The Jerusalem District Court on Wednesday ordered Bank Leumi to transfer approximately NIS 11 million, or $3 million, from UNRWA’s bank account to the Jerusalem Municipality to cover unpaid municipal property taxes, rejecting the agency’s claim that diplomatic immunity shields its funds from collection.

Judge Haya Zandberg ruled that the legal protections granted to UNRWA under a 1967 agreement with Israel had expired following Knesset legislation terminating the arrangement and banning the agency’s operations within Israeli territory.

The dispute concerns two properties UNRWA maintained in Jerusalem for decades: an office and logistics compound in Ma’alot Dafna and an educational campus in Tsur Baher. The agency previously received full municipal property tax exemptions based on its recognized diplomatic status.

Bank Leumi froze UNRWA’s account in February 2024 over compliance concerns that funds could be used for terror financing. The agency did not initiate legal proceedings to lift the freeze.

Following the legislation ending UNRWA’s activities in Israel, the Jerusalem Municipality began collection proceedings for unpaid property taxes for 2024 and 2025.

UNRWA did not file a formal objection, administrative appeal or court petition challenging the assessments, leaving the debts legally final and binding. In August 2025, an administrative attachment order was issued against its bank account for NIS 11,056,426.94.

Bank Leumi subsequently asked the court for instructions on handling the frozen funds.

Zandberg upheld the municipality’s position, ruling that UNRWA could not use the bank’s proceedings to challenge tax assessments after failing to pursue the established appeal process. Informal diplomatic correspondence with Israel’s Foreign Ministry did not substitute for a formal appeal or court filing, she determined.

The judge also rejected UNRWA’s argument that its status as a United Nations body automatically grants it blanket immunity. She held that its protections under the 1967 arrangement ended when that agreement was terminated, and that international commitments do not override explicit Knesset legislation.

The court noted that the attorney general did not intervene in the proceedings to assert immunity on UNRWA’s behalf.

Addressing the concerns that originally prompted the account freeze, Zandberg ruled that transferring money directly to the municipality to satisfy tax debts would not place the funds in UNRWA’s operational control.

She also determined that the prohibition on UNRWA’s activities in Israel does not relieve it of its obligation to pay for municipal services it received.

The court instructed Bank Leumi to formally register the attachment and transfer the funds directly to the Jerusalem Municipality.

Shai Glick, CEO of the advocacy organization Btsalmo, welcomed the ruling as a legal and moral victory for Israel and Jerusalem residents, saying it demonstrated that UNRWA must comply with Israeli law and meet its obligations to taxpayers.

(YWN World Headquarters – NYC)