Interest on a judgment in Israel is one of the first numbers a foreign creditor asks about once a court rules in its favor. The answer is not a single percentage. It depends on what the court awarded, from which date interest runs, whether the contract already sets late-payment interest, and what currency the judgment is in.
This guide follows the Interest and Linkage Adjudication Law, 1961, in the consolidated Hebrew text published by the Bank of Israel (version dated January 1, 2025). It explains the structure of the Law so you can ask better questions. It does not state current rates and it does not calculate what a particular debtor owes.
The Law gives the court discretion. A contract clause on late-payment interest can switch the statutory mechanism off.
What the court may award
Under section 2, a court, tribunal or arbitrator that awards a sum, costs or legal fees may add “shekel interest” to all or part of it. Other forms, such as linkage to the consumer price index or a different rate, are available only where there are reasons for them in the circumstances. If a ruling mentions interest but does not say which kind, section 2(d) treats it as shekel interest only.
From which date interest runs
As a rule, interest on the awarded sum runs from the day the claim was filed until the due date. For costs and legal fees, it runs from the date of the decision. The court may choose a different start date, but not one earlier than the date the cause of action arose or the date the expense was paid (section 2(b)). In special circumstances the court may extend the period to the date of actual payment (section 2(c)).
What happens after the due date
The “due date” is the last date set for payment. If none was set, the Law defines it as thirty days from the decision. From then until actual payment, section 5 adds shekel interest and “arrears fees”, unless the court ruled otherwise.
- Daily interest. Interest is added each day, using the annual rate divided by 365 (section 4a). It is added to the principal at least every twelve months and again on the due date.
- Arrears fees. These are added every three months, starting after the first three months from the due date. For a shorter delay, none are added. They are not added to the principal (section 5a).
- Rates. The annual rates are set in regulations by the Minister of Finance and published every quarter (section 5c). Check the current published figures before you calculate.
When the statutory interest does not apply
Section 6 says no interest is awarded under the Law if an agreement between the parties, or a statute, already provides for interest on late payment. Linkage is excluded in similar cases, for example where the parties agreed on linkage. For a foreign supplier, this makes the payment clause in the contract the first place to look. Read it before you rely on any statutory figure.
Judgments in a foreign currency
If the amount is awarded in a foreign currency, section 5b converts it into shekels for the purposes of the Law. The default is the Bank of Israel representative rate on the date interest starts to accrue, or on the due date if no interest accrues, unless the court decided otherwise.
Paying or offering payment
Under section 9, a party that pays the other side the amount it may owe, in whole or in part, or offers it and is refused, is not charged statutory interest on that amount for the period after the payment or offer. Section 10 adds that making or accepting such a payment does not harm either side’s rights or arguments in the proceedings.
Our experience
In our experience, the interest question is often left until the end of a collection file, and by then a few months have already passed. The practical order is to read the contract’s payment and interest terms first, record the due date, and check whether the claim states the interest basis you want the court to apply. Small differences in the start date matter more than most clients expect.
Related guides
For the first steps on an unpaid invoice, see what to do in the first 30 days. If the debtor is an Israeli company and you are abroad, see suing or collecting from an Israeli company when you are abroad. For enforcement after a ruling, see our contract enforcement guide.
Owed money by an Israeli counterparty?
Contact RNC Group with the contract, the invoices and any court papers. We will tell you what the documents show and what the next step could be.
Legal notice
This article is for general information only and is not legal advice. Laws and their application depend on the facts and jurisdiction and may change. The article may contain omissions or errors and does not create an attorney-client relationship. Obtain transaction-specific advice before acting or deciding not to act.