An Israeli company insured by a foreign insurance company filed a lawsuit in Israel against the insurer for breach of the insurance contract, despite the existence of a foreign jurisdiction clause in the insurance policy.
The court rejected the insurer’s position and ruled that the application of the foreign jurisdiction clause requires an interpretative process and is therefore invalid. The party seeking to deny the other party the right to litigate in an authorized forum should express this explicitly and clearly in the wording of the contract. In contrast to other clauses in the contract, for which, even if it is a ‘closed contract’ concluded between two business parties, there is no obstacle to carrying out an interpretative process within the limits of the language, in order to establish the intention of the parties in the foreign jurisdiction clause – to the extent that it is determined that the language is not clear and unambiguous, this will immediately lead to the ‘death’ of the clause, even if it were possible through an interpretative-linguistic process, without resorting to external circumstances, to reach the conclusion that such a clause was indeed stipulated. Here, the policy stipulates that in disputes regarding the interpretation of the terms of the policy, the place of jurisdiction will be in Germany, but since it was not agreed that every dispute is a dispute regarding the interpretation of the terms of the policy, the wording of the jurisdiction clause is not unambiguous and requires an interpretative process to determine the nature of the dispute, and therefore the foreign jurisdiction clause is null and void.
