The Expansion of Israeli Unjust Enrichment Law: The Mixed Blessings of a Mixed Legal System
AUFBRUCH NACH EUROPA: 75 JAHRE MAX-PLANCK INSTITUT FÜR PRIVATRECHT, pp. 905-922, Basedow, Drobnig, Ellger, Hopt, Kötz, Kulms, Mestmäcker, eds., Mohr Siebeck, 2001
19 Pages Posted: 14 Sep 2011
Date Written: September 1, 2001
The Israeli legal system is mixed. Major parts of it, such as the law of torts, are based on English common law imported into Palestine during the British Mandate (1918-1948). Other, no less important parts of the law of obligations and property have been reformed by the Knesset in a series of enactments based on Continental, essentially German law. These laws may or may not eventually form the basis for the long-awaited Israeli Civil Code. However, although the Israeli legislation is similar to Continental law in form, and the drafting of the separate statutes followed much comparative analysis, the style and method of legal development are in the tradition of the Common Law.
This article ponders the coherence of the resulting blend by studying the landmark Israeli Supreme Court decision in the case of Adras that has blurred the lines between contract law and unjust enrichment, and has profoundly affected Israeli private law ever since.
Israeli law grants very strong remedies against breach of contract. The injured party may have recourse to all remedies not only under contract law but also in unjust enrichment. Contractual rights are likened in fact to property rights and, as such, a “disgorgement principle” applies to the breaching party, who may be stripped by the courts of all gain, even if that exceeds the injured party’s loss. The Adras case has also provided the Supreme Court with the legal basis for extending unjust enrichment law to interests in industrial property that do not amount to intellectual property rights.
In 1999 Israel ratified the UN Convention on the Inter-national Sale of Goods (CISG). In line with its obligations, the Knesset enacted the Sales Law (International Sale of Goods), 5760-1999. The decision discussed in this article related to a factual situation falling under the Hague Convention on Uniform Law for the International Sale of Goods (ULIS), 1964, ratified by Israel and implemented in Israeli domestic legislation. Both conventions limit the remedies available for breach of sales contracts. ULIS was one casualty on the road to justice in unjust enrichment’s empire. The time has come to re-evaluate this strong protection of contractual rights under Israeli law, which gives one view of the Citadel. A better view, it is submitted, would have King David’s Citadel protect the freedom of contracts in a manner more compatible with that found in the legal systems forming the basis for its “mixture”.
A thorough comparative study is outside the scope of a contribution to a Festschrift. Instead, the paper analyzes the decision-making process of that landmark case and offer an explanation how it happened that Israeli law strayed beyond the established limits of those legal systems. The paper concludes with observations concerning the role of comparative law in legal analysis so that original solutions are carefully evaluated before being implemented.
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