Israel Approves Major Reform Limiting Class Action Lawsuits Against Small Businesses

A significant reform aimed at protecting small businesses from class action lawsuits has been approved for its second and third readings by a joint committee of the Knesset's Constitution, Law and Justice Committee and the Economy Committee. The new legislation will prevent class action lawsuits from being filed against "small businesses." The bill will now proceed to a vote in the plenum.

Under the approved amendment, businesses with an annual turnover not exceeding nine million shekels, indexed to inflation, will be shielded from class action suits. Furthermore, for five specific causes of action, including violations of anti-spam laws, businesses will be given a 60-day period to rectify any infringement after being formally notified. If the violation is corrected within this timeframe, a class action lawsuit cannot be filed. For certain accessibility-related claims, businesses with turnovers up to 50 million shekels will also be subject to this prior notification requirement.

The legislation also stipulates that if a request to certify a class action is submitted in cases where prior notification was required, and such notification was not given, the court will order the dismissal of the request. Shraga Torjeman, President of the Israel Chamber of Commerce and Industry, commented on the decision, stating, "We promised to put an end to the exploitation of class action lawsuits and to protect small and micro-businesses. Today it officially begins."