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Basic Laws of Israel: Absentees' Property (Compensation) Law


The purpose of the law is to pay compensation to every resident of Israel, whether of East Jerusalem or elsewhere in the country. Compensation will be paid in respect only of land, wherever situated, in the State of Israel. The law is concerned with providing a solution for one important part of the larger problem of the Arab refugees.

The Main Provisions of the Law

1. The persons entitled to compensation are all those who were Israel residents on 1 July 1973, or became residents thereafter, and prior to the property becoming vested in the Custodian of Absentees' Property were

  1. the owners of property, including their heirs, or
  2. the tenants only of urban property, including spouses living with them at the last mentioned date, or
  3. the lessees of property, or
  4. the owners of any easement in property.

2. The criteria for determining the value of property have been adopted from the Palestine Conciliation Commission of 1961. Accordingly, in respect of urban property the base figure is the net annual value on 29 November 1947 as last determined before that date for the purpose of urban property tax. In order to allow for the fact that net annual value is always set at a very low figure, an addition of a sum ranging from 30% to 60% (depending on the date of the last pre-1947 assessment) of the net annual value will be made. Since the original values were given in pounds sterling, the resulting figure will be multiplied by 175 to yield its equivalent in Israel lira of today. As regards agricultural property, the present-day value will be determined according to its classification for the purpose of rural property tax; the fourteen or so categories with their value per dunam are specified in the Schedule to the Law.

All sums properly paid by the Custodian of Absentees' Property on behalf of an owner will be deducted from the compensation.

Tenants of urban property will generally receive 15% of the value of the property as ascertained for the purpose of compensation. A lessee will receive such compensation as is found to be the value of his rights in the property.

3. Claims for compensation must be submitted before 30 June 1976 in the manner and form to be prescribed by regulation. If a person becomes an Israel resident after 1 July 1973, the claim may be submitted within two years thereafter, if that goes beyond 30 June 1976.

An advisory committee is to be set up, under the chairmanship of a Magistrate, to advise the Officer in Charge as to the rights of claimants, the determination of the annual value and the amount of compensation. In the event of any dispute over the decision of the Officer in Charge as to the right to compensation or the amount thereof, either the claimant or the Attorney General have a right of recourse to the District Court within six months after the Officer has given notice of his decision.

These legal proceedings are exempt from court fees. The fees of lawyers dealing with compensation claims are expressly restricted by the Law to certain maximum percentages; payments made in excess of the permitted rates may be recovered in civil proceedings and any person receiving any excess is liable to be fined five times the amount of the excess and, if a lawyer, may be open to professional disciplinary proceedings.

4. After compensation has been finally determined, the first IL 10,000 thereof will be paid in cash not later than 1 July 1975 or within six days after final determination whichever is the later, and the balance will be discharged by the issue of government bonds within six months after final determination. The bonds will be registered in the name of the recipient with the Bank of Israel, but, from 1 April 1980, will be negotiable as if they were bearer bonds. They will be repayable in 15 equal annual instalments, with accruing interest at the rate of 4% on 1 October of each year commencing in 1975, although the Minister of Finance, with the approval of the Knesset Finance Committee, may direct earlier payment if that is required for rehabilitating or rehousing the claimant. Capital and interest will be linked with the cost-of-living index. Bonds will be exempt from stamp duty.

The foregoing applies to owners of property. Payment for compensation to other claimants is generally to be made before 1 July 1975 or within six months after final settlement of the claim, whichever is the later.

5. The Ministers of Finance and Justice are responsible for implementing the Law. The Minister of Justice may make regulations regarding procedures for making claims and the manner of dealing with them.

Source: The Knesset