Until 1988, it was possible to file a class action under Regulation 29 of the former Civil Procedure Regulations, 1963 and 1984 ("Regulation 29") which stipulated that if the number of persons interested in one claim is large, one or some of them may, at the request of an applicant(s) and with the permission of the court, represent all interested parties in that claim.
In 1969 the Supreme Court held in CA 86/69 Merkela v Rabinowitz et al, P.D. 23(1) 645 that a class action application under Regulation 29 may only be granted if the relief sought by each of the members of the class is identical and is required due to breach of the same contract or due to damage caused by the same tort.
Over the years, very few class action certification motions were filed under the narrow framework of Regulation 29.
In the years following 1988, various laws were amended by adding specific arrangements for filing class actions, such as the Securities Law, 1968 (Chapter I1); the Consumer Protection Law, 1981 (Chapter F1); and the Economic Competition Law (formerly known as the “Antitrust Law”), 1988 (Chapter F1), to name a few.
In 2003, within the framework of PCA 3126/00 State of Israel v A.S.T Project Management, P.D. 57 (3), 220 (Nevo 2003), the Supreme Court rejected the district court's ruling (CP 1478/99 A.S.T Project Management v the State of Israel (Nevo 2000)) to grant a certification motion by virtue of Regulation 29, stating that the circumstances of the case did not fall within the ambit of that regulation’s wording. The Supreme Court stated that the legislature should find a legislative solution and urged it to expedite the much-needed class action legislation.
The patchwork regime under Regulation 29 and the amended laws mentioned above had the following problematic features.
The foregoing failings brought about the passage of the Class Actions Law, 2006 (the "Class Actions Law"), which addresses many of the above issues.
Nevertheless, there are still calls to amend specific aspects of the Class Actions Law to further implement the law’s goals and to reduce the frequency of its misuse in unsuitable claims.
The historical roots of Israel’s class actions regime are in England. However, its modern form derives from the United States. Over the years, the class actions procedure has been adopted in other common-law countries, such as Australia, New Zealand, and some provinces of Canada.
Similarities and Differences between Class Actions in Israel, the USA, and Other Common-Law Countries
The main similarities and differences between the class actions regimes in Israel, the USA, and other common-law countries are as follows.
In Israel, according to Section 20 of the Class Actions Law, in order for the court to certify a class action, the applicant(s) must prove the existence of a personal cause of action (in order to maintain the constitutional right to a fair/proper procedure). In the United States, proving the existence of a personal cause of action is only deemed necessary in some of the 50 states.
In Israel, Section 23 of the Class Actions Law sets forth the parameters for awarding legal fees to class counsel in a settlement or judgment, based mainly on a RAND Corporation study on class actions in the United States. The RAND study proposed that legal fees be determined, inter alia, in accordance with the benefit accrued to the members of the class and the general public from conducting the lawsuit, in order to prevent settlements that are more beneficial to class counsel and the class action plaintiffs than to class members. Section 23(b) of the Class Actions Law instructs Israeli courts to determine fees awarded to class counsel based on:
The good faith principle
The good faith of the applicant is one of the four conditions that must be met under Section 8(a)(4) of the Class Actions Law for certification of a class action. Specifically, there must be a reasonable basis to assume that the interests of all class members will be represented and managed in good faith by the applicants and their attorneys (the latter are often the party that initiates and determines the course of the class action).
The court may dismiss a certification motion if it finds that it was filed in bad faith, as the Supreme Court ruled in PCA 3698/11 Shlomo transportation (2007) LTD v S.A.M.G.R enforcement services LTD (Nevo 6 September 2017). However, in the US, good faith is not an explicit statutory requirement and appears to be invoked only in extreme cases of bad faith.
Professional class action plaintiffs
In the US, professional class action plaintiffs who profit from filing class actions, eg, in the field of securities, have been banned. In Israel there is no such prohibition.
The Israeli court may certify a claim as a class action subject to such changes or conditions as it deems fit to ensure fair and efficient management of the case. According to Section 10(c) of the Class Actions Law, the court may define a subclass, if it finds that some of the members of the class raise questions of fact or of law, which are not common to all members of the class, and it may appoint a subclass representative if this is necessary to ensure that the matter of the subclass members is represented and managed in an appropriate manner. This mechanism is derived from Australian legislation (Sections 33Q and R of the Federal Court of Australia Act, 1976) and Canadian provincial legislation (Section 5 of Ontario’s Class Proceedings Act, 1992 and Section 6 of British Columbia’s Class Proceedings Act (RSBC 1996)).
The fund for class actions
The Class Actions Law established a fund to assist in the financing of class actions in Israel which are in the public interest (the "Governmental Fund of Class Actions"). Such a fund also exists in the Canadian provinces of Ontario, Quebec and British Columbia.
The fund is managed by a nine-member board appointed by the Israeli Minister of Justice and it is allocated funds from the Ministry of Justice's annual budget.
There is no applicable information in this jurisdiction.
Class actions in Israel are regulated by two items of legislation: the Class Actions Law, 2006 and the Class Actions Regulations, 2010.
In Israel a claim can only be filed as a class action if the subject of the claim appears on the second appendix of the Class Actions Law, which is an exhaustive list of the following matters:
The following matters described in the second appendix of the Class Actions Law may be brought as class actions, in some cases, even regardless of whetherthe applicant(s) and the respondent(s) actually entered into a transaction.
The statutory definition of what constitutes a class action suit is a claim or matter which raises material questions of fact or law similar to all members of the putative class. A person, public authority or organisation may file a class action on behalf of other persons whose claims are similar or identical to the applicant’s claims, without prior authorisation to act on behalf of those persons.
Under Section 8 of the Class Actions Law, if the existence of a personal cause of action has been proven, the court may certify a claim as a class action if the following conditions have all been met.
The court may certify a claim as a class action even if neither of the conditions (i) or (ii) in the third point above has been met, if the court finds that the existence of these conditions can be ensured by replacing counsel or by adding counsel or by replacing the applicant(s) or by adding applicant(s), or by other means.
A class action may only be filed on the grounds mentioned above in 3.1 Scope of Areas of Law to Which the Legislation Applies or in a matter that a statutory provision expressly states may be filed as a class action.
However, in certain circumstances a class action will not be certified against a government authority in relation to damage caused by a third party whose actions have resulted in the use or non-use of the supervisory, regulatory or enforcement powers of the authority in relation to that third party.
A class action before the first instance can be filed in the magistrates' courts or the district courts depending on the amount being sought (the magistrates' courts can hear claims of up to ILS2.5 million while the district courts can hear claims amounting to ILS2.5 million or more).
When a certification motion is filed, the facts claimed must be supported by an affidavit and in certain matters an expert opinion may be required (eg, for proof of damage, and to support matters of special expertise). The certification motion must also specify the alleged cause of action and why it meets all conditions for approving the claim as a class action (as mentioned in 3.2 Definition of Collective Redress/Class Actions).
Appeals on rulings or judgments rendered by a magistrates' court are heard by a district court and appeals on rulings or judgments of a district court (when sitting as a court of first instance based on subject matter jurisdiction) are heard by the Supreme Court. The Supreme Court will only hear an appeal on an appellate judgment of a district court in rare cases.
If a case is heard by the economic department of a district court (as an economic issue as detailed in Section 5 of the Class Actions Law), the losing party in a decision to certify a claim as a class action can file a motion to reconsider the certification motion decision by a panel of three judges of the economic department of the district court in question. If the panel finds that a request for reconsideration raises an issue of special importance or sensitivity or an issue that has yet to be resolved by binding precedent, it may order that the hearing be referred to the Supreme Court, which will hear the request for reconsideration as if it were an appeal of the decision.
The overall procedure for bringing a class action in Israel is as follows, from beginning to end.
The Israeli legal system is adversarial and has many common-law features. Israel does not have juries. Israeli judges are professional judges who are appointed by a judicial appointments committee consisting of Supreme Court judges, government ministers, members of parliament and Bar association representatives.
The Israeli judiciary has specialised courts such as the economic departments of the district courts, administrative courts, maritime law courts and labour law courts. Class actions regarding these subject matters must be filed solely with the applicable specialised courts. Appeals upon judgments of the above will be filed with the Supreme Court, except appeals regarding labour law which will be filed with the National Labour Court.
As mentioned in 3.2 Definition of Collective Redress/Class Actions, a person, public authority or organisation may file a class action on behalf of other persons whose claims are similar or identical to the applicant’s claims, without prior authorisation to act on behalf of those persons.
As stated, the existence of a personal cause of action for the applicant and a cause of action for the class members is a necessary condition for class action certification. In the absence of a cause of action, the certification motion can be dismissed, as the class action does not create substantive rights.
A person who does not have a personal cause of action is not entitled to file a class action.
However, if the court finds that all of the conditions mentioned in 3.2 Definition of Collective Redress/Class Actions have been met vis-à-vis the defined class, but the conditions regarding the specific applicant(s) have not been met, the court will certify the class action but may order the replacement of the applicant(s). It should be noted that some judges have decided in certain cases to ascribe lesser importance to the personal cause of action requirement.
The class is defined by the applicant(s). The court has discretion to change the definition of the class in light of the facts and reasons specified in the certification motion ruling.
The Class Actions Law does not limit the size of the class, but the courts have yet to determine whether there is a minimum threshold for class size below which class action certification should be denied. In practice, the minimum size issue is determined on a case-by-case basis.
In Israel the default for joining a class action is an opt-in mechanism, unless the court explicitly determines that an opt-out mechanism should apply in a specific case.
As part of a class action proceeding, respondent(s) can apply to join a third party that is needed in order to resolve the disputes, instead of clarifying issues relating to that third party in a separate procedure.
As in any claim filed, the applicant(s) can submit a request to join additional respondents.
The court is also authorised, as part of its decision to certify the class action, to order the replacement of the applicant(s) and even their counsel.
If the court certifies a class action, in the certification ruling it must determine the class in whose name the action will be conducted. Generally speaking, the certified class will not include a person whose cause of action arose after the date on which the class action was certified.
The court has full discretion to set the procedures for hearing the case (including delaying proceedings due to a similar earlier case). The court will base its ruling on Supreme Court precedents or, in the absence of a Supreme Court precedent, may base its ruling on rulings made by courts of the same hierarchical rank.
The court may seek the position of the relevant regulator regarding the issue(s) in dispute in the case.
The court may also suggest that the parties try to resolve the dispute between them directly or in mediation.
Adjudication of the certification motion can take two to four years in the magistrates' courts and three to five years in the district courts.
Usually, cases end in settlements within a year from the date of filing of the certification motion, though some settle later.
If a certification motion is approved, the court will then hear the class action claim and that may take an additional two to three years in the magistrates' courts and three to four years in the district courts. However, a case will very rarely be handled after a certification motion is approved as the parties will try to reach a settlement at this stage.
The statute of limitations in Israel for most civil litigation is seven years and this will apply to class actions unless stated otherwise in specific legislation (which will usually stipulate shorter prescription periods).
Section 26 of the Class Actions Law adds a specific statute of limitations with regard to class actions.
Where the court has ordered that the class in whose name a class action will be managed will only include a person who has notified the court of their desire to join it, in accordance with Section 12, the obsolescence period of a suit by a person listed among the class in whose name the certification motion was submitted and who had not informed the court of their desire to join the class action deriving from the same grounds, will not end before a year has passed from the day they made said notification, under the condition that that person’s suit had not become obsolete by the date the certification motion was submitted.
Binding Israeli precedent deems the certification stage a preliminary phase of the case. Therefore, most motions for summary dismissal of certification motions will be denied outright, without addressing the merits of such motions. Overall, the vast majority of the cases in which summary dismissal motions succeed concern subject matter that does not appear in the second appendix of the Class Actions Law.
The courts may allow deviation from procedural conduct based upon court rulings in the form of dismissal or delay for any reason – including due to the existence of settlement negotiations and if the parties waive the right to conduct cross examinations.
When a class action is filed, the applicant(s) is required to pay half of the fixed filing fee, which varies depending on the rank of the court concerned (the full filing fee for district court class actions is ILS16,128 and the magistrates' court class action fee is half that amount, ie, ILS8,064).
If the court dismisses the certification motion, the second half of the fee will be paid by the applicant(s) and if the court approves the certification motion, the second half of the court fee will be paid by the respondent(s).
In the case of settlement, an exemption from the second half of the filing fee may be obtained, otherwise the respondent will have to make the payment.
If the lawsuit ends in a settlement or if a class action is certified, the applicant(s) and counsel receive a percentage of the benefit to the class as a reward for their efforts and representation of the class.
In a withdrawal of the action (see 4.12 Settlement and ADR Mechanisms), the remuneration and legal fees will usually run in the tens of thousands of shekels (in most cases, up to ILS100,000). In a settlement by way of a consent judgment (which results in res judicata), the amounts will usually run in the hundreds of thousands of shekels and in some cases (mostly securities or insurance actions) in the millions of shekels.
A costs order given in the context of a certification motion decision will not reflect the actual costs of the prevailing party. If the application is denied, the Civil Procedure Regulations, 2018 require the court to order the applicant(s) to pay the respondent’s “reasonable and fair expenses”.
Certification motions based on certain causes of action are exempt from payment of the filing fee (see an example in 5.4 Impact of COVID-19).
There are few litigation funds (in addition to the Governmental Fund of Class Actions as mentioned in 1.2 Basis for the Legislative Regime, including Analogous International Laws) which fund class actions (in full or in part).
The general rule of discovery prior to certification is that the applicant is only entitled to discovery of documents that are relevant to the issues in dispute re the certification motion stage (which usually excludes information on the amount of damages and scope of the class). "Fishing expeditions" are not permitted.
If a respondent ignores an applicant’s discovery request or if the applicant deems the respondent’s replies insufficient, the applicant will often file a motion to compel discovery.
Attorney-client privilege and litigation privilege apply as they do in regular litigation, meaning the court may not lift attorney-client privilege or the litigation privilege without express consent from the client. In so far as there is client-attorney privilege, disclosure or allowing the applicant(s) to get a copy thereof, may be avoided completely.
The court may issue protective orders to protect the respondent’s trade secrets or the confidentiality or privacy of third parties, such as ordering that certain documents will not be produced to the applicant, that redacted documents will be produced or that document production will be subject to a confidentiality order.
Monetary relief, declaratory relief, restraining orders and mandatory injunctions are available in Israeli class actions.
As early as after filing of the certification motion, the parties may contact one another to discuss possible resolution of the case, ranging from withdrawal of the case to settlement by means of a judgment (which results in res judicata). This can be done at any time during the case by the parties themselves or with the assistance of a mediator. The court may suggest that the parties mediate their dispute as well.
Any withdrawal or settlement requires court approval. Unless the settlement provides for full dismissal of the claim, the settlement will include remuneration to the applicant and legal fees for the applicant’s counsel. A settlement via a judgment will also include some benefit to the class members. The remuneration and legal fees in either mechanism are subject to court approval and the court may decide to reduce the amounts or to order no remuneration/legal fees at all.
Before deciding whether to approve a res judicata settlement agreement the court requires the Attorney General's position with regard to the settlement agreement and may appoint an examiner to examine the settlement, including its pros and cons in relation to all class members and taking into account all relevant circumstances.
The court can approve the settlement agreement, reject it or request the parties to amend it.
The judgment will apply to the applicant(s), to the members of the class (unless requests to opt out from the class were granted) and to the respondent(s).
If the judgment is monetary and the judgment debtors do not pay the judgment amount, it can be enforced via the execution bureau (Israel’s version of bailiffs). If the judgment is declaratory or for injunctive relief, the violating party may be found in contempt of court and fined.
As stated in 4.7 Length and Timetable for Proceedings, there are some exceptions to the statute of limitations regarding certain class actions. One of them is the statute of limitations in claims against the state or against government authorities, which is only 24 months.
In November 2020, following years of litigation, the Supreme Court in ADP 8626/17 Menirav v the Tax Authority, ordered the Tax Authority to refund public taxes collected illegally during that 24-month period but also added that the refund period would include the period after the filing of the certification motion; and under exceptional circumstances, even after the approval of the certification motion, thus the court set new limits for the state’s restitution period.
Also, as stated in 4.5 Joinder, a court may permit additional individuals to join a class. The justices of the Menirav court added additional individuals whose cause of action arose after the filing of the certification motion, due to the exceptional circumstances of the case. This may be a sign of future developments in this matter.
In light of the evolution in case laws in the 15 years since the commencement of the Class Actions Law, the Ministry of Justice formed an inter-ministerial committee in November 2020 to consider amending the Class Actions Law. At this early stage, there have been no official disclosures regarding possible changes to the Class Actions Law.
In addition, as stated in 4.12 Settlement and ADR Mechanisms, settlement is an option to dispose of a certification motion. When a settlement is filed with the court, the Attorney General is required by the court to submit their position. As a result of the massive workload on the Attorney General, the Attorney General's Office is considering delegating its powers under the Class Actions Law to specific government offices/public attorneys.
See 5.1 Policy Development.
Brexit has had no apparent impact on collective redress and class actions in Israel.
During various phases of the COVID-19 pandemic, the Israeli government imposed restrictions on businesses all the way up to closures. As a result, class actions seeking refunds/reductions of insurance premiums were filed. For example, in ADP 25472-04-20 Kama Mia Textile Ltd et al v Migdal Insurance Company Ltd et al, the applicants claimed that the insurance companies were unlawfully enriching themselves at the applicants' expense and at the expense of the putative class, and that the insurance companies should significantly reduce the premiums of the class members for employers' liability and third-party liability coverage. The Haifa District Court denied the certification motion in this case.
Certification motions regarding automotive policies and homeowner policies are still pending in the Tel Aviv-Jaffa District Court.
There has been a massive increase in certification motions filed per the Equal Rights for Persons with Disabilities Law, 1998 and especially regarding internet accessibility, as businesses sought to operate via websites when they could not open their physical places of business to the public.
According to the Israeli economic press, at the height of the COVID-19 disruptions to the Israeli economy (March–April 2020), approximately 450 class actions were filed; this is five times the regular two-month average of new class action filings.