Explaining the Israeli Supreme Court’s Ruling on Contractor Delays in Delivering Apartment to Buyers
Israeli economic newspapers have recently published headlines claiming that “the Supreme Court dismissed a petition for exemptions from paying compensation for delays in apartment deliveries due to the war” and that “the war does not constitute a justified reason for delaying apartment deliveries.”
These headlines triggered uncertainty among clients who contacted us and wanted to understand the true meaning of the ruling. Therefore, we are explaining the facts and clarifying that not every headline accurately reflects the actual judicial ruling. To use a salient adage: don’t believe everything you read.
The Petition Filed with the Supreme Court
The Israel Builders Association petitioned the Supreme Court to instruct the State to sweepingly recognize the Swords of Iron War as a frustrating event for the purposes of section 5A(c)(2) of the Sale (Apartments) Law, 1973, which addresses exemptions from paying compensation for delays in apartment deliveries (HCJ 50085-05-25 Israel Builders Association v. the Prime Minister).
The petitioners also petitioned the Supreme Court to instruct the State to take various actions to compensate contractors for damages caused to them as a result of the crisis in the construction sector due to the ban on entries of Palestinian workers due to the war.
Rationale for Dismissing the Petition
On July 27, 2025, the Supreme Court dismissed the petition for the following reasons:
- The petition was vague – The petition did not relate to a specific administrative decision, but rather requested blanket remedies pertaining to the formulation of economic policy.
- The principle of separation of authorities – The Supreme Court does not usually instruct the Knesset to legislate laws or the government to initiate legislative amendments.
- No concrete data – The petition did not present specific factual data that would enable the court to examine the claims on their merits.
- The need for specific clarifications – The petitioned relief pertaining to delays in apartment deliveries should be adjudicated in the various courts within the framework of specific cases.
Operative Significance of the Ruling
Despite the widespread media coverage, the Supreme Court did not actually rule that the Swords of Iron War cannot constitute a frustrating event that justifies delays in apartment deliveries. In fact, the ruling has no real operative significance to the question of delays in apartment deliveries in projects constructed during the Swords of Iron War. The Supreme Court did not issue any substantive decision on this question, but rather merely clarified that it is not within its purview to instruct the State on how to formulate policy in this regard.
The Supreme Court ruling leaves decision-making on the question of whether the war constitutes a frustrating event to the procedural courts, which will hear each case on its own merits, on the basis of its specific circumstances.
What Then Is the Significance of the Ruling?
In our opinion, the most important statement in the Supreme Court’s ruling is the following:
“It is undeniable that the Swords of Iron War caused deep and prolonged damage to many in Israeli society. The crisis in the construction sector is one of the most prominent and the distress claimed by the petitioners is understandable.”
This ruling may actually be helpful to contractors when pleading their cases in the procedural courts. They can use it to support their claims that the war caused them delays in their work, but this, of course, depends on the concrete circumstances of each case.
The Bottom Line
Contrary to the newspaper headlines, the Supreme Court ruling does not change the current legal situation, and any subsequent claim regarding delays in apartment deliveries will be adjudicated on its own merits, according to the specific circumstances of each project.
During any specific hearing, the court will examine the concrete impacts of events deriving from the war on specific projects (such as manpower shortages due to callups of reservists or foreign workers’ difficulties entering Israel, delays in supplies of raw materials, or closures of construction sites by order of the Home Front Command), and will apply the relevant provisions of the Sale (Apartments) Law to each individual project according to its specific circumstances.
***
Adv. Gal Lifshits and Adv. Yatir Madar are partners in Barnea Jaffa Lande’s Litigation Department. They and the rest of the litigation team are at your service in this regard.