man has the obligations of fatherhood forced on him, even if he did not agree to this ab initio, and his basic rights are overridden by values and the basic rights of the wife. This is certainly the case where he agreed to fatherhood ab initio, as in the case before us.

Since as a result of his behaviour and his consent — irrespective of any fault — the wife changed her position irrevocably, so that she was deprived of any option of having her ova fertilized by the sperm of a donor, the husband is estopped from opposing the continuation of the process, even if he has arguments that are good in themselves. This is the very essence of estoppel, that it silences good arguments. Arguments that are not good do not need to be estopped.

We can read into the implied agreement that was made by the behaviour of the parties a moral undertaking of the husband to agree to the demand ‘Give me children or else I die’. Such an undertaking, when the wife ‘comes with an argument’, can be enforced by estopping the opposition of the husband.

Since this solution seems to me more just, as it did to Justice Ariel in the trial court, I would suggest that we deny the husband’s appeal.

In all of the above I have not considered the problems relating to such a child, when he is born, from the viewpoint of his family ties in Jewish and civil law. There are many opinions in this regard as to whether the child is deemed the child of the woman who gives birth to him or the child of the genetic mother. And what is the law with regard to marrying the relations of both of these, and the intestacy of both of these and his father’s intestacy (see a synopsis of the opinions on this subject in Dr Avraham Steinberg ed., Encyclopaedia of Jewish Medical Ethics, vol. 2, the entry ‘In-vitro fertilization’, at pp. 115 et seq. [58].

We do not need to consider all these, since the argument of a ‘support for my old age’ does not depend on motherhood in Jewish or civil law, but on the reality of the mother raising the child. If indeed she succeeds in raising her genetic child in her home, this will, in so far as it is possible, fulfil the woman’s yearning and needs.

I am not unaware of the Public Health (In-vitro Fertilization) Regulations, but these regulations are not necessarily an obstacle to the continuation of the procedure, since they do not apply precisely to the case before us (where there is no divorce).

Indeed, the Professional Public Commission for Examining the Issue of In-vitro Fertilization recommended in 1994 that the whole procedure should be carried out only with joint and continuing consent. Certainly this should ideally be the case, as explained in the Commission’s Report and in the opinion of my colleague. When the recommendations of the Commission are incorporated in binding rules, all those who need in-vitro fertilization will know ab initio what to expect. But we are dealing with a special case, post factum. If my approach is correct, the recommendations of the Commission should not be an obstacle for Mrs Nahmani.

I therefore propose that we deny the appeal.

 

 

Appeal allowed by majority opinion, Justice Ts. E. Tal dissenting.

28 Adar II 5755

30 March 1995.

 

Full opinion: 

Income Tax Assessor v. Sadot

Case/docket number: 
CA 2026/92
Date Decided: 
Sunday, May 20, 2001
Decision Type: 
Appellate
Abstract: 

 

Facts: Respondents 2 and 3 were partners in the ‘Sadot’ Partnership.  These two partners established a corporation, Sadot Transportation Company (1982) Ltd., and transferred all the assets and obligations of the partnership to this company, allocating the Company’s shares to the respondents at an identical proportion to their holdings in the original partnership.

These partnership assets included trucks. The dispute between the parties relates to the characterization of the transfer of these trucks from the partnership to the company The respondents presented this transfer as free of gain, while the income tax assessor believes that the transfer of assets from the partnership to the Company is a ‘sale’ according to the definition in section 88 of the Income Tax Ordinance, and that this transfer therefore triggered a capital gains tax.

 

Held: The majority opinion was written by Justice Englard.  The key question in this case relates to the essence of the transfer of an interest in a partnership in the eyes of the Tax Authority.  Specifically the question arose as to whether it was possible to transfer an overall share of a partnership, or rather, whether only individual assets be transferred.  The Court accepted the view of the court of first instance that for purposes of taxation the transfer of the partnership business from the partners to the corporation was to be seen as a transfer of the interest of each partner in the partnership and not as the transfer of each and every asset separately.  The appeal was therefore denied.

 

Voting Justices: 
Primary Author
majority opinion
Author
concurrence
majority opinion
Author
dissent
Author
dissent
Full text of the opinion: 

CA 2026/92

 

1.   Income Tax Assessor Petah Tikvah

v.

1.   Sadot Transportation Corporation (1982) Ltd.

2.   David Brandeis

3.   Haj Yihyeh Abed El Jabar

 

The Supreme Court Sitting as the Court of Civil Appeals

[May 20th, 2001]

Before President A. Barak, Vice President S. Levin, Justices T. Or, T. Strassberg-Cohen, I. Englard.

Appeal on the Judgment of the Tel-Aviv District Court (Justice Pilpel) on March 4, 1992 in CC 98/98, 88/98, 83/89.

 

Facts: Respondents 2 and 3 were partners in the ‘Sadot’ Partnership.  These two partners established a corporation, Sadot Transportation Company (1982) Ltd., and transferred all the assets and obligations of the partnership to this company, allocating the Company’s shares to the respondents at an identical proportion to their holdings in the original partnership.

These partnership assets included trucks. The dispute between the parties relates to the characterization of the transfer of these trucks from the partnership to the company The respondents presented this transfer as free of gain, while the income tax assessor believes that the transfer of assets from the partnership to the Company is a ‘sale’ according to the definition in section 88 of the Income Tax Ordinance, and that this transfer therefore triggered a capital gains tax.

 

Held: The majority opinion was written by Justice Englard.  The key question in this case relates to the essence of the transfer of an interest in a partnership in the eyes of the Tax Authority.  Specifically the question arose as to whether it was possible to transfer an overall share of a partnership, or rather, whether only individual assets be transferred.  The Court accepted the view of the court of first instance that for purposes of taxation the transfer of the partnership business from the partners to the corporation was to be seen as a transfer of the interest of each partner in the partnership and not as the transfer of each and every asset separately.  The appeal was therefore denied.

Vice President S. Levin wrote a separate opinion supporting the majority conclusion.

Justice Strassberg-Cohen joined the opinions of Justice Englard and Vice President Levin.

Justice Or joined by President Barak wrote a dissenting opinion.

 

For petitioners – Yehuda Livlein; Leah Margalit.

For respondent – Giora Amir.

Legislation:

Income Tax Ordinance [New Version].

Property Betterment Tax Law  5723-1963.

Law for Encouragement of Industry (Taxes) 5729-1969  .

Partnership Ordinance [New Version] 5735-1975 ss. 1(a), 2, 20, 20(b), 31, 34(1), 66(a).

Corporations Law 5759-1999 s. 4.

Law of Adjustments for Inflation.

Capital Gains Law 

 

Israeli cases cited:

[1]        CA 289/66 Kirshenberg v. Income Tax Assessor Gush Dan, Padim A 58.

[2]        CA 441/88 Yarchi v. Goldberg IsrSC 43(4) 378.

[3]        CA 583/88 Barnea v. Arkia Israeli Airlines Ltd. and others, IsrSC 45(5) 670.

[4]        CA 306/88 Felsenstein and others v. Income Tax Assessor, Haifa IsrSC 45(3) 542.

[5]        CA 896/90 Income Tax Assessor Haifa v. Halevi IsrSC 49(1) 865.

[6]        CA 3574/92 Income Tax Assessor Gush Dan v. Pereg IsrSC 50(3) 690.

[7]        CA 536/88 Etz Levod v. Income Tax Assessor for Large Plants, IsrSC 46(4) 738.

[8]        CA 425/79 Angel Ltd. v. Income Tax Assessor, Income Tax, Jerusalem, IsrSC 36(3) 829.

[9]        CA 20/63 Ben-Zvi v. Income Tax Assessor, Bet-Hadar, Tel-Aviv-Yaffo 1, IsrSC 17 1963.

[10]     CA 82/60 Poychtunger v. Income Tax Assessor, Tel-Aviv 4 (Central) IsrSC 14 1366.

[11]     CA 477/71 Shtetner v. Income Tax Assessor, Haifa, IsrSC 26(2) 513.

[12]     CA 231/58 Income Tax Assessor, Rehovot v. Amos Bohanik, IsrSC 13(3) 1948.

 

Israeli District Court cases cited:

[13]     ITAp 367/70 Shternzis v. Income Tax Assessor Tel-Aviv, Pada C 327.

[14]     ITAp 118/90 Lev Hagalil Partnership v. Income Tax Assessor, Tiberias Pada 20 122.

 

American cases cited:

[15]     Commissioner of Internal Revenue v. Shapiro, 125 F.2d 532 (1942).

[16]     United States v. Shapiro, 178 F.2d 459 (1949).

[17]     Thornley v. Commissioners of Internal Revenue, 147 F.2d 416 (1945).

[18]     Hatch’s Estate v. Commissioner of Internal Revenue, 198 F.2d 26 (1952).

[19]     Williams v. McGowan, 152 F.2d 570 (1945).

[20]     Meyer v. U.S., 213 F.2d 278 (1954).

[21]     C.I.R: v. Smith, 173 F.2d 470 (1949).

[22]     Long v. C.I.R., 173 F.2d 471 (1949).

[23]     Helvering v. Smith, 90 F2d 590 (1937).

 

Israeli books cited:

[24]     G. Procaccia, the Corporation, Its Essence and Creation [1965].

[25]     A. Raphael, D. Ephrati Income Tax Laws (volume 2, 1986). 

[26]     S. Bornstein, Taxation in Corporate Dissolution (1987).

 

Israeli articles cited:

[27]     Y. Ne’eman ‘Method of Calculation of Capital Gains in the Sale of the Interests of a Partner in a Partnership’ Roeh Heshbon 21 (1971-1972) 195.

[28]     A. Alter ‘The Separate Legal personality of a Partnership of the Purposes of Tax Law in Israel’ Roeh Heshbon 34 (1986) 336.

[29]     Y. M. Edri and Y. Eden ‘On the Problem of the Excess Tax Liability, Statutory Veil and the Taxation of a Partnership, a Cooperative Agricultural Association, a House-Corporation, and a Family Corporation in the Income Tax Ordinance’ Iyunei Mishpat 13 (1988) 307.

[30]     D. Glicksberg ‘Averaging Property Betterment and Spread of Capital Gains’ Mishpatim 21 (1992) 371.

[31]     M. Kaputa, ‘Tax Planning in the Context of Partnerships and International Joint Transactions.’ Misim 13/1 (1999) A 64.

[32]     A. Yoran (Yorakvitz) ‘Tax Planning in Incorporation of a Partnership as a Corporation’, Roeh Hachesbon 22 (1972) 163.

[33]     Z. Sharon ‘Assets that are not Transferable according to Section 104 of the Ordinance’, Misim 8/5 (1994) A 34.

 

Foreign books cited:

[34]     H. Kelsen Introduction to the Problems of Legal Theory (Wien, 1934, transl. of 1st ed., by B. Litschewski Paulson, S.L. Paulson, Oxford, 1992); H. Kelsen Reine Rechtslehre (Wien, 2 Aufl., 1960).

[35]     H.E. Abrams, R.L. Doernberg Essentials of United States Taxation
(The Hague, 1999).

[36]     B.I. Bittker Federal Taxation of Income, Estates and Gifts (Boston, New York, vol. III, 1981).

[37]     Mertens Law of Fed Income Tax (vol. IX).

[38]     R.E. Beam, S.N. Laiken Introduction to Federal Income Taxation in Canada (Don Mills, 9th ed., 1988-89).

[39]     Canadian Master Tax Guide (44th ed., 1989).

[40]     Simon’s Direct Tax Service (London, 1995).

[41]     J. Waincymer Australian Income Tax – Principles and Policy (Sydney, 1991).

[42]     R.L. Deutsch and Others Australian Tax Handbook 1996 (Sydney, 1996).

[43]     A.S. Silke On South African Income Tax (Durban, memorial ed., by
A. De Koker, vol. II, 1995).

 

Foreign articles cited:

[44]     E.J. Schnee ‘The Future of Partnership Taxation’ 50 Wash. & Lee L. Rev. (1993) 517.

 

 

JUDGMENT

Justice I. Englard

This appeal raises a fundamental problem in the complex area of partnership taxation.  The problem relates to the essence of a partnership and its ramifications on the taxation of the partnership in the case of the transfer of assets out of the partnership.  In this case all the assets of the partnership were transferred to a company that was set up by the partners. 

1.    These are the relevant facts: Respondents 2 and 3 were partners in the ‘Sadot’ Partnership whereby the former’s share in the partnership was 60% and the latter’s share was 40%.  It should be noted that it was not clarified fully whether the partnership was registered or not.  The two partners established a corporation, Sadot Transportation Company (1982) Ltd. (hereinafter: ‘the Company’) and transferred all the assets and obligations of the partnership to it.  The company was registered and incorporated on May 26, 1982 and began operating on July 1, 1982.  The Company’s shares were allocated to the respondents, such that they are shareholders in the Company at an identical proportion to their holdings in the original partnership.  The respondents also serve as the Company’s directors. 

2.    The partnership assets, as is apparent from its balance statement, were made up of fixed assets (which included trucks, a van, communication equipment, and inventory) and current assets (which included various customers and debtors).  The liabilities of the partnership included long term liabilities and current liabilities.  In the Company’s books the closing balances of the partnership balance statement as of June 30, 1982 were recorded as the opening balances of the Company as of July 1, 1982.

3.    The dispute between the parties relates to the obligation of the partners, respondents 2 and 3, due to capital gains they realized, according to the appellant, from the transfer of the trucks from the partnership to the Company.  The respondents presented this transfer as free of gain, since the value of the trucks in the opening balance of the Company is the same as their value in the closing balance of the partnership.  This value represents the cost of the ‘depreciated value’ of the trucks – meaning the original cost that was paid by the partnership less the permitted rates of depreciation, or in the language of the Income Tax Ordinance [New Version]: the balance from the original cost.  According to the respondents’ claim, absent a difference between the two values, no capital gain is to be attributed to them.  The income tax assessor thinks otherwise: in his opinion the transfer of assets from the partnership to the Company is a ‘sale’ according to the definition in section 88 of the Income Tax Ordinance.  If it is a sale, then the amount of consideration that was given to the partnership (‘the seller’) by the Company (‘the buyer’) is to be determined by the market prices of the trucks on the day of transfer.  Indeed, the income tax assessor determined the cost of the transfer by the insurance appraisal of the trucks and with the agreement of an accountant.  As the market price determined in this manner is greater than the depreciated cost, the income tax assessor imposed a capital gains tax on the partners for the difference.  A change in the price of the trucks also influenced the Company’s appraisal in that it was charged the differences in income which stem from increasing the sums of the protected/fixed assets and increasing the depreciation addition and the depreciation deduction.

4.    The respondents objected to these appraisals, and after their objections were dismissed they filed an appeal to the District Court.  Their appeal was granted by Justice A. Pilpel and from there the appeal of the income tax assessor comes before us.  The respondents appeal in the lower court relied on two central points; one: transfer of the trucks from the partnership to the Company does not constitute a ‘sale’ as defined in section 88 of the Income Tax Ordinance, and therefore the provision of section 89 of the Ordinance which imposes income tax on capital gain does not apply.  This argument relied on the fact that registration of the ownership of the trucks was not transferred to the Company’s name, and that the owners of the trucks (the original partners) are the same as the shareholders in the Company.  It is found – the claim is made – that there was no transfer or real ‘sale’ as the identity of those with control of the trucks has not changed.  The respondents explained that they avoided transferring ownership of the trucks to the Company because such a transfer would create an additional ‘hand’ in the chain of owners, which would lower their market value by at least 20%.

5.    The other point the respondents relied on in their appeal in the lower court was that in contrast to the approach of the Income Tax Assessor the transfer of all the assets and liabilities of the partnership to the Company is not to be viewed as the transfer of each asset individually.  The ‘asset’ which is sold to the Company – if in fact we are dealing with a sale – is the total share of the partner in the assets of the partnership and not each item separately.  Therefore, it is not proper to see the price differences of the trucks as the capital gain of individual assets that were transferred by the partners.  The asset which each one of the partners transferred is not his share in the trucks, but his overall share in the partnership, including its assets and liabilities.  Consequently, the capital gain is to be calculated as to the overall share in the partnership and not as to the individual items in the assets of the partnership.  Meaning, according to their claim, the partners transferred to the Company their non-specific interests in the assets of the partnership, which are directly impacted by the rights and obligations of the partnership to third parties and not just by the ownership of the trucks.  The difference between the two approaches has significant ramifications as to the scope of the tax liability of each partner, as according to the approach of the Income Tax Assessor, the gain from selling the tangible assets of the partnership will be taxed without taking into account its ongoing liabilities and its long term liabilities, which, no doubt, impact the value of the overall share of each partner in the partnership.  Relying on the judgment in the case of CA 289/66 Kirshenberg v. Income Tax Assessor Gush Dan [1] at p. 61, the respondents claimed that just as the transfer of shares in a company and the gain which stems from this is not to be equated with the transfer of lots that were the inventory of the company’s business, so too the interests of the respondents in the partnership is not to be equated with the transfer of each truck or any other asset to the Company.

6.    The lower court dismissed the claim which denied the existence of a ‘sale’ as that term is defined in section 88 of the Income Tax Ordinance.  The court decided that in light of the broad definition of the term that includes ‘. . .  any other activity or event consequent to which an asset leaves a person’s possession and all this whether directly or indirectly. . .’ it is appropriate based on the law to determine that in the transfer of all the partnership’s assets to the Company, including said trucks which it operated, a sale transaction took place according to the meaning of this term in section 88 of the Ordinance.

7.    On the other hand, the court accepted the respondents’ second claim, in determining that ‘the asset’ which was sold to the Company is the overall share of each partner in the partnership assets and not each item from these assets individually.  In doing so the court relied on the article of Y. Ne’eman ‘Method of Calculation of Capital Gains in the Sale of the Interests of a Partner in a Partnership’ (Roeh Heshbon 4 (205) January 1971, p. 195) in which the author critiques the decision of Justice S. Asher in ITAp 367/70 Shternzis v. Income Tax Assessor Tel-Aviv [13].  In the aforementioned case the partner sold his share in a cafeteria business.  The judge raised the possibility that in fact no asset was sold as follows.

In this case the subject of the sale is half of the business which belongs, ostensibly, to the partnership and it could be argued that no asset has been sold here – as the partnership is the owner of the various assets which make up the business and it has not sold anything.  But, in fact, the representatives of both parties related to the appellant’s sale as the sale of the various assets included in the business – apparently out of the assumption that the partnership was not registered and the partners are the owners of the property; there is also support for this approach in the contract of sale N/1.  Clause 2 of said contract states that the appellant is selling to the buyer – ‘all his interests in the business rental, the reputation, the equipment, and the merchandise’ – meaning he is selling his half in these defined assets as stated, and the consideration paid to him is in consideration of these assets; I will relate therefore to the appellant’s sale as though it was the sale of assets as defined in said section 88.

8.    The quoted section it arises that Justice Asher did not consider the idea of sale of an overall share in the partnership but rather raised the possibility that it this transaction is not at all a matter of sale of an asset.  This approach is the basis for Y. Ne’eman’s critique, in which he holds that the sale of an interest of a partner is to be regarded as the sale of a capital ‘asset’ on which tax is owed according to the Income Tax Ordinance.  The lower court adopted, as said, the opinion of Y. Ne’eman and determined that the share of the partner in the partnership is to be viewed as an ‘asset’ ‘as he is the owner of an ‘interest . . .  eligible or presumed’ in the partnership as a legal personality separate from the partners themselves.’  The Court distinguished the Shternzis case, by explaining that in contrast to what was stated in that judgment ‘in fact in the case before us it is entirely clear that the sale from the partnership to the Company is not the sale of defined separate assets but the transfer of the partnership assets to the Company.’  It is to be noted that it is difficult to accept this distinction as it is clear that in the Shternzis case the partner sold his entire half in the partnership business.  Because the contract of sale here establishes that each partner is selling to the buyer ‘all his interests in the business rental, the reputation, the equipment, and the merchandise’ it is not to be understood that he is selling his half in defined individual assets, where the sale of each and every asset constitutes a separate sale.  As said, the contrast between the sale of a share of a partnership and the sale of a share of each of the partners’ assets was not considered at all by Justice Asher.

9.    Be that as it may, the approach of the lower court is that for the purpose of calculating capital gains tax, the sale of a partner’s share in a partnership is to be seen as the sale of an overall share and not as a separate sale of each and every asset separately.  Y. Ne’eman, in his article, bases his approach regarding the transfer of an overall share in the partnership on the fact that the partnership is a separate legal personality.  The author notes that the Shternzis case dealt with an unregistered partnership.  However, he was of the opinion, relying on the view of G. Procaccia, The Corporation, Its Essence and Creation (1965) 190, that even the unregistered partnership is a legal personality in Israeli law.   Y. Ne’eman’s conclusion is that ‘by force of the separate nature of the legal personality of the partnership, the assets are to be regarded as held by the partnership and not by those holding the interests in it.’   The lower court here touched upon the question of the legal personality of the partnership under consideration before it.  It did not find evidence in the testimony and the documents for the respondents’ claim that the ‘Sadot’ partnership was registered.  But the court added:

I am of the opinion, however, that even if we treat the partnership as an unregistered partnership – that would not change the situation.  It appears to me that the determining variable in this matter is the fact that in fact the totality of interests and liabilities in the partnership, and not separate assets that served them in the partnership business, were transferred here from the partnership to the company that was set up by the partners (and their holdings in it are identical to their share of the partnership).  Therefore, it appears to me that by law the tax assessment on the capital gains – to the extent that it was created as a result of this transfer according to the provisions of the Ordinance, is to be determined based on ‘the consideration’ and the ‘balance of the original price’ (as these terms are defined in section 88 of the Ordinance) of the overall share of the partner in the partnership that was transferred to the Company, and not of each item separately.

10.  Based on the lower court’s opinion it is not entirely clear if the Court was of the opinion that an unregistered partnership constitutes a legal personality – as is the view of G. Procaccia – or rather whether it was of the opinion that there is no importance to the essence of the partnership as a legal personality for the purpose of the decision as to the calculation of the capital gain in the case of a sale of a share of the partnership by a partner.  The appellant claims before us in this context that absent evidence on the part of the respondents that the ‘Sadot’ partnership is a registered partnership, this matter is no longer in dispute.  Therefore, according to his approach, in terms of the general law ‘Sadot’ is not a legal personality.  It is to be emphasized, however, that the two parties are not hanging their fate on the registration of the ‘Sadot’ partnership; the appellant focuses on the claim that for the purposes of the Income Tax Ordinance, in any case, a statutory lifting of the veil of the legal personality of the partnership takes places, and the tax laws apply to the individuals in partnership.  The respondents, for their part, emphasize the independent economic existence of any partnership, not necessarily of a registered partnership.

11.   At the conclusion of its judgment the lower court dismisses one of the claims of the Income Tax Assessor, according to which the second legal argument for the appeal was raised by the respondents only at the summations stage.  The court dismisses this claim with the rationale that such a formal claim is not sufficient to impact the results of the discussion, but is relevant only to the question of costs.  The practical conclusion of the court is that the appeal is to be granted and the discussion is to be sent back to the objection phase in order to give the Income Tax Assessor the opportunity to look into the question of the capital gains that were obtained by the transfer of the overall share of each partner in the partnership.

12.  In the appeal before us the Income Tax Assessor broadens the scope to both the substantive problems of the sale of assets by a partner as well as to the formal rationale of ‘change of direction’.  In contrast, the respondents repeat their rationales, with an emphasis on the concept of sale of a share in a partnership, as opposed to selling a part in each and every asset separately.  The claim that under the circumstances the transfer of a share in the partnership is not to be considered a ‘sale’ in the sense of section 88 of the Income Tax Ordinance is now barely heard.

13.  I will say at the outset that the formal claim of ‘change of direction’ is not to be accepted.  The respondents in this case already raised the issue of the sale of an interest in a partnership in their summations both orally and in writing before the District Court.  The appellant, for its part, responded broadly to the substance of the claim in its written summations in the lower court, even though there was nothing to prevent raising the formal claim at the final stage of the appeal.  Against this background, the complaint of ‘change of fronts’ is not to be heard.  As was said by this Court in the case of CA 441/88 Yarchi v. Goldberg [3] at 384 (in the words of Justice Maltz):

‘… at times the parties amend the pleadings silently, by handling the case along different tracks than those established in the pleadings, and if they do so, the claim will not be heard later – and certainly not at the appeals phase – that the court was not to have deviated from the case route as marked in the pleadings.’

Moreover, I will add that it is possible to find the kernel of the substantive claim as to the sale of an interest in a partnership already in the rationales of the appeal to the lower court.  Indeed, the respondents noted there that ‘the Company received the liabilities and assets of the partnership’.  Therefore, the lower court was correct in dismissing the mentioned formal claim of the appellant.

14.  The respondents’ other claim, that the transfer of the partnership assets does not constitute a ‘sale’ in the sense of the provision of section 88 of the Income Tax Ordinance, meets a similar fate.  The lower court was correct in determining that the assets of the partnership left its possession and the possession of the partners when they were transferred, from a business perspective, to the hands of the Company.  These assets now appear on the Company’s balance sheet, and even if the ownership is still registered in the name of the (former) partners, nonetheless at this point they are being used by the Company.  Beginning with the 1983 tax year the Company had been deducting depreciation of the trucks adjusted on the basis of the historical purchase prices.  It is to be noted that the event that constitutes the subject of this case, the transfer of an asset that is in the ownership of a partnership to a company that is established expressly for the purpose of this transfer, is now regulated in the provision of section 104B of the Income Tax Ordinance.  This provision replaced the prior provision in section 95 of the Income Tax Ordinance that also dealt with the sale of an asset from a number of a people to a company in exchange for shares in that company.  This arrangement of deferral of the tax until the sale of the transferred asset by the company to which it is transferred shows that an event such as the one discussed here is a tax event.  Otherwise there would be no need to establish a tax deferral arrangement.  It follows that transfer of an asset owned by a partnership to a company that does not fulfill the conditions detailed in the arrangement constitutes a sale and establishes an obligation in the framework of capital gains tax.  This also shows that the lower court was correct in dismissing this claim of the respondents.

15.  This brings me to the crux of the legal problem in this appeal, which is: the essence of the transfer of an interest in a partnership in the eyes of the Tax Authority.  More specifically: is it possible to transfer an overall share of a partnership, or is it only possible to transfer individual assets?  The solution to this problem is disputed both among the various legal systems and among scholars.  Y. Ne’eman in his aforementioned article already noted the existence of differences of approaches between the English legal system and the law in the United States.  There is therefore no escape from looking into this matter and making a determination in the aforementioned substantive issue.

16.  Some of the scholars base the entirety of the problem on the essence of the partnership as a legal personality.  Thus, for example, we have seen that Y. Ne’eman in the aforementioned article provides the rationale for his approach that selling the interest of a partner is considered the sale of a capital asset, in that according to Israeli law every partnership – even one that is not registered – is a legal personality that is separate from the partners that make it up.  The truth is that the question whether an unregistered partnership is a legal personality, meaning a corporation, has yet to be settled in our system.  As this Court pronounces on the matter in CA 583/88 Barnea v. Arkia Israeli Airlines Ltd. and others [4] at pp. 683-684 in the words of President M. Shamgar:

‘The question of whether an unregistered partnership is a legal personality separate from the partners who make it up is a complex question, to which there is no clear resolution in the case law of this Court. . . 

There is also a difference of opinion among scholars as to this question. . .’

See ibid as to the various sources in case law and literature which were brought by the Court.  As it turns out, we do not know whether the partnership before us was registered or not.  My opinion concurs with that of the lower court that the question of whether a partnership is in principle considered a legal personality does not add or detract from the matter before us. 

17.  As Hans Kelsen has shown in his book on pure legal theory, the concept of legal personality is no more than a construct of legal theory and does not have social substance.  It is a helpful concept which describes a set of rights and duties that relate to the behavior of a number of people who strive to reach a joint aim.  The concept is a metaphor of personification that serves as a description of a very intricate system of norms that are beyond the scope of the present analysis.  [H. Kelsen, Reine Rechtslehre (2. Aufl. Wien 1960) 172-195. And see the core of the idea already in the first edition of the book in the English translation. H. Kelsen, Introduction to the Problems of: Legal Theory (transl. B. Litchevski Paulson & S.L. Paulson, Oxford 1992) 46-53].  However, it is not necessary for the term to be exclusive to a system with a fixed normative content.  Some see a legal personality in a group of people which is solely defined by the fact that they are entitled to file a suit in its name; some demand that it must be able to own property; and some demand that the property be considered absolutely separate from the property of the members who make it up in the case of insolvency (meaning the idea of limited liability).  It is found that the concepts ‘legal personality’ and ‘corporation’ do not compel normative conclusions upon us, but rather they are heuristic legal concepts that serve jurisprudence by describing a normative reality that precedes it.  Against this background the idea of ‘lifting the veil’ also has to be understood as no more than a parallel metaphor which describes the reduction of the idea of personification regarding the normative system titled ‘corporation’ or ‘legal personality.’  The combination of corporation and lifting of the veil is nothing other than an external description of the set of rights and duties which relate to certain people.

18.  Therefore, the question is not if the partnership is a legal personality in terms of jurisprudence – be the tests for that what they may be – but rather if from a normative perspective there exist provisions which relate to the partnership as a separate unit for income tax purposes.  Meaning, in our matter determinative weight is not accorded to the question of whether there exist procedural provisions which allow the partnership to sue in its name, or provisions which enable it to register property in its name, or provisions which limit the right of certain debtors in that they are permitted to access only property considered to belong to the partnership.  The substantive question here is as follows: what is the fate of the partnership for tax purposes?  Is the partnership business a separate business or perhaps is it considered the business of each and every partner?  In other words, in the eyes of the tax law the partnership business may be considered the business of each partner even if according to legal theory the partnership reaches – due to the existence of certain provisions – to the level of a corporation, and vice-versa.

19.  Is the partnership a separate business for taxation purposes?  The starting point for providing an answer is found in the provisions of the tax law, and in our matter, in the provisions of the Income Tax Ordinance.  It is to be noted that it is not necessary that the answer be uniform in the framework of the totality of the tax laws.  Quite the opposite, frequently the tax laws – not just ours but those of other countries as well – create an arrangement that is not methodical as to the essence of certain entities: some provisions will consider a certain entity as a separate business and some provisions will identify this entity with the persons that make it up (a process which as to legal entities is called ‘lifting of the veil’).  A striking example of such hybrids is the family corporation as regulated in the Income Tax Ordinance.  See section 64a of the Income Tax Ordinance, as to which this court established in the case of CA 306/88 Felsenstein and others v. Income Tax Assessor, Haifa [5] at p. 547[c] (in the words of the President M. Shamgar):  ‘It is a matter therefore of a corporation that is taxed as an individual.   This heterogeneity raises a string of questions in tax matters, whose common denominator is in the choosing of the laws that apply – the law of the individual or the law of the corporation.’  (See further in this context CA 896/90 Income Tax Assessor Haifa v. Halevi [6]; CA 3574/92 Income Tax Assessor Gush Dan v. Pereg [7]).

20.  A central provision as to the partnership is found in section 63 of the Income Tax Ordinance.  Section 63(a)(1) of the Ordinance establishes in the following language.

Where it has been proven to the satisfaction of the Income Tax Assessor that two or more people are engaged together in a certain business or certain occupation – the share each partner is entitled to in the tax year from the partnership incomes – and it will be determined in accordance with the provisions of this Ordinance – will be viewed as the income of that partner, and it shall be included in the report of his income which he must submit according to the provisions of this Ordinance.

From this provision the principle arises that for income tax purposes the taxpayer is the individual partner and not the partnership as a separate business.  It is found that we have before us a general provision of ‘lifting of the veil’, which disregards the independent existence of the partnership business.

21.  However, in contrast to this provision, there is a string of other provisions in the Income Tax Ordinance, which perceive of the partnership, explicitly or implicitly, as a separate business unit.  First, in section 63(a)(2) of the Ordinance establishes that the chief partner must prepare and submit, at the request of the Income Tax Assessor, a report of the partnership’s income.  It is found, that at least from an accounting standpoint, the partnership is considered a separate business.  From sections 63(b), 131(a)(5) combined with 131(c) and (d), and 224-A of the Ordinance it can be inferred, apparently, that the partnership is ‘an association of persons’ in the sense of section 1 of the Ordinance.  Most of these provisions exclude the partnership, for certain taxation purposes, from the rules which apply to an association of persons.  Some sought to learn from these exceptions that all the rest of the provisions which relate to an association of persons – meaning to the concept which signifies a separate business – also apply to a partnership.  (In this vein see, A. Alter ‘The Separate Legal personality of a Partnership for the Purpose of Tax Laws in Israel’ [28] at p. 340; compare also Y. M. Edri and Y. Eden ‘On the Problem of the Excess Tax Liability, Statutory Veil and the Taxation of a Partnership, a Cooperative Agricultural Association, a House-Corporation, and a Family Corporation in the Income Tax Ordinance’ [29] at p. 315; see, on the other hand, a different opinion offered by A. Raphael and D. Ephrati, Income Tax Laws, Volume 2 [25] 299-300.)  It should further be noted that the definition of the term ‘association’ in section 1 of the Property Betterment Tax Law  5763-1963 – also includes a registered partnership.

22.  It is no wonder that the bifurcated status of the partnership raises and continues to raise many problems regarding its taxation.  From the short and general provisions on the topic of partnership taxation it is difficult to attribute to the legislator a general and consistent approach as to the various aspect of partnership taxation.  The case law, by nature, has dealt with specific questions, thus, in the case of CA 536/88 Etz Levod v. Income Tax Assessor for Large Plants [7] (hereinafter: ‘the Etz Levod Case’), the problem arose surrounding section 19 of the Ordinance, which places limitations on the deduction of interest expenses of a taxpayer with preferred loans.  In that case, the partnership borrowed money and paid interest for these loans.  The taxpayer, a partner in that partnership, had preferred loans, as they are defined in section 19 of the Ordinance.  The dispute surrounded the question of whether the preferred loans that the partner had were to also be adjusted as to interest expenses and rate differences that were expended by the partnership because of the loans.  The position of the tax authorities was that according to section 63 of the Ordinance, income and expenses of the partnership, including loans it took out, are income, expenses and loans of the partners according to the proportion of their share in the right to profits.  Therefore, the partner must, according to sections 63 and 19 of the Ordinance, conduct the necessary adjustment also as to interest and rate difference expenses that he spent via the partnership.  The position of the taxpayer was that it was not proper to adjust the preferred loans that he held.  He explained this as being in accordance with the language of section 63(a)(1) of the Ordinance, under which the ‘partnership income’ is to be worked out ‘according to the provisions of this ordinance.’  He took this to mean that one is to calculate the taxable income of the partnership in accordance with rules as to deductions, off-sets and exemptions in the Ordinance and attribute to each partner as per his share only the result which is reached in the bottom line, meaning profits or losses.

23.  President M. Shamgar accepted the position of the tax authorities, relying on the provisions of section 63 of the Ordinance, and stated as follows (at p. 742):

The broad topic of partnership taxation is not laid out before us as such.  Our topic in this case is in a narrower sector, and it is the permitting of interest expenses, which the partnership expended for a loan that it took out during the course of running its business.  This court has dealt in the past more than once with examining various legal topics that arose incidentally to taxation of economic and business activity undertaken via a partnership.  According to the rules which were delineated, be the status of the partnership what it may be according to the provision of the general law, the provision of section 63 of the Ordinance is to be viewed as a specific provision for income tax purposes, according to which the partnership is not a taxpayer and does not carry an independent income tax liability.

Incomes from a partnership are the direct income of the partners.  It follows that the incomes of the partners are to be viewed as stemming directly from their original source, without the independent legal personality of the partnership interjecting between this source and the eligible partner. (CA 425/79 Angel Ltd. v. Income Tax Assessor, Income Tax, Jerusalem [9] at p. 835).

This means that the partnership incomes are not to be discussed as a separate concept from the incomes of the partners.  Tax liability is imposed on the partners directly for the share of each of them in the income of the partnership.  In this sense ‘one is not to separate between the involvement of a person in an individual manner and the involvement of that person (in that business) as a partner. . .’

(CA 20/63 Ben-Zvi v. Income Tax Assessor, Bet-Hadar, Tel-Aviv-Yaffo 1, [10] at p. 1968).

As we have seen, section 63(a)(1) of the Ordinance contains two operative provisions: first that the share that each partner is entitled to from the partnership income is to be regarded as the income of that partner.  The position of the Court, as brought supra, relies on this provision, in which the statutory source for attributing the income of the partnership to the partner for the purpose of the latter’s tax liability is contained.  According to the second provision in this section, the partnership income is to be clarified in accordance with the provisions of ‘this Ordinance’ (and see also section 63(a)(2)).  This latter provision is in apparent contradiction with the automatic attribution of the partnership income to the partners as it does not elucidate the nature of this required ‘clarification’ regarding the partnership income.  The appellant is of the view that this clarification is none other than clarification of the taxable income of the partnership, which is to take place at the level of the partnership, and only after that assessment is the final result reached to be attributed to the lone partner.  The appellant’s position therefore places the central interpretive weight on the clarification of the income at the partnership level.  However, this approach was not adopted in the case law which dealt with the topic.  The Court regarded the principle that was established as to attribution of the partnership income to the partners the central arrangement of the article, while the provision as to clarification of the partnership income was interpreted as establishing a ‘mechanistic stage in order to reach the income of the partner from the partnership. . .’ (CA 82/60 Poychtunger v. Income Tax Assessor, Tel-Aviv 4 (Central) [11] at p. 1368).  The basic point here is that the incomes of the partnership are directly attributed to each and every partner according to their share.  The term ‘partnership income’ as such does not have ramifications in terms of the income tax laws, but only as an accounting tool for clarifying the income of the partner, who is the final taxpayer according to the Ordinance’s provisions.  The same is the law as to the deduction of expenses, which is the question before us.

In the continuation, President Shamgar states (at p. 744):

The rule is that examining the entitlement to deduct expenses is done only as to the income of the partner, that is the ‘taxable’ income, and therefore the expenses borne by the partnership will be examined, for purposes of allowing them, as though they were expended by the individual.  It follows that the law for interest expenses borne by the partnership in our matter, is as the law of the premium in CA 477/71 Shtetner v. Income Tax Assessor, Haifa, [12]. In both cases permitting the deduction of expenses is to take place at the level of the final taxpayer, which is the partner.

24.  The importance of the legal rule that was determined in the Etz Levod Case is that in the entire realm of the deployment of section 63 of the Ordinance the partnership is not to be viewed as a separate business.  Indeed, it was earlier ruled in this vein that ‘. . .  the business of the partner and the business of the partnership are one and the same for the purpose of section 23(2)’, in the sense that regarding a husband and wife who are partners in a business, the source of the wife’s income is seen as dependent on the source of the husband’s income. (CA 82/60 Poychtunger v. Income Tax Assessor, Tel-Aviv 4 (Central)[10]).  It was also ruled that bringing an asset into the partnership by a partner in consideration for receiving a payment from the rest of the partners proportionate to their share in the partnership is not a sale to an entity that is separate from the selling partner, and therefore the income tax liability is not determined separately from the obligation of the selling partner:  ‘therefore, the dealing of a person on an individual level is not to be separated  from his dealing (in the same business) as a partner, and to be referred to. . .  as two separate assessments’ (CA 20/63 Ben-Zvi v. Income Tax Assessor, Bet-Hadar, Tel-Aviv-Yaffo 1[9]) It was further ruled that  ‘the incomes of the partners are to be seen as stemming directly from their first source, without the separate legal personality of the partnership partitioning between this source and the entitled partner,’ meaning the incomes of the partnership are the direct incomes of the partners.  It follows that as to a partner which is an industrial company, which benefits from reduced tax as stated in section 19 of the Law for Encouragement of Industry (Taxes) 5729-1969, a reduced tax is to be regarded as due on the income of the partnership attributed to that partner, as well. (CA 425/79 Angel Ltd. v. Income Tax Assessor, Income Tax, Jerusalem [8]).

25.  All this regards the realm of application of section 63 of the Ordinance.  On the other hand, in other matters relating to the taxation of a corporation, it has at times been ruled that the law of the partnership is as the law of a separate business.  It was ruled in this vein in ITAp 118/90 Lev Hagalil Partnership v. Income Tax Assessor, Tiberias [12] (in the words of Judge Haas).  The question under consideration was whether a partnership which grants its partners or employees a benefit beyond what the law recognizes as a business expense must pay an advance on the excess benefit, as per section 181B of the Ordinance, and whether a partnership is to be included in the definition of ‘an association of persons’ in section 1 of the Ordinance.  After surveying the case law which relates to section 63 of the Ordinance the Court summarized that ‘it is possible, perhaps, to understand, that in light of the provision of section 63 of the Ordinance the Ordinance disregards the separate legal personality of the partnership, for this matter only.  But, it is not to be learned from this that the Ordinance disregards the separate legal personality of the partnership when it is a matter of the partnership’s obligations to third parties; the relationships among the partners; as to ownership of assets; and as to the existence of work relationships between the partner and the partnership.’ The Court examined whether the provisions of section 181B of the Ordinance are included in the ‘decrees’ by which the legislature has imposed partial disregard of the separate legal personality of the partnership, meaning ‘whether the provisions of section 181B and 181C, which deal with payment of advances on excess expenses, which the section imposes on ‘an association of persons,’ are also overridden by section 63 of the Ordinance.  The Court’s conclusion is:

 The provisions of section 181B which speak of ‘an association of persons’ in a manner that includes the partnership – despite the provision of section 63 of the Ordinance which speak of obligating the partners as ‘a taxpayer’.  The section is to be interpreted according to its meaning and basic text when there is a definitive presumption that the legislature knew of the existence of the provisions of section 63 and despite this did not qualify the term ‘association of persons’ in section 181B in order to remove the partnership from it.  The claim of the representative for the appellant that section 63 of the Ordinance, being a special law (Lex Specialis), caused a statutory lifting of the veil as explained supra, is too sweeping and does, necessarily, need to also include the provisions of said section 181B, which can also be seen as a separate statutory provision and there is no need to conclude that there is a contradiction between the provisions of section 63 and section 181B.  Each section could certainly stand on its own as each serves a different statutory purpose.  Even if the partners themselves, in the end, are liable for payment of the tax on the excess expense, still this is not sufficient to cancel the statutory provisions in section 181B, which require the payment of an advance.

26.  We can see that the legislature’s approach is pragmatic and does not regard itself as subject to an overall approach as to the essence of the partnership from the perspective of taxation.  As S.Bornstein summarized in his book Taxation in Corporate Dissolution [26] at 287: ‘In principle the case law has chosen to determine these questions according to the interpretation of the purpose of each and every provision at issue, and not necessary in reliance on the formal definition of the terms of which the Ordinance makes use in each and every one of those provisions. .  .’

27.  Absent an overall approach as to the essence of the partnership from the perspective of taxation, the problem returns to its starting point: how is the transfer to another person of the share of a partner in a partnership to be regarded?  Is it a matter of the transfer of individual assets or the transfer of an overall share in the partnership?  I will state at the outset that the Income Tax Ordinance does not contain an explicit provision which will directly answer this question.  First, section 63 of the Ordinance does not regulate this matter, as it deals with the establishment of the income and expenses of the partnership.  According to the arrangement established in the Ordinance, the partnership’s income is attributed directly to each and every partner according to his share.  This arrangement does not answer the question which arises in our matter, which is in terms of section 63 of the Ordinance: what is the income of the partner when he transfers part of his interests in the partnership to another person, or even all of them?  Meaning, the problem is not attribution of the income to the partnership or the partner, but rather, how to conceive of the assets transferred by the partner, with the clear assumption that this is a matter of his income.  Therefore, I cannot agree with the central rationale of my colleague Justice Or, according to which section 63 of the Ordinance is an indication of an overall approach as to the essence of the partnership.  Granted, if we apply the conceptual formula at the base of the provision of section 63 – which is a disregard of the separate existence of the partnership business – then we will also resolve the problem in our matter by way of ruling out of the approach as to the transfer of an overall share of the partnership.  The necessary conclusion of this approach is that the partner transferred nothing more than individual assets.  However, as the question in our matter is situated, as stated above, beyond the defined realm of the provision of section 63, then the determination as to broadening the applicability of the approach at the foundation of the provision is not compelled by the reality.  This requires separate weighing of considerations that are based on appropriate legal policy.

28.  Second, even the other provisions, which work from the assumption that the partnership is an ‘association of persons’ cannot require us to apply this presumption to our matter which is not directly regulated by it.  Therefore, even if we hold – as do some authors – that as long as there is not a contradiction between the provisions of the Ordinance which relate to the taxation of an association of persons and the specific arrangement established in relation to taxation of a partnership, those same provisions will apply and co-exist with the specific arrangement (S.Bornstein, Taxation in Corporate Dissolution [26]), this does not provide an answer to our question, as the provisions mentioned do not regulate the matter of transfer of the share of a partner to another person.  And again, broadening the fundamental approach at the basis of these provisions – the approach of a separate business – also must be determined separately.

29.  It becomes clear that the starting point of this analysis – the provisions of the Income Tax Ordinance – has not led us to a resolution of the special problem before us.  Analysis of the provisions has shown us that the regulation of the partnership in tax laws is based on two opposing approaches, each of which presents a different solution to our problem.  A similar situation existed in U.S. law prior to the passing of Internal Revenue Code §741 in 1954.  In the U.S. it is also common to juxtapose two fundamental approaches as to the essence of a partnership.  On the one hand the ‘aggregate’ theory (aggregate theory) also called the pass-through or conduit theory, which views the partnership as a cluster of individuals, and on the other hand the approach which views it as a separate unit from the partners that make it up (entity theory).  However, there too, the overall regulation of partnership taxation is not methodical and rules can be found within it, some of which stem from the one approach and some from the opposing approach.

30.  Prior to 1954, absent an explicit statutory provision, the courts in the U.S. were called upon to determine whether the sale of a share in a partnership by a partner constitutes the sale of a total capital asset or the sale of the share of the partner in each and every asset in the partnership.  The federal courts ruled in favor of the first alternative.  A classic example of a decision in this vein is found in the case of Commissioner of Internal Revenue v. Shapiro [15].  Here, a partner in a partnership of two sold his share (which was one half) to his partner.  The state claimed that the tax rate was to be calculated on the basis of the income from the sale of the partner’s share in each and every asset.  The court stated in this context (at p. 535):

Petitioner presses the point that the issue depends primarily upon the extent to which the partnership is to be regarded as an entity, separate and apart from its members. In our opinion, a decision of this more or less troublesome question would throw no light on the present controversy. The case must be viewed as though the entire assets of the partnership with its value as a going concern added were sold. The fact that one-half interest in the partnership assets and its good will only were sold has nothing to do with the issue, and the further fact that the sale was from one partner to another has no more to do with the question than if the sale had been made to a stranger.

The Court reached the conclusion that:

Respondent sold all his interest in the partnership, tangible and intangible, as a going concern, which in all essentials is different from the ordinary assets of the partnership used in the usual course of its business.

The legal rule established here took root in case law, as the federal court attests to in a later decision: United States v. Shapiro [16] stating (at p. 461):

The denial ...of the petitions for certiorari ...indicates to us that the Supreme Court is not disposed to disturb the rulings of the Courts of Appeals of the Second, Third, Fifth, and Sixth Circuits and of the Tax Court to the effect that the sale of an interest in a partnership is the sale of a capital asset, regardless of the nature of the partnership properties.

31.  Moreover: in another case a problem arose in a context that was almost identical to the one before us.  This would be the case of Thornley v. Commissioners of Internal Revenue [17].  Here the partners transferred all the partnership assets to a new company in exchange for allocation of shares in proportion to their relative share in the partnership.  Later, the former partner sold the shares in the company at a profit.  .  The problem before the court was whether for purposes of taxation of the profit, the action of transfer of the partnership assets to the company was to be viewed as a transfer of an overall share in the partnership or as a transfer of his share in individual assets.  The difference in approach related to the calculation of the years in which the partner held the capital stock of the company, which he sold after a number of years.  The number of years for which a shareholder is considered to be holding the capital stock influenced the tax rate which was owed at the time of the sale.  The special question was whether a shareholder can also add the period in which he held his share in the partnership to his period of holding of the company shares, or whether he must show his period of holding for each and every asset separately.  This special question does not concern us here; the importance of the decision is in the approach of the Court to the essence of the transfer of the partnership assets at the time of the founding of the company.  As to this the Court says (at p. 421):

From the above it is clear that the subject matter of the direct exchange between the partnership and the corporation was the partnership interest in the entire business and its physical assets, real and personal and goodwill as a going concern.

And later (at p. 422):

In our opinion, however, applying the rule that ‘taxation deals with realities not semblances; with substance not form’ the transaction is one of an exchange of partnership interest for corporation stock. Simply stated what happened here was incorporation by the partners of their partnership business. The transaction from partnership to corporation was accomplished by the transfer by the partners (acting in their identity as co-partners as co partnership) of all of the assets of the partnership to the corporation with the partners receiving from the corporation shares of stock in proportion to their respective partnership interests. There was never at any time any liquidation of partnership assets to the partners. Had the stock been issued by the corporation to the partnership in exchange for their respective proportionate interest in the partnership, certainly no question could have been raised by even the most aggressive tax-collector. The fact that that was not done but that the corporate stock was issued directly to the partners, does not in any way change the nature or complexion of the transaction.

...

The critical test is not whether the corporation technically acquired the ‘partnership interest’ but, as was pointed out in Kessler v. United States (124 F.2d 152) whether the petitioner gave up ‘his partnership interest in exchange for the stock even though that interest as such did not pass to the corporation’. 

Here clearly the petitioner and his co-partners acting in concert gave up his partnership interest in exchange for the stock of the corporation.’

32.  This approach was also accepted eventually by the tax authorities in the United States, as is explained in the decision in Hatch’s Estate v. Commissioner of Internal Revenue [19].  In that case partners in a partnership that was the owner of a motorized vehicle business sold the partnership business to a foreign company.  A debate arose regarding, whether, under the circumstances, the transaction was the transfer of assets or the transfer of an interest in a partnership.  The Court stated the following (at pp. 28-29):

Where a partnership interest had been sold, the Commissioner of Internal Revenue for many years treated it as the sale of the selling partner’s undivided interest in each specific partnership asset....

However, in 1950, the Commissioner of Internal Revenue acquiesced to the overwhelming case authority to the effect that for income tax purposes the sale of a partnership interest in a going concern should be treated as the sale of a capital asset. ...And this partnership interest is personal property which is separate and distinct from his co-ownership of the specific partnership property.

As I mentioned above, the case law received legitimization in 1954 in an amendment of the Internal Revenue Code which regulated the issue of transfer of interests in a partnership. The general principle that the transfer of interests in a partnership constitutes the transfer of a capital asset was established in section 741 of this statutory code, subject to the exceptions established in section 751 of the code (Unrealized receivables and inventory items).  So too, specific provisions were established, which detail the manner of calculation of capital gains in the transfer of an interest in a partnership.  (See generally as to the American arrangement H.E. Abrams & R.L. Doernberg, Essentials of United States Taxation (1999) pp. 3-1 - 3-244).

33.  In my view, it is appropriate to adopt the approach that was developed at the time in the U.S. case law and which the lower court agreed with.  Absent an explicit statutory provision, when we come to determine the method of taxation in accordance with the proper legal policy, the true essence of the transaction, which establishes the tax liability and its economic content, is to be examined.  Transfer of a share in a partnership is in essence the transfer of an interest in a ‘going concern’ with the totality of its assets and liabilities.  An interest in a ‘going concern’ of a partnership is close, at its core, to the concept of a share in a business corporation.  Here too it is a matter of an economic entity unique and separate from those holding it.  The status of the partnership as an independent economic entity is also strengthened by its recognition in the general law, which grants it various capacities that bind the partnership’s operations.  In this regard the partnership differs from a one person business, as to which it is difficult to distinguish between the activities, assets, and obligations of the individual, and those of his business.  Artificial dissolution of the partnership, which constitutes one economic entity, and imposing a selective tax on tangible assets alone from the ‘going concern’ of this entity, does not comport well with the economic reality.  This is because the economic reality relates to the entity of the partnership as a ‘going concern’ in the totality of its aspects.  It is to be presumed that the appraisal of the economic worth as well, which dictates the consideration for the sale of an interest in a partnership, is also achieved in keeping with this approach.

34.  On the other hand, the approach that imposes a capital gains tax on the total interest in the partnership in the case of the transfer of the partner’s share gives full force to the economic entity of the partnership and thereby gives expression to the true essence of the transaction.  This approach gives significance, for tax law purposes, to the ‘phenomenon’ of a partnership, which is recognized in the general law.  This approach also accords with the principle of attempting to coordinate the understanding of foundational terms in civil law and tax laws.  This stands out particularly when the partnership is perceived of as a legal personality.  It is, of course, not necessary that the partners transfer their overall share in the partnership.  The path is always open to them to transfer their share in individual assets.  In accordance with their choice, the fixed tax rate will be determined according to the appropriate tax event.

35.  In opposition to the proposed approach, criticism, which has also been adopted by my colleague Justice Or in his opinion, has been voiced by scholars, who claim that recognition of the separate entity of the partnership may carry with it unwanted results, and that it may create a tool for inappropriate tax reduction or the imposition of too heavy a tax burden, and this due to the ‘capital’ taxation arrangement for assets, which are ‘earned’ in their essence.  (Y. M. Edri and Y. Eden ‘On the Problem of the Excess Tax Liability, Statutory Veil and the Taxation of a Partnership, a Cooperative Agricultural Association, a House-Corporation, and a Family Corporation in the Income Tax Ordinance’ Iyunei Mishpat 13 (1988) 307, at pp. 322-323).

36.  I will comment in this context, that, fundamentally, it is not necessary that taxation of capital income differ from taxation of earned income.  And indeed, the current global trend is to narrow, if not eliminate, this distinction.  (See D. Glicksberg ‘Averaging Property Betterment and Spread of Capital Gains’ Mishpatim 21 (1992) 371 at p. 371).  However, if there is a distinction in the taxation arrangement, then the tax laws are to be applied according to the essence of the matter.  This is the law with the taxation of the sale of shares in a company.  The sale of the shares creates an obligation for capital income, which is not dependent on the character of the specific company assets.  (See for example, CA 289/66 Kirshenberg v. Income Tax Assessor Gush Dan, [1] where it was ruled that given that the company was a separate legal personality from its members, no tax liability would be imposed on earned income at the time of the sale of shares in it, even though the company’s assets included primarily business inventory, and that the sale of shares would be taxed as capital income only.)  In particular, the ‘aggregate’ approach is likely to create difficulties, as it requires the application of different laws on different assets within the partnership.  According to the ‘aggregate’ approach, one is to distinguish, as to individual assets, between equipment, which is a capital asset, and business inventory, which is an earned asset.  This distinction, may, for example, create difficulties in the framework of the personal principle.  The legislature applied this principle only to capital gains tax (section 89(b)(1) of the Ordinance).  The result will be that in selling a share of a partnership, several assets will be subject to the personal principle and others not.  It appears that this situation is not satisfactory.  There is no doubt that under these circumstances, there is an advantage to considering all the assets as one unit.

37.  The criticism that an arrangement that is in essence ‘capital’ should not be applied to assets that are in essence ‘earned,’ does not appear to me to be well-grounded.  The idea that there is something ‘natural’ in the categorizations applied to assets is not clear to me.  A tax event is determined by its economic significance, which is capital or earned.  This is the situation in the case of a corporation with shares and this is how it should be for a business partnership as well.

38.  In his opinion, my colleague Justice Or brings an example in order to concretize the difficulties of applying a ‘capital’ taxation arrangement on ‘earned’ assets.  This example deals with the provision of the possibility of spreading out the profits for the partner that stemmed from the sale of the interest in the partnership, over the course of four years, even when the partnership only accumulated profits in the fourth year.  Spreading the profit out will lessen the effective tax the partner will bear, since he had no income in past years.  In my opinion, this example does not raise any difficulties.  The reasons that justify the spreading of capital gain over the course of four years in ‘natural’ capital assets (and company shares) are also valid as to the interest in the partnership.  It is to be remembered that the presumption at the base of the arrangement of spreading out the capital gain, which assumes an equal annual growth of the value of the capital asset, is also not always consistent in reality regarding ‘natural’ capital assets (See D. Glicksberg ‘Averaging Property Betterment and Spread of Capital Gains’ [30] at p. 379 and p. 389).

39.  Still, it is clear that the attempt of a taxpayer to arrange any transaction with the primary purpose of evading taxes will be judged by the criteria which apply to artificial transactions (section 86 of the Ordinance).  Therefore, criticism that relies on the concern for tax evasion is not very convincing.

40.  Additional criticism is rooted in the claim that the proposed approach is not applicable without the legislation of specific provisions, as arises from the experience in the U.S., where the legislator found it necessary to complete the judicial work via a series of statutory provisions. (See Y. M. Edri and Y. Eden, Ibid, at p. 322).  But, the American experience in fact provides refuting evidence: the case law made the step from an ‘aggregate’ philosophy to an ‘entity’ philosophy on its own initiative, without waiting for a statutory arrangement and specific coordinating provisions.  Moreover, the American legislator felt the need to supplement the details of the particular legal arrangement because of the special background in American law, regarding the significant gap between capital taxation and earned taxation.  The situation in Israel is different in this regard.  In any event, the existence of such provisions in the U.S. is not a determining factor when we must decide the fundamental question.  Should the adoption of the proposed approach lead to problems, then the hand of the legislator is poised to fill in what is necessary.

41.  My colleague Justice Or describes the difficulties regarding the absence of a coordinating provision by means of several examples.  I will touch upon them briefly.  First, I do not see a special problem regarding the calculation of the original price and the balance of the original price.  The solution will be to calculate these values similarly to how they are calculated in a corporation.  Second, regarding the concern of double tax collection absent specific statutory provisions, it is possible to prevent double tax collection via purposive construction of the law, based on the fundamental principle that prohibits collecting double taxes for the same income.  (See S.Bornstein summarized in his book Taxation in Corporate Dissolution (Jerusalem, 1997) 301).  Third, a similar approach would also solve the problem of receiving remuneration which is tax exempt; the fundamental principle mentioned necessitates increasing the original price by the amount of the remuneration or reducing the consideration at the same rate.  Fourth, in the opinion of my colleague Justice Or, there is a need for a coordinating provision that will prevent the indirect deduction of expenses that are not deductible, by turning them into a capital loss.  It appears that a similar phenomenon could also occur as to ‘natural’ capital assets.

42.  It is to be remembered, that the ‘aggregate’ approach, proposed by the Income Tax Assessor is also not easy to implement.  Let us examine, for example, the ramifications of the ‘aggregate’ approach on taxation of the partnership income when the makeup of the partners changes during the course of the life of the partnership.  An outcome of the ‘aggregate’ approach is that after sale of a share of the partnership to a new partner, the method of calculation of the ongoing income necessitates its distribution among the partners according to their investments.  This means that, at the time of calculation of the taxable ongoing income of the new partner out of the partnership incomes, the amount that he invested in the business inventory of the partnership is to be taken into account and he is to be given the opportunity to deduct depreciation, in accordance with the consideration paid by him, for the depreciation bearing assets of the partnership.  This method is complicated and difficult to apply, as it necessitates much adjustment and an accounting distribution of the partnership transactions among the partners (see A. Raphael, D. Ephrati, Income Tax Laws, Volume B [25] at pp. 334-335).  In this context it has been written as to the situation in the U.S.:

‘The result is that each partnership asset has two bases - one for the continuing partners and one for the purchasing partner. In the extreme, each asset could have as many different bases as the partnership has partners. The recordkeeping requirements in this situation are a nightmare.’ (J. Schnee ‘The Future of Partnership Taxation’ [44] 517, 534).

I will reiterate that our situation is substantively different from the situation that exists in the U.S. and therefore the difficulties there are not to be equated with those that are likely to arise here.  Each and every method has its problems.  It is appropriate that the legislator regulate the matter of partnership taxation in a general arrangement.   And indeed, the absence of a clear and consolidated statutory arrangement also creates difficulties in the realm of international taxation of activity in the framework of partnerships, such as the question of the location of the domicile of the partnership (see in this context M. Kaputa, ‘Tax Planning in the Context of Partnerships and International Joint Transactions.’  [31] p. 64A.

43.  Our situation has yet to be resolved.  Under the present circumstances there is an additional element which may impact the tax liability.  We have before us a case where all the partners transferred their share in the partnership to a new corporation.  The result is that now the new owner of the partnership assets is the corporation.  The partnership has thereby been entirely liquidated.  I will clarify the matter: by transferring the overall share of a partner to the corporation, the latter becomes a partner in the partnership in place of the outgoing-transferring partner and its proportion in the partnership is in accordance with the transferred share.  Let us now assume that the other partner as well – in the partnership of two – transfers his overall share in the partnership.  The result is that from this moment the partnership has ended, since a partnership, in accordance with its name and definition in the Partnership Ordinance [New Version] 5735-1975, is a connection among persons who manage a business together for the purpose of making profits (section 1(a) of the Ordinance).  In the case of the transfer of all the shares of a partnership to an association, the latter manages the business transferred to it on its own.

44.  Dismantling a partnership is a tax event.  This was explained by A. Yoran (Yorakvitz) ‘Tax Planning in Incorporation of a Partnership as a Corporation’ [32]:  ‘Granted that for the purposes of determining the tax on earned income the independent legal existence of the partnership is ignored and each partner is held to his share in the partnership income.  But this fact does not enable one to say that a business was not transferred, using the argument that the partnership was not viewed as the owner of the business’ (at p. 164).  A separate question is what is the nature of this event.  In the case of the liquidation of a corporation, the principle established in section 93 of the Ordinance is that two separate tax events occur: the corporation is considered as the one selling its assets to the shareholders, while the shareholders are considered to be the ones selling the shares in their possession.  The two separate tax events produce separate tax liabilities, however, the shareholder is entitled to a credit for the tax paid by the company in order to avoid a double tax. (See at length, S.Bornstein, summarized in his book Taxation in Corporate Dissolution (Jerusalem, 1997) 193-219).  But the problem is: do the taxation rules in corporate liquidation apply in the case of the dismantling of a partnership?  And more precisely: does the dismantling of a partnership also produce two separate tax events, meaning, both at the level of the partnership and the level of the partners, similar to what occurs with the liquidation of a corporation regarding the relationship between the corporation and the shareholders?  Moreover, assuming this is the case, is it possible to avoid double taxation?  These questions stem from the need to integrate the ‘aggregate’ approach of section 63 of the Ordinance with the ‘entity’ approach of the partnership, which views it as an ‘association of persons.’  (See S. Bornstein, Ibid, at pp. 281-302).  The author is of the view that there is nothing to prevent applying the legal arrangement in section 93 of the Ordinance to a partnership.  The result is that the partnership being dismantled is considered to have sold its assets to the partners, and the partners as having ‘sold’ their interests in the partnership.  (Compare also A. Raphael and D. Ephrati, Income Tax Laws, [25] at pp. 337-340).

45.  Be the law what it may as to the details of taxation in the case of the dismantling of a partnership, in any case, the claim is that it is not a matter of the transfer of a right in a partnership, but the transfer of the individual assets of the partnership. As, we will discover if we examine the essence of the event according to its results, the assets which the partnership held are now held by the corporation.  The partnership itself disappeared – for lack of partners – and ostensibly there is no other explanation as to the assets being in the hands of the corporation other than that the partnership is the one which transferred the assets to it.  This transfer took place alongside the dismantling of the partnership.  We find that in the circumstances of the matter before us, justice is still on the side of the Income Tax Assessor, who demanded taxation in accordance with the assumption that the individual assets of the partnership, rather than an interest in the partnership, were transferred to the corporation.

46.  Indeed, such an argument was raised by the appellant in his written summations before the court of first instance.  There it was argued that the corporation did not purchase a share of the partnership and that ‘it is impossible to purchase part of something that no longer exists.’   And further that ‘at the time of the dismantling of the partnership . . .  it is no longer the interest in the partnership that is sold, but its assets themselves, each separately.’  The appellant also repeated this argument in his summations before us:  ‘from the moment the partners transferred to the corporation the assets and liabilities of the partnership and the partnership ceased to exist, and then the corporation could not receive the interest of the partners as an asset.  The corporation could not purchase an asset that no longer exists, meaning that the partners too have sold their interests in the partnership assets and no more.’  There is no doubt that such a formal-conceptual argument is substantial.

47.  The question then is must we reach the conclusion provided for by the world of legal concepts?  We will concretize the question with the tax planning possibilities.  Let us imagine that in the circumstances of the case before us, one partner transferred his entire share in the partnership (50%) to the corporation, but the other partner held on to a miniscule share of the partnership (such as one thousandth).  In these circumstances the partnership would not be not dismantled, since there are still two partners in the business, the corporation and the minor partner.  (Another possibility to consider is the transfer of the partnership business to the company and its daughter-company).  The substantive question at issue is whether there is a tangible-economic difference between the two situations which justifies different taxation.  I am not referring to the problem of an artificial transaction for the purpose of tax evasion, but to a fundamental approach as to taxation of the original transaction.  In my view, there is no point in distinguishing between the two situations just described.  This is because our view of a partnership is not as a ‘legal personality,’ but rather is as a ‘going concern.’  Therefore, the fact that the partnership as a legal concept disappeared from the normative horizon does not detract from the economic reality, according to which the business continues to exist in the framework of the corporation that purchased it.  This means that the partners transferred their share in the partnership business to the corporation and under these circumstances the dismantling of the partnership, which is necessitated by the very transfer, is not to be seen as an additional tax event.  In this way the business of a partnership differs from a sole proprietorship.  And if one would ask, why do we not relate to a sole proprietorship, in its transfer to another person, as a separate legal personality, my answer would be that, as explained above, it is very difficult to distinguish between the personal assets and business assets of an individual.  On the other hand, with regard to a partnership, in which there are natural conflicts of interest between the two partners, identifying the business assets is easier.  Therefore, the idea of an independent business is not to be broadened beyond the templates created by the legislator.  It is to be noted that the individual may today, according to the Corporations Law 5759-1999, incorporate his business and distinguish it by means of a corporation of an individual.

48.  Support for this approach may be found in U.S. case law.  Justice Frank stated as follows in his dissenting opinion in the case of Williams v. McGowan [20] at p. 573:

I agree that it is irrelevant that the business was once owned by a partnership. For when the sale of the Corning Company occurred, the partnership was dead, had become merely a memory, a ghost. To say that the sale was for the partnership’s assets would, then, be to indulge in animism. But I do not agree that we should ignore what the parties to the sale, Williams and the Corning Company actually did. They did not arrange for a transfer to the buyer, as if in separate bundles, of the several ingredients of the business. They contracted for the sale of the entire business as a going concern..... To carve up this transaction into distinct sales - of cash, receivables, fixtures, tracks, merchandise, and good will - is to do violence to the realities. I do not think Congress intended any such artificial result....Where a business is sold as a unit, the whole is greater than its parts.  Businessmen so recognize; so, too, I think, did Congress. Interpretation of our complicated tax statutes is seldom aided by saying that taxation is an eminently practical matter (or the like). But this is one instance where, it seems to me, the practical aspect of the matter should guide our guess as to what Congress meant. I believe Congress has those aspects in mind and was not thinking of the nice distinctions between Roman and Anglo-American legal theories about legal entities.

The federal court in the case of Hatch’s Estate v. Commissioner of Internal Revenue [18] adopted the dissenting view of Justice Frank.  See also the decision in the case of Meyer v. U.S. [22].

49.  In conclusion: the position of the court of first instance that for taxation purposes, the transfer of the partnership business from the partners to the corporation is to be regarded as the transfer of the interest of each partner in the partnership and not as the transfer of each and every asset separately, is to be accepted.  As I noted, the partners have before them several possibilities for executing the transfer of assets in a partnership.  Apart from the possibility of transferring an overall share, they can, of course, transfer assets separately.  Moreover, in certain defined situations section 104B of the Ordinance now provides the possibility of transferring partnership assets to the corporation without an immediate tax liability (this arrangement replaced, beginning in 1994, a similar arrangement which was established in section 95 of the Ordinance, which was in effect during the dates relevant to the issue before us).  According to the arrangement in section 104B of the Ordinance:

Partners in a partnership or joint owners who transfer an asset in the ownership of the partnership or who transfer an asset in their joint ownership, respectively, to a corporation that was specifically established for this purpose and this corporation did not have any other asset or other activity at that time or beforehand, and this in exchange for allocation of shares in that corporation alone, will not be held liable for taxes according to this Ordinance, according to the Law of Adjustments for Inflation, or the Capital Gains Law, according to the matter, if the following conditions are fulfilled. . .

Fulfillment of the conditions established in the provision results in deferral of the tax payment: section 104E and 104F of the Ordinance defer the collection of the tax that would be due were it not for this legal arrangement.  They establish, inter alia, that the original price, the date of purchase, and the value of the purchase of an asset that was transferred as described will be as they were in the hands of the transferors, meaning in the hands of the partners.  As a result, when the asset is sold by the corporation, the capital gains tax that would have been collected were it not for the legal arrangement is paid.  For a discussion of the types of assets that are transferable according to section 104 of the Ordinance see Z. Sharon ‘Assets that are not Transferable according to Section 104 of the Ordinance’ Misim H 5/(1994) p. 35A.

Therefore the appeal is to be dismissed.  The appellant will pay the respondents attorneys fees and expenses in the amount of 25,000 NIS.

 

 

Vice President S. Levin

Once the respondents agreed to transfer the totality of all their rights and liabilities in the partnership to the corporation – and not to the transfer of individual assets – this agreement is to be approved not only in the civil realm, but also for the purpose of tax matters, unless there is in the tax laws a specific provision to the contrary.  I have not found an explicit provision such as this in section 63(a) of the Ordinance and I have not seen a sufficient reason to expand what is stated in it to additional matters.  I do not take lightly the difficulties that arise with the acceptance of the approach of Justice Englard, some of which may not have received a sufficient response; but this is a matter, in my opinion, for the legislator to address.  I join my opinion to the opinion of Justice Englard that the appeal is to be dismissed.

 

 

Justice T. Strassberg-Cohen

I join with the opinion of Justice I. Englard and the comments of my colleague Vice President S. Levin, for their reasons.

 

 

Justice T. Or

Partners in a partnership set up a corporation and transferred all their rights and liabilities in the partnership to it.  Will they be taxed as one who has sold an interest in a partnership (similar to a share) or as one who sold his share in each and every asset of the partnership assets (similar to a sole proprietorship)?  That is the question at the center of this appeal.

The primary facts and proceedings

1.    The respondents 2 and 3 (hereinafter: ‘the respondents’) were partners in a partnership titled ‘Sadot’ (hereinafter: ‘the Partnership’).  The Partnership dealt in transport and among its assets had fixed assets and current assets.  During the course of the year 1982 the respondents decided to change the form of the association in which they ran their business and established a company named Sadot Transportation Corporation (1982) Ltd. (hereinafter ‘the Corporation’).  All the assets and liabilities of the Partnership were transferred to the Corporation.  Each one of the respondents held shares in the Corporation in the same proportion of holdings in the Partnership that he had in his possession prior to that.  In the Corporation’s books the closing balances of the Partnership balance sheet were recorded as the opening balances of the Corporation. 

The Income Tax Assessor (hereinafter: ‘the appellant’) taxed the partners for the capital gain they acquired, according to his claim, from the transfer of fixed assets (trucks) of the Partnership to the Corporation.  The respondents objected to these assessments and their objections were dismissed.

The respondents appealed to the District court.  Their argument was that transfer of their interests in the Partnership to the Corporation is not a ‘sale’ according to its meaning in section 88 of the Income Tax Ordinance (New Version) (hereinafter: ‘the Income Tax Ordinance’ or ‘the Ordinance’).  Alternatively the ‘asset’ that was sold is not their interest in each and every asset of the Partnership assets, rather, the asset that was sold is their overall interest in the Partnership.

The District Court determined that the transfer of the Partnership assets to the Corporation is within the broad definition of the term ‘sale’ in section 88 of the Ordinance.  However, the court determined that the tax assessment of capital gain to the extent that such a gain indeed has been generated from transfer of the fixed assets to the Corporation will be determined as per the overall share of each partner in the Partnership that was transferred to the Corporation and not as to each and every asset separately.  It was determined that the discussion be remanded to the objection stage for the capital gain to be calculated, to the extent that indeed such capital gain was created.  From here comes the appeal before us.

The parties’ arguments and the framework of the dispute

2.    The appellant claims that the Income Tax Ordinance does not recognize the separate legal personality of a partnership.  Therefore, unlike a share, which reflects the conglomerate of rights and duties of a shareholder in a corporation, the Ordinance does not recognize an interest in a partnership which similarly reflects the conglomerate of rights and duties of a partner in a partnership.  A partner in a partnership has the right to a certain percentage (in accordance with the partnership agreement) in each of the partnership’s assets and liabilities.  Therefore, in the transfer of the partnership assets, the partner is taxed on each asset separately, according to the character of the partnership asset, and according to the partner’s share in this asset.  The appellant also raises the procedural claim according to which the claim that we are dealing with the sale of an interest in the Partnership was not raised in the appeal that was submitted to the District Court, and therefore should not have been heard.

The appellant further emphasizes that the decision of the District Court is difficult to implement.  Determining the worth of an association in and of itself is a complex and complicated task, all the more so in this case where the calculation is to be done many years after the event.

The respondents, for their part, argue that the Ordinance does not refute the legal character of the partnership, but it ignores it for certain purposes.  In any case, the partnership is undoubtedly an economic entity in which the partner can sell his interest.  An interest in a partnership is an ‘asset’ as per its meaning in section 88 of the Ordinance.  Which includes, inter alia, any right or benefit merited or held.  In light of what was said, when a transfer of all the assets and liabilities of a partnership takes place, the interest of the partner in the partnership is transferred and not his share in each and every asset.  As for the procedural claim, the respondents argue that the dispute as to the substance of the transferred asset was raised and discussed fully and no injustice was caused to the appellant.  Therefore, the argument is to be dismissed.

The respondents further claim that even if the transfer of the trucks is to be taxed with a capital gains tax, detached from the transfer of the rest of the assets and liabilities to the company, then under the circumstances the transfer is not included in the framework of a ‘sale’ as defined in section 88 of the Ordinance.

It is to be noted that we do not have before us the claim that section 95 of the Ordinance that deals with the transfer of an asset to a corporation in exchange for shares (this section, which applies to transfer of assets to a corporation during the time period relevant to our matter, has been replaced by a more comprehensive arrangement which is set in section 104B of the Ordinance) applies to the transfer of the trucks from the Partnership to the Corporation.  According to the conditions established in it, said section enables deferral of the tax liability.  According to the appellant’s claim, section 95 and its replacement section 104B, do not apply to cases such as those before us, in which assets are transferred to a corporation in exchange for payment of debts.  This, according to his claim, for the reason that a condition for applying that arrangement is that the transfer of the assets is for shares alone.  It should be commented, that this construction of the appellant is not the only one possible.  However, in light of the fact that the respondents themselves are not claiming that transfer of the asset in this case fulfills the conditions of section 95 we will leave the question of the construction of sections 95 and 104B of the Ordinance to an instance where it is necessary.

4.  I do not accept the procedural claim of the appellant as to ‘change of direction’ for the reasons detailed in the opinion of my colleague, Justice Englard.  So too, I accept my colleague’s view that the right of a partner to his share in the partnership is within the broad definition of the term ‘asset’ in section 88 of the Ordinance, and that the transfer of the partner’s share in the partnership is within the framework of the broad definition of the term ‘sale’ in said section 88.  However, this is not sufficient to settle the primary dispute in this appeal.  Just as the interest in a partnership is an asset, so too the interest in each and every asset of the partnership assets is an asset.  The dispute remains therefore as to the substance of the transferred asset in the sale of the partner’s share in the partnership.  Whether, in terms of the tax, the transfer of the share of a partner in a partnership is to be related to as the sale of an asset which is an ‘interest in the partnership’ or as the sale of his interest in each and every asset?

5.    In the topic of partnership taxation, there exist two analytical theories in which the basic concepts which are at their foundation contradict each other.  Accordingly, they address the question before us differently.  The entity theory sees the partnership as an independent unit separate from the partners that make it up.  The partnership is the taxpayer and the tax is levied on its income.  It is clear, that this theory if applied to the case before us, will regard the sale of the share of a partner in a partnership as the sale of an interest in the partnership.  The second, the aggregate theory holds that for tax purposes, the partnership does not have its own independent existence.  It is not a tax unit. The tax units are the partners that make up the partnership.  Each partner is taxed separately according to his share in the partnership incomes.  Applying this theory to the case we are dealing with will lead to the determination that in the sale of a share of a partner in a partnership in fact his share in each and every asset of the partnership assets is being sold.  As I will detail infra (in paragraph 10) it is not necessary to adopt either of these theories in a sweeping manner, and it is possible to adopt an integrated approach which applies both theories – each in different taxation matters.

These conflicting theories, are reflected in the disagreement between scholars as to the topic of partnership taxation.  Some hold that in light of the separate legal personality of the partnership, the assets are held by the partnership and not the partners, and therefore the sale of interests in the partnership is not the sale of each asset individually, but the sale of the interest in the partnership which holds the assets (Y. Ne’eman ‘Method of Calculation of Capital Gains in the Sale of the Interests of a Partner in a Partnership’ [27], p. 195; A. Alter ‘The Separate Legal personality of a Partnership of the Purposes of Tax Law in Israel’ [28] 336; A. Raphael and D. Ephrati, Income Tax Laws, Volume 2 [25] 299).  Others are of the view that for purposes of the tax laws, the partnership assets are viewed as belonging to the partners, in accordance with their share in the partnership, and therefore when a partner sells his share in a partnership he is selling a proportional share in each of the assets which belong to the partnership (see: Y. M. Edri and Y. Eden ‘On the Problem of the Excess Tax Liability, Statutory Veil and the Taxation of a Partnership, a Cooperative Agricultural Association, a House-Corporation, and a Family Corporation in the Income Tax Ordinance’ [29] at p. 320).

6.    I will preface and state that my view is that as to the sale of the share of a partner in a partnership, our legal system adopts the aggregate theory which views this as the sale of the share of the partner in each and every asset of the partnership assets.  This is how the case law has seen it, this is the practice and it is not appropriate to change this approach by way of case law.  Below, I will clarify my rationales for this stance.  The following will be the order of things: first, I will present the normative background relating to partnership taxation; later, I will survey the legal situation in the matter we are dealing with in various legal systems in which there exists a normative background similar to ours; and finally, I will detail my rationales which are at the foundation of the conclusion I have reached.

Normative background

The Income Tax Ordinance is lacking comprehensive and coherent regulation as to the overall topic of partnership taxation, and the specific matter before us in particular.  The provision in the Ordinance which deals with partnership taxation is the provision of section 63.  Section 63(a) which is important for our matter, prescribes as follows:

‘63(a)  Where it has been proven to the satisfaction of the Income Tax Assessor that two or more people are engaged together in a certain business or certain occupation

(1) The share each partner is entitled to in the tax year from the partnership incomes – and it will be determined in accordance with the provisions of this Ordinance – will be viewed as the income of that partner, and it shall be included in the report of his income which he must submit according to the provision of this Ordinance.

(2)  The chief partner, meaning that partner from among the partners who are residents of Israel whose name appears first in the agreement as to the partnership – and if this head of partners is not active then the head of partners who is active – will prepare and submit according to the demand of the Income Tax Assessor, a report of the partnership income for each year, as it is determined in accordance with the provisions of this Ordinance, and will specify in it the names and addresses of the other partners in the firm and the share that each partner is entitled to in the income of that year; if none of the partners is a resident of Israel, one with power of attorney, an agent, a manager, or a broker of the firm who resides in Israel will prepare and submit the report.’

From this section it arises, that on the topic of the income tax liability for partnership incomes, the Ordinance relates to a partnership as a collection of individuals and not as an independent unit separate from the partners who make it up.  The section expresses, therefore, the view of the aggregate theory.  Indeed section 63(a)(2) directs that the head of the partners will submit a report of the partners incomes, however, the report of the partnership incomes is not submitted for the purpose of taxing this income to the partnership but for the purpose of distributing it among the partners and for the purpose of taxation of each partner for his share in this income.

It is to be emphasized, that the provision of section 63 is an important provision in all that relates to the tax laws which apply to a partnership and to partners, being the provision which relates to one of the topics of importance in tax laws, which is the provision as to the tax liability.  It deals, like the question in the dispute in the appeal before us, with the question which relates to the tax liability in its broader sense.  And here, the provision of the section views the partnership, in terms of the tax laws,  as a collection of individuals and not as a separate legal body.

8.    By the nature of things, given that section 63 is the only provision which deals with partnership taxation, it stands at the center of the discussion in matters which arise in the areas of partnership taxation.  Courts have turned to the construction of section 63 in a long line of decisions  which dealt with specific matters in this area.  The case law which dealt with section 63 of the Ordinance has gone clearly in the direction of disregarding the independent existence of the partnership for tax purposes.  Justice Witkon expressed this approach in the following manner:

‘Indeed, it is true, our legislator granted the partnership a legal personality, but be the significance and purposes of this legal personality what they may be, one cannot disregard the basic provision in the Partnership Ordinance (section 2) which defines the term ‘partnership’.  Partnership, according to this definition is the relationship that exists between persons dealing in a joint business for the purpose of making a profit.  Learn from this that the partners are those dealing with the business and they are making the profits. .  .  in this vein section 52 of the Income Tax Ordinance also places the tax liability on the partners themselves for the share of each of them in the partnership income, and we find that determining this income is none other than a mechanistic phase in order to reach the partner’s income from the partnership. . .  we cannot therefore learn by analogy from the law of the corporation to the law of the partnership, as the appellant has done (CA 82/60 Poychtunger v. Income Tax Assessor, Tel-Aviv [8] at 1368)’.

President Shamgar explained this when noting:

‘According to the rules that were delineated, be the status of the partnership according to the general law what they may be, section 63 of the Ordinance is to be seen as a specific provision for income tax purposes, according to which the partnership is not a taxpayer and does not bear independent liability in income tax:. . .That is to say, one is not to speak of the partnership incomes as a separate concept from the incomes of the partners.  The tax liability is imposed directly on the partners for the share of each one of them in the partnership incomes.  In this sense, ‘one is not to distinguish, therefore, between the dealings of a person on an individual basis and their dealings (in the same business) as a partner. . .’  (CA 20/63 at p. 1968)’ (CA 536/88 Etz Levod v. Income Tax Assessor for Large Plants [7]).

This approach was expressed consistently in the case law.  Thus, for example in CA 477/71 Shtetner v. Income Tax Assessor, Haifa [11] Justice Witkon discussed the question of permitting deduction of life insurance expense that the partnership paid to insure the lives of the partners.  In order to answer the question, Justice Witkon examined whether this expense was an expense in generating the income of the partner and not the income of the partnership.  This, since the taxable income is the income of the partner and not the income of the partnership.  He established as to this matter that:

‘An expense that is prohibited to the partner cannot be permitted for the partnership.  It is found that in the end the two are not to be separated.’ (Ibid, [11] at p. 516).

In CA 425/79 Angel Ltd. v. Income Tax Assessor, Income Tax, Jerusalem [10], a partnership was established between the appellant corporation which was an industrial corporation as per its definition in the Law for Encouragement of Industry (Taxes) 5729-1969 –  and another person.  The Income Tax Assessor sought to deny the appellant the tax benefits which are granted by said law to an ‘industrial corporation’ based on the claim, that the partnership is a separate legal personality, and it produces said incomes and not the ‘industrial corporation’.  The court dismissed this claim.  The Court determined that:

‘The partnership incomes are the direct incomes of the partners.  From here that the partners incomes are to be seen as stemming directly from their first source, without the separate legal personality of the partnership partitioning between this source and the entitled partner.’ (Ibid, at p. 835.  See also: CA 231/58 Income Tax Assessor, Rehovot v. Amos Bohanik, [12]; CA 20/63 Ben-Zvi v. Income Tax Assessor, Bet-Hadar, Tel-Aviv-Yaffo 1 [9]).

9.    To summarize this point, in all that relates to the construction of section 63 of the Ordinance, the case law has consistently adopted the aggregate theory.  It viewed the partnership as a collection of individuals who together manage a joint business.  This does not contain a direct answer to the matter we are dealing with, however, it does contain an indication as to the manner in which the tax legislator views the status of the partnership for tax purposes.

Transfer of a the share of the partner in the partnership – comparative law

Perusal of comparative law provides a window through which it is possible to understand the various arrangements followed in this matter in other legal systems with a normative background similar to ours, and enable us to learn from their experience.  The similar side to the legal systems which we will present later is that, similar to the law applicable in Israel, income tax is imposed on the partners according to the share of each one of them in the partnership assets.

In comparative law there is no uniformity in relating to the taxation of the transfer of a share in a partnership.  In the United States, prior to legislation of Chapter K of the Internal Revenue Code (hereinafter: ‘IRC’) the U.S. Appeals Court ruled in a long line of decisions, that the sale of a share of a partner in a partnership will be taxed with capital gains tax for the sale of the overall interest in the partnership.  (See: C.I.R v. Shapiro  [15]; C.I.R : v. Smith [22]; Long v. C.I.R. [23]; Thornly v. C.I.R. [17]; United States v. Shapiro [16]; but compare Helvering v. Smith [24]; Williams v. McGowan [20]).  This legal rule created a loophole which was taken advantage of by taxpayers in order to tax earned income with capital gains tax.  The American legislator later anchored the legal rule according to which the sale of an interest in a partnership is the sale of an overall interest in the partnership in section 741 of IRC 1954.  However alongside this section, section 751 was legislated whose purpose is to close up the loophole which enabled evasion of taxation of earned income.  (See:  B. Bittker, Federal Taxation of Income, Estates and Gifts (Volume 3) [36] 82-7; Mertens, the Law of Federal Income Taxation (Volume 9) [37] 460-525 ).   Section 751 establishes as follows:

‘(a) The amount of any property, or the fair market value of any property, received by a transferor partner in exchange for all or a part of his interest in the partnership attributable to-

(1) Unrealized receivables of the partners, or

(2) Inventory items of the partnership, shall be considered as an amount realized from the sale or exchange of property other than a capital asset’.

This exception taxes the current assets that come within it with regular tax and not capital gains tax.  From here that the American method indeed represents the entity theory approach in the matter we are dealing with, however, it is a very tempered version.

As for the American law it is also worth noting that the American Law Institute (ALI), supports, in its position paper from 1984, changing the law.  The view was expressed in the position paper that policy considerations do not support the present rule which taxes the transfer of an interest in a partnership with capital gains tax.  Among the rationales for changing the law, the position paper explains the complexity of the present system and the difficulty of actually implementing it.

In Canadian law as well it was determined that the sale of the interest of a partner in a partnership will be taxed with capital gains tax for the overall interest in the partnership. (See: R. Beam & S. Laiken, Introduction to Federal Income Taxation in Canada [38]; Canadian  Master Tax Guide [39]; J. Weinstein, ‘Sale of a Partnership Business’, 1996 Corporate Management Tax Conference (1996)).  As we will detail below, both the American Legislation and the Canadian Legislation deal with the sale of the interest of a partner in a partnership, including adjustment provisions whose purpose is to adjust laws of capital gains taxation to an ‘interest in partnership’ asset.

11.   As opposed to the law applied in the United States and Canada, in England it was determined, in a guideline of the tax authorities (from January 17, 1975) that the sale of the interest of a partner in a partnership is viewed as the sale of each and every asset of the partnership assets.  The text of the guideline is as follows.

‘1. Nature of the asset liable to tax [TCGA 1992 s 59] treats any partnership dealings in chargeable assets for capital gains tax purposes as dealings by the individual partners rather than by the firm as such. Each partner has therefore to be regarded as owing a fractional share of each of the partnership assets and not for this purpose an interest in the partnership.

....

2. Disposals of assets by a partnership.

Where an asset is disposed of by a partnership to an outside party each of the partners will be treated as disposing of his fractional share of the asset. Similarly if a partnership makes a part disposal of an asset each partner will be treated as making a part disposal of his fractional share...’ (See: Simons Direct Tax Services, p. 1860).’

Similar to the situation in England, it was determined by the tax authorities in Australia, in Guideline IT 2540 (from June 22, 1989) that the sale will be viewed as the sale of each and every asset of the partnership assets.  This guideline was anchored in the law in Taxation Laws Amendment Act which added sections 160A-160C to the Income Tax Assessment Act 1936 (see J. Waincymer, Australian Income Tax: Principles and Policy [41] 306-317; Australian Tax Handbook [42] 822-844).  In South African law as well such an event is taxed as though each and every asset of the partnership assets is sold (see: Silke on South African Income Tax : ((Volume 2) [43] p. 11.1-11.25).

12.  We can see, that in countries with a similar legislative history to ours, various approaches were adopted as to the manner of taxation of the transfer of a share of the partner in a partnership.  They have an echo both of the aggregate theory and the entity theory.   However, at least in all that relates to American law, in which the transfer of the interest of a partner in a partnership is taxed with capital gains tax, it is a matter of a very weak version of the entity theory, as from the rule of transfer of an interest in partnership as a capital asset, many assets with an earned character are excepted.  So too, in legal systems that adopted the entity theory in the area, specific adjustment provisions are included in the relevant legislation whose purpose is to adjust the capital taxation to the special asset of an ‘interest in a partnership’.

The considerations for adoption of the aggregate approach as to the sale of the share of a partner in a partnership

13.  As said, my opinion is that in the matter we are dealing with the aggregate theory, which taxes a partner in accordance with his relative share in each of the partnership assets, is to be adopted.  The central rationale which supports the conclusion I reached, is the rationale which is at the basis of section 63 of the Ordinance.  From this section it can be learned that the Israeli legislator is of the opinion that the partnership resembles more closely a business run by a private individual than a business run by an association such as a corporation.  In my view this rationale must guide us even in determining the question which is at the center of our matter.  In addition to what has been said, there are two additional rationales which strengthen my said conclusion.  The one, a determination according to which it is a matter of the sale of an interest in an asset, will lead to a blurring between capital assets and earned assets, and will lead to distortions and unwanted results.  The second, the Ordinance, in its present formula, is not set up to absorb such a determination.  Its absorption may lead in its wake to severe implementation problems due to the lack of adjustment provisions in the Ordinance for capital gains taxation of the special asset of ‘an interest in partnership’.

A. The rationale at the basis of section 63

14.  I  join the position of my colleague Justice Englard that in our matter there is no relevance to the question whether the partnership is a legal personality or not (and this in contrast with the view of Y. Ne’eman in said article, which bases the substance of the problem on the existence of the separate legal personality of the partnership).  The question is as my colleague defined it, how do the tax laws view the business of a partnership.  If we want to simplify it, the question which must be determined is, whether in terms of the tax laws, a partnership more closely resembles a limited liability corporation or a private business.

Section 63 points clearly to the fact that at least, from the perspective of the ‘incomes’ of the partnership, the tax legislator views the partnership as a private business in the hands of several individuals and not as a separate entity such as a limited liability corporation.  Indeed, this section, on its own, is not sufficient to provide a clear and final answer to the question before us.  However, as mentioned above, section 63 can also serve as a guide for the direction of the tax legislator on the topic of taxation of transfer of the share of a partner in a partnership.  In taxation of a partnership, the taxable income is of each of the partners who owes taxes for his profits in the partnership and not of the partnership.  The emphasis is on the partner as an individual.  In this vein it can also be said that as to the matter of determining the capital gains which apply to each partner, he is to be regarded as any other individual and the capital gains tax which apply to him are to be calculated, under the assumption that he is an individual with interests in each of the assets of the partnership, which he transferred to the purchaser of the interests.  My view is, that as to the sale of the share of the partner in the partnership, there is no good reason to deviate from said direction of the legislator as it is reflected by section 63.

15.  My colleague, Justice Englard, is of the view that in our matter we are to adopt the entity theory and accordingly to tax the interest of a partner in a partnership that is transferred to another with capital gains tax.  In this context he mentions that section 63 does not directly address the question that arises in this case.  In addition he notes that there are a line of provisions in the Ordinance which conceive of the partnership, explicitly or implicitly, as a separate business unit.  So too, my friend explains that there is case law which determines that the law of the partnership is as the law of a separate business.

As said, I agree with the view of Justice Englard according to which section 63 itself does not provide a direct answer to the case we are dealing with.  However, it is to be reiterated that section 63 is the only section in the Ordinance which deals with partnership taxation and it can point in the direction of the aggregate theory.

As for the other sections which point, according to the view of my colleague, to a different approach, my view is that they cannot serve as a reference for such an approach.  The provision of section 63(a)(2) to which my colleague refers, is merely a technical provision.  My colleague wishes to conclude, from the provisions of sections 63(b), 131(a)(5) combined with 131(c) and (d) and 224(a) of the Ordinance, which in part exclude the partnership from their application, that from this it can be inferred, ostensibly, that the rest of the provisions which apply to an association of persons also apply to a partnership.  In my opinion, we cannot learn from these provisions to our matter.  The provisions, primarily deal with technical matters and not the question of tax liability.  And even if it can be concluded from them that the partnership is an association of persons, the significance of this is not that it is a matter of an association of persons of a corporation type to which the laws which apply to a corporation apply.

As for the case law which Justice Englard brings in support of his position, it is to be emphasized that this case law amounts to a single judgment (ITA 118/90 Lev Hagalil Partnership v. Income Tax Assessor, Tiberias [14]) which is not from the study halls of this court.  In this, I do not wish to express an opinion as to said judgment on its merits in itself, as it is not up for discussion before us.  I will only clarify that that judgment focused on a specific determination and not a general one, according to which a partnership is an ‘association of persons’ as to section 181B of the Ordinance and therefore it was determined in it that that section applies to the partnership.  This construction was done using careful language and with the awareness that this is not an easy determination and that it needs to be reconciled with the provisions of section 63 of the Ordinance.  I would like to reiterate that the accepted approach in Israeli case law as to taxation of partnership, an approach which has existed for some time, consistently and unequivocally follows the aggregate approach.

16.  The direction of the legislator, as it is reflected in section 63 of the Ordinance, is also supported by the provisions of the general law, from which one can learn that one can find a broader common denominator between a partnership and the business of a private person than between a partnership and a corporation.  A limited liability company is a very sophisticated legal personality.  According to section 4 of the Corporations Law 5759-1999:

‘A corporation is a legal personality with the capacity for any right, duty and operation which is consistent with its character and nature as an associated body.’

This section emphasizes that a corporation has the legal capacity which comes very close in degree to the legal capacity of a person made of flesh and blood.  The independent entity of a limited liability corporation has powerful expression in that there is a clear-cut and impassable partition (apart from the exceptional cases of lifting of the veil) between its creditors and its shareholders.  Moreover, even in the inner circle, between it and its shareholders, the latter do not owe the corporation anything apart from the capital they committed to invest in it (the principle of limitation of liability).  The situation of partners in a partnership is different.  According to section 20 of the Partnership Ordinance [New Version], 5735-1975 (hereinafter: ‘the Partnership Ordinance’) every partner is liable, jointly with the other partners and severally, for all the liabilities that the partnership is liable for.  Indeed, according to section 20(b), an enforcement order will first be issued against the partnership and only in the situations listed in the section will be issued against a partner.  However, the principle by which first one turns to the partnership and only later to the partners, does not dull the distinction between the status of partners and the status of shareholders in a company.  In the inner circle, among the partners and the partnership, section 34(1) establishes that every partner is liable for covering the losses of the partnership at a rate proportional to the capital sum that he agreed to sign to.  Here too, the distinction between a partnership and a corporation is clear.  As said above, a shareholder in a limited liability corporation does not owe it anything beyond the capital that he committed to invest in it.  On the other hand, the liability of the partner for the losses of the partnership is not static, but it stands in direct relation to the amount of the loss and to the proportion of his share in the partnership.  In summary, even if we assume that some of the characteristics of the partnership  grant it the status of an entity within the legal world, there is a great distance between this status and the status that is granted to a limited liability company.

17.  On the other hand, the partnership is close in essence to a business run by an individual.  The real distinction between it and a sole proprietorship is that the partnership is managed by several persons.  Indeed, for considerations of efficiency the Partnership Ordinance grants the partnership certain capacities that are not granted to an individual managing a business.  While the sole proprietor does not have an entity separate from the individual himself, a registered partnership has the capacity to sue and be sued  (section 66(a) of the Partnership Ordinance).  So too, the partnership, as distinct from each of the partners separately, holds the partnership assets (section 31 of the Partnership Ordinance).  These capacities enable efficient management of a business which is managed collectively by a number of owners.  It is easy to understand the discomfort that would be caused, for example, if it was necessary to register the partnership assets in the names of the partners themselves.  In such a case, whenever there would be a change in the composition of the partnership the immediate need would arise to change the registration of the ownership of assets which require registration.  As said, these capacities were granted to the partnership so that the partnership business could be managed more efficiently.  However, they do not create a substantive distinction between a private business and a partnership like the one that exists between a partnership and a limited liability corporation (for additional considerations see Y. M. Edri and Y. Eden in said article [29] p. 317).

18.  My colleague, Justice Englard, presents a different position.  In his view, an interest in an ‘active business’ of a partnership is similar, at its core, to the concept of a share in a business corporation, as in the two cases it is a matter of a unique economic entity that is separated from those holding it.  In that, in his view, a partnership is distinguished from a business run by an individual, as to whom it is difficult to separate between his private assets and liabilities and those of his business.  My colleague Justice Englard further adds that imposing a tax only on the tangible assets from the ‘active business’ of this entity, does not reconcile with the economic reality.

From an economic standpoint, there is great logic in the position of my colleague, according to which a one is to examine a business in an overall and coherent manner, as a ‘going concern’, and not to split it artificially to its various components.  There is therefore much rationale behind the claim that in terms of the economic reality, there is a similarity between the taxation of the sale of the shares of a shareholder in a corporation and taxation of the sale of the share of a partner in a partnership.  But similar economic logic applies as to a ‘going concern’ managed by an individual.  Also as to the sale of a business of a private individual, as opposed to  his other private assets, there is logic  in determining the value of the sold interest in accordance with the value of the sold business as a whole business unit and not as a sale of each of the assets included in it separately.  Indeed, a situation in which an individual sells his business, is very similar to a situation in which two partners sell their interests in the partnership business.  For example, Reuven manages a photo developing business.  Shimon and Levi also manage a similar photo developing business but they manage it as a partnership, Reuven, Shimon and Levi decide to retire and sell their business – Reuven  sells his interests in his business while Shimon and Levi sell the interests in their joint business.  Is there a real rationale for a distinction, in terms of the tax laws, between the manner of determining the liability in capital gains tax between Reuven and Shimon and Levi?  In the case of Reuven as the sole owner of the business, it is a matter of a live and active business which can be related to separately from its owners.  The entire difference between a partnership and such a business is in the number of people managing it.  Ostensibly, there is no real reason to claim that the fact that a number of people manage a business and not an individual constitutes an appropriate criteria which justifies a distinction in the manner of taxation between the two cases.

19.  My colleague, Justice Englard seeks to distinguish between his approach as to transfer of an ‘interest in a partnership’ and adoption of the ‘going concern’ approach also as to a sole proprietorship.  He suggests a distinction which focuses on the likelihood of blending of assets.  According to his approach, it is difficult to distinguish for an individual between private assets and business assets.  On the other hand, in a partnership, due to the conflict of interest between the partners, identification of the business assets is easier.  This distinction between a partnership and the sole proprietorship, is difficult in my view.  Blending of assets is a factual matter.  In fact, it is possible that there is a business managed by an individual in which the distinction between the business and the other personal affairs and accounts of the business owner is meticulously maintained, and there may be a partnership where the line of separation between the partnership business and the private affairs of the partners is not maintained.  In any event, in a corporation, blending of assets is a cause for retroactive ‘lifting of the veil’, to the extent that it is proven that such blending occurred.  If we apply these grounds to our matter, with the necessary changes, as of course there is not any veil partitioning between a person and his business, then the situation of blending of assets justifies that the business of an individual not be considered a separate business unit for tax purposes, however, it does not justify a distinction, to begin with, between the manner of taxation of a partnership and the manner of taxation of a sole proprietorship.

20.  To summarize what has been stated in paragraphs 14-19 above, it can be said that the approach of the legislator of the Ordinance, as reflected in its section 63, is to see the interests of the partner in the partnership as similar to the interests of a private individual in his business.  As I have sought to show, indeed there are lines of similarity between the interest of an individual in his business and the interest of a partner in the business he shares with others, a similarity on which a similar treatment of the tax laws in the two cases is based.  From hence the conclusion, that when a partner transfers his interests in a partnership, he is similar to an individual who transfers an interest in his business, and will be viewed as transferring his interest in each of the assets of the partnership business.  The ‘going concern’ or ‘active business’ approach, which my colleague Justice Englard seeks to apply, as to transfer of interests in a partnership – without my expressing an opinion as to whether it constitutes the lex ferenda – if examined, ought to also be examined as to the transfer of the business of an individual who manages his business separately from his other private matters.

In any event, be the lex ferenda what it may, in its current version the Income Tax Ordinance is not laid out for such a radical change without causing damage to the fundamental principles on which it is founded.  It is proper, therefore, that the initiative for the revolution in tax laws which apply to a partnership and those who are partners in it, as my colleague suggests, and to the extent that it should be so, come from the legislator.  It is to be presumed that in the event of such a change in the law, the legislator will ensure a comprehensive and coherent arrangement which will properly address all the consequences which stem from this.  It is not proper that a change of such magnitude, will be the product of case law, as there is a real concern, as will still be clarified below, that it will leave in its wake more questions and queries than those it seeks to resolve.

B. Harm to the distinction between regular income and capital income

21.  The Income Tax Ordinance, similar to additional legal systems, distinguishes between the taxation of regular income and the taxation of capital gains.  Indeed, the general tendency existing in many countries as well as in Israel, is to bring together the two taxation regimes, and today the tax rates which apply to regular income and to capital gain are even identical.  However, the tax regimes have not been completely united and the difference between taxation of capital gain and taxation of regular income still stands in several ways, some of which I will mention below.  First, the international rules of taxation of regular income differ from the international rules of taxation of capital gain (see for example sections 2,5,89(b) of the Ordinance).  While the application of the personal tie is very broad in the taxation of capital gains (sections 89(b)(1) of the Ordinance) it is very limited in the taxation of regular income.  Second, while there is no arrangement which enables the spreading out of regular income, as the legislator was aware of the fact that the capital gain was accumulated over a number of years and not only at the date of implementation, and therefore established a spreading out arrangement in section 91(e) of the Ordinance, which enables spread of the capital gains up to a period no longer than four tax years or the period of ownership of the asset, whichever is shorter.  Third, the laws for deduction of regular expenses are different from the laws of deduction of capital expenses.  While regular expenses are deductible to the extent that they were expended in the generation of the income of the taxpayer (section 17 of the Ordinance) capital expenses are not deductible.  Fourth, while it is not possible to deduct depreciation of earned income , it is possible to deduct depreciation of depreciable capital assets.  Fifth, the laws of offset of regular losses are different from the laws of offset of capital losses (see:  sections 28, 92 of the Ordinance).

22.  Taxation of the sale of a share in a partnership as the sale of an overall interest in a partnership as an asset, ignores the character and classification of the assets in the partnership’s ownership and taxes all these assets as though they were capital assets which influence the value of the overall interest being sold.  As long as the distinction between taxation of regular income and taxation of a capital asset stands as is, it is not appropriate to blur the borders between the two types of incomes.  Such blurring may incentivize evasion of tax, and lead to unreasonable consequences.

My colleague Justice Englard, does not see any difficulty in this.  In his view, just as a share, which aggregates within it capital and earned assets, is taxed as capital so too the interest in a partnership.  According to his view the aggregate approach specifically may create difficulties, as it requires the application of different laws on different assets within the partnership.

According to my view, there is no doubt that blurring of the realms between earned and capital income which stems from applying capital taxation on the transfer of an interest in a partnership will drag unwanted consequences after it, among them consequence of tax evasion.  To this the situation that existed in the United States following the approach of the case law there to tax the transfer of an interest in a partnership with capital taxation serves as a thousand witnesses.  This is the place to emphasize that the tax reductions which are caused as a result of the blurring of the boundaries between earned and capital income constitute tax reductions which result from a judicial determination, namely from the determination (as in my colleague’s version) according to which an overall interest in a share in the partnership is transferred.  Therefore, it is ostensibly a matter of tax reductions which were done lawfully and which cannot be dealt with via anti-planning norms.  The result is unsatisfactory in two senses.  Not only is it a matter of a tax reduction that will hold from a legal standpoint, but it is a matter of a tax reduction that is the product of the Court’s case law.

I also do not share my colleague’s position, that the aggregate theory creates a difficulty in light of its distinction between capital and earned taxation.  The aggregate theory, is a simple approach which is aligned with the existing solutions and existing laws and applies them as they are on the sale of assets in the process of sale of an interest in a partnership.  There is no need, in its framework to invent new solutions and no difficulty arises in implementing solutions.  All that is needed is to apply the regular law to each and every asset.  Just as the law will apply to an individual business owner, so too it will apply to a partner in a partnership as to his share in the partnership assets.  As to the ‘difficulty’ which my colleague Justice Englard mentions with the aggregate theory according to which it leads to application of the international taxation tie on only some of the assets and not on all the assets, there is no difficulty in this.  It is natural that in the sale of assets of various types different laws apply.  More than once it will occur that capital and earned assets are sold, and on each type different laws apply, including the laws of international taxation as to the taxation tie which justifies taxation.

23.  My position that the approach of my colleague will lead to a blurring of boundaries between earned and capital incomes can be exemplified in the following way.  Take a case where the taxable income of a partnership all of whose assets are current assets, was, during each of its three years of operation, negligible.  In the fourth year the partnership earned a profit.  At the end of the fourth year the partner, who has no additional income beyond the partnership, sells his share in it.  According to the approach which sees in this sale the sale of an interest in an asset, then the partner is entitled to demand the spread of the profit that he earned from the sale over a period which is not to exceed four years, and thereby significantly reduce the effective tax he bears, in light of the fact that he had no income in the past years.  It is clear that the profit was not earned over the years, but it stemmed from the partnership business over the last year, which increased the value of his interest in the partnership.  This unwanted consequence stems from the application of section 91(e) of the Ordinance which is suited to ‘natural’ capital assets for a sale that by its nature and character is not a capital sale.  In earned assets the ‘compression effect’ that the spreading out arrangement comes to overcome does not exist (See D. Glicksberg ‘Averaging Property Betterment and Spread of Capital Gains’ [30] at 371). 

My colleague Justice Englard takes issue with this example, saying that the reasons which justify the spread of the profit over four years with capital assets are also valid as to an interest in a partnership.  So too, he comments that in many cases, the presumption at the foundation of the arrangement of spread of the profits, according to which there is an even yearly growth in the value of the capital asset in a manner that justifies attribution of equal parts to the tax years in the spread period, does not match the reality.  My view is different.  When it is a matter of natural capital assets, the match between the presumption at the foundation of the arrangement of spread of capital gain and reality is great and therefore, in this context, the presumption is reasonable.  On the other hand, with an asset of a ‘partnership interest’ the degree of matching between this presumption and the reality is minimal and therefore is not reasonable.  Moreover, and this is the main point, my colleague’s approach grants the taxpayer the possibility of controlling the substance of the transferred (this in total contrast with the existing situation as to natural capital assets).  If the taxpayer wishes, he will transfer his share in one unit as a ‘partnership interest’ including undistributed profits, and will be taxed on this in an overall manner as capital gain.  In this last way, he has the choice to turn an earned asset into a capital asset.  This choice, which may benefit the taxpayer, is of course not given to the taxpayer where it is a matter of natural capital assets.  It turns out, therefore, that according to the approach of my colleague an unwanted opening was created for tax evasion.

It should be mentioned that the consideration of blurring of the boundaries between taxation of capital income and earned income, was one of the main considerations that drove the American legislator to establish section 751 (quoted above) in a law, alongside a provision which recognizes the sale of a share of a partner in a partnership as the sale of an interest in a partnership.   Establishing a legal rule according to which the sale of a share in a partnership is the sale of an interest taxed as a capital gain, will lead to the problematic reality that existed in the United States prior to the statutory arrangement that came to address it.

24.  It will be noted that the case that I mentioned above serves only as an example of the unwanted consequences as a result of the fact that due to the sale of a ‘partnership interest’ there has resulted a blurring in the distinction between capital income and regular income.  There are additional examples of this.  Such blurring could lead to unwanted consequences in terms of tax laws, in light of the difference between the provisions in the Income Tax Ordinance as to taxation of regular income and the provisions as to the taxation of capital gain, some of which I discussed in paragraph 21 above.

C. Implementation problems

25.  A ‘partnership interest’ is a special asset.  This asset has characteristics that are not characteristics of ‘natural’ capital assets.  The asset changes from time to time, in accordance with the change in the assets which make it up.  Its value changes in accordance with these changes.  Its value also changes in accordance with the economic results of the partnership business.  Applying section E of the Ordinance, that deals with the taxation of capital gains which grow from the sale of a capital assets, on a ‘partnership interest’ raises significant difficulties.  Section E is designated for dealing with ‘natural’ capital assets.  Its provisions are adjusted to such assets.  It is not built for dealing with capital assets of the ‘partnership interest’ type.  Applying its provision on a ‘partnership interest’ will encounter substantial difficulties.

26.  In order to understand these difficulties, it is appropriate to explain the way in which the Ordinance taxes capital gains.  Section 91 imposes a capital gains tax on the actual capital gains that the taxpayer gained, at the same rates as his regular income, when the capital gains is regarded as income at the highest level in the ladder of his existing income.  The Ordinance establishes a number of definitions and formulas for calculating the actual capital.  Put simply, the actual capital gain is the actual rise (after neutralizing the effects of inflation) in the value of the capital asset from the date of its purchase until the date of its sale.  In the terminology and technical definitions of the Ordinance ‘actual capital gain’ is defined in section 88 as the ‘amount by which the consideration is greater than the balance of the original price’.  The ‘inflationary amount’ is defined as ‘(1) the part of the capital gain which is equal to the amount by which the balance of the adjusted original price is greater than the balance of the original price. . .’  From hence, that in order to calculate the actual capital gain, we need the definitions of ‘the balance of the original price’ and ‘the balance of the adjusted original price’ and of ‘the consideration’.  These terms are defined in section 88 of the Ordinance as follows:

The balance of the original price’ – the original price of the asset after the deduction of depreciation amounts;

‘The balance of the adjusted original price’– the balance of the original price . . .  multiplied by the index on the day of the sale divided by the index on the day of the purchase . . .;

‘consideration’ – the price that is to be anticipated from the sale of the asset by a willing seller to a willing buyer when the asset is free of any encumbrance which comes to guarantee a debt, a mortgage or other right which is intended to guarantee payment;. . .’

‘The original price’ is defined in section 88 as follows:

‘’Original price’ –

(1) For an asset that is bought – the amount the that taxpayer spent for the purchase of that asset; (2) For an asset received in a barter – the consideration at the time of the barter;

. . .

(5) For an asset that the taxpayer created – the amount that the taxpayer spent for creating the asset.

(6) For an asset that reached the taxpayer in any other way – the amount that the taxpayer spent for the purchase of that asset;

And all with the addition of expenses spent by the taxpayer for improving the asset or holding it from the day of purchase until its sale, as long as they were not deducted in the past in calculating the taxable income of the taxpayer.

It is found, that in order to calculate the capital gains tax liability, the ‘balance of the original price’ is to be calculated and subtracted from the ‘consideration’ and thereby the ‘capital gain’ is reached.  The ‘balance of the original price’ is to be subtracted from the ‘balance of the adjusted original price’ and thereby the ‘inflation amount’ is reached.  The tax will be imposed on the ‘actual capital gain’, meaning, the difference between the capital gain and the ‘inflation amount’.  At the center of the calculations, is the value of the ‘original price’ when, as said, it not possible to calculate the capital gains tax liability without first calculating the ‘original price’ of the asset being sold.

27.  Applying said provisions to the sale of a ‘partnership interest’ entails many difficulties.  What, for example, is the ‘original price’ of the ‘partnership interest’?  Is it the amount that a partner invested when he joined the partnership or perhaps it is the accumulation of the ‘original prices’ of all the partnership assets?  What is the ‘balance of the original price’ of the ‘partnership interest’?  Can we say that it is the ‘original price’ of the interest deducting the depreciation on the interest, when it is difficult to view the ‘partnership interest’ as a depreciable asset?  Does it stem from this that depreciation and ‘balance of the original price’ of the partnership interest is identical to the ‘original price’?  Or perhaps we would say that ‘balance of the original price’ is the ‘balance of the original price’ for each and every partnership asset?  How will the adjustment for inflation be made and the balance of the adjusted original price be calculated?  These questions clarify the difficulty in applying Chapter E of the Ordinance on the ‘partnership interest’.  Such an application in fact is not possible without statutory intervention which will establish adjustment provisions which will enable application of Chapter E of the Ordinance on a partnership interest.

My colleague, Justice Englard, does not relate to all these questions, whose resolution is necessary in order to implement the provisions of Chapter E of the Ordinance on the transfer of a ‘partnership interest’.  However, he comments that calculation of the ‘original price’ of the partnership interest does not raise a special problem.  According to him, this is to be calculated similarly to the manner of calculation of the ‘original price’ of a share in a corporation.  I do not share the approach that this is necessarily the only or appropriate solution.  Usually, the original price of a share is the sum that was paid for its purchase or the market value of the share at the date of its purchase and changes that occurred in the corporation’s assets between the date of purchase and the date of sale do not influence the original price.  On the other hand, it is not at all clear that assets that a partner brought into a partnership during its lifetime do not influence the ‘original price’ of the partnership interest.  The opposite, it is very possible that it is appropriate that additional investments and assets that the partner invested in a partnership will influence the original price of the partnership interest.  Therefore, the determination is necessary as to the degree of effect of these additional investments by the partner and a determination as to the manner of its calculation.  The Income Tax Ordinance does not provide a clear cut answer to this.

28.  Generally, my colleague is of the view that the absence of adjustment provisions is not a determinative factor when a question of a fundamental character is in the mortar.  In his view ‘Were that special problems will arise with the acceptance of the proposed approach, then the hand of the legislator is poised to complete that which requires completion.’ (paragraph 41 of his judgment).  As said above, my view is, that the approach of my colleague will lead to a revolution in the area of tax law of partnerships, a revolution which the Income Tax Ordinance is not set up to deal with.  It will be emphasized, it is not a matter of a regular question of construction which the judge dealing with is meant to decide according to the various construction options open before it.  In its present formula, the Income Tax Ordinance lacks any provisions which enable applying capital taxation on the transfer of a ‘partnership interest’.  In order for the matter to be possible, ‘creative case law’ of the Court is needed, ab nihilo.  On the other hand, the aggregate approach which is reflected in section 63 of the Ordinance and the application of this approach does not raise, as previously mentioned, any vagueness.  I prefer the approach, according to which one must operate within the law which supplies satisfactory answers for its implementation, rather than the approach according to which the court will determine the general policy, the principle, in the topic of partnership taxation and thereby force the legislator to be dragged after it and complete what needs completion and repair that which needs repair.  As I clarified above, my view is that even if it is proper to change the existing situation relative to the taxation of a partnership – without establishing this – it is appropriate to leave to the legislator the task of shaping general policy as to taxation of a partnership in general and taxation of the transfer of the partnership interest in particular and to develop this policy in a detailed and comprehensive arrangement which will enable its implementation.  It is not appropriate in my view, that this court place a preference on one of the two paths in the matter of partnership taxation, with the knowledge that the legislator must come on its heels and disassemble the mines that it leaves in its wake.

29.  The difficulties in applying Chapter E on the ‘partnership interest’ in the present statutory situation, in which the adjustment provisions do not exist, can be exemplified with three examples.  The one, two partners who set up a partnership and each invest 100,000 NIS in it.  The partnership purchases a truck in the amount of 200,000 NIS.  During the course of the year the partnership accumulated an income of 100,000 NIS which was not distributed.  According to what was said in section 63 of the Ordinance, each partner will pay tax according to his share in the income (under the assumption that the average tax rate which applies to the taxpayer is 50%, his share in the income is 50,000 NIS).  If he sells his share in the partnership for the sum of 150,000 NIS, he will have a capital gain of 50,000 NIS (150,000-100,000).  The outcome is that he pays a double tax.  In light of what is said, the need is created for a provision which will adjust the ‘original price’ to the fact that the partnership incomes were not distributed and therefore the ‘original price’ is to be increased by the undistributed profit or the consideration is to be reduced at the same rate. (See Y. M. Edri and Y. Eden, Ibid, [29] at p. 322).  Such an adjustment provision, was established by the Israeli legislator in section 64a(a)(7) in regards to a ‘family corporation’.  Similar to a partnership in the taxation of a ‘family corporation’ as well there is an arrangement of lifting of the veil.  In order to avoid double taxation of the members of the corporation, upon the sale of their shares in the corporation section 64a(a)(7) establishes that:

‘In the sale of a share of a family corporation an amount equal to the part of the sum of the profits that accumulated in the corporation during the period of the benefit and it did not distribute, as per the part of the share in the rights to corporations profits, will be subtracted from the consideration, in the matter of section 88 both as to the seller and as to the buyer.’

Such adjustment as said is also established in American law, which as said, taxes the sale of a share in a partnership as the capital sale of the interest in the partnership.  Section 1001, which is found in Chapter O of the IRC, which deals with calculation of the profit for the sale of the capital assets, establishes that the profit or loss is the amount realized over the adjusted basis.  The chapter contains provisions for calculation of the adjusted basis, in addition to provisions which impact its calculation, which are spread in the various chapters including chapter K.  Section 705, which is found in Chapter K, deals with calculation of the adjusted basis of the interest of the partner in the partnership.  The section adds to the adjusted basis the share of the partner in the partnership incomes, in order to avoid the double taxation which we pointed out above.  A similar adjustment provision is absent from the Ordinance as to the taxation of the transfer of the share of a partner in a partnership.  In its absence, the taxation of a share in a partnership as an interest in a partnership will lead to an unwanted consequence of double taxation.

As to said example, my colleague Justice Englard responds that it would be possible to solve the problem that arises in light of the lack of an adjusting provision in our matter by way of the purposive interpretation of the law which will avoid double taxation.  It is appropriate to emphasize in relation to this, first that we are not dealing with the interpretation of an existing statutory provision but in creating an arrangement ex nihilo by this court.  Second, preventing the double taxation can be done under the circumstances in one of two ways – the one by increasing the ‘original price’ by undistributed profits; and the second, by reducing the consideration by the same rate.  Each of these ways may have a different impact on taxation in the future.  Which of the two ways should the Court undertake?  Is it not a matter for the legislator to regulate?

30.  A second example, exemplifying the implementation problems that will be created as a result of the determination that in transferring a share in a partnership an interest in a partnership is sold, is as follows.  The partnership spends 100,000 NIS that is not deductible.  The next day one of the partners sells his share in the partnership for 50,000 NIS.  Should we say that he had a capital loss of 50,000 NIS (150,000-100,000)?  It is clear that the answer to this is in the negative, as otherwise the selling partner will be able to deduct a non-deductible expense.  In actuality, this partner has not experienced a capital loss or a capital gain – he received his investment back at the same value.  In order to avoid the indirect deduction of the non-deductible expense, an adjusting provision is needed which will reduce from the ‘original price’ the expenses expended by the partnership and which are not deductible.  The adjusting provision which resolves this anomaly is found in section 705 of the IRC The section reduces from the adjusted basis the partner’s share in the partnership’s non-deductible expenses in order to prevent this indirect deduction.  Such a provision is necessary to the extent that the rule is adopted that the sale of an interest of a partner in a partnership is taxable with capital gains tax for the sale of the interest in the partnership.  But an adjusting provision of this type is absent from the Ordinance.  In its absence, the rule according to which the sale of a share in a partnership is like the sale of an interest in a partnership will lead to an unwanted result of indirect deduction of a non-deductible expense.

31.  A third example, three partners set up a partnership with an investment of 100,000 NIS each.  During the course of the tax year, the partnership received one intake in the amount of 90,000 NIS, which is not taxable, a gift or other intake which is tax exempt.  To the extent that later, the partner sells his interest in the partnership in the amount of 130,000 NIS, he will be taxed for the capital gain of 30,000 NIS.  We find that the partner was taxed for an intake that is not taxable.  In order to avoid this result, an adjusting provision is necessary which will increase the original price by the sum of the intakes which are taxable or are tax exempt, or which will reduce the consideration by the same rate.  Such a provision is found in section 705(a)(1)(b) of the American IRC.  The section increased the adjusted basis of the partner at the proportion of his share in the non taxable incomes of the partnership.  Such a provision does not exist in the Ordinance.  In its absence adoption of the rule, according to which the sale of the interest of the partner in the partnership is the sale of a capital gain of an interest in a partnership, will lead to the unwanted result of the taxation of a partner for non-taxable income.

My colleague Justice Englard is of the view that a tax exempt intake will not be taxed by force of the core principle which prohibits collection of a double tax.  In this subject, first, it is not necessary, as a one and only solution, that a tax exempt intake, which turns to a partnership asset and is included in its assets, will not be taken into account in determining a capital gain with the sale of an interest in a partnership.  Second, even if it is a matter of a double tax, I will turn to what is said in the latter part of paragraph 29 which is appropriate, with the necessary changes, in our matter as well.

32.  These examples, of course do not exhaust the spectrum of unwanted results which may result from adoption of said rule lacking suitable adjustment provisions.  They exemplify, that in its present state, Chapter E of the Ordinance is not adapted to the taxation of the special asset of a ‘partnership interest’.  Indeed I clarified above that in those legal systems which chose to adopt a rule according to which the sale of a share in a partnership is to be taxed as the sale of an interest in a partnership, such as the American and Canadian legal systems, the relevant tax law includes clear provisions which adjust the taxation arrangement which applies with taxation of capital gains to the special asset of an interest in a partnership.

My colleague, Justice Englard notes that in particular the American experience is counter evidence to the claim that imposing liability on the transfer of a share in a partnership as an interest in a partnership is not implementable absent specific adjusting provisions.  He reminds in this context, that the case law took this step, without waiting for a detailed statutory arrangement.  As I noted above, comparative law enables us to learn from the experience of others and to avoid problematic situations they got into.  Indeed, in the United States the case law preceded the statutory arrangement.  However, as I detailed above, this fact created difficulties which required statutory intervention.  From this experience one can learn that even if according to one view or another the lex ferenda is to tax transfer of a share in a partnership as the transfer of an interest in a partnership – without expressing an opinion that it is so – the right way is to direct a recommendation to the legislator to anchor a full and coherent statutory arrangement in this vein.  This is not to be done by way of case law which does not suit the practiced legal provisions.

Conclusion

33.  The dispute as to the appropriate way to tax the transfer of the share of a partner in a partnership is legitimate.  In this complex matter there are views in one direction and another.  Different legal systems take different approaches.  As I sought to show, Israeli law chose to impose a tax in such a case for the transfer of a share of the partner in each of the partnership assets and not for the transfer of a ‘partnership interest’.  The principle which arises from section 63 of the Ordinance, the provisions as to the distinction between a regular income and a capital income, and the statutory provisions which establish the way to taxation of capital gains – all these point clearly in this direction.  This was also the practice until now.  In my view, this situation is not to be changed other than by the explicit word of the legislator.

34.  If my view were to be heard, the appeal would be granted, the judgment of the District Court would be overturned, and the decision of the appellant the subject of the appeal to the District Court would be upheld.  So too, I would impose on the respondents the appellant’s costs in both courts, in the amount of 25,000 NIS.

 

President A. Barak

I join the opinion of my colleague Justice Or.  I accept his rationales.  I seek to draw the attention of the legislator to the matter before us.  It is appropriate for it to be regulated – whether by adoption of my colleague Justice Englard’s model, or by adoption of my colleague Justice Or’s model or by the adoption of a third model – by a comprehensive and thorough act of legislation.

 

It was decided by a majority of opinions as per the opinion of Justice Englard.

 

27 Iyar 5761

20 May 2001

 

 

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