At the end of November 2017, the Constitution, Law and Justice Committee of the Knesset approved a revised draft bill to amend the Courts Regulations (Fees), whereby parties filing a motion to certify an action as a class action will be charged a court fee. At issue is a material change pertaining to class actions, as they were exempt from court fees up until now.
This exemption served the primary purpose of class actions – to encourage private enforcement, as well as to give claimants, who, for the most part, are consumers suing major corporations, the opportunity to join forces in order to protect their rights and sue at low cost, in situations in which personal lawsuits are not economically feasible.
Now, the opponents to the amendment are arguing that petitioners will be blocked from filing a class action if they don’t have enough money to pay the fee. The average citizen’s chances of defending his rights against the State or against corporations prejudicing him, at a relatively minor price, will be severely constrained. On the other hand, the supporters of the amendment argue that it will constitute a deterrent against groundless or futile lawsuits and will slightly relieve the burden on the courts.
The first draft bill for an amendment pertaining to the payment of a fee for opening a proceeding to certify an action as a class action was filed back in July 2016, and was the subject of a stormy debate both by the public and in the Knesset. The draft bill approved by the Constitution, Law and Justice Committee is more lenient than the one originally submitted, and sets the fee for filing a motion to certify an action as a class action with the Magistrate’s Court at NIS 8,000 and with the District Court at NIS 12,000. (The original draft bill sought to impose a fee in the sum of NIS 50,000 for filing a motion to certify a class action.) This fee is divided so that the representative claimant is required to pay only a portion (about two thirds) of the fee when opening the proceeding, while the remaining third will depend upon the outcome of the proceeding. If the judgement is awarded in the plaintiff’s favor, or if the proceeding ends in a settlement, under which the defendant rectifies the default due to which the suit was filed, then the fee paid by the plaintiff will be refunded to him. The draft bill also clarifies that lawsuits pertaining to particular subjects, such as environmental violations, and discrimination in relation to rights and the provision of services, shall be exempt from the fee.
This measure hardens the legislature’s position regarding class actions, with the objective being to protect the judicial system from the flood of motions that have been filed since the Class Actions Law came into effect in 2006. Every year, many dozens of motions to certify actions as class actions are filed, with only a small percentage of them being certified and an even smaller percentage of certified class actions ending in a judgement. Most of the motions to certify actions as class actions end with the claimant abandoning the lawsuit or with a settlement agreement. Many of them are also dismissed, in instances when the court believes there are no grounds for a suit, whether a personal lawsuit or a class action.
The new regulations have not yet come into effect, since another vote is needed by the amendments committee, but social organizations have already given notice that they intend to file an appeal to the High Court of Justice against the amendment. However, it appears the legislature is determined to raise – and not insignificantly – the entry barrier to the courts for those seeking to file a class action.