Comments on the inter-ministerial team report for the examination of the Class Actions Law, 2006

The Brandeis Institute collaborated with Lobby 99 to draft a policy paper in response to the inter-ministerial team report that examined the arrangements stipulated in the Class Actions Law, 2006. Although the report correctly identified the issue of inherent representation in the representative procedure and conciliation procedures, the solutions proposed in the report only partially addressed the root of the problem.

The Brandeis Institute’s stance is that the representative procedure should be given a distinct structure that reflects its public and representative nature, while also ensuring that the objectives outlined in the Class Actions Law, such as compliance and deterrence against violations, are met.

The policy paper emphasizes that settlements in class actions should serve the purpose of the Law and not be used as a substitute for judicial decision-making. To achieve this cause, the paper recommends that the court provide reasoned approval and instructions before initiating settlement negotiations, set deadlines for progress reports to the court, regulate judicial review at the end of the settlement process, and establish unique disclosure obligations within the framework of representative settlement procedures. Additionally, the paper suggests strengthening the position of petitioners that object to settlements and creating incentives to submit effective objections.

Additionally, the remedies within the framework of settlement arrangements should serve the public aspects of the representative procedure – compliance and deterrence against its violations. Accordingly, the Law should include financial remedies imposed on the company, behavioral remedies as a means of ensuring enforcement, and personal liability of office holders within the framework of settlements.

Ultimately, the discrepancies between the claimed amounts and the compensation amounts obtained in the representative procedure should not be assumed to be an exaggeration in the amount of the claim, as the report states. Instead, it should be examined whether part of the reason for the discrepancy is an underpayment by the defendant in view of the differences in power between the parties, which allow defendants to escape payment for the full damage that the violation of law caused.