Facebook Inc. vs. Be Chemo, Israel Supreme Court Rules On The Topic Of The Choice Of Law & Jurisdiction Clauses

Author:Mr David Wolberg (Kuperschmit, Goldstein & Co.)
Profession:Global Advertising Lawyers Alliance (GALA)

The Israel Supreme Court, has recently delivered a ruling which limits the capability of a contracting party to determine the jurisdiction. Often, within standard contracts, companies will compel its customers and/or users to accept the governing law and jurisdiction. For example, a company which is based in Germany, will draft a contract which determines that the agreement is subject to the laws of Germany and all disputes must be filed before a German court.

Israeli users, when joining Facebook, signed an agreement, determining that all disputes will be subject to the laws of California and must be brought before the courts of California. Section 15(1) of the agreement determined that:

"You will resolve any claim, cause of action or dispute (claim) you have with us arising out of or relating to this Statement or Facebook exclusively in the U.S. District Court for the Northern district of California or a state court located in the San Mateo County, and you agree to submit to the personal jurisdiction of such courts for the purpose of litigating such claims. The laws of the State of California will govern this statement, as well as any claim that might arise between you and us, without regards to conflict of law provisions."

A class action was filed against Facebook at an Israeli District Court. Facebook, referring to Section 15(1) of the agreement, filed a motion to have the case dismissed. Facebook demanded the plaintiffs be held accountable to the agreement's choice of law and jurisdiction clause. The District court rejected the motion, rejecting Facebook's claims to both the choice of law and the choice of courts.

The District Court's decision was appealed before the Israel Supreme Court. A panel, headed by the President of the Supreme Court, Justice Chayot, adjoined by the Deputy of the Supreme Court President, Meltzer and Justice Baron, partially rejected the appeal. All Supreme Court rulings and decisions are important and influential. However, the length of this ruling and the identity of the Judges, including both the President and her Deputy, amplifies the importance of this ruling.

The Supreme Court determined that the contract between Facebook and its users is a "standard contract", meaning, an identical contract, not open for negotiation, which every costumer/user must sign. As such, the contract between Facebook and its Israeli users, is subject to the Israel Standard Contracts Act-1982. Pursuant to the Standard...

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