Israel: Class actions – litigation, policy and latest developments

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The applicable legal and regulatory regime

The Israeli Class Actions Law, 5766–2006 (the Class Actions Law or the Law) was enacted in 2006. It sets out the matters for which motions may be filed to certify class actions and establishes the principles and requirements governing class action claims.[1] A class action may be filed in Israel only if it relates to a claim as specified in the Class Actions Law, and one such claim alleges a cause of action under the Israeli Economic Competition Law, 5748–1988 (the Competition Law), as specified in Item 4 of the Second Addendum of the Law.

According to section 50 of the Competition Law, any violation (by act or omission) of this law, is deemed a tort under the Israeli Torts Ordinance (New Version), 5728–1968, thereby allowing the injured party to file a civil lawsuit against the violator.

Often, the trigger for private enforcement is based on an action taken by the Israeli Competition Authority (ICA). Despite the fact that a decision of the general director of the ICA, or a court’s decision, can constitute prima facie evidence in civil proceedings only under specific circumstances,often – and in order for petitioners to be ‘first in line’ – motions to certify are filed immediately after an ICA investigation commences or when the ICA files an indictment with the court. Therefore, frequently motions to certify that are based on investigation by the ICA or indictments, are stayed until the investigation is completed by the ICA or until the court renders its verdict on the case.

In recent years, actions initiated by foreign competition authorities and judicial proceedings in foreign courts have also triggered private enforcement in Israel.

Anticompetitive behaviour suitable for class actions

Generally, non-competitive behaviour prohibited by the Competition Law and the damage it can cause to the Israeli consumer can be the basis of a class action. Most competition class actions are based on allegations of: (i) restrictive arrangements (cartels and other horizontal or vertical conduct);[2] and (ii) abusive behaviour such as exclusionary and exploitative practices (refusal to deal, price discrimination, tying, unfair prices that are excessive and predatory, etc).

Findings of competition authorities and court decisions

The Israeli law recognises several ways to use the findings of the general director or court decisions as a basis for civil lawsuits, including class actions. Under section 42(a) of the Evidence Ordinance (New Version) 5731–1971, the findings and conclusions of a decision in a criminal case that convicts the defendant will be admissible as prima facie evidence in civil cases, with respect to what is stated in them, provided that the same defendant is a party to the civil case. This applies to violations under the Competition Law that may be enforced in criminal proceedings.

In addition, section 43 of the Competition Law provides that the determination of the general director shall be admissible as prima facie evidence in every legal proceeding. Regarding judgments and decisions of regulatory agencies or courts rendered outside of Israel, the Israeli Foreign Judgments Enforcement Law, 5718–1958 establishes the formal conditions for enforcing a foreign court judgment, as well as the direct and incidental recognition of foreign judgments, under very specific circumstances. Concerning decisions of foreign regulatory agencies, there is no binding precedent of the Supreme Court of Israel on whether such decisions may be used for follow-on class actions. Currently, their evidential admissibility and weight are determined by the judges in the framework of each Israeli proceeding in accordance with the particular circumstances of each case.

Who can bring claims?

Section 4 of the Class Actions Law defines who is entitled to submit a motion to certify, as given below.

  • A person who has grounds for an action regarding a matter listed in the Second Addendum of the Law or in a matter set out in an explicit legal provision that raises substantive questions of fact or law common to all members of the group.
  • A public agency or organisation (including the Israel Consumer Council)[3] may file a claim with respect to one of the areas of its public operations, in a suit that raises substantial questions of fact or law common to the entire class, on behalf of that class.

How to assemble a class

According to section 4 of the Class Actions Law, the petitioner – whether an individual, a public agency or an organisation – must file a motion to certify that raises substantive questions of fact or law common to all members of the class. The petitioner offers a definition for the class it represents in the motion to certify. The court can accept or change the definition suggested by the petitioner.

According to section 10 of the Class Actions Law, if the court grants a certification order, it must define the class in whose name the action is to be pursued and may also define sub-classes within the general class where it finds that there are questions of law or facts that are common to some of the class members.

Threshold criteria that must be met

Under the Class Actions Law, a court may certify a claim as a class action only if it finds that all of the following cumulative conditions are met: (ⅰ) the claim raises substantial questions of fact or law that are common to the class, and a reasonable possibility exists that such questions would be decided in favour of the class; (ⅱ) a class action is the efficient and appropriate means of resolving the dispute under the circumstances of the case; (ⅲ) there is reasonable basis to assume that the interests of all members of the class will be properly represented and managed; and (ⅳ) a reasonable basis exists to assume that the interests of all members of the class will be represented and managed in good faith.

The criteria for choosing class representatives

The following persons and entities are entitled to file a motion to certify: (ⅰ) an individual who has a claim that raises substantial questions of fact or law that are common to the entire class, in the name of that class; (ⅱ) a public agency with respect to one of the areas of its public operations, for certification of a representative claim that raises substantial questions of fact or law that are common to the entire class, in the name of that class; and (ⅲ) an organisation with respect to one of the areas of public operations in which that organisation is engaged, in a suit that raises substantial questions of fact or law that are common to the entire class, in the name of that class.

In addition, the petitioner must convince the court that there is reasonable basis to assume that the interests of all members of the class will be properly represented and managed; and that there is reasonable basis to assume that the interests of all members of the class will be represented and managed in good faith.

Moreover, the court can replace the petitioner to ensure that class affairs will be represented and managed in the most appropriate or efficient way.

The steps in how to successfully certify a class

The Class Actions Law establishes a two-stage process for the administration of class action proceedings: (ⅰ) the preliminary stage is the motion to certify, in which the court is required to determine (principally), based on prima facie evidence, whether the claim raises a cause of action and whether a class action is the appropriate procedural instrument to address the claim; and (ⅱ) a second, substantive stage, in which, if certified as a class action, the claim is administered, settled or decided in accordance with the Class Actions Law’s specialised procedures.

Notifying class members

What must be communicated?

Section 6 of the Class Actions Law determines that a copy of the motion to certify be sent to the director of the courts by the petitioner to be published in the Registry of Class Actions. Section 25 of the Class Actions Law, entitled ‘Publication of Notices to Class Members’, contains instructions pertaining to notification. It provides a list of specific outcomes of the proceedings the occurrence of each of which must be accompanied by a published notification to the members of the class in a representative action. These are: (i) a decision to certify a class action; (ii) a decision to approve the withdrawal of all representative petitioners or all class counsel or a decision determining the incapacity of the representative petitioners, or their counsel, to continue in their respective positions, or a decision to dismiss a class action; (iii) the filing of a motion to approve a settlement or compromise; (iv) a court decision to approve a settlement; and (v) a court decision or order in the representative action. Apart from these specific provisions, section 25(b) of the Class Actions Law provides additional general powers whereby a court may order the publication of any notification it deems necessary for the management of proceedings and the fair and efficient representation of the class.

Operation on an opt-in or opt-out basis

Under the Class Actions Law, the default for joining a class action is an opt-out mechanism, unless the court explicitly determines that an opt-in mechanism should apply in a specific case.

Section 11 of the Class Actions Law establishes an opt-out mechanism in which anyone who belongs to the class defined by the court will be considered as included in the class action, unless they have notified their objection to be a part of the class within 45 days from the court’s decision to certify the motion.

In special circumstances, the court may order an opt-in mechanism and include in the class only those who have notified the court, in writing, of their wish to be included in the class.

Damages assessment

Section 20(a) of the Class Actions Law guides the courts on how to quantify damages and divide remedies among members of the class. First, the court may issue an order for payment of monetary compensation, or it may grant another remedy directly to each individual member of the class whose eligibility to such remedy has been proven, in the amount and manner decided by the court.[4] Second, the court may order that each member of the class prove their eligibility to monetary compensation or to another remedy.[5] Third, the court may order the defendants to pay an inclusive sum of damages, from which members of the class would receive individual compensation on a pro-rata basis.

When members of the class either relinquish their compensation, fail to prove their eligibility or cannot be located, the remaining sum is allocated among the other members of the class in proportion to the harm each has sustained,[6] and where funds remain unallocated, they shall be reverted to the State Treasury.[7]

Each of the three methods is subject to the important caveat that in granting such an order, the court should take precautions to avoid unnecessarily burdening the parties and members of the class.

The process for settling claims

Proposed settlement agreements in class actions must be brought before the court and are subject to its approval. Judicial procedures regarding settlement agreements are divided into two stages: the filing of a motion to approve a settlement agreement, and a subsequent stage for the court’s approval of the settlement agreement.

In the first stage, a motion to approve a settlement is filed with the court, and if the court does not find grounds to reject the settlement, it will order the publication of a notice concerning the filing of the motion to the members of the class. The court will send the notice and copies of the motion to approve the settlement, the proposed settlement and the class action to the Israeli attorney general, the Israeli director of the courts and to any other person the court may instruct. A person who is a member of a class, a public authority, an organisation or the attorney general may submit an objection to the proposed settlement, and the parties have the right to respond to such objections. In recent years, it has become more common for the attorney general, public authorities and organisations to file objections to settlements on various grounds. The court is not bound by these objections; however, they could affect any potential settlement.

With respect to the second stage, relating to judicial approval of the settlement, the Class Actions Law provides that the court may not approve a settlement ‘unless it finds that the settlement is proper, fair and reasonable in view of the interests of the class members… and resolution of the dispute by means of a settlement constitutes the most efficient and fair means of resolving the matter under the circumstances of the matter’.[8]

The main advantage of a settlement is that, when finally approved, it constitutes res judicata regarding all the members of the alleged class and in connection with all the causes of action included in the settlement. Generally, it is very common in Israel for class actions to conclude in settlements and, in most cases, motions for the approval of a settlement are submitted with the court during the certification stage. It is possible for parties to also settle after a class has been certified.

Concerning how damages or settlement amounts are apportioned and distributed, in the context of the motion to approve a settlement, the defendant usually commits to compensate the members of the class, either by way of a cash payment or other non-cash benefits (such as equivalent services or discounts), or a mix of both. In recent years, Israeli courts have tended to favour monetary compensation over non-cash benefits. In cases where a difficulty to identify the members of the class arises, it is possible for the compensation to be paid in part, or in full, to charitable or other non-governmental organisations.

Section 27(a) of the Class Actions Law establishes a fund for the management and distribution of the sum awarded as a remedy. Accordingly, if monetary compensation was awarded to the class members and a balance remained after its distribution, the court will order the transfer of the remaining sum to the fund and designate the latter to a cause that is proximate to the subject of the class action. A court will also make such a direction for a contribution to the fund in cases where the court has made an order for a monetary remedy for the public benefit – for example, if payments to the individual members of the class are low or difficult to process.

Recognition of collective settlement in the absence of such claims being made

Generally, there is no form of collective settlement which is not in a class action proceeding filed in accordance with the law. There are some exceptional proceedings in which collective settlements can be made, such as derivative suit proceedings.

Mandatory or voluntary redress schemes

The ICA cannot impose mandatory redress schemes or allow voluntary redress schemes. However, according to section 50B of the Competition Law, the general director and third parties are authorised to agree to a consent decree that may include, among other things, payment to the State Treasury in lieu of other enforcement measures.

The competent court, according to the general director’s request, may grant the agreement between the general director and another person the force of a decree. Such consent decree may be without admission of liability and may include, among other things, an obligation to pay a sum of money to the State Treasury and an obligation to carry out or refrain from carrying out an action. In some cases, the ICA has enabled a consent decree to be reached including an option to pay class members, in relevant class actions in the framework of settlements and under certain circumstances, instead of processing payments to the State Treasury.

Right to appeal

The decision of a district court is generally appealed to the Supreme Court of Israel. Competition class actions are rarely filed with magistrate courts.

A district court decision that denies a motion to certify is subject to appeal as of right to the Supreme Court within 60 days. Following the Supreme Court’s decision, theoretically an additional hearing can be held on its decision before an expanded panel of the Supreme Court. The possibility for an additional hearing is in the discretion of the Supreme Court.

For all other district court decisions, including a certifying decision, leave to appeal must be obtained from the Supreme Court (as a matter of discretion). A motion to grant leave to appeal must be filed within 60 days from the date the decision was rendered.

Any other strategic considerations

In recent years, a growing trend has emerged in Israel: more and more motions to certify based on alleged global cartels and other anticompetitive conduct are being filed with the Israeli courts. The typical petitioners in these cases are Israeli private consumers or private consumer organisations, while the respondents are global entities that allegedly were parties to global cartels or other non-competitive actions.

There has been a notable increase in motions to certify filed in Israel against parties to international cartels that allegedly affected the Israeli market. Enforcement measures taken by competition authorities worldwide against parties to global cartels, usually accompanied by civil litigation, act as an incentive for private petitioners in Israel, who gradually have become less hesitant to seek compensation awards from the courts.

When discussing class actions in Israel regarding international cartels, it is important to analyse whether it is possible to apply the local Competition Law and Class Actions Law to a cartel that involves only, or is comprised mostly of, foreign corporations. Such circumstances raise several issues that are explained below.

The effects doctrine

In Israel, the effects doctrine is applied to attain exterritorial jurisdiction over restrictive arrangements that were made by foreign companies. The doctrine allows the application of the Competition Law to foreign conduct that allegedly harmed competition in Israel. So far, the applicability of the effects doctrine has been referenced in the decisions of the general director and district courts. The Supreme Court has not determined in its decisions whether the doctrine has been adopted under Israeli law. Recently, however, Israeli courts have rendered ground-breaking decisions that have the potential to significantly affect the follow-on class actions based on alleged global cartels.

In a decision in the Trucks case,[9] the district court deliberated on the extraterritorial application of the Competition Law and held that to utilise the effects doctrine – through which the Competition Law can be applied extraterritorially under certain circumstances – the petitioner must establish that the restrictive arrangement had a significant, direct and deliberate effect on competition in Israel and that demonstrating a negligible and incidental effect was not sufficient. An appeal of this decision was submitted with the Supreme Court, in the framework of which a position paper was submitted by the attorney general, stating that the Competition Law applies to conduct that has a significant, direct and foreseeable impact on competition in Israel and does not require an element of intent. In October 2021, the Supreme Court held that at the current stage of the case – that is, the document discovery stage – it was not necessary for the court to render a decision on the application of the effects doctrine. However, the Supreme Court held that the decision of the European Commission, together with the significant market share of the respondents’ trucks in Israel, constituted an initial evidentiary foundation that was sufficient for the document discovery stage. The court emphasised that it was sufficient initial evidence, among other things, due to the inherent difficulty of exposing prohibited connections between large companies, especially when they operated outside of Israel. Therefore, the appeal was allowed in part and the hearing was sent back to the district court.

On the other hand, in a decision of the District Court to grant motions to dismiss (in the Libor case)[10] that was processed before the Supreme Court rendered its decision in the appeal concerning the Trucks case, the judge referenced the district court’s decision in the Trucks case and affirmed the court’s holding in that decision, that if harm to competition in Israel was not substantial and direct, the effects doctrine must not be applied. The judge further held that it is necessary to examine with great caution motions importing to the overloaded courts in Israel global issues that are being adjudicated in foreign courts, especially where enormous costs have been imposed on the defendants along with criminal sanctions with significant implications. An appeal on this decision is pending before the Supreme Court.

An appeal on another decision in the Forex case[11] was filed with the Supreme Court, which held that there is no established case law on the application of the effects doctrine in Israeli law, but the court stated that the possibility should not be precluded for the Competition Law to apply to the claim at hand pursuant to the effects doctrine, and the district court did not err when it elected at this stage not to adjudicate on the conditions for the application of the doctrine.


[1] In addition, the Class Action Regulations, 5770–2010 were enacted in 2010, dealing mostly with procedural aspects.

[2] Horizontal agreements include cartel conducts (for example, price fixing, market allocation and bid rigging) and ‘softer’ conduct such as exchange of information among competitors. Vertical agreements may include exclusivity and MFN clauses.

[3] The Competition Law includes an additional barrier to representation by an organisation, providing that an organisation may only serve as the representative body if the court is convinced, under the circumstances, that a difficulty exists in terms of the motion being filed by an individual. The Israel Consumer Council is excluded from such a barrier.

[4] Section 20(a)(1).

[5] Section 20(a)(2).

[6] Subject to the rule that a class member may not receive higher compensation than that which is their due.

[7] Section 20(a)(3).

[8] In the process of evaluating the proposed settlement, the court may appoint an ‘examiner’ (ie, an expert in the class action relevant field) who will operate as an ‘officer of the court’ and advise the judge on the proposed settlement.

[9]RLFI agriculture Ltd v Man Trucks and Bus AG et al (the Trucks case).

[10]Hatzlacha v UBS AG (the Libor case).

[11]UBS AG v Gertler (the Forex case).

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