Written by: Haim Ravia, Dotan Hammer
Israel’s Ministry of Justice has published a draft bill that would mandate foreign businesses directing their activities toward Israeli customers to comply with key Israeli consumer and privacy protection laws, regardless of choice-of-law clauses in their contracts.
The proposed “Law on the Applicability of Laws to Foreign Businesses Directing Their Activities to Israeli Customers” responds to the rapid growth of cross-border e-commerce and recent Supreme Court rulings addressing jurisdiction over international tech giants.
Under the draft bill, foreign businesses would be subject to Israeli mandatory laws when they take proactive steps to operate in the Israeli market, such as translating websites into Hebrew, displaying prices in shekels, providing Hebrew-language customer service, or advertising to Israeli consumers. Transactions involving Israeli real estate would also trigger applicability.
The draft defines protected “customers” as individuals purchasing goods or services for personal use, as well as small businesses with up to five employees or annual turnover under 2 million shekels when entering standard form contracts.
Four laws are listed in the bill’s schedule as applicable to qualifying foreign businesses: the Consumer Protection Law, the Privacy Protection Law, the Standard Contracts Law, and the Payment Services Law. The Minister of Justice would have the authority to amend this list by governmental order, subject to parliamentary approval.
The bill also proposes amending the Standard Contracts Law to establish a presumption that choice-of-law clauses favoring foreign jurisdictions are unfair contract terms. Foreign businesses directing activities to Israel would be required to publish the contact information of an Israeli representative on their websites.
The legislation follows a Supreme Court ruling in the Agoda case, where justices applied Israeli consumer law to the Singapore-based travel platform and called on the legislature to clarify the legal framework. A petition for a rehearing was recently denied.
Click here to read the draft bill on the Applicability of Laws to Foreign Businesses Directing Their Activities to Israeli Customers (in Hebrew).
