On September 22, 2024, the Israeli Supreme Court overturned a judgment of the Tel Aviv-Jaffa District Court, which had ruled that the Bat Yam Municipality was entitled to expectation damages in connection with a tender for the sale of the municipality’s rights in real estate.

The appellant submitted bids for the tender on behalf of two companies in which he had substantial ownership. When the bids were opened, it was revealed that these two companies had submitted the highest bids. However, the winning company did not sign the sale agreement and did not transfer the required funds to the municipality. As a result, the municipality declared the second company the new winner. Several years later, the municipality filed a lawsuit against the company that withdrew its bid, claiming it was entitled to expectation damages amounting to the difference between the two bids.

The Supreme Court was split on the question of whether the appellants had acted manipulatively and in bad faith. Judge Ronen sided with the municipality, reasoning that the appellants had offered no justification for failing to complete the sale. By contrast, Judge Kabub found that while the appellants might not have acted diligently, this did not amount to bad faith. Judge Willner joined Judge Kabub’s decision to accept the appeal but left open the question of whether a bidder in a tender may maneuver between multiple bids.

Today, a motion for further hearing of the Supreme Court’s judgment was rejected by Acting President Judge Amit. In its decision, Judge Amit wrote that a reading of the judgment reveals that no binding precedent was established by a majority of the panel, as Justice Willner joined only in the outcome of Justice Kabub’s opinion without ruling on the fundamental questions regarding manipulation in tenders or the remedy of expectation damages. He also noted that Justice Kabub did not make a definitive ruling on whether a bidder in a tender may always submit multiple bids for economic reasons without it being considered manipulative.

29/10/2024

Last month, the Ministry of Construction and Housing in Israel published a call for foreign companies to submit applications to be included in a database of foreign contractors for the construction of residential buildings in Israel. In an unprecedented decision, the Ministry has stated that it will not include in the database: “An Offeror whose Home Country has been rated in one or more of the following years (2020, 2021, 2023) as a ‘Tier 3’ country in the annual report of the U.S. State Department regarding Human Trafficking pursuant to the Trafficking Victims Protection Act.” Tier 3 countries are those whose governments do not fully meet the minimum standards for trafficking victim protection and are not making significant efforts to do so. China is listed as a Tier 3 country, along with Russia, Belarus, and others (Israel is listed as Tier 2). This decision makes Chinese companies ineligible for selection to compete in the Israeli residential construction market. Several Chinese companies have petitioned the Administrative Court, arguing that this condition is discriminatory, unreasonable, and disproportionate. Although an interim injunction was not granted, the petition is expected to be heard soon.