Israel's Supreme Court has ruled that a developer who refused to sell an apartment to an Arab couple acted in a discriminatory manner, and must pay them NIS 40,000 in compensation.

The couple, from I'billin in northern Israel, have been living in Jerusalem for the past 20 years. They wanted to buy an apartment suitable for their disabled son in the new residential project in the Pisgat Zeev neighborhood marketed by the May-Tal Engineering and Services development company. In a telephone conversation with the couple, the company's representatives made it clear to them that it did not sell apartments in the project to Arabs.

The couple filed a lawsuit in the Magistrates Court, which ruled that the company had to pay each of the couple NIS 20,000 in compensation for discrimination. May-Tal appealed the ruling to the District Court, arguing that the tender for the sale of land published by the Israel Land Authority (ILA) and the contract with it after May-Tal won the tender contained no mention of or ban on discrimination, and that the apartments marketed were in a purely private project with no public character. The District Court dismissed the appeal, and the company appealed to the Supreme Court.

A three-judge Supreme Court panel consisting of Justice Menahem Mazuz, Justice Neal Hendel, and Justice Alex Stein dismissed the May-Tal's appeal, ruling that the company had breached its duty to give the couple equal treatment because they were Arabs, and therefore had to pay them compensation.

The judges rule that equality is a supreme value in any democratic concept that respects human rights, without which a society cannot be considered democratic. In view of the principle involved, Attorney General Avichai Mandelblit also participated in the proceeding by submitting his opinion, which held that a private contractor building on state land and marketing it had the duty to practice equality.

Mandelblit's opinion stated that when land is marketed to private developers, ILA began in 2013 adding a clause to tenders specifically stating that the developer undertakes to refrain from discrimination in marketing housing units, and that a breach of this condition gives ILA a right to void the tender results and the signed contract. In furtherance of this, and in order to increase the ability to enforce this condition, a clause was added to ILA contracts stipulating compensation amounting to 15% of the price of the land if the anti-discrimination clause is breached.

The ruling states that the company should have accepted its equality obligation because of the special status of state land, and that administrative law bars a contracting company marketing state land from discriminating between Israeli citizens in selling apartments that it built on state land on the basis of personal or group characteristics, such as nationality, religion, or race. It was therefore ruled that a company that behaved in this manner would be required to pay compensation to a person harmed by the discriminatory practice.

At the same time, the question of a private contractor refusing to sell an apartment on privately owned non-state land, was left open.

Also taking part in the legal proceeding were the Association for Civil Rights in Israel (ACRI) and the Kohelet Forum. In his ruling, Mazuz stated, "There are few cases in which, as in the matter before us, discrimination surfaces in its full ugliness without being camouflaged by some pretext or other on the part of the supplier of the product or the provider of the service."