The Supreme Court increased the “fine” for unjustified representative actions

The Israeli Supreme Court ruled that “the time has come to consider imposing, in appropriate cases, substantially higher legal costs on the initiators of representative actions whose application has been rejected or quashed.”

The Supreme Court’s ruling was made as part of an appeal against a decision in a representative action against the automobile concern Renault, in which the district court dismissed the claim and ordered the plaintiff to pay legal costs of NIS 80,000 to the defendants.

Renault’s lawyers challenged the district court’s decision regarding the amount of legal costs, pointing out that the award covers no more than 10% of the actual costs.

Although the Supreme Court rejected the appeal on the merits of the case, two of the three judges saw it as an opportunity to address the increasing number of representative actions with little chance of success and virtually no financial risk to the applicant, and to change the “restraint doctrine”.

Judges Yechiel Kasher and Ruth Ronen stated that the blanket policy of refraining from collecting costs from collective applicants was no longer justified, and a gradual move to awarding significantly higher costs in cases where their applications were rejected or quashed was necessary.

Judge Ofer Groskopf, in a minority position, opposed changing the “restraint doctrine”, believing that it would discourage applicants who are initially at a disadvantage with respondents.