Is AKUM’s Arbitration Clause Enforceable?

LEAH ZLOTNIKLeah Zlotnick is an Israeli singer, composer and lyricist who was born in 1959 to a Yemenite family, and immigrated to Israel as a baby.

Her career took off in 1990 and she sings in Hebrew, Arabic and Yemenite, including a Hebrew cover of Elton John’s Don’t Go Breaking My Heart.

AKUMOn 6 September 2018 Leah Zlotnick sued the Israel Copyright Collection Society AKUM for 800,000 Shekels claiming that for years the society had paid her “laughable royalty sums” and from inquiries that she had made, she had not been given the full amount owing to her from her creations.

CONTRACTLeah Zlotnick is an Israeli singer, composer and lyricist who has been a member of AKUM since 28 August 1995. As a member, she is obliged to follow the guidelines and regulations of the general assembly and the management of the collection society. She claims that the arbitration clause in Akum’s regulations is a Standardized Contract as per the Law of Standard Contracts 1982.and was amended subsequent to her joining the organization. She was unaware of the clause and therefore it is not binding.

arbitration.jpgAKUM claims that under Section 5 the Law of Arbitration 1968, Arbitration is the appropriate forum for the disagreement to be heard. The Arbitration clause in AKUM’s regulation was considered by Judge Ruth Ronen in H.P. 35255-08-17 Amir Benayun vs. AKUM 10 July 2018, where it was upheld, although the way of appointing an arbitrator was challenged. In the present case, AKUM consents to appointment of an Arbitrator by consensus. Judge Orenstein, President of the District Court offered to appoint an arbitrator in re Benayun. It is therefore clear that the court case should be suspended pending arbitration.

monopolyZlotnick considers that AKUM enjoys a monopoly, and its members are held captive. They should therefore be able to choose between arbitration and court. Arbitration is more expensive and the arbitrator is not bound by civil procedure. It is only an appropriate option where both parties willingly and actively select it, and not having challenged the clause in the amended guidelines cannot be considered as actively choosing the option. Thus even if the plaintiff had challenged the guidleines within the period defined by the statute of limitations, she does not have any alternative to AKUM. The plaintiff claims that she is concerned with her colleagues and wants to establish legal precedent, which arbitration cannot do.

The relevant laws are Law of Arbitration 1968 Sections 5, 5c and 16 and the Law of Standard Contracts 1982.

Judge Shiloh ruled that that the plaintiff cannot reasonably expect that the regulations of the organization will not change subsequent to her having joined AKUM. The method for choosing an arbitrator in the regulations may be draconian but AKUM has agreed that an arbitrator be chosen by consent or by the President of the District Court. In such circumstances arbitration is a reasonable option.

statute of limitationsWhen the regulations were changed and the arbitration clause was inserted, the statute of limitations for regarding this clause started from when the clause was added, and so the artiste’s challenge of the clause was submitted to late  In this instance, there is no special reason to justify the case being tried in court since it is a specific disagreement between the association and the artiste regarding the size of the royalty payment due. Since there is an arbitration clause, the parties should sort out their disagreement via arbitration.

The Court ruled that the law suit concerning royalties owed by the Copyright Collection Agency to Ms Zlotnik should be put on hold pending compulsory arbitration. In so doing, the court has upheld the compulsory arbitration clause in the collecting society’s regulations

Civil Appeal 2107-09-18 Leah Zlotnick vs. AKUM LTD, Ruling by Judge Naftali Shilo, 9 January 2019.


DISCLOSURE I was briefly a member of AKUM (as a magician I am a performing artist). However I am no longer a member.

Arbitration is less transparent that court rulings. No doubt the judge preferring arbitration is totally independent of concerns by the court to clear their workload. The idea of a precedential ruling is appealing, but there are issues of efficiency as well.

Categories: contract, Israel Copyright, license, Licensing, royalties, royalty, בית משפט, החלטת ביניים, החלטת בית משפט, זכות יוצרים, קניין רוחני, קנין רוחני

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