2025 offered numerous examples of how Israeli case law continues to grapple with evolving legal and technological challenges. Fundamental legal questions arose regarding the ubiquitous use of artificial intelligence in the business and public spheres. Because these issues have not yet been regulated through legislation, the courts were called upon to resolve them by interpreting and applying existing laws.
Case law in 2025 reflected two synergistic trends: (1) strengthening legal certainty in the business arena, inter alia, by increasing the precedence given to the wording of commercial contracts and narrowing the latitude of judicial interpretation; and (2) expanding Israeli jurisdiction over global technology corporations, especially when their operations impact users and businesses in Israel.
Concurrently, the courts continued to address legal questions arising from the Swords of Iron War and its ramifications. However, due to the lengthy duration of judicial proceedings, many of these issues have yet to result in binding rulings. At this stage, deliberations provide only preliminary “indications” of emerging principles. In the coming years, we can expect an increasing number of rulings that will offer a more systematic response to these questions.
Contract Law – Providing Certainty and Stability in the Interpretation of Business Contracts
2025 reflected the courts’ increasing inclination to limit judicial discretion when interpreting contracts and to adhere to their actual wording, especially in detailed commercial contracts. For example, the Supreme Court adjudicated a dispute between the Queen of Sheba Hotel and the owners of the hotel’s vacation units, who had engaged in a “closed contract,” meaning a comprehensive and exhaustive contract between commercial parties. The Supreme Court’s analysis began and ended with the wording of the contract itself. The justices held that there was no room to deviate from the contractual wording and no justification for fleshing out or altering a contract based on external considerations of justice or fairness.
International Jurisdiction – Applying Israeli Jurisdiction to Global Tech Giants
Israeli case law has shown a clear trend in recent years: global internet corporations cannot hide behind geographic borders when their activities affect consumers in Israel. This trend was reinforced in 2025 when an Israeli court ruled that it had jurisdiction to adjudicate a class action filed against OpenAI, the developer of ChatGPT. The court made it clear that any company providing global online services and collecting payments from Israeli users should expect, as a foreseeable business risk, to potentially be sued in Israel.
Competition Law – Supreme Court Recognizes Indirectly Injured Parties
For the first time, the Supreme Court ruled on an issue that had remained unresolved for years, shedding light on one of the most practical questions in competition law: may indirectly injured parties sue a cartel even if they did not transact directly with cartel members, but were harmed by price hikes along the chain of transactions? The Supreme Court ruled that they may, recognizing indirectly injured parties as potential plaintiffs entitled to seek damages caused by cartel activity.
However, the recognition in principle did not make the path to a class action easier. In the same context, the court dismissed a class action in limine that attributed damages to the Israeli public to the global LIBOR cartel. The court clarified that it would only approve a class action led by indirectly injured parties, if at all, as a last resort after exhausting all other alternatives—primarily, joining directly injured parties to the proceeding. The absence of such parties signaled the difficulty in demonstrating damage to class members and in proving that a class action is the most efficient and fairest way to resolve the dispute. Accordingly, the court held that the plaintiffs failed to present even a minimal evidentiary basis for the existence of damage in Israel.
Artificial Intelligence Law – AI Cannot Be the Inventor of a Patent
For the first time, an Israeli court addressed a fundamental intellectual property question relating to artificial intelligence: can AI software be recognized as an “inventor” and thus qualify for patent protection? The question arose from a lacuna in the Patent Law, which does not define the term “inventor” or explicitly stipulate whether an inventor must be human. The district court issued a comprehensive and well-reasoned ruling, holding that a machine cannot be considered an inventor under Israeli law, and that an invention originating from a machine cannot be registered in the machine’s name.
Thus, Israel aligned itself with a consistent international trend. Courts and authorities worldwide have similarly rejected attempts to register patents with non-human “inventors,” thereby refusing to resolve the AI conundrum during patent registration applications and relaying the problem to legislative authorities.
Criticism of Negligent Use of AI Tools
In 2025, the courts took a far harsher approach toward litigants and lawyers who relied blindly on AI tools to find “precedents” without independently verifying the results. A series of court rulings harshly criticized pleadings citing nonexistent case law, fabricated legal quotes, and even fictitious statutory provisions, stressing that the duty to submit accurate and credible court filings cannot be delegated to an algorithm. Case law has also rapidly progressed from criticism to the imposition of personal sanctions, initially modest but later reaching thousands of shekels.
Project and Construction Law – Does War Justify Project Delays?
Since the outbreak of the war, many construction projects in Israel have slowed or come to a halt, and timetables normally perceived as rigid have become an open legal question regarding who bears the cost of delays. Is this a familiar “Israeli” risk that reasonable contractors should have anticipated—given prior judicial recognition that war is not necessarily unforeseeable—or are these exceptional circumstances amounting to force majeure or frustration of contract? Case law has not yet provided an unequivocal answer, and the issue remains dependent upon future court rulings.
Against the backdrop of this uncertainty, the Israel Builders Association tried to shift deliberations from specific disputes to a ruling in principle. It petitioned the High Court of Justice to declare the Swords of Iron War a “frustrating event” that releases contractors from the obligation to pay compensation for delivery delays and that enables them to demand compensation from the State for sector-wide damages, including those caused by the ban on Palestinian workers. The High Court of Justice dismissed the petition, mainly because its wording was too vague, but also stressed that it cannot issue sweeping determinations and that each case must be examined on its own merits.
Nonetheless, the dismissal did not ignore the broader reality. The High Court of Justice acknowledged that the Swords of Iron War caused deep and prolonged damages to Israeli society, including a major crisis in the construction sector. This recognition, while not granting an automatic exemption, may serve as an important starting point for future analyses of liability, risk, and the division of damages between parties.
Inheritance Law – One Spouse Changing a Mutual Will
2025 also witnessed a series of Supreme Court rulings addressing changes to a mutual will. The court clarified the law in instances when spouses execute mutual wills—interdependent and reciprocal wills, such as bequeathing all property to the surviving spouse, and upon that spouse’s death, dividing the estate equally among the couple’s children)—and later one spouse wants to change his or her will.
The courts struck a balance between freedom of testation, a basic right allowing a person to change a will, and the reliance interest of the other spouse, who executed his or her will based on the reciprocal arrangement. Under these principles, a mutual will may be revoked, but such revocation automatically nullifies the other spouse’s mutual will and triggers an obligation to return any inheritance received as a result of it.
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Adv. Gal Livshits is a partner in the firm’s Litigation Department.
Barnea’s Litigation Department is one of Israel’s Leading practices, ranked in the top tiers by both local and international legal directories. We represent some of the country’s most prominent clients in complex legal disputes, Locally and Internationally. Our firm has extensive experience in representing leading clients in the Israeli market, including public and private companies, government entities and local authorities, banks and financial institutions, and directors and senior executives.