(b) If a person is arrested and released, and the court finds that the arrest was due to a frivolous complaint filed in bad faith, the court may obligate the complainant, after giving him an opportunity to argue his arguments in this matter,
To pay, to the person who was arrested, compensation for his arrest and the expenses of his defense, in an amount to be determined by the court.
(c) The Minister of Justice, with the approval of the Constitution, Law and Justice Committee of the Knesset, may enact regulations –
(1) With respect to the proceedings in a request for compensation under this section, whether before applying to the court or in court;
(2) To determine maximum amounts for compensation in accordance with subsection (a).
(d) A court decision under this section may be appealed as a criminal judgment.
This statutory provision was born after section 80 of the Penal Law, and from the beginning it was created in its image as a mirror of the provision of section 80 (see the Criminal Procedure Law Proposal (Amendment No. 13), 5741-1981, at p. 172). Its incarnations were that at first it was the provision of section 29A as it was added to the Criminal Procedure Law, 5725-1965 in the Criminal Procedure Law (Amendment No. 15), 5741-1981; then the same provision was transferred to section 32 of the Criminal Procedure Law, and finally it came to us as the provision of section 38 of the Arrests Law.
In the explanatory notes to the proposed Criminal Procedure Law (Amendment No. 13), at p. 172, we read, inter alia, the following (after the author of the explanatory notes cites the provision of section 80 as formulated at the time):
Section 80 of the Penal Law refers to a person who has been indicted, and it does not allow the payment of compensation to a person who was arrested and released after no material was found against him that would justify the filing of an indictment. Not every arrest that ends with nothing justifies payment of compensation. A significant percentage of arrests are carried out lawfully, and arrests are essential to the police as an auxiliary tool for maintaining public safety and fighting crime. However, there are cases in which it is justified to compensate a person who has been wrongfully arrested for the damage caused to him, especially if it turns out that there was no basis for the arrest in the first place (as opposed to release due to the lack of sufficient evidence to file an indictment) or if there are special circumstances that justify compensation (such as particularly serious damage). Offered