A foreign claimant can have a well-documented commercial claim and still face an early demand to put money into court before the dispute moves forward. A security-for-costs order can tie up working capital, change the settlement balance and put the claim at risk if the deposit deadline is missed. The right response starts with the claimant’s legal form, finances and the grounds for the request, not nationality alone.
Our firm plans for a security application as part of the decision whether and how to sue in Israel. We assess the legal grounds, develop the evidence to resist or reduce the requested amount, and connect the funding decision to the proposed litigation strategy.
What the rule says
Regulation 157 of the Civil Procedure Regulations gives the court discretion to order security for the defendant’s costs. A limited-liability corporate plaintiff also faces section 353A of the Companies Law, which expressly covers Israeli and foreign companies. Under that section the court may order security on the defendant’s application and stay proceedings until it is provided, unless the circumstances do not justify security or the company proves it can pay the defendant’s costs. A corporate plaintiff should prepare evidence of ability to pay rather than treat foreign residence as the only issue.
Regulation 157(b) sets the consequence. If the security is not provided by the deadline the court sets, the statement of claim is struck out. That makes the order a real risk to the whole case, not a formality.
The claimant’s legal form changes the response
For an individual plaintiff, residence abroad and the location of recoverable assets can raise a practical concern about collecting a later costs award. For a limited-liability company, the separate section 353A regime makes evidence of ability to pay especially important. A shareholder’s resources are not a substitute for proving the company’s own position unless the proposed arrangement is legally supported and accepted.
Our firm identifies the legal route that applies to the particular claimant and builds the response around its statutory grounds, financial evidence and any applicable treaty protection. That connects the legal distinction between an individual, a limited-liability company and another entity to the arguments put before the court.
Build the response around evidence
- Ability to pay. Present current financial evidence, assets, liabilities and the practical availability of funds. A bare statement that the business is active may leave the real issue unanswered.
- Grounds for an exception. Explain the circumstances supporting refusal or reduction of security under the legal route that applies. Address the merits where relevant, without assuming that an assertion of a strong claim settles the motion.
- The amount requested. Test the defendant’s estimate against the work, issues and likely costs of this case. Distinguish the amount claimed in the lawsuit from the costs that security is intended to cover.
How the amount is set
Security is not the damages claimed in the lawsuit, and there is no single deposit amount for every foreign plaintiff. Review the requested sum, the expected procedural work and the burden on access to court. If security is ordered, confirm the exact amount, form and deadline. A proposed personal guarantee or other alternative must be assessed and accepted; it is not an automatic replacement for a cash deposit.
The Hague Convention exemption
Regulation 28 of the Israeli regulations implementing the 1954 Hague Convention protects a claimant or intervener who is a citizen of a contracting state and domiciled in a contracting state from security imposed merely because of foreign status or the absence of domicile or residence in Israel. Check both conditions and the applicable treaty position. For a company, assess any treaty argument together with the section 353A regime.
The regulations also allow a reciprocity-based exception through the Director of Courts. Treaty protection must therefore be checked for the particular claimant and state before it is used in a response. It does not remove every possible ground for a security order.
What to do before you file
- Assess the risk and likely scale of a security application as part of the litigation budget.
- Check the claimant’s legal form, citizenship or corporate status, domicile and recoverable assets.
- Prepare evidence of the company’s ability to pay, and identify any circumstances or treaty grounds supporting an exception.
- Test the amount and form of security rather than responding only to whether an order should be made.
- If an order has already been issued, deal with the deposit deadline immediately and seek any needed extension or change in the order before it expires.
If you plan to sue in Israel from abroad and want to know what to expect on this point, contact RNC Group. For the wider picture, see our guide to suing an Israeli company from abroad and our note on hiring Israeli counsel for a single matter.
Do not let a security motion decide the claim before the merits.
A large deposit request can put pressure on cash flow and settlement decisions. Missing the court’s deadline can lead to the claim being struck out. Address the motion early enough to put the financial evidence and legal arguments before the court.
Our firm represents foreign businesses and individuals in Israeli commercial litigation. We respond to security-for-costs applications, present evidence of ability to pay, examine treaty and statutory exceptions, challenge excessive amounts and seek suitable changes to the form or timing of security where justified.
This article is for general information only and does not constitute legal advice. Laws and their application depend on the facts and jurisdiction and may change. Although we aim to keep this information accurate and current, we do not guarantee that it is complete or up to date. The article may contain omissions or errors. Reading this article does not create an attorney-client relationship with RNC Group. Before making a decision or taking action, seek advice from a qualified lawyer in the relevant jurisdiction.