By Haggai Carmon

The U.S. government recently won a victory at the Tel Aviv, Israel Labor Court (by Judge Alya Fogel, president of the Court) when it denied a lawsuit by a former local employee for severance payment. The Court awarded the U.S. with costs.

Irena Shaikevitch worked for 19 years as a locally hired employee at the U.S. Embassy in Tel Aviv. During the most recent years of her employment, she was assigned to the American Citizens Services section at the Consulate. While conducting an investigation regarding visa fraud, the Embassy’s security officer suspected that Shaikevitch was divulging classified visa denial information to Mordechai Tzivin, a private attorney who had befriended her. During an interview with the security officer, Shaikevitch admitted she gave Tzivin such information. Subsequently she was separated from her employment for cause without customary severance payment.

Shaikevitch sued the United States at the Tel Aviv Regional Labor Court for severance payment, failure to give her prior notice, and personal damages. She also sought statutory punitive interest on the withheld payments: currently 515% annually.

Shaikevitch argued that her actions, to which she had admitted, do not justify her separation for cause without severance payment. She claimed that the U.S. should have applied less severe disciplinary actions against her.

The U.S. argued that Shaikevitch had been working in a sensitive environment that required a high degree of trust and integrity from its employees. The U.S. also argued that Shaikevitch admitted to grossly violating that trust when she gave sensitive information to an outsider, while using her co-workers in another department to obtain the information she needed. Therefore, the U.S. was justified in separating Shaikevitch for cause without severance payment.

The Court ruled that the U.S. was justified in separating Shaikevitch, by not giving her prior notice and by denying her severance payment. The Court ruled that by divulging classified visa information without any authorization from her supervisors, Shaikevitch created a potential criminal and security risk, in clear violation of the Embassy’s procedures. The Court indicated that Israel’s Severance Payment Law mandates the payment of severance to separated employees, unless the case falls under one of few exceptions. One of these exceptions is when the employee has engaged in fraud, theft or bribery. The Court found that although there were conflicting factual accounts regarding the volume of information divulged, as well as regarding the length of time during which Shaikevitch engaged in the information theft, her own admission was sufficient to establish that the U.S. was correct in separating Shaikevitch for cause without making any severance payment, due to the great severity of these acts.

In sum, the court denied Shaikevitch’s claim for severance payment and for damages incurred by the failure to give her advanced notice.

This is a case of first impression in Israel. Most similar cases concerned theft of tangible property, and none of them involved a foreign embassy. Furthermore, cases where the Court has completely justified a total denial of severance payment, are extremely rare.

The Court has ruled that embassy employees are held to a higher standard, and that their seniority operates against them in cases of breach of trust.

“Beyond the attempt of the plaintiff and Advocate Tzivin to justify their actions by using despicable terms, we are of the impression that these actions are particularly severe in view of the plaintiff’s place of work. We should make it clear that such conduct is unacceptable to the court in any workplace. However, the plaintiff’s place of work for almost two decades was at the American Embassy in the State of Israel – where a strict code of conduct is applied, which the plaintiff failed to follow. Therefore, the inappropriate manner of the plaintiff’s conduct is manifested even more strongly.”

The Court has also sent a strong message to other employees:

“Additionally we have weighed the plaintiff’s actions also by measuring the effect they could have on other employees at her workplace. We think that in a place where such serious events took place – against all procedures of the defendant, then the defendant’s reaction against the perpetrator was appropriate under the circumstances. Otherwise, the defendant’s employees could get the impression that the plaintiff’s acts were legitimate and their severity is not great.”

These statements are pivotal as a deterrent against recurrence of similar wrongdoing by embassies’ employees. The Court has adopted the U.S argument that embassy employees are held to a higher standard and that foreign embassies’ strict rules of conduct should be recognized and applied.

The Israeli Labor Courts are known for their disposition to favor employees. This is particularly true when the defendant is a powerful employer, such as a big corporation or a foreign State. Therefore, the U.S. victory in this case is particularly significant.

The U.S. government was represented by Haggai Carmon.

By Haggai Carmon

On January 4, 2009, the 9th Circuit Court of Appeals in San Francisco dismissed a class-action suit brought by Holocaust survivors against the Vatican Bank, ruling that the Bank is protected under the U.S. Foreign Sovereign Immunities Act and that the U.S. court system does not have jurisdiction in this case.

The suit was originally filed in 1999 by Holocaust survivors from Croatia, the Ukraine and Yugoslavia, most of whom now live in the United States. It alleges that the Vatican Bank accepted and laundered assets stolen by the Nazis from thousands of Jews, Serbs and Gypsies oppressed and killed when the Nazi-supported Ustasha government ran Croatia.

In suing, the survivors sought an accounting and recovery of the Ustasha Treasury, part of which was transferred to the Vatican after WWII. The plaintiffs were hopeful, given that in 1998, Swiss banks accused of questionable money management on behalf of the Nazi regime agreed to pay about $1.25 billion to Holocaust victims and their families.

In Alperin et al  v. Vatican Bank, Plaintiff Attorney Jonathan Levy argued that the Vatican Bank has engaged in commercial activities in the U.S., which is one of the exemptions to the Foreign Sovereign Immunities Act. The Court, however, ruled that the defendant’s commercial activities in the U.S. were simply “too tangentially related to [the plaintiffs’] legal claims to be considered the basis for the suit.”

Although Levy does not plan to appeal the decision, he did voice his disappointment that “the court found that dealing in gold teeth from concentration camps was not a commercial act.”

By Haggai Carmon

On December 16, 2009, President Barack Obama signed an Executive Order amending Executive Order 12425, which designated Interpol as a public international organization entitled to enjoy certain privileges, exemptions and immunities.

Although alternative media outlets have picked up on this Executive Order with a view to inciting panic, the order simply expands the international police organization’s immunity to match that of other international organizations like the Red Cross.

Interpol is the world’s largest international police organization, numbering 188 member countries. It was created in 1923 to facilitate cross-border police cooperation. It seeks to support and assist all organizations and services that aim to prevent or combat international crime.

Even where diplomatic relations do not exist between countries, Interpol tries to facilitate cooperation so as to strengthen the fight against crime around the world. The organization’s constitution prohibits any intervention or activities of a political, military, religious or racial character.

In 1983, Ronald Reagan issued Executive Order 12425, which served to classify Interpol as an international organization protected by the International Organizations Immunities Act. The Act protects qualifying international organizations from certain levies and taxes, searches and seizures, but Reagan’s EO excluded Interpol from some of the Act’s immunities.

In 1995, Bill Clinton signed an EO lifting one exception relating to federal taxes and duties. President Obama’s EO lifts the remaining exceptions, making Interpol immune to search and seizure, as well as social security, property and importation taxes.

In essence, President Obama has only afforded Interpol the same immunities given other similar international organizations operating within U.S. territory.