Therefore, the court must be aware of the possible importance of appointing claims committees, and give precise instructions to corporations regarding the manner in which the committee is appointed and its mode of operation. At the same time, the court must also be constantly aware of the fear of possible misuse of this institution, and prevent such use in the case before it and in future cases. In doing so, he must add content to the rules relating to the operation of such committees, so that these rules will act to incentivize the proper use of these committees, and to prevent their misuse.
- As I noted above, in the current application for approval, the question of the possibility of filing a derivative claim on behalf of an association must first be decided, and in particular, the question of the possibility of filing such a claim on behalf of the Football Association. Only if the answer to these questions is yes, will there be room to examine the question of the status of the Independent Claims Committee appointed by the Association and the question of whether there is room to adopt its decisions in this case.
Derivative Claim in an Association
- Is it possible to file a derivative claim on behalf of an association? This question will be examined both in general and with a specific reference to the association that is the subject of the current proceeding – the Football Association, with its special characteristics.
As stated above, the institution of a derivative claim allows a person who is not one of the authorized organs to exercise its power of action on behalf of the company. This mechanism is enshrined in sections 194-206 of the Companies Law, 5759-1999 (hereinafter: the "Companies Law"), which stipulate that a shareholder or director (and in appropriate cases also a creditor) may file a derivative claim on behalf of the company. Anyone who is not one of these is not entitled to file a derivative claim.
As of today, there is no explicit statutory provision that applies the institution of a derivative claim to a corporation of the type of "association". The Supreme Court did not address this question in a binding manner, and there is no judgment that directly relates to the question of the possibility of filing a derivative action on behalf of an association in general, and on behalf of the Football Association in particular.
- The judgment in the Kahani case is the central judgment in which the Supreme Court examined a similar question – the question of the possibility of filing a derivative claim in the name of health funds, which are Ottoman associations. Prior to the hearing on its merits, the court (Justice Y. Amit) clarified that it would examine the question specifically in relation to a specific type of Ottoman association – a health fund – while paying attention to the question "If the law of the health plans is the same as that of any Ottoman association, or perhaps there is a reason for which a different law should be applied to them" (Priestly Matterin paragraph 12 of the judgment of Justice Y. Amit).
Although the judgment in the Coheni case discussed at length the question of the applicability of the derivative claim mechanism set forth in the Companies Law to a corporation that is not a company, it was preceded by other discussions in case law that dealt with the possibility of applying the arrangements set forth in the Companies Law to other corporations by way of analogy. Thus, in the case of the High Court of Justice 6627/98 Neumann v. Registrar of Cooperative Societies, IsrSC 55(5) 299 (2000) (hereinafter: The "Neumann Rule") The Supreme Court ruled that members of a cooperative society may petition for the termination of the membership of other members of the association. This, inter alia, is based on the possibility of drawing an inference from the arrangement set forth in the Companies Law regarding a derivative claim, and applying it to cooperative societies.