On April 13, 2026, the Israeli Supreme Court delivered an important judgment in Renault S.A.S. v. Ganot (Civil Appeal 22239-04-25), addressing the long-standing approach of Israeli courts toward awarding legal costs against unsuccessful plaintiffs in class action proceedings.
The ruling may prove significant for insurers and businesses operating in Israel, particularly in sectors frequently exposed to consumer class actions, including automotive, financial services, pharmaceuticals, telecoms and insurance.
For many years, Israeli courts have followed what is commonly referred to as the “moderation rule” – namely, a restrained approach to awarding costs against representative plaintiffs whose motions for certification of class actions are dismissed. The rationale behind this approach was the concern that substantial cost exposure could create a chilling effect and discourage the filing of legitimate class actions serving the public interest.
The new Supreme Court judgment does not formally abolish this principle. However, two of the three justices expressly stated that the time may have come to reconsider the traditionally lenient approach and gradually move toward more substantial costs awards in appropriate cases.
The Underlying Proceedings
The proceedings arose from a proposed class action filed against Renault and its Israeli importer, alleging that certain vehicle safety systems failed to comply with Israeli regulatory standards.
The motion for certification relied heavily on an expert opinion which the District Court later described as fundamentally flawed and incapable of supporting the allegations advanced in the application.
After lengthy proceedings, including preliminary hearings and the submission of the regulator’s position, the plaintiff ultimately withdrew the certification motion. The District Court nevertheless ordered the plaintiff to pay costs of ILS 80,000 to the defendants, noting both the weakness of the claim and the late stage at which the withdrawal occurred.
Renault appealed, arguing that the costs awarded represented only approximately 10% of its actual legal expenses and asking the Supreme Court to reconsider the traditional “moderation” approach applicable in Israeli class actions.
The Supreme Court’s Decision
The appeal itself was dismissed, and the Supreme Court declined to increase the specific costs awarded in this case. However, the broader significance of the judgment lies in the competing opinions expressed by the panel.
Justice Grosskopf, writing the principal opinion, supported maintaining the existing restrained approach. In his view, representative plaintiffs already face substantial financial risks, including court fees, expert costs and litigation expenses, and exposing them to substantial adverse costs could discourage legitimate class actions.
Justice Grosskopf also emphasized the inherent information asymmetry in class actions, where much of the relevant information is held by the defendant. Accordingly, the dismissal of a certification motion does not necessarily mean that the proceedings were abusive or frivolous.
However, Justices Ronen and Kasher took a markedly different view.
Both justices accepted that Israeli courts may now need to move, cautiously and gradually, toward awarding materially higher costs against unsuccessful representative plaintiffs, even where bad faith cannot necessarily be established.
Justice Ronen noted the dramatic increase in class action filings in Israel in recent years, as well as empirical data suggesting that only a relatively small percentage of class actions ultimately result in relief for the represented group.
According to Justice Ronen, higher costs awards may be appropriate not only in clearly abusive or bad-faith proceedings, but also in cases where certification motions lacked adequate factual or legal foundation, should never have been filed, or should have been withdrawn at a significantly earlier stage.
Justice Kasher went even further in emphasizing the substantial burden imposed on defendants merely by the filing of class actions. He highlighted that class actions expose defendants not only to potentially enormous financial liability, but also to reputational damage, loss of customers and increased regulatory scrutiny, even where the claims ultimately prove meritless.
Importantly, both Justices Ronen and Kasher stressed that any such shift should develop gradually through the lower courts on a case-by-case basis rather than through an immediate formal doctrinal change.
The Last Word Has Yet to Be Said
At present, the judgment does not create a formal new rule requiring substantial costs awards against unsuccessful representative plaintiffs. The appeal itself was dismissed, and the specific costs award remained unchanged.
Nevertheless, the opinions of Justices Ronen and Kasher strongly suggest that parts of the Supreme Court are increasingly concerned by the growing volume of weak or speculative class actions filed in Israel and may support a gradual recalibration of the balance between encouraging legitimate public-interest litigation and protecting defendants from excessive litigation burdens.
Whether lower courts will adopt this approach in practice – and how far the shift will ultimately go – remains to be seen.
Yael Navon: Yaelf@levitansharon.co.il
May 25, 2026
Categories: Uncategorized
Tags:
