The first appellant is a Finnish timber trading company that supplied the rest of the appellants, importers of wood to Israel, with a cargo of wood from Finland. On 5 June 2014, the wood was loaded in Finland. Shortly after loading, various problems were discovered on the ship, which caused a delay in its arrival in Israel. It is claimed that during this period proper maintenance conditions were not observed in the ship's warehouses and the cargo was damaged. When the ship finally arrived at the port of Ashdod on 7 September 2014 it was apparent that the wood was rotting, and was developing fungi and mould. The appellants were forced to sell the cargo at a reduced price. They filed a claim against the ship, alleging that the damage to the wooden cargo was caused by negligence on the part of the ship and its employees and the breach of the ship's obligation to transport the cargo and keep it in proper condition. There is an admiralty claim against the ship in favour of the appellants - a claim anchored in the provisions of ss 40 and 41 of the Shipping Law 1960 and in s 6 of the Admiralty Act of 1861.

The respondent shipowner applied to dismiss the claim outright or to stay proceedings on the basis of foreign jurisdiction clauses included in the bills of lading issued to the appellants by the vessel's charterer, Imperial Bulk Carriers (Imperial). These bills of lading were not attached to the claim. According to the shipowner, the bills of lading contained an exclusive English forum and choice of law clause. The appellants objected on the ground that the foreign jurisdiction clause did not apply to their claim against the shipowner. According to them, the charterparty between the shipowner and Imperial did not contain a jurisdiction clause and therefore the shipowner was indifferent as to forum. The choice of forum in London did not reflect the true desire of the appellants and the shipowner, and could not be enforced. Alternatively, the court should exercise its discretion and determine that Israel is the proper forum to determine the claim since most of the relevant connections point to Israel.

The lower court accepted the application for a stay of proceedings. The shipowner was entitled to rely on the jurisdiction clause in the bill of lading even when the issuer of the bill of lading is a charterer. In order to succeed in the claim against the ship, the appellants must point to the bill of lading as evidence of the delivery of the cargo, the conditions of the transport, as well as proof of their right to the cargo. Therefore, the appellants are precluded from claiming that the shipowner is not entitled to rely on the provisions of the bill of lading. The shipowner's right to rely on the jurisdiction clause in the bill of lading is also based on the Himalaya clause in cl 18 of the bill of lading. Therefore, the jurisdiction clause set forth in cl 3 of the bill of lading also applies to the claim filed by the appellants against the shipowner. The alternative claim that most of the relevant connections are with Israel was rejected. It was ruled that the cargo was indeed delivered in Israel and that the damage was discovered upon his arrival. However, the damage occurred because of the ship's crew failures while the ship docked at the port of Mantyluoto In Finland. Most of the relevant witnesses are not residents of Israel. The first appellant is a Finnish rather than an Israeli company. If indeed, as the appellants argued, the entire world is one global village, then the place of residence of the appellants should not be preferred over the place agreed upon by the parties.

The appellants appealed to the Supreme Court.

Held: Appeal upheld and stay of proceedings in the trial court lifted (Hendel and Mintz JJ; Amit J dissenting).

In light of the lack of uniformity in the laws of the various countries regarding the issue of bills of lading and their legal implications, it was necessary to consolidate the rules that stemmed from the lack of equality in the bargaining positions between the carriers and the freight forwarders. The Hague Rules were drafted in order to bring uniformity to the rules in force in the countries that adopted them, in connection with the obligations and rights of maritime carriers on the one hand and those in need of their services on the other. At an international conference in Brussels in 1924, these rules were adopted, which established, among other things, the minimum liability of carriers which could not be departed from. The intention was to unify the laws of the various countries in these matters and to establish a uniform level of responsibility in the maritime transport industry.

The Hague Rules (the Hague-Visby Rules) were adopted by the Israeli legislature and received statutory form in the Carriage of Goods by Sea Ordinance of ​​1926, the Schedule to which is a literal translation of the Hague Rules. This Ordinance was intended to regulate the responsibility for transporting goods 'from the time when the goods are loaded on to the time they are discharged from the ship'. The Ordinance provides special material provisions for the regulation of the duties of a maritime carrier towards a cargo owner in respect of damage caused to the cargo carried by a bill of lading while transporting it, whether the cause of action is contractual or tortious. The provisions of the Ordinance stipulate rules of liability, exemption from liability, a limitation of liability and a short period of limitation applicable to the transport contracts specified in the Ordinance.

The Supreme Court held that the foreign jurisdiction clause was applicable to the claim and that it could not be said that Israel was forum conveniens. However, there was the additional question as to whether it was appropriate to stay proceedings in an Israeli court when there were grounds for concern that the claim will be dismissed in the foreign court due to limitation. Here the limitation period of a year in art 3.6 of the Hague-Visby Rules was material.

The majority held that, although the limitation argument did not constitute a new or surprising circumstance justifying reconsideration, it was impossible to ignore the fact that the shipowner insisted on the limitation defence, which was likely to be accepted in England, and therefore the appellants will be left with no possibility of receiving any remedy. The shipowner's insistence on the limitation argument leads to the conclusion that 'practical justice' requires that foreign jurisdiction clause not be upheld in this case. The appellants filed the claim in Israel within one year and the judgment was given after the end of that year. The appellants filed the claim in Israel at a time when the limitation period had not yet passed, both in Israel and in England. There is no argument that the appellants acted in a deliberate and tactical manner in order to select a forum artificially. Against this background, the correct weight should be given to the unwillingness of the shipowner to waive the claim of prescription.

The dissenting judge noted that in the world of international trade, relatively short periods of limitation are acceptable, especially in sea transport. The appellants took the risk of not filing a protective writ in England. The fact that the respondent was not willing to waive its right to raise limitation does not in itself determine the fate of the appeal at hand. The appellants did not meet the burden imposed on them to indicate special circumstances in respect of which the jurisdiction clause should be disregarded. Since there are no special circumstances that justified the continued investigation of the claim in Israel, the foreign jurisdiction clause must be respected.