Israeli court rules that asset recovery for terrorism judgments can be collected from foreign duty and tax authorities

By Christine Duhaime | April 29th, 2020

Judgment day in Jerusalem

The Jerusalem District Court has ruled that damages awarded to victims of acts of terrorism can be satisfied over time from taxes and duties collected for another foreign state.

The ruling arose from a tort litigation filed in Jerusalem involving claims for compensation from a number of terrorist acts committed during the al-Aqsa Intifada from 2000-2002 attributed to Palestinian organizations against Israelis.

دولة فلسطين

Eight families filed claims for terrorism related compensation against the Palestinian Authority دولة فلسطين and the Palestine Liberation Organization (“PLO“). Claims were also filed for non-terrorism related acts. For example, the murder of two Israeli reserve officers, Yossi Avrahami and Vadim Nurzhitz, at a police station in Ramallah.

In 2019, the Jerusalem District Court ruled that the Palestinian Authority, the PLO and others were liable for the acts of terrorism under the claims.

محمد ياسر عبد الرحمن عبد الرؤوف عرفات القدوة الحسيني

In terms of asset recovery, the Court had earlier agreed to a lien over a small piece of real property in the Mount of Olives Cemetery in Jerusalem that was owned in 2004 by now deceased PLO leader Mohammed Abdel-Raouf Arafat As Qudwa al-Hussaeini, now owned by his estate, which suggests that Courts will at least preserve and may allow asset recovery for terrorism damages from the family of the leadership of a terrorist organization or one that was once aligned with terrorism ideology. It appears that Mr. Arrafat’s estate was a named defendant in the litigation and some of the acts occurred while he was the leader of the PLO.

On Friday, the Jerusalem District Court assessed the damages under the families’ claims at US$150 million and ruled that the judgment could be satisfied from money in the control and custody of the government of Israel held in trust for the Palestinian Authority.

At least two different Israeli government agencies collect about US$50 million a month in taxes and duties from the West Bank and Gaza on behalf of the Palestinian Authority and transfers it to them. The taxes and duties are from import and export duties and VAT collected at Israeli ports and from payroll withholding taxes from Palestinians working in Israel.

The Israeli government agencies act as an agent for the Palestinian Authority, collecting and holding the funds collected in trust until the end of each month when the funds collected are then remitted to the Palestinian Authority.

The international transfer payments are collected and remitted by Israel pursuant to the terms of an international peace accord between the two states.

The Court held that the judgment can be satisfied over time from those duties and taxes collected by Israeli government agencies and held in trust for a foreign state – in essence, allowing the claimants to satisfy the judgment by garnishing from the fund of transfer payments owed to another foreign state. A basic garnishing order can trump the terms of a peace accord among two foreign states.

تحصيل الديون

The effect of the judgement is that while the PLO and the Palestine Authority, among others, which are outside Israel, were held liable, government agencies of another state (Israel) can be forced to be a type of debt collector to satisfy tort terrorism judgments and a successful party can garnish transfer payments payable under international agreements.

Israel has 30 days to appeal the decision, which it may do because the garnishment of funds owed to Palestine at this time will significantly impact humanitarian aid, for which the judgment makes no exemption.


What this may mean for Iran is up for debate. Iran owes the most amount of money in the world in unsatisfied terrorism judgments. If one can collect or garnish funds from other foreign government agencies who owe Iranian agencies in recurring or periodic transfer payments, it may change the asset recovery process overnight.

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