Israeli Committee Approves Class Action Immunity for Small Businesses
Translated & summarized from TheMarker by baba
An Israeli Knesset committee approved a reform granting class action immunity to businesses with annual turnovers up to 9 million shekels. The amendment also requires a 60-day notice period before filing certain class action suits. While some advocated for higher or lower thresholds, the current figure was a compromise. The Knesset must still vote to finalize the legislation.
The story in 5 lines · by baba
- Businesses with annual turnovers up to 9 million shekels will be immune from class action lawsuits.
- A 60-day preliminary notice period is now required before filing certain class action suits.
- The reform was approved by a joint Knesset committee on its way to a full vote.
- Some groups argued the 9 million shekel threshold is too low, while others wanted it higher.
- The amendment addresses issues including labeling, spam, and accessibility regulations.
A joint committee of the Constitution and Economy committees in the Knesset has approved a reform to class action lawsuits, granting immunity from such suits to small businesses. The amendment, passed on Thursday for a second and third reading, stipulates that businesses with an annual turnover of up to 9 million shekels ($2.4 million) will be protected. This measure is part of a broader reform of class action proceedings, with the current amendment focusing on essential aspects.
Additionally, the approved amendment mandates a preliminary contact with a business before filing a class action lawsuit for specific alleged violations. These include issues such as incorrect weight calculations for packaging, sending unsolicited advertisements (spam), product labeling, unit price marking, and certain accessibility regulations. A class action can only be filed 60 days after this initial contact if the violations are not rectified.
During discussions in September, Committee Chairman Simcha Rothman suggested that the 9 million shekel threshold was too low, advocating for broader immunity. However, the current figure was agreed upon as a compromise. Employer organizations also expressed that the immunity threshold should be raised to 20 million shekels in annual turnover.
Entrepreneur Avir Kara argued that class action lawsuits are often exploited for trivial matters, citing an example of a lawsuit concerning Hebrew instructions on blenders. Conversely, the Ministry of Justice had initially proposed a lower immunity threshold of 2 million shekels, with possible exceptions. Committee Legal Advisor Elazar Stern noted in September that even small businesses can infringe on the privacy of many individuals and cause public harm, especially when enforcement agencies lack the capacity to address such cases.
Representatives from disability organizations also argued in September that the threshold should be lower than 9 million shekels, citing ongoing violations of accessibility regulations by small businesses. For the amendment to become law, the Knesset must vote to approve the split amendment. Rothman expressed gratitude to his colleagues and stated that efforts would continue to bring the matter to a full plenum vote to finalize the legislation within the given timeframe.
