The Legal Ecosystem and Local Businesses in Palestine
- Marissa Taylor
- Jun 15, 2022
- 4 min read
Updated: Jun 21, 2022
After providing research on the landscape of the private sector in Palestine, I was asked to conduct more research on businesses in Palestine, specifically how the local legal ecosystem supports local businesses. In my research, I took a deeper look into how businesses are run and regulated in Palestine and how legal decisions are made in communities. The below information is a short overview of the process of local arbitration courts in Palestinian communities.
Overview
Most businesses in Palestine are small or medium-sized, family-run enterprises. Typically, decisions about the business are made consensus in the family with a heavy weight placed on the patriarchs and sometimes the matriarchs. The regulatory frameworks and legal system surrounding business practices in Palestine are primarily conducted at the local level. The Palestinian Authority’s lack of control over the territories and low approval ratings contribute to a preference for informal adjudication of disputes. Disputes regarding businesses are often considered family matters and are taken to local arbitration courts. These informal justice systems go by a number of titles, but most are run by the local elders and rulings are often decided in favor of the patriarchs of the family.
Business in Palestine
The Palestinian economy is small and relatively open. While 95 percent of firms in the West Bank and Gaza are family owned small- and medium-sized enterprises employing less than 20 people, large holding companies dominate certain sectors. The private sector is mostly firms with moderate productivity, low investment, and limited competition, the majority of which are operating in retail and wholesale trade activities. Due to the small size of the local market (about 5 million consumers with relatively low purchasing power), access to foreign markets through trade is essential for private sector growth. Enterprises are highly dependent on Israel for either inputs or as a market, and 90 percent of Palestinian exports are sold to Israel.
Palestinian Authority Regulatory System
The PA established a sound legislative framework for business and other economic activity in the areas under its jurisdiction in 1994; however, implementation and monitoring of implementation needs to be strengthened, according to many observers. The PA Ministry of National Economy is in the process of drafting key pieces of economic legislation to improve business and commercial regulation, including an updated Companies Law (already under consideration by the President’s Office), new intellectual property rights protections, a Competition Law, and procedures for resolving bankruptcy. The PA President’s approval in May 2016 of the Secure Transactions Law, Leasing Law, and Moveable Assets Regulations, greatly improved Palestinians’ access to credit.
Legal System and Judicial Independence
Commercial disputes can be resolved by way of conciliation, mediation, or domestic arbitration. Arbitration in the Palestinian territories is governed by PA Law No. 3 of 2000. International arbitration is accepted. The law sets out the basis for court recognition and enforcement of arbitral awards. Generally, every dispute may be referred to arbitration by agreement of the parties, unless prohibited by the law’s Article 4, including disputes involving marital status, public order issues, and cases where no conciliation is permitted. In the event that the parties do not agree on the formation of the arbitration tribunal, each party may choose one arbitrator and those arbitrators shall then choose a presiding arbitrator, unless the parties agree to do otherwise.
The Palestinian Authority is under direct control of just 39% of the West Bank and due citizen’s low approval ratings of the PA and a tradition of using informal models of justice, many legal disputes regarding family and business matters are resolved at the local level.
Informal Justice Systems
Throughout the modern period, Palestinians—particularly those outside of urban settings—have used various models of informal or extralegal justice to adjudicate disputes and address transgressions of social norms without turning to state institutions like police and courts. These non-state avenues of justice vary according to time, place, and community. They are described by different terms—customary law (‘urf), tribal adjudication (al-qada' al-‘asha'iri), communal reconciliation (sulh)—but in all cases they share the characteristics of maintaining social order in communities that have tense or tenuous relationships with state authority. Although informal justice in Palestine (as in other Arab societies) is often associated with nomadic communities of Bedouin, it is also common among settled Bedouin and non-Bedouin communities. Palestinians seeking to resist or overturn colonial authority have sought in such practices a model of indigenous justice; in general, however, informal justice privileges male authority within extended kinship groups and thus reflects and reinforces patriarchal social norms.
Personal Status Laws in Gaza
By the twentieth century, nearly all laws in Gaza related to contracts, criminal proceedings, and commercial transactions had been removed from the shari’a courts and incorporated into a secular civil law. The sole exception was the personal status laws, which remained governed by Islamic shari’a.
Personal status laws encompass nearly all legal areas that most acutely affect women, including marriage, divorce, child custody, maintenance, and inheritance. The following section outlines each of these legal areas under personal status laws and describes the application of the laws by the shari’a courts in Gaza.
Shari’a rules regarding inheritance generally provide that women receive half the amount given to a comparable male relative. In practice in Gaza, women often do not even receive this amount of inheritance and may be pressured or even threatened by male relatives not to file a claim for the inheritance to which they are entitled at all. As a result of these discriminatory inheritance practices, the financial resources available to a woman are even more limited in an environment where female employment is already at significantly low levels.9
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