Similarly, in Civil Case 1931/00 (Tel Aviv District) Sheetrit v. Arison Investments in a Tax Appeal [published in Nevo] (August 20, 2002) (hereinafter: "the Sheetrit case"), the District Court accepted a motion to certify a derivative action on behalf of the New General Workers' Union, which is an Ottoman association. An appeal against the judgment in the Sheetrit case was dismissed by the Supreme Court, without the court expressly addressing the question of whether it is possible to approve a derivative claim on behalf of an Ottoman association or an association (see Civil Appeal 9491/04 Sheetrit v. Arison Investments Ltd., [published in Nevo] at paragraph 13 of the judgment of Justice (as he was then called) A. Grunis (August 23, 2006)).
- In the Kahani case, the possibility of applying the arrangement of derivative claims in the Companies Law to non-corporate corporations was examined, in the first stage, by the District Court in a derivative claim 9167-02-14 (Tel Aviv District) Cohen v. Clalit Health Services [Published in Nevo] (June 11, 2015) (Judge H. Kabub) (hereinafter: "Priestly Matter in the District"). The District Court ruled there that it is possible to file a derivative claim on behalf of health funds that are incorporated as Ottoman associations, by way of an inference from the arrangement in the Companies Law and the required changes. The court clarified that this is a quasi-company corporation, which, although it is not intended for profit, conducts economic activity, its managers are responsible for managing the funds of millions of insured, and there is also a representative problem. The decision explained that unlike non-profit organizations – which are subject to the supervision of the Registrar of Non-Profit Organizations – Ottoman associations are not subject to control and supervision. Therefore, a determination that it is not possible to file a derivative claim will in fact create a situation of an undesirable "vacuum".
- The request for leave to appeal the decision – as well as the appeal on its merits – was granted, as stated, in a detailed judgment of the Supreme Court. The Supreme Court emphasized that a distinction must be made between the desired law (which may support the possibility of filing a derivative claim on behalf of an Ottoman association) and the prevailing law, according to which it is not possible to file a derivative claim on behalf of a health fund. The court based its decision on a series of cumulative reasons, which we will address in detail below.
In summary, it should be noted that the Supreme Court referred to the quasi-public status of the health funds, which operate by virtue of the National Health Insurance Law, 5754-1994 (hereinafter: the "National Health Insurance Law"); He noted the mechanisms for supervision and control of the health funds; the special relationship between the health plans and their members, including the "forced membership" in them by virtue of the provisions of the law – both on the part of the members and on the part of the health plans (which are obligated to provide services to their members regardless of the payment of health insurance premiums); and the intention of the legislature as it is learned from the provisions of the National Health Insurance Law (section 37E of the law), from the explanatory notes to the bill and from the minutes of the Knesset committees.
- It should be noted that between the decision in the Kahani case in the District Court and the Supreme Court's ruling on appeal, the question of the possibility of filing a derivative action on behalf of an association also arose before me, incidentally, in a derivative action 12839-08-12 (Tel Aviv District) Ben Lavi v. The Association for the Professional and Social Advancement of Administrative and Service Employees, [Published in Nevo] In paragraphs 92-98 of my judgment (October 20, 2015) (hereinafter: "The Ben Lavi case"). At the same time, in the Ben Lavi case, which was also mentioned in the Supreme Court's judgment in the Kahani case, the question of whether there is a right to file a derivative action on behalf of an association was not decided, because the parties did not raise any argument in this regard.
In a recent judgment, the question was discussed once again before the District Court (Judge G. Levin) in Civil Case (Be'er Sheva District) 69740-05-18 Shukron v. Abergal [published in Nevo] (May 8, 2019) (hereinafter: "the Shukron case"). The District Court ruled in that case that, in principle, it is possible to recognize the possibility of filing a derivative action on behalf of an association by drawing an analogy from the arrangement set forth in the Companies Law in the matter of a public benefit company, and taking into account the unique circumstances of the case. Despite the reference to the judgment in the Cohen case, the court clarified that the rationales that underpinned the recognition of the possibility of filing a derivative action in the name of a cooperative association (in theNeumann ruling and in the Sheetrit case) also apply in relation to the association that was discussed in that case. This is because the association carries out economic activities, and its members may have an interest in its economic and administrative conduct; and since its structure may give rise to a representative problem that stems from the conflict of interest between the members of the association and its organs.
Is the absence of an arrangement in the law relating to a derivative claim in an association a laconic or a negative arrangement?
- The interpretive question that must be considered is whether the absence of an explicit legal provision applying the institution of claim derivative to an association means a negative arrangement, or whether it is a lacuna (a "legislative vacuum"). If we are dealing with a negative arrangement, there is no room for the completion of the law by virtue of inference. On the other hand, if it is a case of a lekuna, the court may consider using a tool of inference, inter alia, from the arrangement in the Companies Law, based on Section 1 to the Foundations of Law Law, 5740-1980 (see discussion of this with Ben-Zion Greenberger and Nehemia Ben-Tor Laws of Non-Profit Organizations in Theory and Practice Volume 1 (2nd edition, 2013) (hereinafter: "Greenberger and Ben-Tor"); David A. Frenkel Non-Profit Organizations Law 202-206 (2nd Expanded Edition, 2012) (hereinafter: "Frenkel"); Yes, Rabbi Aharon Lightning Interpretation in a sentence - General Interpretation Theory 470-471 (1992); Civil Appeal 3622/96 Hacham v. Maccabi Health Fund, Piskei Din 52(2) 638 (1998)).
From what has been said it follows that the possibility of completing the law by virtue of an inference from the Companies Law cannot be the starting point of the interpretive proceeding, but rather it is contingent on the outcome of such a proceeding. Interpretation and Complementary Separately – The question of whether we are dealing with a lacuna or a negative arrangement is an interpretive question, and the possibility of drawing a conclusion from the legal provision that applies to a company to the norm that applies to an association is part of the completion process, which can be approached only if we are dealing with the buyer.