Israeli Court: Non-Israeli Citizens Cannot Sue Foreign Sovereigns

Carmon & Carmon is pleased to announce a recent victory in the Israeli Labor courts on behalf of the United States government. In May of 2007, an individual who worked in Israel for the U.S was separated from his employment for cause. He therefore filed in Israel a Complaint against the United States for severance pay and the balance of unpaid wages. Though the Complaint was filed before the Law for Foreign States Immunity -2008 came into action, since there had been no hearing on the matter until after the law was enacted, the Immunity Law was determined to be applicable to this case. The Immunity Law governs issues of foreign sovereign immunity in civil proceedings before Israeli courts. Though the law covers much territory in regards to when a foreign entity is eligible for immunity, there are strict limits outlined in the law. Immunity is denied when the following items are fulfilled: the cause of action is within the exclusive jurisdiction of a Regional Labor Court, the matter at hand is labor which has been or is to be performed in Israel, and when the employee is an Israeli citizen or habitual resident of Israel.

The Plaintiff claimed that the United States should be denied immunity under these points. He submitted several letters indicating his area of residence as proof. The court then asked for the opinion of Israel’s Legal Advisor to the Government (Israel’s Attorney General) and it had agreed with the plaintiff, stating that “In view of Plaintiff’s notice….that he is a resident of the Village of Nahalin west of the Israeli fence, then the Plaintiff meets the requirements of Article 4(a)(3) of the Law, and therefore the Defendant cannot be immune.”

The United States countered, insisting that it enjoys full protection under the Immunity Law. The judge presiding over the case, the Honorable Hadas Yahalom, agreed with the United States’ position, rejecting the position of the Legal Advisor to the Government and dismissed the case with costs.

This was a case of first impression in Israel. The Labor Court is open to all, including non-Israeli citizens or residents. However, Carmon & Carmon’s attorneys were able to show that the Israeli Legislature did not intend to grant access to the Labor Court in lawsuits against foreign States if the plaintiff was not either a resident or a citizen of Israel. As an appeal was not filed, the U.S victory became final.

A Jerusalem Court: A Court Cannot Order a Foreign State to Reinstate a Former Employee

In September of 2010, the Honorable Judge Daniel Goldberg of the Regional Labor Court in Jerusalem rendered a partial judgment in favor of the United States, represented by Carmon & Carmon.

An individual was separated from his employment at the U.S Consulate General in Jerusalem for cause. He then filed a complaint against the U.S government stating that the U.S government owed back wages, compensation for unlawful separation, and severance payment. Under Israeli law, unlawfully withholding wages and severance payment could result in a court order imposing the defendant with a 515% a year punitive interest. The circumstances of the separation laid out in the case are fairly cut and dry. The Plaintiff was hired by the US Consulate as a vehicle mechanic in 2003. As for all government jobs, he was required to disclose any previous arrests during the application and employment process. The Plaintiff said that he had none. In 2006, he was arrested by Israeli police and it came to the attention of his employer that he had lied during the application process. When presented with the information, the Plaintiff admitted to having covered up a previous arrest during the hiring process. Because of this, the Plaintiff’s security clearance was cancelled and the US Consulate terminated his employment.

The U.S filed a motion to dismiss the Complaint on several grounds. First was that it enjoyed sovereign immunity from the Plaintiff’s demand to be reinstated at his job, have the separation revoked and to be awarded punitive interest on unpaid severance payments. Second, the U.S argued that the Israeli courts had no jurisdiction in terms of the demand for reinstatement because the separation was an act of the U.S Government and was related to security concerns. Third, the U.S argued that the punitive interest is a quasi punitive sanction, and rules of customary international law state that a court cannot impose foreign sovereigns with punitive or quasi punitive sanctions.

The Plaintiff countered these arguments, saying that foreign sovereign immunity is limited to governmental acts. He stated that his employment was not a governmental act but a commercial act, from which the U.S is not immune. Regarding the punitive interest, the Plaintiff argued that “granting punitive interest is considered to be a private act from which there is no immunity or a governmental act that is immune.”

After reviewing all of the information, the Honorable Judge Goldberg rendered a partial decision that the Plaintiff did not lift the burden of proof that his employment was a private act. Also, there is a special legal system applicable to employees of posts of the U.S Government, which gives the employment a governmental aspect. “The determination of a security classification of an employee of the United States government is a quintessential governmental matter of the United States government. Therefore, the United States government is immune from the jurisdiction of a court outside the United States.” Punitive interest was denied based on the Defendant’s argument of its penal nature. The Plaintiff’s demands for revocation of his separation and punitive interest were denied.

Israeli Labor Court: Embassy Employees are Held to a Higher Standard of Trust

By Haggai Carmon

The U.S. government recently won a victory at the Tel Aviv, Israel Labor Court (by Judge Alya Fogel, president of the Court) when it denied a lawsuit by a former local employee for severance payment. The Court awarded the U.S. with costs.

Irena Shaikevitch worked for 19 years as a locally hired employee at the U.S. Embassy in Tel Aviv. During the most recent years of her employment, she was assigned to the American Citizens Services section at the Consulate. While conducting an investigation regarding visa fraud, the Embassy’s security officer suspected that Shaikevitch was divulging classified visa denial information to Mordechai Tzivin, a private attorney who had befriended her. During an interview with the security officer, Shaikevitch admitted she gave Tzivin such information. Subsequently she was separated from her employment for cause without customary severance payment.

Shaikevitch sued the United States at the Tel Aviv Regional Labor Court for severance payment, failure to give her prior notice, and personal damages. She also sought statutory punitive interest on the withheld payments: currently 515% annually.

Shaikevitch argued that her actions, to which she had admitted, do not justify her separation for cause without severance payment. She claimed that the U.S. should have applied less severe disciplinary actions against her.

The U.S. argued that Shaikevitch had been working in a sensitive environment that required a high degree of trust and integrity from its employees. The U.S. also argued that Shaikevitch admitted to grossly violating that trust when she gave sensitive information to an outsider, while using her co-workers in another department to obtain the information she needed. Therefore, the U.S. was justified in separating Shaikevitch for cause without severance payment.

The Court ruled that the U.S. was justified in separating Shaikevitch, by not giving her prior notice and by denying her severance payment. The Court ruled that by divulging classified visa information without any authorization from her supervisors, Shaikevitch created a potential criminal and security risk, in clear violation of the Embassy’s procedures. The Court indicated that Israel’s Severance Payment Law mandates the payment of severance to separated employees, unless the case falls under one of few exceptions. One of these exceptions is when the employee has engaged in fraud, theft or bribery. The Court found that although there were conflicting factual accounts regarding the volume of information divulged, as well as regarding the length of time during which Shaikevitch engaged in the information theft, her own admission was sufficient to establish that the U.S. was correct in separating Shaikevitch for cause without making any severance payment, due to the great severity of these acts.

In sum, the court denied Shaikevitch’s claim for severance payment and for damages incurred by the failure to give her advanced notice.

This is a case of first impression in Israel. Most similar cases concerned theft of tangible property, and none of them involved a foreign embassy. Furthermore, cases where the Court has completely justified a total denial of severance payment, are extremely rare.

The Court has ruled that embassy employees are held to a higher standard, and that their seniority operates against them in cases of breach of trust.

“Beyond the attempt of the plaintiff and Advocate Tzivin to justify their actions by using despicable terms, we are of the impression that these actions are particularly severe in view of the plaintiff’s place of work. We should make it clear that such conduct is unacceptable to the court in any workplace. However, the plaintiff’s place of work for almost two decades was at the American Embassy in the State of Israel – where a strict code of conduct is applied, which the plaintiff failed to follow. Therefore, the inappropriate manner of the plaintiff’s conduct is manifested even more strongly.”

The Court has also sent a strong message to other employees:

“Additionally we have weighed the plaintiff’s actions also by measuring the effect they could have on other employees at her workplace. We think that in a place where such serious events took place – against all procedures of the defendant, then the defendant’s reaction against the perpetrator was appropriate under the circumstances. Otherwise, the defendant’s employees could get the impression that the plaintiff’s acts were legitimate and their severity is not great.”

These statements are pivotal as a deterrent against recurrence of similar wrongdoing by embassies’ employees. The Court has adopted the U.S argument that embassy employees are held to a higher standard and that foreign embassies’ strict rules of conduct should be recognized and applied.

The Israeli Labor Courts are known for their disposition to favor employees. This is particularly true when the defendant is a powerful employer, such as a big corporation or a foreign State. Therefore, the U.S. victory in this case is particularly significant.

The U.S. government was represented by Haggai Carmon.

    "Although the lawsuit was totally unjustified, we thought it would be difficult to defend, but Haggai devised a brilliant defense strategy that worked perfectly."

- A memo from a top U.S. diplomat in the U.S. Embassy in Israel to the U.S Department of Justice.
    "Many thanks for your outstanding work. The U.S. Government is fortunate to be able to call upon your expertise and assistance."

- United States Ambassador to Israel