Bipartisan Push Signals Major Changes to Israel’s Class Actions Law Are Coming – Regardless of Who Wins the October General Elections

Background: In 2024, Israel’s Ministry of Justice proposed Amendment No. 16 to the Class Actions Law, 5766-2006, which passed its First Reading. The Bill aims to curb frivolous class actions, introduce mandatory pre-action notice, eliminate “coupon” settlements, cap attorney fees, and expand class action standing for privacy violations.

What’s Happening Now: Israel’s 25th Knesset dissolved on July 17, 2026, ahead of elections on October 27. Yet in a highly unusual move, the Constitution, Law and Justice Committee is convening next week – during the election recess – to continue deliberating the Bill. This session was enabled by a rare coalition-opposition consensus reflecting bipartisan recognition of the issue’s urgency.

Key Developments (Subject to Committee Approval): The version heading to Committee narrows the original Bill’s scope:

Small business exclusion – Businesses with annual turnover up to NIS 9 million (~USD 3M) will be exempt from class action exposure entirely – covering ~90% of Israeli businesses (up from NIS 2 million in the original Bill).

Mandatory pre-action notice – For “minor” violations (spam, labeling, accessibility), businesses with turnover up to NIS 50 million (~USD 16.7M) must be given 60 days to cure before a class action may be filed.

Elimination of compensated withdrawals – Plaintiffs will no longer be able to receive fees upon withdrawing a class action application.

Fee schedule codified – A tiered statutory fee table will govern plaintiff counsel fees, linked to actual recovery and litigation stage.

What This Means for Foreign Airlines Operating in Israel: Foreign airlines are frequent class action targets in Israel under the Consumer Protection Law and Aviation Services Law. The high volume of passengers, combined with the heavily regulated nature of aviation, creates an attractive multiplier for serial plaintiffs. Key impacts:

Reform Element	Impact on Foreign Airlines
Fee schedule & elimination of compensated withdrawals	Reduces exposure – undercuts the “strike suit” economic model; removes incentive to file for quick settlements
Dismissal of vexatious claims	Reduces exposure – courts may dismiss claims involving minimal harm (e.g. minor disclosure deficiencies)
Privacy class actions (new cause of action)	Expands exposure – class actions for data breaches now possible without a consumer relationship (e.g. users who merely searched flights)
Prohibition of coupon settlements	Expands exposure – travel vouchers/credits no longer permitted; presumption shifts to cash, increasing settlement costs
Small business exclusion & pre-action notice	Does not apply – thresholds (NIS 9M / NIS 50M) are irrelevant to major airline operators (smaller carriers may benefit)

 

Outlook: The Bill cannot pass in the current Knesset. However, having cleared First Reading, it qualifies for legislative continuity (din retzifut), meaning the next government can resume directly from Second and Third Readings without restarting the process. Cross-party support makes passage in the 26th Knesset likely.

It remains to be seen what changes will ultimately be approved following next week’s Committee session. For any questions regarding these developments and their potential impact on your Israel operations, please do not hesitate to contact us.

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*This content is provided for informational purposes only and does not constitute legal advice. Airlines should consult qualified Israeli counsel to evaluate their specific circumstances and options.

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