The Tel Aviv District Court has, for the first time, considered a request to enforce an ICSID award in Israel. In the case against Spain, the Court declined enforcement, holding that Israel was not the appropriate forum due to the absence of any substantive connection to Israel and the ongoing European legal controversy regarding the Energy Charter Treaty.
On 25 August 2025, the Tel Aviv District Court dismissed the enforcement proceedings in Israel for an ICSID award against Spain in the matter of Sun-Flower v. Spain. The dispute arose from Spain’s modification of its renewable energy tariff regime, prompting the claimants – German-registered companies – to initiate ICSID arbitration under the Energy Charter Treaty (ECT). Following a protracted arbitration, in which both parties participated, the tribunal rendered an award in favor of the claimants, granting them €18 million plus costs. Spain’s application for annulment was subsequently rejected, and one of the claimants, Sun-Flower, sought to enforce the award in Israel. Spain objected on several grounds, and the District Court ultimately accepted Spain’s position, holding that Israel was not an appropriate forum for enforcement. Notably, this is the first case in which enforcement of an ICSID award has been sought before Israeli courts.
The Court’s principal rationale was the doctrine of forum non conveniens, emphasizing the absence of any substantive connection to Israel. Neither party was domiciled or incorporated in Israel, and the underlying project was unrelated to Israel. The Court also noted that Sun-Flower had not alleged the existence of Spanish assets in Israel against which enforcement could be sought. The District Court thus underscored that Israeli enforcement proceedings are not intended to serve as a general platform for international creditors in the absence of a minimal domestic nexus. While the terminology of forum non conveniens was invoked, the Court’s reasoning extended more broadly to considerations of judicial economy and the appropriateness of Israel’s involvement in such proceedings.
The District Court further held that the lack of a substantive nexus justified the exercise of its inherent discretion to refuse enforcement. Of particular significance was the ongoing legal controversy surrounding the ECT’s arbitration clause and its application to intra-EU disputes. In recent years, the Court of Justice of the European Union (CJEU) has ruled that investor-state arbitration between EU member states is incompatible with EU law, especially in the context of the ECT – a treaty from which most EU member states have announced their intention to withdraw, with the exception of Hungary. Consequently, several European courts have declined to enforce ICSID awards arising from such disputes. Spain argued, and the District Court agreed, that Israeli courts should not disregard this unresolved and evolving legal debate. The Court reasoned that enforcing the award in Israel, in the face of ongoing European controversy, would risk inconsistency and undermine principles of international comity. Although Israel is not bound by EU law, the Court considered the scale and significance of the European dispute to be a material factor.
This outcome highlights the tension between Israel’s obligations under the ICSID Convention and the discretionary doctrines available to national courts. The ICSID system was designed to eliminate such discretion, mandating that awards be recognized and enforced in every contracting state as if they were final domestic judgments, without requiring a territorial connection or regard to parallel proceedings elsewhere. Nevertheless, the District Court rejected Sun-Flower’s arguments for strict adherence to automatic enforceability, stating that it was “hard to agree with such a strict approach.” By relying on the European legal controversy, the lack of a domestic nexus, and sovereign sensitivities, the District Court effectively reintroduced discretion into a regime premised on automatic enforcement.
For practitioners, this decision demonstrates that ICSID membership alone does not guarantee enforcement in Israel. A genuine Israeli connection – at minimum, the presence of assets within the jurisdiction – remains crucial. Awards entangled in broader international controversies or involving sovereign states may encounter additional hurdles. The decision signals that Israeli courts are not prepared to relinquish their discretion, even in the context of final arbitral awards.
It should be noted that this ruling is not necessarily the final word. As a District Court decision, it is subject to appeal before the Supreme Court. On appeal, the Court may revisit the appropriateness of relying on external legal controversies and nexus requirements in light of Israel’s obligations under the ICSID Convention. Until then, Israel may be regarded as a selective enforcement jurisdiction: reliable where there is a domestic anchor, but not an alternative forum for awards already contested abroad.
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