Why do you frame the question like that. You are perfectly well aware that if the question is constrained by "Arab" and "Jew" you force an answer that sounds like racism. I refuse the question and the type of thinking behind it..
You could have asked "Why is it that there is no civil marriage in Israel?". That is, two Jews cannot contract a civil marriage, nor a Jew and an non-religious person, nor an Arab Muslim and a Jew, nor an Arab muslim and a non-religious person and so on and so on and on through every assigned micro-category that you care to construct.
But you knew that already, didn't you. So the second question is "Why did you frame the question as you did, where it begs it's own question/answer to the one you seek?".
That there is no civil marriage in Israel is one of many totally disgusting disgraces, I agree. It causes problems and difficulties that simply should not be there. Many of my own family have, with my full encouragement and support, conducted their marriages completely ignoring that appalling religious law. The administrative work-around - which is completely legally acceptable - is to get married abroad. The law then accepts that civil contract as a valid marriage for all Israeli civil and legal purposes.
But you already knew that, didn't you? And even so, framed your question as one of Arab and Jew.