Right of Detention in Contract Disputes

Zell & Co. attorneys successfully resolved a major dispute between the firm high-tech client and a recalcitrant employee who had attempted to withhold the employer’s proprietary intellectual property under a claimed right of detention in a labor dispute.  At issue in the case was the scope of an employee’s right of detention (zekhut ikavon) with respect to intellectual property.  Israeli law generally permits a party to a contract to withhold assets provided that party from a counterparty in connection with the performance of a contract where the withholding party claims that the counterparty has breached its contractual obligations.  We concluded that the right of detention applies only to tangible personalty and not to intangibles like the intellectual property in question.  A more detailed memorandum on the subject will shortly be made available on this Site discussing the legal authorities supporting the firm’s conclusion.