These notions of class and rivalry are a subject of legal construction. The legislature deals with it, and the courts deal with it, and at the core of the construction are considerations of proper legal policy. Can a third party, who does not have the direct substantive legal right, come on behalf of the owner of the right and fight his dispute? Should the power of the workers on behalf of natural resources and wildlife to bring their case to court should be recognized? Since when can a person stand guard for his own rights?
The answers given to dilemmas of status and rivalry reflect profound decisions that go to the root of the law and the purposes it seeks to promote. In the current reality, when those with status and rivalry fight their war against the defendants, and when the law is decided one way or the other, we tend to ignore these decisions, which are the basis of the litigation platform, and take them for granted, and not her.
- These general insights are particularly powerful in relation to the question to be decided in the present case: the imposition of personal liability on officers of the corporation who acted within its framework. As we shall see right away, the imposition of such liability cannot be a trivial matter. At issue is the principle of the separate legal personality of the companies, which is a basic condition for their proper operation. On the other hand, the activity of officers cannot grant them immunity, since the veil of association is not an impenetrable armor. A balance is required between the considerations at hand, and this balance is reflected in the answer to the question of when a third party, external to the company, will have the status to sue its officers, and when a legal rivalry will arise between them.
I will now turn to the examination of this balance.
Consideration of the principle of separate legal personality while shaping the status of the plaintiff and the legal rivalry
- Everyone is familiar with the basic principle of corporate law, which is the principle of the separate legal personality of the company. "From the day it was registered with the Registrar of Companies, the company is an independent legal entity that is separate from that of its shareholders and is competent for any right, duty and legal action, which is consistent with its character and nature as a incorporated body" (Yosef Gross, Companies Law 213 (Volume One, 2016) (hereinafter: Gross Companies)).
A company is a self-contained corporation. "From the company's rehabilitation, a legal barrier separates the company's assets from the assets of its shareholders" (Zohar Goshen and Assaf Eckstein, Corporate Law 40 (2023) (hereinafter: Goshen and Eckstein)). The result of the separation of legal personality is that "a company has its own legal capacity and bears duties and rights separately from the rights and obligations of its entrepreneurs, shareholders or directors" (Gross Companies, at p. 220).
- Against this background, it is not surprising that the law establishes a direct rivalry between the officer and the company, in light of the substantive duties it imposes on it.
Section 214 of the Companies Law, 5759-1999 (hereinafter: the Companies Law) establishes the main duty imposed on officers, and as is well known, this is their duty of loyalty to the company (for an extensive discussion on this matter, see the recent judgment of the Honorable Justice Kabub in Other Municipality Applications 1137/23 Deri v. The Jewish National Fund (published in the databases [Nevo]; 2025 at paragraphs 84 ff.) (hereinafter: the Deri case)). Alongside this, there are many other obligations, and this is not the place to elaborate on it (for a discussion, see Ofer Grosskopf and Yifat Naftali Ben-Zion, "'You caught a many, you didn't catch it,' is it true? On Norms of Conduct, Procedural Mechanisms, and Judicial Review in Corporate Law," Yoram Danziger 133, 135 ff. (Limor Zer-Gutman and Ido Baum, eds., 2019)).