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israel legal profile

Proelium Law LLP


Israel has a mixed legal system of English common law, British Mandate era regulations and Jewish, Christian and Islamic religious law. Israel has no formal constitution but the functions of a constitution are fulfilled by the Declaration of Establishment, which established the twelve Basic Laws.[1] These are entitled, respectively: The Knesset, Israel Lands, The President of the State, the Government, The State Economy, The Army, Jerusalem the Capital of Israel, The Judiciary, The State Comptroller, Freedom of Occupation, Human Dignity and Liberty, and Referendum. The superiority of the Basic Laws is questioned as they are a product of the of the Knesset acting as a Constituent Assembly. Nevertheless, according to judicial interpretations, Basic Law: Human Dignity and Basic Law: Freedom of Occupation hold the highest normative status.[2] Otherwise, legislation holds the highest status. Legislation appears in three forms. Primary legislation are the statutes of the Knesset, secondary legislation is formed by regulations and by-laws. Emergency legislation forms the third form.

Basic Law: The Judiciary establishes three hierarchical bodies. At the apex is the Supreme Court, followed by the District Courts and subsequently the Magistrate’s Courts. Magistrate’s Courts act as civil trial courts, whilst District Courts have authority as trial and appellate courts, hearing civil and criminal appeals; the Supreme Court is the final court of civil and criminal appeals.[3] Specialist, limited jurisdiction courts also exist, such as religious, labour and military courts. The judiciary does not carry corruption risks for business interests and is not an obstacle for companies wishing to operate in Israel. Bribes are not exchanged, and the judiciary is independent as confirmed in Basic Law: The Judiciary. Indeed, judges are appointed by a committee of members from the Supreme Court, cabinet, the Knesset and the Israel Bar Association.[4] Israel possesses a strong legal anti-corruption framework and anti-corruption laws are implemented effectively, and as such impunity is not seen as an issue. Nevertheless, Prime Minster Netanyahu is embroiled in multiple corruption scandals. On 13 February 2018, Israeli police stated that they possessed enough evidence to charge Netanyahu in two separate corruption cases

Israeli contract law is governed by the Contracts (General Part) Law of 1973, whilst the Companies Law 1999 regulates the structure and operations of business entities.[5] The Basic Law: Freedom of Occupation forms the basis of Israeli labour laws, but there are also swathes of further protections for labour, such as the Minimum Wage Law 1987. Nevertheless, Israel does offer incentives, such as tax benefits, to businesses that meet requirements under the Law for the Encouragement of Capital Investment. The Penal Law of 1977 is the core legislation relating to criminal matters and forms Israel’s primary anti-corruption legislation.[6]

Israel is a participant to several treaties and agreements. These include the Israel-Egypt and Israel-Jordan peace treaties as well as the Oslo Accords, Geneva Conventions, Framework Agreement on Climate Change and the International Covenant on Civil and Political Rights. Israel is also a member of numerous international organisations including the Paris Club, the International Atomic Energy Agency, the Organisation for Economic Cooperation and Development and the European Organisation for Nuclear Research.


Israel has enjoyed strong economic fundamentals in recent history and the economy has proved to be flexible and adaptable. Unemployment  and inflation are low; the latter is currently at 0.2% it is forecast to remain below 2% through 2022.[7] Public debt remains fairly high at 62.2% of GDP and the fiscal deficit is expected to widen in 2018 owing to greater public spending, although the current account is expected to continue to be in surplus.[8] Overall the economy is technologically advanced, with a highly skilled workforce and numerous research and development centres and technological start-ups have found success in the Israeli economy. As such, Israel is ranked 54 of 190 in the World Bank’s Doing Business index and 37 of 190 in the Starting a Business Index.[9] Nevertheless, the cost of living is high, and monopolies dominate some sectors, whilst the Israeli government often adopts trade restrictions which favour domestic producers. Meanwhile owing to the developed nature of the economy companies will face significant local and international competition. The geopolitical and security situation in the region is also tense.

The developed nature of the Israeli economy, however, makes it attractive and low risk for investors and entrepreneurs. Industry is dominated by high-tech products and the workforce is largely highly skilled and educated, mirroring Western nations.[10] Furthermore, Israel has several free trade agreements, including with the EU. Israel has recently discovered large amounts of natural gas in the Tamar and Leviathan fields in the Western Mediterranean. Furthermore, oil may also be discovered underneath these gas fields. As such, there are extensive pipeline infrastructure networks being built, providing ongoing opportunities for suppliers and engineering consultancy, and as new fields come online, opportunities may arise in extraction of natural resources.[11] Renewable energy is also a severely underexploited source of power within Israel. Opportunities also exist in education, particularly focused on the energy industry as Israel has few formal education programmes focused on energy extraction and development. Given the high-tech nature of the economy, joint R&D programmes with Israeli firms are constantly arising across a wide range of sectors, particularly the aerospace and defence industry.[12]


The State of Israel is a Levantine nation located in the Middle East bordering Egypt, the Gaza Strip, Lebanon, Syria, Jordan and the West Bank. Israel has an estimated population of 8.29 million people, including the populations of the Golan Heights and East Jerusalem. The population is largely concentrated around Tel Aviv, the largest city with 3.61 million inhabitants, and the Sea of Galilee. Jerusalem acts as the proclaimed capital of Israel and has a population of 839,000. Hebrew is the official state language, although Arabic is spoken officially by the Arab minority and English is also widely used. Around 75% of the population are ethnically Jewish, whilst the non-Jewish minority are predominantly ethnically Arab. Judaism is the majority religion, but there is a large Muslim minority and smaller religious minorities including Christians and Druze.[13]

The country risk and business climate rating are both viewed as being low risk, owing to stable business environment and relatively advanced economy. Nevertheless, there are several security threats Israel faces. Corruption does not pose a major obstacle to doing business or investing in the Israeli economy; Corruption is not institutionalised in any sector and the judiciary is widely viewed as efficient and independent. This is reflected in Transparency International’s 2017 Corruption Index which ranked Israel 32 of 180. Corrupt practices may still occur, however, particularly when dealing with public procurement.[14]

Israel’s GDP, excluding the West Bank, is US$348.01 billion and despite unsteady real GDP growth over the past fifteen years, it is forecast to stabilise at roughly 3% annually over 2018-2022.[15] The official currency is the Israeli New Shekel.  Israel is parliamentary democracy. The executive branch is formed by the president, currently Reuven Rivlin, who is the chief of state and the prime minister who is the head of government. This position is currently held by Benjamin Netanyahu. The President is elected by the Knesset for a seven-year term, with the next election scheduled for 2021, whilst the prime minister is usually the leader of the largest party who is tasked with forming a government following legislative elections. The Presidency is ceremonial, and executive power rests with the prime minister. The unicameral 120-seat Knesset forms the legislative branch of government. Members serve a four-year term and are elected directly in a single nationwide constituency by proportional representation. The next election is due by November 2019.

Report Footnotes



[3] Ibid.













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