Class Actions and the Regulatory State — Lessons from Israel
Cambridge International Handbook of Class Actions (Brian Fitzpatrick & Randall Thomas, eds.) (Cambridge University Press, 2020, Forthcoming)
48 Pages Posted: 22 Feb 2020 Last revised: 7 May 2020
Date Written: January 27, 2020
Israel presents an interesting case for the study of class actions. The Israeli class action statute was enacted in 2006, and since then it has fueled an unprecedented number of cases per year relative to any other jurisdiction. However, the introduction of class actions also generated difficulties and unintended consequences. Beyond the familiar concerns regarding abusive litigation and cheap settlements, particularly popular in Israel are class actions that are based on minor violations of regulatory standards. Indeed, courts and legislators have attempted to rein-in class actions in the recent years.
This paper attempts to draw the lessons from the Israeli experience. First, it maps the landscape and jurisprudence of Israeli class actions. It also provides an overall assessment and prognosis, taking into account the institutional factors that underlie the apparent success of class litigation in Israel. Second, it focuses on the design choices that balance class litigation with public enforcement, that is, agency’s enforcement and decision-making. Examples of mechanisms that the Israeli class action uses to strike this balance are public funding; considering agency’s enforcement behavior and legal position; and quick procedures to handle trivial regulatory violations. The Israeli experience can enrich the relevant discourse on private and public enforcement, and inspire the implementation of class litigation in jurisdictions that traditionally defer to their regulators.
Keywords: class actions, Israel, regulation through litigation, private enforcement
JEL Classification: K40, K41
Suggested Citation: Suggested Citation