Discretion

General Association of Merchants and Self-Employed Persons v. Minister of Interior

Case/docket number: 
FH HCJ 3660/17
Date Decided: 
Thursday, October 26, 2017
Decision Type: 
Original
Abstract: 

[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.]

 

Further hearing in the verdict given in HCJ 6322/14 in which a variety of claims were raised regarding two amendments to the By-Law of Tel Aviv-Jaffa (Opening and Closing Shops), 5740-1980 (hereinafter: the Amendments), addressing the opening of businesses on the Sabbath in Tel Aviv-Jaffa. The petitioners argued in favor of the constitutionality, reasonableness and proportionality of permitting businesses to open on the Sabbath. On the other hand, Respondent 4 (hereinafter: the Municipality) petitioned against the decision of the Minister of Interior to delay the entering into force of Amendment No. 2 to the by-law, which concerned opening of grocery stores on the Sabbath. In the verdict that is the subject of the further hearing, the court accepted the Municipality’s petition and rejected the petitioners’ petition. It was held that the decision to disqualify Amendment No. 2 was invalid, and that permitting businesses to open on the Sabbath via the amendments was not per se an excess of authority or discretion. The hearing focused on the question of the validity of Amendment No. 2, and the question of whether the amendments meet the standards of administrative law.

 

The High Court of Justice (decision by President Naor, joined by Justices Hayut, Danziger, Amit and Barak-Erez, against the dissenting opinion of Justices Hendel and Sohlberg), rejected the petition for a further hearing and held that:

 

Regarding the validity of Amendment No. 2, first it was decided that the Minister of Interior’s position not to approve the amendments does not affect the validity of the amendment. It was held that the current procedure is not appropriate for examining the lawfulness and reasonableness of the Minister of Interior’s position, which was not at all submitted to the panel in the proceeding that is the subject of the further hearing. In addition, the Minister of Interior’s position regarding postponing amendment No. 2 was given very late. In light of these facts, the petition is rejected. However, because it is appropriate that the issue of the Sabbath be considered and clarified when all the positions are before the court, the court reviewed the merits of the Minister of Interior’s position that Amendment No. 2 should be completely disqualified. It was held that in exercising the authority granted him by Section 258 of the Municipalities Ordinance, the Minister of Interior should accord significant weight to local autonomy, and that his position fails to do so. It was noted that the infringement on the municipality’s autonomy is particularly problematic, because local authorities in Israel are explicitly authorized to enact, in their by-laws, provisions regarding the opening of businesses in their jurisdictions on the Sabbath, as stated in the Law Amending the Municipalities Ordinance (No. 40), 5751-1990 (hereinafter: the Authorizing Law).  It was noted that one of the purposes at the foundation of the Authorizing Law is that these issues will be regulated specifically at the municipal, local level, and the opposite should not be done. The authority to make the values-based determination within the framework of the by-laws belongs to the municipality, and not to the Minister of Interior. The Minister of Interior is not supposed to evaluate if the determination is optimal in his opinion, but rather whether it is within the zone of reasonableness. Leaving the decision in the hands of the municipality is intended to realize the principle of municipal autonomy and to give substantial weight to local considerations. The Minister of Interior’s decision is intended to oversee the lawfulness of the municipality’s decision, but not to replace its discretion with his own. Also, the Minister of Interior’s position contradicts an additional central purpose at the foundation of the Authorizing Law, which is about balancing. In light of that purpose, a sweeping position, devoid of balance reflecting the character of the city, the uniqueness of its different areas and the distance between them – is unreasonable. In light of all of the above, even if the Minister of Interior’s position had been submitted on time and were evaluated on its merits, there would be no deviation from what was decided regarding Amendment No. 2 in the verdict that is the subject of the further hearing. Therefore, Amendment No. 2 remains valid.

 

On the question of whether the amendments meet the standards of administrative law, regarding authority, the Authorizing Law authorizes local authorities in Israel to enact provisions in their by-laws regarding the opening of businesses in their jurisdiction on the Sabbath; there is no contradiction between the amendments and the Hours of Work and Rest Law. That law does not create a sweeping prohibition on opening businesses on the Sabbath. In any event, the amendments were done through the Authorizing Law, which authorizes the municipality to permit the opening of businesses on the day of rest. Even if there were a contradiction, it would be a contradiction between the Authorizing Law and the Hours of Work and Rest Law, which are norms belonging to the same rank in the legal hierarchy. The Authorizing Law prevails, because it is a law enacted subsequent to the enactment of Hours of Work and Rest Law, and in any event, because it is a specific law that, in a focused way, grants powers to local authorities in Israel, in contrast to the generality of the Hours of Work and Rest Law. In light of all of the above, the municipality did not exceed its authority when it enacted the amendments.

 

Regarding the issue of discretion, the amendments are within the zone of discretion that the Authorizing Law grants the municipality. Although the amendments do, beyond a minimal level, infringe on the rights of merchants and others, which stem from opening commercial businesses and places of leisure on the Sabbath, on the other hand, the amendments protect other rights, including freedom of association and freedom of conscience. The heart of the evaluation is the balance between competing rights. The balance does not privilege one viewpoint over the other. It does not detract from the status and importance of the Sabbath as a national asset of the Jewish people and one of the values of the State of Israel as a Jewish and democratic state. However, the meaning of the balance is that, together with protecting the unique character of the Sabbath, one must allow each individual to shape his Sabbath as he chooses. The legislator tasked the local authority with the job of conducting this balance, which should reflect the unique character of each city, the character of communal life within it and the practical solutions regarding its circumstances. The amendments were enacted with the goal of reflecting the unique balance appropriate for the city of Tel Aviv-Jaffa, taking into consideration the status of the Sabbath, the composition of the population of every neighborhood, its way of life and the character of the city. Amendment No. 1 permitted opening businesses in a small number of commercial sites that are disconnected from residential areas. Amendment No. 2 permitted opening a limited number of grocery stores in specific geographic areas, subject to restrictions. It means opening a small number of businesses that constitute a tiny fraction of the number of businesses operating in the city on weekdays, a factor weighing in favor of proportionality. The balance that was reached allows for the preservation of the unique character of the Sabbath and does not significantly change the face of the city, given the existing normative situation. In summary, the amendments are within the zone of proportionality granted to the municipality, and there was no place to intervene in them.

Voting Justices: 
Primary Author
majority opinion
Author
concurrence
Author
concurrence
Author
dissent
Author
dissent
Author
concurrence
Author
concurrence
Full text of the opinion: 

High Court of Justice

FH HCJ 3660/17

Before:                                                 Honorable President M. Naor

                                                                Honorable Justice E. Hayut

                                                                Honorable Justice Y. Danziger    

                                                                Honorable Justice N. Hendel

                                                                Honorable Justice N. Sohlberg

                                                                Honorable Justice D. Barak-Erez

 

The Petitioners:                                1. General Association of Merchants and Self-Employed Persons

                                                                2. Noam Knaani

                                                                3. Avraham Levi

                                                                4. Morris Bremer

                                                                5. Yaakov Bremer

                                                                6. Adi Wizaum

                                                                7. Motti Maoz

                                                                8. David Chaimov

                                                                9. Eliyahu Miller

                                                                10. Isaac Alkoser

                                                                11. Pinhas Tsalik

 

The Respondents:                           1. Minister of Interior

                                                                2. Minister of Economy

                                                                3. Ministry of Economy

                                                                4. Tel Aviv-Jaffa Municipality

                                                                5. Mayor of Tel Aviv-Jaffa

                                                                6.  Otzar Marine Industries Ltd.

                                                                7. The Tel Aviv-Jaffa Economic Development Authority Ltd.

                                                                8. Israel Land Authority

                                                                9. Gindi Holdings Development 2009 Ltd.

                                                                10. Yaakov Bruchim (formal)

 

Further hearing of the High Court of Justice’s verdict in HCJ 6322/14, HCJ 996/15, HCJ 2998/15, and HCJ 4558/15 (unpublished) rendered on April 19, 2017 by the Honorable President M. Naor and the Honorable Justices A. Hayut and D. Barak-Erez

Date of Hearing: 15 Av 5777 (August 8, 2017)

Representing Petitioner 1:                            Adv. David Shuv; Adv. Uriel Boni

Representing Petitioner 2-11:                     Adv. Ivri Feingold

Representing Respondents 1-3 and 8:      Adv. Dana Briskman; Adv. Ron Rosenberg

Representing Respondents 4-5 and 7:      Adv. Yisrael Leshem; Adv. Yochi Kadir-Paz; Adv. Idan Liron

Representing Respondent 6:                       Adv. Yehezkel Reinhertz; Adv. Avinoam Peretz

Representing Respondent 9:                       Adv. Yehoshua Horesh; Adv. Lior Mimon; Adv. Hagar Pines

 

Verdict

President M. Naor:

At the heart of this further hearing before us is the character of the Sabbath in the city of Tel Aviv-Jaffa. The background for the proceeding is two amendments to the By-Law of Tel Aviv-Jaffa (Opening and Closing Shops), 5740-1980 (hereinafter together: the Amendments), which address opening businesses on the Sabbath in the city of Tel Aviv-Jaffa.

Background of the Further Hearing

  1. The By-Law of Tel Aviv-Jaffa (Opening and Closing Shops), 5740-1980 (hereinafter: the By-Law) provides that businesses should not be opened on the Sabbath and Jewish holidays, with limited exceptions (see section 2 of the By-Law). The enforcement of the By-Law was the focus of a judgment by this court in App Adm Pet 2469/12 Bremer  v. Tel Aviv-Jaffa Municipality (unpublished) (June 25, 2013) (hereinafter: the Bremer  case). In that case, the court accepted the position of the appellants there (who are also the petitioners before us) that the enforcement policy then in place -  which included imposing fines but refraining from issuing closure orders – is not effective. The court therefore remanded the issue to the municipality to exercise its discretion and make a decision about how to exercise the powers granted to it to enforce the By-Law. It was also held that if the municipality wants to change its policy regarding opening businesses on the Sabbath, it cannot do so by way of non-enforcement but rather should amend the By-Law as required by law.
  1. [sic] As a result of the decision in the Bremer case, in 2014 the city council approved an amendment to the By-Law (By-Law of Tel Aviv-Jaffa (Opening and Closing Shops) (Amendment No. 1), 5774-2014 (hereinafter: Amendment No. 1). Amendment No. 1 basically permitted the opening of businesses on the Sabbath in three commercial sites, the opening of convenience stores in gas stations on the Sabbath and the opening of grocery stores. Then-Minister of Interior Gidon Saar used his authority under Section 258 of the Municipalities Ordinance [New Version] (hereinafter: the Ordinance) to approve most of the provisions of Amendment No. 1, but he invalidated the provision regarding opening grocery stores. Amendment No. 1, as approved, was published in Reshumot [official legislative reporter-trans.].
  2. Thereafter, the city council approved an additional amendment to the By-Law (By-Law of Tel Aviv-Jaffa (Opening and Closing Shops) (Amendment No. 2), 5774-2014 (hereinafter: Amendment No. 2)). Amendment No. 2 addressed the opening of grocery stores on the Sabbath according to area and subject to various restrictions, including receiving a permit. Amendment No. 2 was submitted to Interior Minister Saar on August 13, 2014.  On October 7, 2014, using his authority under Section 258 of the Ordinance, the Minister of Interior ordered the publication of Amendment No. 2 to be delayed. About a month later, on November 3, 2014, Interior Minister Saar resigned from his position. From the time the decision was made to delay, and for two and a half years, no decision was made on the merits of Amendment No. 2. That was despite an agreement reached during legal proceedings and various developments, about which I will expand later.
  3. These amendments were at the foundation of four petitions that were disposed of in the verdict that is the subject of the further hearing (HC 6322/14 General Association of Merchants and Self-Employed Persons v. Minister of Interior [unpublished] (April 19, 2017). In those petitions a number of claims were raised regarding the amendments. In brief, Petitioner 1 and Petitioners 2-11 (hereinafter: the merchants) and Respondent 9 (hereinafter: Gindi) raised a variety of claims about the lawfulness, reasonableness and proportionality of permitting businesses to open on the Sabbath. In opposition, Respondent 4 (hereinafter: the Municipality) petitioned against the Minister of Interior’s decision to delay the entering-into-force of Amendment No. 2. In the verdict that is the subject of the further hearing it was unanimously decided to accept the Municipality’s petition and to reject the petitions of the merchants and Gindi. Regarding the delay of Amendment No. 2, it was held that, in light of the long period of time that had passed since the decision to delay, the failure to make a decision on the merits should be seen as an unexplained decision to invalidate Amendment No. 2. The absence of an explanation imposed a burden on the state to prove that the decision to invalidate Amendment No. 2 was made lawfully, but the state did not provide a reason that it believed justified the invalidation. Given that state of affairs, the court invalidated the decision to invalidate Amendment No. 2. It was also held that using the amendments to permit businesses to open on the Sabbath is not per se a flawed decision in terms of authority or discretion.
  4. The petitioners, who did not accept the result of the verdict, filed a motion for a further hearing, and on July 12, 2017, Deputy President (ret.) E. Rubinstein granted it. In his decision he explained:

 

“Do we have before us a rule in the sense of Section 30(b) of the Courts Law? In my opinion, the resulting state of affairs shows an answer in the affirmative. Indeed, sometimes there is uncertainty in cases like this […], and we are further dealing with a procedure in which restraint was exercised, but once the verdict was rendered against the background of a flaw in the conduct of the authority and with a

 

And later it was written:

“Irrespective of the result, the Sabbath, whose status in global Judaism needs no elaboration, deserves to have its case considered and clarified when all positions are before the Court, especially considering the broad implications, stakes and importance for others […]” (ibid, para. 12).

  1. On August 8, 2017, we heard the parties’ oral arguments before this expanded panel. The disagreements between the parties can be distilled into two questions: The first question before us is the validity of Amendment No. 2, in light of the various transformations it underwent; A second question that arose is whether the amendments meet the standards of administrative law. These are the questions that need to be decided in the further hearing. I will address them in order.

 

The Validity of Amendment No. 2

        The Transformations of Amendment No. 2

  1. The Municipality submitted Amendment No. 2 to the Minister of Interior for approval on August 13, 2014. About two months later, on October 7, 2014, Interior Minister Saar ordered a delay in publishing the amendment. In doing so, he exercised his power under Section 258 of the Ordinance, which says:

 

Approving and(a) Once the council approves a by-law,

Publishing By-Laws the mayor will sign it, and the

by-law will be published in Reshumot.

(b) A by-law will not be published as detailed in subsection (a) until six days have passed from the day the mayor brought the by-law to the attention of the Minister; If the Minister or his authorized representative announces that he does not oppose the by-law, the by-law will be published even before the end of this period.

(c) During the period specified in subsection (b), the Minister may order a delay in publishing the by-law, so long as he does not decide to do so without the Minister or his authorized representative having first detailed his reservations and given the mayor or his authorized representative an opportunity to raise claims against the delay in publishing the by-law.

(d) If the Minister delays the publication of a by-law as specified in subsection (c), he may do one of the following:

(1) Order a cancelation of the delay;

(2) Invalidate the by-law for reasons he will enumerate;

(3) Return the by-law with his comments to the council for reconsideration.

(e) If the Minister cancels the order to delay publication of the by-law, the by-law will be published in Reshumot.

 

The text of the section teaches us, therefore, that the decision to delay is not the end of the story. Subsequent to it, there must be a decision on the merits – cancelling the delay and publishing the by-law, invalidating the by-law or returning it to the city council with comments. A decision of this kind was not forthcoming, and in the meantime the petitions that are the subject of the further hearing were scheduled for oral hearings before this court.

  1. The hearing took place on July 6, 2015, and at its conclusion it was decided:

“1. After some back-and-forth, the Tel Aviv municipality […] and the state agreed to the following:

  1. The Municipality will not insist on chapter 4 of its petition [about delaying Amendment No. 2 – M.N.].
  2. Within 7 days, the Municipality will submit answers to the questions that the Minister of Interior has posed regarding Amendment No. 2 to the by-law, without prejudice to the claims that the Minister of Interior acted without authority on the substance of the issue.
  3. Ninety days thereafter (the court’s recess days are included in the count), the Minister of Interior will issue a decision regarding Amendment No. 2.
  4. The Municipality and the other parties reserve their right to raise claims regarding the decision that will be issued.
  1. The Minister of Interior’s decision will be submitted to the court and all the parties to the petitions listed in the heading within 100 days from today, counting the days of the court recess.
  2. We take note of the fact that the other petitions have yet to be considered, and the parties’ arguments will be heard at a time that will be determined” (emphases added – M.N.).
  1. On October 13, 2015, after the one hundred days set in the above-mentioned decision had passed, the state informed the court that then-Interior Minister Silvan Shalom, who had begun to examine the issue, discovered a conflict of interest that prevented him from making a decision, and that therefore the issue was referred for a governmental decision about transferring the authority to another minister. Two months later, on December 14, 2015, the state informed the court that the government had decided, on December 13, 2015, that “Within 4 weeks a decision will be made regarding the appropriate mechanism for exercising the authority of the Minister of Interior.” On December 24, 2015, the state made an additional filing, informing the court that the authority of the Minister of Interior had been transferred to the government, and that a committee of directors-general had been established to discuss the issue and make recommendations to the government within 180 days.
  2. On March 28, 2016, an additional hearing was held, and the court subsequently issued orders-nisi in the petitions. Seven months after the committee of directors-general was established, on August 4, 2016, the state updated that the committee had completed its discussions, and that the deadline for submitting its recommendations had been extended by 45 days. Approximately five months later, on January 17, 2017, the state informed the court that the government had held a discussion about Amendment No. 2 in its meeting on January 8, 2017, during which the director-general of the prime minister’s office clarified that the committee of directors-general had not arrived at a single agreed-upon recommendation. The committee presented the government with a “range of possibilities” that arose in its discussions, which spanned the gamut between approving Amendment No. 2 as written to completely invalidating it. At the end of the discussion, the government decided to delay a decision on the matter, pending a decision on merging the cities of Tel Aviv-Jaffa and Bat-Yam – a process about which, at the time, not even a first decision had been made.
  3. On January 23, 2017, a third hearing was held in the petitions, and at its conclusion they were referred to the court for a decision. A week later, on February 3, 2017, the state informed the court that on January 29, 2017, the government decided to restore the authority to the current Minister of Interior, Aryeh Deri, and that he intended to make a decision within sixty days. From that update and until the issuing of the judgment that is the subject of the further hearing, two and a half months later, no additional update from the state was received. In the verdict rendered on April 19, 2017, it was held that, in light of the long time that had passed – a duration of two and a half years – the failure to make a decision on the merits should be viewed as a decision to invalidate Amendment No. 2 without explanations. Because the state did not meet its burden of providing a reason that would justify such invalidation, the court held that the decision to invalidate Amendment No. 2 was invalid.
  4. On May 3, 2017, the petitioners filed a motion for a further hearing. They attached to that motion a document signed by Interior Minister Deri, dated April 9, 2017. That document shows that the Minister of Interior decided to invalidate Amendment No. 2. The reason was his determination that consideration for the autonomy of the Municipality did not justify the scope of the infringement of Amendment No. 2 on the social and religious-national values that form the basis of making the Sabbath a national holiday (hereinafter: the Interior Minister’s position). The Interior Minister’s position was not submitted to the Court prior to the rendering of the verdict, and it was not submitted to the Municipality. The verdict was therefore rendered in the absence of the Interior Minister’s position being placed before the Court. In any event, we were not informed that the Minister had reached a decision.

In its response of June 23, 2017 to the motion for a further hearing, the state clarified that the Minister of Interior first informed the Attorney General of his intention to invalidate Amendment No. 2 on April 18, 2017. At the request of the Attorney General, an unsigned copy of the above-mentioned document was submitted for his review on April 19, 2017, a few hours before the verdict was rendered. Under these circumstances, “the state believed that it would have been inappropriate to submit the Minister of Interior’s decision to the Tel Aviv Municipality at that time” (ibid, para. 47).

  1. The question of the status of the Interior Minister’s position is at the heart of the central dispute between the parties to the further hearing. The parties also disagree regarding the lawfulness and reasonableness of invalidating Amendment No. 2 on the merits.

 

The Parties’ Claims Regarding Amendment No. 2 and the Interior Minister’s Position

 

  1. The merchants claim that the Interior Minister’s position is the sole starting point for the further hearing. That position, they argue, reflects the consistent position of the executive branch and the legislative branch, and therefore it should be determinative. The Merchants also argued that, on the merits, there is no cause for intervening in the Interior Minister’s position, which takes into consideration all the ramifications of Amendment No. 2 and reflects a clear, values-based decision on a complex and sensitive issue.
  2. In contrast, the state argued that the current proceeding is inappropriate for evaluating the lawfulness of the Interior Minister’s position. In its opinion, that position was not reviewed in the verdict that is the subject of the further hearing, and given the unique character of this proceeding, it would be inappropriate to review the position at this stage. In its argument summary, the state did not address the Interior Minister’s position on the merits, but in response to our questions during the oral hearing, the position of the Attorney General was submitted using the following words:

“The Interior Minister’s decision indeed raises significant legal difficulties, primarily given the extent of the intervention that the central government may exercise into the autonomy of the local authority. Having said that, the decision does not rise to the level of extreme unreasonableness, and that is once we consider that, under the unique circumstances of this case, as a practical matter, the result of the decision is to accommodate the will of the local authority to a certain extent by opening the three sites, convenience stores, and shops in Jaffa on the Sabbath. The Attorney General believes that, were the result of the Minister of Interior’s decision to be that no shop would be open and there would be no accommodation of the will of the residents, then the issue would reach the level of extreme unreasonableness” (Transcript of August 8, 2017 hearing, p. 28, lines 18-24).

 

Having said that, the state repeated its position in principle that this is not the appropriate stage at which to consider the lawfulness of the Interior Ministry’s position (See: ibid, line 25). In his argument summary, filed pursuant to my decision of July 31, 2017, the Minister of Interior argued that it would be proper to rule on the merits of his position, considering the importance of the issue in principle.

  1. The Municipality claimed that it would be inappropriate to rule on the Interior Minister’s position at the current stage of the proceeding. The Municipality also claimed that the Interior Minister’s position, given its timing, does not justify deviating from the finding in the verdict that is the subject of the further hearing, namely that the state’s conduct is defective due to laches that are so extreme, they turn the delay into an unexplained refusal. In any event, according to the Municipality, the Minister of Interior’s authority to invalidate the amendment expired a long time ago. On the merits, the Municipality claimed that the Interior Minister’s position was based on extraneous considerations and suffers from extreme unreasonableness.

The Validity of Amendment No. 2 – Discussion and Resolution

  1. Does the Interior Minister’s position have consequences for the validity of Amendment No. 2? In my opinion, the answer is no. The state is correct in its argument that the current proceeding is inappropriate for evaluating the lawfulness and reasonableness of the Interior Minister’s position, which was not brought before the panel in the proceeding that is the subject of the further hearing. The procedure of a further hearing is intended for clarifying a rule that was decided in a verdict, and not for discussing what the verdict does not contain (see: FH Civ Haran v. Charitable Trust Foundation of the Late Gavrialovich [unpublished] (September 15, 2010); FH Civ 8184/13 Dabah v. State of Israel [unpublished] (May 8, 2014); FH Civ 1075/14 Keren Hayesod – United Israel Appeal v. Jewish National Fund via the Israel Land Administration [unpublished] (July 15, 2014); FH Crim 6876/14 Doe v. State of Israel [unpublished] (December 17, 2014); FH HCJ 360/15 Hamoked: Center for the Defence of the Individual V. Minister of Defense [unpublished] (November 12, 2015). The Interior Minister’s position was not submitted to the Court in the proceeding that is the subject of the further hearing. The parties to the case did not make arguments about it, and the Court did not give its opinion about it. There is therefore no room to consider it at this stage of the proceeding (See and compare FH 2/64 Koenigshofer v. Humphert, 18(3) PD 377, 383 (1964); See also my opinion in FH Civ 3993/07 Jerusalem Tax Assessor 3 v. Ikafood Ltd., 65(1) PD 238, 320-324 (2011)).
  2. Indeed, “You can’t turn back the clock” (FH 3/58 Finance Minister v. Freight and Container Ships Ltd., 12 PD 1849, 1854 (1958); See also ibid, page 1852). That is particularly true when, as is in our case, the Municipality was not made aware of the Interior Minister’s position, and the position was not made public but rather remained buried in the Minister of Interior’s drawer, even though ten days passed between the time it was reached and the publication of the judgment (See and compare App Civ 5945/04 Jerusalem Tax Assessor 1 v. Sami [unpublished], para 10 of my judgment (April 22, 2007). The rule is that “Norms that have ramifications for the collective or for the rights of individuals must be made public, so that everyone can know what the law says […]. Law that is made public is binding law, it and not documents of whose existence individuals and the collective, all of them or some of them, are unaware” (App Civ 3213/97 Naker v. Herzliya Local Planning and Zoning Committee, 53(4) PD 625, 648 (1999); See also and compare App Civ 421/61 State of Israel v. Haus, 15 PD 2193, 2204-2205 (1961)).
  3. Another reason not to deviate from the decision reached in the verdict regarding Amendment No. 2 is the timing in which the Minister of Interior’s position was received. It should be noted: the decision to delay the publication of a by-law is not a final decision. It must be followed by a decision on the merits (see art. 258(d) of the Ordinance). In my opinion, we don’t need to rule on the principled question of what is the precise time period in which a minister of interior, who has ordered delay of the publication of a by-law, must make a final decision on the merits of that ordinance, in order to determine that this particular decision came too late. I will explain.
  4. In our case, Minister of Interior Gidon Saar made his decision to delay publication on October 7, 2014, during the sixty day period allotted in Article 258 of the Ordinance. Time passed, and no decision was made on the merids of the amendment. After about nine months, the parties reached an agreement in the context of litigation, which was validated by the court in its July 6, 2015 decision. According to the terms of that agreement, the minister of interior committed, as noted, to submit his decision to the court and the other parties “within 100 days from today” (ibid, emphasis added – M.N.). The deadline for making a decision on the merits of Amendment No. 2 was – according to the agreement – therefore October 16, 2015. That deadline passed. No decision on the merits was reached, and every few months, the state would issue an “update” to the court, saying that no decision had been reached (as enumerated in paragraphs 9-11). Despite repeated comments from the court to the effect that the executive branch is refusing to decide a question placed before it (see my decision of December 15, 2015 (“[As] we repeated and emphasized, the executive branch must made a decision”); Transcript of March 28, 2016 Hearing; Transcript of January 23, 2017 Hearing), the state acted as if it had all the time in the world. No additional agreement was reached by the parties, and none was requested in any event, and no judicial decision was issued to authorize deviating from the timeline set. The Minister of Interior’s Position, dated April 9, 2017, missed the deadline, therefore, by about a year and a half.

I don’t see a legal justification for intervening in the holding made in the decision that is the subject of the further hearing, namely that under the circumstances described, we are dealing with a refusal made without providing reasons (see paragraph 18 of the verdict and the sources cited therein). Based on what has been said thus far, the request for a further hearing should be rejected.

  1. Having said that, and once Deputy President (ret.) E. Rubinstein decided that “the Sabbath deserves … to have its case considered and clarified when all positions are before the Court” (his decision of July 12, 2017), I see fit to address the merits of the Minister of Interior’s position, even though arguments for dismissal forestall that. Evaluating the merits of the Minister of Interior’s position leads to the same result, denying the request for an additional hearing. I will explain.
  2. As noted, the Minister of Interior thought that Amendment No. 2 should be completely invalidated. To his way of thinking, the consideration that should be accorded to the local authority’s autonomy does not justify the “extent and the derivative meaning of the harm that Amendment No. 2 causes to socio-social and national religious values and purposes that are the basis of the designation of the Sabbath as a day of rest” (para. 59 of the Interior Minister’s position). In his introduction, the minister addressed the importance of the Sabbath in Jewish heritage:

“The Sabbath and its observance is [sic-trans.] a bedrock of the secret of the Jewish people’s existence. Sabbath observance is one of the commandments that the children of Israel were commanded to observe in the ten commandments […]. Numerous ideas in the foundations of the Jewish people’s belief are included in and derive from this commandment and its observance. As is known, the Sabbath was designated as a day of rest in the State of Israel from its very founding. Two purposes are at the heart of this weekly day of rest: a socio-social purpose and a national religious purpose, which are intertwined” (ibid, paras. 16-17).

The Minister of Interior believes that Amendment No. 2 significantly infringes on the social purpose of the day of rest. That is due to the competitive disadvantage it creates for small business owners which constitutes “harm to and thwarting of” their ability to exercise their right to a day of rest (ibid, para. 35), and due to the employment of workers who are “an interchangeable work force […] of weak socio-economic status” in businesses that would be permitted to open on the Sabbath (ibid, para. 41).

  1. Additionally, The Minister of Interior thought that Amendment No. 2 significantly undermines the national-religious status of the Sabbath and the way the public sphere looks during the Sabbath. That is due to its deviation from the status quo, which allows places of entertainment to open, but prohibits purely business activity:

 

“Throughout the years, as per the status quo that represents broad national agreement regarding activities on the Sabbath, places of entertainment have been allowed to open […] but commercial activity and opening commercial establishments has not been permitted. The draft by-law put forward now proposes, for the first time, to allow pure, undeniably business activity throughout the city of Tel Aviv” (ibid, para. 45).

He believes that should not be allowed, especially considering the scope and size of the area where sales would take place and the fact that the amendment applies to businesses that do not sell food for immediate and urgent needs. Similarly, he thinks it would be wrong “to recognize the Tel Aviv Municipality’s claim that a “need” that can be recognized in order to justify undermining the purposes of the Sabbath is essentially just a need to satisfy the “will” of the residents, based merely on their preferring the convenience of a particular arrangement – and no more than that” (ibid, para. 51).  That is particularly true because, in his opinion, the will of the residents and the “habit” for which they are asking to open businesses “is the result of violations of the law and years in which it was not enforced” (ibid).

  1. The Minister of Interior also stated that the arrangement that the municipality adopted risks becoming a model for other towns in Israel, and therefore Amendment No. 2 would trigger changes in the character of the Sabbath throughout Israel:

“Under these circumstances, the dam would burst and [the] opening of businesses on the Sabbath would risk turning into a breached vision throughout the country […]. Therefore, in essence, it is not a single by-law that hangs in the balance but rather the appearance of the Sabbath and its character, as a national, general matter, hang in the balance” (ibid, para. 58).

For that reason, he believes, “in the broad perspective granted the central government” (ibid, para. 57) emphasis eliminated – M.N.)) invalidating Amendment No. 2 is justified.

  1. According to the State, although the Minister of Interior’s position “arouses significant legal difficulties,” it “does not reach the level of extreme unreasonableness.” I cannot accept that argument. The Minister of Interior’s position did not appropriately consider the uniquely autonomous status of the Municipality, and therefore is not reasonable. I will explain. Local autonomy, meaning “the direct connection of the local authority to the law, unmediated by other governmental authorities” (HCJ 3791/93 Mishlev v. Minister of Interior, 47(4) PD 126, 132 (1993) (hereinafter: the Mishlev case) is “the basic principle of local administration” (Itzhak Zamir, Hasamchut Haminhalit [Administrative Authority], Vol. 1 453 (2nd ed. 2010) (hereinafter: Zamir) (emphasis added – M.N.)).
  2. If that is so, in exercising his authority under Article 258, the Minister of Interior should accord significant weight to local autonomy, as “those wielding authority from the central government should be guided by the need to act with respect toward the elected officials of the local authority – toward them and those who elected them – and to remember that the days of coercive paternalism have passed” (Mishlev case, p.131; See also: Zamir, pps. 451-453, 477;  FH HCJ 3201/96 Agriculture Minister v. Lod Valley Regional Council, 61(3) PD 661, 663 (1997); HCJ 2838/95 Greenberg v. Katzrin Local Council, 53(1) PD 1, 10-15 (1997); FH HCJ 1913/13 Muasi v. Minister of Interior, 52(2) PD 49, 66 (1998); HCJ 10104/04 Peace Now v. Supervisor of Jewish Towns in Judea and Samaria, 61(2) PD 193, 168 (2006); See also and compare: HCJ 4381/97 Meizlik v. Petah Tikva Local Planning and Zoning Council [unpublished], para. 57 of Justice E. Rubinstein’s judgment (December 29, 2009)). As was noted in a case similar to ours:

“With regard to the degree of intervention of the central government in the enactment of the bylaws, the Attorney-General’s position was that the power to disqualify bylaws that do not deal with issues that affect the central government or that extend beyond the boundaries of that local authority should be exercised in moderation. As a rule, the Minister of the Interior should not replace the discretion of the local authority with his discretion where the authority acted within its power and in a reasonable manner. The Minister of the Interior has no technical ability to consider in depth the considerations that guided the local authority and the factual basis that was used to enact the bylaw, nor is it right that he should do so” (HCJ 953/01 Solodkin v. Beit Shemesh Municipality, 58(5) PD 595, 606 (2004) (hereinafter: Solodkin case).

  1. The Minister of Interior’s position in this case did not really take into consideration the autonomy of the Municipality. Indeed, the Minister of Interior clarified that he does not think the will of the city’s residents is adequate to justify any harm to the purposes of the Sabbath and to permit businesses to open. The Minister of Interior focused on the character of the Sabbath at the national level, without giving expression to the local character and the circumstances of Tel Aviv-Jaffa. His explanation was that if Amendment No. 2 were to be approved, “the dam would burst” and the arrangement that the Municipality adopted would become a model for other towns in Israel. I cannot accept this explanation. Legal standards should not be changed on basis of mere assumptions regarding potential consequences that the future may hold. Indeed, “Thus, while it may very well be that the slippery slope is indeed quite perilous, the slippery slope argument is by far more dangerous” HCJ 5016/96 Horev v. Transportation Minister, 51(4) PD 1, 74 (1997)). The infringement on the municipality’s autonomy is particularly problematic in this case, because local authorities in Israel were explicitly authorized to legislate by-laws that govern the opening of businesses on the Sabbath (See: Law to Amend the Municipalities Ordinance (No. 40), 5751-1990 (hereinafter: the Authorizing Law). One of the purposes at the foundation of the Authorizing Law is specifically that these issues should be regulated at the municipal, local level, and not at the national level.
  2. This purpose is well-grounded in precedent. I noted as much in the Bremer case:

“If the nature of the city of Tel Aviv-Jaffa requires, in the opinion of its leaders who represent the population, not to close businesses such as those of the Respondents, on the Sabbath, the By-Law can be changed through the manner prescribed in the law […] The Attorney General stated that the Municipality is authorized to strike a balance "between the interest of preserving the nature of the Sabbath as a day of rest […] and making certain economic activity possible". However, in my opinion, the appropriate place for striking such a balance is in a Municipality decision whether to promulgate a by-law regarding the activity of businesses on the Sabbath and formulating the arrangements prescribed” (ibid, para. 52 of my opinion).

And in another case, President M. Shamgar ruled:

“Pursuant to the amendment to the Authorizing Law, which added paragraph (21) […] reasons related to religious tradition were authorized as relevant in enacting by-laws under paragraph 20 […]. Article 249(20) [of the Ordinance-M.N.] does not set mandatory guidance for the local authority but rather merely grants it power. That is understood, because we are talking about an authorizing provision whose application and method of implementation remain in the hands of the local authority” (HCJ 5073/91 Israel Theaters Ltd. v. Netanya Municipality, 57(3) PD 192, 207 (1993) (hereinafter: the Israel Theaters Case).

This court noted even before the Authorizing Law was enacted:

“This issue of opening and closing shops is inappropriate for national legislation. It should be regulated specifically at the local legislative level, because it is an issue which requires taking into consideration the make-up of the population of each place, its habits and ways of life and the character of that place” (Crim App 858/79 Lapid v. State of Israel, 34(3) PD 386, 391 (1980)).

Regarding another authorizing law, which addresses the sale of pork on the territory of a local authority, it has been established that:

“The purpose was therefore that the balance between the conflicting purposes — the considerations concerning the protection of religious and national sensibilities, on the one hand, and the consideration of individual liberty, on the other — would not be made on a national level, according to a principled balancing that the legislator determined. Instead, the purpose was to make a balancing at a local level. In this local balancing, the character of the authority and the changing particulars of each local authority would be taken into account. (Solodkin case, p. 610; See also: HCJ 163/57 Lubin v. Tel Aviv-Jaffa Municipality, 12 PD 1041, 1076 (1958)).

  1. We should not mix things up. The authority to make the value judgment within the framework of the by-laws belongs to the Municipality, not to the Minister of Interior.  The Minister of Interior does not evaluate whether the decision is optimal, in his opinion, but rather whether it is within the zone of reasonableness. In that sense, in my opinion, the broad perspective given to the Minister of Interior was intended, for example, to ensure that the by-law that a particular local authority enacted does not create a negative externality for other local authorities (take for example a local authority that decides to bury its garbage on the outskirts of its borders, next to another city). Indeed, leaving the judgment in the hands of the municipality was intended to realize the principle of municipal autonomy. Beyond that, however, it was also intended to realize a central aspect of the Authorizing Law, namely tipping the scales in favor of local considerations, and no one is in a better position than the municipality to evaluate them. A decision by the Minister of Interior is intended to oversee the lawfulness of a decision by the Municipality, not to replace its discretion.
  2.  Furthermore, the Minister of Interior’s position contradicts an additional central purpose at the foundation of the Authorizing Law – the balancing purpose. This purpose affects the scope of the Minister of Interior’s discretion pursuant to Article 258 of the Ordinance (See and compare: the Solodkin case, p. 621). The Minister of Interior’s position is sweeping in character, and it would prohibit opening any grocery store at all – and indeed any commercial establishment, except for a critical need – without reference to a city’s circumstances or the will of its residents. We might wonder: If the solution is so simple, why did I take more than two whole years to reach it? I will dare to say that the HCJ [High Court of Justice-trans.] is again being called upon to do the dirty work. After the HCJ does that dirty work, one can say, “It wasn’t me (the Minister) – it was the HCJ.”
  3. In any event, the Minister of Interior’s position is inconsistent with the Authorizing Law, which relies entirely on a purpose of compromise and balancing (see: the Israel Theaters case, p. 207; the Bremer case, para. 52 of my opinion; See also and compare: the Solodkin case, p. 622). It is a balance between the conflicting rights within the circumstances of the particular case: the balance between freedom of religion, on the one hand, and freedom from religion, on the other; the balance between equality on the one hand, and freedom of occupation on the other. In my opinion, considering this purpose of the Authorizing Law, a sweeping position that lacks a balance reflecting the character of a city, the uniqueness of the different areas within it and the distances between them – is unreasonable.
  4. I have thus reached the conclusion that, even if the Minister of Interior’s position had been submitted on time and considered on its merits, there would be no cause to deviate from what was decided in the verdict which is the subject of the further hearing determined regarding Amendment No. 2. Amendment No. 2, therefore, remains valid. The question remains whether Amendment No. 2, like Amendment No. 1, meet the standards of administrative law. I will now address that question.

The Amendments’ Compatibility with the Standards of Administrative Law

 

The Parties’ Arguments on the Amendments’ Compatibility with the Standards of Administrative Law

  1. The merchants raised many arguments against the compatibility of the amendments with the standards of administrative law. Regarding authority, the merchants argued that the amendments constitute a primary arrangement that the Municipality is not authorized to regulate. That is especially the case, they argue, because the Authorizing Law only authorizes the Municipality to order the closing of places of entertainment and not the opening of businesses. The merchants also argued that the amendments contradict the Hours of Work and Rest Law, 5711-1951, which, they say, proscribes the opening of businesses on the Sabbath. Their claim is that the Hours of Work and Rest Law is on a higher normative plane, and therefore such contradiction negates the amendments. However, after we held oral hearings, and upon hearing our comments, the merchants withdrew that claim (see: Motion of August 31, 2017). Regarding discretion, the position of the merchants was that the amendments are unreasonable, because they contradict the status quo that reflects a decisive rejection of commerce on the Sabbath, in contrast to the activity of places of entertainment. The merchants also claimed that the amendments are unreasonable, both due to their broad implications – which, they argue, threaten to strip the laws regarding rest of their power – and also because they infringe on equality and encourage criminal activity.
  2. Gindi also argued that the amendments are unreasonable, emphasizing claims it made in the proceeding that is the subject of the further hearing. It believes that the Municipality should be ordered to add the site, “Sarona Market”, which it owns, to the list of commercial sites where Amendment No. 1 permits businesses to open on the Sabbath. That is primarily because the decision not to include the site on the list was based on extraneous considerations, as the Municipality partially or completely owns the three sites which it permitted to open on the Sabbath.
  3. The state and the Municipality argue that there is no cause to intervene in the court’s holding in the verdict that is the subject of the further hearing, namely that the amendments were enacted pursuant to lawful authority and that they do not deviate from the zone of reasonableness. The state also claims that there is no contradiction between enacting the amendments, which was done pursuant to the Authorizing Law, and the Hours of Work and Rest Law, because these legal provisions address different issues. This approach, the state argued, is consistent with this court’s jurisprudence and with interpretive considerations.
  4. The Minister of Interior’s position, which was separately attached to the state’s argument summary (see: my decision of July 31, 2017), was different. Like the merchants, he believes that Article 9A of the Hours of Work and Rest Law proscribes the very opening of commercial businesses on the Sabbath. Therefore, he argues, the Authorizing Law cannot supersede this provision, and it does not authorize the Municipality to permit opening businesses on the Sabbath.

 

The Issue of Authority – Discussion and Ruling

 

  1. The merchants’ arguments regarding the Municipality’s lack of authority to enact the amendments are not new. These claims were raised and rejected in the verdict that is the subject of the further hearing. I see no reason to deviate from that ruling. First, the merchants argued that the Authorizing Law does not authorize the Municipality to permit opening businesses on the Sabbath, because it only addresses the closure of places of entertainment. That claim must be rejected.
  2. The Authorizing Law came about due to the doubt that arose regarding the authority of local authorities to enact, in their by-laws, provisions that, for religious reasons, proscribe opening places of entertainment on the Sabbath (see: Crim Case (Jerusalem Magistrate) 3471/87 State of Israel v. Kaplan [unpublished] 5748(2) PM 26 (1987) (hereinafter: the Kaplan case). Indeed, the Authorizing Law was intended to remove that doubt and to guarantee the continued validity of the existing by-laws. However, its purpose, as defined, was “to grant local authorities the authority to regulate the prohibition on opening businesses on days of rest,” including for reasons related to religious tradition (Explanatory Notes of the Local Authorities Bill (Prohibition on Opening and Closing Businesses on Days of Rest), 5748-1988, H.K. 134 (emphasis added – M.N.); See also the Israel Theaters case, p. 2017; the Bremer case, paras. 27-28 of my opinion). In any event, the text of the Authorizing Law is clear.
  3. The Authorizing Law explicitly authorizes the local authorities in Israel to enact provisions in their by-laws that address opening businesses in their domains on the Sabbath. The Authorizing Law added, inter alia, Article 249(21) to the Ordinance, which says that:

 

A municipality may use its authority pursuant to paragraph (2) within its jurisdiction or in part of its jurisdiction regarding days of rest, taking into consideration reasons of religious tradition and regarding the day of Tisha Ba’av […];

The above-reference article explicitly refers to Article 249(21), which addresses “the opening and closing of shops”:

 

  •  

and Closingrestaurants, coffee shops, tea houses, drinking establishments,

  •  

 

I cannot accept the argument that a law that authorized, inter alia, “regulating the opening […] of shops and factories […]” was intended to apply only to places of entertainment or only to regulating the closure of businesses. That argument is incompatible with the clear text of the law (for more on the municipality’s authority to permit opening businesses on the Sabbath see: the Bremer case, para. 52 of my opinion). 

  1. The merchants and the Minister of Interior raised an additional argument on the issue of authority, namely that there is a contradiction between the amendments and the Hours of Work and Rest Law. According to that argument, the Hours of Work and Rest Law prohibits opening businesses on the Sabbath, and therefore the By-Law cannot permit them to open. That argument should also be rejected. Indeed, as the state noted, we are dealing with two sets of laws that operate on different planes and do not contradict each other. To the contrary: they complement each other. Business owners whose activity on the Sabbath has been approved within the framework of the amendments are still subject to the provisions of the Hours of Work and Rest Law, and obviously they must abide by them. I do not accept the merchants’ position that the Hours of Work and Rest Law contains a sweeping prohibition against opening businesses on the Sabbath. In my opinion, an interpretation of that kind is inconsistent with the text and purpose of the law.
  2. Indeed, during the oral hearing, the merchants argued that the procedure before us is inappropriate for ruling on the interpretation of Article 9A of the Hours of Work and Rest Law. In addition, a week after the hearing (on August 13, 2017), the merchants filed a motion to supplement their arguments on that issue. In our decision of August 14, 2017, we denied that motion. Despite their motion being denied, on August 31, 2017, the merchants submitted a long line of documents on the subject, attached to an “urgent update and motion” from them. In that framework, they moved for the court “to refrain from addressing the question of the meaning of the prohibition set in Article 9A of the law” and stated that they wanted to relinquish their argument about the contradiction between the amendments and the Hours of Work and Rest Law. That motion was also denied (see our decision of August 31, 2017). We must therefore rule on the issue of the correct interpretation of Article 9A of the Hours of Work and Rest Law. That is especially true, given Deputy President (ret.) E. Rubinstein’s ruling that “the further hearing will apply to the entire verdict” (para. 12 of his decision of July 12, 2017), and given that the above-stated issue was placed at our doorstep by the merchants in the framework of the procedure that is the subject of the further hearing, and in any event was raised by the Minister of Interior in the summary of argument submitted on his behalf.
  3. The Hours of Work and Rest Law prohibits employment and work on the weekly day of rest. It says:

Prohibition 9. An employee shall not be employed during his weekly rest, unless

Of Employment such employment has been permitted under section 12.

During Weekly

  •  

 

  • On the prescribed days of rest […] the owner of a workshop of

Of Work [sic] industrial factory shall not work in his workshop or industrial

During Weekly factory, and the owners [sic] of a shop shall not do business in his

Restshop.

(b) On the aforesaid days of rest, a member of a cooperative society

shall not work in a workshop or industrial undertaking of the society; a

member of an agricultural cooperative society shall not work in a

workshop or industrial undertaking of the society unless the work is

connected with the services necessary for its farm […]

 

Permission 12. (a) The Minister of Labor and Social Affairs may permit an

For employee to be employed during all or any of the hours of weekly

Employment rest, if he is satisfied that interruption of work for all or part of the

On Weeklyweekly rest is likely to prejudice the defense of the State or the

Restsecurity of persons or property or seriously to prejudice the economy, or a process of work or the supply of services which, in the opinion of the Minister of Labor and Social Affairs, are essential to the public or part thereof.

 

 

  1. My opinion is that the Hours of Work and Rest Law does not address the question of opening or closing businesses on the day of rest, but rather with the personnel question of work on the day of rest.  I draw that conclusion from the text of the clauses and their captions, which use the words “employment” or “work” (see: Aharon Barak, Parshanut Tachlitit Bamishpat [Purposive Interpretation in Law], 401-402 (2003) (hereinafter: Barak)). Similarly, from reading the explanatory notes for Amendment No. 1 of the law it is clear that Article 9A, which was added at the same time, was not intended to serve as a provision that requires closing businesses, but rather was intended to expand the application of the prohibition of employment (see: ibid, p. 407). According to the explanatory notes of the amendment:

 

“The Hours of Work and Rest Law, 5711-1951 currently applies to salaried employees only. The suggested amendment would also subject factory owners, members of a cooperative society and shop owners to the provisions regarding days of rest, with some caveats” (Explanatory Notes of the proposed Hours of Work and Rest Law (Amendment), 5727-1966 (1966, H.H. 136).

 

This approach is supported by the fact that we are dealing with a law that infringes on the constitutional right to freedom of occupation (see: HCJ 5026/04 Design 22- Shark Deluxe Furniture Ltd. v. Director of Sabbath Work Permits Department – Ministry of Labor and Social Affairs, 60(1) PD 38, 51 (2005) (hereinafter: the Design 22 case)) and that carries criminal sanctions (see: art. 26 of the Hours of Work and Rest Law). These reasons also lead to the conclusion that the appropriate interpretation is a narrow interpretation (see: Barak, p. 425).

  1. My conclusion that the Hours of Work and Rest Law does not create a sweeping prohibition on opening businesses on the Sabbath is also compatible with precedent regarding the Hours of Work and Rest Law, which held that it does not contain “a general provision about closing places on days of rest” (the Israel Theaters case, p. 206 (emphasis added – M.N.); See also: the Design 22 case, p. 63). In any event, let it be clear that the amendments were enacted pursuant to the Authorizing Law, and it is what authorizes the Municipality to permit businesses to open on the day of rest (see para. 39 above). If that is so, even if a contradiction were to exist, it would be a contradiction between the Authorizing Law and the Hours of Work and Rest Law, meaning between norms that are on the same plane. Under the non-interpretive standards we use (see: Barak, p. 117), the Authorizing Law would prevail as a law enacted subsequent to the Hours of Work and Rest Law (lex posterior derogate priori), and in any event it is a more specific law that grants power to the local authorities in Israel in a targeted way, in contrast to the generality of the Hours of Work and Rest Law (lex specialis derogate generali).
  2. In passing, I note that on the issue of the interpretation of the Hours of Work and Rest Law, as well as on additional issues that arose, we were presented with the position of Minister of Interior Deri that was, as noted, different from the state’s position. In the oral hearing before us, and in their response of August 20, 2017, the merchants argued that we should have allowed the Minister of Interior to present his position separately from the state. I reject that argument. According to the case law, “the position of the authorities (as opposed to the personal opinion of those holding office within them) on questions of law is determined, as an institutional matter, by the Attorney General” (HCJ 320/96 Garman v. Herzliya City Council, 52(2) 222, 239 (1998); See also: HCJ 4247/97 Meretz Party in Jerusalem City Council v. Minister of Religious Affairs, 52(5) PD 241, 277 (1998); HCJ 3094/93 Movement for Quality Government in Israel v. Government of Israel, 47(5) PD 404, 425 (1993); But compare: HCJ 6494/14 Gini v. Chief Rabbinate [unpublished], paras. 21-26 of the opinion of my colleague, Justice N. Sohlberg (June 6, 2016); But see also: ibid, paragraph D of the opinion of Deputy President E. Rubinstein; and also HCJ 6017/10 Israel Union for Environmental Defense v. Minister of National Infrastructure [unpublished], paragraph G of the opinion of Justice E. Rubinstein (July 3, 2012).

Indeed, the personal position of Minister of Interior Deri was different from the state’s position. The Attorney General agreed to bring it to our attention. In doing so, he acted within the scope of his authority. But that is not the position of the state, which is the litigant before us. The state’s position – as was presented before us and as should be presented before us – is the one that is decided by the Attorney General (See: HCJ 4267/93 Amitai – Citizens for Good Governance and Integrity v. Prime Minister of Israel, 47(5) PD 441, 473 (1993); See and compare also: Solodkin case, p. 607).

  1. I have therefore reached the conclusion that the Municipality did not exceed its authority when it enacted the amendments. However, as is known, authority is different from discretion. A number of arguments were raised regarding discretion. I will now evaluate them.

 

Issue of Discretion – Discussion and Ruling

  1. In the verdict that is the subject of the further hearing, it was held that the amendments are within the zone of proportionality within which the Municipality must operate. I do not see a cause for deviating from that holding, either. First, regarding Gindi’s claims that extraneous considerations influenced the decision not to include the site it owns on the list of sites in Amendment No. 1, because Gindi is a respondent, I doubt that it is possible to grant its motion for a remedy. In any event, in my opinion, the relevant considerations that the Municipality raised, the most important of which is the proximity to residential areas, suffice to preclude intervention in the By-Law based on Gindi’s arguments. Additionally, the merchants also raised a long line of arguments which, in their opinion, show that the amendments are not reasonable and not proportional.
  2. These arguments were presented by the merchants in the proceeding that is the subject of the further hearing. Inter alia, they repeatedly referred to documents they submitted in the procedure that is the subject of the further hearing, which included various statements that the mayor made on various occasions. I do not think that the procedure of a further hearing is the appropriate framework for reconsidering facts and arguments that were already presented and decided upon (See: FH 6/58 Mann v. Ayun, 12 PD 109, 112 (1958); FH Crim 5567/00 Deri v. State of Israel, 54(3) PD 601, 613 (2000); FH Crim 2334/09 Perry v. State of Israel [unpublished], para. 34 of the opinion of Justice A. Procaccia (ret.) (May 23, 2011)). A further hearing is not intended to facilitate arguments against the result of a particular proceeding by re-arguing the case before an expanded panel that exercises judicial review of the verdict. Instead, it focuses on the legal aspect. The procedure of a further hearing revolves around the legal precedent that was set in the verdict (See: FH 3379/91 Caspi v. State of Israel [unpublished] (August 15, 1991); FH Civ 1075/15 Blum v. Anglo Saxon – Asset Agency (Israel-1992) Ltd. [unpublished], para. 18 of my opinion (March 8, 2015)).
  3. At the legal level, my opinion is that the amendments are within the zone of discretion that the Authorizing Law granted to the Municipality. The merchants painted a gloomy picture of the amendments wreaking serious harm to their rights to equality and freedom of religion. It is true that the amendments violate the merchants’ rights and also the rights of others, a violation which, in my opinion, is beyond de minimus. In this context, the violation stems from both the opening of commercial establishments on the Sabbath as well as opening places of entertainment, and it also affects the social purpose and the national purpose at the heart of the designation of the Sabbath as a day of rest. In no way do I minimize this violation. However, the review does not end once a rights violation has been found. On the other side are the other rights that the amendments protect, including freedom of occupation and freedom of conscience. The heart of the review is the balance between the conflicting rights. The balance does not favor one worldview over another. It does not detract, not even a whit, from the status and importance of the Sabbath as national property of the Jewish people and as one of the values of the State of Israel as a Jewish and democratic state, as Ahad Ha’am said: “More than the Jewish people kept the Sabbath, the Sabbath kept them.” However, balance means letting a thousand flowers bloom. It means that, in addition to protecting the unique character of the Sabbath, we should also allow each individual to design his Sabbath as he wishes and according to his beliefs and to fill it with content as he sees fit. To borrow the words of Zelda, “To light candles in all the worlds – that is the Sabbath” (Zelda, “Sabbath and Weekday”). There is a reason the legislator saw fit to task the local authority with conducting this balance: so that the balance point it chooses will reflect the unique character of each city, the extent of communal life within it and the potential practical solutions that characterize its circumstances. Indeed, when the Sabbath begins, the city is draped in celebration, but the garment draping one city is different from the garment draping another.
  4. The balancing with which the local authority is tasked is not simple, but it is crucial for maintaining communal life in a diverse society like ours. Communal life is not “all or nothing” but rather is based on tolerance for a divergent opinion, mutual respect and mutual compromise. Communal life is not “black and white” but rather a spectrum. It is responsive to the recognition that human beings are free creatures who design their life narratives, but also to the recognition that they do so within the framework of society and not on a desert island. It is based on the understand that each of us bears responsibility for society as a whole, but that does not mean giving up on fundamental components of our identity or the uniqueness of each of us. It is not a perspective of “I won’t sign on to desecrating the Sabbath” but rather recognition of the indispensability of the perspective, “Live and let live”.
  5. In the case before us, a review of the amendments, in my opinion, points to the fact that they were enacted in order to achieve this balance. The amendments were designed to reflect a unique balance point that is appropriate for the city of Tel Aviv, taking into consideration the status of the Sabbath, the composition of the population in each neighborhood, its way of life and the nature of the city. Amendment No. 1 permits opening businesses in a very limited number of clearly delimited commercial sites that are disconnected from residential areas. Amendment No. 2 permits opening a limited number of grocery stores according to geographic location, in a way that considers the character of each area. The opening is subject to various restrictions, first and foremost the need to obtain a permit. Ultimately, in our case, we are talking about opening a limited number of businesses that constitute a tiny fraction of the number of businesses operating in the city during the week, and that also influences the proportionality of the measure. The balancing point chosen facilitates observing the unique character of the Sabbath and does not significantly change the look of the city, considering the existing normative situation. I am not saying this framework is optimal. There may be other frameworks that are also within the zone of proportionality. I am not even saying that this framework should or could be adopted in other cities. My ruling can be summarized as follows: the proposed amendments are within the zone of proportionality within which the Municipality operates, and there is no place to intervene in them.

 

Conclusion

  1. Therefore, if my opinion prevails, the motion for a further hearing is denied. Beyond what the law requires, and despite what is written in paragraph 41 [para. 40-trans.], no court costs will be imposed.

 

After These Words

  1. After writing these words, I read the opinions of my colleagues, Justices N. Hendel and N. Sohlberg. My position has not changed, but I feel I must add the following brief words:
  2. My colleague, Justice Sohlberg, commented that I favored “reasonableness above authority”, because, in his opinion, I focused on the question of the reasonableness of the Minister of Interior’s position and not on the question of the Municipality’s authority to enact the amendments to the By-Law (see para. 1 of his opinion). Indeed, as I noted, “authority is different from discretion (above, para. 46 [para. 45- trans.]) – but these are two stages of the review of the same administrative decision. In our case, as noted, the Minister of Interior’s position was that Amendment No. 2 should be invalidated. What needed to be reviewed was his authority to do so (and there was no dispute that the authority exists pursuant to Article 258 of the Ordinance, and therefore there was no reason to expand on that). At the second stage, the reasonableness of his exercise of discretion must be evaluated. A similar evaluation is required for the passage of the amendments by the Municipality: First, we must ask if the enactment of the amendments was done with the proper authority (see paras. 37-43 above [paras. 36-42-trans.]) and then the question arises whether there were flaws in the exercise of judgment (see paras. 47-51 above [paras. 46-50-trans.]). After that evaluation was completed, my conclusion regarding the authority of the Municipality to enact the amendments was different from that of my colleague Justice Sohlberg.
  3. This is not the place to restate all the reasons that formed the basis of my ruling (see paras. 37-39 above [paras. 36-38-trans.] regarding the Authorizing Law and paras. 40-44 [paras. 39-43-trans.] regarding the Hours of Work and Rest Law), but I will note that, in my opinion, the Authorizing Law specifically granted the local authorities in Israel the authority to regulate the opening and closing of businesses in their jurisdictions on the Sabbath, using by-laws. That is clear from the text of the law as well as from its legislative history (see: KP 12(3) 1192-1193 (5751) (U. Lynn (Chair of the Constitution, Law and Justice Committee)), and compare the wording of the bill in its first reading with the wording in the second and third readings). I think there is no dispute between me and my colleagues, Justice Hendel and Justice Sohlberg, about that.  However, our opinions diverge regarding the Hours of Work and Rest Law. In my opinion, as noted, it does not articulate a sweeping prohibition on all business activity on the Sabbath, and they disagree with that. I think the position of my colleagues does not reflect the full range of relevant sources regarding the purpose of the legislation (as noted, I will not repeat my explanation, but see paras. 41-43 above [paras. 40-42-trans.], and see also the comprehensive and clear opinion of my colleague, D. Barak-Erez at paras. 4-25), and especially the way the law was understood and implemented in the nearly half century that has passed since it was enacted, both by this court (see: the Israel Theaters case, p. 206; the Design 22 case, pps. 44, 46, 63), as well as by the administrative authority in charge of implementing it. In its argument summary, the state clarified that “the interpretation that has been determined, that Article 9A applies only to the personnel aspect of work during days of rest, is compatible with long-standing enforcement policy and the interpretation according to which the Ministry of Labor (in its various forms) operates” (ibid, para. 17).
  4. In my opinion, there is no contradiction between the Authorizing Law and the Hours of Work and Rest Law. Regarding this determination of mine, my colleague Justice Sohlberg wondered, “What is the point of the Authorizing Law?” (para. 16 of his opinion), noting that if the Hours of Work and Rest Law does not include a sweeping prohibition on opening businesses on the Sabbath, then the point of departure is that their opening is permitted. However, that, in my understanding, is exactly the justification at the heart of the Authorizing Law. It is a basic principle that one does not prevent a citizen from making a living “and one doesn’t get involved in this life in a purely administrative way” (HCJ 144/50 Shaiv v. Minister of Defense, 5 PD 399, 407 (1951)). It is true that the administrative agency has no authority other than that which the law grants it: “If an agency professes to deviate from the domain delimited, it leaves the domain recognized by law, and in that sense, its actions are null and void” (Baruch Bracha, Mishpat Minhali [Administrative Law], Vol. I 35 (1987); See als: Zamir, p. 73; Dafna Barak-Erez, Mishpat Minhali [Administrative Law], Vol. I 97 (2010) (hereinafter: Barak-Erez). As I noted, the Authorizing Law was enacted because of the doubt that arose regarding the authority of local authorities to enact provisions in their by-laws regarding prohibitions on opening businesses on the Sabbath (see para. 38 above [para. 37-trans.]; see and compare a similar authorizing law addressing the sale of pork; Solodkin case, pp. 602, 607-608). The Authorizing Law was enacted and granted the Municipality the authority “to regulate the opening and closing of shops, and workshops […]” on “days of rest, taking into consideration reasons of religious tradition”.   Accordingly, President M. Shamgar ruled in the Israel Theaters case that “Article 249(20) does not set mandatory guidance for the local authority but rather merely grants it power. That is understood, because we are talking about an authorizing provision whose application and method of implementation remain in the hands of the local authority” (ibid, p. 207); In accordance with that, I ruled at the time, in the Bremer case, that if the municipality believes that the character of a city justifies permitting certain businesses to be open on the Sabbath, it should amend the by-law (See: ibid, para. 52), and as a result the Municipality enacted the amendments that are the subject of our case. That was also my position in the verdict that is the subject of the further hearing, and that is my position now.
  5. For that reason, I cannot agree with the approach of my colleague, Justice Sohlberg, which declines to view the Authorizing Law as a law enacted subsequent to the Hours of Work and Rest Law. It is well-known that laws are not enacted for the sake of enacting them. The legal situation that existed prior to the passage of the Authorizing Law is different than the legal situation now. The Authorizing Law changed the face of the Municipalities Ordinance, which predates the Hours of Work and Rest Law. Article 249(20) of the Ordinance, which also predates the Authorizing Law, but within whose framework the case law had barred taking religious tradition into consideration, changed its form, and thanks to Article 249(21) it took on a new form. Therefore, as I noted (see para. 43 above [para. 42-trans.]), even if there were a contradiction between the Authorizing Law and the Hours of Work and Rest Law, then under the non-interpretive standards we use, the Authorizing Law prevails as a later law. That is because it was enacted in 1990, while Article 9A was added to the Hours of Work and Rest Law in 1969.
  6. As to the comment of my colleague Justice Sohlberg about the need “to limit the wingspan” of the reasonableness rationale (see paras. 35-36 of his opinion), I emphasize that my opinion differs from his. In this court’s jurisprudence going back nearly four decades, the reasonableness rationale is as an essential tool in reviewing the decision of an administrative agency (See: HCJ 389/80 Dapei Zahav Ltd. v. Broadcasting Agency, 35(1) PD 421, 435-449 (1980); See also Barak-Erez, Volume II, pps. 723-769 and especially p. 733). In my opinion, there is no flaw in the reasonableness rationale just because it is an abstract norm or an open-ended term. On the contrary: “that fact allows reasonableness to be a ‘bridge through which the law can provide modern solutions to new social problems’” (HCJ 3997/14 Movement for Quality Government in Israel v. Foreign Affairs Minister [unpublished], para. 2 of my opinion (February 12, 2105); For more on the importance of the reasonableness rationale in administrative law, see, e.g.: ibid, paras. C-D of Deputy President E. Rubinstein’s opinion, and paras. 3-6 of the opinion of my colleague, Justice E. Hayut; see also HCJ 5853/07 Emunah National Religious Women’s Movement v. Prime Minister, 62(3) PD 445, 486-489; 510-512 (2007), to which my colleague Justice Sohlberg referred (in that case, Justice A. Grunis’s position regarding the reasonableness rational, on which my colleague relied, remained a minority opinion, and Justices A. Procaccia and E. Arbel addressed the status and importance of the reasonableness rationale)). The sting of its vagueness is dulled following years in which case after case in Israeli common law shaped it, something that provides us a comprehensive body of rules to govern its implementation.
  7. My position, as stated, has not changed, and it is that the Municipality is authorized to enact provisions in its by-laws concerning the regulation of business activity on the Sabbath. Exercising this authority must withstand the standards accepted in our administrative law, and specifically it must be proportional. I also held (see paras. 49-51 above paras. 48-50-trans]) that the amendments in our case are within the zone of proportionality accorded to the Municipality, and therefore there is no room to intervene in them. This determination does not mean that there are no other frameworks for regulating business activity on the Sabbath that would also be within the zone of proportionality. If, for example, the municipality wanted to distinguish between places of entertainment and business establishments within the By-Law and to permit opening the former only – even though that distinction has no grounding in the legislation – and some petitioner challenged a hypothetical by-law such as this, I also would think there is no room for intervention. The very exercise of the authority granted it, as well as its method of exercising it within the zone of proportionality, are up to the Municipality.
  8. In the Bremer  case, there was no doubt that the by-law did not permit opening businesses on the Sabbath. I thus ruled in that case that the Municipality should work to ensure that businesses are closed on the Sabbath, and if the character of the city justifies, in its opinion, permitting certain businesses to be open on the Sabbath, the Municipality should change the by-law. That was – as I noted (see above, para. 49 [para. 48-trans.]) – not to make a value judgement regarding the desired character of the Sabbath, but rather as an expression of the view that laws, including the By-Law, should be followed. Those words also apply to the case at hand. My ruling does not seek to express a “secular” or “religious” view. My verdict reflects what, in my mind, is the correct interpretation of the law, as I explained at length.

 

The President

Justice Y. Danziger

With complete concurrence, I join the comprehensive judgment of my colleague the President.

At the heart of the matter – the question of the Sabbath. How it should be treated and how it should be observed. This question is a question of values, and the answer will vary depending on the identity of the respondent. Recognition of that fact of course supports the conclusion that the discretion to determine the appropriate balance concerning the Sabbath should not be exercised generally, “at the national level”, but rather in a more focused and considerate way, for each urban space, keeping in mind the difference and diversity among the populations that comprise the various cities. This approach facilitates optimal expression of the character and uniqueness of the cities and their residents. It facilitates maximal expression of the free wills and autonomies of the residents. The appropriate perspective, as my colleague the President expressed well, is the perspective of “live and let live”. In a society composed of a complex human mosaic, this perspective is necessary and essential. It is the cornerstone of successful communal life. In this sense, as noted, it is hard to give priority to a value judgment at the “national” level, which is inherently more general and less pluralistic, at the expense of a narrower judgement, aimed at the local character only. In addition, it should be noted that the Sabbath is not a singular thing. There is no one correct way to observe it. It can be done this way and that way. In that context, I am concerned that the dichotomous division between one who “observes” the Sabbath and one who “violates” it oversimplifies the reality and its complexity. This is especially so regarding the concern that the Minister of Interior expressed, that the national religious look and character of the Sabbath will be changed in one fell swoop, and in place of the “national agreement” about it, there will be one big confusing mess. As noted, this concern assumes, in theory, that there is one correct “national way” to observe the Sabbath, which is not the case.

 

                                                                                                                                                Justice

 

Justice Y. Amit

  1. I concur with the precise and exhaustive judgment of my colleague, the President.

For years, the conduct of the executive branch indicated that, in effect, it had decided not to decide regarding the validity of the amendment to the By-Law. As noted in the President’s judgment, that conduct should be viewed as an unexplained refusal which does not withstand judicial review. I also share the President’s opinion regarding the relevance of the Hours of Work and Rest Law, 5711-1951, because there are different purposes at the foundation of the two laws, and “the division of labor is as follows: the Hours of Work and Rest Law regulates the Jewish worker’s rest on the Sabbath, while the by-laws address the question of opening (or closing) the businesses themselves” (Gidon Sapir, “’Vikaratem Lashabat Oneg?’ Avoda Mis-char Vibilui Bishabat Biyisrael Mekom Hamidinia Viad Hayom [‘And Call the Sabbath a Delight?’ Work, Commerce and Leisure on the Sabbath in Israel from the Founding of the State to the Present]”, 31 Mehkarei Mishpat 169, 182 (2017); hereinafter: Sapir). Similarly, I don’t think there was a flaw in the discretion of the Municipality, which chose to legislate a balanced arrangement within the zone of proportionality.

  1. The decision to grant a further hearing was also based on the honored status of the Sabbath “in the world of Judaism”, and, I would add, the honored status of the discussion of the Sabbath’s character in Israeli society. Given the importance of the issue, I will address it briefly.

I completely agree with the President that “The Minister of Interior’s position did not appropriately consider the uniquely autonomous status of the Municipality (para. 27 [para. 26-trans.] of her verdict). Indeed, the present case exemplifies the clash between the central government and the local government. The relationship between these governments is complex, and this is not the place to exhaust the discussion (for an expansion, see: Nehamia Avneri, Mishpat Hamakom: Shilton Atzmi Mekomi Vichakika Mekomit [The Law of the Land: Local Self Rule and Local Legislation], 23-58 (2013) (hereinafter: Avneri); Shalom Zinger, Dinei Shilton Mekomi: Hoveh Viatid [The Law of Local Government: Present and Future], 121-147 (2013) (hereinafter: Zinger); Yisachar Rosen-Zvi, “’Makom Hatsedek’: Mishpat Hashilton Hamekomi Vi-i-Tsedek Chevrati” [’The Place of Justice’: The Law of Local Government and Social Injustice]”, 28 Iyunei Mishpat 417 (5766-5767)). To avoid getting off scot-free, I will add a few words about the status of local government in the context of multi-culturalism, shaping the public sphere and the relationship between religion and state. I will note that I address these issues from a broad perspective and therefore will not address the legal distinctions between a municipality and a local council.

  1. There are two discernable principled perspectives regarding the status of the local government, and for our purposes we will make do with the succinct description that Justice Folgelman provided in HCJ 4790/14 Yahadut Hatorah v. Minister of Religious Services [unpublished] (October 19, 2104) (references deleted):

"The administrative perspective views the local government as part of the central government. On this view, the central government is the source of authority for the local government, and the central government has supervisory powers over and the power to intervene in the local government. This position sometimes expresses a paternalistic view of the local government as pertains to its relationship with the central government. It views the local government as one who is dependent on the [national-trans.] government or as an arm of the central government; 'a contractor' that plays a role for another governmental body, subject to its instructions and under its supervision [...] in contrast to this perspective, there is another perspective regarding the local government -- the autonomous perspective. In contrast to its predecessor, this perspective considers the local government to have independence from the central government [...] It is based on the opinion that the local government is a body of independent-democratic rule that represents the interests of the local residents. It views the local government as a tool for realizing communal-cultural values regarding different issues, meaning: an institution whose role is to facilitate members of the community running their ‘internal’ affairs without intrusion from the state, while preserving the ability of the communities to control their public space and to translate the preferences of their members into public policy [...]

Throughout the years, various approaches have been expressed in the case law (in various contexts) regarding the above-mentioned perspectives, to the point where some said that the law of local government 'is swinging like a pendulum' between two opposing perspectives on local government [...]"

 

To continue the image of the pendulum, I note, by the way, that I doubt if the legislative branch and the executive branch invest sufficient efforts to improving the organizational and legal framework within which local government agencies operate. Over the years, commissions have been established, experts have invested time and effort, but a significant portion of the reports on the subject have not been implemented. It is particularly worth nothing the report of the Governmental Commission on Local Government Affairs (Zinbar Commission), which was approved by the government as far back as 1985 but was neglected. In addition, the Municipalities Bill, which was proposed by the government and put before the Knesset for consideration in 2007, was not promoted (for academic writing on the bill, see the publication Chukim, which devoted its first issue to the subject, and also Ron Shapira’s article, “Hirhurim Al Hatzaat Chok Iriot Chadash [Reflections on the New Municipalities Bill]”, 7 Din Vidvarim 677 (2012)).

  1. In any event, the Israeli legal system recognizes the autonomy of local governments to act within the framework of their lawful authority. In our case, the authorization is unambiguous: The Law to Amend the Municipalities Ordinance (No. 40), 5751-1990 (known as the Authorizing Law) authorizes the municipality to design the local legal arrangements for opening places of business on the Sabbath. This means that for this sensitive issue, the legislator chose to transfer the authority to the local government, which acts according to its considerations and commensurate with the character of the residents and the place (see paras. 26-29 [25-28-trans.] of the President’s opinion). This starting point is in large part also the ending point that dictates denying the motion. I chose to go beyond that only in order to expand the view-point and to highlight the fact that the Authorizing Law is just one branch of the branches of a broader principle, which is expressed in legislation, case law and the legal literature.
  2. Legislation: The most prominent example of the legislator’s consideration of the local character is the Authorizing Law that is the subject of our discussion, but additional laws regarding the relationship between religion and state contain a similar discernable trend. The prohibition on selling pork was left to the discretion of the local authorities (Local Authorities Law (Special Authorization), 5717-1956), as was the opening of places of entertainment on Tisha Ba’av (Law Prohibiting Opening Places of Entertainment on Tisha Ba’av (Special Authorization), 5758-1997). The prohibition on openly displaying leavened products on Passover does not apply in a town where a majority of residents are not Jewish (art. 2 of the Law of the Holiday of Matzot (Prohibitions on Leavened Products), 5747-1986), and the prohibition on raising swine excludes a number of local authorities enumerated in the schedule of the Law Prohibiting Raising Swine, 5722-1962. From an additional perspective, the Law of Jewish Religious Services [Integrated Version], 5731-1971 regulates religious services by establishing local religious councils, and the local authority’s council significantly influences the appointment of the council’s members (art. 2 of the law; See also art. 6A) and also influences the appointment of the municipal rabbi (Amendment 7 of the Jewish Religious Services Regulations (Elections of Municipal Rabbis), 5768-2007).
  3. Case Law: The President’s opinion cited judgments that emphasized the important of creating local arrangements regarding opening and closing businesses on the Sabbath, as well as in the context of selling pork and its products, according to the legislation cited above. I can add statements that have a more general hue. Thus, for example, Justice Cheshin emphasized in HCJ 6741/99 Yekutieli v. Minister of Interior, 55(3) PD 673, 705 (2001): “Unlike the state, whose policy is inherently state-wide, a local authority is authorized and required to focus itself – subject to specific exceptions enumerated in law – on its own domain only, and its policy must express local interests of the authority and its residents. A local authority is supposed to take care of its community – not the entire community of the state – and its policy must adapt itself to the community as a whole living within the authority’s domain”.

In another matter, Justice Cheshin directly addressed the provision of religious services by the local authority:

“Even though religion – doctrinally – knows no boundaries of place or time, religious services have a local character and are supposed to adapt themselves to the specific needs of the residents of this or that local authority […] The demands for Jewish religious services, while sharing a common denominator, vary in their points of emphasis from community to community; the demands for religious needs can be heterogeneous and dependent on worldview” (HCJ 4247/97 Meretz Party in Jerusalem City Council v. Minister of Religious Affairs, 52(5) PD 241, 253 (1998)).

Prior to the above words came comments by Justice Alon, who expressed himself in this spirit: “Local authority elections give expression, first and foremost, to the will of the residents of that authority regarding the municipal issues of that place, and the religious services provided by the religious council constitute a substantial part of these municipal needs” (HCJ 121/86 Shas Party v. Minister of Religious Affairs, 40(3) PD 462, 466 (1986).

Justice Dorner’s words in HCJ 2838/95 Greenberg v. Katzrin Local Authority, 53(1) PD 18 (1997) (dissenting opinion regarding the result):

“Referring the handling of local issues to the local authorities is based on the view that it is better for local issues to be regulated according to the conditions of each place and its needs. The appropriate solution for a particular problem in a particular town does not necessary fit another town. The local authority has a relative advantage over the central government in handling local issues. Additionally, for considerations of democracy, local issues should be managed according to the will and aspirations of the residents of the place, and by their elected officials.”

  1. The literature and academic writing of legal scholars also include expressions of recognition of the special status of the local authority, and I will cite a few of the sources relevant to our issue.  Professor Itzhak Zamir thought that the special status of the local authority is even expressed in the context of primary arrangements. He said: “It is one thing to grant authority for setting primary arrangements to a local authority, such as a municipality, which is a democratic body directly responsible to the residents. Democracy, even micro-level democracy, deserves sweeping authority to serve the residents according to the policy it set. It is another thing to grant such authority to a minister or another administrative agency” (Itzhak Zamir, “Hasamchut Haminhalit [Administrative Authority]”, 81(a) Mishpat Umimshal 103 (1992); See also Itzhak Zamir, Hasamchut Haminhalit [Administrative Authority], Vol. 1 446-457 (2nd ed. 2010)).

Prof. Menachem Maunter addressed this issue in the framework of a discussion of the State of Israel as a multi-cultural state. According to his approach, the solution for disagreement stemming from different cultural groupings is to implement the principle of decentralization. As he wrote:

“Decentralization needs to be an important principle in the life of a multi-cultural state. The citizens of such as state should get used to the perspective that the state is not supposed to comprehensively realize their normative viewpoints within the context of its uniform arrangements. Instead, citizens of a multi-cultural state should expect to realize their normative viewpoints comprehensively at the sub-state level, namely: at the municipal level, within cultural communities, in associations […] to say it another way, citizens of a multi-cultural state need to get used to the recognition that only some of the normative arrangements that apply to them will be uniform, while others will be differential – they will apply only to some citizens” (Menachem Mautner, Mishpat Vitarbut Biyisrael Bifetach Hameia Hesrim Viachat [Law and Culture in Israel at the Turn of the Twenty-First Century] 322 (2008)).

Mautner went on to specifically address realizing the principle of decentralization as concerns the public character of the Sabbath in Israel. In light of the definition of Israel as a Jewish state, the Sabbath was established as the official day of rest, but regarding the specific content that is to be expressed in the public sphere, Mautner supports a solution that allows different communities to design arrangements that suit the character of the place, so long as they don’t severely infringe on those whose culture and beliefs differ (ibid, pps. 326-327; Compare Sapir’s suggestion on page 223, that primary legislation can regulate the issue at the national level, together with authorizing local authorities to make changes via a special majority; See also the draft Sabbath Law, 5776-2016). It is worth mentioning Mautner’s comment that the response to the disadvantages of the principle of decentralization is developing social solidarity and emphasizing the common good (ibid, p. 331 and thereafter; for more on trends and challenges of decentralization see, Ishai Blank, “Mikomo Shel Ha’mekomi’: Mishpat Hashilton Hamekomi, Bizur Vi-I Shivyon Merchavi Biyisrael [The Place of the ‘Local’: the Law of Local Government, Decentralization and Spatial Inequality in Israel”, 34 Mishpatim 197 (5764-5765); Ishai Blank, “Mamlachtiut Mivuzeret: Shilton Mekomi, Heipardut Vi-i-Shivyon Bichinuch Hatzibori [Decentralized Statehood: Local Government, Secession and Inequality in Public Education]”, 28(2) Iyunei Mishpat 347 (2004); Ishai Blank, “Kihila, Merchav, Subyekt – Tezot Al Mishpat Umerchav Biakvut Sifro Shel Yisachar (Isi) Rosen-Zvi [Community, Space, Subject - Theories on Law and Space Following Yisachar (Isi) Rosen-Zvi’s Book]”, 2 Din Udvarim 19 (5767)).

As part of Prof. Ruth Gavison’s attempts to find a remedy for the perpetual tension in the relationship between religion and state in Israel, she also addressed questions related to the character of public life. Prof. Gavison expressed regret that “these battles are waged using such dogmatic language, and they deteriorate into a threat against the rule of law and the legitimacy of the institutions authorized to make communal decisions in our society. That stems from, inter alia, the breakdown of mechanisms for negotiation and compromise”. She later emphasized that “Some of the coercion stemming from enforcing a particular public character can be minimized using spatial limitations”, and as an example she mentioned activities in the public sphere on the Sabbath (Ruth Gavison, “Medina Yehudit Videmokratit: Etgarim Visikunim [Jewish and Democratic State: Challenges and Risks]”, Rav-Tarbutiut Bimidina Demokratit Viyehudit [Multi-culturalism in a Democratic and Jewish State] 213, 258-259 (eds.: Menachem Mautner, Avi Sagi and Ronen Shamir; 1998)). Indeed, he who ignores the difference between the population of Ramat Gan and the population of Bnei Brak, or between Jerusalem and Tel Aviv, and seeks a uniform, rigid solution, will find himself forcing an inappropriate social arrangement in a broad manner. The differences are not just between cities. Within the same city, there are differences between neighborhoods and between areas, and the local authority is tasked with these distinctions. The variations and differences at the municipal level are not just at the geographical-territorial level but also along the axis of time. What was right for yesterday is not necessary right for today, creating a need to allow the local authority, which has its “finger on the pulse”, the flexibility it needs. We need not go far back to see that “the city of Tel Aviv at that time was a single house on the seashore” but now Tel Aviv is a vibrant and bustling city, a city that never stops, and its character in the 2000’s is not the same as its character decades ago.

  1. Following our minor digression, we get back on track and point to the targeted conclusion: Israeli law recognizes the autonomy granted the local government to exercise its lawful authority, commensurate with the nature of its residents and the local character. Indeed, “Regarding the source of authority, according to the principle of administrative rule of law [intra vires-trans.] […] the local authorities are subject to the favor of the governmental branch (legislative or executive) which grants them the power to act. On the other hand, regarding the content of the authority, the various authorizing statutory provisions grant the local authority powers with a generous hand” (Avneri, p. 91; emphasis in original). That is the general principle, and for the specific issues of religion and state it has advantages that cannot be disregarded: creating a public sphere that suits the character of the surroundings and the way of life of the residents of the place, as well as minimizing coercion of different cultural populations. However, it is not a silver bullet, and the principle should be implemented with caution and sensitivity.

Similarly, the autonomy granted the local authority is not, of course, absolute. The various legislative provisions detail the powers of the central governmental agencies to supervise and intervene. Inter alia, legislating by-laws is subject to the authority of the Minister of Interior pursuant to Article 258 of the Municipalities Ordinance [New Version]. In the current case, we need not exhaust the discussion of the boundaries of the local authority’s autonomy or the limits of the power of the Minister of Interior to intervene in the content of a city’s by-law (on this, see para. 26 [para. 25-trans.] of the President’s opinion, and compare: HCJ 58/53 Haviz v. Haifa Municipality, 7 PD 701, 713 (1953); HCJ 6249/96 Association of Contractors and Builders in Israel v. Mayor of Holon, 52(2) PD 43, 47 (1998); HCJ 7186/06 Malinovsky v. Holon Municipality [unpublished], paras. 57-62 (December 29, 2009); HCJ 1756/10 Holon Municipality v. Minister of Interior [unpublished], especially para. 41 (January 2, 2013); Avneri, pps. 78-84; Zinger, p. 211).

In my opinion, to extrapolate, we can say that the scope of the legitimate intervention of the Minister of Interior (or another agency of the central government) is inversely proportional to the scope of the discretion granted the local authority, pursuant to the authorizing law and its purpose (compare: HCJ 953/01 Solodkin v. Beit Shemesh Municipality, 58(5) PD 595, 621 (2004)). In our case, the legislator authorized the local authority to act according to its discretion, which requires, as noted, adapting to the character of the residents and the place. The Tel Aviv City Council did the work of designing a measured and balanced arrangement that expresses observance of the character of the Sabbath in the public sphere along with considering the daily needs of a respectable portion of city residents.

In contrast, the Gavison-Medan Contract contained an agreement for a general prohibition on commercial activity on the Sabbath, but suggested allowing limited activity for small grocery shops (Yoav Artsiali, Amanat Gavison-Medan: Ikarim Viekronot [Gavison-Medan Contract: Essences and Principles] 40 (Israel Democracy Institute; 5763)).

Before concluding I note that in light of the special status of the Sabbath in the State of Israel and against the background of the distinction between the local level and the central government, I did not see fit to evaluate what has been done in this area in foreign countries. In that context, I will briefly say that the arrangement that the Municipality of Tel Aviv set is moderate compared with the global trend toward limiting restrictions on commercial activity on days of rest (see Tomer Yahud and Ariel Finkelstein, “Chukei Hamischar Vihavoda Biyom Hamenucha Bimidinot Haolam: Mechkar Hashvaati [Law of Commerce and Labor on the Day of Rest Throughout the World: A Comparative Study]” (Institute for Zionist Strategies; July 2016).

  1. Conclusion: Regarding the petition before us, I concur with the President’s opinion.

 

Justice

 

Justice N. Hendel

  1. Again, the Sabbath. The queen for whom the State of Israel forces the court to define the boundaries of her kingdom.

The current procedure raises for further hearing the question of the lawfulness of two amendments to the By-Law of Tel Aviv-Jaffa (Opening and Closing Shops), 5730-1980, K.T. 745, 1448 (hereinafter: the By-Law), which moderate and abridge the scope of the prohibition that the By-Law had imposed in the past on opening businesses on the Sabbath and Jewish holidays. The first one - By-Law of Tel Aviv-Jaffa (Opening and Closing Shops) (Amendment), 5775-2015, K.T. H.S.M. 358 (hereinafter: the First Amendment) – permits the opening of “convenience shops” in gas stations and other shops – “including any office, commercial establishment, kiosk […] public entertainment, workshop or factory” at three defined sites within the city. Similarly, the First Amendment significantly reduces the restrictions on the format for operating coffee shops, a term that includes also “restaurant, bar, a shop selling ice cream or any other food establishment” and pharmacies throughout the city. An additional element of the amendment – the authority to grant a permit to open grocery stores on the Sabbath and Jewish holidays on certain streets – was invalidated by then-Minister of Interior Gidon Saar. In addition to the argument that it essentially authorized activities of businesses “that for years trampled upon the By-Law with a heavy boot” and was not an arrangement based on relevant criteria, the invalidation was explained by reference to the disproportional infringement that opening the grocery stores via the proposed framework would cause to “the value of the Sabbath as the general day of rest in the State of Israel”.

Following the invalidation of this aspect of the First Amendment, the Tel Aviv-Jaffa City Council approved the second amendment – that is the Tel Aviv-Jaffa By-Law (Opening and Closing Shops) (Amendment), 5777-2017, K.T. H (hereinafter: the Second Amendment). Like its predecessor, this amendment authorized the mayor to grant permits to open grocery stores on the Sabbath and Jewish holidays. However, the framework proposed in the Second Amendment is more detailed, grounded and proportional in a number of ways: first, it limits the size and character of the grocery stores – and clarifies that permits can be issued only to kiosks or businesses used for “selling food and consumer items for personal or household use, that do not include handling the food, including food delivery”, whose size does not exceed 500 square meters. The second amendment limits the number of permits and subjects the authority of the mayor to a maximum “regional quota”. The starting point for calculating that quota is 15% “of the number of units used for transacting in food in that same area during all the days of the week.” In addition, the amendment gives clear priority to opening grocery stores located in central areas that are noisy anyway, while minimizing the infringement on the character of the Sabbath in residential areas, and it outlines clear and egalitarian criteria for allocating permits, in order to avoid rewarding lawbreakers.

The Second Amendment was also brought to the approval of then-Minister of Interior Gidon Saar, who noted its relatively limited nature, compared with its predecessor. However, the minister saw fit to clarify certain aspects of the amendment -- the criteria for granting permits and the scope of discretion allowing the authority in the future to expand the quota for permits. The minister therefore ordered the publication of the Second Amendment in Reshumot to be delayed, pursuant to his authority under art. 258(c) of the Municipalities Ordinance [New Version], and left the final decision on the issue to his successor. However, the successor failed to make a decision, his authority - which at a certain point was transferred to the Israeli government - was later restored to the current Minister of Interior, Aryeh Deri, but still the decision was delayed. With the continued silence of the Minister of Interior and the government as background, the verdict that is the subject of the further hearing was rendered, in which this court (President M. Naor and Justices E. Hayut and D. Barak-Erez) rejected the petitioners' claims in HCJ 6322/14 and HCJ 996/15 [unpublished] (hereinafter: Association of Merchants), accepted the Tel Aviv Municipality's petition (HCJ 4558/15) [unpublished] regarding the Second Amendment, and authorized the two amendments to the By-Law (hereinafter: the verdict). At first, it was held that the failure, over a long period of time, to make a final decision on the fate of the amendment -- deviating from the deadlines set out in the Municipalities Ordinance – was a violation of the general obligation to act with due diligence, and ignoring the agreements reached during the litigation was essentially "an unexplained decision to invalidate Amendment No. 2” (para. 18 [para. 17-trans.] of President M. Naor’s judgment). The burden of proving the lawfulness of the decision therefore passed to the state – which did not meet it and did not present any reason for invalidating the Second Amendment.

Regarding the substantive merits of the Association of Merchants’ arguments, it was held that the Law Amending the Municipalities Ordinance (No. 40), 5751-1990, S.H. 1336, 34 (hereinafter: the Authorizing Law) explicitly authorizes the local authorities to regulate the opening and closing of businesses on the Sabbath and Jewish holidays – and that the amendments do not contradict the provisions of the Hours of Work and Rest Law, 5721-1951, because the latter “concerns the regulation of individual labor relations internal to the place of business. In contrast, the amendments to the By-Law regulate the activities of businesses without reference to the identity of the employee”. Regarding the issue of discretion, it was held that the amendments are within the zone of proportionality and fulfill the purposes of the Authorizing Law – conducting a balance between the conflicting rights, according to the unique characteristics of each local authority. The petitioner’s arguments in HCJ 2998/15 [unpublished], seeking to expand the list of sites where the First Amendment allowed shops to open, were also rejected.

The Association of Merchants, which was dissatisfied with the result, filed a motion for a further hearing in which it repeated, inter alia, the argument that the amendments to the By-Law are contrary to the Hours of Work and Rest Law which, it claimed, prohibits the very existence of commerce on the Sabbath. Furthermore, the Association of Merchants found that, although it was not brought to the court’s attention in real time, the Minister of Interior, as early as April 9, 2017 – ten days before the verdict was rendered – signed a letter intended to be sent to the mayor of Tel Aviv-Jaffa, containing a reasoned decision regarding the invalidation of the second amendment (hereinafter: the reasoned decision). Under these circumstances, and considering the substantive ramifications of the verdict on Israeli society as a whole, the Association thought that the position of the minister should not be ignored, and his reasons should be evaluated before invalidating the decision. The Minister of Interior shared this position, and the state supported holding a further hearing on the question of the relationship between the Hours of Work and Rest Law and the Authorizing Law – although, on the substance of the matter, it accepted what was decided in the verdict on this issue. On July 12, 2017 Deputy President (ret.) E. Rubinstein granted the Association of Merchant’s motion, and decided that “the further hearing will apply to the entire verdict”. Hence the hearing before us.

  1. Before getting into the heart of the issue, as a preliminary matter, I will outline general contours for the image of the Sabbath, about which – as the Babylonian Talmud relates – the Holy One Blessed Be He said to Moses our rabbi, the most revered of prophets:

“I have a precious gift in My treasure house, called the Sabbath, and desire to give it to Israel; go and inform them” (Babylonian, Shabbath, 10a).

This “present” occupies a central place in the world of Judaism – and found a place of honor in the Ten Commandments, on the seam-line between the fundamental commandments that concern the relationship between a person and God, and those that are among people. The Sabbath carries a double normative duality. First – the universal as opposed to the particular. The world as opposed to the Jewish people. The holy scriptures contain a distinction between the “Genesis Sabbath” and the “Jewish Sabbath”. In this sense, the Sabbath has undergone permutations. At the conclusion of the story of creation in the chapter Genesis, the Sabbath is presented as “the crown of creation” – “God blessed the seventh day and made it holy because on it he ceased all the work that he had been doing in creation” (Genesis 2:3). Ibn Ezra clarifies that “doing” means that humankind continues the doing, starting on the eighth day. Construction of the physical world hence concluded in six days, but from a moral point of view, the world is not yet complete. The Sabbath is the mediator between the creation of the physical world and the creation of humankind, responsible for continuing its spiritual construction (see the comments of the Rabbinical Judge Dr. Isidor Grunfeld on the book “Horeb” of Rash”ar Hirsch [Samson Raphael Hirsch, Horeb: A Philosophy of Jewish Laws and Observances, Volume I, 273 (the Soncino Press, 1962)].

The second stage in the development of the Sabbath is the obligation to “keep and remember” that was imposed on the Jew in relation to the Sabbath day. As was written in the Ten Commandments in the Book of Exodus –

“Remember the Sabbath day to set it apart as holy. For six days you may labor and do all your work, but the seventh day is a Sabbath to the Lord your God; on it you shall not do any work, you, or your son, or your daughter, or your male servant, or your female servant, or your cattle, or the resident foreigner who is in your gates. For in six days the Lord made the heavens and the earth and the sea and all that is in them, and he rested on the seventh day; therefore the Lord blessed the Sabbath day and set it apart as holy” (Exodus 20:8-11).

The Sabbath therefore has a complex and multi-faceted nature. Indeed, the Sabbath prayers and blessing over the wine mention the universal aspect (“in memory of the act of creation”) as well as the Jewish historical aspect (“in memory of the exodus from Egypt”).

There is an additional duality. On the one hand, the Sabbath is a commandment concerning the relationship between people and God, but simultaneously it is also a commandment concerning the relationship among people. More precisely, between a person and his society. The aspiration is to create a different society. A society of equality and rest. The Sabbath is supposed to be the religious experience that brings a person closer to his creator, and also a social experience that topples societal boundaries and brings a person closer to himself. We should pay attention to what the Book of Exodus commands – that all of us should rest on the Sabbath: the landlord, the citizen and the foreigner, and even the slave (at the time this concept existed) and the domestic animal. Jewish law even recognizes the concept of the “resting of utensils” (See Babylonian Talmud, Shabbath, 18b). Such is the Sabbath – a diverse, multi-purpose and multidimensional creature.

The Sabbath contains a national-particularistic aspect, in which it is presented as a kind of symbolic and perpetual reminder of the extraordinary relationship between God and his people – a relationship that has a constitutive expression in the exodus from slavery in Egypt to spiritual liberation and receiving the Bible. In this sense, the Sabbath expresses the national uniqueness and spiritual uniqueness of the Jewish people: “It is a sign between Me and you for your generations, to know that I, the Lord, made you holy […] Thus shall the children of Israel observe the Sabbath, to make the Sabbath throughout their generations as an everlasting covenant. Between Me and the children of Israel, it is forever a sign” (Exodus, 31:13-17). In parallel, but in harmony, the image of the Sabbath – as it is portrayed in the Ten Commandments of the Book of Exodus (20:8-11) and in the Book of Deuteronomy (5:12-15) – also expresses a universal human experience of exodus from slavery to freedom. It puts the social aspect in center-stage and calls for the learning of lessons from past experiences, internalizing the value of a day of rest that momentarily blurs the gaps between social classes – “in order that your manservant and your maidservant may rest like you”.

Given the many layers and meanings of the Sabbath, it is no wonder that, even when other traditions found themselves tossed about in the winds of change or bowing under the burden of new and challenging world views, the Jewish public maintained broad agreement regarding its importance. On this point, we recall the famous words of Asher Ginsberg, “Ahad Ha’am”:

“One need not be Zionist or scrupulous about religious commandments in order to recognize the value of the Sabbath […] we can say without exaggeration that more than the Jewish people kept the Sabbath, the Sabbath kept them. Had it not reshaped their ‘soul’ to them and rejuvenated their spiritual life each week, the hardships of the ‘days of action’ would have pulled them further and further down, until they would have finally descendent to the lowest storey of materialism and moral and intellectual nadir. Therefore one definitely need not be Zionist to feel the glory of the historical holiness that surrounds this ‘good gift’” (Ahad Ha’am, Al Parshat Drachim [At a Crossroads], Vol. 3, Chap. 30; emphasis added).

Haim Nahman Bialik, a graduate of the Volozhin Yeshiva and the national poet, also noted, in that spirit, that “without the Sabbath, there is no image of God and no image of humankind in the world. If work were an end in itself, there would be no difference between human and beast […] the Sabbath is culture” (Letters of Haim Nahman Bialik, Vol. 5, 228 (Fishel Lachower, ed., 5699)).

These perspectives quickly became entrenched in the law of the young State of Israel. As early as June 9, 1948 – less than a year after the establishment of the state – the official newspaper published the Days of Rest Ordinance, 5708-1948, which declared the Sabbath, together with Jewish holidays, to be “the fixed days of rest in the State of Israel”. The Work and Rest Hours Law, 5711-1951 granted the Sabbath a more substantial and tangible status, determining that “the weekly rest will include […] for Jews, the Sabbath Day.” These provisions, on whose details I will expand below, express the diverse purposes that allow even a person who is not religious to recognize the importance of the Sabbath. As Justice A. Barak noted a decade ago:

 

And Justice Barak wrote in the Horev case (HCJ 5016/96 Horev v. Minister of Transportation, 51(4) PD 1, para. 55 of his opinion (1997) –

“Sabbath observance is a central value in Judaism. The fourth of the Ten Commandments, the Sabbath constitutes an original and significant Jewish contribution to the culture of mankind. See 31 The Jewish Encyclopedia, [107], under The Sabbath, at 422.  It is a cornerstone of the Jewish tradition and a symbol, an expression of the Jewish message and the character of the Jewish people. Deprive Judaism of the Sabbath, and you have deprived it of its soul, for the Sabbath comprises the very essence of the Judaism’s nature. Over the generations, throughout its blood-soaked history, our nation has sacrificed many of its children in the name of the Sabbath”.

However, we cannot ignore the Israeli reality – which accords the Sabbath a character that is not necessarily compatible with the Jewish law conception over the generations. The delight of the Sabbath in Bnei Brak and Safed is not like the delight of the Sabbath of citizens who take advantage of their vacation day for a walk in the bosom of Israeli nature, a visit to football fields or museums – often with a fascinating integration of the traditional “blessing over the wine” – or “just” for rejuvenation. At the heart of the issue is a deep and profound ideological dispute, which is at the center of a prolonged public discourse that has reached this court on more than one occasion. I personally think that, given the respect with which we should treat each other’s world view – Sabbath view – we would do well to avoid a binary determination and rather shape the public space by way of compromise. We should give expression to the traditional view of the Sabbath, to which I subscribe, without pushing aside a significant segment of the population whose view of the Sabbath – as a national symbol and as a social symbol – differs. And what a good example we have before us. Israeli law does not impose on an individual the Jewish law prohibition against working on the Sabbath. It focuses on his right to rest from everyday troubles. It is no accident that the term day of rest relies on the commandment, “in order that your manservant and your maidservant may rest like you”. That is out of recognition that the Sabbath is the day of rest of the Jewish people in its country. This sensitivity to the worker, to the individual, integrates the universal with the particular; the history of the nation with the needs of the individual and safeguarding his human dignity. Indeed, the Sabbath is a secret gift that reveals a new face in every generation.

  1. I now state that I cannot concur with the position of my colleague, President M. Naor. Were my opinion to prevail, we would rule that the motion for a further hearing should be granted, in the sense of invalidating the Second Amendment, because the reasoned decision of the Minister of Interior on this issue does not deviate from the zone of reasonableness.

Indeed, the decision was made with great delay, blatantly violating the obligation of the administrative agency to exercise its authority with appropriate speed, according to Article 11 of the Law of Interpretation, 5741-1981, and according to the agreements reached during the previous proceeding. Furthermore, the Minister of Interior kept quiet and refrained from informing this court – through the Attorney General – about the substantive change in the state of affairs due to his signing the decision to invalidate the Second Amendment. However, as serious as his conduct may be, when it became clear that at the time the verdict was reached, there was a reasoned decision to invalidate the Second Amendment, we are not at liberty to ignore it and to shift the burden from the Tel Aviv Municipality – which petitioned against it – to the state. Indeed, art. 258(d)(2) of the Municipalities Ordinance authorizes the Minister of Interior “to invalidate a by-law for reasons he will provide”. The obligation to provide reasons, in our case, is therefore grounded in the specific norm that authorizes the minister to invalidate by-laws – and does not derive (only) from the general obligation to provide reasons, which is grounded in Article 2A of the Law to Amend the Organization of Administration (Reasoned Decisions), 5719-1958, or from the obligation of fairness that the administrative agency bears (see Civ App 3886/12 Zeev Sharon Construction and Earth Contracting Ltd. v. VAT Director [unpublished], para. 39 (August 26, 2014)). Therefore, had the reasoned decision not been given in time, we would surmise – in light of the combination of the obligation to provide reasons and the provision of Article 6(b) of Law to Amend the Organization of Administration (Reasoned Decisions), 5719-1958 – that it is insufficient to transfer the burden to the state, and that we should render invalid the decision to invalidate the Second Amendment. However, once the reasons for invalidating the Second Amendment were given (even if not delivered) before the verdict was rendered, the obligation to provide reasons was met, and there is no longer a justification for transferring the burden to the state – not to mention “automatically” invalidating the decision to invalidate.

  1. My colleague President M. Naor reasons that (para. 17 of her opinion) [para. 16- trans.] “the procedure of a further hearing is intended for clarifying a rule that was decided in a verdict, and not for discussing what the verdict does not contain” – and therefore the Minister of Interior’s reasons, which were not presented to the court in the prior proceeding, cannot influence the result of the further hearing. However, even if the Minister of Interior’s reasons were missing, their absence was very “present” – and even played a central, if not determinative, role in the verdict.  The discussion of “what is” in the decision in the previous go-round, namely authorizing the Second Amendment due to the Minister of Interior’s unexplained invalidation, does not allow us to ignore the reasoned decision that came into the world, at the end of the day, before the verdict was rendered. Under these circumstances, we can understand Deputy President E. Rubinstein’s (ret.) approach, which held that a decision bearing such substantial ramifications for the character of the Sabbath in the State of Israel is important enough “to justify further consideration, when all the positions are laid out” (para. 11 of the decision to hold a further hearing). That includes the position of the Minister of Interior, to whom the legislator trusted with broad discretion on the issue.

I will add that even if “the Minister of Interior’s position” was not formally presented in the prior proceeding, its substantive reasons were raised before the court and were even analyzed in the verdict. In his reasoned decision, the minister noted that the Second Amendment undermines the social-societal purpose of the days of rest – violating the rights of Sabbath-observant small business owners and workers to equality, freedom of occupation and freedom of religion (paras. 34-42 of the reasoned decision). That is in addition to the infringement on the national-religious purpose and the status quo, which does not allow for “pure, unadulterated” business activity (ibid, paras. 43-47). In the minister’s view, we can accept limited commercial activity that fills a “critical need” for residents, but the Second Amendment deviates widely from that definition – both because of the number of permits that it seeks to grant, as well as because of the characteristics of the relevant businesses (ibid, paras. 51-56). Given the national implications of approving the Second Amendment – which the Minister of Interior believed, for the above-stated reasons, would open the floodgates and lead to a significant and undesirable change in the character of the Sabbath throughout the State of Israel – “the broad perspective that is the purview of the central government” leads, in his opinion, to the conclusion that this amendment should be invalidated (ibid, paras. 57-59).

A study of the verdict reveals that the precedent it set is also grounded in analysis of the substantive position of the minister, as described above – which was expressed in the proceeding by other litigants (see paras. 5-7 [paras. 4-6-trans.] of President M. Naor’s opinion). That is true regarding the appropriate balance between the conflicting rights and purposes (ibid, paras. 24-28 [paras. 23-27-trans.]; paras. 4-5 of Justice D. Barak-Erez’s opinion) and also regarding the question of the scope of autonomy that is granted to municipal authorities in this context (para. 25 [para. 24-trans.] of President M. Naor’s opinion; para. 3 of Justice D. Barak-Erez’s opinion). Considering that the Minister of Interior’s substantive position was present in the prior proceeding, arguments were argued over it and normative determinations were made about it, I do not see an obstacle to addressing it in the framework of the further hearing – and this time with the formal status as a reasoned decision regarding the fate of the Second Amendment.

In the absence of a procedural obstacle to addressing the merits of the reasoned decision, I do not think that the delay which it was received – without minimizing its severity – justifies ignoring its content. Even if I assume that we could have avoided holding a further hearing in the verdict, once the Deputy President ruled positively on that issue – the very holding of the procedure, on all elements of the verdict, is the departure point requiring the panel to render an opinion. The judges on the panel have a broad spectrum of discretion regarding the result of the further hearing, from accepting it to rejecting it. Having said that, it had already been decided to hold a further hearing. I respect the procedural position of the President, but for the reasons I discussed, that it is not the only possible way to deal with the procedural hurdle that the delayed decision of the Minister of Interior puts before us. Indeed, my view is also that there is meaning – if you will, a limit – to the Minister of Interior’s conduct. Thus, for example, we should not have considered, in this proceeding, the minister’s decision, had it been received after the verdict was rendered.However, once the decision was made and signed before the verdict was rendered, in such a way that it would have been possible to bring it before the court, I am willing to accept the argument that we should not accord decisive weight – certainly not for such a sensitive and loaded issue such as the status of the Sabbath – to the delay in receiving it. We should not minimize the obligation of the administrative agency to act with appropriate speed, but in light of the importance of the issue before us, the flaws in its conduct do not overshadow the reasoned position. Sometimes, the subject of the hearing and its essence affect procedural considerations (compare, only for purposes of analogy, this court’s approach regarding the flexibility we should exercise in applying the rules of procedure to adoption issues; Leave App Fam Mot 2205/09 Jane Doe v. Attorney General, [unpublished], paras. 6-7 of President A. Grunis’s opinion (April 22, 2009)). In any event, once the further hearing was granted, in my opinion, that provides a consideration and a certain guidance in favor of discussing the issue on its merits, even if we are not obligated to do so.

  1. We therefore must decide whether the reasoned decision deviates far enough from the zones of reasonableness and proportionality to justify invalidating it. My colleague President M. Naor answered that question in the affirmative. In her opinion, the Minister of Interior’s position – believing that there should be a sweeping prohibition against opening businesses on the Sabbath that do not fulfill an “essential need” – undermines the purposes of the Authorizing Law and ignores the municipality’s autonomy and the legislator’s intention to create a balanced, compromise arrangement. My view is different. Even though the Minister of Interior could have reached a different result, the result he actually reached does not deviate from the zone of reasonableness. At the root of the disagreement between the President and me is the question of the relationship between the Hours of Work and Rest Law and the Authorization Law – a question that affects the interpretation of the latter and the scope of the discretion of the local authority and the Minister of Interior regarding by-laws that address the opening or closing of businesses on the Sabbath and Jewish holidays.
  2. A study of the relevant provisions of the Hours of Work and Rest Law Law teaches us that it contains two different norms regarding days of rest: the first, also chronologically, prohibits employing salaried employees during their “weekly rest”, which is determined by their religious affiliation –

“7. (a) An employee’s weekly rest shall be not less than thirty-six consecutive hours in the week.

(b) The weekly rest shall include –

(1) in the case of a Jew, the Sabbath day;

(2) in the case of a person other than a Jew the Sabbath day or Sunday or Friday, whichever is ordinarily observed by him as his weekly day of rest.

9. An employee shall not be employed during his weekly rest, unless such employment has been permitted under section 12.

The second level of the obligation of rest, which is of central importance in our case, was added in the Hours of Work and Rest Law (Amendment), 5729-1969, and it imposes an obligation on business owners to stop working on the “fixed days of rest” in the State of Israel. Unlike its predecessor, which established that the weekly rest of a Jewish employee will include the Sabbath day, but left those who are not Jewish a choice regarding their weekly day of rest (see, for example, App Lbr (nat’l) 396/09 Kisselgof – Mayanei Hayeshua Medical Center [unpublished], para. 16 of Justice A. Rabinovich’s opinion and para. 2 of Justice I. Itah’s opinion (November 9, 2010)), this layer creates a different arrangement. It requires that –

“9A (a).  On the prescribed day of rest, within the meaning of the Law and Administration Ordinance, 5708-1948, the owner of a work-shop or industrial undertaking shall not work in his workshop of [sic] undertaking and the owners of a shop shall not do business in his [sic] shop.

[…]

 (c) A non-Jew may – in respect of his workshop, industrial undertaking or shop, situated in the area of a local authority whose non-Jewish inhabitants, according to the determination of that authority, are at least 25 per cent of its total population – observe the prohibitions imposed by this section, at his option, either on the aforesaid days of rest or on his own Sabbath and holydays. The same shall apply in a quarter of a local authority if the area and the proportion - not less than 25 per cent - of the non-Jewish inhabitants of that quarter have been determined for this purpose by that authority.” (emphasis added).

 

  In other words – the rule is that the business owners that Article 9A addresses are not permitted to work or engage in commerce in their businesses on the Sabbath or during Jewish holidays – which are defined, in Article 18A(a) of the Law and Administration Ordinance as “the fixed days of rest in the State of Israel” – irrespective of their personal religious identity. That conclusion derives not just from the text of Article 9A(a) of the law, which is phrased in a sweeping manner, but also from the exception contained in Article 9A(c) of the Hours of Work and Rest Law – according to which a non-Jewish merchant can choose whether to engage in commerce in his shop on the Sabbath if it is located in an area in which a considerable part of the population is not Jewish. Thus when a shop – or workshop – is within a substantially Jewish area, commerce or work is forbidden in that place even if the owner is not Jewish. That is, as noted, in contrast to the arrangement of “the weekly rest” which allows non-Jewish salaried employees to choose their day of rest.

  1. The variation I noted testifies to the deep and substantial difference between the two arrangements that address days of rest. While Article 9 of the Hours of Work and Rest Law focuses on protecting the religious and social rights of the individual employed as a salaried employee – and guarantees him “a weekly rest” – Article 9A includes an additional dimension. In addition to expanding the personal protection, so that it also applies to a business owner who is not an employee, the article attaches significant weight to the public interest in maintaining the unique character of the Sabbath and Jewish holidays. It is concerned not just with guaranteeing individual rights, but also with shaping the character of the Jewish public space during the national days of rest. For that reason, in substantially Jewish areas, even a non-Jewish business owner is required to stop working on the Sabbath and during Jewish holidays – and he cannot freely choose his days of rest. Of course, such a person is also entitled to stop working on the days of rest of his religious community, but he cannot use them to exchange the obligation not to work or engage in commerce on the Sabbath and Jewish holidays – for example, to engage in commerce on the Sabbath and to stop working on Friday or Sunday – even though such an exchange would fully realize the individual social purpose. The emphasis is on “fixed days of rest”, which have a national character, and not on the “weekly rest”, which derives from the individual religious identity of each employee. Opening a shop for commerce in a substantially “Jewish” area is viewed as infringing on the status of the Sabbath in that space, and therefore Article 9A forbids it, irrespective of the religion of the shop owner. An interpretation that ignores the national-public element of Article 9A of the Hours of Work and Rest Law would be hard-pressed to explain negating the right of choice of a non-Jewish shop owner – in contrast to the employee who may freely choose his weekly day of rest – just because of the location of his shop.
  2. The inevitable result of this textual and purposive interpretation is that the prohibition that Article 9A of the Hours of Work and Rest Law imposes on working in a workshop and industrial factory or engaging in commerce in a shop, is not a “gevara” prohibition – meaning a personal prohibition against the business owner working in the place.  Indeed, this element of the law creates a “heftsa” prohעקibition (object-based prohibition on opening the business) [gevara and heftsa are Aramaic terms in Jewish law for prohibitions relating to persons or objects respectively -trans.] – meaning a prohibition on opening industrial factories, workshops or shops in Jewish residential areas on the fixed days of rest – and prevents activity in these businesses irrespective of the worker’s specific religious identity. Not just the owner of the business is not permitted to work in the place, but also his salaried employees – Jews and non-Jews – because otherwise the national-social purpose of the law would be thwarted. It is would be inconceivable for a non-Jewish owner of a shop to be personally barred from engaging in commerce in a shop located in a substantially Jewish space, but for his non-Jewish salaried employees to be permitted to take his place – even though the influence on the public space would be identical.

According to the interpretive picture sketched here, the relevant provisions of the Hours of Work and Rest Law can be described as having three focal points: worker; business owner; and the business itself. Article 9 of the law focuses on the worker and prohibits his employment during the weekly days of rest that derive from his religious identity. In contrast, Article 9A of the law regulates the obligation to rest in relation to the two additional focal points and requires the business owner (who fits the categories enumerated in the article, which I will discuss below) as well as the business itself to stop working during the fixed days of rest in the State of Israel, namely the Sabbath and Jewish holidays.

  1. Having said that, the prohibition relating to the third focal point mentioned – opening businesses on fixed days of rest – is not absolute, and does not apply to all business activity. As President M. Shamgar clarified in HCJ 5073/91 Israel Theaters Ltd. v. Netanya Municipality, 57(3) PD 192, 207 (1993), “the above-stated law does not include a general provision regarding closing places on days of rest”. Instead –

“In establishing the principle of observing a weekly day of rest and designating it on the Sabbath, the legislator sought to achieve two integrated goals: first, a social goal, that a weekly day of rest should be designated for each person to rest from his work, spend time with his family or in the company of friends and have time for holiday and entertainment, according to his choices and preferences” (ibid, 207-208, emphasis added).

Consistent with President Shamgar’s analysis, we should strictly interpret the prohibition in Article 9A of the Hours of Work and Rest Law, to apply not just to activity of an industrial nature (work in a “workshop” or “industrial factory”) or commerce. In contrast, closing businesses used for holiday, recreation or entertainment would betray one of the primary goals that the legislator sought to promote and would place workers in a Catch 22: they would indeed get to rest from their work on the Sabbath, but they would not be able to engage in the holiday and entertainment they prefer. Therefore, according to both the text of Article 9A as well as its purposive interpretation, the article seeks to impose a limited prohibition on engaging in industry and commerce. Opening and operating restaurants, coffee shops, theaters or cinemas – as well as additional institutions that contemporary Israeli society considers to be places of recreation – is therefore not prohibited in itself; indeed, according to this perspective, I may help realize the purpose that the legislator pursued in setting days of rest (See and contrast Crim Case (Jerusalem Magistrate) 3471/87 State of Israel v. Kaplan [unpublished] (2) PM 26 5748 (1987), para. 4G).

Furthermore, for the reasons I stated, we should be cautious in interpreting the terms “will engage in commerce” and “shop”. A furniture shop is different from a stand offering passers-by ready-made food, and a multi-faceted shopping center is different from a “convenience store” offering clients of a gas station incidental refreshment. It is highly doubtful that the legislator, who sought to allow citizens to take advantage of their Sabbath rest to go to theaters or cinemas, would have insisted to prevent them from acquiring essential food items at a small grocery store or to refresh themselves at a gas station on their way to a place of recreation (See and compare Crim App 217/68 Izramex Ltd. v. State of Israel, 22(2) PD 343, 358-360 (1968), in which the justices in the majority narrowly interpreted the term “shop” in Article 249(20) of the Municipalities Ordinance – and held that a gas station is not included in the term, even though technically commerce does indeed take place in it).

  1. This interpretation of the Law of Work and Rest House, creating a substantial distinction between engaging in industry and commerce on the Sabbath and Jewish holidays and recreation and holiday activities and which is primarily positively received – is consistent with the principles that Prof. Ruth Gavison and Rabbi Yaakov Medan formulated in the Gavison-Medan Contract (see Yoav Artsiali, Amanat Gavison-Medan: Ikarim Viekronot [Gavison-Medan Contract: Essences and Principles] 40-45 (2003)). According to the contract, “Government offices, educational institutions, industrial factories, banks, services and commercial institutions will be closed on the Sabbath”. However, “Restaurants and recreational establishments will not be prohibited from operating on the Sabbath […] a limited number of small grocery stores, gas stations and pharmacies will not be prohibited from operating on the Sabbath”. That, as Prof. Gavison explained, is out of a desire to preserve the uniqueness of the Sabbath in the Israeli public sphere, with the understanding “that the operation of restaurants and recreational establishments on the Sabbath is not exceptional but rather is necessitated by the character of the Sabbath” (ibid, p. 42). This sharp distinction between commerce and industry and entertainment and holiday is also expressed on a different level –interpreting the discretion that Article 12(a) gives the Minister of Labor to grant a permit to employ workers during their weekly rest. It was held that –

“This broad power that was given to the […] is intended to extend the power to grant permits not only to the supply of essential physical necessities, but also in order to ensure essential necessities of the public or of parts thereof in spiritual matters and the spheres of culture, art, leisure and entertainment. It is intended to ensure the individual’s quality of life in a free society that has freedom of religion and freedom from religion. It is intended to allow a person to realize in a proportionate manner the social aspect of the Sabbath in accordance with his tastes and his lifestyle, and to give expression thereby to customs, lifestyles and the various cultures in the many strata of Israeli society” (the Design case, para. 3 of Justice A. Procaccia’s opinion).

 

As an aside, I will add that this narrow interpretation of Article 9A of the Hours of Work and Rest Law is also appropriate for external reasons, given its infringement on the constitutional right to freedom of occupation and the criminal sanction that attaches to its violation (see para. 43 of President M. Naor’s opinion).

Note that the distinction between commerce and industry and business activity in the field of recreation and entertainment derives from two sources. On the normative plane, it is based on the text of Article 9A of the Hours of Work and Rest Law and on the position the case law takes regarding the purposes of days of rest, as was presented above. Indeed, this position may raise difficulties from the traditional Jewish law point of view regarding the appropriate character of the Sabbath and Jewish holidays. For that reason, I attach primary importance to the secondary source – namely, the Gavison-Medan Contract. The beauty of the contract in my opinion is that it is a sincere and real attempt of respected and prominent leaders of the hawkish ideological camps – Rabbi Yaakov Medan, among the leaders of the Har Etsion Hesder Yeshiva, and Prof. Ruth Gavison, winner of the Israel Prize in law, who specializes in issues of religion and state and does not come from the world of Jewish law – to reach a necessary compromise on the sensitive issue of the status of the Sabbath in the public sphere (and at the broader level, of the relations between religious and the State of Israel). In my perspective, only a true compromise in which both sides give up the aspiration of “all mine” regarding the public sphere – and certainly the personal sphere – suits the complexity of the social fabric, the national as opposed to the personal, if you will – an expression of the fact that the State of Israel is a Jewish and democratic state.

  1. Against the background of this interpretation of the Hours of Work and Rest Law, the question arises of how to interpret the authority granted the municipality, in Articles 249(20)-(21) of the Municipalities Ordinance –

“(20) To regulate the opening and closing of shops, factories, restaurants, coffee shops, tea houses, drinking establishments, cafeterias, canteens and other institutions of this kind, and of cinemas, theaters and other places of public entertainment or other kinds, and to supervise their opening and closing, and to determine – without infringing on the generality of the authority – their hours of operation on any given day; However, the validity of this passage is subject to any exemption that the Minister creates in an order;

(21) A municipality may use its authority pursuant to paragraph (2) within its jurisdiction or in part of its jurisdiction regarding days of rest, taking into consideration reasons of religious tradition and regarding the day of Tisha B’av; “days of rest” – as detailed in Article 18A of the Ordinance on Governance and Law Organization, 5708-1948, on this issue, the Sabbath and Jewish holidays – from the start of the Sabbath or Holiday until their conclusion; ‘the day of Tisha Ba’av’ – in its meaning in the Law Prohibiting Opening Places of Entertainment on Tisha Ba’av (Special Authorization), 5758-1997”.

 

The combination of these clauses would appear to create explicit authorization granting the local authorities broad discretion for all that concerns opening and closing businesses on the Sabbath – be they shops and workshops or restaurants and coffee shops. However, this interpretation creates a problem, because it puts Articles 249(20) and (21) of the Municipalities Ordinance on a collision course with Article 9A of the Hours of Work and Rest Law, which prohibits, as noted, opening workshops or shops on the Sabbath and Jewish holidays in areas with a substantial Jewish population.

  1. As a theoretical matter, we could deal with this apparent contradiction using three different models: First, allowing the earlier norm to prevail, for the reason that the later norm does not address the same issue, and therefore there is no contradiction between them. In our case, the substantive similarity between Article 9A of the Hours of Work and Rest Law and Articles 249(2)-(21) of the Municipalities Ordinance is too great to allow us to choose this path. Second – allowing one of the norms to prevail, according to the rules of conflict of laws that give supremacy to the later norm (lex posterior derogate priori) or the specific norm (lex specialis derogate generali). Given the centrality of the Hours of Work and Rest Law, this position does not seem appropriate in our case – because it is hard to argue that Article 249(21) of the Municipalities Ordinance sought to cancel, implicitly, such a substantive arrangement. That is especially true, given the Explanatory Notes of the Local Authorities Bill (Prohibition on Opening and Closing Businesses on Days of Rest), 5748-1988, H.K. 1872, 134, which became (in the framework of the Law to Amend the Municipalities Ordinance (No. 40), 5751-1990, S.H. 1336, 34) Article 249(21) of the Municipalities Ordinance. These explanatory notes make it clear that “the goal of the proposed law is to remove the above-stated doubt [regarding the power of local authorities to regulate the opening and closing of businesses on days of rest; N.H.] and to preserve the ‘status quo’ for that issue” (emphasis added). Because Article 9A of the Hours of Work and Rest Law, which was passed in 1969, constitutes a later norm relative to Article 249(2) of the Municipalities Ordinance (from 1964), then preserving the status quote actually means not infringing on the Hours of Work and Rest Law. It would therefore appear that in our case, we should adopt the third model, which contemplates an interaction between the later and earlier norms, which together form a harmonious common arrangement. This model is also appropriate because of the important normative status of the Hours of Work and Rest Law, including its Articles 7-9A.

Preferring this model is consistent with the position of the learned former President A. Barak, according to which:

“The presumption should be in favor of legislative harmony within a legislative system, in such a way that the meaning given to a piece of legislation will be woven ‘faithfully into the embroidery of the legislation and will form together with it a single, whole entity’ […] one who interprets any particular provision interprets the entire body of legislation, and the meaning given to any particular provision must integrate into the meaning given the rest of the legislative provisions” (Aharon Barak, Parshanut Bamishpat – Parshanut Hahakika [Interpretation in Law - Legislative Interpretation] Vol. 2, 327-328 (1993)).

 

In other words, before an interpreter resorts to conflict of laws rules, which determine which of the competing norms will prevail – he should evaluate whether “the contradiction is real or imagined”, where “he is guided by the interpretive perspective that seeks to guarantee normative coherence and systemic consistency”. Only after the interpretive attempt to create legislative harmony fails, and it becomes clear that the contradiction between the norms is real, is there room to move to the second phase and evaluate which norm enjoys supremacy – either because its normative status is higher or because it is a specific or later norm relative to its rival (Aharon Barak, Parshanut Bamishpat – Torat Haparshanut Haklalit [Interpretation in Law, General Theory of Interpretation], Vol 1, 540 (1992)). Faithful to that principle, we must seek, therefore, the interpretation that allows Articles 249(2) and (21) of the Municipalities Ordinance to live together under the same roof as the prohibition that Article 9A of the Hours of Work and Rest Law imposes on opening shops and workshops during the fixed rest days.

  1. It seems that we can resolve the apparent contradiction between the above-mentioned norms using the distinction between a situation of “default” that Article 9A of the Hours of Work and Rest Law creates – closing businesses that operate in the areas of industry and commerce, and the absence of a prohibition on opening others – and the authority given to local authorities to deviate from that arrangement: if you wish, to allow a certain scope of industry and commerce; if you wish, to prohibit even the opening of places of entertainment.

In other words, Article 9A of the Hours of Work and Rest Law creates a national-state-wide arrangement, establishing that on the Sabbath, workshops or industrial factories will not be opened and there will be no commerce in shops, except in the framework of the exception grounded in Article 9A(c). However, based on the same rationale that prevents imposing a prohibition on operating places of entertainment at the national level – in other words, recognition of the existence of divergent approaches to the desired practical character of the Sabbath, and of the need to allow expression for groups whose worldviews reject the Jewish law model – the local authorities have been given the possibility to deviate from the general norm and create municipal arrangements. Thus, it is possible to balance the competing rights in the best way possible, while according weight to the unique characteristics of each urban area – including the preferences and worldviews of its residents. Sometimes, these characteristics will lead to relaxing the restrictions on business activity on the Sabbath and will permit a certain scope of commerce, and sometimes the result will be the opposite – to the point of limiting activities of recreation and entertainment.

This interpretive journey, which absolves us of the necessity to resort to conflict of laws rules, leads to the conclusion that in the absence of a relevant by-law, the nation-wide prohibition on business activity belonging to the categories in Article 9A of the Hours of Work and Rest Law will apply – and only on that business activity. It is clear that a local authority that wants to do so may deviate from the national arrangement, subject to the general restrictions imposed on municipal discretion.

  1. The normative picture arising from this interpretive journey has great meaning, because it leads to the conclusion that – in contrast to other contexts in which the legislator authorized the local authorities to regulate a certain issue at the municipal level – in our case the authorities have been given relatively narrow discretion. I will demonstrate the uniqueness of the case before us using a comparison with the Local Authorities Law (Special Authorization), 5717-1956, which authorizes a local authority “to enact a by-law that limits or prohibits sale of pork and pork products intended for consumption” within its jurisdiction or in parts of it. As this court noted in the Solodkin case (HCJ 953/01 Solodkin v. Beit Shemesh Municipality, 58(5) PD 595, 610 (2004) (hereinafter the Solodkin case) –

“Unlike the prohibition of the raising of pigs, with regard to which a national arrangement was adopted, a local arrangement was determined for the prohibition of selling pig meat and meat products. The purpose was therefore that the balance between the conflicting purposes — the considerations concerning the protection of religious and national sensibilities, on the one hand, and the consideration of individual liberty, on the other — would not be made on a national level, according to a principled balancing that the legislator determined. Instead, the purpose was to make a balancing at a local level” (emphasis added).

The legislator therefore deliberately refrained from setting a general norm regarding sale of pork, and left the issue, with the value-laden decisions it implicates, to the exclusive regulation of the local government – just as it did in the context of opening places of entertainment on Tisha Ba’av (Law Prohibiting Opening Places of Entertainment on Tisha Ba’av (Special Authorization), 5758-1997). Therefore, this court could have concluded that the municipal level had been granted broad discretion, and the legislator sought to give it – and not the central government – the choice among different solutions that are within the zone of lawfulness (Solodkin case, 620). However, that is not the situation in our case. As noted, the legislator chose to create a national arrangement regarding the existence of business activity on the Sabbath, and disclosed its opinion regarding the appropriate balancing model between freedom of religion, freedom from religion, freedom of occupation and the right to equality -- imposing a prohibition on commercial and industrial activity.

Under these circumstances, while the local authorities indeed have the authority to deviate from the national-country-wide arrangement that the legislator set - their discretion is relatively narrow. And the relativity regards the Minister of Interior, as I will explain. The authorities are not operating in a normative vacuum, and they should view the balance that the legislator created on the national level as a kind of anchor, or point of departure, for conducting the balances at the municipal level (It should be noted that a similar model, sketching general principles and leaving the local government space for discretion in its implementation, was also adopted in the framework of the Gavison-Medan Contract; See art. 14 of the principles [pp. 41-42] and the explanatory notes of Prof. Gavison [p. 43]). The zone of lawfulness within which the authorities operate to regulate business activity on the fixed days of rest is limited, therefore, relative to the one in which they operate in the context of selling pork and pork products. The mirror image is that the Minister of Interior has a much broader sphere of intervention in our case – certainly when he believes that the influence of a particular local arrangement will spill over beyond the four corners of the relevant authority and may eat away at the provision of Art. 9A of the Law of Work and Rest Ours at the national level.

To summarize – the local authorities have broad discretion, and they may deviate from the provisions of Article 9A of the Hours of Work and Rest Law. However, this is not a situation in which the legislator refrained from making a normative decision and left the issue for determination at the municipal level – as it did regarding the sale of pork or opening places of entertainment on Tisha Ba’av. On the contrary, a general norm prohibiting activities of industry and commerce on the Sabbath has unequivocally been established. In this state of affairs, the autonomy granted the local government for the issue at the focus of our case leaves room for more intensive oversight by the central government. A decisive part of that oversight is analyzing the ramifications of the local decision for the national arena – and the extent of infringement on the principled normative arrangement that the legislator adopted in Article 9A of the Hours of Work and Rest Law.

To that I add that the justification for more comprehensive oversight of the central government also derives from the substantive purposes of the days of rest – which deviate from the symbolic realm (similar to, let’s say, the prohibitions on selling pork or engaging in public entertainment on Tisha Ba’av), and it concerns the fundamental rights of the workers. These rights, which the Minister considered in his reasoned position, influence the scope of the discretion of the local authorities regarding opening businesses on fixed days of rest.

  1.  Given the principled ruling regarding the scope of the Minister of Interior’s intervention in decisions of the local authorities under Articles 249(20)-(21) of the Municipalities Ordinance, I accept the Attorney General’s position (presented in Paragraph 15 of the opinion of my colleague, President M. Naor), that the decision to invalidate the Second Amendment does not suffer from extreme unreasonableness – even though the Minister could, of course, have arrived at a different result. I will explain.

My colleagues, President M. Naor (paras. 26-27 [paras. 25-26-trans.] of her opinion) and Justice Y. Amit (paras. 2, 4 and 8 of his opinion) believe that the decision to invalidate the Second Amendment suffers from extreme unreasonableness, because it does not give sufficient consideration to the autonomy of the local authority. However, the normative picture that I presented offers, in my view, a response to that. It teaches that the legislator didn’t authorize the municipal level to act in a vacuum – but rather presented the nation-wide arrangement set in Article 9A of the Hours of Work and Rest Law as a departure point for exercising the authority. The autonomy granted, therefore, to local authorities is relatively limited – in a way that inherently increases the scope of the Minister of Interior’s legitimate intervention (compare with para. 8 of my colleague Justice Y. Amit’s opinion). In the case before us, the Minister of Interior explained his invalidating the Second Amendment with the concern that the supposedly local arrangement would erode the nation-wide arrangement that the legislator outlined – and would shape, de facto if not de jure, a reality that contradicts his value judgment (paras. 57-58 of the reasoned decision). In other words, it is not the balance that the Tel Aviv-Jaffa Municipality chose in itself that led to invalidating the Second Amendment – but rather its presumed influence on the national arena, beyond the borders of Tel Aviv. This explanation would appear to be at the heart of the Minister of Interior’s legitimate intervention, given the delicate system of balances between the two levels of the arrangement: national and local.

Furthermore, a study of the reasoned decision indicates that the minister did not sweepingly negate any opening of shops for selling food on the Sabbath. We should remember that the First Amendment permitted the opening of convenience stores in gas stations, the selling of food items in pharmacies – and even allocated three urban sites in which commerce is permitted. Beyond that, in his decision, the Minister of Interior took into account the number of businesses that would be permitted to open pursuant to the Second Amendment (para. 53 of the reasoned decision); their size (ibid), and the scope of discretion given to the Tel Aviv City Council regarding a future increase in the quotas (ibid, para. 56). In other words, the decision doesn’t completely negate the municipality’s ability to confer on the Sabbath a unique local character – but rather seeks a more appropriate balance between that character and the legislator’s normative determination regarding the national arena. Even if it would have been possible to arrive at a different decision, we should remember “that the appropriate solution is actually in the balance, and not in the complete negation of one world view in favor of another (para. 24 [para. 23-trans.] of President M. Naor’s opinion in the verdict). We cannot define a result that allows the unique character of Tel Aviv to be expressed – albeit in a balanced way, without completely discarding the value judgment that Article 9A of the Hours of Work and Rest Law reflects – as deviating in an extreme way from the zone of reasonableness.

Viewed in this way, the Minister of Interior’s decision does not constitute “intervention” in the municipality’s affairs. The model established is that the municipality’s position is a first decision, but it is subject to the Minister of Interior. The latter is the one authorized to approve or invalidate the by-law (“If the Minister delays the publication of a by-law […] he may do one of the following: (1) Order a cancelation of the delay; (2) Invalidate the by-law for reasons he will enumerate; (3) Return the by-law with his comments to the council for reconsideration”; Article 258(d) of the Municipalities Ordinance). Of course, he may take local considerations into account, but national considerations are not beyond the zone of his discretion – and are not an illegitimate consideration. Naturally, the range of the Minister of Interior’s discretion depends on the subject. My opinion is that, given the existing legislative picture – namely, the legislator’s decision to create a guiding national arrangement for the issue; as well as the public, moral, symbolic and practical importance of the Sabbath, including its ramifications for the substantive, fundamental rights of those who engage in the work, the local authorities’ discretion is limited. Consequently, the space for the Minister of Interior’s intervention in their decisions in this area is broader than usual. The starting point – in other words, the position of the authority – need not be the ending point. I note that Minister Deri’s decision is explained well, is thorough, and presents a consolidated position not just regarding the Sabbath but also regarding the legal situation.

Again, I emphasize, we are dealing with judicial review of the Minister of Interior’s decision. There is no dispute that the minister could have arrived at a different result, and could have approved the Second Amendment. Had he done so, I would have refrained from intervening for the very same reasons – recognition of the broad discretion granted him on the issue. Regarding the balance he chose, and review of that balance, caution is appropriate. In every decision requiring a balance between different considerations, one could arrive at a broad spectrum of results. For example, in general, one could accord equal weight to a number of considerations, or attach greater weight to a particular consideration. The decision by the executive branch to accord greater weight to a particular consideration does not necessarily render the result unreasonable – or even less reasonable. I think that the decision to invalidate the second amendment, due to considerations of protecting the nation-wide arrangement that the legislator outlined for the issue, is in the heart of the zone of reasonableness and proportionality, and there is no cause to intervene in it.

  1. Following these words, the opinions of the rest of the members of the panel came to me for consideration, including various additions. I again pondered the issue, and I will say this:

In the past, in various Jewish diasporas, in Poland, Morocco, and in the old settlement of Safed, Jews observed the Sabbath according to religious law. Today, in the 21st century State of Israel, Jews argue about the Sabbath. That is especially true regarding the Sabbath in the public sphere. This argument, which is appropriate in character and image, preserves, at first glance paradoxically, the relevance of the Sabbath and guarantees that it will constantly change its shape, but will remain a unique day in the Israeli-Jewish public experience. To paraphrase the famous words of Ahad Ha’am, cited above, we can say that “More than the Jewish people kept the argument over the Sabbath, the argument kept the Sabbath and its status in the State of Israel.”

The truth must be told, and it is apparent. In the State of Israel, a large group observes the Sabbath according to Jewish law, and another large group does not do so. The range between the extremes is broad and rich. Concerning the character of the Sabbath in the public sphere, there is considerable debate among the groups and even within them. And yet, and this would be a sad irony if specifically in the State of Israel, there would be an infringement on the social-spiritual component of rest on the Sabbath, which is grounded in the Hours of Work and Rest Law. That is because the Jewish religion is the one that brought the social revolution into the world – maybe the first of its kind – that is latent in the Sabbath. The idea at the foundation of the weekly day of rest was accepted and implemented by humanity in its entirely. The angel of rest whispers into the ear and tells the worker: You are a worker but not a slave. Indeed, you shall eat bread earned through your sweat, and the work is difficult and essential, but it should not be allowed to swallow the human being and his personality. Simultaneously, the angel of rest whispers into the ear and says to the employer: You are the strong party, but for one day of the week there is equality between you and the worker, who is exempt from your affairs. Values of equality, rest and the freedom of the spirit that the Sabbath represents are strongly tied to the religious origin and history of the Jewish people and reasons of tradition.

Our framework is legal. As judges, our role is to rule according to the law of the State of Israel. Indeed, from a birds-eye perspective, and theoretically, the various opinions show that it is possible to interpret the Hours of Work and Rest Law and the Authorizing Law in different ways. However, that situation itself may constitute, in my opinion, an additional reason for the caution required regarding the court’s intervention into the delicate issue placed before us. In any event, and without diving into the details again, my interpretive position is that the existing legal framework is built on an interaction between the local and the national, the religious and the social, individual liberty and recognition of the special public status of the Sabbath, and the city council’s powers and the powers of the Minister of Interior. The interpretation that seems correct to me, for the reasons enumerated, is that at the start of the game, the ball is in the city council’s court, but it later passes to the Minister of Interior’s court. Given the implications of municipal decisions about the rest of the worker, the employer and the business on the Sabbath – not to mention the status of the Sabbath as a national cultural symbol – the local authorities have not been granted exclusive discretion on the matter. The law authorizes the Minister of Interior to approve or invalidate by-laws. In my opinion, what emerges is the conclusion that the rest of the worker, the employer and the business on the Sabbath constitutes an issue that is not just local. In addition, it is hard to accept that the legal ruling in our case would not affect different places in Israel, beyond the borders of Tel Aviv-Jaffa. We should recall that the Minister of Interior is a member of the government chosen through parliamentary elections. Had the Minister of Interior chosen another position, I would think that the law would require refraining from intervening. In contrast to the majority position and the position of my colleague, Justice N. Sohlberg, I think that the outline of the law allows for broad interpretation, which could lead to two results. On the one hand, the law authorizes the local authorities to permit commerce on the Sabbath, and on the other hand it imparts to the Minister of Interior broad discretion in which we should not rush to intervene. Given the Minister of Interior’s position, which is reasoned and to the point, my opinion is that we should respect it, and this court should not intervene.

  1. Were my opinion to prevail, then, we would order the motion for a further hearing granted so far as the Second Amendment is concerned – in the absence of a cause for intervening in the reasoned decision of the Minister of Interior in our case. Given the result, and the way the proceedings have played out, I would not order court costs.

 

  •  

 

Justice N. Sohlberg

I read the important opinion of my colleague, President M. Naor, and I considered its reasons, but I do not agree with it.

  1. Two central questions have been set before us: first, were the amendments to the Tel Aviv-Jaffa By-Law of Tel Aviv-Jaffa (Opening and Closing Shops), 5740-1980 enacted pursuant to authority in law? Second, does the Minister of Interior’s decision not to approve these amendments rise to the level of extreme unreasonableness? Note: the question of authority precedes the question of reasonableness; in the absence of authority, there is no need to address the question of reasonableness. However, in her opinion, my colleague places reasonableness before authority.

According to her methodology, the principle of local autonomy means that the discretion over opening and closing businesses on days of rest should be first and foremost given to the local authority. That is the principled point of departure for my colleague, the President, in her opinion – from the beginning and in the end – and it seamlessly weaves together the opinions of my male and female colleagues who joined the majority opinion. In their approach, “it is

  1. The dispute between my colleague and me – similar to the dispute that emerged between us recently in FH HCJ 5026/17 Gini v. Chief Rabbinate [unpublished] (September 12, 2017) (hereinafter: Gini Further Hearing) – is not just the question of what is the interpretation of the law; the root of the dispute is deeper, and it is entrenched in the question of the way in which the law should be interpreted. My colleague, it seems to me, interprets the law ‘from top to bottom’, according decisive weight to the fundamental, value-laden perspectives that are suitable (in our case, the desired division of authority between the central government and the local government); as a consequence, the desired law takes the place of the law in fact, and fundamental perspectives are what shape, de facto, the correct interpretation. According to my approach, interpretation of the law should be done ‘from bottom to top’, through the work of ‘digging’, which is sometimes exhausting, from the foundation to the rafters. It is not (just) perfuming ourselves with fundamental principles and constitutional rights, but rather analyzing the law and all its parts, from its legs to its guts.
  2. Before we address the merits of the issue –  a brief comment on the justification for holding a further hearing. According to the methodology of my colleague, the President, “the procedure of a further hearing is intended for clarifying a rule that was decided in a verdict, and not for discussing what the verdict does not contain” (para. 17) [para. 16-trans.], and therefore there is no room to address the Minister of Interior’s position in the context of the further hearing before us, “which was not submitted to the panel in the proceeding that is the subject of the further hearing” (ibid). According to her position, that is sufficient to warrant rejecting the motion for a further hearing, and her addressing the merits of the Minister of Interior’s position is therefore ‘not required by law’. As far as I’m concerned, there is no justification for saddling the petitioners with the Minister of Interior’s omissions. In any event, even without addressing the question of whether the Minister of Interior’s position in itself warrants holding a further hearing (given the date it was submitted), the motion for a further hearing is based in more than just that position alone. In addition to the Minister of Interior’s position, we have been presented with a question of the interpretation of the provisions of Article 9A(a) of the Hours of Work and Rest Law, 5711-1951 (hereinafter also: the Law), of the provisions of Articles 249(2) and 249(21) of the Municipalities Ordinance [New Version] (hereinafter also: The Ordinance), and the relationship between them. As counsel for the Attorney General noted in their response – “Concerning the honorable court’s determination in Paragraph 22 of the verdict [that is the subject of the further hearing – N.S.] regarding the normative relationship between Article 9A of the Hours of Work and Rest Law and Articles 249(2)-(21) of the Municipalities Ordinance – this is a new and important precedent” (para. 25 of the response). My colleague, the President agrees, in her ruling that this issue needs to be decided (para. 41 of her opinion [para. 40-trans.]), and I agree. I will now address the question at hand.

 

The Authority

  1. Does the Tel Aviv-Jaffa Municipality have the authority to order the opening of businesses on the Sabbath? In order to answer that question, we must address the correct interpretation of the provision of Article 9A(a) of the Hours of Work and Rest Law, and of the provisions of Articles 249(2) and 249(21) of the Municipalities Ordinance, and the symbiotic relationship between them.

Article 9A(a) of the Law of Work Hours and Rest

  1. According to my colleague’s position – “the Hours of Work and Rest Law does not address the question of opening or closing businesses on the day of rest, but rather the personnel question of work on the day of rest” (para. 43 of her opinion [para. 42-trans.]). My colleague learns this from the text of the provisions of Articles 9 and 9A of the law and from their captions, as well as from the explanatory notes to the draft law through which Article 9A was added. To borrow from the world of yeshiva erudition: my colleague believes that the provision of Article 9A(a) creates a “gevara” prohibition – hinging only on the shop-owner; as opposed to a “heftsa” prohibition – whose application is on engaging in commerce in the shop itself. This division, which is also relevant on the conceptual level, may also have a certain hold in the text of the law; in any event, in my opinion, it cannot withstand an evaluation of the purpose of the law – subjective and objective alike. As will be clarified below, the purpose of Article 9A is to prohibit a shop-owner from engaging in commerce in his shop on the days of rest; either personally or not personally.
  2. As noted, according to my colleague, the text of Article 9A and its caption indicate that its application is personal. As for me, I think the text of the article (“A shop owner shall not engage in commerce in his shop”) and its caption (“Prohibition on Work During the Weekly Rest”) do not help our case; both are consistent with the two interpretive possibilities before us. The term “work” and the phrase “shall not engage in commerce” can be interpreted as a personal act, as well as a description of general activity. Thus far, the court has not had to directly address the interpretation of Article 9A, and in any event not to rule on it. It is true that we can find statements about the article and tiny hints about the relationship between it and the Authorizing Law, but only as obiter dictum, because there was no need for an exhaustive, in-depth discussion of the interpretation of the law’s provisions. That was true for the Israel Theaters case (HCJ 5073/91 Israel Theaters Ltd. v. Netanya Municipality, 57(3) PD 192, 207 (1993) (the verdict addressed cinemas, and as will be clarified below, there is no dispute over the fact that Article 9A does not apply to them); that was also the case for the Design case (HCJ 5026/04 Design 22- Shark Deluxe Furniture Ltd. v. Director of Sabbath Work Permits Department – Ministry of Labor and Social Affairs, 60(1) PD 38, 63 (2006) [sic-trans.]. There is therefore no ‘precedent’ on the issue, and that is why we have convened. I will evaluate the intention of the legislator, as reflected in the legislative history, in case it can shed light on the correct interpretation of the article (on the importance of legislative history as a primary interpretive source, see my opinion in the Gini Further Hearing, paras. 4-11).
  3. In bringing the draft law through which Article 9A was added to The Law before the Knesset plenary for the first reading, then-Minister of Labor Yigal Allon began by presenting the bill as such:

“I am satisfied that this time I can submit to the Knesset a bill that can expand the application of the obligation of rest on additional kinds of workers, without violating the status quo regarding religion.

As far back as the debate that emerged in the last government, I opined that instead of legislating a law having a religious character, which could infringe on freedom of recreation, we should amend the Hours of Work and Rest Law, which blends a social principle with recognition of the days of rest traditional to members of each religion.

While at the start of this century, there was a conception that labor laws are intended to protect only manual wage laborers, this conception has expanded, and there is no dispute today that the state should extend its protection to every worker as such – a manual laborer and an office clerk, a salaried employee and an independent contractor.

The draft law before you seeks to establish that what is accepted for the Sabbath and Jewish holidays rest for salaried employees in manual labor and industry will also apply to independent contractors and members of cooperatives in those same sectors. Similarly, commerce in shops will be prohibited.

[…] In general, labor laws seek to ground existing practices, to improve the situation while setting legal determinations. In this case, too, the proposed legislation gives a legal imprint to the existing situation. Currently, private, cooperative factories and workshops throughout Israel and in the agricultural settlements also stop working. That is true for commerce in the shops. The concept of shop does not include guest houses, restaurants, coffee shops, places of entertainment, clubs, gas stations, beaches, swimming pools, sports facilities, etc. For these issues, the situation remains as it is today, both legally as well as in terms of the reality.

[…] It is hereby proposed to expand the application of the Hours of Work and Rest Law without infringing on the accepted status quo” (D.K 30, 2157-2158 (5726); emphasis added – N.S.).

  1. It is clear: the provision of Article 9A was not passed in a vacuum, but rather against the background of the existence of a ‘status quo’, in which people stop working on days of rest in factories and workshops, and shop owners cease their commerce; at the same time, businesses that meet needs for culture, entertainment and leisure are allowed to continue to operate as usual, even during days of rest. Excepting these kinds of businesses (called “places of entertainment”) from the prohibition grounded in Article 9A(a), in order to preserve “recreational freedom”, provides an indication about the bounds of the general prohibition. Infringing on ‘recreational freedom’, which the legislator feared, would happen only if places of entertainment were closed. If the application of Article 9A is indeed personal, how is it relevant to a violation of the status quo? If businesses – commerce or entertainment – can remain open independently through non-Jews, what is the point of distinguishing between the owners of this and the owners of that?
  2. Furthermore, the interpretation that the application of Article 9A is personal and does not seek to prohibit the commerce itself within the shops on days of rest appears to be inconsistent with the explicit words of then-Minister of Labor Yigal Allon, who said “commerce in shops will be prohibited” (ibid). Note: that was not an aside, but rather a faithful expression of the substance of the legal arrangement. Inter alia, comments made during the various debates of the draft law – both in the Knesset plenary as well as in the Labor Committee – clearly testify to the fact that the members of Knesset and the legal advisors related to the prohibition in Article 9A – clearly and simply – as a prohibition on commerce itself, which therefore requires closing businesses on days of rest. Thus, for example (and this is just a ‘tiny taste’ of the examples), in a debate held in the Labor Committee on January 1, 1969, Menahem Harniv, the legal advisor of the Ministry of Labor, said that “the provisions of the law require Jews to close their shops on the Sabbath”; Later in the debate MK Moshe Aram, the committee chairperson, noted that “this law guarantees that a Jew will not open his shop on the Sabbath” (Transcript of Meeting No. 185 of the Labor Committee, 6th Knesset, 13-14 (January 1, 1969). Similarly, during the debate on July 3, 1968, one of the committee members asked the legal advisor of the Labor Ministry, will the law require closing businesses that were open prior to its entering into force? His answer was as follows: “If there is currently a local authority in which shops are open – because there is no by-law that closes – let’s assume theoretically there is a city in which shops are open on the Sabbath – and this will obligate the shops even without the local authority doing anything” (Transcript of Meeting No. 154 of the Labor Committee, 6th Knesset, 14 (July 3, 1968) (hereinafter: Transcript of the July 3, 1968 debate).
  3. We can find another unequivocal expression of the legislator’s intention in comments made during a debate in the Labor Committee over Article 9A(c), which provides as follows:

“A non-Jew may – regarding his workshop, industrial factory or shop that is within the jurisdiction of a local authority or in a quarter of the local authority where the number of non-Jewish residents are at least one third of all residents of the authority or quarter, depending on the circumstances – observe the prohibitions of this article on the above-stated days of rest or on his Sabbath and holidays, as he chooses”.

  1. This article, which creates an exception to the provisions of Article 9A(a), teaches us that a non-Jew may open his shop on the days of rest, provided that it is in an area where the number of non-Jewish residents constitute at least one third of the residents of that area. The deputy legal advisor of the Ministry of Religious Affairs said, against the background of the enactment of this article:

 

“The trend is in fact a compromise between two opposing interests. In general, it is in the interest of every person to observe the days of rest in his religion freely, and in the State of Israel there is freedom of religion for all who desire it, for all the religious communities. On the other hand, we should ensure that a small minority living in the same quarter or city will not disturb the Sabbath or holiday rest of the large majority of people living in the same area. Therefore we made this formula of compromise, of two thirds and a third. That means if the minority in that same place is large enough to constitute more than a third of the residents, then we should take it into consideration. It is already a factor, even though it is still a minority. It might be only 40%, but it is a large enough minority that we should take it into consideration and give it the possibility to choose its days of rest according to its religion. But if the minority is small, let’s say 20%, in my opinion it would infringe on the large majority, the 80% of residents, if that 20% would open their businesses on the Sabbath. That is what the law seeks to prevent […]

Were we not to make this limitation, every person would be able to open his business without any limitation – let’s say if there were just 5% non-Jews in an area of a Jewish community, without taking into consideration the 95% Jews there – we might even encourage fictions, of Jewish business owners fictitiously, or through other arrangements, selling their businesses to non-Jews in order to open them on Sabbath days. That is what the law explicitly seeks to prevent and therefore established residents of that same area and not business owners as a criterion for opening or closing the shops (Transcript of Meeting No. 162 of the Labor Committee, 6th Knesset, 9 (July 31, 1968); emphasis added – N.S.).

  1. The consequence of the above is that the purpose of the prohibition established in Article 9A is also aimed at preserving the character of the public sphere on days of rest by closing commercial establishments on the Sabbath, because if that were not the case – why would the legislator set a limitation related to the composition of the population?

Furthermore, setting this limitation is also embedded in the fear of a fiction, in which Jewish business owners would sell their shops to non-Jews and thus (“or through other arrangements”) bypass the prohibition on opening the store on days of rest. Note well: the same fiction that the legislator feared would be brought in by Jewish shop owners through the “back door” – my colleague, the President, seeks to bring in through the “front door”; It would be sufficient for a Jewish shop owner to engage in commerce in his own shop through a non-Jewish employee, and he would not have to make the effort to “sell” his shop.

  1. We have before us explicit and unequivocal expressions of legislative intent. Had counsel for the Attorney General not argued that “It is difficult […] to know the subjective intention of the legislator at the time it enacted the above-mentioned Article 9A” (para. 54 of the Attorney General’s response; in my opinion it is not so difficult, it is our obligation in interpreting a law to deal with all its aspects), I would barely have bothered to expand on the issue. I have brought only the conspicuous examples, which can enlighten us and give us a clear explanation. One who wishes to learn and go into depth can read the various transcripts, and he will come to know that the debates over the draft law – explicitly and implicitly – are all based on understanding the prohibition as relating to the very commerce in the shop, and not just the labor of the shop owners.
  2. Beyond the unequivocal intent of the legislator (and even if I were to accept the approach that its weight in legislative interpretation is not great; see the position of my colleague in the Gini Further Hearing, para. 19 of her opinion), we will address the fundamental internal contradiction created by approaching Article 9A, with its subsections, as dealing with the personal question of work on the day of rest. As is known, “Every legislative unit is evaluated against the background of the entire piece of legislation in which it appears and from which we can learn the purpose that the legislator sought to achieve. We should aspire to achieve harmony among the various parts of the law (Aharon Barak, Parshanut Tachlitit Bamishpat ]Purposive Interpretation in Law[ 402 (2003); emphasis added – N.S.). We should therefore interpret the prohibition established in Article 9A(a) in a way that is consistent with the provision of Article 9A(c), and we should not abide by an interpretation that places them in a state of contradiction (see also HCJ 6494/14 Gini v. Chief Rabbinate [unpublished], para. 34 of my opinion (June 6, 2016)). As the Minister of Interior noted in his letter of June 26, 2017 to the Attorney General (which was submitted for our consideration under the heading ‘Position of the Minister of Interior’; emphasis in original): “Adopting the interpretation [according to which the application of the prohibition set in Article 9A is personal – N.S.], would lead to an absurd situation in which a non-Jew would be prohibited from working as an independent business owner on the Sabbath in most cities in the State of Israel (insofar as they don’t have ‘at least a quarter of the authority’s residents’ who are non-Jews, pursuant to Article 9A(c-d) of the law), amazingly, he would be permitted to work as an employee for a Jewish business owner. Does a fundamental contradiction like that make sense?”; It is a good question, and it has no answer – neither in the response of the Attorney General nor in the opinion of my colleague, the President.
  3. The intention of the legislator, as well as a logical and harmonious reading of Article 9A of the Hours of Work and Rest Law, with its subsections, indicates that the prohibition grounded in it does not apply just to the work of shop owners, but rather to the very fact of commerce in shops on the days of rest.
  4. Note: if indeed, as my colleague concluded, the application of the prohibition set in Paragraph 9A(a) of the law is personal, and the point of departure is that it is permissible for commercial establishments to be opened on the days of rest (by non-Jews), then we would, it seems, close the discussion at this stage, because what would be the value of the Authorizing Law? My colleague adopts the argument of counsel for the Attorney General, namely that “we are dealing with provisions of a law that cover various issues, which we can compare, metaphorically, to two stories completing each other to form one building. One who enters the first floor – the licensing floor – would find himself facing the power of the local authority to regulate the opening and closing of businesses on the Sabbath. Once he leaves the first floor, holding a license to open a business, he approaches the second floor – the floor of the non-waivable labor laws. There the business owner discovers he is obligated to observe the prohibition against employing Jews and Jews working on the Sabbath, together with all the other provisions of the Hours of Work and Rest Law” (para. 68 of the Attorney General’s opinion; para. 40 [para. 39-trans.] of the President’s opinion). Think about it: If the default set in Article 9A is that the entirety of businesses is permitted to open on days of rest, why do we need two stories? Why should the business owner bother entering ‘the first floor’? It would be enough to approach ‘the second floor’, which allows him to open his business through a non-Jew, even in the absence of the Authorizing Law. However, to the extent that Article 9A prohibits the very act of commerce in shops during days of rest, then we must evaluate the bounds of the power granted the local authority pursuant to Articles 249(2) and 249(21) of the Municipalities Ordinance (quoted in para. 39 [para. 38-trans.] of the President’s opinion) and the relationship between it and the above-mentioned prohibition. I will address that now.

 

The Authorizing Law

 

  1. According to my colleague, “the Authorizing Law explicitly authorizes the local authorities in Israel to enact provisions in their by-laws that address opening businesses in their domains on the Sabbath […] The above-referenced article [Article 249(21) – N.S.]  explicitly refers to Article 249(21), which addresses ‘the opening and closing of shops’ […] I cannot accept the argument that a law that authorized, inter alia, ‘regulating the opening […] of shops and factories […]’ was intended to apply only to places of entertainment or only to regulating the closure of businesses. That argument is incompatible with the clear text of the law” (ibid; emphases in original). According to my colleague, even if we accept the interpretation that Article 9A articulates a sweeping prohibition against opening businesses on the Sabbath, “it would be a contradiction between the Authorizing Law and the Hours of Work and Rest Law, meaning provisions that are on the same normative plane. Under the non-interpretive standards we use […] the Authorizing Law prevails as a law enacted after the Hours of Work and Rest Law […] and in any event it is a more specific law that specifically grants authority to the local authorities in Israel in a targeted way, in contrast to the generality of the Hours of Work and Rest Law” (para. 44 [para. 43-trans.] of her opinion). 
  2. It cannot be denied. The broad language of Article 249(20), on which Article 249(21) rests, apparently contradicts the provision of Article 9A of the Hours of Work and Rest Law. In order to deal with this contradiction, we must evaluate how things developed chronologically. As I will clarify below, according to the non-interpretive standards that my colleague discussed, the Hours of Work and Rest Law is the later, and also the more specific law regarding the power granted the local authority pursuant to the Municipalities Ordinance.
  3. The Municipalities Ordinance [New Version] was enacted in 1964, based on the Mandatory Municipalities Ordinance. Article 249 of the ordinance establishes the powers granted to the municipality, including the general authority to regulate “the opening and closing of shops” (caption of art. 249(20) of the ordinance). Based on that authority, together with the authority granted the municipality to enact by-laws pursuant to Article 250 of the ordinance, local authorities have, throughout the years, enacted by-laws regulating the opening and closing times of various businesses in their jurisdictions on days of rest.
  4. In 1969, the Hours of Work and Rest Law was amended, and Article 9A was added to it, which set, as aforementioned, a prohibition on commerce in shops on days of rest, with a distinction drawn between commerce and places of entertainment. The question of the meaning of “shop” as stated in the article, and the need to define it, were debated at length within the Labor Committee; during the debate on July 3, 1968, a letter signed by the Minister of Justice, The Minister of Religion and the Minister of Labor was presented, in which they proposed to add to Article 9A the following clarifications:

“(a) To add a definition of the term ‘shop’ as follows: a shop for purposes of this article – a place of business whose primary business is selling goods to be consumed outside the place. Excepting pharmacies and gas stations.

(b) To add a provision establishing that in order to remove doubt, it is hereby clarified that each local authority will be authorized to enact by-laws adding, within the jurisdiction of the authority, a prohibition on running, on the weekly day of rest, a business whose running is not prohibited by this article” (Transcript of the July 3, 1968 debate, p.2; emphasis added – N.S.).

 21. From the above we learn two things relevant for our case: First, in legislating Article 9A, the legislator had in mind the local authority’s power to enact by-laws regarding opening and closing times for businesses on days of rest. The clarification that the legislator considered adding on this issue was only “to remove doubt”; Second, the provision of Article 9A sought to establish an arrangement that set a threshold of closing businesses on days of rest, to which the local authority would be allowed to add a prohibition regarding “a business whose running is not prohibited by this article” (meaning – an entertainment establishment), but not to subtract from it (meaning – to permit the opening of commercial establishments). The words of Menahem Harniv, the legal advisor to the Ministry of Labor, as he clarified the need for the addition proposed in the ministers’ letter, are instructive regarding the scope of the municipality’s authority under the amendment to the Hours of Work and Rest Law and thereafter:

“For those who think that the local authorities have the power to prohibit [opening businesses – N.S.] – this only adds. It says the same thing that already exists, and in fact does not change something. For those who, by the way, want to say: If I prohibit, then I can also permit […] then there’s no need to accept the whole law. Then there’s no need for a state law. We can leave it as is. Every local authority – if it wants, may prohibit, and if it doesn’t want – may permit” (ibid, p. 12).

  1. We thus see that prior to the legislation of Article 9A, the local authority’s power in regulating the opening and closing of commercial and places of entertainment on days of rest was quite broad – if it wanted, it prohibited, if it wanted, it permitted. Article 9A of the law narrowed the bounds of that power, and essentially negated the power of the local authority to enact a by-law that permits the opening of ‘shops’ that had been prohibited from opening on days of rest. Note: Unlike my colleague, Justice N. Hendel, I do not think that Article 9A defines a ‘default’ from which the local authority may deviate (para. 13 of his opinion). In my opinion, this article, which was, as noted, enacted out of recognition of the power of the local authorities to regulate the opening and closing of ‘shops’ in their jurisdictions on days of rest, in practice limited such power. To complete the picture, I note that at the end of the day, it was decided not to add the above-mentioned clarifications from the ministers’ letter (because, inter alia, the main points were clarified in the transcript), but that does not alter the fact that Article 9A was enacted while the legislator had in mind the power granted to the local authorities pursuant to Article 249(2).   
  2. I will therefore repeat what I said at the start: Indeed, the arrangement grounded in Article 9A of the Hours of Work and Rest Law stands in contradiction to the text of Article 249(2) of the Municipalities Ordinance. However, the arrangement in Article 9A is the later in time, it is the more specific of the two, and therefore it narrows the broad authority imparted to the municipality under Article 249(20).
  3. Having clarified the relationship between Article 9A and Article 249(2), we can evaluate the substance of the amendment that was done by adding Article 249(21) to the ordinance. As my colleague the President noted in her opinion (para. 38), the basis of the Authorizing Law in the Magistrate Court’s verdict in Crim Case (Jerusalem Magistrate) 3471/87 State of Israel v. Kaplan [unpublished] 5748(2) PM 26 (1987) (hereinafter: the Kaplan case), in which it was held that local authorities may not order the closing of places of entertainment on days of rest for religious reasons. Given that, the Municipalities Ordinance was amended, and Article 249(21) was enacted, which sought to permit the local authority to also consider religious considerations in exercising its power under Article 249(2) of the ordinance. In bringing the draft bill before the Knesset plenary for a second and third reading, the committee chairperson, MK A. Lein, emphasized that, “this is not a special law, that is the authorizing law; what is before us is an amendment to Article 249 of the Municipalities Ordinance […] this law is not about changing an established and accepted legislative norm. We have here a decision of a Magistrate Court in Jerusalem, which has created confusion about the meaning of the law” (Transcript of Meeting No. 241 of the 12th Knesset, 3, 8 (December 17, 1990); emphasis added-N.S.). The consequence of the above is that the addition of Article 249(21) was not intended to establish a new power of the local authority to regulate the opening and closing of businesses in its jurisdiction on days of rest, but rather explicitly to clarify that the power granted the local authority at the outset, under Article 249(2), could also be exercised “taking into consideration reasons of religious tradition”. As the committee chairperson noted: “The central and most important change in the draft bill before you is encompassed in the provision that says that opening and closing businesses and places of entertainment in Israel may be done, by explicit authorization, also for reasons of religious tradition. That is the central, principled and exclusive change included here in the draft bill” (ibid, p. 5; emphasis added- N.S.). In my opinion, Article 249(2) clarified what is already clear.
  4. To summarize this part: Article 249(20) grants the local authorities power to regulate the opening and closing times of businesses in their jurisdiction, including during days of rest. Article 9A of the Hours of Work and Rest Law established a specific arrangement, later in time, for the opening and closing of businesses on days of rest. That arrangement, in practice, narrowed the broad power that had been granted to the local authorities under Article 249(2). Article 249(21), which was worded by reference to Article 249(20), sought explicitly to clarify that this power of the local authority can also be exercised for religious considerations. In any event, Article 249(21) does not seek to change the bounds and substance of the authority, which is still subject to the arrangement set in Article 9A.

 

Social Purpose

  1. An evaluation of the Hours of Work and Rest Law from a broader perspective also supports the conclusion that the local authority lacks the power to order the opening of commercial establishments on the days of rest. As is known, “There are two purposes that underlie the arrangements concerning the hours of weekly rest in the Hours of Work and Rest Law, and these complement one another” (the Design case, p. 57). One purpose is a social-societal purpose, “that a weekly day of rest should be designated for each person to rest from his work, spend time with his family or in the company of friends and have time for holiday and entertainment, according to his choices and preferences. Establishing the day of rest was also intended to protect the health of the worker and guarantee fair labor conditions” (Israel Theaters case, 207-208). The second purpose is religious-national, “which regards the observance of the Sabbath by Jews as a realization of one of the most important values in Judaism that has a national character. In a similar spirit, designating other days of rest for persons who are not Jewish realizes their religious outlook” (Design case, p. 58; On the national, spiritual and cultural importance of the Sabbath see the beautiful words of my colleague, Justice N. Hendel, in paragraph 2 of his opinion).
  2. The prohibition on opening commercial establishments on the Sabbath, which dictates – and to a large extent compels – a unitary day of rest for the entire economy, with some infringement on freedom of occupation, constitutes a central means of achieving the purposes of the law, and it is what allows business owners to rest from work without worrying about their livelihoods: “This violation — which is mainly a prohibition of working on the Sabbath — applies in principle equally to all owners of businesses, and therefore prima facie it cannot give an unfair competitive advantage to one competitor or another” (Design case, p. 63). If we accept the interpretation that permits the opening of commercial establishments on days of rest, we would, in practice, negate the ability of business owners who wish to do so to stop working on their day of rest; they were crying in grief under the weight of their work on the Sabbath, and their cry for help rose up. Thus, the owner of a commercial establishment who decides to make his own Sabbath, meaning to open his shop on the Sabbath (through a non-Jew) acquires for himself – and according to my colleague, lawfully so – a competitive advantage over the commercial establishments operating nearby. The latter, who fear incurring financial loss – both in terms of loss of profits as well as the ‘leaking’ of their customer base – would be forced to open their shops, too, in order to avoid ‘being left behind’.  Therefore they will have to hire non-Jewish workers (see Articles 9 and 7(b) of the Hours of Work and Rest Law), but the ability to do so is reserved particularly for the owners of large businesses, who have the financial resources required to do so. A small business-owner, on the other hand, who cannot afford to hire a non-Jewish worker to work in his place on the day of rest, will throw his hands up in the air. The small business owners don’t even have the possibility of giving up their day of rest and competing: On one hand, they can’t afford to hire a non-Jewish worker; on the other hand, they are not permitted to engage in commerce in the shop themselves. The small merchants are the ones expected to absorb the financial loss stemming from opening commercial establishments on the days of rest (see and compare the words of Justice (as he was then called) E. Rubinstein in App Adm Pet 2469/12 Bremer v. Tel Aviv-Jaffa Municipality (unpublished) (June 25, 2013), para. 3). Clearly, such a result is not desirable, and it is completely opposed to the social purpose of the Hours of Work and Rest Law.
  3. We should now ask: if the social purpose is indeed so important, why distinguish between commercial establishments and places of entertainment, as the legislator did? Shouldn’t – from both a national and social perspective – places of entertainment also stop their work? I think we can actually find an answer to that question in the words of my colleague the President (para. 50 [para. 49-trans.]):

“Communal life is not ‘all or nothing’ but rather is based on tolerance for a divergent opinion, mutual respect and mutual compromise. Communal life is not ‘black and white’ but rather a spectrum. It is responsive to the recognition that human beings are free creatures who design their life stories, but also to the recognition that they do so within the framework of society and not on a deserted island. It is based on the understand that each of us bears responsibility for society as a whole, but that does not mean giving up on fundamental components of our identity or the uniqueness of each of us. It is not a perspective of ‘I won’t sign on to desecrating the Sabbath’ but rather recognition of the indispensability of the perspective, ‘Live and let live’.

  1. The social purpose has two layers: The first layer is concerned with rest from labor and relaxation from travail; the second layer stands on the back of the first, and it is concerned with the quality of that rest. Specifically, due to the great importance of days of rest, we should recall that the character of the rest varies among people. For one person, the Sabbath delight is in prayer, the blessing over the wine, a feast, and rest within the bounds of Jewish law; another person, in contrast, seeks to delight in a museum exhibition, a family outing to the cinema or resting on the seashore. We should therefore allow each person to shape his day of rest according to his world view and belief:
  2. Alongside the protection of Sabbath observance from the national-religious aspect, the law leaves the social aspect of the day of rest open to be shaped in accordance with the variety of different lifestyles and tastes in the many sectors of Israeli society. Indeed, there are many different ways in which people decide how to act on the day of weekly rest given to them, each person in accordance with his way of life, belief and lifestyle [...] Within the framework of the social aspect of the Sabbath we require a recognition of the needs to depart from the prohibitions of employment where this is essential in order to allow the Sabbath to be shaped as the day of rest for the general public in a free, pluralistic and tolerant spirit, without causing disproportionate harm to other social groups, and without uprooting the unique national character of the Sabbath from among the Jewish people. We should thereby recognize that in order to realize the individual character and leisure culture of the individual, we also need public frameworks that will assist and allow this, including public transport that will allow the public to move freely, the opening of museums and cultural institutions, the activity of theatres and cinemas, the holding of lectures and congresses, and the like” (Design case, pps. 66-67).

 

  1. A person’s right to shape his day of rest in his image is not unlimited; additional values and interests hang in the balance, and we must balance between them. Opening commercial establishments on the Sabbath is different than opening places of entertainment – from both the point of view of the shop owners as well as the consumers’ point of view. The absence of a prohibition on opening places of entertainment on the Sabbath does indeed inflict a certain harm to the Sabbath day profits of owners of places of entertainment who seek to stop their work, but that harm is of a more limited quality and nature:

“A person who buys a pair of shoes on the Sabbath will not buy another pair during the week. Therefore, if some shoe stores are open on the Sabbath, those interested in closing on the Sabbath will lose part of the proceeds that would have otherwise accrued during the week, had all the shops been closed on the Sabbath. This loss would apparently be considerable, in light of the fact […] that the proceeds that would be received at this kind of business on the Sabbath would be considerably greater than the proceeds received during the week. Consequently, opening one shoe store on the Sabbath exerts significant pressure on all the owners of shoe stores in the area to open their businesses and work on the Sabbath. The situation regarding places of entertainment is different: a person who sits in a coffee shop or goes to the cinema on the Sabbath will not, for that reason, refrain from sitting in a coffee shop or going to the cinema again during the week. Therefore, the loss caused to one who chooses to close his coffee shop on the Sabbath will not substantially influence his proceeds during the week” (Gidon Sapir, “’Vikaratem Lashabat Oneg?’ Avoda Mis-char Vibilui Bishabat Biyisrael Mekom Hamidinia Viad Hayom [‘And Call the Sabbath a Delight?’ Work, Commerce and Leisure on the Sabbath in Israel from the Founding of the State to the Present]”, 31 Mehkarei Mishpat 169, 222 (forthcoming 2017)).

  1. There is also a substantial difference from the point of view of the consumers. As noted, the social purpose supports the right of consumers who want to experience pleasure according to their viewpoints, belief and preferences. That is not the case concerning commercial activities. Commerce is concerned with buying and selling, its main point is financial profit, functional needs that are not related to rest or leisure. Furthermore, the functional nature of commercial activity is expressed, inter alia, in the fact that there is no advantage to engaging in shopping particularly on the day of rest. Making purchases at the grocery store or similar place can also be done before or after the Sabbath. That is different from activities of leisure and rest, which by their nature can take place particularly on the Sabbath, the day of rest, when all family members have stopped working together and are perfecting their rest with joint activities. I will clarify and emphasize: there is no doubt that opening commercial establishments on the Sabbath constitutes a significant addition of convenience for a broad community of consumers. That should not be dismissed at all. Convenience, while it is not a fundamental constitutional right, is not a vulgar word. A person’s desire to have the chance to buy milk and eggs and soy sauce (and also clothing and furniture) on the Sabbath is understandable and legitimate. However, that desire is not the whole story; hanging in the balance is also the fundamental right of the owners of the commercial establishments who want to stop their work on the day of rest. The addition of comfort likely to stem from commercial consumption on the Sabbath does not justify such significant harm to the small-scale merchants.
  2. Furthermore, excepting places of entertainment from the bounds of the prohibition set by Article 9A of the law allows the owners of places of entertainment – small and large, rich and modest – who choose to give up their weekly rest, to operate their businesses themselves, without relying on salaried employees. It should also be noted that the distinction between commercial establishments and places of entertainment is deeply rooted and accepted in the discourse about the image of the Sabbath in the State of Israel; it is not by chance that, for years, it has taken root in draft laws and various public contracts (Ruth Gavison and Yaakov Medan, Masad Liamana Chevratit Chadasha Bein Shomrei Mitzvot ViChofshiim Biyisrael [Foundation for a New Social Contract between the Religious and Secular in Israel], 223-237 (5753); Sapir, pps. 217-222; Elyakim Rubinstein and Noam Sohlberg, “Dat Vimidina Biyisrael Bishnat Hayovel [Religion and State in Israel in the Jubilee Year]”, Manhe Liyitzhak; Kovetz Mamarim Lichvodo Shel Hashofet Yitzhak Shilo Bigvurotav [Mediator for Yitzhak: Collected Articles in Honor of Judge Yitzhak Shilo in his Courage] 399 (eds. Aharon Barak and Menashe Shava, 5759), also printed in Elyakim Rubinstein’s book, Nitivei Mimshal Umishpat [Paths of Governance and Law[ 196, 214-218 (5763)).
  3. The key word: Balance – between the rest of the merchants and the rest of the consumers. It is not a perspective of “I won’t be party to desecrating the Sabbath” but also not a perspective of “I will buy milk and eggs on the Sabbath for spite”. “Live and let live,” my colleague said; and I say – “Rest and let rest”. How appropriate for our issue are the words of the Jewish-American philosopher and theologian, Abraham Joshua Heschel, in his monumental book, ‘The Sabbath’:

“Someone wishing to reveal the sanctity of the day is tasked with abandoning the alienation that exists in the vulgar commerce of life, and his being trapped under the yoke of his labor and sweat. He should walk far from the strident voices of the other days, from the tensions and greed of acquisition […] he should detach from his work, and understand that the world has already been created and will survive even without the help of humankind. Six days a week we wrestle with the world, wringing profit from the earth; on the Sabbath we especially care for the seed· of eternity planted in the soul […] Six days we strive to master the world, and on the seventh day we should be wise enough to master our selfhood” (Abraham Joshua Heschel, Hashabat [The Sabbath] 33 (trans. Alexander Ibn Hen, Yediot Ahronot 2003)).[SB1] 

 

On the Sabbath, the darling of days, we ‘should be wise enough to master our selfhood’ , to exit the trap of “the yoke of labor and swea[SB2] t’; so that we can relax, rest, and fulfill the words of the prophet Isaiah (58; 13) ‘And call the Sabbath a delight”, and to distinguish, as the law instructs, between commerce and pleasure.

  1. The subjective purpose of the above-mentioned law’s clauses, as clearly reflected in the legislative history; the reciprocal relationship between them over the axis of time; and also the objective purpose, which relates to the social considerations at the foundation of the Hours of Work and Rest Law – lead to the conclusion that the local authority does not have the power to order the opening of commercial establishments on days of rest.

 

In the Margins: The Reasonableness of Reasonableness

  1. At the heart of my opinion – the question of the power of local authorities to order the opening of commercial establishments on the Sabbath. Once I reached the conclusion that such authority does not exist, I need not address the question of the reasonableness about which my colleague expounded, but it is impossible to remain exempt, without saying anything. I will say only this: according to my colleague, the Minister of Interior’s position suffers from extreme unreasonableness, because it “did not appropriately consider the uniquely autonomous status of the Municipality” (see par. 25 [para. 24-trans.] of her opinion; emphasis added – N.S.). I saw the words of my colleague, the President, and I was reminded of the words of President (ret.) A. Grunis; his words are logical, and we should set them in our sights:

“The court’s expertise in general, and in the field of administrative law in particular, relates to questions of authority and procedural flaws [...] By contrast, the court has no special advantage or expertise on the subject of unreasonableness [...] the ground of unreasonableness has undergone a change and has almost developed into a kind of ‘supreme norm’ […] In the course of this development, it has swallowed up, like a person whose appetite is insatiable, specific grounds for judicial scrutiny that were recognized in the past (for example, the grounds of irrelevant purposes and irrelevant considerations). The great disadvantage of this ground in its current scope lies in its high degree of abstraction. The high degree of abstraction expands the role of judicial discretion and thereby increases legal uncertainty. It creates a huge disparity between its exalted position in the legal universe and its application in a concrete case […] Often use is made of the concept of weight in order to emphasize the concrete application of the ground of unreasonableness. Thus it has been said on more than one occasion that a decision will be set aside for unreasonableness even if the authority that made the decision took into account all of the relevant considerations, where it gave the wrong weight to one or more of the considerations that were taken into account […] Admittedly metaphors, such as weight, are an accepted tool of legal language. The imagery helps the court to analyze, develop its thoughts and convey the reasoning to the reader. At the same time, the use of metaphors may sometimes make the reasoning vaguer rather than clearer. The use of the image of weight in the context of unreasonableness admittedly helps to some extent. But we cannot ignore the fact that a determination of unreasonableness is almost entirely based on an examination of the end product, i.e., the outcome of the decision. In other words, the use of the metaphor of weight with regard to considerations that the competent authority making the decision took into account can sometimes, it would seem, be used to disguise disagreement with the result” (HCJ 5853/07 Emunah National Religious Women’s Movement v. Prime Minister, 62(3) PD 445 (2007), para. 9 of his opinion; See also the words of President M. Landau in HCJ 389/80 Dapei Zahav Ltd. v. Broadcasting Authority, 54(1) PD 421, 431-32, who as far back as nearly fifty years ago expressed his concern about the misunderstandings that using the concept of reasonableness risked creating).

  1. Reasonableness has many faces, and what is appropriate also depends on the eyes of the beholder (HCJ 43/16 Ometz Movement: Citizens for Good Governance and Social and Legal Justice v. Government of Israel [unpublished], para. 15 of my opinion (March 1, 2016). What one might consider to be extremely unreasonable is seen by another as reasonable and appropriate. That is true in general, and specifically when the issue at hand is value-laden and general, part of a long-running public discussion. Our issue is proof of this. We should continue to strive to focus the cause of reasonableness into minute details, into standards, and even to clip its wingspan, as part of a trend “to dispel the cloud of vagueness, to add to clarity and to constrict the space of uncertainty in which reasonableness lives, also in a forward-looking way” (ibid).

 

The Social Purpose as a Bridge

  1. We cannot conceal the truth. The argument over the image of the Sabbath is profound, ideological, principled. That is true of additional issues concerning the relationship between religion and state and the fundamental values of the State of Israel as a Jewish and democratic country. No side is willing to give up on its holy of holies – religious holiness or secular ‘sanctity’. There is a reason I sought to rely on the important words of my colleague, the President, in her opinion (see para. 28 ibid [para.27-trans.]), regarding the principled approach that should guide our path. Doing so can illustrate that the dispute between us is not broad, deep and principled as might otherwise seem. We do not disagree on the point of departure: there is no perspective of ‘all or nothing’, ‘black or white’, but rather tolerance for a different opinion and mutual concessions. We will not obscure the dispute between us – over authority and reasonableness and interpretation, but we neither will we exaggerate it; this is not “religious” against “secular”, “north” against “south” or periphery against “the State of Tel Aviv”.  I wrote at length above about the social purpose, one of the two purposes at the foundation of the Hours of Work and Rest Law. I think that reasonableness can unite all of them, without paying the price of giving up on religious or secular ideology. On the issue of the Sabbath, rather than serving as another bone of contention, the social-societal consideration can act as a cornerstone of agreement.

Epilogue

  1. Prohibiting work on the Sabbath under Article 9A of the Hours of Work and Rest Law applies to commercial establishments but not to places of entertainment; the prohibition is not merely personal but rather applies to the fact of commerce in the shop; the Authorizing Law does not grant power to the local authority to order the opening of commercial establishments. From my point of view, therefore, the motion for a further hearing – should be granted.

 

Justice

Justice E. Hayut

  1. In the verdict that is the subject of this further hearing, I joined the opinion of my colleague, President M. Naor, that there is no flaw at the level of authority or discretion that justifies intervening in the By-Law of Tel-Aviv-Jaffa (Opening and Closing Shops) (Amendment No. 2), 5774-2014 (hereinafter: Amendment No. 2). Hearing the arguments that the parties raised again in the further hearing has not changed my mind.
  2. The Law Amending the Municipalities Ordinance (No. 40), 5751-1990 (hereinafter: the Authorizing Law) applies, also to days of rest, the power granted to the local authority under Article 249(2) of the Municipalities Ordinance [New Version] (hereinafter: the Ordinance) to regulate “the opening and closing of shops, factories, restaurants, coffee shops, tea houses, drinking establishments, cafeterias, canteens and other institutions of this kind, and of cinemas, theaters and other places of public entertainment or a type of it”. Thus the Authorizing Law anchored the special-autonomous status of the authority also concerning days of rest, and allowed it to use by-laws, according to its discretion, to shape activity in the public sphere on these days, within its area of jurisdiction. As early as 1993, this court, in the opinion of President Shamgar, addressed the significance of the Authorizing Law and the bounds of the power it imparts to the local authority (HCJ 5073/91 Israel Theaters Ltd. v. Netanya Municipality, 57(3) PD 192, 207 (1993), hereinafter: the Israel Theaters Case and also see on this issue para. 28 [para. 27-trans.] of the opinion of my colleague, the President).

My colleague the President repeated and emphasized these words when she noted that “the authority to make the value judgment within the framework of the by-laws belongs to the Municipality, not to the Minister of Interior.The Minister of Interior should not evaluate whether that judgment is optimal, in his opinion, but rather whether it is within the zone of reasonableness …A decision by the Minister of Interior is intended to supervise the lawfulness of a decision by the Municipality, not to replace its discretion” (para. 29 [para. 28-trans.] of her decision. I share this position. For the reasons my colleague the President detailed in her opinion, I also take the position that the Hours of Work and Rest Law, 5711-1951 (hereinafter: Hours of Work and Rest Law), including its Article 9A(a) does not address the question of opening and closing businesses on the day of rest but rather with the personal question of work on that day. Therefore, to my way of thinking, we don’t find within the Hours of Work and Rest Law a prohibition on opening businesses on the day of rest, and in any event there is no clash between its provisions and the provisions of the Authorizing Law and the by-laws that were enacted pursuant to it.

  1. In his decision to grant the motion for a further hearing, Deputy President E. Rubinstein (ret.) noted that “the Sabbath, whose status in the Jewish world needs no elaboration, deserves to have its case considered and clarified when all positions are before the Court”.

Indeed, the Sabbath has been adorned with many crowns, and there is a special place reserved for it in the heart of every Jewess and Jew, even if they do not fulfill the commandment of observing the Sabbath according to Jewish law. The national poet H.N. Bialik said about the Sabbath that “it is the most genius invention of the Hebrew spirit” (Sefer Hashabat [Book of the Sabbath] (Dvir Publishers, 5708, p. 517)) (hereinafter: Book of the Sabbath), and many others have reified the wonderful blending of religious values and social values (Book of the Sabbath, p. 521; Leave App Crim Handyman Do It Yourself Ltd. v. State of Israel, 57(3) PD 1, 6 (2003)). But with its founding, the State of Israel raised the banner of Jewish and democratic values together, and the need to integrate the state’s Jewish contours with its democratic contours requires us to walk the path of balance and compromise. That is the case in general, and that is the case regarding the Sabbath.

  1. In the Israel Theaters case, President Shamgar addressed the purposes at the foundation of the Hours of Work and Rest Law:

“In establishing the principle of observing a weekly day of rest and designating it on the Sabbath, the legislator sought to achieve two integrated goals: first, a social goal, that a weekly day of rest should be designated for each person to rest from his work, spend time with his family or in the company of friends and have time for holiday and entertainment, according to his choices and preferences … second, designating the day of rest on the Sabbath takes place against the background of the commandment of religious law and Jewish tradition” (ibid, 206-207).

The effort to integrate these two goals, while allowing certain economic activity for places of entertainment and commercial establishments on the days of rest, as well, was expressed in the Authorizing Law. According to this law, as noted, the local authority was imbued with power to order, inter alia, “the opening and closing of shops and workshops…” on the days of rest, but it was emphasized that the authority must exercise this power while taking into consideration “reasons related to religious tradition” (arts. 249A(20) and (21) of the ordinance). The legislator thus did not completely prohibit the local authorities from regulating the opening and closing of shops and workshops on the days of rest but outlined for them a clear standard of consideration for reasons related to religious tradition, and in doing so chose the path of balance and compromise (see para. 31 [para. 30-trans.] of the opinion of my colleague, the President). My colleague Justice Sohlberg seeks to establish the balance point in this context as the distinction between places of entertainment and commercial establishments. However, this distinction has no basis either in the text of the Authorizing Law, and as my colleague the President described so well, or in the law’s legislative history. It therefore cannot be accepted. Having said that, I accept the position that we should be very cautious with provisions that permit the opening of shops and workshops on the days of rest, and that provisions that allow that with “too generous a hand” risk upsetting the delicate balance that must be preserved in this context between the State’s Jewish values and its democratic values.

  1. In his opinion that was submitted to us at the stage of the further hearing, the Minister of Interior expressed concern over creating a precedent that would create a fissure in the status quo and change “the appearance of the Sabbath and its character throughout the country”. First, I note that there is merit in the ruling of my colleague, the President, that this is a decision that was not submitted and in any event was not addressed in the procedure that is the subject of the further hearing (see paras. 17-20 [paras. 16-19-trans.] of her opinion). For that reason, I doubt that we can address it now. However, even on the merits of the issue, I did not find a justification, under these circumstances, for the concern that the minister expressed in his decision over a sweeping infringement on the appearance of the Sabbath and its character at the national level, to the point where he would believe there is cause for invalidating Amendment No. 2 of the Tel-Aviv Jaffa [sic] Ordinance. That is the case, given the very limited scope of the sites and the businesses whose opening was permitted in Tel Aviv on the Sabbath, both according to Amendment No. 1 and according to Amendment No. 2, which exemplify a reasonable and proportional balance between the existing interest in observing the character of the Sabbath as a day of rest while allowing for the possibility of some economic activity that suits the city’s character, with its various neighborhoods and its diverse population.

For these reasons, I concur with the position of my colleague, the President, in the further hearing as well.

                                                                                                                                Justice

 

Justice D. Barak-Erez

  1. Should we respect the choice of the Tel Aviv-Jaffa Municipality city council to amend its by-law in such a way as to allow the opening of grocery stores on Sabbath days holidays? That, in essence, is the question that again was placed before us. That – and not additional questions, although additional questions were wound up in the parties’ arguments. As I noted in the verdict that is the subject of the further hearing, we are not addressing the question of whether, at the level of norms and viewpoints, we should prefer arrangements that take the side of broadly closing businesses on the Sabbath or those that regulate ways of opening them. We are also not addressing the question of what is the optimal application of the national and social ideal of the Sabbath. I believed in the past, and I still believe, that we should respect the decision of the city council, and allow the value-laden dispute in the background to continue to take place in the arena that is appropriate for it – the public arena. For that reason, I concur with the opinion of my colleague, the President, also in the further hearing, and for the reasons she provides. Having said that, in light of the dispute that has erupted between my colleagues, Justices N. Hendel and N. Sohlberg and the rest of the colleagues on the panel, and while focusing on the question of the authority of the municipality to permit the opening of stores on the weekly day of rest, I seek here to present the details of my position.

 

Further Hearing and Not a Retrial

  1. Before I dive into the merits of the issue, I will add that, like my colleague, the President, I also think it important to be punctilious in not permitting a further hearing of a verdict to become a platform for a retrial. Finality in litigation is an important value in our system, and actually in every legal system. That is particularly important, in light of the fact that giving a government agency a chance to present a new position, that would be addressed on the merits after the legal proceedings have ended risks incentivizing strategic behavior – at first presenting one position, and if it is not accepted, it can present another position.
  2. Truth be told, I agree with my colleague, the President, that this reason is sufficient to justify denying the motion for a further hearing. However, given that the scope of discussion has been broadened, I will continue and also address the merits of the issue. However, it is important to emphasize that the reasons behind the late decision of the Minister of Interior should not be at the center of the discussion, but rather the question of the lawfulness of the Tel Aviv-Jaffa’s by-law, including its amendments – both in terms of authority as well as in terms of discretion.

 

A Municipality’s Authority to Permit the Opening of Businesses on the Sabbath

  1. The petitioners’ arguments in the further hearing were largely based on the legal position that Article 9A of the Hours of Work and Rest Law, 5711-1951 (hereinafter: the Hours of Work and Rest Law) should be interpreted to completely prohibit activities by businesses belonging to the category of “shops” on the Sabbath, and therefore, in any event, the authority of the municipality to permit the opening of businesses would be limited to regulating the opening of places of leisure and recreation – hotels, restaurants and cultural institutions – what are often called “places of entertainment”. My colleague, the President, rejected this argument. In contrast, my colleagues, Justices N. Hendel and N. Sohlberg, reached a different conclusion on this issue. According to them, a reading of Article 9A of the Hours of Work and Rest Law reveals that the law creates a prohibition on the activities of shops, workshops and factories on the Sabbath. My colleague, Justice Hendel, believes that the resulting conclusion is that the local authority has extremely limited discretion to permit businesses to open on the Sabbath, while the Minister of Interior has broad oversight powers over its decisions on the issue. My colleague, Justice Sohlberg, takes the point even further, finding that the municipality acted ultra-virus and lacks the authority to permit the opening of businesses in the category of “shops” on the Sabbath.
  2. In this dispute, I agree with my colleague, the President. I believe, with all due respect, that the opposing position does not reflect the correct interpretation of the Hours of Work and Rest Law – neither in terms of its text and legislative purpose, nor in terms of its relationship to other provisions in the very same law and to provisions of the Municipalities Ordinance [New Version] (hereinafter: Municipalities Ordinance or the Ordinance), and not even in terms of its legislative history. When it is evaluated more broadly, including, inter alia, the way people have understood the law to amend the Municipalities Ordinance (No. 40), 5751-1990, known as “The Authorizing Law”. I will explain my position.
  3. In order to address the interpretation of Article 9A of the Hours of Work and Rest Law, whose caption is “
  1. On the prescribed days of rest, within the meaning of the Law and Administration Ordinance,, 5708-1948, the owner of a workshop of [sic] industrial undertaking shall not work in his workshop of undertaking and the owners [sic] of a shop shall not do business in his shop
  2. On the aforesaid days of rest, a member of a cooperative society shall not work in a workshop or industrial undertaking of the society; a member of an agricultural cooperative society shall not work in a workshop or industrial undertaking of the society unless the work is connected with the services necessary for its farm.
  3. A non-Jew may, in respect of his workshop, industrial undertaking or shop situated in the area of a local authority whose non-Jewish inhabitants, according to the determination of that authority, are at least 25 per cent of its total population, observe the prohibitions imposed by this section, at his option, either on the aforesaid days of rest or on his own Sabbath and holydays. The same shall apply in a quarter of a local authority if the area and the proportion - not less than 25 per cent - of the non-Jewish inhabitants of that quarter have been determined for this purpose by that authority.
  1. The opposing view focused on the provision that says “the owner of a shop shall not do business in his shop”. According to this position, the prohibition set in Article 9A applies to activity in the business in general, in contrast to the activity of the shop owner himself on his weekly day of rest. We disagree with that.
  2. A reading of the Law of Work Hours and Rest sharpens the clear distinction that it contains between the terms “will work” and “will employ”. The law ordinarily regulates the issues of employers and their employees.  In contrast, there are prohibitions on someone who is a shop owner to “employ” workers through a formula that deviates from the law’s dictate. The law therefore clearly distinguishes between the “work”, which is the activity of the worker himself, and the “employment”, which is the employer’s part of it. Accordingly, Article 9A of the law says that the owner of a workshop and the owner of a factory shall not “work” in his workshop or factory – “shall not work”, and not “shall not employ”.
  3. Against that background, I think that Article 9A was intended to extend the obligation of rest on Sabbath days and holidays to non-salaried workers, including workshop owners and shop owners (see: HCJ 347/84 Petah Tikva Municipality v. Minister of Interior, 39(1) PD 813, 821 (1985) (hereinafter: Petah Tivka Municipality case). In other words, the legislator sought to take care of independent business owners by imposing an obligation of rest on them, to take care of them and their family members, too, as it had already done in regulating this forced rest (as a welcome personal arrangement) for salaried employees. From that alone we should not conclude that the legal provision is intended to require the absence of activity in the business itself. Indeed, pursuant to the reality at the time the legislator enacted the law, namely that most commerce was retail commerce, and workshops were mostly small, the Sabbath rest of the owner of the business would be expected to end the operation of the business itself. That is even, from my point of view, a result that in many cases brings a social blessing. However, from a legal point of view, it is not a necessary outcome.
  4. In my opinion, this interpretation is required not just by the text of Article 9A of Hours of Work and Rest Law, but also by its purpose. As we know, the Hours of Work and Rest Law is, first and foremost, a protective labor law whose purpose is to regulate the rights of workers and to guarantee their rest, whether they chose it or not (see: HCJ 6522/06 Kochavi v. National labor Court in Jerusalem [unpublished], para. 17 (April 22, 2009); FH HCJ 10007/09 Glutan v. National Labor Court [unpublished], para. 11 of then-Justice S. Jubran’s opinion (March 18, 2013)). Broad areas of regulating the national character of the Sabbath deviate from the bounds of this law, and that is without detracting from the national-identity purpose of the law, which is expressed in the choice of Sabbath days and Jewish holidays as the primary days of rest (See Leave App Crim Handyman Do It Yourself Ltd. v. State of Israel, 57(3) PD 1, 6 (2003) (hereinafter: the Handyman case); HCJ 5026/04 Design 22- Shark Deluxe Furniture Ltd. v. Director of Sabbath Work Permits Department – Ministry of Labor and Social Affairs, 60(1) PD 38,  (59) (2005) (hereinafter: the Design 22 case).
  5. My colleague, Justice Sohlberg, cited statements made during the process of enacting Article 9A of the Hours of Work and Rest Law, with the goal of understanding its subjective purpose. However, I think that a complete reading of the debates that took place in the Knesset and the committees raises a more complex and even different picture. Of course, legislative proceedings always include many speakers and participants, and in any event some of the participants’ statements in the debates express their own positions and do not necessarily indicate the “legislative intent” (see: Aharon Barak, Parshanut Bamishpat – Parshanut Hahakika [Interpretation in Law, Legislative Interpretation] Vol. 2, 265 (1993) (hereinafter: Legislative Interpretation).  That is particularly true when we are dealing with a subject that is in social-public dispute such as the subject of the Sabbath, such that the Knesset debates over it reflect a broad spectrum of positions (for more on this, see Gidon Sapir, “’Vikaratem Lashabat Oneg?’ Avoda Mis-char Vibilui Bishabat Biyisrael Mekom Hamidinia Viad Hayom [‘And Call the Sabbath a Delight?’ Work, Commerce and Leisure on the Sabbath in Israel from the Founding of the State to the Present]”, 31 Mehkarei Mishpat 169, 173-184 (2017) (hereinafter: Sapir)).
  6. Even before I address statements made during the debates, we should begin with the draft law’s explanatory notes, where it is explicitly written that “the Hours of Work and Rest Law … currently applies to salaried employees only. The proposed amendment seeks to apply its provisions regarding days of rest to factory owners, members of cooperative societies and shop owners, too, with certain caveats” (Explanatory Notes for the draft Hours of Work and Rest Law (Amendment), 5726-1966, HH 136). If that is so, the explanatory notes of the draft bill that includes Article 9A establish, as noted, that the intent of the legislator was to apply the law to independents, as well. That – and no more. There is no mention of broader aspects of ceasing the activity of businesses on the Sabbath as an objective in itself.
  7. My colleague quoted the words of then-Minister of Labor Yigal Allon, in the Knesset plenary at the time he brought the amendment that included Article 9A for a first reading. My impression is that reading the statements made by Minister Allon in the plenary can actually indicate the emphasis that Article 9A puts on regulating employment and not the opening of businesses: “I am satisfied that this time I can submit to the Knesset a bill that can expand the application of the obligation of rest on additional kinds of workers, without violating the status quo regarding religion” (D.K. 5726, 2157). He went on to say: “While at the start of this century, there was a conception that labor laws are intended to protect only manual wage laborers, this conception has expanded, and there is no dispute today that the state should extend its protection to every worker as such – a manual laborer and an office clerk, a wage laborer and an independent contractor” (ibid. Emphasis added). This language, which presents to the reader the employee and the employer – and not the business – is, as noted the same language used in the Hours of Work and Rest Law itself, and it is the language that is compatible, as explained, with law’s objective purpose as a protective labor law.
  8. This conclusion becomes stronger/more plausible when we examine statements by Adv. M. Harniv, the legal advisor of the Ministry of Labor, during the debates over the amendment in the Knesset Labor Committee. For example, he explained: “In bringing this law before the Knesset, the Minister of Labor did not hide the fact that this law is an outcome of the coalition agreement; having said that, he added that the law is part of the development of labor legislation throughout the world. If labor legislation was initially intended to protect the wage laborer, as time passed, the perspective that the independent contractor should also be protected developed further and further. Article 9 of the original law prohibits employing a worker on his day of rest, and this draft law seeks to impose such prohibition on the independent contractor as well” (Transcript of the Knesset Labor Committee of November 16, 1966). In my opinion, the following statement of his is particularly enlightening:

“When I debate this law I look at it as a social law and not just as a religious law. That was the foundation, and I participated in coalition negotiations over it, and I know. In many other previous governments, there was a coalition agreement that promised to enact a “Sabbath law”. In this law, the word “Sabbath” is not even mentioned. And when it was agreed upon, the Minister of Labor required two things: first, that if this is a Sabbath law and a religious law, why does it have to be part of the Hours of Work and Rest Law? And second – then the Minister of Religious Affairs would have had to be responsible for it … I call your attention to the fact that this law does not discuss the Sabbath but rather the weekly day of rest … it’s a social law. As we do for salaried employees, that is how we shall do for independents, who are also workers. From the point of view of the national legislation, they will have a day of rest” (Transcript of Labor Committee of July 3, 1968).

  1. My colleagues, Justices Hendel and Sohlberg, find support for their interpretation in Article 9A(c) of the Hours of Work and Rest Law, which forbids a non-Jew from opening his shop on the Sabbath in an area where there is a decisive Jewish majority. For them, that article indicates the legislator’s intention not to allow the opening of businesses in Jewish areas on Saturdays, even if those who work in the business as a practical matter are not Jewish. I do not think that the above resembles a piece of evidence. At the heart of those words, there could be an alternative explanation to the one that my colleagues propose, one that is based on simple market logic. What does that mean? In my opinion, with Article 9A(c), the legislator sought to prevent a situation in which the “vacuum” created in a certain area – in which all the Jewish-owned businesses were closed on the day of rest – would be exploited by non-Jewish business owners, who are not required, under the law, to stop working on the day of rest (See, e.g. statements by Member of Knesset T. Sanhadrai in the transcript of the Labor Committee of November 22, 1967).
  2. As an aside, I will note that I do not agree with my colleagues’ position regarding the interpretation of the term “shop” as it appears in Article 9A of the law. For them, this term is limited to businesses that sell products, as opposed to places of entertainment. It would appear difficult to interpret Article 9A as necessarily intending to refer to a “shop” in the narrow sense. This interpretation is inconsistent with the social purpose of Article 9A, because it leaves open the question of whether it applies to many other businesses that are not a “shop” in the narrow sense and are not a “workshop” or “factory”. What about offices that supply professional services such as accounting, legal representation or medicine. Are they workshops? Or should we say that the prohibition does not apply to them at all? Furthermore, I believe that the positions presented regarding the interpretation of the term “shop” in the statements made during the legislative debates do not necessarily express the appropriate interpretation of that term, primarily if we pay attention to the fact that repeated requests to add a definition of that term were repeatedly rejected, deliberately, inter alia, for reasons that were defined as “relating to the governmental coalition” (See, e.g. D.K. 5729 1904). In any event, I do not think we need to address the full range of the above-mentioned aspects in our case, given the conclusion that Article 9A of the law does not include a prohibition on opening businesses on the Sabbath, but rather imposes restrictions on the work of those for whom it is their weekly day of rest, including the business owners themselves.
  3. Similarly, I want to point out that the interpretation proposed by the opposing position puts the Hours of Work and Rest Law on a direct collision course with the Authorizing Law. As we know, Article 249(2) of the Ordinance imparts the local authority with power to regulate “the opening and closing” of shops, workshops, places of entertainment and additional institutions, and “to determine … their opening and closing hours on any given day”. Article 249(21) of the Ordinance adds and explicitly clarifies that the local authority may exercise such power in respect of the weekly day of rest, too, taking into consideration reasons of religious tradition. My colleagues tried to resolve this difficulty through various interpretive paths. I think the solution is much simpler: there is no contradiction between the Hours of Work and Rest Law and the Municipalities Ordinance, and in any event there is no interpretive tension that needs to be bridged. Article 9A of the Hours of Work and Rest Law is a protective law that guarantees the Sabbath rest for those who work as independent contractors, while the Municipalities Ordinance regulates the scope of what is permitted for opening businesses, and each of those kingdoms remains within its own domain.

 

The Post-Legislative History: Implementation of the Law Throughout the Years and New Proposed Laws

  1. In addition to the aforesaid, I want to emphasize that the interpretation of Article 9A of the Hours of Work and Rest Law cannot be done as if we were reading a blank slate. As we know, as part of the method of purposive interpretation, we should examine the legislative history of a piece of legislation. In that context, one examines both the pre-legislative history (the legal and social background that led to the act of legislation, as well as the stages that the law passed on its way to enactment) and the post-legislative history, meaning the events that occurred after the act of legislation that are relevant to it (See: Barak, Legislative Interpretation, pps. 351-352).
  2. We have in the record decades in which the Hours of Work and Rest Law has been discussed and implemented in the rulings of this court. In each case, the legal proceedings were based on the fundamental assumption that the Hours of Work and Rest Law does not per se prohibit opening businesses on Saturdays and holidays, in contrast to employing workers on their days of rest in these businesses (See, e.g., the Petah Tikvah Municipality case, pps. 821-822). Thus, in the two central judgments in which this court addressed arguments against the prohibitions on employing salaried workers on the Sabbath – the Handyman case and the Design 22 case – the proceedings were entirely based on the assumption that it is possible to operate the business itself, and the discussion was over the restriction on employing Jewish workers in the business on the day of rest. This state of affairs becomes clearer, as noted, if we examine the Bremer  case, in which most of the judges on the panel concurred with the result, including then-Justice E. Rubinstein, who granted the motion for a further hearing in this case. The Bremer case essentially referred the leaders of the Tel Aviv-Jaffa Municipality to enact a new by-law that would take a clear position about the operation of businesses on the Sabbath (ibid, paras. 52-56 of then-Deputy President Naor’s judgment). Was that ruling intended to direct the city’s leaders toward a path that is blocked in advance? I would be astonished if that were the case.
  3. It is worth noting that many of the petitioners for the further hearing, who reified the argument based on the interpretation of Article 9A of the Hours of Work and Rest Law, were essentially the appellants in the Bremer case. Despite that fact, they did not move for a further hearing after the verdict in case and did not argue that directing the Tel Aviv-Jaffa City Council toward the path of enacting a by-law regarding the operation of businesses on the Sabbath was a new and difficult precedent, which allegedly contradicts the law, as they are arguing now. This kind of procedural conduct would seem to arouse wonder and even discomfort. In contrast to an appeal, which can be filed only by one who wants to challenge the operative result of the verdict, a motion for a further hearing is intended to restore the law to its proper path.
  4. Furthermore, we should note that interpreting Article 9A to completely prohibit opening businesses on the Sabbath is inconsistent with the practice in which local authorities have engaged for many years. Many authorities – excluding the Tel Aviv municipality – enact by-laws pursuant to their authority under the Municipalities Ordinance in which they regulate the issue of opening and closing businesses on the Sabbath (for more on this, see: Gidon Zaira and others, Achifat Hahoraot Bidvar Ptichat Asakim Visgiratam Bimei Hamenucha Al-Yidei Harishuyot Haekomiot [Enforcing the Provisions on Opening and Closing Businesses on Days of Rest by the Local Authorities] (Haknesset, Research and Information Center, 2014)). Without addressing the question of the intensity of the enforcement of these laws – which is a separate question – one wonders why many local authorities need to regulate, in detail, the question of closing and opening businesses on the Sabbath using by-laws, if the assumption is that in any event the law sweepingly prohibits it? In my opinion, that fact demonstrates that the above-mentioned interpretation does not reflect the consensus among the local authorities.
  5. It is worth noting that an examination of the permits issued for work on the Sabbath under Article 12 of the Hours of Work and Rest Law (on the list available on the Ministry of Economy’s web site) indicates that in practice, these are permits for employing workers. Were the Ministry of Economy to instruct itself to follow the interpretation proposed ty the opposing position, each time it issued a permit for employment on the Sabbath, it would have had to issue, in parallel, a permit for the operation of the business itself – based on the assumption that employing a worker is like operating the business. It did not do so.
  6. Furthermore, the draft laws that were submitted in recent years seeking to adopt a clear distinction between the law that applies to businesses in the area of commerce and that applying to cultural and recreational institutions are all based on the assumptions that this is an innovation worthy of being introduced – as opposed to a reflection of the current legal state of affairs (see, e.g. Draft Law Weekly Day of Rest, 5776-2015, P/20/2112; Draft Sabbath Law, 5776-2016, P/20/3340. See also Sapir, pps. 230-231).
  7. We can say the same thing, with the necessary adjustments, about the way my colleague, Justice Hendel, relates to the principles outlined in the document called “the Gavison-Medan Contract”. This contract is a comprehensive proposal for a new status quo, which seeks to present a new compromise on issues of religion and state (see: Yoav Artsiali, Amanat Gavison-Medan: Ikarim Viekronot [Gavison-Medan Contract: Essences and Principles] (2003)). It has no normative force, and its fundamental assumption is that it does not reflect the current state of affairs. I say that without addressing the details, for example the fact that the document includes additional agreements regarding the Sabbath, such as limited operation of public transportation on the Sabbath (as part of a new social agreement on the subject).
  8. Having said all that, I believe that there is no basis for the argument that the interpretation of Article 9A in the President’s judgment is a “new” interpretation. In my opinion, the opposite is true: the interpretation on which the opposing position is based is an interpretation that is inconsistent with previous rulings and with the de facto conduct in the field.

 

On the Autonomy of the Local Authority and the Minister of Interior’s Supervisory Role

 

  1. If this is the case, I agree with my colleague the President that the local authority is authorized to regulate the issue of opening and closing businesses on the Sabbath within its jurisdiction, by enacting by-laws. We should evaluate the considerations that the Minister of Interior may consider regarding by-laws from the perspective of the general reciprocal relationship between the local government and the central government, as the legislation designs it, and for our case, primarily the Municipalities Ordinance.
  2. As is clear from the Municipalities Ordinance, the body that is tasked with establishing the organization of life in the municipality is the city council. This principle stems from the fundamental perspective viewing local authorities as the governmental bodies that express the autonomy of the community and democracy that has enhanced representative mechanisms (See further: HCJ 3791/93 Mishlev v. Minister of Interior, 47(4) PD 126 (1993); HCJ 953/01 Solodkin v. Beit Shemesh Municipality, 58(5) PD 595, 620 (2004) (hereinafter: the Solodkin case) and the references it contains; Itzhak Zamir, Hasamchut Haminhalit [Administrative Authority], Vol. 1 446-447 (2nd expanded ed. 2010)). In contrast, the Minister of Interior has an oversight function, which is supposed to reflect protection of the general public interest, but not to replace the municipality’s discretion at the outset (HCJ 7186/06 Malinovsky v. Holon Municipality [unpublished], paras. 60 (December 29, 2009) (hereinafter: the Malinovsky case)). As I noted in the verdict that is the subject of the further hearing – “the Minister of Interior’s decision is supposed to oversee the lawfulness of the of the authority’s action, to ensure that it is not tainted by aspects of negative externalities vis a vis other authorities, and to give expression to the system’s common values (subject to the principle that their implementation is not supposed to be uniform throughout the entire country)” (ibid, para. 3 of my opinion). I will therefore seek to repeat what I wrote in this context and to clarify it.
  3. One of the clear aspects necessary for the Minister of Interior’s oversight relates to the required coordination between local authorities and cooperation between them. This is coordination that can be termed horizontal coordination. Thus, for example, there is a concern over unfair competition between authorities, which would require intervention by the minister. Indeed, such competition could have positive aspects, in the sense of allowing people to choose among different and diverse services that each authority offers, according to their preferences and how they wish to shape their lives (See: Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. Pol. Econ. 416 (1956); Ishai Blank, “Mikomo Shel Ha’mekomi’: Mishpat Hashilton Hamekomi, Bizur Vi-I Shivyon Merchavi Biyisrael [The Place of the ‘Local’: the Law of Local Government, Decentralization and Spatial Inequality in Israel”, 34 Mishpatim 197, 208-210 (2004) (hereinafter: Blank)). However, having said that, competition between authorities has certain limitations, considering, for example, the difficulties related to moving between them and information gaps regarding the attributes and character of a particular local authority (See, e.g.: Blank, p. 209). I have written in the past that action within a competitive paradigm can lead to a situation in which a local authority will avoid weighing broad considerations, for example considerations of distributive justice at the regional or even national level (See e.g. HCJ 7425/09 Tuttnauer Ltd. v. Minister of Interior [unpublished], para. 31 (January 3, 2013). An additional concern that arises in this context is about externalizing the costs of one authority to another (ibid, paras. 32-25). In that vein, in our context, we might imagine a difficulty wound up with the fact that a municipal council might order the opening of businesses on the Sabbath particularly close to a quiet residential (or even religious) neighborhood of another city, in such a way as to infringe on the quiet it enjoys or to influence its character. The Minister of Interior’s broad gaze can prevent such situations.
  4. On another level, it is important to consider the question of whether this is an area in which both the local and central governments have been granted authority to act in parallel. This is coordination that can be termed vertical coordination. Addressing issues of security and public order is an example of an area of this type. Local authorities are authorized to act in this area to a certain extent (pursuant to Article 249(29) of the Municipalities Ordinance), but that is also a core area of activity for police and other security agencies belonging to the central government. If that is the case, where parallel authority exists for the local government and the central government to regulate a particular area, there is space for the Minister of Interior to exercise his supervisory power.
  5. Having said that, there are areas whose regulation is primarily assigned to the local authority, and for these, one should accord substantial weight to its autonomous space. Designing the local authority’s public space is a clear example of an area in which one should, to a great extent, cede to the local authority, because it is close, double-meaning intended, to the residents and the environment in which they live, and can express human diversity (See: Blank, p. 211). It is not by chance that the legislator chose to authorize the local authorities to regulate various areas concerned with religion and state, as will be detailed below.

Arrangements for Opening Businesses on the Sabbath from the Perspective of the Authorities’ Autonomy

  1. Further what has been said thus far, the legislator’s choice to impart the local authorities with the authority to regulate the opening of businesses on days of rest was not made unintentionally. It reflects the historical complexity of the relationship between religion and state in Israel. As far back as the founding of the state, Israeli society struggled to reach comprehensive arrangements in the area of Sabbath observance, and therefore it was decided to set a number of framework principles, but to leave great space for decisions reflecting local tradition – instead of setting a general governmental policy. In essence, this choice of the legislator is based on the traditional perspective that views the issue of opening and closing shops on Sabbath days and holidays as a primarily local issue (See: Crim App 858/79 Lapid v. State of Israel, 44(3) PD 386 (1980)), except for certain kinds of businesses, such as gas stations (See Crim App 217/68 Izramex Ltd. v. State of Israel, 22(2) PD 343 (1968)). In that, it differs from the choice that characterized the regulation of other subjects related to the Sabbath, such as oversight of public transportation (See: Article 71(7A) of the Transportation Ordinance [New Version] and Regulation 386A of the Transportation Regulations, 5721-1961).
  2. It is worth noting that this choice of delegating decisions to the local level also characterized, at least in the past, additional areas of regulation that relate to issues of religion and state. We can see a prominent example of this in the authorization to enact local municipal ordinances on the subject of the pork prohibitions under the Local Authorities Law (Special Authorization), 5717-1956 (see the Solodkin case on page 620). See also: Dafna Barak-Erez, “Gilgulo Shel Chazir: Mesemel Leumi Liinteress Dati? [The Evolution of Pork: From a National Symbol to a Religious Issue?]”, 33 Mishpatim 403 (2003); Dafna Barak-Erez, Chukim Vichayot Acherot [Laws and Other Animals] (2015)). In truth, the legislators had in mind the success of this bizarre model in the symbolic area of pork prohibitions when they sought to establish an additional authorizing provision concerning by-laws on the subject of the Sabbath, thirty years later.
  3. Nothing said here detracts from the recognition that the issue of the Sabbath has an important national aspect. This recognition is integrated in the view that there are subjects that have both local aspects and national aspects (See generally: Yisachar (Isi) Rosen-Zvi, “Mahuto Shel ‘Hamekomi’ – Hirhurim Al Mekomiut Biakvut Bagatz 10104/04 Shalom Achshav v. Yosef [The Essence of the “Local” – Musings on Locality Following HCJ 10104/04 Peace Now v. Yosef]”, 12 Mishpat Umimshal 333 (2010). Similarly, we are not holding that the central government has no authority to intervene in regulating activity on the day of rest. As noted, there is no absolute partition between “local” areas and “national” areas, and we can imagine extreme cases in which the local authority’s decision would give so little weight to the general-national consideration in the framework of the balancing it conducts, that the minister’s intervention would be justified. Thus, for example, the broad perspective of the central government could be expressed in the cases in which the local authority completely ignores the national value of observing the Sabbath as a day of rest. However, that is not the case before us, and it is even far from it.
  4. My colleague, Justice Hendel, says that the uniqueness of the subject of the Sabbath justifies regulating it at the national level, as opposed to the local level. That is a possible approach. However, we can also imagine an approach that says that actually, the difficulty in reaching a decision on this issue at the national level justifies decentralizing the decision to the different communities. In any event, that is currently the approach that the legislator chose for all that concerns opening businesses on Sabbath days (as opposed to the subject of employment during those days), and we must respect it.

Back to the Minister of Interior’s Updated Position

  1. Having said that, we return to the concrete issue before us. A reading of the Minister of Interior’s position that was submitted in advance of the further hearing indicates that it does not reflect the customary legislative hierarchy. Thus, the Minister of Interior presents an organized world view but barely addresses the local authority before us – the City of Tel Aviv-Jaffa – and its special characteristics. In essence, these characteristics are not mentioned or discussed at all, except for mentioning that, according to the formulation of the current by-law, sale of food is permitted in convenience stores, pharmacies and three distinct sites. The autonomy of the local authority essentially is treated only by way of negation: “I am not persuaded, despite the weight that should be given to respecting the autonomy of the local authority, that the by-law as proposed by the Tel Aviv Municipality justifies the infringement …” (para. 17 of the Minister of Interior’s Position). The local authority’s autonomy therefore remains a saying, even lip service, as opposed to a value that has actuality.
  2. The diminishing treatment accorded to the consideration of autonomy of the local authority in the Minister of Interior’s position is also expressed in the way it contrasts “need”, which is presented as a legitimate consideration, with the consideration of “will”. The position says that such will “is based on making the convenience of this or that arrangement a priority and nothing more (para. 13 of the Minister of Interior’s position). If that is so, the evaluation is purely instrumental – what is a “need” and what is “convenience”. There is no respectful mention of the fact that this is a choice of the community, who chose their public officials as the product of a political process that expressed debate and thought, and not just the will of the “residents”.
  3. If that is so, the approach that arises from the Minister of Interior’s position is that he is tasked with forming policy on the subject from a nation-wide perspective. This approach transgresses the legislative arrangement, and it is opposed to the point of departure we discussed above. I therefore concur with the conclusion that my colleague, the President, reached, namely that there was no room for the Minister of Interior to intervene in the by-laws that the Tel Aviv-Jaffa City Council enacted. In this context, I wish to note that I also concur with the words of my colleague, the President, regarding the cause of reasonableness (para. 58  of her opinion), following the comment of my colleague, Justice Sohlberg on this issue. As my colleague noted, I also think that the cause of reasonableness is a central and critical tool for exercising judicial review of the administration, and in any event, throughout the years, our case law has enshrined guiding rules for exercising and implementing it, while being scrupulous about respecting the space for the discretion that the authority has been given in law. These principles become even more important in cases in which the flaw in the activity of the local authority rises to the level of completely ignoring a relevant consideration (See and compare: FH HCJ 3299/93 Wechselbaum v. Minister of Defense, 49(2) PD 195 (1995).
  4. I will add that I do not see much in the concern that the Minister of Interior expressed, that authorizing opening shops in the city of Tel Aviv would become “the new standard” for opening businesses in other authorities, as well, in such a way as to redesign the character of the entire nation. There is no basis for thinking that all local authorities will necessarily rush to open businesses on the Sabbath, to the extent of what was decided in Tel Aviv. Each city has its own characteristics, and in that vein, we actually might expect variety in the decisions that will made on the issue. I will add, beyond what is necessary, that I personally believe that the public status of the Sabbath is strong in the hearts of many citizens in Israel. Why assume that this position will not be given serious consideration by public officials in the local authorities, each authority according to its characteristics?

 

On Social Justice and the Sabbath Rest

  1. We should acknowledge: Choosing to open businesses on the Sabbath is not devoid of dilemmas. The Sabbath is a national symbol whose status and dignity should be preserved in the State of Israel. Furthermore, the Sabbath rest is a precious social asset whose protection we should safeguard – in general, and especially for disempowered populations in the labor market. These arguments presented by the petitioners, who are thoroughly convinced of them, do not fall on deaf ears. However, as was explained at length, the Hours of Work and Rest Law chose to protect these values without establishing a sweeping prohibition on opening businesses on the Sabbath. I wish to add two important clarifications on this issue.
  2. First, protecting the special status of the Sabbath in the public space of the State of Israel is not the same thing as observing the Sabbath according to Jewish law. This is true not just regarding the operation of places of entertainment (recreational and cultural institutions and coffee shops and restaurants), as the petitioners noted, but also regarding opening other businesses.
  3. Second, the petitions did not lay out a sufficient factual basis for the argument that their position is essential for protecting disempowered workers. Indeed, it is possible that opening businesses on the Sabbath will expose disempowered workers to work on their weekly day or rest, against their will and in violation of the law. However, the way to combat that is by appropriate enforcement of labor laws. During the hearing, no real basis was presented for the argument that opening grocery stores on Saturdays in the scope defined in the municipal law would create a special risk for disempowered workers – more than do the many restaurants and coffee shops in the city or the hotels on its beaches, which operate on a broad scale on Saturdays. In these establishments, one should be scrupulous about the workers’ weekly day of rest, and the authorities should prepare for that. Furthermore: to the extent we are talking about protecting small business owners who struggle, as was argued before us, to withstand the competition of businesses open on the Sabbath, we should add and evaluate the weight of opening businesses on the Sabbath versus other economic pressures that may be larger, for example, competition with businesses that operate continuously. If that is so, we should protect the special place of the Sabbath, but some of the social struggles lie in other places. To a certain extent, one gets the impression that this is one of those cases in which the petitioners “are looking for the coin under the lamppost” and not in its place.

In Conclusion: An Historical Look at the Sabbath Arrangements in Tel Aviv

  1. As I briefly noted in my opinion in the verdict that is the subject of the further hearing, we cannot view the dispute before us disconnected from the historical continuum on which it is located. I think that evaluating the issues from that perspective as well indicates that we should not see in the by-law an expression of a process of “continuous erosion” of the image of the Sabbath, but rather an expression of a lively debate that has taken place throughout the years on this issue (on the different perspectives regarding the characteristics of the Sabbath day among the founding generations of the Zionist movement, see further: Tzvi Tsameret, “Mordim Vimamshichim – Itzuv Hashabat Lifi Y.H. Brenner, A.D. Gordon, G. Katzenelson, S.H. Berman, E. Schweid Vi M. Eyali [Rebelling and Continuing – Designing the Sabbath According to Y.H. Brenner, A.D. Gordon, G. Katzenelson, S.H. Berman, E. Schweid and M. Ayali]”, Hayashan Yitchadesh Vihaddash Yitkadesh – Al Zehut Tarbut Viyahadut, Asufa Lizichro Shel Meir Eyali [The Old Will Be Renewed and the New Will Be Sanctified – On Identity, Culture and Judaism, A collection in Honor of Me’ir Ayali] 347 (2005)). In the hearing before us, the beautiful and moving saying of Ahad Ha’am was repeated: “More than the Jewish people kept the Sabbath, the Sabbath kept them” (from his article, “Shabbat Tzionut [Sabbath and Zionism]”), which was also mentioned in the opinion of my colleague, the President. Specifically for that reason, it is worth mentioning the context in which those words were written, whose force was directed at the time against those who wanted to replace the Sabbath with rest on another day, and the author was lending his ear to the “voice of protest of the national sentiment against canceling the Sabbath”. They thus expressed opposition to canceling the national status of the Sabbath, and did not address the specific content of how it would be observed.
  2. These words also apply, with the necessary changes, to the City of Tel Aviv-Jaffa itself. The petitioners sought to present to us a picture of a “Tel Aviv status quo” based on consensus founded on a “division of labor” that distinguishes between opening places of entertainment on days of rest and opposition to opening other businesses. According to this narrative – opening grocery stores “broke” that agreed upon status quo, and that alone is reason enough to restore the situation to what it was. However, a deep examination of the issue exposes a much more complex picture. In essence, a historical look indicates that the appropriate scope of observing the Sabbath in the City of Tel Aviv-Jaffa was the subject of disputes as far back as the city’s early days, and that these disputes have continued to the present time. In essence, even opening places of entertainment and recreation was not without controversy. And I will emphasize that this is not merely an anecdote. Examining the subject from the perspective of a number of decades helps to better understand the issue before us.
  3. In my opinion in the verdict that is the subject of the further hearing, I addressed the fact that the first by-law limiting the opening of businesses on the Sabbath within the City of Tel Aviv was enacted during the British Mandate, as far back as 1926, and it was invalidated by the Supreme Court of the Land of Israel in 1928 (Attorney General v. Altshuler (1928) 1 P.L.R. 283). Afterward, an updated by-law was enacted on the subject of the opening and closing times of businesses in 1932. That by-law did not include restrictions on opening businesses on the Sabbath (By-Law Regarding Opening Shops Within the Jurisdiction of the Area of the Tel Aviv Local Council, I.R. 1932, Ann. 2, 225). The continued public debate on the issue led to its replacement in 1937 with another by-law that imposed limitations on opening businesses on the Sabbath and indeed distinguished between coffee shops and restaurants and shops (By-Law (Opening and Closing of Shops), 1937, I.R. 1937, Ann.2, 664. See also Y. Frankel, “Hashabbat Umoadei Yisrael Bamishpat Hai Bazman Hazeh [The Sabbath and Jewish Holidays in Israeli Law at this Time]”, 2 Haparklit 107, 110 (1945)). However, the by-law from 1937 also did not end the disputes on the issue, and did not bring about the total closure of commercial activity, of peddlers for example (See: Anat Helman, “Torah, Avoda Ubatei Café: Dat Vifarhasia Bitel-Aviv Hamandatorit [Bible, Work and Coffee Shops: Religion in Public in Mandatory Tel Aviv]”, Katedra 85 (5763); Anat Helman, Or Viyam Hakifuh – Tarbut Tel Avivit Bitkufat Hamandat [Sun and Sea Surrounded It – Tel Aviv Culture During the Mandate Period],  91-99 (2007)). It is worth noting that already at that time, public intellectuals such as Bialik did not approve of the characteristics of the public space in Tel Aviv on the Sabbath (ibid, p. 99). In essence, the disputes extended throughout the years, despite the opening of cultural institutions, and we recall in this context the decision of the mayor of Tel Aviv in 1979, barring the holding of a production in the Kamari Theater on the Sabbath eve (See: HCJ 11/79 Mirkin v. Minister of Interior, 33(1) PD 502 (1979)).
  4. This is not, therefore, a “state of nature” that was violated, but rather an ongoing public dialogue, and its internal balances change periodically, according to the times – and subject to the consensus that the Sabbath needs to be different and distinct from weekdays.
  5. These issues are noted here, of course, in brief, and the goal is just to show that we are not dealing with a rule and deviation from it, but rather a dynamic development of city life. As noted, our case is not a question of what is the correct way to mark the Sabbath in the State of Israel, but rather what can the local community determine for itself.

 

Looking to the Future

 

  1. From my point of view, concern over eroding the traditional image of the Sabbath in the public sphere in the State of Israel is out of place. These are more complex processes. It is well known, for example, that in residential areas in which the religious population is in a clear majority, there are restrictions on driving vehicles on the Sabbath and holidays, even if that was not the case in the past, because the composition of the population there was different. The legal arrangements reflect the current needs of society and its widespread points of view, together with preserving principles that do not vary with the changing winds. Having said that, the details may change, just as life itself changes. By-laws that negate the special status of the Sabbath would be out of place. However, there is certainly a place for by-laws that respect the Sabbath in different ways, commensurate with the local community’s ways of life. One should hope that the discussion of this subject will continue in the appropriate place – the public arena.

 

Justice

 

It was decided by majority opinion (President M. Naor and Justices E. Hayut, Y. Danziger, Y. Amit and D. Barak-Erez, against the dissenting opinion of Justices N. Hendel and N. Sohlberg), as stated in the judgment of President M. Naor, to deny the motion for a further hearing and to uphold the verdict that is the subject of the further hearing. No costs are imposed on the parties.

 

Decided today, 6 Heshvan 5778 (October 26, 2017)

President                            Justice                                  Justice

Justice                                  Justice                                  Justice

Justice


 

A v. B

Case/docket number: 
CA 447/58
Date Decided: 
Monday, May 25, 1959
Decision Type: 
Appellate
Abstract: 

The appellant claimed an order in the District Court against the  respondents,  who were husband and wife, declaring that he was the natural father of a child born to the wife and registered as that of the respondents. The claim was struck out in limine and the appellant appealed.

 

Held, dismissing the appeal,

 

Per Olshan P. The granting of a declaratory order is in the discretion  of  the court, and having regard  to  the nature of the claim, public interest and  morality,  the prejudice  to the status and interests of the child who was not even a party to the proceedings, and the fact that the appellant had not even told the court for what reason the order was required, the claim was rightly struck out.

 

Per Landau J. An action such as this, in which the court is asked to approve an act which offends against public morality with all the  harm  which  it  involves  for  the welfare of the child and for the adults concerned, and without it being shown that a proper purpose is being served, is a gross abuse of the process of the court and will not be heard.

 

Per Witkon J. An action for a declaratory judgment which does not serve a practical purpose involves a misuse of judicial authority which should not be entertained, and as the appellant had not disclosed any legitimate interest worthy  of  judicial  protection  that alone was sufficient to deny him access to the courts.

 

Per Berinson J. (Sussman J. concurring). The relief claimed is in the discretion of the court, and it is inconceivable that any court will grant the appellant's request which en­ dangers the status and future of a minor who is not a party to the action and cannot defend himself, when the appellant has not shown in his claim what benefit he will derive therefrom.

Voting Justices: 
Primary Author
majority opinion
Author
concurrence
Author
concurrence
Author
concurrence
Non-writer
majority opinion
Full text of the opinion: 

C.A. 447/58

 

A. v. B. AND ANOTHER

 

In the Supreme Court sitting as a Court of Civil Appeal

 

Olshan P., Sussman J., Landau J., Berinson J. and Witkon J.

 

Judgments and Orders-Declaratory Judgment-Discretion of Court­ No proper purpose shown-Possibility of prejudice to third parties.

 

The appellant claimed an order in the District Court against the  respondents,  who were husband and wife, declaring that he was the natural father of a child born to the wife and registered as that of the respondents. The claim was struck out in limine and the appellant appealed.

 

Held, dismissing the appeal,

 

Per Olshan P. The granting of a declaratory order is in the discretion  of  the court, and having regard  to  the nature of the claim, public interest and  morality,  the prejudice  to the status and interests of the child who was not even a party to the proceedings, and the fact that the appellant had not even told the court for what reason the order was required, the claim was rightly struck out.

 

Per Landau J. An action such as this, in which the court is asked to approve an act which offends against public morality with all the  harm  which  it  involves  for  the welfare of the child and for the adults concerned, and without it being shown that a proper purpose is being served, is a gross abuse of the process of the court and will not be heard.

 

Per Witkon J. An action for a declaratory judgment which does not serve a practical purpose involves a misuse of judicial authority which should not be entertained, and as the appellant had not disclosed any legitimate interest worthy  of  judicial  protection  that alone was sufficient to deny him access to the courts.

 

Per Berinson J. (Sussman J. concurring). The relief claimed is in the discretion of the court, and it is inconceivable that any court will grant the appellant's request which en­ dangers the status and future of a minor who is not a party to the action and cannot defend himself, when the appellant has not shown in his claim what benefit he will derive therefrom.

Israel cases referred to :

(1)          C.A. 238/55-Aharon Cohen and Bella Bousslik v. Attorney­ General (1954) 8 P.D. 4; S.J., Vol II, 239.

(2)          C.A. 291/56-Ya'akov Szczupak v. Shmuel Rapaport and 4 others

(1959) 13 P.D. 39.

(3)          C.A. 16/55-Marasha Ltd v. Albert Massri (1957)  11  P.D. 126. 350

(4)          File 226/5714-Husband A. v. Wife B. (1954) Rabbinical District Courts Judgments, Vol. 1, p. 145.

English cases referred to :

(5) Yoo/ v. Ewing (1904] 11. R. 434.

(6)          Holman and others v. Johnson, alias Newland (1775) 98 E.R. 1120.

Trichter for the appellant.

Levitsky for the respondents.

OLSHAN P. By virtue of secs. 38(b) and  40 of  the  Courts Law, 1957, it has been decided to forbid the publication of the names of the parties and of the child involved in these proceedings.

This is an appeal from a judgment given in the District Court of Tel Aviv-Jaffa on  December  4, 1958 by Lamm J. In terms of this judgment a claim filed by the appellant against the respondents for an order declaring that he, is the natural father of a child registered as that of respondents, was struck out.

It is not in dispute between the parties that the respondents, husband and wife, have been lawfully married for more than ten years and that  the child in question was born in December 1953.

The appellant, in his action, bases his claim  on  the allegation that he maintained sexual relations with the second respondent during the above-mentioned period, and also did so nine months before the bi th of the child.             .

The defence is based upon a complete denial of all the appellant's allegations, and includes the averment "that the action was commenced vexatiously and/or for defamatory and denigratory purposes only.

The  plaintiff  himself  requested  the  dismissal  of  a  similar action pre­ ,

viously filed· by him in this Honourable Court in  Civil  File  582/58. The earlier action was dismissed by a decision of the Registrar on 22.4.58."

The judgment, which is the subject of this appeal, states:

"I agree with Mr. Trichter (counsel for the appellant) that an action should not be struck out when there are prospects that the court will decide in favour of the plaintiff. But this is not so in the present case. The action is in fact direc­ ted towards obtaining a declaratory judgment which will de­ termine that the minor is illegitimate. I do not think that the courts of this country are entitled to grant relief to a person so as to injure the rights of a child, even if! were to accept the allegations in the claim as true, although a situation is con­ ceivable in which the interests ofa child may demand such a declaration, especially where an unmarried woman is concerned. I find, therefore, that the claim is misguided and I strike it out as not disclosing a cause of action."

Counsel for the appellant submits that the learned judge was not entitled to strike out the claim without affording the court an opportunity of considering the evidence which the plaintiff could adduce in order to obtain the declaration which he sought.

This would appear, at first sight, to be an argument of substance  and as a rule the courts are not anxious to exercise the power given to them by Rule 21 of the Civil Procedure Rules. In the result, however, I have reached the conclusion that the decision of the  learned  judge should not be disturbed. As he correctly states in his judgment, it is inconceivable that a court considering a claim such as this will exercise its discretion in favour of the plaintiff and agree to grant a declaratory judgment as sought, for the court must apply the utmost care when a minor is likely to be adversely affected.

But it is not this opinion which was expressed by the learned judge that served as the ground for his striking out the claim. From the context it is clear that the decisive reason for his ruling was that which appears in his concluding statement:

"I therefore find that the claim is misguided and I strike it out as not disclosing a cause of action."

This accords with the provisions of Rule 21.

Counsel for the appellant criticizes this conclusion ai:d it would appear, at first glance, that there is substance in this criticism.

The criterion for striking out a claim pursuant to Rule 21 is that the judge who is asked to strike out a claim under this Rule must assume  that the plaintiff will succeed in proving at  the trial all the facts alleged in his statement of claim. Upon this assumption, the judge is to ask himself the question  whether,  in law,  the facts  thus  proved  constitute a basis for the right asserted in the statement of claim. It is only in a case where the judge may properly say that, though the alleged facts are established by the evidence, the right asserted is not legally recognised, that he may exercise the power given him by Rule 21 and strike out the claim. If we are to apply the above criterion in the present case, the strictures of appellant's counsel would appear to be sound.

These are the facts upon which the appellant bases his claim:

(a)          The male and female defendants have been married for more than ten years.

(b)          From July 1952 the plaintiff had maintained intimate relations with the female defendant and cohabited with her.

(c)           At the end of February or early March 1953, i.e. about 9 months before the child was born, the plaintiff and the female defendant  spent six days in Shefayim and had sexual relations there.

(d)          The male defendant was impotent and/or otherwise  incapable of procreation.

- (e) Since July, 1952, the female defendant had cohabited  with no one  except the plaintiff.         ·

(f)           Relying on the facts set out in the statement of claim or some of them the petitioner believes and claims  that he is the natural father  of the child.

(g)          The defendants have never denied the plaintiff's allegations concerning his paternity of the child and the female defendant has not even really rejected his demand that the child be surrendered into his custody.

If it be assumed that the plaintiff will prove all these facts, he will thereby establish that he is the child's natural father. Accordingly appellant's  counsel  questions  the  ,action  of  the  learned   trial  judge in striking out the claim upon the ground that it does not  disclose  a cause of action.

Had this not been an action for a declaratory  judgment-i.e. for an equitable remedy the granting of which lies within the court's dis­ cretion-I would, perhaps, have found more substance in the appeal.

As I have said, the respondents deny most emphatically all and each of the allegations and assert that the claim was filed "vexatiously and/or for defamatory and denigratory purposes only". If there is  only  a scintilla of truth in the respondents' denials, the filing of the claim is singularly scandalous. One appreciates the concern of the respondents about the unsavoury details which the appellant was ready to put to the court together with all the "evidence" and "examinations" and the pernicious effect this will have upon the child. Their concern is under­ standable even if in point of truth they are quite confident that the appellant would ultimately fail. But in the light of the criterion for applying of  Rule  21 we have  to deal with  the appeal  without  regard  to the denials of the respondents.

In as far as granting a declaratory judgment lies within the court's

discretion-and a plaintiff may not demand this remedy as a vested right-then, even if the claim had not  been  struck  out  by  virtue  of  Rule 21 and  the  matter  had  come  to  trial,  the  court,  having  regard to the nature of the claim, would have had the power to dismiss it in limine before hearing the evidence, upon deciding that bearing in mind the nature of the claim, public interest  and  morality  and  the prejudice to the interests and status of the child (who is not even a party to the action) it is not prepared to use its discretion in favour of the plaintiff to grant him the relief he claims.

I have not found in English or  American  law  a single  aase  like the one before us, of a person who purports to  be the father  of a child  by alleging illicit sexual relations with a married woman and seeks a declaratory judgment which necessarily involves proclaiming that the child is illegitimate.

In as far as granting a declaratory judgment is discretionary, the court may consider the plaintiff's conduct even from a moral viewpoint and pose the question whether in equity the plaintiff deserves the relief which the judge is by law competent, but not under a duty, to grant.

It is not to be overlooked that in declining to grant a declaratory judgment at the outset of the trial, the court does not decide the merits of the dispute between the parties. If the case reached the stage of hearing and the court had announced at the commencement that no matter what the evidence will be it is not prepared to grant the relief prayed for, be­ cause in equity the plaintiff does not merit it-the court would not there­ by have decided the paternity question.

The discretionary nature of the relief in granting a declaratory judgment as explained above is to be gathered from the many precedents cited by the Deputy President (Cheshin J.) in his judgment in Cohen and Bousslik v. Attorney-General (1).

After mentioning all the authorities, the Deputy President aid:

 

"The court, in  considering  all  the  circumstances  of the case before it, particularly as we are dealing with relief which originated in the Courts of Equity, cannot, and should not, disregard the behaviour of an applicant and the back­ ground of his actions which, he submits, have created the rights in respect of which he seeks an authoritative declara­ tion from the court."

LikewiseSussmanJ. said (atpp. 36-37):

"Iam not prepared to dispute the principle enunciated          by Justice Cheshin, namely, that in considering whether or not to grant declaratory relief, the court may take into account the behaviour of the parties, as reflected in the actions which constitute the basis which serves for their application to the court."

Silberg J. was also of the same opinion. The two last-named justices only disagreed with the judgment of the Deputy President on the question whether from the point of view of the public interest the relief sought should be granted.

Does the plaintiff come to court with clean hands in the present case-as reflected in the statement of claim itself?

He says: "I maintained sexual relations with  a  married  woman. The child born five years ago and registered as the lawful child of the defendants is illegitimate. He is my son. Please make a declaratory judgment confirming my allegations and proclaim me as the child's father." He does not even trouble to tell  the court why  he requires such a declaration. The question of the appellant's conduct arises  not  just with regard to the female defendant but vis-a-vis the child who was not made a party to the proceedings at all, and particularly with regard to public morality.

To my mind there is no shadow of a doubt as to the reaction.of the court in connection with the exercise of its discretion in favour of a plaintiff such as this.

In Szczupak v. Rapaport (2), also a case of a declaratory judgment, no problem involving public morality arose. Nevertheless, the Coqrt of Appeal declined to deal with the lower court's conclusion regarding the very ght which the appellant had claimed and stated (at p. 40):

"As indicated, the appellant claimed a declaratory judgment. When a plaintiff makes such a claim, the burden  is upon him not merely to prove his right but also tQ convince the court that the circumstances demand this right to be determined by means of a declaratory judgment alone. The appellant here (as well as in the District Court) did not deny that it is possible for him to connect with the municipal sewage system without any difficulty and that the first, second and third respondents have agreed that it be done at their expense. That being so, the plaintiff has not succeeded in con­ vincing the court how he will be aggrieved or prejudiced if the right which he claims will not be established by means of a declaratory judgment. On the contrary, his insistence is likely to arouse a suspicion, or more correctly an impres­ sion-and we wish to emphasize that this has not been proved

-that here the question is one of scoring a triumph or of other motives which are not clear to us. Since on the one hand the appellant has not succeeded in  convincing  the court of the necessity for the relief sought, and since on the other hand his attitude tends to create the impression aforesaid, it follows  that  he  has  not  discharged  his  duty of convincing us that he should be granted a declaratory judgment. We have therefore decided to dismiss the appeal accordingly."

A fortiori when the petitioner comes with unclean hands, as above explained. Pomeroy in Equity Jurisprudence (5th  ed.) Vol.  II,  p. 91, sec. 397, speaking of the principle of clean hands in connection with equitable remedies says:

_    "It    says that  whenever  a  party, who as actor seeks to set the judicial machinery in motion and obtain some remedy, has violated conscience, or good faith, or other equitable principle, in his prior conduct, then the doors of  the court will be shut against him in limine; the court will refuse to interfere on his behalf, to  acknowledge  his right, or to award him any remedy."

At page 117, section 402, he says:

"The principle is thus applied in the  same  manner  when the illegality is  merely  a  ma/um  prohibitum,  being in contravention to  some  positive  statute,  and  when  it  is a ma/um in se, as being contrary to public policy or good morals."

And at page 133, section 402e:

"Even in this situation, however, it has been held that a person who marries another, knowing that the latter has a husband or wife living, is not an 'innocent or injured party', and the courts will refuse a formal decree of nullification."

 

This is very close to the case before us, for there is no doubt that the purported marriage is invalid, although the court will decline to assist him by granting relief which lies in its discretion.

And at page 143, section 404:

"A court of equity acts only when and as conscience commands; and, if the conduct of the plaintiff be offensive t9 the dictates of natural justice, then, whatever may be the rights he possesses, and whatever use he may make of them in a court of law, he will be held remediless in a court of equity. Misconduct which will bar relief in a court of equity need not necessarily  be of such nature as to be punishable as a crime or to constitute the basis of legal action. Under this maxim, any willful act in regard to the matter in litigation, which would be condemened and pronounced wrongful by honest and fairminded men, will be sufficient to make the hands of the applicant unclean."

Courts are particularly circumspect and exercise abundant caution when the relief claimed is likely to affect the status of a child, such as to att h to him the status of an illegitimate person.

In A v. B. (4) a case decided by  the Rabbinical  Court  of Tel Aviv, it was said (at p. 149):

"As for the plaintiff, it is clear that a person is not be­ lieved to say of the child of a woman married to another that the child is his, not the husband's, so long as the latter does not say that the child is not his."

In most instances, this problem arises when a  man  reputed  to be  the  father  or  to  whom  paternity  is  attributed,   endeavours  to  obtain a declaration that he is not the father. Even in such a case, when the plaintiff does not base his claim upon grounds which clash with public morality, his course will encounter many obstacles, if it involves a dec­ laration that the child is illegitimate.

Borchard on Declaratory Jqdgments (2nd ed.) p. 486, writes:

 

"On the other hand while allowing the child  to protect its status through declaratory actions some British Courts have refused to allow a putative father to bastardise  a child by securing a judicial declaration that a child  born  to his wife was not his -on the theory that he was adequately protected by the defence available to him should the child claim maintenance. Yet there seems a good reason why the plaintitrs legal interest in rejecting the imputation of father­ hood should have been judicially protected by declaration.

The Appellate Division in New-York in a recent case  pointed out a distinction between a  declaratory  proceeding to establish illegality of a child, in which the child is a nec­ essary party, and a proceeding in the Domestic Relations Court for an order of support,  which is not an adjudication  of illegality, if the husband is held  not  to  be the father of  the child."

 

An instructive illustration  of  the  matter  under  consideration  is the case of Yoo/ v. Ewing (5). There,  the plaintiff  filed a claim against one defendant who had formerly been his wife and from whom he was divorced and against a second defendant who was the young  female child of his former wife. In this action he asked for a judgment declaring that the child was not his daughter and also as against the first defendant an order prohibiting her from representing the child as his daughter.  They had been married in 1894 and following the marriage a son was born. The parties separated in March 1895 and thereafter no longer cohabited as husband and wife. The wife and the son lived in a town  near which the plaintiff lived. In April 1898  the  plaintiff  sailed  for India and returned in the year 1900. The female infant was born in December 1898 and the mother registered her as the daughter of the plaintiff. She did  not  inform  the  plaintiff  of  his  birth  at  all. In  1900 a divorce decree was granted on grounds of  her  adultery  and  custody of the infant son was given to the mother pursuant to an agreement between them, which recited that the son was the only child of their marriage. When the action was begun, the mother was married to  the man with whom she had committed adultery.

The judgment (at p. 811) reads:

. "It was  sought  to· show  not  alone  that  the  plaintiff was not the father of the child, but that another person was. Now the presumption oflegitimacy in the case of a child born during wedlock is not one juris et de jure.... But the pre­ sumption is of enormous strt:ngth, and will not be rebutted in an ordinary case, where husband and wife live together, by mere evidence, or even proof, that a person or persons other than the husband had improper relations with the wife. In such a case the law on the clearest grounds of public  policy and decency will not allow an enquiry as to who is the father. But it might be otherwise here, for this is not in this respect an ordinary case, as the husband and wife were not living to­ gether under the same roof."

Notwithstanding the admissions of the defendant which were proved, the action was dismissed and (at page 812) it was said, following a suggestion that the result might have been different, had this been a suit for divorce:

"But it is a suit mainly and really not against Mrs. Ewing but against the other defendant, the infant. The decree sought for against her is a decree in rem; that is a decree that would be final, and binding and conclusive."

The judgment later explains that despite the rule (similar to  our rule) concerning the power to make declaratory judgments, even without additional relief, a court will not  render  such  judgments  if  they  are not required in connection with positive rights at the time of the action. And no declaratory judgment will be given if it is only required by the plaintiff in connection with what appears to him as future or possible future rights.

"Nor must anything I have said to be  taken  to  mean that this court has not ample power to decide questions of legitimacy, when necessary, as for instance, when a claim is raised in which legitimacy is a material element in determin­ ing rights. If an action were brought against  the  plaintiff here for the maintenance of  the  defendant  Dorothy,  it would be open to him to contest it on this ground  that though born during  wedlock,  the  defendant  was  not  in fact his child" (at p. 816).

From the foregoing I have no doubt that had the appellant's action come to Lamm J. for trial (and not by way of a motion to strike out pursuant to Rule 21) he would have been entitled even at the outset, relying simply on the statement of claim, to inform the parties that he was not prepared to exercise his discretionary power in favour of the appellant in order to assist him by recognizing his paternity  by means  of granting a declaratory judgment, because he did not regard him meritorious as explained above.

 

The only question then that arises in the appeal before  us is merely a procedural question, namely, was the learned  judge  permitted  to adopt this attitude within the framework of Rule 21, upon  the ground that no cause of action  was  disclosed.  In  other  words,  does  the fact or circumstance showing that a plaintiff is, or is not, deserving of relief which lies within the discretion of the court constitute an element of the cause of action.

In an action of the kind now before us, this fact may form an element in the cause of action in a negative sense. Let me explain. In an ordinary action for a declaratory judgment the burden is upon the plaintiff, as stated in Szczupak v. Rapaport (2), "to convince  the court that the circumstances demand this  right  to  be  determined  by  means of a declaratory judgment alone."  Nevertheless,  if  the  plaintiff  does not expressly set out in the statement of claim the circumstances which entitle him to discretionary relief, it is almost certain that the action cannot be struck out on  the basis of  Rule 21. If  the statement  of claim is silent in the matter, the court will say that since prima facie there is nothing withi'.n the statement of claim itself to indicate that the plaintiff is not entitled to the  assistance  of  the court, such  omission  is  not  to be regarded as a defect in the statement of claim so as to permit the exercise of the power given by Rule 21. In such a case, if the defen ant seeks to strike out in reliance on Rule 21, the court will refuse the application, and will say that the question whether the plaintiff is en­ titled to discretionary relief has to be resolved  in  the course of the trial in the light of the circumstances which unfold themselves and on the evidence adduced by the parties with reference to the right itself claimed by the plaintiff.

Only in a very rare case, such as in the one before us, when the statement of claim itself discloses circumstances which show con­ clusively that the court must refrain from assisting the plaintiff by exercising its discretion in his favour-even on the assumption that the plaintiff can prove  the facts  set  out in  the statement  of  claim-in  such a case there is, in my opinion, a possibility of applying Rule 21, because what is sought by the plaintiff will not be granted him even if he should prove these facts.

Just as in the normaf situation the reason for striking out  the claim is that no purpose will be served by continuing with the proceedings, because even if the plaintiff proves the facts 'the right claimed will not thereby be proved, so here the reason is that there is no purpose in dealing with the action on its merits because even if the plaintiff proves the facts, his right to obtain a declaratory judgment will not thereby be established.

 

In ah action for sp.ecific performance, for example, if the defendant applies to strike out the  action  under  rule  21,  upon  the  contention that the plaintiff has not come with clean hands,  his application  will fail. The court will then say that since there is nothing in  the statement of claim to indicate the absence of "clean hands," but only the defence

alleges this, it is not a matter of. striking out the action and the issue in dispute, like all other issues, must be decided in the course of the trial and after the evidence is heard. But if the statement of claim itself discloses facts which point to the plaintiff's "unclean hands," the defendant can, in my opinion, move to strike out the action. The fact that here the "unclean hands" according to the terms of the claim arises with respect to public morality and not merely to the defendant does not alter the situation.

Moreover, in an instance such as the one before us, it seems to me that equity even compels adoption of the means provided in Rule 21, for not only will no purpose be served by_ leaving the action to go to trial in the usual manner, but definite harm will result therefrom.

If the claim is not struck out, the plaintiff can deliver interrogatories and compel the defendants to answer the questions in accordance with the provisions of the Civil Procedure Rules and this very thing will defeat the reason for which the court will refuse to use its discretion in favour of the plaintiff.

The plaintiff in the present case has already delivered such in­

terrogatories which contain questions such as the following:

To the male defendant:

Do you believe that the child is your natural child and that you are his natural father?

Is it true that you are impotent? Is it true that you are sterile?

Have you been cured of your sterility?

Is it true that Professor Zondek said that you are incurably sterile?

Is it true that various persons have informed you that your wife was having sexual relations with the plaintiff?

 

To the female defendant:

Is it true that from July 1952 onwards you have maintained sexual relations with the plaintiff?

Is it true that the plaintiff is the natural father of the child with whom you were pregnant in the month of Septem­ ber 1952?

Is it true that you have had no sexual relations with anyone except the plaintiff?

Is it true that the plaintiff is the natural  father  of  the  chila with whom you were pregnant in 1953?

Is it true that  the  plaintiff  is  the  natural  father  of  the child to whom you gave birth in December 1953?

Is it true that your husband is sterile?

Is it true that since July 1952, and up to the time that the child was born, you had no sexual relations with anyone  except the plaintiff?

Have you had sexual relations from July 1952 to 1953  with  any person or persons other than the plaintiff and, if so, please state their names and addresses?

It is also to be noted that in reality the plaintiff's adversary in con­ nection with the action  for a declaration  of  paternity  is the child  who is not a party at all in the proceedings, and it is he whom the plaintiff seeks to have declared illegitimate, and this about four years after his birth.

I am of the opinion that the appeal should  be dismissed, and  that the appellant should be ordered to pay the respondents the costs of the appeal (includi g counsel's fees) in the aggregate sum of IL 300.

LANDAU J.  I agree  that  the appeal should  be dismissed.  For  myself, I see no need to rest the decision in this matter on  the discretionary nature of the claim for a declaration in accordance with the rules of equity. It is not the form of the prayer which is decisive here but the sub­ stance of the matter which the appellant is brazen enough to bring before the court. If his allegations are true, he has committed an act which of­ fends against public morality, and now he asks the court to give him its ap­ proval therefor, with all the harm which it involves both for the welfare of the child and for the adults concerned. This is an abuse of the process of the court which can hardly be exceeded, because "no court will lend its aid to a person who bases his cause of action upon an immoral  or illegal act", in the words of Lord  Mansfield  in  Holman  v. Johnson (6), which  I cited in  Marasha  Ltd.  v.  Massri  (3).  It  sometimes  happens  that  in a civil action the court undertakes an examination of matters which are contrary to law or morals, when required  to decide  an action  brought for a proper purpose.  But this appellant  has not shown in his statement of claim that he has any legitimate interest in washing his dirty linen before the court.

I am therefore of the opinion that this action was justly struck  out and my reason is that it is vexatious within the meaning of Rule 21 (d), and therefore not proper to be dealt with by the court.

 

WITKON J. I am also of the opinion  that  there  was justification  for dismissing thw action in limine, and that  because, in my view,  an action for a declaratory judgment which does not serve a practical purpose involves a misuse of judicial authority which should not be entertained. The appellant has not disclosed any legitimate interest worthy of judicial protection, and this alone is sufficient to deny him access to the courts. The fact that we are here dealing  with  a  "delicate"  subject,  and  th t the appellant is not morally blameless tends to add weight to the above reason even though by itself it  is not, in my opinion, conclusive.  Had the appellant sought to prove his paternity of the minor for a legitimate purpose-e.g., in connection with a  matter  of  succession-the  court would certainly have been obliged to go into the details. But this is not the case in the present instance, and accordingly the learned judge was right in dismissing the action in limine.

BERINSON J. The plaintiff asks the court to declare that he is the father of the child to whom the female defendant gave birth at a time when she was the wife of another man. The plaintiff does not say why he requires this declaration. It is not to be supposed that a court of equity to whose discretion the granting of such a declaration is given will use its discretion in a case such as the present, in which, as it is possible to judge from the claim •itself, the declaration (if made) is likely seriously to prejudice third parties, without our knowing in what way it can be of advantage to the plaintiff. By "third parties" I do not include the female defendant who, according to the allegation of the plaintiff, maintained sexual relations with him whilst married to another. So far as she is concerned, there is nothing to prevent-either from a moral or any other viewpoint-the disclosure of the truth in court even if the truth is harmful and prejudices her and  her married  life. If  indeed  the allegation of the plaintiff is true, and at this stage we may not say that it is not true, the female defendant is not entitled to any special consideration by the court. Compared to her he is not affected with any more immorality or "unclean hands" than she is. It is therefore im­ possible, in my opinion, to say with certainty, or even to assume at the very outset, before hearing the substance of the case, that from the point of view of the possible harm to the woman the court would not have exercised its discretion in favour of the plaintiff, had he succeeded in proving all the allegations of fact which appear in his statement of claim.

But the matter does not only concern the woman but also and principally the child. What has this child been guilty of that his legal and social status should be allowed to be put into doubt without any  real need therefore? Is it conceivable that  any  court  will  decide  to  grant the plaintiff's  request  which endangers  the status and  future  of a minor who is no party to the actio-n and cannot defend himself, when the plaintiff has not shown in his claim what benefit he will derive therefrom? Had the plaintiff at least disclosed for what purpose he required the declaration and upon such disclosure  had there prima facie been  room  to weigh the possible harm to tJ;ie child against the possible benefit  to t}:le plaintiff, it might then have been proper to permit the action to proceed to judgment in the normal course. But the plaintiff did not do this. He has not disclosed his motives and reasons,  and  the claim  in itself is defective. It is like y to inflict grievous harm upon the child without our knowing that a comparable advantage will accrue to the plaintiff. Not everyone who wishes may come to court and obtain a declaratory judgment. The plaintiff has no right to a declaratory judg­ ment as a matter of course and on the basis of the claim such  as it is, even if it were fully proved, one cannot see that he will succeed in con­ vincing the court firstly that the relief claimed is essential and secondly that he is worthy of it.

I therefore agree that the appeal must be dismissed. SUSSMAN J. I concur in the judgment of Berinson J.

Appeal dismissed. Judgment given on May 25, 1959.

 

 

 

 

 

Full opinion: 

Burka'an v. Minister of Finance

Case/docket number: 
HCJ 114/78
Date Decided: 
Thursday, April 28, 1955
Decision Type: 
Original
Abstract: 

An order nisi required that Respondent 2 (The Company for the Reconstruction and Development of the Jewish Quarter) show cause as to why it should refrain from granting a lease to the Petitioner for one of the apartments regarding which the Respondent published an “offer of apartments to the public”, and why the provision under which the offering is limited to Israeli citizens and new olim [immigrants under the Law of Return] should not be revoked.

 

The High Court of Justice held:

A.        The Respondent’s demand that the lessees of apartments in the Jewish Quarter of Jerusalem’s Old City be Israeli citizens or new olim does not constitute unlawful discrimination.

 

B.        (1)        Once a petition has been submitted to the High Court of Justice and the matter is pending before the Court, turning to the media and enlisting public support constitute contempt of court.

            (2)        A petitioner who prays relief from the High Court of Justice must impose silence upon himself outside of the courtroom.

Voting Justices: 
Primary Author
majority opinion
Author
concurrence
Author
concurrence

Kach v. Central Election Committee for the Twelfth Knesset

Case/docket number: 
EA 1/88
Date Decided: 
Tuesday, October 18, 1988
Decision Type: 
Appellate
Abstract: 

The Appeal revolved around the decision of the Central Election Committee for the Twelfth Knesset, under its authority according to section 63 of the Knesset Elections Act [Consolidated Version] 1969, that the “Kach” List be barred from participating in elections to the Knesset, under section 7A of Basic Law: The Knesset. The Appellant’s argue that section 7A, which was added to Basic Law: The Knesset is invalid for the following reasons: it is inconsistent with the principle of equality as established by section 4 of Basic Law: The Knesset; it is an extreme divergence from the principles of democracy and harms the citizen’s right to vote and to be elected, and that the causes for bar – which are listed within it in the absence of definitions – contradict each other. For the purposes of the considerations weighed by the Central Elections Committee, the Appellants argue, they are irrelevant considerations flawed by unreasonableness and discrimination. They further maintained that the “Kach” List must not be viewed a list to which section 7A of Basic Law: The Knesset applies. At the outset of the hearing in the Appeal, the Appellants sought to have three of the Supreme Court Justices recused from adjudicating the appeal, as they had previously adjudicated a matter involving the “Kach” List.

 

The Supreme Court held:

 

A.        1.         A judge is not barred from adjudicating a matter merely because he had previously adjudicated and decided the matter.

            2.        The resolution for the plight of a party, whose matters are often brought before a court, is in the nature and character of the judicial role and the judicial mental discipline.

            3.        It is presumed that a judge of the highest appellate level not be wrongfully influenced from things that are irrelevant or that are not raised in the particular matter before him, and that he is ready to hear any case with patience, tolerance and openness relevant challenges and new perspectives on issues he heard before and are raised before him again.

 

B.        1.         It is possible to change section 4 of Basic Law: The Knesset, once a majority of Knesset members give their voice to it. In this regard it is irrelevant whether we are concerned with a slight divergence or an extreme divergence from the principle laid in section 4 above, as in allowing an amendment passed by a special majority, the legislature did not establish an exception to the nature or material scope of the possible amendment.

            2.         Section 46 of Basic Law: The Knesset gives explicit support to conflicting legislation, which constitutes implicit amendment to section 4. Such treatment of implicit amendment results in the conclusion that there is no foundation for the argument that a piece of legislation that changes any of the norms provided by section 4 must include an explicit declaration that the new legislation comes to diverge from section 4 of Basic Law: The Knesset.

            3. Under the circumstances at hand, this is legislation made explicitly in order to create an exception for the principle in section 4 of Basic Law: The Knesset. It is a direct amendment of the Basic Law within the same legislative framework, by integrating an additional provision into the Basic Law, alongside section 4, when the implication for section 4 is apparent and clear to all.

 

C.        Even according to commonly acceptable principles, the court does not see itself authorized to review the validity of legislation by the Knesset, aside from cases where there is a formal argument as to the manner of the law’s enactment.

 

D.        1.         Exercising a basic right and implementing it de facto cannot be absolute, as there may be extreme circumstances created where exercising a particular right by one conflicts in those same concrete circumstances with the lawful right of another or become a serious and immediate risk that must be prevented.

            2.         Restricting liberties, including the right to be elected, requires direct and explicit legislation that would create clear limits and would not leave the matter to unfettered discretion of some administrative authority or another.

3.         Such legislation ought to include two substantive components: one, which would express the actual granting of the formal power, and the other which would define the circumstances under which it may be exercised.

4.         The possibility of legislation that would limit the right of lists that seek to put the mere existence of the state at risk to participate in elections does not raise difficulties on a principle level. However to the extent that there are attempts to expand the circle of the type of lists to be barred in advance from participating in elections process, the implication of such legislation on the very existence and realization of the fundaments of democracy would necessarily grow.

 

E.         1.         The amendment to the Basic Law: The Knesset as reflected in section 7A should be interpreted from within it according to its language and context and on the basis of the purpose of this piece of legislation.

            2.         The nature of the issue addressed by section 7A of the Basic Law is the limit of a constitutional basic right which carries by its nature the standard for the appropriate interpretation of the provision narrowly, strictly and limitedly and that its instructions not be implemented but for in extreme cases.

            3.         Such interpretive approach does not conflict with the written law. It is an understanding of the legislative purpose which did not seek to minimize protection of liberties but to protect them in light of a real risk.

 

F.         1.         Section 7A does not address the goals and action that reflect the nature of the list and which are a natural outcome of its identity. It targets phenomena such as those listed in paragraphs (1) to (3) of section 7A, which are dominant characteristic central among the aspirations or activities of the list, which for their purpose the list exists and acts and for whose advancement it seeks to participate in the elections.

            2.         In designing the elements of section 7A of Basic Law: The Knesset, the legislature did not include the element of a clear and imminent danger or of a probable possibility for realizing the danger reflected in the goals or actions of the lists, or any other similar test which ties between the wrongful action and the possibility of its materialization.

            3.         The term “explicitly” in section 7A of Basic Law: The Knesset refers to open and declared things, but also when one wishes to rely on implicit information, the final conclusion must be clear and unequivocally point to the issue being included among those listed in section 7A among the dominant characteristics of the list and its tendency to translate its goals into action.

            4.         The evidence in such case must be clear, unambiguous and persuasive.

 

G.        1.         There is not much to the argument as to a seeming conflict between the different paragraphs of section 7A of Basic Law: The Knesset. The existence of the State of Israel as the state of the Jewish people does not contradict the State’s democratic character, and these two can co-exist with complete harmony.

            2.         Incitement to racism can lead to barring a list from participation in elections, even if the alleged incitement seems to be done out of the goal to keep the State of Israel existing as the state of the Jewish people. The legislature’s premise is that the State of Israel can exist as the state of the Jewish people without incitement to racism.

            3.         Under the circumstances here, the goals and actions, attributed to the Second Appellant, implicate the principle that establishes the rights of the citizens of the state to vote and to be elected, which derives from the democratic nature of the state.

 

H.        1.         The legislature did not include in Basic Law: The Knesset a definition for the term “racism.” Under these circumstances, we may be assisted, among others, but the definition included in section 144A of the Penal Act 1977 in order to identify the elements of the phenomenon and in order to examine the Appellant’s goals and actions.

            2.         It is possible for a similar linguistic term to be interpreted differently across two different pieces of legislation, but it is all generally influenced by the legislative context and the legislative purpose of the law. Additionally, there is no converse interpretive rule that the same term in different statutes must lead to adopting a different and distinct interpretation for that term in each of the statutes.

            3.         The argument that “racism” refers only to distinctions and differences on a biological level – that is based on distinctions along the lines of the human races – must be rejected. Persecution in all its forms, whose reasons may be nationalistic, is included nowadays within the common meaning of the phenomenon of racism.

 

I.          1.         The Act for Correcting Administration Procedures (Decisions and Reasoning) 1958 is irrelevant under the circumstances here, whether in light of establishing the body which is entitled to the reasoned response or whether in light of the definition of a “public employee” in section 1 of the Act.

            2.         Following HCJ 620/85, when a collective body – such as the Knesset – is concerned, a body that is under no obligation to give reasons for its decisions, one can infer to some extent as to its considerations from reviewing the minutes of its discussions.

            3.         Under the circumstances, the Court has all the material that was before the Central Elections Committee, including the minutes of the discussions where the committee members expressed their reasoning. From the substantive review one may well surmise the basis for the decision to bar and the Second Appellant was aware of this.

 

J.          1.         When subjecting the decision of the Central Elections Committee to judicial review, the Court examines whether the process of the discussion was lawful. A lawful discussion means, generally, that the rules of natural procedure were not violated, that the procedures established by the legislation governing the committee or that were set out in its guidelines were maintained, that the decision was given by those authorized to do so, and that it fits the authority of the decision maker.

            2.         The Court further examines whether the Central Elections Committee exercised its authority while using it for its purposes. When no mistake in law occurred and when the decision is not flawed or influenced by fraud, the questions considered are whether the decision was given on the basis of evidence that supported it and whether it did not violate the law for another reason. The Committee must exercise its authority while using it for its purposes. This duty is comprised of several elements and they are that no irrelevant factors were considered, that the Committee did not ignore relevant information and that the decision was not so extremely unreasonable that a reasonable committee could not have made and that it was not proven that exercising the authority was merely an arbitrary act.

            3.         The political configuration of a body that is formed in order to organize the elections and exercise authorities under the Knesset Elections Act [Consolidated Version] when party activity is at its highest, it possibly carries natural incidental outcomes. Those who expect that a body comprised of clearly political elements would operate in a manner in which a court does, conflates one with the other.

            4.         Under the circumstances here, the Second Appellant’s arguments as to the self-interested considerations of the members of the Central Elections Committee and their parties and as to their lack of good faith are merely hypotheses and speculations by the Appellants, which are generally established by the structure of the system deciding as to bars and ineligibility. Should the decision be found by a court to be justified on its merits in light of the material before the court, this would undermine the meaning of the above arguments.

 

K.        1.         Under the circumstances, the list of the Second Appellant was lawfully barred by the Central Elections Committee because its publications, its speeches, its proposals and its actions or an incitement to racism as well as an undermining of the State’s democratic character, as provided by section 7A of Basic Law: The Knesset.

            2.         The level of activity by the Second Appellant, in all its forms, the extremity in presenting the issues and the actions that accompany them, and the serious distortion of the State’s nature and governance as a result, all paint the goals and actions the excessive seriousness that is sufficient in order to base the decision of the Central Elections Committee.

Voting Justices: 
Primary Author
majority opinion
majority opinion
majority opinion
majority opinion
majority opinion
Full text of the opinion: 

 

 

IN THE

SUPREME COURT OF THE STATE OF ISRAEL

 

Election Appeal 1/88

 

Before their Honors:     President M. Shamgar

Deputy President M. Elon Justice M. Bieski

Justice S. Levin Justice D. Levin

 

 

Appellants: 1. Moshe Neiman,

2. The “Kach” Party

 

 

v.

 

 

Appellee:      The Chairman of the Central Election Committee for the 12th Knesset,

 

Argued:        30 Tishrei 5749 (October 11, 1988)

2 Cheshvan 5749 (October 13, 1988)

Decided:       7 Cheshvan 5749 (October 18, 1988)

 

 

On behalf of the Appellants: Adv. A. Papo

 

On behalf of the Appellee:     Adv. D. Beinish, Deputy State’s Attorney; Adv.

N. Arad, Director of the Department Handling Cases Filed with the High Court of Justice for the State’s Attorney’s Office

 

 

JUDGMENT

 

 

 

President M. Shamgar

 

1.5,1988,for12thpursuantunder63of5729/1969determined party not run because violationof7aofday,ofparty’spursuant64(a)ofpartyfromparticipatingongroundsviolationof(2)(3)of7aofaresultofdecision,rightunder64(a)of

2.fora ofreasonsoverruledecisionofhisorder.

3.(a)beginningofhearing,apreliminaryrequestforofonpanelrecusefromhearing,requestdenied,reasonforpostponed.firstdecision.

(b)ourdecision,ofrequest

 

made along with the other justices on the panel believe there is no reason for any justice to recuse himself from this case. Constitutional issues, like any other legal issue, frequently appear before this Court, and, on occasion, two parties may reappear as parties before this Court. Sometimes, a party may reappear after appearing before this Court sitting as either the High Court of Justice or as the Court of Appeals. The appealing party in this case, a political party in the Knesset, or its leaders, has petitioned this Court sitting as the High Court of Justice a number of times. It is, therefore, reasonable to assume that most of the judges on this Court have already heard a case in which the [Kach] party was a litigant. In many of these cases, if not all of them, questions involving the objectives and the conduct of the Appellant have been raised and adjudicated by various panels of this Court.

An opinion expressed by a judge in the context of a decision of the High Court of Justice addresses the specific issue raised by a particular case or a given time. The nature of the judicial role is to be open to arguments designed to shed light on a set of factual circumstances or to develop a legal theory. A judge is not disqualified by the mere fact that he has already adjudicated the legal issue in question.

Moreover, like in the U.S., the “rule of necessity” allows judges to sit in judgment in cases affecting the judiciary (See United States v. Will, 101 S.Ct 471, 480 (1980)). If in a case such as this Court members recused themselves, the Court would essentially deny the petitioner the ability to have his day in court (See State

v. Sage Stores Co., 157 Kan. 622 (1943)). The highest judicial authority never exhausts itself and can never become unapproachable because a litigant has turned to it too many times, either by appeal or petition. It is not superfluous to add that in this case there are only one or two judges on this Court who have never sat in a

 

case to which the Appellant was a party, and it is inconceivable that we would come to a point at which this Court would be unable to hear the case of the Appellant or any other concerned party (See CrimA 323/76 Nir v. State of Israel, IsrSC 30(3) 592, 594, n.7). If we were to adopt another approach, we could come to the untenable situation in which we would not be able to adjudicate such cases. As the U.S. Supreme Court has said, “There was no other appellate tribunal to which, under the law, he could go” (Evans v. Gore, 40 S.Ct 550, 551 (1920)).

(c)

  1. (a) In his first argument, counsel for the Appellants challenged the validity of Section 7a, added in 5785/1985 as Amendment 9 to the Basic  Law:  The Knesset. It reads:

Prevention of participation of candidates’ list

 

7A. A candidates’ list shall not participate in elections to the Knesset if its objects or actions, expressly or by implication, include one of the following:

  1. negation of the existence of the State of Israel as the state of the Jewish people;
  2. negation of the democratic character of the State;

 

  1. incitement to racism.

 

Adv. Papo claims that Section 7a is void because it contradicts Section 4 of the same Basic Law, which the legislature has granted superior status. In other words, he argues that disqualifying a party from participating in Knesset elections violates Section 4’s guarantee of equality, which, as mentioned is Section 4, is among the most basic foundations of our electoral system. Because [Section 4] states that it cannot be amended except by a majority of Knesset members, its provisions should be viewed not only as protected, but also as superior to any other legislation. Therefore, any legislation found to be inconsistent with Section 4 should be nullified by this Court.

  1. We do not accept this claim. Section 4 sets forth the principles of the Israeli election system and dictates, among other provisions, that the elections should be equal (See HCJ 98/69 Bergman v. Finance Minister, IsrSC 23(1) 693). However, Section 4 informs us how the legislature can legislate while deviating from the principles set forth by Section 4. It states, “This Section cannot be amended except by a majority of members of the Knesset.” This means that it can be amended so long as a majority of (more than 60) Knesset members vote to do so. It does not matter whether the deviation from the principles set forth in Section 4 is significant or not, because the legislature, allowing for the amendment of the Section, did not restrict the nature or extent of the potential amendment. By way of an absolute majority vote, various provisions have been enacted in the election laws that may constitute a deviation from the norms of equality (See, e.g., 5729/1969 Knesset and Local Elections Act (on funding, limiting expenses and auditing) (as amended, 5730); 5769/1969 Elections Law (on the validity of laws); see also, HCJ 260, 246/81 Derekh Eretz Organization v. Broadcasting Authority, IsrSC 35(4) 1; HCJ 141/82 Rubinstein v. Speaker of the Knesset, IsrSC 37(3) 141).

 

Therefore, Section 4 does not prevent the legislature from enacting provisions that deviate from the principles set forth in Section 4, so long as it does so in a manner consistent with the Basic Law.

Furthermore, Section 46 of Basic Law: The Knesset explicitly allows for contradicting legislation which implicitly changes Section 4. Once it is deemed permissible to make an implicit change, there is no longer a basis for the Appellants’ counsel’s additional claim that any legislation changing a norm established by Section 4 must explicitly say that the new law deviates from Section

4.

  1. Finally, counsel for the Appellants also confirmed that Section 7a was passed by a majority of Knesset members. In light of what we have said, nothing in Section 4 requires us to overturn Section 7a.

5.

(b) This claim also does not change our position as to the validity of Section

 

7a. The accepted principles of this Court do not allow it to invalidate legislation passed by the Knesset, except in cases formally challenging the procedure by which the law was adopted (See, e.g., HCJ 98/69). In this context, I see no reason to address this constitutional argument in depth. I would add though, that as far as I am concerned, this argument is essentially the same as the previous one comparing Section 7a and Section 4.

6.

7.

 

The fundamental liberties - including freedom of expression, freedom of belief and equality in competing for public office, are all inherent in our governmental system and, therefore, in our legal system too. In every society one finds a variety of differing views and opinions; in a free society the diversity is manifest, in a totalitarian society the diversity is masked and concealed. Exchange of opinions, clarification of views, public debate, the urge to know, learn and convince - all these are essential tools in the service of every opinion, view and belief in a free society. The act of classifying citizens and distinguishing between them, some of whom are granted rights and others not, contradicts the truth that underlies the freedoms and, in its theoretical essence, manifests the same internal contradiction as does a person who decries democracy while utilizing the rights it confers. Even with unpopular views and opinions must one contend and seek methods of persuasion. Prohibitions and restrictions are extreme devices of the last resort. The premise is that freedom of speech finds prominent expression when accorded also to those whose opinions appear to be mistaken and even dangerous…

The decision then goes on to cite the enlightening quote from Justice Brandeis in Whitney v. California, 274 U.S. 357, 377 (1927), which addresses the issue of limiting free speech:

To courageous, self-reliant men, with confidence in the power of free and fearless reasoning applied through the processes of popular government, no danger flowing from speech can be deemed clear and present, unless the incidence of the evil apprehended is so imminent that it may befall before there is opportunity for full discussion. If there be time to expose through discussion the falsehood and fallacies, to avert the evil by the processes of

 

education, the remedy to be applied is more speech, not enforced silence.

 

Basic rights and their application cannot be absolute because of the likelihood that in extreme circumstances the use of such rights by one person will conflict with the constitutional rights of another or may create extreme and immediate danger that must be stopped. However, the authority for establishing general limitations or limitations in specific circumstances rests with the Knesset (HCJ 337/81 Mitrani v. Transportation Minister, IsrSC 37, 337).

In other words, limiting these freedoms, including the right to be elected, requires direct and explicit legislation, clearly delineating the limitations without allowing for unlimited discretion on the part of administrative or other authorities. We note, however, that in order to safeguard and honor these freedoms not only is a formal statute necessary, but also the establishment, within the statute, of the standards by which these powers can be activated. Such statutes must have two essential components. The first expresses the fact that formal authority has been granted, and the other clearly defines the circumstances in which such authority can be exercised.

It was stressed that the possibility that legislation limiting the right of parties wishing to harm the very existence of the State to participate in elections (see EA 1/65) is not, theoretically, difficult in principle; however, as one seeks to expand the number of parties excluded from the elections, the ramifications of such legislation upon the continued existence and realization of our basic democratic foundations will necessarily grow as well.

8.

 

here,  the  explicit  intent  of  the  legislature  prevails,  especially  because  we  are dealing with legislation that was enacted pursuant to a detailed ruling of this Court.

  1. The beginning of Section 7a refers to the sources from which indication of the negative behavior described in subsections (1), (2) and (3) can be inferred. In that context, the legislature refers to goals or actions. This means that we are dealing with the political party’s outlook and opinions which express its goals or, alternatively or additionally, the party’s conduct which demonstrates and reflects its character. A party’s objectives can generally be derived from its formal platform or from its advertisements, speeches or opinions expressed within political frameworks.
  2. The legislature added that the three grounds for disqualification, outlined in subsections (1) to (3), can be expressed either explicitly or implicitly. The terms “explicit” and “implicit” includes that which is clearly expressed and that which can be derived from the circumstances or concluded from a stated goal or action that, by itself, are not blatant expressions of unlawful conduct or intent pursuant to subsections (1), (2) or (3).
  3. In setting forth the principles of Section 7a, the legislature did not require the existence of clear and present danger, the probability of danger arising from the objectives and conduct of the party in question, or any similar test that looks to the connection between the condemned action and the possible results. Through this, the legislature changed the legal status until the enactment of Basic Law: The Knesset (amendment no. 9).
  4. Section 7a deals with objectives and conduct, but it does not become, as a result, a technical provision that takes effect only in certain  circumstances without any interpretive guidelines. The essence of such a matter, the limitation of a basic constitutional right, inherently carries a standard of interpretation that must

 

be strict and narrow, and Section 7a should be reserved for only the most extreme cases. This interpretive approach does not conflict with the statute, but is rather a result of a proper understanding of the purpose of the statute, which does not seek to limit  freedoms, but to protect them  against  actual danger. In other words, [Section 7a] should be applied in a way that takes into account the great weight given to our fundamental liberties.

  1. As previously mentioned, [Section 7a] includes both objectives and conduct. When we refer to “objectives” we mean ideological goals that the political party in question wants to implement and that reflect the party’s primary platform. As we understand it, the Section refers to objectives and conduct that reflect the character of the party, and those that flow naturally from the party’s identity. The authority granted by Section 7a is not intended for marginal matters whose realization would be insignificant and inconsequential. Subsections (1) to

(3) refer to dominant characteristics that are central to the aspirations or to the actions of the party characteristics that represent the reason for the party’s establishment and because of which the party wants to be elected. [We refer to] a platform or behavior that is prominent and typical of such a party, though it is certainly possible that they will be accompanied by other objectives and conduct as well. In any event, the facts should indicate that the objectives or conduct, as stated in Section 7a, are central among the objectives and conduct of the political party in question and that there is intent to implement the objectives and realize their [goals].

All this concerning the objectives and conduct must be clearly seen, and there must be no doubt that it falls under the categories specified in subsections (1) through (3). This also applies, mutatis mutandis, to the interpretation of the term “implicitly.” As noted, the meaning of that provision is that at times, we can derive

 

the objective from the circumstances that demonstrate the true nature of a particular action without an accompanying explicit declaration or statement. Sometimes we can arrive at a conclusion through logical reasoning even without an explicit declaration. On the other hand, the expression “explicitly” refers to clear and declared matters. However, even when arriving at a conclusion based on implicit data, the final conclusion must be clear and unequivocal that the behavior in question is included in subsections (1) through (3); that the trait is among the dominant characteristics of the party; and that it intends to act upon its objectives. Once again, the evidence in such a case must be clear, unequivocal and convincing.

9.

  1. As we have mentioned, Adv. Papo claims that there is an internal contradiction between subsections (1) and (2), since denying the democratic nature of the State (subsection (2)) can stem from the desire to maintain the State as the state of the Jewish nation (subsection (1)). Under this approach, the desire to be loyal to one of the stated goals that the legislature wishes to protect can also be what causes a party to be disqualified. Furthermore, within his critique of Section 7a, he argues that the term “democratic” in subsection (2) and the term “racism” in subsection 3 are not properly defined.
  2. The democratic nature of the State of Israel has been well established since its founding. This is clear from the language of the Declaration of Independence itself, which expresses the basic foundations of the State until this day (HCJ 73, 78/53 Kol Am, Ltd., Al-Etihad Newspaper v. Interior Minister, IsrSC 7, 781, 784; see also, Dr. Z. Segal, Israeli Democracy, Constitutional Principles in

 

the Regime of the State of Israel, at 262, (Ministry of Defense, 5748)).

 

The democratic concept as well as its implementation is reflected by the government and the legal and practical status of the State’s citizens and residents and, among other things, the principle of the rule of law, which includes equality before the law. The characteristics of democracy flow through the State’s political, social and cultural makeup. A great expression of this is the guarantee of basic rights and freedoms.

  1. The establishment of Section 7a expresses the desire of the legislature to block, in the most extreme cases, activities that intend to uproot the basic principles of the State. As stated in HCJ 620/85 Mitri v. Speaker of the Knesset, IsrSC 41(4) 169, 210:

The purpose of Section 7a is to create a separation between legitimate parliamentary activities and actions of the type described by the statute. It is as if it states that Knesset members are not allowed to take part in parliamentary positions adopting such objectives or conduct.

The history of the Jewish people is the basis for why we see the importance of eliminating racism, so much so that an explicit prohibition is enshrined in our constitution.

10.

The lack of such conflict has already been emphasized by President Agranat

 

in EA 1/65 at 385:

 

There is no doubt, as the Declaration of Independence has already made clear, that not only is Israel a sovereign, independent state, which seeks freedom and is characterized by a government of the people, it was also established as a “Jewish State in the Land of Israel.” The State was established, first and foremost, by virtue of “the natural and historical right of the Jewish people to live as any other people in its own sovereign state, and its [establishment] was the realization of the yearning of generations for the redemption of Israel.”

My colleague, Deputy President Elon also addressed this matter in EA 2, 3/84 at 297:

The democratic character of the State of Israel found expression in the Declaration of Independence, which speaks of ensuring complete equality of social and political rights to all its inhabitants irrespective of religion, race or sex, and guaranteeing freedom of religion, conscience, language, education and culture. These principles serve as our guiding light. The Jewish character of the State of Israel [is expressly found] in the Declaration of Independence in the very definition of the state as a Jewish State, and not merely as a state of Jews, in the opening of its gates to Jewish immigration for Ingathering of Exiles (as was expressed later in the Law of Return, 5710-1950), and so on. These principles likewise serve to guide us. This constellation of principles forms part of the Jewish state’s special make-up. Prominent Zionist thinkers of all trends and streams, Jews of varying world outlook, citizens of the State of Israel  of different ethnic and religious belonging, have all reflected upon and continue to

 

debate the practical significance and application of the principles of the Declaration of Independence in the Jewish state.

The Appellants’ attempt to demonstrate a contradiction between subsections

(1) and (2) is doomed to failure even if we apply it to the purpose of the legislation. Each subsection is self-sufficient and exists alongside the other. Not only is there no contradiction between them, but we also cannot assume that the legislature intended for one of the provisions to diminish the illegal nature of an objective or conduct just because a party wishes to advance one provision that the legislature wishes to protect at the expense of another. To illustrate, from the wording of Section 7a it seems that incitement to racism (a term we will discuss further) can disqualify a party from participating in an election,  even if the incitement  is supposedly driven by the will to maintain the State of Israel as the state of the Jewish nation. The desire to maintain the State, as stated in subsection (1) cannot serve as a license for racism. The presumption of the legislature, with which we agree, is that it is possible for the State of Israel to be the state of the Jewish nation without inciting racism.

11.

 

There is no reason for us to fully define the term “democracy” in this context. The question before us does not require this, and it will suffice to address the implication of the Appellants’ objectives and conduct upon a citizen’s right to vote and be elected, which undoubtedly stems from the democratic nature of the State; and, all the more so when such objectives and conduct are part of a campaign that aims to harm the equality that exists between citizens in both rights and stature.

We already stated that the right to vote and to be elected is one of the foundations of a democratic regime, and, in this context, there is no reason to

 

expand upon this.

 

12.

 

When amendment 12 to the Basic Law: The Knesset was proposed, another bill, 5745/1985 amendment 24 to the Penal Code, was proposed as well. This second law was passed in the Knesset, although slightly after the amendment to the aforementioned Basic Law and is now part of Section 144a-144e of the 5737/1977 Penal Code. As explained in the comments for the then-proposed amendment 24 to the Penal Code, because incitement to racism has become a troubling phenomenon, there is an educational need to amend the Penal Code to explicitly prohibit incitement to racism, instead of settling for the more general prohibitions that were listed in Sections 133 and 134 of the Penal Code. The 5746/1986 amendment 20 to the Penal Code includes a definition of the term “racism,” and this is what is says (Section 149a of the Penal Code):

Racism is the persecution, humiliation, degradation, open hatred, hostility, or violence, or causing strife for a certain group or portions of the population because of their color or their membership in a certain race or national- ethnic origin.

No other law defines the term in question.

 

Additionally, the attorney for the Appellee, Assistant Attorney General Dorit Beinish, has brought to our attention the 1966 Convention on the Elimination of all forms of Racism as well as foreign criminal laws defining the term “racism.”

  1. As we have mentioned, the legislature has not defined the term “racism” in the Basic Law: The Knesset, and I do not believe it is necessary to come up with an exclusive definition of the term. For our purposes it suffices to determine whether  the  objectives  and  conduct  in  question  are  included  in  the  term  in

 

question. I believe we can look, inter alia, to the definition in Section 144a [of the Penal Code] to identify some of the characteristics of the aforementioned phenomenon in judging the nature of the objectives and conduct of the Appellants.

Section 144a of the Penal Code includes a definition for the term “racism.” At the beginning of the section its states that the two definitions in it refer to “this article,” which directly refers to Chapter 8, Article 1(a) of the Penal Code. Nevertheless, I see no reason for us not to use this definition in order to help us understand Section 7a of the Basic Law: The Knesset, without creating an exclusive list. The amendments to the Basic Law: The Knesset and to the Penal Code were proposed at the same time to further the same goal, namely, for the first time, to combat racism in different ways. The two amendments are explicitly in pari materia, meaning that they are meant to prevent the same behavior, and only differ as  to  where they  apply.  One of the  amendments was enacted to  fill a legislative void found by this Court (first mentioned in EA 1/65, and then in EA 3, 2/84), and the second amendment was enacted to stress the wrongness of racism by making it a separate crime listed in the Penal Code.

While we accept that a term can be interpreted differently for different pieces of legislation, they are all influenced by the legislative context and the purpose of the law (See CA 31/63 Feldberg v. Director of Tax Law Relating to Land Value Increase, IsrSC 17, 1231, 1235; HCJ 442/71 Lansky v. Interior Minister, IsrSC 26(2) 337, 349). There is no contradicting rule of interpretation compelling the interpretation of a term differently than the way it is interpreted in other statutes (HCJ 441/86 Masada Ltd. v. Appraiser of Large Factories, IsrSC 40(4) 788, 798 note b).

The fact that a definition is created for the needs of the statute in which it is found, does not prevent us from interpreting the term by using its definition in

 

another statute, when the definition is applicable under the circumstances, regarding its subject, context and legislative purpose (CA 341/80 Eili v. Sasson, IsrSC 36(3) 281).

  1. Adv. Papo claims over and over again that the term “racism” refers only to differentiations and distinctions based on biological features that distinguish between different races of people.

This claim is unfounded. As we have seen, the Penal Code definition of the term also refers to unlawful acts, as defined there, against people of different national origins. Likewise, the International Convention on the Elimination of All Forms of Racism and legislation in other countries, including Austria (section 283 and 302 of its 1974 penal code), Belgium (1981 law), Bulgaria (section 35 of their constitution and section 196 of its penal code), Denmark (section 266(b) of its penal code), Finland (chapter 13, article 5 of its penal code) and France (sections 72-545 of its 1972 Law Against Racism), as well as other examples. Different forms of persecution based on nationality are widely accepted today as a form of racism.

  1. Adv. Papo also claims that “incitement” is not listed among the prohibited actions in the provision defining racism. To support his claim, he turns to the Knesset debate regarding the suggestion to include incitement in the definition in the new Section 144a of the Penal Code, but notes that the suggestion was ultimately not accepted.

I do not see how the [Knesset] debate helps us interpret Section 7a. Subsection (3) explicitly mentions incitement; therefore, there can be no doubt that in the context, the legislature refers to incitement. Furthermore, even in the case of the Penal Code, such a claim cannot stand because the criminal offense (unlike the definition of “racism”) explicitly refers to publicizing with the intent to incite.

 

13.

14.

  1. The 5719 law is not relevant to this issue because of those entitled to a reasoned response, [who, in this case, are those seeking a disqualification], and in light of the definition of the term “public servant” under Section 1 of the law.
  2. The question of when the Knesset plenum or a Knesset committee must provide a reason for its decisions has been addressed by this Court in HCJ 306/81 Flatto-Sharon v. Knesset Committee, IsrSC 35(4) 118, and this judgment also applies to decisions made by the Election Committee. As then-Deputy President Y. Cohen stated (at 133):

The decision of the Knesset committee regarding the suspension did not provide any reasoning. I see no problem with this, as we are dealing with a body made up of various members, each of whom certainly had their own reasons. The decision is a reflection of the collective will of the members who voted in favor. To a certain extent we can find out the reasons by examining the transcripts of the hearings before the committee…

 

This issue came up again in HCJ 620/85 where my honored colleague, Justice S. Levin said (Id. at 285):

…When we refer to a collective body such as the Knesset, which has no requirement to rationalize its decisions, we can, to a certain extent, understand its considerations by examining the transcript of its hearings (HCJ 306/81).

We also have all the information that was before the committee, including transcripts from the hearings in which the members stated their reasoning. Included in the transcripts are the exhaustive and well reasoned summaries of the committee’s chairman. Thus, we see that the reasons and the background of the committee are available to us and to the Appellant.

  1. There can be no doubt that, practically speaking, the underlying reason for the committee’s decision can be understood, and that the Appellant was well aware of it. When informing the Appellant of its decision, the committee cited the paragraphs of Section 7a that it believed to be relevant to the matter and notified the Appellant of its right to appeal the decision as required by the Knesset Elections Act.
  2. Furthermore, as the court hearing this appeal, this Court has the right to reach, based on the material before it, any decision that the Committee could have made (HCJ 86/58 Boganim v. Chief of General Staff of the IDF, IsrSC 12, 1653, 1663, note d). Essentially, this Court, hearing such an appeal, has a lot of authority and, in light of this, one reason or another does not hold us back from reaching a decision on the merits.

Therefore, claiming  that there is a lack of reasoning in the decision is baseless.

 

15.

16.

 

the publicity.

 

  1. The claim of discrimination in the case before us is unfounded. This time, for the first time, there were many requests to disqualify parties, including that of the Appellant, which, asked to disqualify all the other parties. Therefore, from a factual standpoint, there is no basis for the claim that the committee only took up the Appellant’s case.
  2. If [the members of the committee] indeed met internally with their respective parties, a claim which has been denied, it would probably reveal a side effect of the statutory arrangement in the Knesset Elections Act, according to which, the Central Election Committee, which is made up of representatives of the parties, is the body that determines whether a particular party is approved or disqualified. In other words, it is a natural byproduct of the political segment of the committee, established to organize the elections and that also has authority pursuant to Section 63 of the aforementioned act, when political activity is at its peak (See also, HCJ 731/84 Kariv v. Knesset Committee of the Knesset, IsrSC 39(3) 337, 338 (S. Levin, J.); HCJ 620/85 at 242 (Deputy President). In both EA 1/65 and EA 2, 3/84, this Court has pointed out the problem of authorizing a political body to disqualify political parties. As it appears from [the law], the legislature disagrees and has left the current arrangement as is, even after enacting Section 7a. This demonstrates the importance of the right to appeal to the courts, which is guaranteed by the Knesset Elections Act.

Nevertheless, one cannot expect a politicized committee to conduct itself in the same way as a court.

  1. Regarding the claim that the committee members took into account their own interests and that of their respective parties, there has been no evidence from which we could conclude anything more than what we said above regarding the

 

allegation of bad faith. All we have are the assumptions and speculations of the Appellants, which, as we have said, are essentially anchored in the structure of the system by which disqualifications are decided. If we find the decision to be just on its merits based upon the information before us, the aforementioned allegations regarding bad faith and self-interest are irrelevant.

17.

  1. The general claim of Adv. Papo that we cannot take into account the legal actions of the Appellant (for example, proposing legislation, protesting with a permit, etc.) is unacceptable. When the legislature refers, in Section 7a, to objectives and conduct denying the democratic nature of the State or inciting racism, it did not distinguish between objectives and conduct according to the standard suggested by the Appellant, which distinguishes between legal actions and those which are illegal. The nature and content of an objective or behavior and their results are what make the determination, because the legislature wanted to prevent the occurrences described in Section 7a. Incitement against a portion of the civilian population and calling for their rights to be denied; suggesting that close relationships between Jews and members of another nation be outlawed; calling for discrimination  against  members  of  another  nation  in  matters   of  criminal

 

punishment; revoking their right to petition the High Court of Justice; separating where they can bathe; revoking their social rights and forbidding them  from serving in the army, while hurting and insulting those who already serve – all these actions and anything similar are all clear indicators of anti-democratic or racist acts. The same applies even if these suggestions are stated in a newspaper article which is published with a proper license or if the idea surfaces by way of proposed legislation in the Knesset (HCJ 620/85 at 210).

  1. My colleague, the Deputy President, has already extensively dealt, on the basis of his profound knowledge, with the Appellant’s claim requesting recognition that its goals and actions are justified under Jewish law, and dismissed [it] entirely. I will not repeat all of what he had to say on the matter, which is written in EA 2, 3/84 at 298 on, but I will quote a part of his decision (at 301-302):

[Jewish law] define[s] a member of a national minority as possessing the status of a "resident alien" (ger toshav) and the only condition that attached to that status was observance of the seven Noachide Laws, i.e., those elementary obligations of law and order which all civilized peoples are commanded to observe, and which the scholars regarded as a kind of universal natural justice (Maimonides, Hilkhot Issurei Bi'ah 14:7; B.T. Sanhedrin 56a; Nahmanides, Commentary to Genesis 34:13; and cf. Elon, op. cit., 183 ff.). A national minority is entitled to all the civil and political rights enjoyed by other residents: "...A stranger and a sojourner shall live with you" (Leviticus 25:35); "Resident aliens are treated with courtesy and loving-kindness as an Israelite, since we are commanded to sustain their life

... and since you are commanded to sustain the life of a resident alien, he is healed gratuitously" (Yad Hilkhot Melakhim 10:12; Hilkhot Avodah Zarah 10:2). And the scholars also said (Deut. 23:17 and Tractate Gerim 3:4):

 

A resident alien shall not be settled in border districts nor in poor habitation but in a good residence in the centre of the Land of Israel where he can pursue his skills, as it is written: he shall dwell with you, in the midst of you, in the place which he shall choose within one of your gates, where it pleases him best, and you shall not oppress him.

The fundamental guiding principles as regards the attitude of the Jewish State to its overall population, are the fundamental principles of [Jewish law] in general, as pointed out by Maimonides (Yad, Hilkhot Melakhim 10:12):

For it is stated: The Lord is good to all and His tender mercies extend to all His works, and further: Its ways are ways of pleasantness and all its paths are peace.

18.

 

  1. The objectives or conduct of a political party are included in subsections (1), (2) or (3).
  2. The objective in question is central and essential to the party’s platform and not merely a subordinate or marginal issue; the objective must reflect the party’s identity. The same applies, mutatis mutandis, regarding conduct, as it must be an act that prominently expresses the nature and character of the party.
  3. The party is acting to implement its goals in order to turn what is currently conceptual into a realization.
  4. [The party’s] participation in the elections is a method for the party to realize its objectives or further its conduct.
  5. The negative conditions listed in subsections (1), (2) and (3) manifest themselves with great gravity and are taken to the extreme.

 

  1. The evidence of the presence of all of the above must be clear, convincing and unequivocal.

Throughout the examination of the relevant factors listed above, it must always be remembered that it is preferable to allow the freedoms than to limit them.

19.

20.

The Appellant wishes to deprive a portion of the citizens of the State, which it distinguishes by its national origin and ethnicity, of their right to vote, to be elected and to be appointed to government positions. Stripping such rights is a clear and unequivocal infringement upon the very soul of democracy, which is based on equal political rights among all citizens, irrespective of race, religion, nationality or gender. The comparison to other countries who, for example, have only allowed women to vote in recent years, and who, even prior to that were

 

considered democratic, is pointless. We refer to the definition of democracy which is accepted today and in accordance with our own view, according to which, for example, not allowing women to vote would be considered a distinctly anti- democratic act, which no one would even think of doing. The same applies to the idea of collectively depriving citizens belonging to a certain group of their rights, which is also an absolutely anti-democratic act that one should not come to terms with.

The Appellant’s objectives and conduct are also clearly racist: systematically fanning the flames of ethnic and national hate, which causes divisiveness and animosity; calling for the forceful deprivation of rights; systematic and intentional degradation directed towards a specific part of the population selected because of their national origin and ethnicity; [calling] for their humiliation in ways very similar to the terrible experiences of the Jewish nation. All these reasons suffice, in light of the evidence presented, to come to this conclusion regarding incitement to racism. The extent of the actions taken by the Appellant in all its forms; the extremism through which it presents the action accompanying it; and the terrible distortion of the nature of the State and its regime that flow from it point to the severity of its objectives and conduct that requires that we affirm the decision of the Central Election Committee.

We have decided to dismiss the appeal.

 

 

Decided today, 7 Cheshvan 5749 (October 18, 1988)

Movement for Quality Government in Israel v. Prime Minister

Case/docket number: 
HCJ 232/16
Date Decided: 
Sunday, May 8, 2016
Decision Type: 
Original
Abstract: 

This was a petition challenging the decision to appoint Knesset Member Rabbi Aryeh Machlouf Deri (hereinafter: Deri) to the office of Minister of the Interior in the Israeli Government. The petition was submitted against the background of Deri’s conviction of corruption offences, among them offenses of bribe taking and breach of trust, committed in the period during which he held several senior positions in the Ministry of the Interior at the end of the 1980s. It should be noted that pursuant to Deri’s appointment as Minister of the Economy and Minister for the Development of the Negev and the Galilee, the Petitioner challenged Deri’s appointment to any ministerial office in light of his criminal record. That petition was recently denied (HCJ 3095/15 – HCJ Deri). The current petition challenges his appointment specifically to the office of Minister of the Interior.

 

In a majority decision (per Justice S. Joubran, Justice Y. Danziger concurring, Justice N. Hendel dissenting), the High Court of Justice denied the petition for the following reasons:

 

The criminal record of a candidate for public office is undeniably a factor that the appointing authority must take into account among its considerations in deciding upon an appointment. This obligation derives from a public authority’s role as the public’s trustee. However, the Court has explained on more than one occasion that a candidate’s criminal record is only one of the considerations that an appointer must weigh in deciding upon an appointment to a public office. It has been held that in assessing the criminal record, appropriate weight must be assigned to a number of factors that must be balanced: a. the severity of the offenses ascribed to the candidate and their relationship to the office he is intended to fulfill; b. the character of the offenses; c. the duration of the offenses; d. the time that has elapsed since the commission of the offenses, and the public interest in the rehabilitation of criminals; e. the moral turpitude of the offenses; f. the candidates expression of contrition; g. the necessity of the candidate for the position. In balancing these considerations, the Court examines whether the candidate’s actions testify to a normative-value flaw in his conduct that would influence his fitness to serve in the intended office, and that would affect public confidence in the civil service. In striking the balance, each consideration must be assigned its appropriate, relative weight in accordance with the circumstances of each individual case. Assigning relative weight must be performed in a material manner, bearing in mind its underlying purpose, which is the examination of the normative fitness of the candidate for the office, and the effect of the appointment on public confidence in the governmental regime.

 

In HCJ Deri, the Court implemented those rules, and in balancing the relevant factors in their entirety – the severity of the Deri’s criminal record; the moral turpitude of his acts; his lack of contrition; and the time that had elapsed since the commission of the offenses – found that Deri’s appointment to the office of Minister of the Economy did not fall outside the boundaries of the margin of reasonableness. That was the case in view of the character of the appointment – the appointment of a minister in the course of forming a government by the Prime Minister and obtaining the confidence of the Knesset – which broadens the margin of reasonableness granted the Prime Minister.

 

The judgment in HCJ Deri, and the balance struck therein, served as the starting point for the proceedings in the current petition. The question before the Court was, therefore, whether the fact that Deri was now being appointed to the specific office of Minister of the Interior should change the result arrived at in HCJ Deri. In the opinion of Justice Joubran, in which Justice Danziger concurred, the answer was in the negative, and the appointment of Deri as Minister of the Interior – despite its inherent problems – did not deviate from the margin of reasonableness.

 

As had been held in the past, where there is a clear, direct relationship between a person’s criminal past and the public office for which he is a candidate, it is possible to conclude that the criminal past entirely disqualifies him from serving in the particular office. In examining whether there is a direct, material relationship, the Court must examine, inter alia, whether the public office served as a means for the perpetration of the offense, and whether there is a moral flaw that derives from the relationship between the office and the attributed offense. In the opinion of Justice Joubran, the acts attributed to Deri did not ground a direct, material relationship to the office of Minister of the Interior that would entirely disqualify Deri’s fitness to serve in that capacity. In accordance with the approach of Justice Joubran, the offenses of which Deri was convicted were not unique to the position of Minister of the Interior, and they were not committed by means of Deri’s authority as Minister of the Interior, or by means of the exploitation of that position in a manner unique to that office that would not be possible in the framework of a senior position in another ministry. The connection between the offenses of which Deri was convicted and the Ministry of the Interior primarily consisted of the fact that Deri served as Minister of the Interior and in other positions in the Ministry of the Interior at the time of the commission of the offenses.

 

Indeed, Deri’s appointment might be viewed by part of the public as the return of an elected official who strayed to the same position in the framework of which he abused his role as a public trustee. The appointment might also be interpreted as the granting of a Government and Knesset seal of approval that there was no flaw in the manner that Deri acted in committing the offenses while serving in senior positions in the Ministry of the Interior. That is a circumstance that must be given appropriate weight in examining Deri’s fitness to serve as Minister of the Interior, but it is not sufficient to create a clear, direct relationship between the offenses that he committed – by their character and substance – and the office of Minister of the Interior of a type that would create a moral blemish that time could not mitigate.

 

The Court rejected the Petitioner’s argument that the role of Minister of the Interior requires a special level of ethical conduct that entirely negates the possibility of appointing a person who has been convicted of political corruption. As a rule, in the absence of a clear, direct relationship between the offenses a person committed and the position for which he is a candidate, there are no grounds for establishing special fitness and ethical requirements for different government ministries. Moreover, there is nothing about the specific office of Minister of the Interior that, by its character and nature, would require stricter standards in regard to a candidate’s criminal record than those required for appointment to the office of minister in any other ministry.

 

Although the Court did not find a clear, direct relationship between Deri’s criminal past and the office of Minister of the Interior, Justice Joubran was of the opinion that Deri’s criminal record posed two unique problems. One was that the offenses were committed in that ministry, and the appointment of Deri as its head bore symbolic significance that could further harm public confidence in governmental authorities. The second was the fact that the offense of which Deri was convicted in what is referred to as the “Public File” was committed in the course of exercising his authority as Minister of the Interior. However, after examining the balance struck among the various considerations in HCJ Deri, it was held that the said problems were insufficient to move Deri’s appointment as Minister of the Interior over the boundary of the margin of reasonableness. This conclusion was primarily based upon the fact that countering these additional problems was a mitigating factor in the form of the Knesset’s ratification of Deri’s specific appointment to the office of Minister of the Interior, following a debate that addressed, inter alia, his criminal record, whereas the ratification of Deri’s appointment as Minister of the Economy was given in the framework of the Knesset’s general vote of confidence in the Government as a whole. In this regard, it was emphasized that ratification by the Knesset in the course of voting confidence in the Government – wherein the appointment of a particular minister is “subsumed” – is not the same as ratifying the specific appointment of a minister following a debate on the various aspects of the matter.

 

Therefore, in the opinion of Justice Joubran, with Justice Danziger concurring, under the circumstances of the case, and in view of the broad margin of discretion granted to the Prime Minister in regard to decisions related to the appointment of ministers, Deri’s appointment as Minister of the Interior remained a “borderline case” that, despite the difficulties that it raises, does not provide legal grounds for intervention. The Court emphasized that in deciding to uphold the appointment, the Court was not granting moral endorsement of the appropriateness of the appointment, or expressing its approval.

 

In the opinion of Justice Hendel (dissenting), the decision to appoint Deri as Minister of the Interior could not stand, inasmuch as it was unreasonable to a degree that justified the annulment of the appointment. According to the approach of Justice Hendel, there was a clear, direct relationship between the office of Minister of the Interior and the offenses committed by Deri. In addition, the appointment inflicted severe harm, particularly to the overarching values of ethical conduct, good governance, and public confidence. The three pillars of that relationship are: the nature and uniqueness of the office, the character of the offenses, and the concrete circumstances of their commission. Each of those pillars is of significant, independent weight. Each directly affects the relationship among them and reinforces it in such a manner that Deri’s appointment as Minister of the Interior could not be permitted to stand.

Voting Justices: 
Primary Author
majority opinion
Author
concurrence
Author
dissent
Full text of the opinion: 

HCJ 232/16

 

 

 

Petitioner:                    Movement for Quality Government in Israel

 

                                                                        v.

 

Respondents:              1. Prime Minister of Israel

                                    2.  Government of Israel

                                    3.  Attorney General

4.  Aryeh Machlouf Deri, Minister for the Development of the Periphery, the Negev and the Galilee

5.  Knesset

 

Attorneys for the Petitioners:  Eliad Shraga, Adv; Daniel Duschnitzky, Adv; Tomer Naor, Adv; Tzruya Medad Luzon, Adv.

Attorney for Respondents 1-3:  Dana Briskman, Adv.

Attorney for Respondent 4:  Navot Tel Zur, Adv; Elinor Alex, Adv.

Attorney for Respondent 5: Dr. Gur Bligh, Adv.

 

The Supreme Court sitting as High Court of Justice

 

Before: Justice S. Joubran, Justice Y. Danziger, Justice N. Hendel

Petition for orders nisi and interlocutory orders

 

Abstract

 

This was a petition challenging the decision to appoint Knesset Member Rabbi Aryeh Machlouf Deri (hereinafter: Deri) to the office of Minister of the Interior in the Israeli Government. The petition was submitted against the background of Deri’s conviction of corruption offences, among them offenses of bribe taking and breach of trust, committed in the period during which he held several senior positions in the Ministry of the Interior at the end of the 1980s. It should be noted that pursuant to Deri’s appointment as Minister of the Economy and Minister for the Development of the Negev and the Galilee, the Petitioner challenged Deri’s appointment to any ministerial office in light of his criminal record. That petition was recently denied (HCJ 3095/15 – HCJ Deri). The current petition challenges his appointment specifically to the office of Minister of the Interior.

 

In a majority decision (per Justice S. Joubran, Justice Y. Danziger concurring, Justice N. Hendel dissenting), the High Court of Justice denied the petition for the following reasons:

The criminal record of a candidate for public office is undeniably a factor that the appointing authority must take into account among its considerations in deciding upon an appointment. This obligation derives from a public authority’s role as the public’s trustee. However, the Court has explained on more than one occasion that a candidate’s criminal record is only one of the considerations that an appointer must weigh in deciding upon an appointment to a public office. It has been held that in assessing the criminal record, appropriate weight must be assigned to a number of factors that must be balanced: a. the severity of the offenses ascribed to the candidate and their relationship to the office he is intended to fulfill; b. the character of the offenses; c. the duration of the offenses; d. the time that has elapsed since the commission of the offenses, and the public interest in the rehabilitation of criminals; e. the moral turpitude of the offenses; f. the candidates expression of contrition; g. the necessity of the candidate for the position. In balancing these considerations, the Court examines whether the candidate’s actions testify to a normative-value flaw in his conduct that would influence his fitness to serve in the intended office, and that would affect public confidence in the civil service. In striking the balance, each consideration must be assigned its appropriate, relative weight in accordance with the circumstances of each individual case. Assigning relative weight must be performed in a material manner, bearing in mind its underlying purpose, which is the examination of the normative fitness of the candidate for the office, and the effect of the appointment on public confidence in the governmental regime.

In HCJ Deri, the Court implemented those rules, and in balancing the relevant factors in their entirety – the severity of the Deri’s criminal record; the moral turpitude of his acts; his lack of contrition; and the time that had elapsed since the commission of the offenses – found that Deri’s appointment to the office of Minister of the Economy did not fall outside the boundaries of the margin of reasonableness. That was the case in view of the character of the appointment – the appointment of a minister in the course of forming a government by the Prime Minister and obtaining the confidence of the Knesset – which broadens the margin of reasonableness granted the Prime Minister.

The judgment in HCJ Deri, and the balance struck therein, served as the starting point for the proceedings in the current petition. The question before the Court was, therefore, whether the fact that Deri was now being appointed to the specific office of Minister of the Interior should change the result arrived at in HCJ Deri. In the opinion of Justice Joubran, in which Justice Danziger concurred, the answer was in the negative, and the appointment of Deri as Minister of the Interior – despite its inherent problems – did not deviate from the margin of reasonableness.

As had been held in the past, where there is a clear, direct relationship between a person’s criminal past and the public office for which he is a candidate, it is possible to conclude that the criminal past entirely disqualifies him from serving in the particular office. In examining whether there is a direct, material relationship, the Court must examine, inter alia, whether the public office served as a means for the perpetration of the offense, and whether there is a moral flaw that derives from the relationship between the office and the attributed offense. In the opinion of Justice Joubran, the acts attributed to Deri did not ground a direct, material relationship to the office of Minister of the Interior that would entirely disqualify Deri’s fitness to serve in that capacity. In accordance with the approach of Justice Joubran, the offenses of which Deri was convicted were not unique to the position of Minister of the Interior, and they were not committed by means of Deri’s authority as Minister of the Interior, or by means of the exploitation of that position in a manner unique to that office that would not be possible in the framework of a senior position in another ministry. The connection between the offenses of which Deri was convicted and the Ministry of the Interior primarily consisted of the fact that Deri served as Minister of the Interior and in other positions in the Ministry of the Interior at the time of the commission of the offenses.

Indeed, Deri’s appointment might be viewed by part of the public as the return of an elected official who strayed to the same position in the framework of which he abused his role as a public trustee. The appointment might also be interpreted as the granting of a Government and Knesset seal of approval that there was no flaw in the manner that Deri acted in committing the offenses while serving in senior positions in the Ministry of the Interior. That is a circumstance that must be given appropriate weight in examining Deri’s fitness to serve as Minister of the Interior, but it is not sufficient to create a clear, direct relationship between the offenses that he committed – by their character and substance – and the office of Minister of the Interior of a type that would create a moral blemish that time could not mitigate.

The Court rejected the Petitioner’s argument that the role of Minister of the Interior requires a special level of ethical conduct that entirely negates the possibility of appointing a person who has been convicted of political corruption. As a rule, in the absence of a clear, direct relationship between the offenses a person committed and the position for which he is a candidate, there are no grounds for establishing special fitness and ethical requirements for different government ministries. Moreover, there is nothing about the specific office of Minister of the Interior that, by its character and nature, would require stricter standards in regard to a candidate’s criminal record than those required for appointment to the office of minister in any other ministry.

Although the Court did not find a clear, direct relationship between Deri’s criminal past and the office of Minister of the Interior, Justice Joubran was of the opinion that Deri’s criminal record posed two unique problems. One was that the offenses were committed in that ministry, and the appointment of Deri as its head bore symbolic significance that could further harm public confidence in governmental authorities. The second was the fact that the offense of which Deri was convicted in what is referred to as the “Public File” was committed in the course of exercising his authority as Minister of the Interior. However, after examining the balance struck among the various considerations in HCJ Deri, it was held that the said problems were insufficient to move Deri’s appointment as Minister of the Interior over the boundary of the margin of reasonableness. This conclusion was primarily based upon the fact that countering these additional problems was a mitigating factor in the form of the Knesset’s ratification of Deri’s specific appointment to the office of Minister of the Interior, following a debate that addressed, inter alia, his criminal record, whereas the ratification of Deri’s appointment as Minister of the Economy was given in the framework of the Knesset’s general vote of confidence in the Government as a whole. In this regard, it was emphasized that ratification by the Knesset in the course of voting confidence in the Government – wherein the appointment of a particular minister is “subsumed” – is not the same as ratifying the specific appointment of a minister following a debate on the various aspects of the matter.

Therefore, in the opinion of Justice Joubran, with Justice Danziger concurring, under the circumstances of the case, and in view of the broad margin of discretion granted to the Prime Minister in regard to decisions related to the appointment of ministers, Deri’s appointment as Minister of the Interior remained a “borderline case” that, despite the difficulties that it raises, does not provide legal grounds for intervention. The Court emphasized that in deciding to uphold the appointment, the Court was not granting moral endorsement of the appropriateness of the appointment, or expressing its approval.

In the opinion of Justice Hendel (dissenting), the decision to appoint Deri as Minister of the Interior could not stand, inasmuch as it was unreasonable to a degree that justified the annulment of the appointment. According to the approach of Justice Hendel, there was a clear, direct relationship between the office of Minister of the Interior and the offenses committed by Deri. In addition, the appointment inflicted severe harm, particularly to the overarching values of ethical conduct, good governance, and public confidence. The three pillars of that relationship are: the nature and uniqueness of the office, the character of the offenses, and the concrete circumstances of their commission. Each of those pillars is of significant, independent weight. Each directly affects the relationship among them and reinforces it in such a manner that Deri’s appointment as Minister of the Interior could not be permitted to stand.

 

Judgment

 

Justice S. Joubran:

1.         The petition before the Court challenges the decision to appoint Respondent 4 – Knesset Member Rabbi Aryeh Machlouf Deri (hereinafter: Deri) – to the position of Minister of the Interior in the Israeli government. The Petitioner argues that the decision to appoint Deri to that position is tainted by extreme unreasonableness in light of his criminal record from the period when he held several senior positions in the Ministry of the Interior at the end of the 1980s. In the Petitioner’s opinion, that unreasonableness requires that the Prime Minister exercise his authority to remove Deri from his position.

 

Relevant Background

2.         The factual background of the Petition, insofar as it relates to Deri’s criminal record, was detailed at length in paras. 1-8 of the opinion of Justice E. Hayut in HCJ 3095/15 Movement for Quality Government in Israel v. Prime Minister of Israel (Aug. 13, 2015) (hereinafter: HCJ Deri). In brief, it should be recalled that Deri was criminally convicted in two affairs known as the “Personal File” and the “Public File”, which concerned the period between the years 1984 and 1990, during which Deri rose through the ranks of the Ministry of the Interior. He first served as a senior adviser to the Minister of the Interior, was then appointed Director General of the Ministry of the Interior, and was ultimately appointed to the office of Minister of the Interior in the twenty-third Government.

3.         In the “Personal File”, Deri was accused of receiving money bribes while serving in the aforesaid offices, which comprised payment for foreign travel, help in purchasing apartments from an association named “Lev-Banim Levanim Shavim” (hereinafter: the Lev Banim Association) – in which he had previously served as administrative director – and that he exploited his said public positions to advance its interests in a number of affairs. In 1999, the Jerusalem District Court convicted Deri of accepting bribes in a total amount of $155,000, three counts of fraud and breach of trust, and one count of obtaining something by deceit, but acquitted Deri on an additional count of bribe taking and of the offense of making a false entry in documents of a body corporate. Pursuant to his conviction, the District Court sentenced Deri to four years of imprisonment and a fine, and held that the conviction was one of moral turpitude. Deri’s appeal of that conviction to this Court was granted in part (CrimA 3575/99 of July 12, 2000 (hereinafter: CrimA Deri)). In CrimA Deri, the Court held that a causal connection was not proved between the bribes that Deri received and his actions on behalf of the association, and also acquitted Deri of one of the counts of breach of trust. However, the Court stressed the severity of Deri’s offenses, which were committed in the course of his senior public functions, and sentenced him to three years imprisonment. Deri served his sentence, and was released in July 2002, after a reduction of one third of his sentence.

4.         In the “Public File”, Deri was accused that as Director General of the Ministry of the Interior and as Minister of the Interior, he deviated from the rules of good governance by earmarking budget-balancing grants intended for local authorities for the use of institutions that were connected to him or his political party. Deri was ultimately convicted on one count of breach of trust, for his actions in 1989 while serving as Minister of the Interior, for arranging NIS 400,000 in support for an association run by one of his brothers, and in which his wife’s brother-in-law served as treasurer (CrimC (Jerusalem Magistrates Court) 1872/99 State of Israel v. Deri (Sept. 24, 2003) (hereinafter: the decision in the Public File)). On Nov. 20, 2003, Deri was sentenced to three months imprisonment and a fine for this conviction. Since that time, Deri has not been convicted of any further criminal offenses.

5.         Deri returned to the political arena in the elections for the 19th Knesset, held in 2013, and was elected to the Knesset as a representative of the Worldwide Sephardic Association of Torah Guardians (hereinafter: Shas). In the run up to the elections for the 20th Knesset, held in 2015, Deri was returned to the leadership of Shas, and was again elected to represent the party in the Knesset. In the framework of the coalition agreement between Shas and the Likud party for the formation of the 34th Government, it was agreed that Deri would serve as Minister of the Economy and as Minister for the Development of the Negev and the Galilee in that Government. The Petitioner challenged the reasonableness of that appointment in a petition to this Court in HCJ Deri. The petition was denied on Aug. 13, 2015 (Justices E. Hayut, H. Melcer and U. Vogelman). In view of the importance of that decision for the case before us, I will address its main points presently. In the interim, Deri’s appointment to the position of Minister of the Economy and Minister for the Development of the Negev and the Galilee was ratified by the Knesset on May 14, 2015, as part of the Knesset’s voting confidence in the Government. This was carried out, inter alia, on the basis of the legal opinion of Respondent 3 (hereinafter: the Attorney General) of May 11, 2015, which found that Deri’s criminal record did not legally preclude his appointment.

6.         On Nov. 1, 2015, Deri submitted his resignation from the position of Minister of the Economy, against the background of disagreements between him and Respondent 1 (hereinafter: the Prime Minister) in regard to the Government’s decision known as the “Gas Outline”.[1] Deri continued to serve only as Minister for the Development of the Negev and the Galilee. After the resignation of the previous Minister of the Interior, Mr. Silvan Shalom, a recommendation for the appointment of Deri as his replacement was presented to the Government on Jan. 7, 2016. The recommendation noted that in the opinion of the Attorney General there was no legal obstacle to Deri’s appointment to the position of Minister of the Interior. The Government ratified the appointment of Deri as Minister of the Interior on Jan. 10, 2016, and the petitioner submitted the petition at bar on that day, praying an order to annul the Government’s decision to appoint Deri as Minister of the Interior. Along with its petition, the Petitioner also requested an interlocutory order that would prevent presenting Deri’s appointment for ratification by Respondent 5 (hereinafter: the Knesset). The request for an interlocutory order was denied by this Court on Jan. 11, 2016 (Justice N. Sohlberg).

            That very day, Jan. 11, 2016, the Knesset ratified Deri’s appointment to the office of Minister of the Interior by a majority of 54 in favor and 43 opposed. Deri formally took office that same day. Pursuant to that, on Feb. 8, 2016, the Petitioner submitted a request to amend its petition to include a request for an order nisi ordering the Prime Minister to explain why he should not exercise his authority to remove Deri from the office of Minister of the Interior, and for an order nisi against the Attorney General, requesting that he explain why he should not retract his legal opinion according to which there is no legal impediment to the appointment. The request to amend the petition was granted at the consent of the Respondents in the course of the hearing of the petition on Feb. 9, 2016, and the hearing proceeded on the basis of the amended petition.

 

The Decision in HCJ 3095/15 – HCJ Deri

7.         As noted above, in HCJ Deri, the Petitioner challenged the very fact of Deri’s appointment to a ministerial post in view of his criminal past, and the petition was denied. In its decision in the HCJ Deri, the Court addressed the considerations relevant to the reasonableness of appointing a person with a criminal record to public office, and established the appropriate method for balancing those considerations in the circumstances of the Deri appointment. Inasmuch as both sides refer to and rely upon HCJ Deri to some extent, I will first review the main points of that decision before presenting the arguments of the parties in the current petition.

8.         In HCJ Deri, this Court emphasized that in appointing a person to a public office, it is not sufficient that the candidate meet the formal conditions of competence. It was noted that the person making the appointment must exercise reasonable discretion in examining the propriety of the appointment, and must consider whether the appointment is consistent with the principles of fairness, integrity, and the public’s confidence in governmental authorities. The Court explained that when we are concerned with the candidacy for public office of a person who has been convicted of criminal offenses, the severity of that criminal past and the moral blemish attendant to the candidate’s commission of those acts must be weighed against considerations that soften the blow of that criminal record – among them the period of time that has elapsed since the commission of the offenses, and the candidate’s conduct since his conviction.

9.         In evaluating the relevant considerations, the Court noted that the crimes of which Deri was convicted were clear examples of political corruption that impart a severe moral taint to those who commit them. The Court also noted that these were serious crimes that undermine the integrity of government and public confidence therein. On this point, the Court made reference to CrimA Deri, which characterized Deri’s conviction as a slap in the public’s face, which was exposed for the first time to the possibility that the governmental system was being conducted in a subculture of bribe taking. In addition, the Court noted that Deri had not expressed regret for the conduct of which he was convicted. On the other hand, the Court referred to the substantial period of time that had elapsed since the commission of the crimes (between 25 and 30 years), and since Deri had completed serving his sentence (some 13 years), and found that to be a significant consideration in evaluating the reasonableness of the appointment. The Court also found that the fact of the Knesset’s ratification of Deri’s appointment to the ministerial post constituted a factor that weakened the argument in regard to undermining public confidence in government, in view of the Knesset’s status as the body that represents the public will.

10.       The Court noted that balancing the above considerations was complex, and that the appointment was not problem free, and even added that one might say that “Deri’s appointment to a ministerial post stands at the edge of the margin of reasonableness” (para. 23 of the opinion of Justice E. Hayut). Nevertheless, in view of the broad discretion granted the Prime Minister in constituting the Government, and in view of the rule that the Court will only intervene in that discretion in rare, exceptional circumstances – the Court held that there were no grounds for it to intervene in the appointment of Deri as a minister. Justice Melcer added that in “borderline cases”, the Court should respect the margin of discretion granted to the Government, and not intervene in its decisions.

 

The Main Arguments of the Parties

The Petitioner’s Arguments

11.       In the opinion of the Petitioner, Deri’s appointment to the position of Minister of the Interior shifts the equilibrium point established by this Court in HCJ Deri, and moves the appointment over the edge of the margin of reasonableness. The Petitioner relies upon the Court’s holding that Deri’s appointment to a ministerial post was a “borderline case”, and in the Petitioner’s view, Deri’s appointment to the office of Minister of the Interior – the office in which he went astray and perpetrated the crimes – realizes the circumstances that make the appointment manifestly unreasonable. In essence, the Petitioner reiterates the main points of its arguments in HCJ Deri in regard to the severity of Deri’s conduct, the blemish and turpitude that attached to him in their wake, and his lack of contrition – to which the Petitioner now adds two sets of arguments that, in its opinion, tip the scales against Deri’s appointment.

12.       The first set of arguments concerns the special nature of the Ministry of the Interior and the powers granted to the Minister of the Interior, which according to the Petitioner, require that the Ministry be headed by a person of unblemished character. The Petitioner explains that the Minister of the Interior is responsible for regulating local government in Israel, which is the point of contact between the State’s residents and the government. The Petitioner notes that local government is the “backyard” of Israeli government, a place that it sees as characterized by growing corruption, unjustified waste of public funds, and extraneous considerations. In its view, the Minister of the Interior is the person entrusted with enforcing the criminal law, disciplinary rules, and the principles of good governance upon those bodies, as well as for ensuring their honesty. The Petitioner is of the opinion that in light of his criminal record, Deri cannot fulfil those duties and serve as a moral compass for the elected officials of local government, particularly when – in its opinion – he bears some of the responsibility for that poor functioning of the local councils from his days as Minister of the Interior. The Petitioner adds that the Minister of the Interior is granted other powers of consequence, among them monitoring the elections of the local authorities, the authority to make appointments to the various planning boards, the authority to sign bylaws, and the authority to appoint representatives to local public-tender committees. In the opinion of the Petitioner, those powers require that a person with a criminal record that includes offenses of corruption not be appointed to the office of Minister of the Interior.

13.       The second set of arguments concerns the relationship between the offenses for which Deri was convicted and the Ministry of the Interior and the role of the Minister of the Interior. The Petitioner refers to this Court’s decision in HCJ 4668/01 Sarid v. Prime Minister Ariel Sharon, IsrSC 56 (2) 265 (2001) (hereinafter: the Yatom case), in which it was held that when there is a clear, material, direct relationship between the crimes committed by an individual and the office to which he seeks to be appointed, it is possible that the time factor may not have a corrective or mitigating effect upon the reasonableness of the appointment. The Petitioner is of the opinion that such a relationship exists in the case before us, inasmuch as Deri was convicted of committing crimes while serving in public positions in the Ministry of the Interior and as Minister of the Interior. The Petitioner further argues, relying on the State Comptroller’s Report, Examination of the granting of Support to Local Authorities (1991) (hereinafter: the State Comptroller’s Report 1991), that Deri turned the Ministry of the Interior into a fertile pasture for personal and public corruption. In the Petitioner’s view, the existence of such a relationship between Deri’s criminal past and the public corruption attributed to him in the Report, and the public office that he currently seeks, requires the granting of no weight to the passage of time in the context of the specific appointment. Therefore, the Petitioner argues that the circumstances of the case before us are different from those of HCJ Deri, and the balancing of the different considerations requires the conclusion that Deri’s appointment as Minister of the Interior is manifestly unreasonable.

 

The Respondents’ Response

14.       The State (responding in the name of Respondents 1-3) argues that the Petition should be dismissed. First, the State argues that the Petitioner’s arguments from the State Comptroller’s Report 1991 are inadmissible under sec. 30(a) of the State Comptroller Law, 5718-1958 [English: http://www.mevaker.gov.il/En/Laws/Documents/Laws-Compotroller-law.pdf] (hereinafter: the State Comptroller Law), which provides that the State Comptroller’s Report cannot serve as evidence in a legal or disciplinary proceeding.

15.       On the merits, the State is of the opinion that there is no legal impediment to Deri’s appointment to the office of Minister of the Interior, in light of the opinion of the Attorney General of Jan. 7, 2016, which approved the appointment. While the Attorney General expressed his view that Deri’s appointment to the office of Minister of the Interior was of special symbolic significance that somewhat increased the harm to pubic confidence in contrast to the harm that would be caused by his appointment to another ministry, nevertheless, the Attorney General was of the opinion that this was not a decisive consideration – in view of the balance struck in HCJ Deri – and found that the appointment remained with the margin of reasonableness.

16.       The State further relies upon paras. 6-9 of the Attorney General’s opinion, where it states in regard to the material relationship, that the case law of this Court has not as yet established clear distinctions in regard to the various suitability criteria for appointments to the various government ministries, and that there are contradictory statements in the case law in this regard. The Attorney General specifically cited HCJ 1993/03 Movement for Quality Government in Israel v. Prime Minister Ariel Sharon, IsrSC 57 (6) 817 (2003) [English: http://versa.cardozo.yu.edu/opinions/movement-quality-government-israel-v-prime-minister-mr-ariel-sharon] (hereinafter: the Hanegbi case), in which the Court stated that it would be hard to explain a position by which the appointment of a person to the office of minister in a specific ministry would so severely undermine public confidence that the appointment could not be allowed, while permitting him to serve in other ministries. The Attorney General added that inasmuch as HCJ Deri decided that the were no grounds for intervening in the matter of Deri’s appointment in general, there would be no grounds for intervention in his appointment as Minister of the Interior. Alternatively, the Attorney General found that there is no clear, direct relationship, as defined in the Yatom case, between the criminal offenses of which Deri was convicted and the specific areas of responsibility of the Ministry of the Interior. In his view, the crimes of which Deri was convicted are not unique to the Ministry of the Interior, and they could have been perpetrated in the framework of any other government ministry. The State adds that there is nothing special about the office of Minister of the Interior as opposed to other ministerial offices. Thus, for example, the State points out that the Minister of Economics also exercises broad powers, both in terms of their social and public consequences, and in terms of the extent of the budgetary resources that his ministry controls.

            The State is further of the opinion that there is no place for making a distinction between the requirements for ministers in the various ministries, such that the perpetration of political corruption would disqualify a person from serving as a “senior” minister, but not disqualify him from serving as a “junior” minister. In its opinion, such an approach would infringe the principle of the equality of ministers.

17.       To complete the picture, the State pointed out that, as opposed to the position of the Attorney General, the State Attorney was of the opinion that there was a legal impediment to the appointment of Deri to the office of Minister of the Interior. In his opinion, the harm to public confidence in government posed by that appointment was significantly greater that the harm that would be caused by his appointment to any other ministry. He was of the view that there was a direct connection to the office, in the sense of the term in the Yatom case, and that the passage of time could not correct that. However, the State explains that it is the opinion of the Attorney General that obligates the Executive Branch.

18.       The Knesset argues that the Petition against it should be denied in limine, due to a lack of any cause or prayer for relief in its regard. On the merits, the Knesset emphasizes that Deri’s appointment was ratified by the Knesset plenum, and in its opinion, that fact weakens the claim in regard to the undermining of public confidence in government.

19.       In his response, Deri also argues that there is no “clear, direct relationship” between the crimes that he committed and the office of Minister of the Interior. In his opinion, the relationship between the crimes and the Ministry of the Interior is entirely exhausted in the fact of their being committed while he served in various positions in the Ministry of the Interior, and nothing more. As for the “Personal File”. Deri stresses that CrimA Deri expressly rejected the theory that the breach of trust offenses were consideration for bribes that he received. Deri is of the opinion that in the absence of such a causal connection, there is no specific relationship between the character and substance of the offenses committed and the Ministry of the Interior, other than his holding a public office in that ministry at the time. As for the “Public File”, Deri stresses that, in its decision, the Magistrates Court praised him for his appropriate efforts in eliminating the improper practice of making budgetary disbursements to institutions in the absence of clear criteria. Thus, in his view, the Magistrates Court found that he behaved properly in regard to most of the charges in the Public File. According to him, even his conviction on the fifth charge was based upon a conflict of interests in the framework in which he acted, and not upon transferring monies in breach of Ministry of Interior procedures. Therefore, Deri argues that in this case as well, there was no special relationship between the conviction and the Ministry of the Interior that would preclude him from serving as Minister of the Interior.

20.       Deri is further of the opinion that his matter falls within the scope of the broad discretion granted to the Prime Minister in appointing ministers. He emphasizes that the appointment followed proper procedures – first, the Attorney General provided an opinion establishing that there was no legal impediment to the appointment; then the appointment was unanimously approved by the Government, following a long, detailed debate that was conducted without his presence; and finally, the appointment was ratified by the Knesset plenum, following a comprehensive debate in which many Knesset members expressed their views on the matter, expressly addressing Deri’s criminal record and its public significance. Deri is further of the opinion that the Knesset’s ratification grants parliamentary approval to his appointment, which substantially reduces the force of the argument as to the undermining of public confidence. Moreover, Deri believes that greater weight should be granted to the parliamentary ratification in this case than to the ratification addressed in HCJ Deri, as this time the Knesset specifically ratified his appointment, as opposed to ratification in the course of voting confidence in the entire Government.

 

Discussion and Decision

Preface

21.       Before addressing the petition on the merits, I would like to make several preliminary remarks in regard to some of the arguments raised in the petition. It would appear to me that these remarks are already necessary at this stage in order to clarify which issues will be addressed, and what our point of departure will be in addressing them.

22.       First, it may be inferred from some of the Petitioner’s arguments that it seeks that we re-examine our decision in HCJ Deri. While the Petitioner expressly emphasized in its petition that it accepts that decision, and that it is of the opinion that there is a legal bar specifically to Deri’s appointment to the office of Minster of the Interior, nevertheless, its attorney raised arguments concerning the weight that was attributed to the relevant considerations in evaluating the reasonableness of the appointment in HCJ Deri and the manner of their evaluation. Thus, for example, the Petitioner’s attorney referred to the weight attributed to the passage of time since the commission of the crimes, to the absence of contrition, and to the moral turpitude associated with Deri’s conduct, without explaining how and why their weight should be different in regard to Deri’s appointment as Minister of the Interior. We should make it clear already at this point that we have no intention of revisiting HCJ Deri. It is a final decision of this Court, given only half a year ago, and regarding which an application for a Further Hearing was denied by my colleague Justice Hendel (decision in HCJFH 5806/15 of Oct. 28, 2015 (hereinafter: the Deri Application for a Further Hearing )) only five months ago. When a final decision of this Court was made so recently, its conclusion obliges all, and there is no room for another bench to question its correctness in the framework of a new petition of the same subject. It has already been noted that the danger inherent in deviating from that path is that “with the passage of time, this judicial institution will transform from a ‘house of law’ to a ‘house of judges’, with as many opinions as there are judges”. (FH 23/60 Balan v. Executor of the Will of the Late Raymond Litwinski, IsrSC 15 71, 76, (1961) per M. Silberg J); and see: para. 1 of the opinion of E. Hayut J. in HCJ 8091/14 Center for the Defence of the Individual v. Minister of Defense (Dec. 31, 2014)).

23.       A second comment concerns the Petitioner’s arguments that rely upon the State Comptroller’s Report 1991. As the Respondents pointed out in their response, sec. 30(a) of the State Comptroller Law establishes a rule as to the inadmissibility of State Comptroller Reports in legal proceedings: “No reports, opinions or other documents issued or prepared by the Comptroller in the discharge of his functions shall serve as evidence in any legal or disciplinary proceeding”. The purpose of that provision is to ensure independent, effective examination of State authorities, and to encourage the cooperation of the subjects of that examination without fear of a future legal proceedings (see: CA 2906/01 Haifa Municipality v. Menorah Insurance Company Ltd., para. 14 (May, 25, 2006); LCA 9728/04 Atzmon v. Haifa Chemicals Ltd., IsrSC 59 (3) 760, para. 7 (2005)). However, it should be noted that a failure to grant sufficient weight to the recommendations of the State Comptroller can be deemed unreasonable in certain cases (see, e.g.; HCJ 3989/11 Temple Mount Faithful v. Knesset State Control Committee, paras. 10-12 (Dec. 12, 2012)). Therefore, the courts have been willing to admit State Comptroller Reports in evidence when they were submitted in the framework of judicial review of the manner of implementation of the Comptroller’s recommendations (see: HCJ 9223/10 Movement for Quality Government in Israel v. Prime Minister, para. 21 (Nov. 19, 2012) (hereinafter: the Carmel Disaster case); HCJ 2126/99 De Haas v. Tel Aviv-Yafo Municipality, IsrSC 54 (1) 468 (2000)).

            That is not the case in the matter before us. The Petitioner wishes to rely upon the State Comptroller’s Report 1991 as independent evidence in support of its arguments in regard to the relationship between Deri’s criminal past and his work in the Ministry of the Interior. Under sec. 30 of the State Comptroller Law, such independent findings cannot be established on the basis of the State Comptroller Report. Therefore, I do not find it proper to consider the Petitioner’s arguments that rely upon the Report (see and compare: AAA 2851/13 Suissa v. State of Israel – Ministry of Construction and Housing, para. 6 (June 23, 2014); HCJ 8335/09 Dolev Foundation for Medical Justice v. Minister of Health, para. 19 (Dec. 16, 2012)).

24.       Moreover, I am of the opinion that it would not be appropriate to refer to the State Comptroller’s Report 1991 as grounding a criminal record that might disqualify Deri from serving as Minister of the Interior, also by reason of the fact that the Report was, in practice, “subsumed” in the decision in the Public File. It is a matter of first principles that the role of the State Comptroller is to supervise the State authorities, locate flaws and failures in their work, and make recommendations for their correction. There is no question that the Comptroller’s findings are of great importance in uncovering unlawful practices and activities that deviate from the ethical standards expected of the State’s authorities. Therefore, the relevant bodies are required to address what is stated in the Comptroller’s opinion in making their decisions. At times, the State Comptroller’s Report may serve as a catalyst for a criminal investigation and the filing of criminal charges. Nevertheless, it should be understood that the Comptroller’s Reports are not judicial decisions. In this regard, it would be appropriate to quote the opinion of Justice M. Ben Porath in HCJ 152/82 Alon v. Government of Israel, IsrSC 36 (4) 449, 459 (1982) – which I would parenthetically note were made in regard to commissions of enquiry, but that are perhaps even more appropriate in regard to the role of the State Comptroller:

It should be clear that without good reason, the suspicions raised in the Commission’s report should not be left to float about without legal investigation, which alone is capable of properly deciding the facts. That also emphasizes the role of a commission of enquiry in matters of a criminal nature, which is to aid the Government in weighing whether to take actions – and which actions – pursuant to the report (emphasis added – S.J.).

25.       As the Petitioner itself points out, the parts of the State Comptroller’s Report 1991 that are relevant to the case before us addressed the involvement of the Ministry of the Interior in granting financial support to institutions by means of the local councils, in contravention of the rules of good governance. The State Comptroller at the time, Justice (Emeritus) Miriam Ben Porath, saw fit to exercise her authority to question witnesses, pursuant to sec. 26 of the State Comptroller Law, with a view to presenting the findings to the Israel Police, which had initiated an independent investigation into the criminal aspects of Deri’s involvement in granting the said support (see para. 22 of the petition). Ultimately, the State Comptroller’s findings served as one of the grounds for the charges filed in the information in the Public File. As such, the Report fulfilled its role in exposing suspected unlawful and corrupt activity.  But more importantly for the matter before us is that those findings and their significance were given final judicial expression – the judgment in the Public File – and that is the judicial examination that established the final, relevant facts and conclusions that form the basis of Deri’s criminal past in these proceedings. Just as we do not rely upon the facts presented in the information to ground a claim in regard to a defect that would prevent a person from holding public office when there is a final judgment on that information, so, in my opinion, we do not rely upon a State Comptroller’s Report in similar circumstances. For that reason as well, I find that no weight should be ascribed to what the Petitioner presents from the State Comptroller’s Report 1991.

26.       To summarize this section: HCJ Deri, with all the balances struck therein, is the starting point for these proceedings. The question for us to decide is whether the Petitioner has succeeded in showing that, under the present circumstances, Deri’s appointment to the specific office of Minister of the Interior raises special problems in regard to the decision to appoint him to a ministerial role, which could change the equilibrium point established by this Court in HCJ Deri, and place that appointment beyond the scope of reasonableness. In examining this question, I will refer to Deri’s criminal past solely as presented in the judgments in the Personal File and the Public File. On the basis of the above comments, I will now proceed to examine the Petitioner’s arguments, but will first present the principles established in the case law in regard to judicial review of the Prime Minister’s decisions in appointing ministers.

The Normative Framework

27.       As is well known, a decision to appoint a person to public office is an administrative one, and as such, it is subject to the rules of administrative law, particularly the duty of the appointing authority to exercise reasonable discretion in making the appointment. That means that the party making the appointment must consider all of the factors relevant to the decision, and grant each one appropriate weight in evaluating them (see: HCJ 3059/15 Movement for Quality Government in Israel v. Prime Minister of Israel, para. 21 (Nov. 10, 2015) (hereinafter: the Gallant case); HCJ 5657/09 Movement for Quality Government in Israel v. Government of Israel, para. 39 (Nov. 24, 2009)). The discretion exercised by the appointer is subject to judicial review, which is restricted to the question whether the balance struck deviated from the margin of reasonableness. It has been explained on more than one occasion that there may be a number of reasonable alternatives that fall within the margin of reasonableness, and as long as the balance struck by the appointer falls within that margin, this Court will not intervene, even if it is believes that one of the courses of action would have been preferable (see: HCJ 43/16 Ometz – Citizens for Good Governance and Social and Legal Justice v. Government of Israel, para. 38 of the opinion my opinion (March 1, 2016) (hereinafter: the Mandelblit case); HCJ 8134/11 Asher v. Minister of Finance, para. 11 of the opinion of E. Rivlin D.P. (Jan. 29, 2012)). This Court has also explained that the scope of the margin of reasonableness is established in accordance with the identity of the appointer and the type of appointment (see: the Gallant case, para. 22, the Hanegbi case, para. 11 of the opinion of E. Rivlin J. (2003)).

28.       When we are concerned with the margin of discretion granted to the Prime Minister in forming a government, as well as in adding an additional minister or removing a minister from office, the rule is that he enjoys very broad discretion in light of the special character of the authority to appoint ministers. That authority is intended to ensure the Government’s ability to function effectively, and to carry out its mandate to execute its policy, and it includes parliamentary and party considerations (see: HCJ 5853/07 Emunah — National Religious Women’s Organization v. Prime Minister, IsrSC 62 (3) 445, para 22 of the opinion of A. Procaccia J. (2007) [English: http://versa.cardozo.yu.edu/opinions/emunah-v-prime-minister] (hereinafter: the Emunah case)). However, such decisions are not immune to judicial review, inasmuch as the Prime Minister is part of the administrative authority, and subject to the applicable rules (and see, e.g.: HCJ 5261/04 Fuchs v. Prime Minister of Israel, IsrSC 59 (2) 446, para. 3 of the opinion of Cheshin J. (2005) [English: http://versa.cardozo.yu.edu/opinions/fuchs-v-prime-minister]), but the patently political character of the authority to make appointments, taken together with the fact that it is the Prime Minister who exercises it, broadens the margin of reasonableness such that the boundaries of the Court’s intervention in appointments is limited to those instances in which an appointment might seriously harm the standing of the institutions of government and the public’s confidence in them (see: the Emunah case. Para. 23; the Hanegbi case, para 5 of the opinion of T. Orr D.P.). Importance must also be ascribed to the Knesset’s supervision over the exercise of the appointment authority, and to the existence of public-values oversight by means of the democratic process, which also lead to a narrowing of the bounds of intervention in a decision (the Gallant case, para. 24; the Carmel Disaster case, paras. 23-25).

29.       The criminal record of a candidate for public office is undeniably a consideration that the appointing authority must take into consideration in deciding upon an appointment. That duty derives from a public authority’s status as the public’s trustee that “has nothing whatsoever of its own. All that it has, it has for the public” (see: HCJ 6163/92 Eisenberg v. Minister of Construction and Housing, IsrSC 47 (2) 229, para 40 (1993) [English: http://versa.cardozo.yu.edu/opinions/eisenberg-v-minister-building-and-housing] (hereinafter: the Eisenberg case)). It has, therefore, been emphasized that:

…public confidence in civil servants and elected officials is an essential condition for the proper functioning of the civil service and the organs of government. All branches of public service rely on public confidence not only in the practical abilities of civil servants and elected officials, but also, and especially, on their standards of morality and humanity, their integrity and incorruptibility. Without this confidence, the civil service cannot, in the long term, properly discharge its functions at the required level for any length of time.

When persons who have been morally compromised are appointed to public office or left in office after they have gone astray, the ethical basis on which the organs of state and government in Israel are founded may be undermined. The fundamental ethical principles on which Israeli society and government are based may be seriously compromised. Public confidence in the organs of government, whose rank and standards are supposed to reflect the basic ethical principles on which social life in Israel is based, may be weakened (the Emunah case, para 14 [http://versa.cardozo.yu.edu/opinions/emunah-v-prime-minister]; and see: the Eisenberg case, para 46).

 

            Nevertheless, it has been said on more than one occasion that a candidate’s criminal record is but one of many factors that the appointing authority must weight in deciding upon an appointment to a public office. It has been held that in evaluating the weight of a criminal record, a number of considerations must be assessed and balanced: (a) the seriousness of the offenses ascribed to the candidate, and their connection to the office he is intended to fill; (b) the nature of the offenses; (c) the duration of the offenses; (d) the period of time that has elapsed since the commission of the offenses, and the public interest in the rehabilitation of offenders; (e) the presence of moral turpitude in the offenses; (f) the candidate’s expression of contrition; (g) the necessity of the candidate for the office. By means of balancing these factors, the Court evaluates whether the candidate’s acts attest to a normative-value flaw in his conduct that would influence his fitness for fulfilling the office for which he is a candidate, and affect public confidence in the civil service (see: HCJ 3997/14 Movement for Quality Government in Israel v. Foreign Minister, para. 27 (Feb. 12, 2015); the Gallant case, para. 26; the Mandelblit case, para. 64).

30.       In carrying out the balancing, each consideration must be given its appropriate relative weight, in accordance with the circumstances of each and every case (see: the Yatom case, para. 16; the Emunah case, para. 16). The relative weighting of the considerations is carried out substantively, bearing in mind its underlying purpose – evaluating the normative fitness of the candidate for the office, and the influence of the appointment on public confidence in the governmental system. As Justice Hendel explained in his decision on the Deri Application for Further Hearing:

The quantitative number of considerations is of no significance. The decision as to the reasonableness of the appointment is not an arithmetic one that is achieved by assigning points to each consideration, and accordingly making a final calculation. Rather, the decision in such matters is derived from a material evaluation as to the extent of the harm to the candidate’s ability to fulfill the office normatively, practically and ethically – including the consequences of the appointment for public confidence – taking account of the circumstances of the matter in their entirety (para. 5 of the decision).

31.       Against the background of the criteria detailed above, I will now turn to the examination of the appointment of Deri to the office of Minister of the Interior. I would again note that in HCJ Deri, this Court implemented the principles that I enumerated, and in balancing all of the relevant factors – the severity of Deri’s criminal record; the moral turpitude of his actions; his failure to express contrition; and the significant amount of time that had elapsed since the commission of the acts – found that Deri’s appointment to the office of Minister of the Economy did not fall outside the boundaries of the margin of reasonableness. That was so in light of the nature of the appointment – the appointment of a minister in the framework of forming a government by the Prime Minister, and obtaining the Knesset’s vote of confidence – which broadens the margin of discretion granted to the Prime Minister. As I stressed at the outset, HCJ Deri, and the balance struck therein, will be the starting point for this examination. The question for us to decide is, therefore, whether the fact that Deri is now being appointed specifically to the office of Minister of the Interior should change the result reached in HCJ Deri. I will already state that after considering the arguments of the parties, I have found that the answer to that question is no, and that Deri’s appointment to the office of Minister of the Interior – despite its inherent problems – does not deviate from the margin of reasonableness, as I shall explain below.

 

Deri’s Appointment to the Office of Minister of the Interior

32.       As will be recalled, the Petitioner is of the opinion that the fact that Deri has been appointed to the office of Minister of the Interior – the same office in the same ministry in which he committed the acts for which he was convicted – suffices to change the equilibrium point established in HCJ Deri in regard to the reasonableness of his appointment to the office of minister in general, and moves the appointment beyond the boundaries of the margin of reasonableness. In its view, the identity of the office and the ministry create a clear, direct relationship between Deri’s offenses and the office he is intended to fill. In light of that relationship, the Petitioner is of the opinion that the passage of time cannot blunt the substantive defect imparted to Deri by his criminal past, and that defect disqualifies him from serving in the specific office of Minister of the Interior.

            The Petitioner further argues that a substantial part of the job of the Minister of the Interior is the oversight of the ethical conduct of local government, and therefore, in its view, a person who was convicted of corruption cannot serve in that office. To support its assertion in this regard, the Petitioner sought to submit as a document the Report of the Team for evaluating Methods for Reinforcing the Rule of Law and Ethical Conduct in Local Government (January 2016) (hereinafter: The Local Government Report), presented  to Deri by the Attorney General, in his capacity as Minister of the Interior. In the Petitioner’s opinion, this document serves to show that the Minister of the Interior must serve as a personal exemplar for local government, and it is therefore unreasonable to appoint Deri to the office in light of his criminal convictions. We permitted the submission of the document, and it was before us in arriving at our decision. I will now address the Petitioner’s arguments in order.

 

A Clear, Direct Relationship

33.       The subject of the clear, direct relationship between a person’s criminal conduct and the public office for which he is a candidate, and its consequences for the balance of the various considerations at the time of the appointment, was addressed by this Court in the Yatom case. In view of their centrality to the matter before us, I will quote it in full:

Needless to say that in striking a balance among the various considerations, each one must be given its appropriate relative weight among the complex of considerations that must be addressed (see: HCJ 389/80 Dapei Zahav v. Broadcasting Authority, IsrSC 35(1) 421, 445). Thus, for example, in the presence of a clear, direct relationship between the offenses committed in the past by the candidate and the office he is intended to fill, it may be concluded that his criminal record entirely disqualifies him from holding a particular office. In such circumstances, considerations that might have been weighed in support of his appointment, were he considered a candidate for a different office (like the time that has passed since the commission of the offenses, his contrition, the quality of his behavior in the course of the period since the commission of the offense, and his professional qualifications) will not avail, and his candidacy will be disqualified. In establishing the existence of such a relationship, account must be taken not only of the nature of the offenses and the circumstances of their commission, the office in the framework of which the candidate committed the offenses, and the office he is intended to hold at present, but also the severity of the moral blemish imparted to him by the commission of the offenses. In other words, the existence of a relationship that has the potential of disqualifying the candidate is not derived solely from the impact of his criminal past on his professional ability to fulfill the new office, but also from his moral fitness to fulfill it. In the presence of such a relationship between the candidate’s criminal past and the office for which he is intended, his candidacy should be disqualified (ibid., para. 16).

            In a later decision, it was noted that in examining the existence of a clear, substantial relationship, one must examine, inter alia, whether the public office served as a means for the perpetration of the offence, and whether a moral defect derives from the relationship between the office and the imputed offense (see: HCJ 4921/13 Ometz – Citizens for Good Governance and Social and Legal Justice v. Mayor of Ramat Gan, Yitzhak Rochberger, para. 37 of the opinion of M. Naor P. (Oct. 14, 2013) [English: http://versa.cardozo.yu.edu/opinions/ometz-%E2%80%93-citizens-proper-administration-and-social-justice-israel-v-rochberger]).

34.       In the circumstances of the case before us, I do not find that the actions imputed to Deri ground a direct, substantive relationship to the office of Minister of the Interior that would entirely rule out his fitness to serve in that office. After reviewing and reconsidering the decisions to convict Deri, I am of the opinion that his crimes – though their severity as corruption offenses committed by a public servant and elected office holder is undisputed and cannot be taken lightly in any way – are not unique to the office of Minister of the Interior, and were not committed by means of the exercise of his authorities as Minister of the Interior, or the exploitation of that office in any unique manner that would not be possible in the framework of any senior position in another ministry.

35.       First, as regards the Personal File, in CrimA Deri this Court addressed the fact that the bribes Deri received were not bribes “between strangers”, given in consideration of a particular, specific act. The Court emphasized that it was bribery by the members of a tight group – the group that ran the Lev Banim Association – of a member of that group who had succeeded to a position of power, in order that he would use his position for the good of the group and its members (ibid., p. 48). Ultimately, in CrimA Deri the causal connection between the bribe and the offences of fraud and breach of trust that he later committed was severed, after it was found that it had not been proved that the actions later performed by Deri to promote the interests of the Lev Banim Association and its associates were done in consideration for the bribes he received (ibid., paras. 69-70). Although CrimA Deri found that the relationship between Deri and the members of the Lev Banim Association was sufficient to ground a conviction for the offense of bribe taking, nevertheless, in regard to the relationship between the offenses and the intended office – with which we are here concerned – the significance is that the specific functions that Deri performed at that time, among them that of Minister of the Interior, were not of importance in regard to the bribes he received. That being the case, it would seem that the State rightly argued that the offenses committed by Deri in the Personal File are of a kind that could be committed, in practice, in any government ministry. I would reiterate that we cannot take those offenses lightly, however the question before us is not the severity of the crimes, but rather whether they reflect a special relationship to the office of Minister of the Interior. Under the circumstances described, I am of the opinion that no such relationship was proven.

36.       In the Public File, Deri was accused of offenses of breach of trust in the exercise of his authority and the use of his status in the framework of his offices in the Ministry of the Interior. The information charges Deri with transferring various allocations while breaching the Procedure for Granting Support to Local Authorities of 1984. However, the judgment in the Public File acquitted Deri of those offenses related to breaching the Procedure by the exercise of his authority, after finding that requirements of the actus reus for the offenses of fraud and breach of trust under sec. 284 of the Penal Law, 5737-1977, had not been met. The only charge upon which Deri was ultimately convicted in the Public File was the fifth charge, which concerned granting support to an association in Jerusalem that was headed by Deri’s brother, and whose treasurer was the brother-in-law of Deri’s wife (hereinafter: the Association). However, in this regard, as well, the Magistrates Court explained:

If only the matter of deviating from the procedure were before us independently […] we would not have convicted the defendant of the offense for which he is charged in accordance with the case-law tests established in regard to breach of trust, as explained in the chapter headed “The Legal Situation”, inasmuch as the said deviation from the Procedure, after the said obligations were undertaken by Rabbi Dangur and Yehuda, lacks that element of corruption that would transform it from a deviation from good governance and a public administrative defect to a criminal act (see p. 118 of the printout of the decision in the Public File).

We should note that Deri’s conviction on the firth charge derived from the fact that in acting on behalf of the association, he was in a “clear, evident and severe” state of conflict of interests (loc. cit.). The Magistrates Court held that Deri had, therefore, breached public trust and the principle of ethical conduct to a point that fell within the scope of a criminal act of breach of trust. Indeed, in that act Deri committed an offense while exercising his authority as Minister of the Interior. However, in view of the fact that that exercise of authority, itself, was not the criminal act and did not achieve the level of a criminal offense – but rather it was his conflict of interests at the time of exercising that authority – the possible relationship that might arise from that act and the role of Minister of the Interior is not of such significance as to ground a direct, substantive relationship that would disqualify him from serving as Minister of the Interior. Note that this relationship does create an additional problem in regard to Deri’s appointment, but I do not find that that problem leads to the conclusion that the passage of time cannot mitigate the defect arising from Deri’s conviction.

37.       In light of the above, I am convinced that the relationship between the offenses of which Deri was convicted and the Ministry of the Interior primarily consists of the fact that Deri was serving as Minister of the Interior and in other roles in the Ministry of the Interior at the time of the perpetration of the offenses.

38.       Indeed, the identity of the office and the ministry present a unique problem in regard to Deri’s appointment as Minister of the Interior, as opposed to his appointment as Minister of the Economy. This appointment carries symbolic significance, as it may appear to some of the public as an elected official who strayed returning to the same office in which he abused his role as a public trustee. This appointment might even be construed as granting a governmental and Knesset seal of approval that there was no defect in the way Deri acted in committing his crimes while serving in senior positions in the Ministry of the Interior. I believe that this problem indeed increases to some degree the harm to public confidence as a result of Deri’s appointment to the office of Minister of the Economy, which was addressed in HCJ Deri. Clearly we are concerned with a circumstance that must be given appropriate weight in evaluating Deri’s fitness for the office of Minister of the Interior. However, in my opinion, it is not sufficient to create a clear, direct relationship between the crimes committed by Deri – by their character and substance – and the office of Minister of the Interior in such a manner as to impart a moral defect that cannot be mitigated by the passage of time.

39.       Therefore, I am satisfied that the Petitioner has not succeeded in showing the existence of a clear, direct relationship specifically between Deri’s offenses and the office of Minister of the Interior. Nevertheless, the foregoing examination did raise two additional problems that are unique to Deri’s appointment to the office of Minister of the Interior: the symbolic significance attaching to the identity of the ministry and the office, and the fact that Deri’s conviction in the Public File concerned the manner of his exercising authority as Minister of the Interior. I will discuss these problems below.

 

The Nature of the Office of Minister of the Interior

40.       The Petitioner’s assertion that the office of Minister of the Interior requires a “special” level of integrity that entirely rules out the possibility of appointing a person convicted of corruption must be rejected. In my view, as a rule, in the absence of a clear, direct relationship between the offences that a person committed and the office he is intended to fulfill, there are no grounds for establishing different rules of fitness and integrity for the various government ministries. In this regard, it would appropriate to quote the opinion of Justice E. Rivlin in the Hanegbi case:

…and we would only add here that the petitioner takes issue specifically with Hanegbi’s appointment as Minister of Public Security. As far as this line of reasoning is concerned, there is nothing to stop Hanegbi from being appointed as a minister in a different ministry – except, perhaps, the Ministry of Justice. This position raises a problem. It is hard to imagine that an individual whose appointment as Minister of Public Security would cause such severe damage to the public’s trust that we must strike down the Prime Minister’s decision to appoint him, would be able to head another ministry – such as the Ministry of Education or the Finance Ministry. It is difficult to accept that an individual who is so patently unfit to serve in a ministry responsible for law enforcement could, without any hindrance, serve in a ministry entrusted with the state’s foreign policy or its security (ibid., para. 32; emphasis original – S.J.).

            The significance of the position advanced by the Petitioner is that the weight of circumstances that mitigate the severity of a candidate’s criminal past, like the passage of time, would entirely be ignored in regard to the specific office of Minister of the Interior. I am unable to accept that. Indeed, there are cases in which there is a clear, direct relationship between a candidate’s criminal past and a specific ministerial office, and in such cases the candidate would be disqualified from holding that office or exercising certain types of authority deriving therefrom, but could serve as a minister in another ministry (compare: the Gallant case, para. 30). Such a relationship, the characteristics of which I addressed above, goes to the core of fitness to serve in the office, and therefore disqualifies the candidate. But in the absence of such a relationship, it is my opinion that we cannot accept the argument that serving as a minister in a particular office requires “special integrity” that would not be required in another ministry. Such a distinction creates a substantive-normative hierarchy between “more important” and “less important” ministers, which has no basis in law or in the Israeli governmental system. In my opinion, such a distinction would also be improper, as it could itself inflict harm upon public confidence in the governmental system, particularly in regard to confidence in those government ministries regarding which it would be decided that more flexible moral standards would suffice.

41.       Moreover, even in the specific circumstances of the office of Minister of the Interior, I am not convinced that the Petitioner’s arguments of are of any substance. It should be recalled that in HCJ Deri this Court held that there is no legal bar to Deri’s serving as Minister of the Economy and Minister for the Development of the Negev and the Galilee. The office of Minister of the Interior certainly grants the person holding it broad authorities that have significant social, public and economic consequences. Those authorities include, among others, the responsibility to oversee the administration of local government and its good governance. But the Minister of the Economy also enjoys extensive authorities of broad economic and social significance. The Ministry of the Economy controls large budgets, and the Minister’s decisions have significant influence on the market. Various regulatory and enforcement agencies are subordinate to that ministry, along with its ancillary units that have significant contact with the public. In particular, one might point to the Ministry’s responsibility for enforcing labor law and consumer protection, as well as government support of businesses. The Minister of the Economy is also is also expected to serve as a personal example to those subordinate to him in the Ministry of the Economy in exercising their authority, and to those bodies that his ministry is meant to oversee. It may well be that oversight over governmental corruption is one of the most central aspects of the job of the Minister of the Interior, as would appear from The Local Government Report – but it is hard for me to accept the argument that in regard to the office of Minister of the Interior, Deri is bereft of moral authority despite the passage of time, whereas in regard to his holding the office of Minister of the Economy it was held that the time that elapsed mitigated the moral impairment of his corruption offenses and permitted him to exercise various authorities that included oversight and the enforcement of the law.

42.       In conclusion, I do not find that the office of Minister of the Interior, by its character and nature, requires more rigid criteria in regard to the criminal record of a candidate than those required in the appointment of a minister to another ministry.

 

The Reasonableness of Deri’s Appointment

43.       It now remains for us to examine whether the relationship between Deri’s criminal record and the office of Minister of the Interior, and the additional harm to public confidence that it entails, is such as to change the equilibrium point in HCJ Deri, and move the appointment over the boundary of the margin of reasonableness. It should be recalled that although I found that there is no clear, direct relationship between Deri’s criminal past and the office of Minister of the Interior, I was of the opinion that his criminal record raises two unique problems in regard to that appointment. One problem is that he committed the offenses in this ministry, and the appointment carries symbolic significance that might further undermine public confidence in government authorities. The other problem is the fact that the offense for which he was convicted in the Public File was committed in the course of his exercising his authority as Minister of the Interior.

44.       After reviewing the balance struck among the various considerations in HCJ Deri, I am satisfied that the said problems are not sufficient to put Deri’s appointment beyond the boundaries of the margin of reasonableness. As I earlier noted, the evaluation of the considerations is performed substantively, examining the candidate’s ability to fulfill his office from a normative, practical and ethical standpoint, inter alia, against the background of undermining public confidence as a result of the appointment. Considering all of the circumstances of the matter before us, I am of the opinion that the special problems attendant to Deri’s appointment to the office of Minister of the Interior are such that would not negate his normative fitness to fulfill the office.

45.       This conclusion is primarily based upon the fact that, countering those problems I have enumerated, there is, in the circumstances of this case, a mitigating factor in the form of the Knesset’s ratification of Deri’s appointment to the office of Minister of the Interior. Whereas in HCJ Deri, Deri’s appointment as Minister of the Economy was ratified as part of the Knesset’s vote of confidence in the Government as a whole, under sec. 13(d) of Basic Law: The Government, in this case, the Knesset specifically ratified Deri’s appointment to the office of Minister of the Interior. That ratification was granted following a debate in the Knesset plenum that treated, inter alia, of Deri’s criminal record, the consequences of his appointment on public confidence in government, and his many years of public works.

            It should be emphasized that ratification by the Knesset in the framework of a vote of confidence in the Government, where the matter of any individual minister is “subsumed”, is not comparable to the specific ratification of the appointment of a minister that is carried out after a debate of the various aspects of the matter (and compare: the Hanegbi case, para 67 of the opinion of M. Cheshin J.). It is generally acknowledged that the Knesset’s ratification of a person’s appointment to a public office mitigates, to some extent, the claim that the appointment undermines public confidence, inasmuch as the Knesset is the body that represents the public’s opinion (see: HCJ Deri, para. 22; the Emunah case, para. 25; and cf. in regard to parliamentary review of subsidiary legislation: Dafna Barak-Erez, Administrative Law, vol. 1, 324 (2010) (Hebrew)). The claimed harm to public confidence in government is significantly mitigated when the Knesset considered the various aspects of the specific appointment, and thought it proper to ratify it after a relevant debate. In my opinion, that ratification can balance the additional harm to public confidence that results from the relationship between Deri’s criminal record and the office of Minister of the Interior.

            Therefore, I am of the opinion that, under the circumstances, and in view of the broad margin of discretion granted to the Prime Minister in the matter of the appointment of ministers, Deri’s appointment to the office of Minister of the Interior remains a “borderline case” which, despite the problems that it raises, does not provide legal grounds for intervention.

46.       Before concluding, it would be appropriate to emphasize yet again that nothing in this decision should be taken as a moral seal of approval of Deri’s appointment as an appropriate one, or as an endorsement of the appointment. As Justice U. Vogelman explained in HCJ Deri, “the Court is not part of the ratification process, and its role is limited to examining the authority’s actions on the basis of the criteria for judicial review established by law”. Our decision is in the legal sphere, and in its scope we found no grounds for intervening in Deri’s appointment to the office of Minister of the Interior. However, Deri’s criminal record, with all its severity and the moral turpitude associated therewith, has not passed from the word, and the decision to appoint him will have to stand the test of public opinion, with all the means at its disposal.

47.       On the basis of all the above, I would propose to my colleagues that the petition be denied, without any order for costs.

 

Epilogue

48.       It should be noted that after hearing the parties’ arguments, and before rendering our decision, we were informed by the parties’ attorneys, on April 3, 2016, that an investigation is being conducted against Deri on a number of suspicions. After reading the parties’ notices and their responses, we found that the investigation is not relevant to the petition before us. As explained above, the subject of this petition is the reasonableness of Deri’s appointment to the office of Minister of the Interior against the background of his criminal record. It is our understanding that nothing in that investigation would change the result that we have reached, particularly in view of its early stage.

 

Justice N. Hendel:

1.         I have carefully read the well-crafted opinion of my colleague Justice S. Joubran. After considering the material presented to us and hearing the arguments of the parties, and against the comprehensive picture that they depict, I cannot concur with his conclusion. In my opinion, examining the decision to appoint Rabbi Aryeh Machlouf Deri (hereinafter: Deri) to the office of Minister of the Interior in accordance with the relevant criteria leads to the conclusion – in the concrete circumstances and the on-point balance – that this appointment cannot stand, as it is tainted by a degree of unreasonableness of an intensity that requires the disqualification of the appointment.

            I am aware of the fact that Deri meets the fitness criteria under sec. 6(c) of Basic Law: The Government, and that considerable time has elapsed – more than is required by that section – since he was convicted of the offenses of bribe taking and breach of trust, and served his sentence. I am further aware that Deri’s appointment as Minister of the Economy and the Development of the Negev and the Galilee was recently approved by this Court, which held that despite the appointment being “on the boundary of the margin of reasonableness”, there were no legal grounds for intervention – inter alia, in view of the consideration of the passage of time (HCJ 3095/15, per E. Hayut J., H. Melcer and U. Vogelman JJ. concurring) (hereinafter: the decision in the previous petition)). I also denied a request for a Further Hearing in that matter, adopting the conclusions of this Court (HCJFH 5806/15 (hereinafter: the Decision on the Further Hearing)). I will not retract from that in the framework of my opinion below. Of course, the decision in the previous petition stands. However, it must be borne in mind that the circumstances have changed. Another factor has been added to the picture – the fact that the current appointment is specifically to the office of Minister of the Interior – and we must consider how that affects the overall picture. I am of the opinion that this factor is neither marginal nor negligible in any way. On the contrary, in the circumstances of the matter before us, it is sufficient to shift the equilibrium and turn it on its head. In other words, the holding that Deri can serve as a minister does not require or in-and-of-itself lead to the additional conclusion that Deri can specifically serve as Minister of the Interior.

            I will already state, if only in brief, that I find the approach of “what does it matter if he is a minister in Ministry X or in Ministry Y” – which even found some support in the case law (see the opinion of Justice E. Rivlin in HCJ 1993/03 Movement for Quality Government in Israel v. Prime Minister, IsrSC 57 (6) 817, 859  (2003) [English: http://versa.cardozo.yu.edu/opinions/movement-quality-government-israel-v-prime-minister-mr-ariel-sharon] (hereinafter: the Hanegbi 2003 case)) unacceptable. The State put this argument forward in the guise of the principle of equality among ministers. I admit that there is some logic to that approach. It is undesirable, and even impossible, for the Court to precisely grade each ministry. But that is not the point of disagreement. Such cases always possess unique characteristics. What is common is to be found in the difference. We are concerned with a particular person, who perpetrated a particular offense, in particular circumstances, and who was appointed to a particular office. From that we do not infer that there are no rules. On the contrary. The relevant rules and the concrete circumstances must be merged. It is indeed possible that after the statutory period has elapsed, a person who was convicted and served his sentence will be found fit to serve as a minister in one but not another Ministry. Before addressing the instant case, I will present several examples in order to clarify this point in the most general manner. A person drove while drunk, and was sentenced to imprisonment. A long period has elapsed since serving his sentence, and he is now competent to be appointed a minister. Is it the same if the question is whether he can be appointed Minister of Tourism or whether he can be appointed Minister of Transportation? I believe that the answer is clear. Would it be appropriate for a person who served a long custodial sentence to be appointed Minister of Internal Security and be responsible, among other things, for the Prison Service, or serve as Minister of Justice? The answer is similar here, as well. It is interesting to note in this regard that when Deri was appointed Minister of the Economy, it was agreed that despite the normal rule, he would not serve on the Committee for the Appointment of Judges and Public Representatives in the Labor Courts, which I believe was proper. The above is meant to clarify, as I shall explain below, why the decision in the previous petition – which held that Deri could serve as Minister of the Economy and the Development of the Negev and the Galilee – is not necessarily the last word in regard to the present petition.

            In my opinion, under the circumstances, there is a “clear, direct relationship” between the office of the Minister of the Interior and the offenses of which Deri was convicted. That relationship consists of three parts: (a) the nature of the office; (b) the character of the offenses; and (c) the concrete circumstances of their commission. These parts create a two-sided relationship. The first is general, while the second is specific. The first relates to the normative aspect of the nature of the office, the character of the offenses, and the manner in which the relationship between them affects Deri’s fitness to serve as Minister of the Interior. The second relates to the factual aspect of the offenses, and the manner in which Deri’s past service as Minister of the Interior served him, in practice, in their commission. As for the first aspect – the nature and uniqueness of the Ministry of the Interior are characterized by the fact that it holds the authority and the responsibility to inculcate – primarily in local government – values (in the broad and the normative sense) and procedures (on the operative level) that focus upon maintaining ethical conduct and  good public governance. An attendant consequence (which is a value in and of itself) is the creating and reinforcing of public confidence in government. The nature of the offenses of which Deri was convicted – particularly bribe taking and breach of trust – undermine those very values in the most clear and salient manner. Indeed, one can commit similar offenses in any ministry. However, the social harm they involve – including in regard to good governance, ethical conduct and public confidence – is more severe and cries out louder in the place that is meant to serve as the bastion of those values, and is meant to deliver the message that there are boundaries that may not be crossed. Moreover, and this is the second aspect – I am of the opinion that in the concrete case, with regard to the fact that the offenses of which Deri was actually convicted, there is a relationship between those offenses and the office that he held in the past (and to which he is being reappointed at present). The posts that Deri held in the Ministry of the Interior at the time, including the post of Minister of the Interior, served, de facto, as means for the perpetration of the wrongful acts. Such a relationship, in all its parts and aspects, does not allow for Deri’s appointment to the same office at present. That is so even though it is possible for him to be appointed to another ministerial post, at least from a legal standpoint, as was indeed held not long ago in the decision in the previous petition.

            According to these criteria – of the nature and unique character of the office, the character of the offenses, and the circumstances of their concrete commission, and the relationships between these three “elements” – as I will explain in detail below, I have arrived at the conclusion that Deri’s appointment to the office of Minister of the Interior cannot be maintained. My colleague’s opinion detailed the pertinent facts and the arguments of the parties, as well as the main points of the previous decision. Those will serve as the platform and basis for my opinion. Before setting out my reasoning, I will begin with the starting point of our exploration of this case, but first note a final preliminary comment. This petition concerns a decision to appoint Deri as Minister of the Interior against the background of the offenses of which he was convicted in the past, and for which he served his sentence. That is the subject. The parties recently apprised the Court that Deri is under investigation for various suspicions. That enquiry is just beginning. In any case, in terms of this petition and its decision, that investigation is non-existent.

 

The Starting Point of the Examination – The General Rule and the Particular Finding

 2.        The first starting point for this examination is to be found in the general rules that this Court has established in regard to appointments to public office (in general, and not exclusively to ministerial office). I will note the primary ones, without exhausting the list.

            First, it is a well-established principle of the case law that “fitness and discretion are independent” (see, for example: HCJ 6163/92 Eisenberg v. Minister of Construction and Housing, IsrSC 47 (2) 292, 259-260 (1993) [English: http://versa.cardozo.yu.edu/opinions/eisenberg-v-minister-building-and-h... (hereinafter: the Eisenberg case); HCJ 5853/07 Emunah — National Religious Women’s Organization v. Prime Minister, IsrSC 62 (3) 445, paras. 13 ad 24 of the opinion of A. Procaccia J. (Feb. 16, 2007) [English: http://versa.cardozo.yu.edu/opinions/emunah-v-prime-minister] (hereinafter: the Emunah case); HCJ 4921/13 Ometz – Citizens for Good Governance and Social and Legal Justice v. Mayor of Ramat Gan, Yitzhak Rochberger, paras. 32-33 of the opinion of M. Naor P. (Oct. 14, 2013) [English: http://versa.cardozo.yu.edu/opinions/ometz-%E2%80%93-citizens-proper-administration-and-social-justice-israel-v-rochberger] (hereinafter: the Mayors case); HCJ 3997/14 Movement for Quality Government in Israel v. Foreign Minister, para. 23 of the opinion of Grunis P. (Feb. 12, 2015) (hereinafter: the Hanegbi 2015 case) (on the application of this rule – “fitness and discretion are independent” – in Jewish law, see para. 2 of my opinion in the Mayors case)). The import of this rule is that “it is does not suffice that a particular candidate meet the fitness conditions prescribed by law in order to approve his appointment to the office, inasmuch as the decision to make the appointment is subject – in parallel – to the test of the reasonableness of the administrative act” (the Decision on the Further Hearing, para. 3). In this regard, the seven-year period established in sec. 6(c)(1) of Basic Law: The Government [English: https://knesset.gov.il/laws/special/eng/basic14_eng.htm] constitutes a threshold requirement. The section states:

If a person was convicted of an offense and sentenced to prison and if seven years have not yet passed since the day he on which he finished serving his period of punishment, or since the handing down of his sentence - whichever was later - shall not be appointed Minister, unless the Chairman of the Central Election Committee states that the circumstances of the offense do not involve moral turpitude.

            In other words, as long as the period has not passed, there is no discretion to appoint a person who was convicted of a crime of moral turpitude to the office of minister. However, after that period – as arises from the language of the section – there is authority to make such an appointment. However, like other powers granted to an authority, its exercise is subject to the decision being within the margin of reasonableness.

            The reason for this is that alongside the fitness conditions established by the legislature, there may be additional considerations in the sensitive area of appointments that would lead to the conclusion that an appointment is not consistent with the ethical standards demanded by public service, and may undermine public confidence in government. It has even been held that “at times, reasonableness is the only cause for intervention by which an improper appointment can be prevented” (the Hanegbi 2015 case, para. 2 of the opinion of M. Naor D.P., and see para. 2 of the opinion of E. Rubinstein J.). As is also clear from the hypothetical examples presented above, the complexity of life in general, and of political life in particular, present a broad range of possible appointments, including those that clash with the objective of the requisite ethical conduct and public confidence. Therefore, the exercise of discretion is permitted and even required. But it must be exercised with care, and intervention will be exceptional. It should be noted in this regard that in the context of the relationship that nevertheless exists between fitness conditions and reasonableness tests, the case law has held that a candidate’s fitness in terms of the relevant law may cast light upon the scope of the appointing authority’s discretion, and affect the reasonableness of the decision (the Emunah case, para. 19 of the opinion of E. Hayut J.).

            Second, the factors that the authorized person or the appointing authority must consider in appointing a person with a flawed background to a public office have also been outlined in the case law. One of them is the severity of the offenses imputed to the candidate. “In this context, the value the offense is designed to protect should be considered with special severity associated with offenses that have protected values regarding clean governance, public trust in government authorities, and ensuring the integrity of public servants at their core” (the Mayors case, para. 37 of the opinion of M. Naor P.). It is worth emphasizing that “the gravity of the offence is determined not by its ‘position’ in the Penal Law, but by its implications on considerations that underlie the appointment. Consequently, an offence should be regarded as serious where its very essence and the circumstances of its commission not only undermine law and order in general (e.g., murder, robbery, rape), but also the foundations of Government structure, e.g., bribery, fraud and breach of trust, perjury, fabricating evidence, obstructing the course of justice” (the Eisenberg case, para. 55 of the opinion of Barak P.).

            Other factors are the duration of the offenses, and their scope, the time that has elapsed since the commission of the offenses; whether the candidate expressed contrition; whether the offenses were committed intentionally and for the purpose of promoting his own personal interests; whether there was moral turpitude; and as opposed to these, the interest in rehabilitation of offenders and their reintegration into society (the Hanegbi 2015 case, para 27 of the opinion of Grunis P.; the Mayors case, ibid.).

            Another important, primary consideration in the context of the matter before us concerns the existence of a relationship between the offenses and the office. In the Sarid case, this Court noted that where there is a clear, direct relationship between the offense and the office of an elected official, the possible conclusion may be that his criminal record disqualifies from holding a particular public office:

Thus, for example, where there is a clear, direct relationship between the offenses that the candidate committed and the office he is intended to hold, a possible conclusion it that his criminal past entirely disqualifies him from holding a particular office. Under such circumstances, considerations that may have been weighed in support of the candidacy had he been presented as a candidate for a different office (like the time that had passed since the commission of the offenses, contrition, the quality of his conduct over the period since the commission of the offense, and his professional qualifications) will be of no avail, and his candidacy will be disqualified. In establishing the existence of such a relationship, account must be taken not only of the nature of the offenses and the circumstances of their perpetration, the office in the framework of which the candidate committed the offenses, and the office he is now intended to fill, but also the severity of the moral blemish imparted by committing the offenses. That is to say, the existence of a relationship that can disqualify the candidate is not derived solely from the effect of his criminal record upon his professional ability to fulfill the new office, but also from his moral fitness to fulfill it (HCJ 4668/01 Yossi Sarid – Opposition Chairman v. Prime Minister Ariel Sharon, para. 16 of the opinion of E. Mazza J. (Dec. 27, 2001) (emphasis original) (hereinafter: the Sarid case).

            As my colleague Justice Joubran noted, the matter of the relationship also arose in later case law. Thus, in the Mayors case we find:

Another important consideration is the link between the offenses of which the head of authority was accused, and the authorities accorded to him and his status as head of authority [emphasis original]. In other words, the council must address two questions: was the public office used in facilitating the offense, and was there moral turpitude caused by the link between the office of the head of authority and the offense? [emphasis added] (para. 37 of the opinion of M. Naor P. And see the Hanegbi 2015 case, para. 27 of the opinion of A. Grunis P.).

            In the above, we can see an expression of the two sides of the relationship mentioned earlier: the general-normative and the concrete-factual. Thus, in the framework of examining the relationship, we must take account of “the nature of the offenses’, but also of “the circumstances of their perpetration”; we must address both “the office in the framework of which the candidate committed the offenses”, and “the office he is now intended to fill” (where, in the case before us, we are speaking of the same office); we must examine whether the office the candidate held at the time of the commission of the offenses served him as a means for their perpetration, and whether the relationship between the intended office and the offense gives rise to a moral defect.

            Third, and of a more general nature: In the Decision on the Further Hearing, I addressed the objectives and nature of the considerations that must be weighed in examining the reasonableness of an appointment: “The considerations enumerated in the case law in regard to the appointment of a candidate who was criminally convicted, and that were quoted in the judgment, do not carry formal, independent weight. Their purpose is to provide an indication as to the potential harm that the appointment may cause to the civil service, including to public confidence in it … The decision as to the reasonableness of the appointment is not an arithmetic one that is achieved by assigning points to each consideration, and accordingly making a final calculation. Rather, the decision in such matters is derived from a material evaluation as to the extent of the harm to the candidate’s ability to fulfill the office normatively, practically and ethically – including the consequences of the appointment for public confidence – taking account of the circumstances of the matter in their entirety” (para. 5). The considerations were thus intended to examine whether the candidate’s actions testify to a “moral blemish” that influences the candidate’s ability to fulfill the intended office, and affects public confidence (see: the Hanegbi 2015 case, para. 27 of the opinion of A. Grunis P.). They are not the purpose but the means for its realization.

            It should be borne in mind that these considerations are intended to aid the Court in establishing a position on the concrete case before it. We are not concerned with a closed list. Moreover, the considerations need not necessarily stand “in the same line”, and their relative weight may certainly change from case to case. As I pointed out in the Decision on the Further Hearing, this is true not only in regard to the competition among the considerations, but even in the context of an individual consideration (see para. 7, ibid.). In summary, the relative weight of each of the considerations – those inscribed in the case law, and those that may yet be written in the future – changes in accordance with the circumstances of each case, and so, too, the ultimate balance among them.

3.         We shall now turn to the second starting point for our examination, which is the decision in the previous case. So as not to belabor the point, I will say only this: in that decision, the guiding case-law considerations were applied to the concrete circumstances of the case – Deri’s appointment as Minister of the Economy and the Development of the Negev and the Galilee. This Court addressed Deri’s criminal record and the severity of his acts, which constituted “clear examples of political corruption that impart a severe moral blemish to the public personage who commits them” (para. 17). As opposed to that, the significant period of time that had elapsed since the perpetration of the offenses and serving the sentence was also taken into account. Two additional factors supported non-intervention: one was the fact that the Knesset had voted confidence in the Government that was presented to it, including the appointment of Deri as Minister of the Economy and Development of the Negev and the Galilee. It was held that that “could somewhat mitigate the force of the argument that the appointment undermines public confidence in the governmental system” (para. 22). The second is the Government’s decision, ratified by the Knesset, to transfer to the Minister of Religion all authority granted by law to Deri as Minister of the Economy in regard to the appointment of judges and public representatives in the Labor Courts, as noted above. Lastly, it was noted that the Prime Minister is afforded broad discretion in forming the Government. The result of the weighted calculation was, as stated, that the appointment was “on the boundary of the margin of reasonableness”, but that there were no legal grounds for intervention.

            I will address the points that supported sustaining the appointment in the previous petition in the appropriate place. At this stage, I would like to focus upon another matter – the relationship between the decision in the previous case and the current proceedings. Like my colleague Justice Joubran, I, too, do not intend to revisit the decision in the previous petition. It is, indeed, a final judgment of this Court, given only half a year ago, and regarding which a request for a Further Hearing was denied. I do not retract what I said. However, we should recall that the circumstances of the previous petition related to Deri’s appointment as Minister of the Economy and Development of the Negev and the Galilee, whereas the circumstances now relate to his appointment as Minister of the Interior – the office he held when he committed the offenses. One can be of the opinion, as my colleague held, that the relationship between the office and the offenses is limited to the time element, and that is not grounds for changing the result reached in the previous petition. According to this approach, and against the background of the previous decision that upheld Deri’s appointment as a minister, no reason specifically related to his appointment as Minister of the Interior was found that would justify deviating from that decision. As stated, and as I shall explain, I hold a different view. I am of the opinion that the specific appointment to the office of Minister of the Interior – under the concrete circumstances of the case – shift the equilibrium point.

            One might say that the various considerations that must be taken into account in examining the reasonableness of the appointment, and particularly in applying them to the concrete case, are not a mixture but rather a compound. That is to say that although each consideration must be granted its appropriate place in general, and in the specific circumstances in particular, the full picture must also be taken into account. This is required by the task of balancing and weighing, the result of which decides the fate of the appointment – for good or bad. When a consideration or circumstance changes, it may lead to an overall change in the balance. Support for this can be found, for example, in the Sarid case. As noted, that case held that where there was a clear, direct relationship between the office and the offenses, it is possible that “considerations that may have been weighed in support of the candidacy had he been presented as a candidate for a different office (like the time that had passed since the commission of the offenses, contrition, the quality of his conduct over the period since the commission of the offense, and his professional qualifications) will be of no avail, and his candidacy will be disqualified”. Therefore, while the decision in the previous petition is the starting point, it is not necessarily the end point. Along the way, we have encountered an additional variable. We must take it into account – both in and of itself, and in terms of the manner in which it may influence the other considerations. It does not add another layer to those that preceded it, but rather may effect changes in those other layers, and in the relationship between it and itself, and among them themselves.

            Equipped with those tools, we shall now proceed to consider the reasonableness of Deri’s appointment as Minister of the Interior, while focusing upon the consideration of the relationship and its application to the present circumstances.

 

The Normative Relationship – Between the Nature of the Office and the Nature of the Offenses

A.        The Nature of the Office – Authority and Areas of Responsibility of the Ministry of the Interior and the Person at its Head

4.         The Ministry of the Interior is one of the central ministries of the Government. It stands at an important crossroad between government and the daily lives of the citizen and his place of residence. As such, it is responsible for the entirety of functions of the local authorities, as well as for coordination between them and the central administration and the Government (subject to certain areas given to the responsibility of other government ministers, such as education and welfare services). I will detail some of the aspects of those fields of authority and functions, to the extent that they are relevant to the matter before is.

            Section 233 of the Municipalities Ordinance [New Version] [English: L.S.I. New Version vol.  I, 247] states that the fields of authority of a municipality are those established by law, subject to the instructions of the Minister of the Interior:

233.     Unless the Minister shall otherwise order in respect of all or any of the matters concerned, and subject to any other law, the municipality shall, within the municipal area, deal with the matters specified in Article Two and do any other act which a municipality is required by this Ordinance or any other law to do, and may, within the municipal area, or in any town-planning area which includes the municipal area, deal with the matters specified in Article Three.

            Similarly, Chapter 9 of the Local Councils Order (A), 5711-1950, details the authorities of a local council. Section 146 of that Chapter establishes, as a guiding principle, that “Subject to the directives of the Minister, and to the extent that it is not contrary to any law, the council is authorized to act in any matter that relates to the public in the council’s area”. The scope of authority granted to local councils is thus subject to the directives of the Minister, or restrictions that he may impose. In practice, the Minister of the Interior exercises this authority in order to issue general directives by means of Circulars of the Director General of the Ministry of the Interior (Shalom Zinger, Local Government, Past and Future, 130 (2013) (Hebrew) (hereinafter: Zinger).

            An important aspect of the authority of the Minister of the Interior and the interface between the Ministry of the Interior and the local authorities concerns their budgets. First, the Minister of the Interior can make general grants to local authorities from the State budget in order to balance their expenditures and income, and the local authorities are granted discretion in regard to the purposes that will be served by such grants and the institutions that will receive them. After years of making such disbursements in a defective manner, and following review by the State Comptroller and the issuing of directives by the Attorney General, the Procedure for Granting Support to Local Authorities was published in 1984 (published in the Official Gazette 5745, p. 2275) (hereinafter: the Support Procedure). Second, the budget of a local council must be approved by the Minister of the Interior (sec. 206(b) of the Municipalities Ordinance; sec. 2A(b)(5)(a) of the Local Councils Ordinance [New Version]; sec. 81C of the Local Councils (Regional Councils) Order, 5718-1958). The Minister of the Interior is required to exercise appropriate oversight of the budgets of the local authorities, in accordance with his authorities. As this Court has held, this is not “merely a technical, formal authority, and any disregard for the requirement of approval, and any act performed under a budget line or component of the budget without the approval of the Minister of the Interior is not merely technically defective, but rather an unlawful act or omission that go to the very root of the matter” (HCJ 609/85 Zucker v. Mayor of Tel Aviv-Yafo, IsrSC 40 (1) 775, 780 (1986)). The approval of the budget by the Minister of the Interior is an oversight tool granted to him by law in order that he might ensure that the local authorities adapt their budgets and policy to what is necessitated and required by the general economic and social policies (ibid.). It would be appropriate to note that the case law on the need for fair and equal distribution of the budget exhausted many pens.

            Another central aspect of the control exercised by the Ministry of the Interior over the local councils is the matter of oversight. The Ministry of the Interior is responsible for supervising the authorities in order to ensure that they operate as required, and to intervene where operational failures are detected. Such failures may relate to an authority’s financial situation, the manner in which it is handled, and even improper conduct that is contrary to the rules of good governance and ethical conduct (Zinger, pp. 250-251). In order to fulfil that task, the legislature granted the Minister a number of supervisory tools that enable him to intervene actively in the functioning of an authority. Thus, for example, the District Commissioner (who acts as the long arm of the Minister) can order a local authority to fulfil one of its duties within a given time period, and if it fails to do so, the Commissioner may appoint an appropriate person to fulfil that duty (sec. 141 of the Municipalities Ordinance). The Minister can appoint a supervising accountant for a municipality if, among other things, the Minister is of the opinion that its budget or finances are not being managed “in a proper manner or in accordance with the provisions of any law” (sec. 142B(2) of the Municipalities Ordinance). Moreover, sec. 143 of the Municipalities Ordinance authorizes the Minister of the Interior to make structural changes in an authority – even far-reaching changes – in the presence of the situations enumerated under the section. One of those cases is when “in the opinion of the Minister, the council or the mayor, has ceased to perform the functions imposed upon it by this Ordinance or any other law, or is not properly administering the area under its jurisdiction…” (sec. 143(a)(2)),  or when “A commission of inquiry has found that the council or the mayor is not capable of properly acting to fulfil their duties…and recommended to the Minister the dismissal of the mayor or the dissolving of the council” (sec. 143(a)(3). It should be noted that a commission of inquiry is appointed by the Minister in consultation with the Minister of Justice (sec. 144 of the Municipalities Ordinance)). In all of those cases (an one additional), the Minister may order the election of a new mayor or council, or both, and decide upon a date for the elections; appoint a mayor and council, or only a council, from among the persons fit to serve as council members; or appoint a committee to carry out the functions of the mayor and the council, or only the functions of the council” (referred to as an “nominated council”) (sec. 143 of the Municipalities Ordinance; and see the parallel sec. 38 of the Local Councils Ordinance [New Version]). Section 22 of the Local Authorities (Election and Tenure of Head and Deputy Heads) Law, 5735-1975, which was the subject of the Mayors case, establishes that a local authority may remove the Head of the Authority from his office if it find that he “conducts himself in a manner incompatible with the status of Head of the Authority”, and such a decision requires the approval of the Minister of the Interior.

            It has been held that those authorities “give expression to the role of the State’s central government as the overseer of the proper functioning of the local government, and creates a type of equilibrium point between the fundamental right of the residents of the local authority to choose their representatives and the need to maintain a properly functioning government” (HCJ 10963/05 Ataf Haj v. Minister of the Interior, para 4 (Feb. 13, 2006)). As we see, the Minister of the Interior wields significant power, given that the powers granted to him are at the core of public confidence in local government, and are powerfully connected to the democratic rights of the individual, such as the right to vote. The functions of oversight, investigation, examination, directing and supervising were created to a large extent in order to increase public confidence in public institutions and authorities (Tana Spanic, Conflicts of Interest in the Public Service, 235 (2013)).

5.         We thus see that the Ministry of the Interior has certain unique characteristics. The minister that heads that ministry is equipped with broad powers of oversight, as we saw in the examples above. Oversight of governmental corruption is a very central part of his role. That is also clear from the Report of the Team for evaluating Methods for Reinforcing the Rule of Law and Ethical Conduct in Local Government, which was appended to the petition. That comprehensive report shows that the phenomenon of corruption in Israeli local government is, unfortunately, not negligible, and over the years enough testimony has been amassed on the existence of corrupt behavior patterns in various local authorities (see paras. 20-21 of the Report). The severity of the situation reflected by the Report reinforces the importance of combatting the phenomenon.

            It may be that the Ministry of the Interior does not have the largest budget of any ministry. It also may be that it is not considered the most “senior” or the most “important” of the ministries, to the extent that one can rank them, and in accordance with the established criteria of priority. But that is not the test for the purpose of the matter before us. The focus is on the nature of the office itself, and particularly the supervisory authorities granted it. As noted, the Ministry of the Interior is responsible, inter alia, for setting a normative-ethical standard for the local government authorities, and for enforcing various aspects of the law. It is meant to serve – by analogy – as the “watchdog” of good governance and ethics in local government. The Ministry of the Interior and the person heading it are required to supervise and ensure that public confidence in the civil service not be undermined – not only because they serve the public, but because a central part of the responsibility for ensuring those values is on their doorstep. Indeed, the Minister of the Economy (and every other civil servant, certainly of a senior level) is expected to serve as a personal example (see para. 41 of my colleague’s opinion). But nevertheless, I am of the opinion that the nature and character of the office of Minister of the Interior are unique. That uniqueness influences the weight of a criminal record in filling the particular office. As was held in the Eisenberg case:

A minor position cannot be compared with a senior position; a position in which one has no contact with the public cannot be compared with one where there is contact with the public; a position not involving the control, supervision, guidance and training of others cannot be compared with one involving authority over others and responsibility for discipline. Someone who holds the office of a follower cannot be compared with someone who holds the office of a leader; an office that in essence does not make special ethical demands on its holder and on others cannot be compared with an office that is entirely devoted to encouraging a high ethical standard (para. 48 – emphasis added).

            And it should again be emphasized: every public servant must act as the public’s trustee in all that he does. As Justice H. Cohn wrote nearly fifty years ago, and remains relevant:

The private sector differs from the public sector, for while the former acts as it pleases, giving and taking at will, the latter exists solely for the purpose of serving the public, and possesses nothing of its own. Whatever it has it owns as a trustee, and it has no rights or obligations in addition to, or distinct from, the rights of the trusteeship or those conferred or imposed by statutory provisions (HCJ 142/70 Binyamin Shapira v. Jerusalem District Committee of the Israel Bar Association, IsrSC 25 (1) 325, 331 (1971) (hereinafter: the Shapira case).

            The demand of an appropriate moral standard casts its net over all of the public service and its servants, each in accordance with his role and authority. Therefore, “The appointment of someone with a criminal past — especially a serious criminal past like someone who committed an offence involving moral turpitude — harms the essential interests of the Civil Service. It undermines the proper performance of its function. It undermines the moral and personal authority of the office holder and his ability to convince and lead. It undermines the trust that the general public has for the organs of Government” (the Eisenberg case, para 46). True, not every criminal record disqualifies the appointment, and there are counter considerations. Sometimes, the latter prevail. The proof – that is what was held in regard to Deri’s appointment as Minister of the Economy and the Development of the Negev and the Galilee, and as stated, I do not question that holding. But now we have an additional layer. There are relevant requirements and characteristics of every public servant, whomever he may be. But there are characteristics that are more specific to the office. We are focused upon the present legal point in time. When the Minister of the Interior is meant to direct and supervise that local government is properly conducted, and ensure the protection of the values of ethical conduct and good governance, we must examine whether Deri is suitable to serve in that office with utmost care in view of his particular criminal past. It is to that that we shall now proceed.

 

B.        The Character of the Offenses – Bribe Taking and Breach of Trust

6.         The affair referred to as the “Personal File” concerned offences committed by Deri in the years 1984-1990, while serving in senior public positions: assistant to the Minister of the Interior, Director General of the Ministry, and ultimately, as the Minister at its head. The information filed against Deri and others charged Deri with taking bribes and exploiting his positions to promote the Lev Banim Association, in which he had previously served as administrative director, inter alia, by fraudulently receiving monies from the public treasury. The District Court convicted Deri of the offenses of bribe taking, breach of trust, and the aggravated obtaining of anything by deceit (CrimC (Jerusalem) 305/93 State of Israel v. Deri (April 15, 1999)). Deri’s appeal before this Court was granted in part – he was exonerated of one of the offenses, the scope of his conviction on two other counts was lessened, and the sentence pronounced was reduced such that he was sentenced to imprisonment for three years (CrimA 3575/99 Deri v. State of Israel, IsrSC 54 (2) 721 (2000) (hereinafter: CrimA Deri). In the “Public File”, Deri was convicted of the offense of breach of public trust for acts committed while serving as Minister of the Interior, in acting to secure funding in the amount of NIS 400,000, by means of the Jerusalem Municipality, for an association run by his brother and brother-in-law (CrimC (Jerusalem) 1872/99 State of Israel v. Deri (Nov. 20, 2003)). To complete the picture we should note that suspicions arose against Deri in what is known as the “Baron-Hebron Affair” in regard to offenses of fraud, breach of trust, extortion, and obstruction of justice. In the end, no charges were filed in that affair, but in the opinion of the Attorney General at the time, the suspicions were not refuted, and the file was closed for extra-legal considerations (see paras. 5 and 17 of the decision in the previous petition).

            The offense of bribe taking, of which Deri was convicted in the Personal File, is one of the more serious offenses in the Penal Law, and the most serious in regard to a public servant. I recently addressed this offense and the harm attendant to it in the general part of the decision in the Holyland Affair (CrimA 4456/14 Avigdor Kelner v. State of Israel, paras. 2-3 of the Chapter “On Bribe Taking and Blindness” (Dec. 29, 2015) (hereinafter the Holyland case):

The bribery offenses are currently situated in Chapter Nine of the Penal Law, 5737-1977 (hereinafter: the Law), whose title is “Offenses relating to Public Order and Justice”. Among other things, this chapter establishes offenses related to obstruction of justice (Article One), concealment of offenses (Article Two), and assault on police (Article Three). Indeed, this “geographical” location of the offense of bribe taking in the Penal Law is not accidental. It indicates the primary values that the bribery offenses seek to protect: ethical conduct of public servants; the proper functioning of the public administration; and public confidence. Harm to these values equals harm to public order and justice. The common denominator of these values is the public servant. He is the main player in the elements of these offenses. His presence is woven through the entire chapter that comprises the bribery offenses.

The three values are, of course, interrelated. Public servants are required to act fairly and honestly for the benefit of the general interest of the State’s residents. In the desired situation, the general public believes that that is indeed how those called public servants act. That confidence is a necessary condition for a proper society, and for the proper functioning of a democratic regime. As opposed to this, bribery may lead to a public servant working to promote personal interests. The spreading of a culture of bribery leads to the deterioration – by giant steps – of the quality of the public service and the confidence of the general public in public servants. Thus the need to establish a clear criminal prohibition of the bribery offenses in their various forms. It must be ensured that public servants perform their functions as required, and conduct themselves in accordance with the appropriate rules and criteria (CrimA 6785/09 Zoaretz v. State of Israel, para. 40 (Feb. 2, 2011); CrimA 3856/13 Goni v. State of Israel (Feb. 3. 2014); Mordechai Kreminitzer, “Do We Lack Offences? On the Penal Law Bill (Amendment No. 13),” 13 Mishpatim (1980), 159 (Hebrew)).

The bribery offenses are thus intended to protect public order and governance in the State. Additional offenses were established alongside it, such as fraud and breach of trust – section 284 of the Law, and theft by a public servant – section 390 of the Law. The general purpose is to combat the practical expressions of political corruption. This Court has often addressed the severity of this phenomenon. It has emphasized that indications of corruption of any kind imprint a mark of Cain on the forehead of the entire civil service (emphasis added).

            This great danger does not threaten the civil service and the general public alone. Bribery’s influence upon the public servant is great, and it has the potential of distorting his discretion even without his awareness. As I pointed out in the Holyland case (para. 1 of the General Part), this is the “blindness of blindness” – “the receiver of the bribe is not always aware that his sight and discretion have been compromised. He does not see what he is required to see”.

            Thus we see that the offenses of bribery and breach of trust have a clear common denominator in terms of the values they are intended to protect, each alone, and all three together, as they are entwined and interrelated: the first is public confidence in public servants, which is vital to the functioning of public servants and preserving the social frameworks; the second is the integrity of civil servants, which is meant to eradicate the plague of unfairness and dishonesty that stains the civil service with immorality; and the third is the public interest, for which public servants are responsible, and which is intended to ensure the proper functioning of the public administration (on the offense of breach of trust, see in depth, CrimFH 1397/03 State of Israel v. Shimon Sheves (Nov. 30, 2004).

7.         From the above – regarding the nature of the offices, the areas of responsibility, and the authorities of the Ministry of the Interior and the person who heads it, and in regard to the character of the offenses of which Deri was convicted – it is clear that there is a material relationship. The prohibition upon taking bribes and breach of trust is intended to protect state governance, as is the role of the Ministry of the Interior and the person who heads it – particularly in regard to local government. The incompatibility of the offenses of which Deri was convicted and the office of Minister of the Interior is clear: a sick regime is characterized by corruption, and one of its conspicuous expressions is offenses of bribery and breach of trust. In the commission of those offenses, public servants do not serve the public interest, but their own, or other, extraneous interests. As noted, these offenses harm the interests of proper administrative governance, ethical conduct, and public confidence. As opposed to this, a healthy regime – which the Ministry of the Interior is meant to ensure, and tasked to oversee, particularly in regard to the local government that is subordinate to it – is guided by those very values. They are its beacon, which is meant to light the way for the entire public. In such a regime, public servants understand their role as agents and trustees who “possess nothing of their own” (and compare: the Shapira case, ibid.), and take care not to deviate from that role. We are therefore concerned with a head-on clash between darkness and light; between sickness and health. In my opinion, this clash amounts to a “clear, direct relationship” that disqualifies the reasonableness of Deri’s appointment to the specific office of Minister of the Interior.

 

The Concrete Relationship – The Circumstances of the Commission of the Offenses and the Use of the Office in their Commission

8.         My colleague Justice Joubran is of the opinion that there is no “clear, direct relationship” between the offenses that Deri committed and the office of Minister of the Interior (paras. 35-38 of his opinion). In my view, such a relationship does exist – both in the Personal File and in the Public File.

            As for the Personal File – in my opinion, despite the severance of the causal connection between the various offenses of which Deri was convicted, a severance that my colleague correctly noted, there is a relationship between the circumstances of the commission of the offenses that were the subject of charges 1 and 2 and Deri’s office and ministerial service specifically in the Ministry of the Interior. It was indeed held in CrimA Deri that the causal connection between the bribes that Deri accepted when serving in the Ministry of the Interior (the first charge in the information) and the offenses of fraud and breach of trust that he subsequently committed (charges 2 and 3 in the information) was severed. That is because it was not proved that his actions in promoting the interests of the Lev Banim Association and its associates were performed as consideration for the bribes (ibid., paras. 69-70). That is why, as my colleague emphasized, the specific offices that Deri held, including that of Minister of the Interior, were not of importance in regard to the bribes he was given. I take a different view.

            It was held in regard to the first charge, treating of the bribes that he accepted, that Deri had “strong ties to the other appellants who administered Lev Banim. He was himself involved it its affairs, and in practice, he had both influence and control over the manner of its administration. The said sums were paid to him during the period when he served as Minister of the Interior, when it was clearly known to the other appellants that he could raise monies on behalf of Lev Banim. The relationship between giving the monies and the motives of the givers is clear from the circumstances. After all, it is neither the manner nor conduct of associations like Lev Banim, which are sustained through public funding, to pay money into the private pockets of public personages without reason, and the public personages who maintain relations with such associations are also assumed to know and understand that” (CrimA Deri, para. 38, emphasis added). The severity of the conduct increases in view of his authorities as Minister of the Interior. As earlier noted, those authorities include providing support for local authorities by means of general grants for balancing their budgets. From the circumstance of the first charge we learn, in the specific case, that the Lev Banim Association was close to Deri’s heart, as was its financial distress. The other appellants served in various positions in the association, and knew – for their part – that in the framework of his public office, Deri could help them, as he indeed did.

            The second charge addressed in CrimA Deri concerned fraudulently receiving monies from the public treasury, ostensibly intended for the “Jerusalem Center for the Rehabilitation of Released Prisoners” (M.S.A.) association, and unlawfully transferring them to the Lev Banim Association. In the course of the proceedings in that affair, the court accepted the testimony of the state’s witness.  According to that testimony, M.S.A. was granted a sum of NIS 200,000 as support from the Jerusalem municipality, pursuant to its inclusion in a list of associations recommended for support from that source, “but in fact, it was Aryeh Deri who, in the framework of his position as Director General of the Ministry of the Interior, arranged for Uzi Wechsler (the city’s treasurer at the relevant time) to include M.S.A. in the list of institutions recommended for support from the special budget” (CrimA Deri, para. 77, emphasis added). Here, too, we see Deri’s involvement, in this instance exploiting his position as Director General of the Ministry of the Interior to commit the offense. The source of the support monies that M.S.A. received from the Jerusalem municipality was an extraordinary budget (T.B.R.) that the Ministry of the Interior put at the disposal of the municipality (see ibid.). Only “thanks” to Deri’s involvement were the monies directed specifically to M.S.A., and from there to the Lev Banim Association (and see para. 96). As the court found, “Deri’s status in the Shas Movement and in the Ministry of the Interior provided him the influence and ability to act in all that concerned the ensuring of budgets, and as such he became the lord-benefactor of Lev Banim” (para. 94).

The relationship of the offense that was the subject of the second charge in CrimA Deri, in regard to the support that M.S.A. obtained with the help of Deri as Director General of the Ministry of the Interior, is clear from the following holdings of the Court in its decision:

We are of the opinion that Deri was properly convicted of the offense of fraud and breach of trust for his part in this affair. It is not the character or the extent of the effort that he exerted in order to ensure that M.S.A. would be included in the list of receivers of municipal support that grounds his conviction of the said offense, but rather the fact that the said effort was made by Deri against the background of his knowledge, and in spite of his knowledge, that M.S.A. was merely an “institution” for the sake of appearances, and that the budgetary allowance that it would receive would not serve to promote its declared purpose, but rather would be funneled by a devious path to the account of the Lev Banim Association to pay its debts. As a public servant responsible for the approval of granting monies from his ministry’s budget to institutions that municipalities would find suitable, Deri was under an obligation “to act in trust” (CrimA 884/80 State of Israel v. Grossman, IsrSC 36 (1) 405, 416  (hereinafter: the Grossman case), the basic significance of which is to act honestly and fairly. The testimony of the municipal treasurer made it clear that M.S.A. was included in the list of institutions that the municipality recommended for approval of support from the extraordinary budget of the Ministry of the Interior due to Deri’s opinion. Once it was included in the list, the path was laid for the approval that was given by Deri, as Director General of the Interior Ministry, to implement what appeared on its face to be the municipality’s recommendation. As a party to the plan to establish M.S.A., Deri was well aware that M.S.A. was a fictitious body that was intended to serve as a funnel for extracting allocations from public funds to pay the debts of Lev Banim. Under the circumstances, that awareness is sufficient to make his actions – including M.S.A. in the list of bodies recommended for support by the municipality, and approving the municipality’s “recommendation” to the Ministry of the Interior – clear expressions of Deri’s breach of trust, where the harm to the public – which is one of the elements of the offense – is expressed not only in the harm that such acts inflict upon public confidence in government (the Grossman case, ibid., p. 419), but also in denying or reducing support for real institutions that were entitled to the monies that were actually granted to M.S.A. (para. 103, emphasis added).

            To complete the picture, and in regard to a lack of a causal connection to the various charges, it should be noted that in CrimA Deri this Court further held that “the definitions of the offenses ascribed to Deri in the M.S.A. affair do not comprise a requirement that the actions grounding them specifically be ‘in consideration for a bribe’, and stand even without any connection to bribery” (para. 74). In other words, the lack of a causal connection between the bribe and the other offenses of which Deri was convicted does not entirely rule out the possibility of a relationship between each one of the offenses and the positions in which Deri served in the Ministry of the Interior. As I have demonstrated above, such a relationship actually exists.

9.         We shall now proceed to the Public File. The information filed in this case included five charges, primarily founded upon the claim that Deri transferred monies in contravention of the support procedure, and in restricting the discretion of the local authorities. Deri was convicted by the Magistrates Court of the offense of breach of trust only in regard to the fifth charge, which concerned granting support to the Jerusalem association headed by his brother and in which his brother-in-law served as treasurer. The conviction on this charge derived from Deri’s conflict of interests against the background of his family relationship to the heads of the association. My colleague Justice Joubran noted that in this regard Deri committed an offense of breach of trust while exercising his authority as Minister of the Interior, but the exercise of authority itself did not constitute the offense, but rather his being in a situation of conflict of interests at the time that he exercised the authority. My colleague’s conclusion from the above is that “the possible relationship that might arise from that act and the role of Minister of the Interior is not of such significance as to ground a direct, substantive relationship that would disqualify him from serving as Minister of the Interior” (para. 36 of his opinion).

            In my view, we must recall that Deri was not convicted only in the Public File but also in the Personal File, which was the more serious. In taking an overall view, appropriate weight must also be assigned to the fact that the Public File also reveals a direct relationship between Deri’s acts and his position. The Magistrates Court held that if the matter of deviation from procedure had stood alone, it would not have convicted Deri in accordance with the case-law tests for breach of trust, inasmuch as that deviation lacked “that element of corruption that would transform it from a deviation from good governance and a public administrative defect to a criminal act” (p. 118 of the printout of the decision in the Public File). In other words, the Magistrates Court held that the deviation from the procedure lacked “that element of corruption”, but further held that Deri’s acts, performed in a state of “sharp and severe” conflict of interests, constituted a deviation from good governance and amounted to a public-administrative defect. We should recall that those are the values for which Deri was responsible as Minister of the Interior. The Magistrates Court also found it appropriate to emphasize the “identity of the actor”:

At the time of commission, the defendant served in the high and respected office of Minister of the Interior of the State of Israel. In the framework of his office, he acted as he did, as described above, to make an appropriation of NIS 4000,000 to an association headed by his brother, within seven days. The speed at which the matters were accomplished, the exceptional steps that were taken by the municipality in order to pave the way for granting the appropriation without the approval of the Jerusalem municipal institutions … all of these add to the severity of the act, and reinforce our conclusion that the appropriation was so deeply flawed as to render it corrupt … We find no difficulty in holding that the defendant’s breach of trust harms the public. As noted, harm to the public need not necessarily be material, and the harm to public confidence in government that inheres in the act is sufficient … It would appear to us that no one would dispute that this appropriation by the Minister of the Interior of the State of Israel to an association headed by his brother constitutes an act that can harm public confidence in the governmental institutions of the State of Israel. Moreover, the “budgetary pie”, including that of the Ministry of the Interior, is known to be limited and defined. Every appropriation and any support for one institution necessarily detracts from the “budgetary pie” in a manner that frustrates support for another institution. It is therefore proper that support be granted on a relevant basis, in accordance with appropriate considerations, not suffering from defects such as this one proved to us under this charge, and it is proper that the one who approves the appropriation in the Ministry of the Interior be someone who is not acting in a situation of conflict of interests – so that “all the people” see the validity and transparency of the act (ibid., pp. 121-122, emphasis added).

            We thus see that while, in theory, it is possible to commit an offense of conflict of interests in any government ministry – in the real world and under the concrete circumstances – this offense was committed by Deri by means of exploiting his specific position in the Ministry of the Interior as a body that grants financial support to local authorities. A conflict of interests is a situation in which there is a conflict between the interests for which the public servant is responsible and an interest of a different kind. This definition covers a wide range of situations. It should be emphasized that in relationships of a supervisory nature, the requirement that there be no suspicion of conflict of interests is critical. It is also incorrect to view offenses simply on the basis of their titles – bribe taking, breach of trust, conflict of interests, and so forth. One must proceed to examine the story of the offense as it occurred – the actus reus. That examination reveals that Deri’s conviction on the fifth charge, due to his extreme conflict of interests, was clearly connected to the office of Minister of the Interior that he held at the time, and that the necessary relationship exists.

 

Ethical Conduct, Good Governance, Public Confidence and Knesset Ratification

10.       In his opinion, Justice Joubran referred to the existence of a “mitigating factor” in the form of the Knesset’s ratification of Deri’s appointment to the office of Minister of the Interior. My colleague further emphasized that while in the previous petition the ratification of Deri’s appointment to the office of Minister of the Economy was given in the framework of the Knesset’s vote of confidence in the Government as a whole, in the present case the Knesset specifically ratified Deri’s appointment as Minister of the Interior, after conducting a debate on Deri’s criminal record and the consequences of the said appointment for public confidence. My colleague thus inferred that the asserted harm to public confidence in governmental authorities was significantly mitigated when the Knesset – the body representing the public’s opinion – considered the various aspects of the appointment and ultimately ratified it (para. 46 of his opinion).

            I agree that Knesset ratification should be granted weight. High Court of Justice intervention in the appointment of a minister is a sensitive matter that should be approached with caution. This is particularly true when the appointment was brought before a broader forum, like the Knesset. This is an important consideration, but it is not decisive in every case. The importance of Knesset ratification may be especially relevant in a borderline case. As the Court held in the previous petition, Deri’s appointment as Minister of the Economy was, indeed, a case “on the boundary of the margin of reasonableness” (para. 23 of the opinion of Justice E. Hayut). As opposed to that, the present case is not, in my view, on the border but beyond it. Therefore, the Knesset’s ratification – given after a focused debate in regard to Deri – is insufficient.

            In order to explain why the Knesset’s ratification, in and of itself, is not a decisive factor in the present case, it would be helpful to address the guiding principles in the issue before us. We are concerned with the appointment of a minister who is statutorily competent to hold the office. The area of debate is that of the reasonableness of the decision, or more precisely, its degree of unreasonableness. The overarching considerations include ethical conduct, good governance, and the maintaining of public confidence in governmental institutions; again – for the sake of precision – the scope of the harm to those values presented by the appointment. Against the background of the Knesset’s ratification, we will first focus upon public confidence.

            For my part, I would emphasize ethical conduct and good governance. But inasmuch as the rule concerning the maintaining of public confidence is well grounded in the case law, I will say the following: Public confidence is normative, not empirical. It is not examined by means of a “public opinion survey”. The danger of such an approach can be expressed in two directions. In other words, just as public confidence in the form of a virtual survey does not require the normative conclusion of non-intervention in the appointment, the absence of public confidence, similarly inferred, does not automatically lead to intervention in the appointment. For example, it is possible that from a factual perspective, most of the public is opposed to the continued service of an elected official, but we are concerned with rumors in regard to the improper conduct of that elected official that have not been investigated, and the official has not been afforded the opportunity to be heard by an investigating authority. In such cases, it is entirely possible that although the majority of the public supports an immediate result, that should not be accepted. The reason, as has been noted, is that public confidence is not a matter of statistics. Knesset ratification, as well, and with all due respect for the debate that preceded it, is not the last word in terms of judicial review of the reasonableness of the appointment. And even the law does not so establish.

            We should also not forget that we are examining three overarching consideration that are intertwined and interconnected: ethical conduct, good governance, and public confidence. Clearly, ethical conduct and good governance are normative matters that require constant improvement. Ethical conduct is meant to ensure, inter alia, that the decisions and actions of a public servant – both in terms of their content and the manner in which they are made or executed – are not ethically tainted. As for good governance, it is a condition without which all that is achieved is tarnished.

            Indeed, preventing harm to public confidence is a primary, central consideration for the functioning of government. It is only proper that this matter be subject to judicial review and intervention in the framework of an examination of the reasonableness of the decision to appoint a government minister. Like my colleagues, I am of the opinion that it is a       tool that should be reserved for extreme cases. In light of the relationship between the act – on the general and particular levels – and the person filling the office and its nature, and the harm to the overarching considerations of good governance and ethical conduct, I am of the opinion that the matter before us is such a case.

 

Transferring Authorities and the Margin of Reasonableness

11.       Administrative law waves the banner of reasonableness. The latter term comprises the question of whether a decision by an authority is entirely unreasonable or whether it is practically possible to uphold part of it. This may be reminiscent of the element of constitutional law concerning the examination of alternatives of lesser harm.  This is also germane to the matter before us. That is, would it be possible to achieve the requisite objectives without entirely disqualifying Deri’s appointment as Minister of the Interior? Is it possible to conceive of alternatives that would mitigate the harm presented by that appointment such that is might remain within the margin of reasonableness? That would seem to be the path chosen by the Government and the Knesset in the previous petition. In the Government’s decision of May 26, 2015, which was ratified by the Knesset on June 1, 2015, it was decided to transfer to the Minister of Religion Deri’s statutory authority as Minister of the Economy in all that regarded the selection of judges and public representatives in the Labor Courts (R/2, R/3 of the State’s response to this petition). That transfer was one of the reasons given for not intervening in the appointment in the decision in the previous petition (para. 22). In the Gallant case, as well, one of the central considerations for not intervening in the appointment was the scope of Gallant’s authority and areas of responsibility in his role as Minister of Construction, and the transfer of part of his authorities. It was thus held that “the Government’s decision to transfer responsibility for the Israel Lands Authority from the Ministry of Construction to the Ministry of Finance … weakens, in practice, the relationship between the actions imputed to Gallant and his areas of responsibility as Minister of Construction, and thus mitigates the said problem …” (para 30, emphasis added).

            In the matter before us, not only is there a significant, twofold relationship between the offenses and the office, but mitigating the problem by means of transferring authorities – as was done in the Gallant case, and even in the previous petition, the circumstances of which were “lighter” than the present circumstances – is not an option here, and would not even appear possible. The reason for this concerns the nature of the office. One can serve as Minister of the Economy without serving on the Committee for the Appointment of Judges and Public Representatives in the Labor Courts. That is a relatively negligible part of the office, and is not at its core. However the role of the Minister of the Interior is strongly bound, by nature and character, to responsibility for local government. That is a central part of the office, and the person holding that office exercises many authorities in that regard (as detailed above). It would therefore appear that transferring those authorities from the Minister of the Interior would be artificial, and in any case, would not be a workable division.

 

The Time Dimension

12.       This issue of the passage of time remains to be examined. Time has its effect in many areas of life, and the legal realm is no exception. As noted, at the time of Deri’s appointment as Minister of the Interior, thirteen years had passed from the completion of his sentence in the Personal File, and twelve years since the sentence was passed in the Public File. The threshold period established under sec. 6(c) of Basic Law: The Government – seven years – had passed. It is true that our concern is with the question of the reasonableness of the decision and the discretion exercised in that framework. While the legislature did not take a stand beyond the setting of the threshold, it is clear that in such matters, and in general, a period of eight years is not comparable to a period of twenty years. To that we should add that the previous decision attributed weight – and even substantial weight – to the passage of time.

            Nevertheless, I am of the opinion that in this case, the period of time that elapsed cannot serve as a response to the opposing considerations that support disqualifying the appointment – first and foremost, the relationship between the office and the offenses. As already explained, that material relationship derives from the nature of the office, the character of the offenses, and the concrete circumstances of their commission. Each factor stands firmly on its own, and is significantly strengthened by the cumulative effect. As this Court held in the Sarid case, there may be circumstances of a clear, direct relationship between the office and the offenses wherein considerations that would be granted greater weight in the absence of that relationship – including the time factor – will lose that weight where it exists (see para. 2 above).

            Time has its own context. In other words, in my opinion, it would be incorrect to consider only the period of time that elapsed as a “dry” statistic, and what occurred in its course should also be examined. As I noted in the Decision on the Further Hearing in regard to the time dimension: “Here we have an example of how much consideration must be given to all the circumstances as a whole, and not relate to considerations listed in the case law as technical matters that limit the discretion of the appointer, and the scope of judicial review” (para. 7). That is also true in the matter before us.

            Deri’s appointment as Minister of the Interior was made after he served as Minister of the Economy and Minister for the Development of the Negev and the Galilee for only some 6 and 8 months respectively, and it appears that was due to various political reasons, and was a result of unforeseen developments. As that may be, the period of time is not sufficient. Under the circumstance as they developed, the first ministerial position that Deri will fill is, in practice, Minister of the Interior. That is a factor that should be addressed. In this regard I will make recourse to the words of my colleague Justice Joubran, according to whom Deri’s return to the Ministry of the Interior indeed carries symbolic significance, and the appointment may even be seen as a Government and Knesset seal of approval that there was nothing wrong in the manner that Deri conducted himself in committing the offenses while serving in senior positions in the Ministry of the Interior (see para. 38 of his opinion). I would further add and emphasize that the significance is even more symbolic when, in practice, this is the first office to which he is being appointed a minister. Like my colleague, I too am of the opinion that this problem increases the harm to public confidence that resulted from Deri’s appointment as Minister of the Economy, which was the subject of the previous petition. In my opinion, here too there is significance to the fact that Deri is returning – almost as a trial run – to the same office in which he strayed. It would be no surprise if I were to say that sometimes public confidence transfers a kind of burden of proof to the elected official, and the consideration of time meshes with the examination of his acts in the public arena as well. Therefore, under the concrete circumstances and against the background of my reasons, the time that has elapsed is not sufficient, by itself, to provide the key to the door of the office in the framework of this petition.

13.       Is this conclusion in regard to time always correct? I prefer not to decide the fate of the distant future. The conclusion that I have reached in this petition is not the final word in regard to circumstances that are not its own. After a long, very significant period of time has elapsed, during which Deri will have served as a minister or in some other senior public office, the time will come for reappraisal. In this sense, and in accordance with my general approach to the issue, I will refrain from “seizing the corners”, as I shall explain.

            In the Hanegbi 2003 case, Justice E. Rivlin held that it is “hard to imagine that an individual whose appointment as Minister of Public Security would cause such severe damage to the public’s trust that we must strike down the Prime Minister’s decision to appoint him, would be able to head another ministry – such as the Ministry of Education or the Finance Ministry. It is difficult to accept that an individual who is so patently unfit to serve in a ministry responsible for law enforcement could, without any hindrance, serve in a ministry entrusted with the state’s foreign policy or its security” (para. 32). In the Sarid case, Justice Mazza held that “where there is a clear, direct relationship between the offenses that the candidate committed and the office he is intended to hold, a possible conclusion it that his criminal past entirely disqualifies him from holding a particular office” (para. 16). As a rule, and with all due respect, I cannot agree with those positions. As I explained above, it is possible for a person who is unfit to serve as a minister in one ministry to be fit to serve in another ministry, and this case is proof. In the same manner, I would be careful not to make a blanket statement that the existence of a relationship absolutely and forever disqualifies a candidate from serving in the same position that realizes that relationship. A derivative of the well-established case-law rule that a concrete examination must be conducted is that things can change even in regard to a particular person and a particular office. I would summarize by saying that time will tell the weight of time.

 

Interim Summary

14.       We demonstrated above that there is a “clear, direct relationship” between the office of Minister of the Interior and the offenses that Deri committed in the past. The foundations of that relationship are, as stated, three: One, the nature of the office. There is no “competition” here between the Minister of the Interior and other ministers, or among the scopes of the budgets of the various ministries. The focus is on the unique. It is proper to emphasize, in particular, the authorities of the minister that are of a quasi-judicial or a quasi-police character, and that concern oversight of the local government, of good governance, and of ethical conduct. In order to perform this important task, the minister is permitted to take significant, far-reaching steps. Some of them are at the very heart of the democratic system, and concern, for example, the right of citizens to elect the mayors of their cities and the heads of their councils. In practice, the Minister of the Interior is authorized and required to act as a counterbalance to the improper conduct of elected officials. Second, the character of the offenses. That character must be examined in context. As a rule, there are more serious offenses, or, for example, such that carry a more significant maximum period of imprisonment. However, here too, the focus must be upon the uniqueness. We are concerned with offenses that strike at the “foundations of government structure” (the Eisenberg case, para. 55, per A. Barak P.), and undermine and subvert its pillars. The offense of bribery is rightly identified as the most serious offense among them, and I addressed its evil effects at length above (and for a detailed discussion, see the chapter “On Bribery and Blindness” in the Holyland case). Third, the concrete circumstances of the commission of the offenses, and the use of the office and authorities granted to the Minister of the Interior to commit them. As we see from the decisions in the Personal File and the Public File, Deri’s unlawful acts were related to the positions that he held in the Ministry of the Interior. The acts, in all their details, were in the public and governmental arena for which the Minister of the Interior is responsible in regard to local government. There severity is also great. Deri was sentenced to three-years imprisonment for his conviction in the Personal File, and that, too, carries weight. The fact that Deri was given a custodial sentence for the significant period of three years for the serious offenses that he committed – bribe taking and breach of trust – reflects the force of each of the elements of the relationship and their interconnection. That is how the concrete matter must be examined – what is the offense, what is the penalty, and where imprisonment is concerned – what is its length. Even if Deri could theoretically have committed those acts in any other ministry and in any position – in practice, he committed them as Director General of the Ministry of the Interior and as Minister of the Interior, while exploiting his position, power, authority, and service in those very positions.

            As we see from the foregoing, each of these pillars is of great independent weight, and each directly affects and reinforces their interrelationship. The character of the offenses that Deri committed conflicts with the uniqueness of the role of the Ministry of the Interior in general, and the minister at its head, in particular. The first pillar – the uniqueness of the position – waves the banner of ethical conduct, good governance and public confidence. The second pillar – the character of the offenses – crushes those values. The structure of government is destabilized. The direct, material relationship becomes clear. Similarly, in regard to the third pillar – the specific authorities granted the Minister of the Interior, like those concerning the budgets of the local authorities – were unlawfully employed by Deri, while serving as Minister of the Interior, in a manner that conflicts with the values that the first pillar supports and the second negates.

            The result is that in the concrete circumstances before us, we are concerned with a serious and different situation. Primarily, we are not concerned with a “borderline” case. Indeed, Deri meets the statutory competence requirements, and the Prime Minister enjoys broad discretion in appointing government ministers. I am also not unaware of the Knesset’s ratification of the appointment, and of the time that has elapsed. All of these, of course, have bearing. Nevertheless, in my opinion, the counter considerations outweigh the particular circumstances of the case. This is particularly show in regard to the relationship between the offenses and the office, and the force of its components. It should further be recalled and stressed that the harm attendant to the appointment is not limited to the question of public confidence, which is of a normative character, but is broader in scope, and has consequences for additional, significant normative aspects like governmental ethical conduct and the maintaining of good governance. To that we must add that the offenses – which, as noted, were materially related to the office to which Deri is now being appointed – were committed by him while he was serving in that very office in the past. To return to one of the examples given earlier: not only is it problematic to appoint a person convicted of drunk driving – and certainly a more serious traffic offense – as Minister of Transportation, but in my view, it is all the more problematic if the offense was committed when that person served as Minister of Transportation, when he was meant to serve as an exemplar in that specific area, and seriously failed in doing so. As noted above, the various considerations and the different circumstances are not related as a mixture, but as a compound. The picture has changed, and in the present case, that change also leads to a different result. For these reasons, as detailed above, I have arrived at the conclusion that while Deri’s appointment as Minister of the Economy was “on the boundary of the margin of reasonableness”, now – upon his appointment specifically as Minister of the Interior, and de facto as his first trial run – that boundary has been crossed.

 

Jewish Law – Between Rehabilitation and Public Dignity

15.       It is instructive to examine the approach of Jewish law to the issue before us. It would appear that the approach is not uniform, and that in practice, there are a variety of distinctions that influence the outcome. On one hand, we find those who emphasize the belief in the possibility that every sinner can repent any sin and every offense. On the other hand, there are opinions that highlight the recognition of the sensitive dynamic between the individual and the public, and between a person’s past and his present. As is the way of Jewish law, this does not necessarily reflect disagreement, but rather a tying up of loose ends. The guiding principles of Jewish law in regard to this issue are clear, but I would preface in saying that they do not necessarily lead to a particular conclusion in the circumstances before us. My reason for bringing these sources is to highlight the tension that exists, and clarify it, while presenting tools for examining and evaluating the issue. It should be clear that not all of the examples that will be cited are appropriate to the case before us, however they, too, can serve as a resource for deriving the principles of Jewish law on this issue, which is the purpose of the survey.

            Jewish law sees sin as part of every person’s life: “There is not one good man on earth who does what is best and does not err” (Ecclesiastes 2:20). The sins of the biblical heroes – severe and slight – are also revealed among its folios. Moses sins in striking the stone, King David in the matter of Uriah the Hittite and Bathsheba, King Saul in the destruction of Amalek are but a few examples Along with that, the principle of repentance is one of the foundations of Judaism. The Gates of Repentance are open to every sinner, along with the promise that true repentance will wipe away his sins: “Be your sins like crimson, they can turn snow-white; Be they red as dyed wool, they can become like fleece” (Isaiah 1:18). In some ways, the sources see a penitent as being more worthy than one who has never sinned. Thus Maimonides writes in the Laws concerning Repentance:

A repentant person should not imagine that he is distant from the status of the righteous due to the sins and transgressions that he committed. That is not the case. Rather, he is beloved and desirable before the Creator as if he never sinned. Moreover, he has a great reward for he has tasted sin and separated himself from it, and conquered his inclination. Our Sages said: where penitents stand, even the perfectly righteous cannot stand. In other words, the level of the penitent is greater that of those who never sinned, for they vanquish their inclination more (Laws concerning Repentance 7:4).

            The centrality of repentance in Judaism did not stop, and perhaps even invited, distinctions among various types of repentance. The emphasis is that complete repentance – by which a person’s sins are eradicated and become as if they never were – is possible in the relationship between man and his Creator. However, in human relations, a sin is never completely erased. In the words of the Talmud, the sin “pursues the sinner”:

They asked Wisdom, what is the punishment of the sinner? They were told “Misfortune pursues sinners” (Proverbs 13:21) [Rashi ad loc: “An evil person is pursued by his evil”] … They asked the Holy One, what is the punishment of the sinner? He told them, let him repent and his sins will be forgiven (Jerusalem Talmud (Vilna ed.), Makkot 2:6).

            From this source it would appear that the concept of “repenting” is connected to the relationship between man and his Creator. In the words of Rabbi Akiva on Yom Kippur: “Before whom do you purify yourselves, and who purifies you? Your Father who is in Heaven” (Mishnah Yoma, 8:9). For this type of repentance, which may be referred to as “religious repentance” in the relationship between man and God, a change of heart suffices (see: Babylonian Talmud, Avodah Zara 17a: “some acquire eternity in a single hour”. But in the case of repentance in relationships “between a man and his fellow”, which we might refer to as “social repentance”, the sinners return to the normative social order requires punishment as one of its conditions. Moreover, although the blemish fades following repentance and punishment – it is not necessarily eradicated in its entirety. While Jewish law shows great sensitivity for the repentant sinner, and forbids mentioning his past (Mishnah, Bava Metzia 4:10; Maimonides, Laws concerning Sales 14:12, Laws concerning Repentance 7:8), as a rule, the impression made by the offense does not make it easy for the page of life to return to what is was in the past.

            The reason for this difference between religious repentance and social repentance concerns two different elements – logical and epistemological. It may be said that what the two share in common is human limitation as opposed to Divine ability. The first element can be seen in the words of Rabbi Soloveitchik, who noted that repentance before God comprises elements that humans view as illogical. Rationally speaking, we cannot change the past, and “what’s done cannot be undone”. As opposed to that, a person can act retrospectively before God, and make his past spotless. Rabbi Sloveitchik superbly showed the gap between scientifically logical principles and the principle of religious repentance. By the laws of nature, a cause must always yield an effect. But repentance is an exception. That is, a person sinned, but because he has repented, he retroactively changes the situation. Repentance, which was originally the effect of sin, becomes a cause that can even change the nature of the sin from negative to positive, and to a retroactively beneficial factor. That, in the sense that where penitents stand, even the perfectly righteous cannot stand (Rabbi Joseph B Soloveitchik, Sacred and Profane (Gesher, 1966). To sharpen the conceptual gap between religious and social repentance, Rabbi Soloveitchik emphasized the infinite power of religious repentance. According to him, such repentance helps even the most despicable criminals who acted against our nation. On more than one occasion, he wondered whether the leaders of our most bitter enemies could benefit from repentance such that we might accept them. He concluded:

I have no answer… But Ha-Kadosh Barukh Hu sometimes acts in a manner contrary to our human logic. We do not understand it, and the angels do not understand it either (Joseph B. Soloveitchik, The Lord is Righteous in all His Ways, 274 (2006)).

            The second element is to be found in epistemology (the theory of knowledge), and is rooted in the human limitation to know and measure the sincerity of repentance, as opposed to God: “Man sees only what is visible, but the Lord sees into the heart” (I Samuel 16:7). An expression of this element can be seen in the difference between what Maimonides writes in the Laws concerning Repentance and what he writes in the Laws concerning Testimony. In the Laws concerning Repentance – which treats of the religious side of repentance before God – Maimonides writes: “What is repentance … and He who knows the hidden will testify concerning him that he will never return to this sin again” (Laws concerning Repentance 2:2). As opposed to this, in the Laws concerning Testimony, Maimonides addresses the differences among the various types of offenses, and on the need for indicators of the sincerity of repentance:

When a person is sentenced to receive lashes, once he has been flogged by the court, he is again considered an acceptable witness. Other persons who are disqualified as witnesses because of money which they seized or stole must repent even if they made restitution, and they are disqualified as witnesses until it is known that they repented their evil ways (Laws concerning Testimony 12:4; and see Maimonides’ Commentary to the Mishnah, Sanhedrin 3:3; Shulhan Arukh, HM 34).

16.       As noted, in order for the offender to return to society, there is a need for punishment: “Anyone who sinned and was flogged returns to his fitness, as is written: ‘your brother be degraded in your sight’ (Deut. 25:3) – once he has been flogged, he is again your brother” (Maimonides, Laws concerning the Sanhedrin 17:7; Mishnah Makkot 3:15). However, as stated, punishment does not necessarily completely absolve the offense, and this may have consequences for a person even after serving his sentence. One of the consequences, and the one central to our discussion, concerns an offender’s fitness to serve in public office.

            Even in the Bible we see how sin can affect fitness for a public position. Pursuant to the sin of Moses and Aaron, they were forbidden from entering the Land: “… therefore you shall not lead this congregation into the land that I have given them” (Numbers 20:12). And similarly, in the case of Saul, although he admitted his sin, his kingdom was rent from him: “Saul said to Samuel, ‘I did wrong to transgress the Lord’s command and your instructions; but I was afraid of the troops and I yielded to them. Please forgive my offense and come back with me, and I will bow low to the Lord.’ But Samuel said to Saul, ‘I will not go back with you; for you have rejected the Lord’s command, and the Lord has rejected you as king over Israel’” (I Samuel 15: 24-26).

            We also find this in additional and later sources. In the Mishnah, we find a disagreement between Tanaitic sages in regard to the interpretation of the verse “the manslayer may return to his land holding” (Numbers 35:28), and on the question of whether a person who has killed unintentionally may return to a position of leadership that he held prior to his exile to the city of refuge: “He returns to the office he formerly held, these are the words of R. Meir; R. Judah says, he does not return to the office he formerly held” (Mishnah Makkot 2:8). Similarly, pursuant to the Talmud's conclusion in tractate Horayot that a High Priest who sinned returns to his office, Maimonides rules: “The head of an academy who transgresses is flogged before three, and is not reinstated to his office (Laws concerning the Sanhedrin 17:9). In other words, although serving one’s sentence permits the offender to return to society immediately – “since he has been flogged, he is your brother” – there are situations in which serving one’s sentence is not the end of the story, and in order for the offender to return to his prior position, he must go through other stages. Further on in his Laws concerning Testimony, which we quoted above, Maimonides adds various conditions for the return of various offenders. The principle that can be inferred from what he writes is that even if a person has served his sentence and paid his debt to the legal system and society, that is not sufficient to entirely and immediately remove the fear that he may return to his evil ways, and therefore he cannot return to his office until he earns the public’s trust.

            Moreover, we also find in the sources not only a distinction among various offenses, but also among the various endeavors and offices that the offender may wish to undertake. In other words, a person may be fit for one thing and unfit for another. Thus, the Mishnah in tractate Bechorot states:

One who is suspected in regard to the sabbatical year is not suspected in regard to tithes. One who is suspected in regard to tithes is not suspected in regard to the sabbatical year. One who is suspected of both is suspected in regard to the rules of Levitical purity. And it is possible for one to be suspected in regard to the rules of Levitical purity and yet not be suspected of the latter or the former. This is the rule: One who is suspected in regard to the matter must not judge or testify about it (Mishnah Bechorot 4:10).

            We learn from the Mishnah that a person who is suspected of offenses in a particular area cannot hold a public position in the suspected area, but that does not disqualify his fitness in other areas (in this regard, also see: Babylonian Talmud, Sanhedrin 25a – 26b). As for offices that involve enforcement of the law, the Hatam Sofer [Rabbi Moses Schreiber (1762–1839)] ruled that a person who had committed an offense could not hold a law enforcement office, due to the fear of harming the authority attendant to the office: “He is not rejected, but he cannot be a parnass [president or trustee of the congregation] or given responsibility over the public, as we find in [Babylonian Talmud] Bava Batra 15b, ‘which judged its judges. If the judge said to a man, Take the splinter from between your teeth, he would retort, Take the beam from between your eyes. If the judge said, Your silver is dross, he would retort, Your liquor is mixed with water.’” [Rashi, ad loc. explains the that the Talmud is referring to a situation in which the judges were themselves corrupt, so a defendant could retort by criticizing those who criticized him, such that if the judge were to say “Take the splinter from between your teeth,”, meaning that he should renounce and refrain from his minor infraction, he could retort by saying “Take the beam from between your eyes”, and refrain from the serious crime that you are committing] (Responsa Hatam Sofer, Likutim 6:49); Nahum Rackover, Takanat Hashavim – Rehabilitation of Criminals in Jewish Law, 236 (2007) (Hebrew) [English summary: http://www.mishpativri.org.il/english/shavim_english.pdf] (hereinafter: Rakover).

            Jewish legal sources point out that in regard to the trust ascribed to a person who served his sentence, the period of time that has elapsed since the commission of the offense is of importance. Thus, for example, Rabbi Hai Gaon (939-1038) ruled on the question of the return of a transgressor to serve as a prayer leader:

The letter of the law is that nothing stands before repentance. Rather all penitents that God knows have regretted what they transgressed due to ugliness and have taken upon their hearts not to repeat anything like it, He forgives. But human beings, although they do not know what is hidden, and have nothing but what is visible, if a long time passed, and no improper thing was seen, neither openly nor covertly, and the heart believes that he repented—we accept him (Sefer Kol Bo, p. 15, col. 4, Fürth 1782 (Hebrew), and see in detail: Rackover, p. 469)

            As noted, human beings are limited in their ability to measure the sincerity of another person’s repentance. The element of time, and the various other conditions mentioned in the sources, help to some extent as indicators of the penitent’s sincerity that enable him to reacquire the public’s confidence

            Nevertheless, there are offices to which even an absolutely sincere penitent cannot return. The reason for this is that they symbolize a value that may be in tension with the office holder. Thus, for example, Rabbi Moshe Feinstein explained that the reason for the rule that a Nasi [President of the Sanhedrin] who had transgressed could not return to his office was because a person who teaches Torah must be like an angel: “And Maimonides is of the opinion that one who transgressed willfully after being warned, even if he was flogged, he can no longer be thought of as an angel of God, and we should not seek Torah from his mouth” (Dibrot Moshe, Gittin 23:356, and see: Rackover, ibid., p. 210). In the responsa of Maharshdam (Rabbi Samuel ben Moses de Medina (1505-1589)) we find that a person who repented may not return to his public office out of respect for the “dignity of the congregation” (Responsa Maharshdam OH 33) (Hebrew)).

            We should note that this tension is not necessarily a result of the offense. Thus, for example, when King David sought to build the Temple, he was refused because he was not deemed appropriate. That was not due to some sin, but rather because of the incompatibility of his past, in which he spilled copious blood in battle – “for you have shed much blood on the earth in My sight” (I Chronicles 22:8) – and the task of building the Temple, of which the Bible says: “do not build it of hewn stones, for by wielding your tool upon them you have profaned them” (Exodus 20:21) (and see Rashi’s commentary ad loc: “Because the altar was created to lengthen man’s life, and iron was created to shorten man’s life, it is not right that what shortens  should be wielded over what lengthens”).

            To complete the point, it should be noted that despite the gap between religious repentance and social repentance, these spheres are not disconnected from one another, and a person’s ability to repent is, as noted, one of the foundations of Judaism. This obligation is not imposed only upon the person himself, but society must encourage the rehabilitation of transgressors. Thus Maimonides writes in the Laws concerning Repentance: “All the wicked, and criminals and apostates, and such the like who repent, whether openly or in private, are accepted, as is written: ‘Return, faithless children’” (Laws concerning Repentance 3:14). In this light, we will return to the responsum of Rabbi Hai Gaon cited above, in which he emphasizes the consideration that “if a long time passed, and no improper thing was seen, neither openly nor covertly, and the heart believes that he repented—we accept him”. We learn from this that although the wheels of social repentance turn at a different speed than the wheels of religious repentance, just as we must understand and consider the public’s doubt, so the public, at a certain point in time and in accordance with the circumstances, must show understanding for the elected official who transgressed and repented, and permit him to return.

            In conclusion, Jewish law teaches us that there are different spheres of repentance. Repentance between a person and his Maker erases the sin and entirely eradicates it. In the social sphere, serving one’s sentence returns the offender to society and the normative sphere. However, and particularly for the purpose of holding public office, Jewish law does not suffice with the serving of one’s sentence, but sets a higher threshold in accordance with the type of offense and the nature of the office. It would seem that the paths of the Israeli legislature and the case law is consistent with the principles of Jewish law in giving real weight to the time dimension and to the conduct of the elected official in the course of the period since he offended and served his sentence. Thus, in accordance with the threshold conditions established by Israeli law, and thus in the examination of the reasonableness of the appointment in the case law of this Court following the end of the statutory period. The rule that each case must be examined in accordance with its circumstances reinforces the conclusion that although Jewish law gives us tools for balancing and weighing, it would not be correct to infer only one conclusion from it in the matter before us.

            The dignity of the congregation, mentioned in some of the sources as a consideration that justifies not allowing an offender to return to his public office, is important and of significant weight. Like the overarching consideration of public confidence, it comprises value-based and normative dimensions. What arises from the survey is that considerations of the nature of the office and the type of offense are taken into account in Jewish law as well, and it would seem that they can be seen as parallels to the two the central elements of the relationship that I discussed in depth above, which were referred to as the “nature of the office” and the “character of the offenses”. Thus we find that Jewish law employs similar language and balances. Even if the result of the balancing in a concrete case and at the particular level may differ, the purpose of presenting the material was to point out the common guidelines.

 

Conclusion

17.       Recently, this Court upheld the appointment of Deri as a minister of the Israeli Government. Now, we have been confronted with the question of his appointment specifically to the office of Minister of the Interior. The opinion of my colleague Justice Joubran, according to which the appointment can be upheld from a legal perspective, is well reasoned. But in my opinion, the weight of other considerations is decisive, such that the appointment should be annulled. An examination of the case-law considerations and their application to the circumstances of the case, as part of the Court’s review of the reasonableness of the appointment, lead me to the conclusion that the lack of reasonableness in the appointment of Deri as Minister of the Interior is sufficiently great as to justify and require intervention. This is so in view of the clear relationship between the acts and the office, along with the severe harm that the appointment poses, particularly in regard to the overarching values of ethical conduct, good governance, and public confidence. The force of that harm cannot be blunted, for example, by a transfer of authority that would appear to be impossible under the circumstances.

            It should be noted that my opinion is not intended to “punish” Deri. This is not the relevant proceeding, framework, or consideration. However, one cannot ignore the consequences of the circumstances before us for the appointment and the manner in which the new elements change the compound and overturn the conclusion.

            As should be recalled, the decision in matters such as this is guided by general rules, but is implemented and tailored to the specific case – each case in accordance with its circumstances. In other words, each case must be examined against the background of its particular factual foundations, as well as in accordance with the society, the time and the place. This, in my opinion, it the appropriate and correct legal decision in the circumstances. The required distinction under the circumstances between the reasonableness of Deri’s appointment to serve as a minister in general – including in the senior role of Minister of the Economy – and the magnitude of the unreasonableness of his appointment as Minister of the Interior, lead to an appropriate balance between the various, complex parameters of the matter. That is also the case in regard to the time dimension. I would also emphasize on this point, as well, that my opinion rests upon the facts of the present petition. In other words, the door is closed but not necessarily locked. The question of whether after the passage of time – by which I mean a very long, significant period – during which Deri will serve in another public office, and in accordance with his conduct, he will be able to serve as Minister of the Interior, remains open.

            Therefore, if my opinion were to be heard, I would issue an order nisi, with a view to making it absolute, and order the annulment of Deri’s appointment as Minister of the Interior.

 

Justice Y. Danziger:

            I concur in the opinion of my colleague Justice S. Joubran and with all his reasons.

            I nevertheless find it appropriate to make a brief comment in response to the considered opinion of my colleague Justice Hendel. In his opinion, Justice Hendel notes that according to his approach, the prohibition upon bribe taking and breach of trust, which Deri transgressed, is intended to protect state governance “particularly in regard to local government” (para. 7 of the opinion). From reading the rest of the opinion, one gets the impression that according to my colleague’s approach, that uniqueness, inter alia, is what justifies the distinction between Deri’s appointment to the office of Minister of the Interior and his appointment to other ministerial offices, or in my colleague’s words: “The focus is on the unique” (para. 14 of the opinion). Justice Hendel indeed emphasizes that he does not mean that the prohibition upon bribery and breach of trust is less important when other government ministries are concerned, and he further explains that “there is no ‘competition’ here between the Minister of the Interior and other ministers” (ibid.). But in effect, I fear that there is a certain gap between those words and the conclusions of the decision in practice. In this I refer to the fact that the result of my colleague’s decision might create, if only by implication, a sense that, in practice, there is a normative scale that attributes to the type of offenses of governmental corruption a “uniqueness” or “particularity” to positions in government ministries like the Ministry of the Interior, and less so to positions in other government ministries. That conclusion arises particularly from reading paras. 6-8 of my colleague’s opinion, and for my part, I think that we must be cautious in adopting it, both from the descriptive aspect, and primarily the normative aspect.

 

Decided by majority opinion in accordance with the decision of Justice S. Joubran

Given this 30th off Nissan 5776 (May 8, 2016).

 

 

 

 

 

[1] Translator’s note: On the “Gas Outline”, see: http://versa.cardozo.yu.edu/opinions/movement-quality-government-v-prime...

Movement for Quality Government v. Prime Minister

Case/docket number: 
HCJ 4374/15
Date Decided: 
Sunday, March 27, 2016
Decision Type: 
Original
Abstract: 

[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.]

 

The Petitions disputed the legal validity of the Gas Outline adopted by the Government in the framework of Government Decision 432 in regard to the treatment of the gas reserves (hereinafter: the Gas Outline). The state and the gas companies holding the franchises defended the Gas Outline.

 

The Supreme Court, sitting as High Court of Justice (in an expanded bench of five justices) ruled as follows:

 

The Court majority (Deputy President E. Rubinstein, Justices S. Joubran, E. Hayut, and U. Vogelman concurring, Justice N. Sohlberg dissenting) held that the regulatory stability clause, as set out in sections 5 and 6 of Chap. J of the Gas Outline, could not stand. The clause bound the Government to the Outline – including in regard to legislative changes and opposition to legislative initiatives, and primarily in regard to regulatory changes in the areas of taxation, restrictive trade practices, and export caps – for a period of ten years. The Court held that the arrangement contravened a basic rule of administrative law in regard to prohibiting the restriction of an authority’s discretion. The Court explained that the Outline’s provisions not only bound the hands of the Government – and of future governments – but also of the legislature.

 

In light of the above, and in view of the Respondents’ declaration that the stability clause was a sine qua non, Deputy President E. Rubinstein and Justices S. Joubran and U. Vogelman were of the opinion that the entire Outline must be annulled. However, the state would be granted one year to rectify the matter in accordance with the Court’s decision. If the matter not be rectified, the Gas Outline would be annulled.

 

As opposed to this, Justice E. Hayut was of the opinion that the Court should strike down the stability clause alone. In her opinion, the gas companies should be left to decide whether or not they wish to cancel the Outline under the circumstances.

 

In this regard, the Deputy President explained, inter alia, that when an agency is granted authority by law, that authority also comprises a duty to exercise discretion. Simply put, the Government does not have the authority to decide not to decide and not to act. This is all the more the case when the issue is one that is the subject of real political debate, and where the executive branch apparently seeks to bind the discretion of its successors, whose composition and ideology may differ from those of the incumbent government. Pursuant to that, the Court held that the Government had unlawfully discarded its discretion, and in substance, even hobbled the Knesset’s discretion due to party discipline that is often invoked, particularly in regard to sensitive political issues. The issue was also examined in light of the administrative representation doctrine, that is, the government’s ability to make binding promises (even if they may be rescinded, with sanctions, in extreme cases), in light of the announcement by the Government and the gas companies that the Outline should be viewed as such. The Court held that the promise was ultra vires. I this regard, Justice Vogelman emphasized that the scope and term of the stability clause, as well as the “price tag” attendant to its anticipatory breach create, in practice, an unlawful restriction upon administrative discretion. However, in the opinion of Justice Vogelman, nothing would prevent the Knesset form adopting a legislative solution that would permit the Government to establish the three arrangements addressed by the stability clause for a defined term, whether by specific legislation or by legislation that would expressly enable the Government to do so.

 

Justice Hayut found, inter alia, that the restraining provisions in the Gas Outline are particularly far-reaching, inter alia, because they tie the hands and legs of the Government, which, in practice, controls the Knesset legislative process in regard to initiating legislation. Moreover, according to Justice Hayut, the Government’s active undertaking in the provisions of the stability clause to frustrate any legislative change that would be contrary to the Outline, if enacted by means of a private-members bill, crosses all the acceptable boundaries of parliamentary democracy, and renders the restraining provisions clearly and unequivocally unconstitutional. Justice Hayut further expressed the view that, in practice, and despite the rescission doctrine, the restraining provisions create a regulatory and legislative freeze by exposing the state to a suit for significant damages for an unknown amount by the gas companies in the case of extrication from the Outline or any part thereof.

 

In the opinion of Justice Sohlberg, although the regulatory stability clause restricts the administrative discretion of the Government, the clause could stand. There is no need for legislating the Gas Outline, and the Government’s decision, which was approved by the Knesset plenum, is sufficient. Therefore, in his opinion, the Petitions should be dismissed.

 

In the opinion of Justice Sohlberg, the stability clause does not restrict the Knesset’s legislative power, and the Knesset is sovereign to legislate as it sees fit. The stability clause restricts the discretion of the Government, and it is, indeed, exceptional in its term, scope and the expected economic consequences of its breach. However, even the combined force of those characteristics do not result in the absolute restriction of the Government’s discretion by the stability clause. A restriction of discretion is an inevitable consequence of the very existence of administrative contracts and promises, and the balance is expressed by the administrative rescission doctrine, and the possibility of withdrawing an administrative promise. Thus, the Government continues to enjoy a certain margin of future discretion, and in any case, a stability clause grounded in a governmental decision is more flexible than one grounded in a statute. The government has the authority and the professional tools for deciding upon the optimal approach to exploiting gas resources, which is a decision that requires establishing a multidimensional policy. The subject at hand is at the heart of administrative discretion. The Government is permitted to act in that regard in advancing legislation. The regulatory stability clause is part of a “package deal” that resulted from lengthy, complex professional negotiations conducted between the state and the gas companies. In the case of enormous investments of the type under concern, a ten-year undertaking is reasonable, and is required in order to establish policy and act for the realization of important long-term projects. Moreover, under the State Property Law, the Government can, in principle, sell the gas reserves in whole or in part, and such a sale would constitute an absolute restraint of future discretion. If the Government is authorized to do the maximum (to sell), it can certainly do a lesser part thereof (the Gas Outline, including its regulatory stability clause).

 

By a majority opinion of Justices E. Hayut, U. Vogelman, and N. Sohlberg, against the dissenting opinion of Deputy President E. Rubinstein and Justice S. Joubran, the Court held that the validity of the entire Outline (as opposed to the stability clause) is not contingent upon enacting primary legislation.

 

In this regard, in the opinion of the Deputy President and Justice S. Joubran, the Outline (as distinct from the stability clause) constitutes a primary arrangement that requires that it be grounded, in its entirety, in primary legislation rather than in a governmental decision. In the opinion of Justice Sohlberg, while it is a primary arrangement, the existing legislation suffices to empower the Government to decide upon the matter of the Gas Outline, and no further legislation is necessary. In the opinion of Justice Vogelman, even if it would be proper from a public perspective that the Outline be brought before the Knesset in the form of primary legislation, there is no legal obligation to do so under the circumstances. In the opinion of Justice Vogelman, the question of whether the Outline constitutes a primary arrangement must not be examined in accordance with the “overall picture” that arises therefrom, but rather with attention to its concrete details, while focusing upon the aspects that concern the structural changes that may be expected in the gas market and the promotion of competition. In this regard, Justice Vogelman was of the opinion that inasmuch as the Gas Outline is a framework that unites the activities of all the relevant regulators in the natural gas market, each in its area of expertise – in a sort of pooling of regulatory powers – it is legally possible to arrange it in the framework of a governmental decision. Moreover, Justice Vogelman was of the opinion that it is questionable whether the economic-market importance of the Outline and the public debate that accompanied it require, in and of themselves, a finding that the Outline constitutes a primary arrangement. In any case, even if we assume for the sake of argument that the Outline constitutes a primary arrangement, there is sufficient authority for it to be established without need for primary legislation. This authority derives from the combination of all the legal provisions that expressly authorize governmental agencies to make each and every one of the arrangements established in the Outline individually.

 

Under the circumstances, the Court – with the exception of certain comment by Justice Joubran – did not see any problem in the use made of sec. 52 of the Restrictive Trade Practices Law, which grants the Minister of the Economy authority to exempt a restrictive trade practice from the provisions of the Restrictive Trade Practices Law for foreign relations and security considerations. The Deputy President noted that this is also the case – although not unproblematically – in regard to the issues of taxation, price supervision, and export, each in its own right.

 

In regard to the use of the said sec. 52, the Deputy President explained, inter alia, that in such exceptional situations in which there are significant matters of security and state, those matters must be weighed – after determining the issue of authority – against the harm that may be caused to competition (which is the purpose of the Restrictive Trade Practices Law) by making recourse to the section. The issue that must be addressed is the public good. In other words, once the “bar of exceptions” has been successfully cleared in terms of authority, there is a sort of “parallelogram of force” between the interest in competition and the state and security interests. The greater the harm to competition, the greater the need for weighty state or security interests in order to justify recourse to sec. 52. Under the circumstances, and despite the significant harm to the interest in competition, the Court held that the state and security interests were significant, and it therefore cannot be said that recourse to the section was unreasonable. Although recourse to sec. 52 should be limited to exceptional circumstances, the matter before the Court fell within that scope.

 

In conclusion, the Court struck down the Gas Outline due to the stability clause (without finding cause for judicial intervention in any of the other issues), while holding its ruling in abeyance for a period of one year in order to allow time for rectifying the matter.

 

It should be noted that the Deputy President emphasized throughout his opinion that the Court would not examine the economic wisdom of the Outline, and would not express its opinion on the matter. The issue addressed by the Court was a legal one – the limits of governmental authority in a democratic regime, and the extent to which a government may stretch its residual authority – its general authority to act – in the absence of express authority granted by the legislature in regard to a matter of extraordinary, unprecedented economic consequences.

Voting Justices: 
Primary Author
majority opinion
Author
concurrence
Author
dissent
Author
concurrence
Author
concurrence
Full text of the opinion: 

The Supreme Court

 

High Court of Justice 4374/15, 7588/15, 8747/15, 262/16

 

The Movement for Quality Government v. The Prime Minister of Israel

 

Regarding the Gas Outline that was Prescribed in Government Decision 476

 

Summary of Judgment

 

Deputy President E. Rubinstein:

 

These petitions address felicitous discoveries of large natural gas reservoirs in Israel's exclusive economic zone, of which we have been informed in recent years. The petitions dispute the legal validity of an outline that was decided by the Government of Israel in the framework of Government Decision 476 regarding the Matter of Handling the Gas Reservoirs (hereinafter: the "Gas Outline"), and the State and the gas companies, the franchisees of the reservoirs, are defending the Outline. It shall at the outset be emphasized that throughout his opinion Deputy President E. Rubinstein emphasized that the Court is not requesting to examine the economic wisdom of the Outline and does not wish to express an opinion in this matter. The issue that is being examined thereby is a legal question – the limits of the government's power and authority in a democratic regime, and the extent to which its residual power and authority – its general power and authority to act – can be stretched, when the legislator did not explicitly authorize it and when the economic significance is so unprecedentedly immense.

 

The judgment primarily addresses three main issues that were raised in the petitions:

 

First, what are the circumstances in which Section 52 of the Antitrust Law, 5748-1988, which vests the Minister of Economy the power and authority to exempt a restrictive practice from the provisions of the Antitrust Law on grounds of foreign policy and security considerations, can be applied; and was the section applied with authority and in a reasonable manner in the case at hand – whereby the Prime Minister and the Minister of Economy (then as acting minister) relied on this section.

 

Second, was Chapter 10 of the Outline, which grants the gas companies a stable regulatory environment, and in other words, constitutes a Government undertaking not to change the Outline, including by legislative changes and objections to legislative initiatives, and which essentially serves as protection against regulatory changes in the fields of taxes, antitrust and export quotas, for the duration of a decade – prescribed with authority.

 

Third, does the Gas Outline, including all of its aspects, complexity and importance to the economy of Israel, not amount to a "primary regulation", which requires primary legislation, rather than a Government decision.

 

As to the application of Section 52: After examining the Petitioners' arguments relating to the matter of power and authority, the matter of exercising discretion and the issue of proper procedure, Justice Rubenstein reached the conclusion that Section 52 was applied on grounds of foreign policy and security in a reasonable manner and with authority. It was explained that in terms of authority, the Court was convinced that the foreign policy and security considerations are real considerations, which in the case at hand allow entering the scope of Section 52. This was in light of security opinions and opinions in the foreign policy field that were filed, as well as after hearing the position of senior government persons, including the Prime Minister. It was reasoned that in exceptional cases, in which there are significant security and foreign policy considerations, then, after examining the authority aspect, they should be weighed against the infringement that could be caused to competition (the purpose of the Antitrust Law) as a result of exercising the section; and the consideration is the public interest. In other words, once the "exceptionality threshold" has been overcome in terms of the authority aspect, there is the reasonableness aspect, creating a sort of "parallelogram of forces" between the interest of competition and the security-foreign policy interest. The greater the infringement of the competition interest, the stronger the security-foreign policy grounds will have to be, in order to exercise the section; and as mentioned, given these circumstances, despite the significant infringement of the competition interest, it was ruled that the security- foreign policy grounds bear heavy weight, and it follows that it cannot be said that the section was exercised in an unreasonable manner. All after having clarified that Section 52 shall only be exercised in unusual circumstances, but that the matter at hand falls within those grounds.

 

It was further found, although not without difficulty, that each of the taxation policy, the supervision of the prices and the export which appear in the Outline – in and of themselves – were prescribed with authority and in a reasonable manner, however this is not the case with respect to their aggregate impact. This shall be elaborated upon further on.

 

As to Chapter 10 which addresses a stable regulatory environment: Justice Rubenstein's position is that the stability clause in this chapter of the Outline, in which the Government commits to a decade during which it not only will not legislate but will also object to any legislation that is against the provisions of the Outline, was prescribed ultra-vires and is void. This is due to the fact that it was prescribed contrary to the basic administrative law rule regrading prohibiting restricting an authority's discretion. It was explained that when an authority is granted power and authority, the power and authority also create an obligation – the obligation of exercising discretion; simply put, the Government does not have the power and authority to decide not to decide or not to take action. It was emphasized that this is all the more relevant when at hand is a matter that is subject to real political dispute, and when the authority wishes to restrict the discretion of its successors, the composition of which and the ideology it may hold may be different than that of the present government. Furthermore, once it was decided in the Outline that the Government shall avoid regulatory changes in the fiscal field, the antitrust field, and the export quotas that had been prescribed in Government Decision 442, for a period of a decade, the Government has, unlawfully, relieved itself from its discretion. Furthermore, it was ruled that once the Outline which is the subject of this discussion, predetermines that the Government shall object to private bills in the said fields, also for a period of decade, then this, in effect, essentially even restricts the Knesset's discretion in light of the party discipline that is often exercised, especially when at hand are politically sensitive matters. The issue was also examined through the prism of the administrative promise doctrine, i.e. the Government's ability to give binding promises (even if in extreme cases, they can be cancelled with sanctions), this was in light of the notice by the State and the gas companies that the Outline should be viewed as such, and it was ruled that at hand is a promise that was given ultra vires.

 

As to the issue of the primary regulation: Following the above, Justice Rubinstein examined whether it as appropriate to regulate the issues addressed in the Outline by primary legislation, or whether one can suffice with the Government decision. After examining the justifications for all of the primary regulations – i.e. that matters of signal importance should be regulated by legislation – Justice Rubinstein reached the conclusion that the case at hand is a clear case, where the aggregate entirety of aspects which require to be regulated warrant that the matter be regulated by primary legislation, in an orderly and transparent process, which addresses the matter with the participation of the public and of the relevant entities, by the elected authority. It was emphasized that it is possible that with respect to each chapter of the Outline it could be argued that primary legislation is not required, however the essence is the overall impact, and at hand is a case where the whole is greater than the sum of its parts, since at hand is an almost primary regulation of the matter of producing and selling natural gas, and all its various aspects, that has huge economic implications, and which is the subject of deep public dispute. Thus, according to Justice Rubinstein, the Government deviated from the limits of its powers and authorities, when it desired – even if with good intentions – to regulate an important, sensitive, multi-dimensional systematic matter with enormous implications, not by way of legislation, and for this reason as well it was ruled that the Outline was prescribed ultra vires.

 

As to the relief – the operative outcome – according to Justice Rubinstein, in light of that stated above, the Outline should be ruled void, but the date of the voidness should be suspended. The State is given a period of a year during which it can act to regulate the matter of the natural gas. If at the end of a year from the date this judgment is given, there is no such, or other, regulation, the Gas Outline that was prescribed in Government Decision 476 shall be cancelled.

 

 

Justice S. Joubran

 

            Justice S. Joubran concurred with Deputy President E. Rubinstein's judgment and with the outcome he reached.

 

            In the matter of the primary regulation, Justice Joubran emphasized in his opinion that the primary nature of the Gas Outline should be examined in its entirety and not in accordance with the specific regulatory decisions of which it is comprised. This approach is based on the process in which the Outline was adopted by the Government and the Knesset, as a single arrangement that is not separated into parts; and based on its nature and essence as a comprehensive decision that regulates the natural gas market. Justice Joubran emphasized in his opinion that the Gas Outline is an entire policy decision that sets priorities among various interests which relate to the gas market, and he found that the specific regulatory decisions are only a tool to implement the entire Outline. Additionally, Justice Joubran noted the contractual nature of the Gas Outline, which is the outcome of negotiations between the State and the gas companies. In light of the importance of the Gas Outline, its economic implications and the public debate it raises, Justice Joubran joined the position of the Deputy President that the Gas Outline, in its entirety, is a primary regulation, and the regulating thereof by a Government decision requires authorization by primary legislation of the Knesset.

 

            Additionally, Justice Joubran joined the position of the Deputy President that the regulatory stability provisions prescribed in Chapter 10 of the Gas Outline were prescribed without authority, since the Government was not entitled to restrict its own discretion nor the discretion of the Knesset. Justice Joubran added that in his opinion there is a flaw in the sweeping wording of the stability provisions, which could compromise Israel's international standing, if the State were required to renege on undertakings it had previously given.

 

            Finally, Justice Joubran elaborated on flaws, which according to him, occurred in the exercise of Section 52 of the Antitrust Law. First, Justice Joubran found that the factual background, which served as the foundation for exercising Section 52 of the Antitrust Law, was lacking, due to the absence of an expert opinion examining the Gas Outline's impact on competition in the market. Second, Justice Joubran found that the timeframes which were given to the public to express its position regarding the Gas Outline in the framework of the public hearing were insufficient, such that the principle of public participation in the process of reaching the decisions, and of transparency in the political process, were compromised. However, Justice Joubran found that in light of the outcome he reached in the matter of the primary regulation, these matters would be addressed in the framework of the legislative procedure.

 

Justice N. Sohlberg:

 

According to Justice N. Sohlberg's opinion the Petitions should be dismissed, and he disagrees with the opinion of the Deputy President on both matters:

 

1.         The Regulatory Stability Clause – According to Justice Sohlberg the stability clause does not restrict the Knesset's legislative power, and the Knesset is sovereign to do as it wishes; the stability clause limits the Government's discretion, and it is indeed unusual: (a) in its duration – for many years; (b) in its scope – refraining from legislation and an undertaking to change contradicting legislation; (c) in the economic consequences that are expected to derive from the non-fulfillment thereof; However, even considering the accumulation of these characteristics, the stability clause does not constitute an absolute restriction of the Government's discretion. The restriction of discretion is a necessary consequence of the mere existence of administrative contracts and administrative promises, and the balance is expressed in the rules of rescission and in the possibility of withdrawing from an administrative promise. Thus, the Government is left with a certain room for discretion with an eye to the future, and in any event, a stability clause that is anchored in the Government decision, is more flexible than anchoring it in legislation.

 

            The Government is granted the power and authority and has the professional tools to decide on the optimal outline for utilizing the gas resource, a decision that requires prescribing a multi-dimensional policy. The matter at hand is at the core of the discretion of the administrative authority. The Government may act in the matter to promote legislation. The regulatory stability clause is part of an entire 'package deal', which is the result of long and complex professional negotiations that were conducted by the State vis-à-vis the gas companies. In investments of this kind, an undertaking for 10 years is acceptable, and is required in order to prescribe policy and act to realize it by executing long term important projects. It will certainly be very expensive if the Government shall decide in the future not to fulfill its undertaking under the Outline. This depends on the scope of the investments, the degree of deviation from the Outline, the timing thereof, but it still may be an "efficient breach", if the scope of the profit shall exceed the amount of compensation. We are dealing with a unique matter, of a completely different order of magnitude than that to which are accustomed. At hand is a huge economic investment on the part of the entrepreneurs, at a significant risk on their part; there is an economic, political and security need for the implementation of the Outline as quickly as possible; the regulatory stability clause has signal importance within the entirety of the matter and is essential for the gas companies, as a prerequisite for the engagement; and ultimately – the enormous financial consideration which we all hope will be given from the said investment, for the benefit of the entrepreneurs, the State and its citizens. It follows from all of the above that it is only reasonable that the State shall be forced to bear a significant monetary cost to rescind from the administrative promise that is embedded in the Outline, since the greater the reward, the greater the risk. The reasonableness of the restriction of the discretion should be examined through this prism. Furthermore, according to the State Assets Law, the Government, in principle, is entitled to sell all or part of the gas reservoirs, and the actual sale is an absolute restriction of its future discretion. If the Government is permitted to perform a greater act (of selling), then, a fortiori it is permitted to perform a lesser one (the Gas Outline, including its regulatory stability clause).

 

            Based on the grounds he states in paragraphs 8-39 of his opinion, Justice Sohlberg reached the conclusion that the regulatory stability clause is not illegal. The Government is authorized to restrict its discretion as it did, subject to the ability to rescind from the administrative promise.

 

2.         Anchoring the Gas Outline in a Government Decision or Knesset Legislation – the entirety of the Government decision – in the field of export of the gas, taxation, antitrust, along with the regulatory stability clause – creates a primary regulation. However, contrary to the opinion of the Deputy President, Justice Sohlberg is of the opinion that existing legislation, by virtue of which the Government is authorized to decide on the Gas Outline, is sufficient and that there is no need for additional legislation. Section 52 of the Antitrust Law is the source of authority to grant an exemption from the antitrust laws; Section 33(a) of the Oil Law is the source of authority regarding the matter of exporting the gas. Once Justice Sohlberg reached the conclusion that the various components of the Government's decision are properly anchored in authorizing legislation, he raised the difficult question as to how it is possible to prohibit the Government from acting by virtue of such authorizing legislation, due only to the appearance of the 'entirety' thereof? In any event, even if the explicit authorization in the relevant laws with respect to the parts of the Outline are not sufficient, there is also clear authorization with regard to its entirety, in Section 5(a) of the State Assets Law.

 

            The conclusion is that the Government is authorized by law to prescribe the Gas Outline as it did; although the regulatory stability clause indeed restricts the Government's administrative discretion, it is valid; there is no need for legislating the Gas Outline; legislative regulation is expected to encounter difficulties (paragraphs 64-66); a Government decision is sufficient. The natural gas is the property of the State. The Government – as the public's trustee for the State's assets – has the obligation to exercise its power and authority in the matter at hand, which is at the core of governmental actions, in order to preserve the proprietary rights of the State in and to the natural gas, in the optimal manner. Not only was the Government permitted to decide, act and do; it was obligated to do so. This is its responsibility and its duty.

 

Justice U. Vogelman:

 

            Justice U. Vogelman joined the greater part of Deputy President E. Rubinstein's opinion, to which Justice S. Joubran also joined, including the determination that the regulatory stability clause in its current format cannot remain intact. In this regard Justice Vogelman emphasized that the scope and duration of the stability clause, as well as the "price tag" that accompanies its anticipated breach, create a de facto prohibited restriction of administrative discretion. Justice Vogelman added: "I wish to emphasize that I am not in any way ignoring the economic logic underlying the investors' demand for regulatory stability. It is obvious that in consideration for the latter's huge investments, they expect to reduce their risks, in such a manner that will enable them to return their investment and even receive appropriate yield. This interest of the investors must be properly addressed. As my colleague, the Deputy President, clarified in his detailed opinion, there are various possible models to do so. However, as mentioned above, the specific stability clause at hand is not included among such models, in light of its said unique characteristics." Alongside that, according to Justice Vogelman, there is nothing to preclude the Knesset from formulating a legislative arrangement that would allow the Government to anchor the three arrangements which the stability clause addressed, for a defined period of time, either by legislating a designated regulation, or by legislating a provision that would explicitly authorize the Government to do so.

 

            On the other hand, Justice Vogelman did not join the position of the Deputy President and Justice S. Joubran that the Outline (apart from the stability clause) amounts to a primary regulation that warrants – in its entirety – being anchored by primary legislation. According to him, even if it would be appropriate, from a public aspect, that the Outline be brought before the Knesset as primary legislation, given the circumstances of the matter, there is no legal obligation to do so. According to Justice Vogelman's position, the question whether the Outline is a primary regulation should not be examined based on its "entirety" but rather considering its concrete specifics while focusing on the aspects that relate to the anticipated structural changes in the gas market and the promotion of competition. In this context, Justice Vogelman is of the opinion that since the Outline is a framework that consolidates all of the relevant regulators in the natural gas market, each one within his own scope of authority – as a pooling of regulatory forces – it is possible, from a legal perspective – to regulate it in the framework of a Government decision.

 

Furthermore, Justice Vogelman is of the opinion that it is doubtful whether the economic-market significance of the Outline and the public dispute that has accompanied its formulation, in and of themselves warrant the ruling that the Outline amounts to a primary regulation. In any event, even if it is assumed, for the sake of the discussion, that the Outline amounts to a primary regulation, there is sufficient authorization for it to be prescribed not by primary legislation. Such authorization derives from the combination of all of the legislation provisions that explicitly authorize the authorities to prescribe each and every one of the arrangements that were prescribed in the framework of the Outline.

 

As for the relief, Justice U. Vogelman joined the position of the Deputy President E. Rubinstein.

 

Justice E. Hayut

 

Justice E. Hayut is of the opinion that only the restrictive provisions in Chapter 10 of the Outline should be cancelled, and that as long as these provisions are removed from the Outline, there is no need to cancel the rest of its provisions.

 

In her opinion, Justice Hayut states that the Outline does not completely belong to one legal framework, and it in fact constitutes a combination of legal frameworks. It was approved by a Government decision that consolidates the entirety of regulatory aspects that required addressing at that stage and some of the relevant provisions in this context were even drafted in a manner that corresponds with the traditional unilateral and imposing regulation. In this sense it can be classified as an administrative promise and this is how the State and the gas companies chose to classify it in the discussion. However, Justice Hayut further states that throughout the Outline there are more than a few provisions that are drafted as conditions in a contract that are a result of a meeting of the minds between the regulatory entities and the gas companies, and from this aspect, the Outline bears characteristics of a regulatory contract which is a new model of administrative regulation that bases regulatory provisions in various fields on contractual relations and cooperation with the supervised entities.

 

Justice Hayut states that it is possible that the model of a regulatory contract requires certain modification of the traditional administrative law rules in relating to restricting discretion, and she states in this context a modern variation of a stability stipulation in the form of an "economic balancing stipulation" which does not restrict the regulator's discretion and instead prescribes a mechanism of agreed compensation for the commercial corporation for possible regulatory changes. According to Justice Hayut, had the entire Outline been expressed in a regulatory contract that included a provision regarding a known and limited agreed compensation instead of the restrictive provisions, it is possible that that would have managed to overcome the judicial review. However, when it was discovered that in the framework of the Outline, the State was forced to satisfy the gas companies' demand for stability in a different manner, and to include restrictive provisions that do not comply with administrative law criteria, one may wonder what legal advantage, if any, was achieved in choosing the said framework.

 

Justice Hayut ruled that the restrictive provisions are extremely far reaching, inter alia, since they restrict the arms and legs of the Government, as the one that de facto controls the legislative process in the Knesset, in initiating legislation. Additionally, Justice Hayut ruled that the active undertaking of the Government in the framework of the restrictive provisions to frustrate any change in a law that contradicts the Outline, if and to the extent such shall be legislated further to a private bill, crosses all permissible boundaries in a parliamentary democracy and renders the restrictive provisions as clearly and blatantly illegal. Justice Hayut is further of the opinion that de facto, and despite the rules of rescission, the restrictive provisions create a legislative and regulatory freeze due to the exposure to a significant damages claim on the part of the gas companies of an unknown scope, in the event of rescission from the Outline or a part thereof.

 

 Regarding the exercise of the power and authority of the Prime Minister and Substitute Minister of Economy, pursuant to Section 52 of the Antitrust Law, Justice Hayut states that giving the Antitrust Commissioner the chance to reach agreements with the gas companies in a path of an agreed order pursuant to the Antitrust Law, does not contradict the existence of considerations that relate to security and foreign policy, and she further states that it is possible that the period of time that was given to the Commissioner for the purpose of exhausting the said track was too extended and in hindsight it is definitely possible that had Section 52 been exercised earlier, it would have been possible to reach terms of agreement with the gas companies that may have been more convenient for the State in various aspects, and especially in terms of the restriction. However, once the Commissioner decided, after three years during which he negotiated with the gas companies, to renege from the agreement he had formulated therewith, and once he had decided not to present the drafting of the agreed order to be approved by the court, Justice Hayut is of the opinion that there is significant weight to the State's claim that at that stage, it had become urgent to reach understandings with the gas companies, inter alia, since the security and foreign policy considerations had not only not disappeared from the arena – but in certain aspects, it can be said that they became more pressing, and therefore Section 52 of the Antitrust Law was duly exercised at that stage.

 

In conclusion, Justice Hayut is of the opinion that only the restrictive provisions in Chapter 10 of the Outline, are to be cancelled, and that as long as they are removed from the Outline, it is inappropriate to cancel the rest of its provisions. Contrary to the opinion of Justice U. Vogelman, Justice Hayut is of the opinion that the Court should limit itself to the legal conclusion that derives from the analysis it conducted and that it is inappropriate to rush to the conclusion that once the stability clause was cancelled the entire Outline should be ruled void. According to her, the gas companies should be left to decide whether or not in these circumstances, they wish to cancel the Outline.

 

Epilog

 

A.        It was decided by a majority opinion (Deputy President E. Rubinstein and Justices S. Joubran, E. Hayut and U. Vogelman) and against the dissenting opinion of Justice N. Sohlberg, that the stability clause, as drafted in Sections 5 and 6 of Chapter 10 of the Gas Outline, which was prescribed by Government Decision 476 and which addresses "The Existence of a Stable Regulatory Environment" (tying the Government to the Outline, including not changing legislation and opposing legislative initiatives for a period of ten years) – cannot remain intact.

 

B.        Moreover, according to Deputy President E. Rubinstein and Justice S. Joubran and U. Vogelman, in light of that stated in paragraph A above, and in light of the Respondents' declaration that the stability clause is a conditio sine qua non, the entire Outline is to be cancelled; however the State should be given a period of a year during which it can act to regulate that which is required in accordance with our judgment. At the end of a year from the date of the judgment and if and to the extent there shall be no such regulation, the Gas Outline shall be cancelled. In that sense, the order has become absolute.

 

            In contrast, Justice E. Hayut is of the opinion that only the restrictive provisions that are in Chapter 10 of the Gas Outline should be ruled void.

 

C.        According to Justice N. Sohlberg although the regulatory stability clause does limit the Government's administrative discretion, it can remain intact; there is no need for legislating the Gas Outline and the Government decision which was approved by the Knesset plenum is sufficient. Therefore, according to him the Petitions should be denied.

 

D.        By a majority opinion of Justices E. Hayut, U. Vogelman and N. Sohlberg, and against the dissenting opinions of Deputy President E. Rubinstein and Justice S. Joubran, it was decided that the validity of the entire Outline (distinct from the stability clause) is not contingent upon being anchored by primary legislation.

                                      

E.         The Justices of the bench, with the exception of a certain remark by Justice Joubran, did not find flaw, in the circumstances at hand, in the exercise of Section 52 of the Antitrust Law, which exempts the provisions of such law on security and foreign policy grounds.

 

F.         The bottom line thus is as stated in sections (a) and (b) above: it was decided to cancel the Gas Outline due to the stability clause (without having found it appropriate to apply judicial intervention in other matters that were on addressed), while suspending the declaration of voidness for a year in order to allow regulation. 

Sela v. Yehieli

Case/docket number: 
AAA 662/11
Date Decided: 
Tuesday, September 9, 2014
Decision Type: 
Appellate
Abstract: 

[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.]

 

Facts:    An appeal of the decision of the Haifa Administrative Affairs Court, dismissing the petition of the Appellants and holding that the court should not intervene in the decision of the Kfar Vradim local council according to which a women’s mikve (ritual bath) would not be constructed in the town in the near future.

 

Held:     As a rule, a local council enjoys broad discretion in regard to decisions concerning the allocation of public resources. The initial assumption is that a local council – which is an elected authority whose members represent the public they were chosen to serve – occupies the best position for deciding upon the priorities that will advance the general good, and for striking the proper balance between meeting public needs and maintaining the budgetary framework. Therefore, the Court will not hastily intervene in such decisions, and will refrain from placing itself in the authority’s shoes. In the framework of judicial review, the question of whether public resources were allocated wisely, or whether they could have been allocated differently, will not be considered unless the decision regarding the allocation of resources was tainted by a substantive, fundamental flaw that justifies the Court’s intervention.

 

It is clear that the council, like any local authority, is subject to the principles of public law. This restraint in regard to judicial review does not relieve the Court of fulfilling its duty: to ensure that the authority exercises its discretion in accordance with the law. And note: the local authority serves – in all of its actions – as a trustee of public funds, and its job is to advance public purposes for the general good. Even in allocating public resources, the authority is obligated to act in a manner that faithfully serves the entire public and ensures proper governance. Accordingly, the allocation of public resources in public authorities must be carried out in accordance with the principles of reasonableness and proportionality, and in accordance with fair, equal, relevant and transparent criteria. Reasonableness requires that in setting priorities among various subjects for which the authority is responsible, priority be given to the more important subjects.

 

Although the council’s decision relied upon the recommendations of the committee for examining criteria for the construction of public buildings in the village, it is clear that those recommendations cannot absolve it of the duty to exercise its authority to consider every case on its merits. Indeed, an administrative agency will not lightly deviate from the recommendation of a knowledgeable, expert body, established at its request, which was adopted after an in-depth professional evaluation. However, that does not mean that the council is bound by the recommendations of the criteria committee, which is merely an advisory body. Under the circumstances, the decision to rescind its decision to build a mikve in the village, adopt the recommendations of the criteria committee in full, and refrain from taking action in the near future to establish a mikve in the town does not pass the reasonableness test, and does not reasonably balance the needs of the religiously observant female residents of the community, who are required to fulfill their religious obligation of ritual immersion, against the budgetary considerations and the available land resources.

 

The religious obligation of ritual immersion is an integral part of the life of a religiously observant, married woman, and is an inseparable part of her religious ritual and the expression of her identity and customs. It is substantively related to the right to the free exercise of religion and religious practice. No mikve has ever been built in Kfar Vradim. Given the geographic location of Kfar Vradim and its topographic conditions, there is no reasonable way to go to any of the mikves in the nearby towns on foot.  Under the circumstances, the absence of a mikve in the town deprives the female residents of the town of the possibility of performing an obligatory ritual practice that is deemed to be of great importance by the traditionally religious Jewish community.

Voting Justices: 
Primary Author
majority opinion
majority opinion
majority opinion
Full text of the opinion: 

 The Supreme Court sitting as Court of Administrative Appeals

AAA 662/11

 

Before:                                                The Honorable Justice E. Hayut

                                                The Honorable Justice N. Hendel

                                                The Honorable Justice U. Vogelman

 

The Appellants:                       1.  Yehudit Sela

                                                2.  Sima Ben Haim

                                                3.  Peri Shahaf

                                                4.  Yinon Sela

                                                5.  Yoav Ben Haim

                                                6.  Katy Shilo Oliver

                                                7.  Michael Ayash

                                                8.  David Cohen

                                                9.  Amnon Ben Ami

                                                10. Zachary Grayson

                                                               v.

The Respondents:                   1.  Head of the Kfar Vradim Local Council, Sivan Yehieli

                                                2.  Kfar Vradim Local Council

                                                3.  Oriette Amzalag

                                                4.  Shimon Amzalag

                                                5.  Victor Haziza

                                                6.  Tibi Hertz

                                                7.  Jacques Ben Zaken

                                                8.   Nissim Avital

 

Appeal of the judgment of the Haifa Administrative Affairs Court (The Honorable Judge R. Sokol) in AP 21404-06-09 of Dec. 23, 2010.

Date of hearing: 29 Adar 5774 (March 31, 2014)

 

Attorneys for the Appellants: Avi Weinroth, Adv.; Amir Lockshinsky-Gal, Adv.

Attorney for the Respondents: Haim Pitchon, Adv.

Attorney for the State Attorney’s Office: Tadmor Etzion, Adv.

 

Facts:   An appeal of the decision of the Haifa Administrative Affairs Court, dismissing the petition of the Appellants and holding that the court should not intervene in the decision of the Kfar Vradim local council according to which a women’s mikve (ritual bath) would not be constructed in the town in the near future.

Held:   As a rule, a local council enjoys broad discretion in regard to decisions concerning the allocation of public resources. The initial assumption is that a local council – which is an elected authority whose members represent the public they were chosen to serve – occupies the best position for deciding upon the priorities that will advance the general good, and for striking the proper balance between meeting public needs and maintaining the budgetary framework. Therefore, the Court will not hastily intervene in such decisions, and will refrain from placing itself in the authority’s shoes. In the framework of judicial review, the question of whether public resources were allocated wisely, or whether they could have been allocated differently, will not be considered unless the decision regarding the allocation of resources was tainted by a substantive, fundamental flaw that justifies the Court’s intervention.

            It is clear that the council, like any local authority, is subject to the principles of public law. This restraint in regard to judicial review does not relieve the Court of fulfilling its duty: to ensure that the authority exercises its discretion in accordance with the law. And note: the local authority serves – in all of its actions – as a trustee of public funds, and its job is to advance public purposes for the general good. Even in allocating public resources, the authority is obligated to act in a manner that faithfully serves the entire public and ensures proper governance. Accordingly, the allocation of public resources in public authorities must be carried out in accordance with the principles of reasonableness and proportionality, and in accordance with fair, equal, relevant and transparent criteria. Reasonableness requires that in setting priorities among various subjects for which the authority is responsible, priority be given to the more important subjects.

            Although the council’s decision relied upon the recommendations of the committee for examining criteria for the construction of public buildings in the village, it is clear that those recommendations cannot absolve it of the duty to exercise its authority to consider every case on its merits. Indeed, an administrative agency will not lightly deviate from the recommendation of a knowledgeable, expert body, established at its request, which was adopted after an in-depth professional evaluation. However, that does not mean that the council is bound by the recommendations of the criteria committee, which is merely an advisory body. Under the circumstances, the decision to rescind its decision to build a mikve in the village, adopt the recommendations of the criteria committee in full, and refrain from taking action in the near future to establish a mikve in the town does not pass the reasonableness test, and does not reasonably balance the needs of the religiously observant female residents of the community, who are required to fulfil their religious obligation of ritual immersion, against the budgetary considerations and the available land resources.

            The religious obligation of ritual immersion is an integral part of the life of a religiously observant, married woman, and is an inseparable part of her religious ritual and the expression of her identity and customs. It is substantively related to the right to the free exercise of religion and religious practice. No mikve has ever been built in Kfar Vradim. Given the geographic location of Kfar Vradim and its topographic conditions, there is no reasonable way to go to any of the mikves in the nearby towns on foot.  Under the circumstances, the absence of a mikve in the town deprives the female residents of the town of the possibility of performing an obligatory ritual practice that is deemed to be of great importance by the traditionally religious Jewish community.

            The primary consideration that led to the decision was the limited resources available to the council. In its deliberations, the council could, indisputably, give weight to the limits upon the available resources, and allocate them in accordance with public needs. However, under the circumstances of the instant case, the resources – both land and money – that were expected to be required for the purpose of building and maintaining a mikve in the town were not significant. Under those circumstances, the weight of the budgetary consideration relative to the opposing interest was limited.

            That being so, in circumstances in which appropriate weight was not given to the substantial harm to the religiously observant, female residents of the town by the absence of a mikve that is accessible on the Sabbath and on religious holidays, and where it was found that the allocation of resources was given disproportionate weight even though land was readily available for erecting the mikve without harming other public interests, and without any need for allocating substantial resources by the council due to external funding – The Court held that the council’s decision not to erect a mikve was unreasonable and must, therefore, be annulled.

 

Judgment

 

Justice U. Vogelman:

 

            An appeal of a judgment of the District Court sitting as a Court Administrative Affairs in Haifa (the Honorable Judge R. Sokol), denying the petition of the Appellants, and holding that the court would not intervene in the decision of the local council of Kfar Vradim (hereinafter: the Council or the Local Council) not to erect a mikve for the women of the town in the near future.

 

Background

1.         The town of Kfar Vradim was established in the western Galilee following a government decision made in 1978. The town currently has some 6,000 residents. Some of the residents (many dozens of families according to the Appellants) define themselves as religious or traditional. In the past, the authority to plan, develop and market building lots in the town was held by the Kfar Vradim Development Corporation Ltd. In 2008, that authority was transferred to the Council. In 2005, the Local Council and the Ma’ale Yosef Regional Religious Council agreed that the former would be responsible for providing religious services in the village, including “family purity and the instruction of brides”. No mikve was ever erected in Kfar Vradim, and the closest mikves [ritual baths] for women are a short drive away, in the neighboring communities. Over the last few years, some of the local residents began working toward the establishment of a mikve in the town.

2.         On March 12, 2007, the National Religious Services Authority in the Prime Minister’s Office (hereinafter: the Authority) undertook to provide an “extraordinary budget” in the amount of NIS 745,000 for the building of a mikve in the town (hereinafter: the EB). The Local Council was asked to approve the Authority’s offer in order to receive the EB, and on May 22, 2007, it decided to approve it on condition that the Authority agree to exempt the Council from any obligation to finance the construction or maintenance of the mikve. The Council then completed the necessary application for receiving the EB – deleting the sections regarding the Council’s obligation to participate in financing – and returned it to the Authority, while emphasizing the condition that the Council not be required to fund the construction or maintenance of the mikve in any way. At the Council meeting, the chairman at the time informed the Council that, in a meeting with the Minister for Religious Affairs, the Minister informed him that the application to receive the EB would not be approved due to the reservations and deletions made in the application, but added and promised that the maintenance of the mikve would be financed by the Religious Services Authority, and that no funding would be required of the Council. In the course of that Council meeting, Mr. Amnon Ben Ami (Appellant 9, hereinafter: the Donor) – a community resident who had contributed monies in the past for the construction of the community’s synagogue – asked that the mikve be attached to that synagogue, and agreed to guarantee that the maintenance of the mikve will not require funding by the Council. At the end of the meeting, the Council decided “to approve the EB as is, without any changes, and in the “Stage B zone” (by the term “Stage B”, the Council was referring to a particular area in the village).

3.         Pursuant to that decision, on Oct. 23, 2008, the Council published a public tender for the construction of the mikve (hereinafter: the Tender). A petition submitted in regard to alleged flaws in the tender process was dismissed on Nov. 6, 2008, following a declaration by the Council that it would not open the bid envelopes until after the elections for the Local Council and until a decision was reached by the new Council in regard to opening the envelopes (AAA 10/08 (Haifa Administrative) Akirav v. Kfar Vradim Local Council (Nov. 6, 20018)). On Nov. 11, 2008, elections were held for the Local Council, in which a new Council head was elected (Respondent 1). On Nov. 16, 2008, the outgoing Council head requested that the Israel Lands Administration suspend the Council’s request to allocate land for the construction of the mikve, and instead, allocate the land for the construction of the Tefen comprehensive high school. This suspension request resulted from a compromise agreement, granted court approval in 2008, under which the Council agreed to allocate land for the construction of the Tefen school in its jurisdiction (AP (Haifa Administrative) 630/08 Association for the Ma’alot and Region Experimental School (R.A.) v. Industrial Local Council Migdal Tefen (Sept. 4, 2008)).

4.         On Dec. 22, 2008, the new head of the Council informed the bidders of the cancellation of the Tender, and the sealed envelopes were returned to the bidders unopened. In the course of February 2009, a decision was taken to change the location for the construction of the Tefen school, and to allocate other land in the town for that purpose. A Council meeting was held on May 13, 2009. In the course of the discussion of the allocation of land for religious purposes, the head of the Council requested the repeal of the decision of the previous Council in the matter, and added that the Tender for the building of the mikve had been cancelled due to a problem concerning the allocation of the land, and because there was no available budget and the Donor had not provided his share. It was further noted that, in the meantime, the Ministry of Religious Services’ commitment to underwrite construction of the mikve had lapsed. At the end of the meeting, the Council decided to repeal the decision of the previous Council from Nov. 18, 2007 in regard to the synagogue and mikve in Stage B (hereinafter: the Repeal Decision). As a result of this decision, several dozen residents organized in order to bring about its repeal. When their efforts failed, they submitted a petition against the Council’s decision to the Haifa District Court in its capacity as a Court of Administrative Affairs.

 

Proceedings in the Lower Court

5.         In their petition to the lower court, the Appellants argued that the Council’s decision to suspend and cancel the Tender for building the mikve should be annulled, and that the Respondents should be ordered to publish a new tender. A hearing was held on Sept 8, 2009. In the course of the hearing, it was argued, inter alia, that a decision could not be made to construct a mikve, or any other public building, without clear criteria for the allocation of public resources. In the end, a procedural agreement was reached between the parties under which the proceedings in the case would be adjourned for six months, during which the Council would establish criteria for the allocation of land for public buildings and for budgetary support for public purposes. It was agreed that those criteria would “relate to all the needs of the village, including religious needs, among them the construction of a mikve”; and that “in the framework of the criteria that will be established by the Council, the Council will consider the public desire and all the public needs, and will take the public’s constitutional rights into account. In addition, the Council would consider the burden on the public purse […] [and in that regard] the possibility of obtaining public or other funding for the construction of public buildings, including public funding already approved […], and the possibility of combining different needs together in order to reduce and save expenses”. It was made clear that the agreement would not derogate from any of the parties’ claims in regard to the petition itself.

6.         On Dec. 14, 2009, pursuant to the procedural agreement, the Council decided to establish a committee to evaluate the criteria for constructing public buildings in the town (hereinafter: the Criteria Committee or the Committee). The Committee comprised nine members, including representatives of the Appellants. Following five meetings and a public discussion to which the entire community was invited, the Committee presented its conclusions. The Committee decided that the priorities for the construction of public buildings in the town should be based upon a group of criteria, and quantified the relative weight that should be given to each criterion, as follows:

 

            Criterion                                                                                              Relative Weight

  1. Expected number of users                                                                                    30%
  2. Necessary for well-being in the town                                                       25%
  3. Appropriate to the character of the town                                     25%
  4. Cost relative to number of expected users                                                10%
  5. Possibility of fulfilling the need in neighboring communities                  10%

 

            In light of these criteria, the members of the Committee ranked the list of 17 public buildings required by the town. After the mikve placed last under each of the criteria, separately and cumulatively, the mikve was ranked last in priority for the construction of public buildings required for the town.

7.         On April 21, 2010, the Council ratified the Committee’s recommendations, and explained that the priorities would serve as a “compass” for the Council’s decisions in this area, but added that the recommendations do not relieve the Council of its authority to consider each case on its merits. Following the ratification of the recommendations, and in light of the low ranking given to the construction of the mikve, the Appellants submitted an amended petition in which they reiterated the claims made in the original petition, and added claims against the criteria established and the method for ranking public buildings.

The Judgment of the Lower Court

8.         On Dec 23, 2010, the lower court (the Hon. Judge R. Sokol) dismissed the petition and assessed NIS 20,000 against the Appellants for costs. At the beginning of its judgment, the court explained that the fundamental rights of the Appellants to freedom of religion and worship were not in question, but the discussion must be focused upon the question of the criteria for the allocation of public resources in the local authority and the lawfulness of the procedures adopted by the Respondents. The court found that the building of the mikve required the allocation of public resources – land and budget – for construction and maintenance. The court explained that even if the Appellants expect to raise contributions for the project, those contribution are not expected to eliminate the need for public resources, but only to limit the costs. Against this background, the court rejected the Appellants’ claims in regard to the Repeal Decision, as well as the Council’s decision – made following the recommendations of the Criteria Committee – to rank the mikve as the lowest priority in the list of public building construction in the town (April 21, 2010).

9.         As for the Repeal Decision, the court found that since the allocation of land for building of the mikve was contingent upon conditions that were not fulfilled – the money was not provided by the Donor, and the Religious Affairs Authority required an unconditional undertaking that the Council underwrite the construction and maintenance costs – the Council’s decisions were lawfully repealed. Moreover, the Council was at liberty to repeal those decisions inasmuch as they were not made in accordance with the criteria established later in accordance with the Council’s new policy, and because the circumstances under which the decisions were made had changed after it was decided to allocate the land for the building of a school.

10.       All of the Appellant’s arguments against ranking the mikve as the lowest priority for the construction of public buildings were dismissed, as well. As for the claim that there was insufficient factual basis, the court found that the Committee’s reliance upon the data of the Council, upon oral and written public requests, and upon the Committee members’ personal knowledge of the town was reasonable, and that the Appellants had been given an opportunity to present data to the Committee as they wished. It further held that the statements of the Committee members in regard to the town’s future did not testify to the existence of improper considerations in regard to preventing an increase in the number of observant residents in the town, and that that the worldviews of the Committee members in regard to the needs of the community were relevant and required for addressing the matter. As for the Appellants’ claim that the criteria established under the procedural agreement were not included in the final list of criteria, the court held that the procedural agreement could not limit the Council’s exercise of its discretion, and that the said agreement was not intended to establish the criteria, but rather to set out the considerations that the Council should take into account in deciding upon those criteria, which it did. It was further found in this regard that the Council’s decision not to include the availability of resources as a criterion was intended to prevent the use of contributions in order to erect buildings for which there was no real need, and was, therefore, a relevant, legitimate consideration. The court added that the ritual needs of the residents are seen to by the Ma’ale Yosef Regional Religious Council, and that there are mikves in neighboring communities. It held that the absence of a mikve in the town presented a hardship for residents seeking to fulfil the religious obligation of ritual immersion, but it did not prevent the fulfilment of that obligation. Lastly, the court held that, in view of the appropriate judicial restraint to be shown in regard to intervention in administrative discretion, the court should not intervene in the criteria in a manner that would grant priority to the construction of the mikve.

            That is the background that led to the appeal before this Court.

 

Arguments of the Appellants

11.       The Appellants ask that the Court set aside the judgment of the lower court, annul the Council’s decision of May 13, 2009 (in regard to the EB and the allocation of land for the construction of the mikve), and of April 4, 2010 (in regard to ranking the mikve as the lowest priority for public buildings required in the village), and invalidate the recommendations of the Criteria Committee. The Appellants further ask that we order that the Council erect a public mikve in reliance upon the funding from the Ministry of Religious Services, and apply for an extension for obtaining the EB, as may be necessary.

12.       According to the Appellants, the construction of a mikve in the town will protect the right of the residents to freedom of religion and worship, on the one hand, while not affecting the communal resources, on the other. The Appellants argue that the mikve can be combined with another public building, such that it will not detract from the land available for public use, while its construction and maintenance will be funded through state funding and not from the Council’s budget. Under those circumstances, they argue, the Council’s decision to refrain from building a mikve in the town was disproportionate and unreasonable, and derived from improper, extraneous considerations that arose from a desire to preserve the secular character of the community and keep religiously observant people out of the village. They further raised a series of flaws in the Council’s decision-making process in the matter. The Appellants also argued that there were factual errors in the lower court’s judgment, among them, the finding that the mikve was to be built in reliance upon funding by a private donor (whereas, they argues, the funding was to be provided by the State); the finding that the Appellants claimed only a burden upon their constitutional right to freedom of religion and worship (whereas, according to the Appellants, they claimed a real infringement and absolute denial of the ability to perform the religious obligation on the Sabbath and holidays); the finding that allocating land for the mikve was contingent upon conditions that were not met (whereas the Council decided, on Nov. 18, 2007, to waive the conditions it had previously set for the building of the mikve).

 

Arguments of the Respondents

13.       The Respondents support the judgment of the lower court. First, they argue that there were no flaws in the work of the Criteria Committee. On point, the Respondents argue that the Criteria Committee rightly decided that the availability of resources should not serve as a criterion for the construction of public buildings, as otherwise, the Council would have to erect every building for which there was outside funding; that the possibility for combining a number of functions in one building should not be considered in the framework of establishing criteria, as it is a preliminary stage; and that the constitutional rights of the residents should not serve, in and of themselves, as a criterion, and it is sufficient that they are taken into account in the framework of the established criteria. It was further argued that, at present, there were other public buildings that remained to be built, for which the residents had long-ago paid the development costs The Respondents are of the opinion that once the parties decided upon the establishing of the Criteria Committee, there was no longer any justification for reexamining the Council’s decisions prior to the establishing of the Committee, and moreover, in light of the decision of the former Council head to build the Tefen school on the lot, the Council had no choice but to cancel the Tender; in any case, the Council is permitted to decide upon a change of policy; and that, in any case, the requisite preconditions for carrying out the repealed decision – full outside funding and available land – were not met.

 

Proceedings before this Court

14.       On Sept. 6, 2012, a hearing was held on the appeal (E. Hayut, U. Vogelman, Z. Zylbertal, JJ), in the course of which the Court recommended that the parties attempt to settle the dispute amicably and out of court, inter alia, in light of the suggestion that arose in the course of the hearing that it might be possible to build the mikve privately in the town’s commercial center. On Nov. 11, 2012, the parties informed the Court that no agreement had been reached, and that the possibility of building a private mikve as suggested was in doubt inasmuch as it was contingent, inter alia, upon obtaining a zoning variance. Following a further hearing before this panel (E. Hayut, U. Vogelman, N. Hendel, JJ) on Nov. 4, 2013, the Court requested that the State (the Ministry of Religious Services, and, if necessary, the Israel Lands Authority) declare its position on the matter.

15.       The State submitted its reply on Dec. 24, 2013. The reply stated that the Council could submit a request for funding for the construction of a mikve, which would be considered based upon the criteria of the Ministry of Religious Services, and that it was possible to erect a “standard” public mikve in reliance upon state funding. However, it was noted that there are cases in which the local council participates in certain related costs (such as, environmental development and various complimentary costs), and that, as a matter of course, the Ministry of Religious Services requires that the local authority undertake – as a condition for receiving funding – to pay the difference, if any, between the cost of construction and the funding. It was further made clear that there was no need to allocate specific land for the purpose of submitting the application, and that the salary of the mikve attendant would be provided by the Ministry of Religious Affairs, prorated in accordance with the number of users. It was further explained that the state does not participate in the construction or maintenance of private mikves. As far as the allocation of land was concerned, the Israel Lands Authority informed the Court that, after investigating the matter with the engineer of the Lower Galilee Local Building and Planning Committee, it found that there are three lots in the town– lots 718, 720 and 856 – that could be appropriate, in terms of planning, for the construction of a mikve. In light of the above, we were informed that “The State is of the opinion that there is a possible course for the erection of a mikve in Kfar Vradim, the construction of which will be funded (entirely or primarily) by funding from the Ministry of Religious Services. This, if an application is duly submitted on the prescribed dates, and subject to its examination in accordance with the criteria, and its approval”.

16.       Following the State’s reply, the Appellants submitted an urgent request for an interim order. The Appellants asked that we order the Respondents to submit an application to the Ministry of Religious Services for funding for the erection of a public mikve in accordance with the State’s recommendation, in order to meet the timetable for receiving the funding in 2014. The Respondents opposed the request, arguing that they should not be ordered to submit such a request before the matter is approved by the Council in an appropriate administrative procedure. On Dec. 29, 2013, we dismissed the request for an interim order, and ordered that a date be set for a further hearing of the appeal, in which the State’s representative would also participate.

17.       In updated notices submitted on Feb. 28, 2014 and March 3, 2014, the parties informed the Court that the attempt to initiate the erection of a private mikve had failed due to the Local Council’s decision to deny the request for a zoning variance, and that it the possibility of obtaining such a variance was now unclear inasmuch as it would only be possible to resubmit the request after the completion of the parcelization process for the commercial center. We were further informed that the parties remained divided on the issue of allocating Council resources for the construction and maintenance of a public mikve.

18.       On March 31, 2014, this panel conducted a further hearing of the appeal, in which the attorney for the Respondents claimed that there were planning and practical problems in regard to constructing the mikve on lot 856, which had been mentioned in the State’s reply. At the conclusion of the hearing, we ordered that the Respondent’s attorney submit a notice to the Court, no later than April 6, 2014, detailing the planning and other problems cited in his arguments in regard to lot 856, which had been found suitable, in terms of planning, for the erection of a mikve, as well as in regard to the other lots in the area that might be suitable, and that the State’s attorney then submit an updated notice in regard to the possibility for allocating a lot for the erection of a mikve.

19.       On April 6, 2014, the Respondents submitted an update in which they informed the Court that it would not be possible to build a mikve on lot 856, inasmuch as it would require a new urban development plan and the adjustment of infrastructures; because the type of use of the buildings surrounding the lot was not appropriate for the building of a mikve; and because part of the lot had been sold to a private individual. Therefore, according to the Respondents, the possibility of building the mikve in the commercial center would be preferable, since work on the project had begun (without a permit). On May 1, 2014, the State submitted a further notice in which it stated that building a mikve of lot 856 was possible. The State explained that there are no current negotiations for the transfer of parts of the lot to private hands; there is no need for a new, detailed plan for erecting a mikve, as the current plan is sufficient; and that nothing about the type of use of the surrounding lots would prevent the building of a mikve on the lot. It further noted that a mikve could also be built of lots 718 and 720, both from a planning and practical point of view. The State further explained that building a mikve in the area of the commercial center would involve planning and practical problems: under the relevant plan, the area is zoned for “commercial purposes”, and therefore the erection of a mikve would require initiating planning proceedings in order to change zoning; the proximity to commercial areas is incompatible with the operation of a mikve; and the ownership of the lot and construction violations had yet to be resolved. As for funding the building of the mikve, the Council could submit an application for funding to the Ministry of Religious Services for 2015, which would be reviewed in accordance with the Ministry’s criteria that would be published in the final months of the current year.

 

Deliberation and Decision

            Is the Kfar Vradim Council’s decision to rescind its decision to erect a mikve in the town and refrain from acting towards its construction compatible with the rules of public law? That is the question that we must decide.

 

The Scope of Judicial Review over a Local Authority’s Decision in regard to Allocating Public Resources

20.       The Kfar Vradim Council is a local council authorized to decide how resources will be allocated, subject to the provisions of the law. Indeed, “What use a local authority will make of its property, and to what extent will it permit an individual to use it and when will it refuse, is the question that the authority itself, through its elected representatives, is authorized to decide” (HCJ 262/62 Peretz v. Kfar Shmaryahu Local Council, 16 IsrSC 2101, 2114 (1962) (hereinafter: the Peretz case)). As a rule, a local council enjoys broad discretion in regard to decisions concerning the allocation of public resources. The initial assumption is that a local council – which is an elected authority whose members represent the public they were chosen to serve – occupies the best position for deciding upon the priorities that will advance the general good, and for striking the proper balance between meeting public needs and maintaining the budgetary framework. Therefore, the Court will not hastily intervene in such decisions, and will refrain from placing itself in the authority’s shoes (whether we are concerned with a local authority or a governmental authority). In the framework of judicial review, the question of whether public resources were allocated wisely, or whether they could have been allocated differently, will not be considered unless the decision regarding the allocation of resources was tainted by a substantive, fundamental flaw that justifies the Court’s intervention. Such restraint is a corollary of the principle of the separation of powers. In this regard, the words of Justice S. Netanyahu are apt:

 

“The Court will not instruct the authority how to allocated and divide its resources. Requiring an expenditure for a specific purpose must come at the expense of another, perhaps more important, purpose, or perhaps, require enlarging the budget it is granted by the state treasury, which must then come at the expense of other, perhaps more important, purposes. This Court is not the authorized body, and cannot treat of the allocation of the public’s resources” (HCJ 3472/92 Brand v. Minister of Communications, 47 (3) IsrSC 143, 153 (1993) (hereinafter: the Brand case); and see HCJ 2376/01 Federation of Local Authorities in Israel v. Minister of Science, Culture and Sport, 56 (6) IsrSC 803, 811 (2002)).

 

            Despite the broad reach of discretion and the narrow scope of judicial review that it implies, it is clear that the Council, like any local authority, is subject to the principles of public law. This restraint in regard to judicial review does not relieve the Court of fulfilling its duty: to ensure that the authority exercises its discretion in accordance with the law. And note: the local authority serves – in all of its actions – as a trustee of public funds, and its job is to advance public purposes for the general good. As Justice H. Cohn put it:

 

“The private sphere is not like the public sphere. In the former, one grants at will and denies at will. The latter exists for no reason other than to serve the public, and has nothing of its own. All it has is held in trust, and it has no other, different or separate rights or obligations than those that derive from that trust or that are granted or imposed by the authority of statutory provisions” (HCJ 142/70 Shapira v. Bar Association District Committee, Jerusalem, 25 (1) IsrSC 325, 331 (1971); and see HCJ Israel Contractors and Builders Center v. State of Israel, 34 (3) IsrSC 729, 743 (1980); the Peretz case, at p. 2115).

Even in allocating public resources, the authority is obligated to act in a manner that faithfully serves the entire public and ensures proper governance. Accordingly, the allocation of public resources in public authorities must be carried out in accordance with the principles of reasonableness and proportionality, and in accordance with fair, equal, relevant and transparent criteria (see: HCJ 3638/99 Blumethal v. Rehovot Municipality, 54 (4) IsrSC 220, 228 (2000); HCJ   5325/01 L.K.N. Association for the Advancement of Women’s Basketball v. Ramat Hasharon Local Council, para. 10 (June 2, 2004); AAA 5949/04 Mercaz Taxi Ltd. v. Hasharon Taxi Service Ltd., para. 16 (Nov. 28, 2005); and see and compare: HCJ 59/88 Tzaban v. Minister of Finance 42 (4) IsrSC 705, 706 (1989); HCJ 637/89 A Constitution of the State of Israel v. Minister of Finance, 46 (1) IsrSC 191, 200 (1991); HCJ 5023/91 Poraz v. Minister of Construction and Housing, 46 (2) IsrSC 793, 801 (1992); and also see: Dafna Barak-Erez, Administrative Law, 231-235 (2010) (Hebrew); Yitzhak Zamir, The Administrative Authority, 246-248 (2d ed., 2010) (Hebrew); for the anchoring of these principles in the Directives of the Ministry  of the Interior, see: Circular of the Director General of the Ministry of the Interior 5/2001 “Procedure for the allocation of land and buildings without or for minimal consideration” 4-11 (Sept. 12, 2001)). Before reaching a decision on the allocation of public resources, the authority is required to “establish for itself priorities and precedences, and rules and guiding criteria for their application, which must meet the test of reasonableness, and which it must apply equally. Reasonableness requires that in setting priorities among various subjects for which the authority is responsible, priority be given to the more important subjects” (the Brand case, at p. 153).

We will now turn to an examination of whether the decision of the Local Council in the case before us was taken in a proper administrative process, and whether it falls within the scope of the discretion granted the Council.

 

Review of the Decision of the Local Council

21.       I will begin with the conclusion before presenting the analysis: In my opinion, the Council’s decision not to move forward with the building of a mikve for women in the town in the near future does not pass the reasonableness test. Under the special circumstances of the case, I find that the Council’s decision did not reasonably balance the need of religiously observant women to observe the religious obligation of immersion against the budgetary considerations and the available land resources. Under these circumstances, addressing the other claims of the Appellants in regard to flaws that they believe fell in the decision-making process is superfluous, as I shall explain.

22.       As we know, an administrative decision is reasonable if the decision is made as a result of a balance between relevant considerations and interests that have been given appropriate weight under the circumstances (see HCJ 389/80 Golden Pages Ltd. v. Broadcasting Authority, 35 (1) 421, 437 (1981)). Indeed, “A decision may be flawed even when the authority weighed only the relevant considerations, without a hint of an extraneous consideration in its deliberations, if the internal balance among the considerations and the internal weight assigned to each consideration were distorted” (HCJ 1027/04 Independent Cities Forum v. Israel Lands Authority Council, para. 42 (June 9, 2011); Barak-Erez, at p. 725). Examining the reasonableness of the Council’s decision therefore requires that we look at the nature of the considerations that it weighed when it reached that decision, upon the manner of striking the balance, and upon the weight assigned to each consideration. Although the Council’s decision relied upon the recommendations of the Criteria Committee established to set criteria for the construction of public buildings in the town, it is clear that those recommendations cannot absolve it of the duty to exercise its authority to consider every case on its merits.

23.       What weight was the Council required to assign to the recommendations of the Criteria Committee in examining the possibility of acting to erect a mikve in the village? Having established the Criteria Committee for that purpose, the Council was required to take note of the Committee’s recommendations in deciding upon the manner for allocating the town’s resources. Indeed, an administrative agency will not lightly deviate from the recommendation of a knowledgeable, expert body, established at its request, which was adopted after an in-depth professional evaluation. It is decided law that “in the absence of an administrative flaw in the opinion of the advisory body, special reasons and extenuating circumstances are required in order to justify deviation from its opinion, especially when the authority is the one that established the advisory body and authorized it to carry out its task” (HCJ 5657/09 The Movement for Quality Government in Israel v. Government of Israel, para. 48 (Nov. 24, 2009); and see HCJ 8912/05 Mifgashim Association for Educational and Social Involvement v. Minister of Education, Culture and Sport, para 16 (March 14, 2007)). However, that does not mean that the Council is bound by the recommendations of the Criteria Committee, which is merely an advisory body. On the contrary, the Council is required to exercise its discretion independently. As Justice Y. Zamir aptly stated: “[…] a recommendation is only a recommendation. In other words, a recommendation does not exempt the authority from the duty to exercise its own discretion. The authority must weigh the recommendation and decide if it would be appropriate, under the circumstances, to accept or reject the recommendation” (HCJ 9486/96 Ayalon v. Registration Committee under the Psychologists Law, 5737-1977, 52 (1) IsrSC 166, 183 (1988); and for a more detailed discussion, see Zamir, at pp. 1219-1222).

24.       Thus, the Local Council was required to examine each request to erect a public building individually, on the basis of the recommendations of the Criteria Committee, while taking into account all the considerations relevant to the decision. In the matter before us, the Council did not discuss the possibility of proceeding with the erection of the mikve in the town in its meeting on April 21, 2010, and from the documents submitted to us, it would appear that this possibility was also not addressed on its merits in the meetings held thereafter. In fact, it would appear that in the Council’s opinion – as can be inferred from the responses that it submitted throughout the proceedings in this case – there was no need for any concrete consideration of the possibility of erecting a mikve in the town once the project was ranked last in the list of public priorities. From the moment that the Council failed to consider the request to erect a mikve in the town on its merits, not deciding to consider the subject of erecting a mikve in the town in the near future was tantamount to a “decision” as defined by law (see sec. 2 of the Administrative Courts Law, 5760-2000, according to which the lack of a decision is deemed a “decision of an authority”; and see HCJ 3649/08 Shamnova v. Ministry of the Interior, para. 3 (May 20, 2008)). Against the said background, the question before us is whether, under the circumstances of the instant case, the Council’s decision to rescind its decision to build a mikve in the village, to accept the recommendations of the Criteria Committee in toto, and therefore refrain from acting in the near future toward the erection of a mikve in the village, does not deviate from the scope of its discretion.

 

The Reasonableness of the Council’s Decision – The Proper Balance of Relevant Considerations

A.        Considerations supporting the erecting of a mikve in the town – the needs of the religiously observant residents

 

25.       Section 7 of the Jewish Religious Services Law [Consolidated Version], 5731-1971 (hereinafter: the Jewish Religious Services Law) provides that the religious councils of the local authorities are competent to provide for the religious services of the residents. The subject of “family purity”, which concerns the operation of ritual baths, is among the religious services for which the religious councils are responsible (see: HCJ 516/75 Hupert v. Minister of Religion, 30 (2) IsrSC 490, 494 (1976); HCJ 6859/98 Ankonina v. Elections Official, 52 (5) IsrSC 433, 447-448 (1998); HCJ 4247/97 Meretz Faction in the Jerusalem Municipal Council v. Minister of Religious Affairs, 52 (5) IsrSC 241, 251 (1998); HCJ 2957/06 Hassan v. Ministry of Building and Housing – Religious Buildings Development Section (July 16, 2006); Shelly Mizrachi, Religious Councils 7-6 (Knesset Research and Information Center, 2012) (Hebrew); Hadar Lifshits and Gideon Sapir, “Jewish Religious Services Law––A Proposed Framework for Privatization Reform”, 23 Mehkarei Mishpat - Bar-Ilan Law Studies 117, 147-148, 153-154 (2006) (Hebrew)).

26.       Mikve services for women are necessary to maintaining the religious lifestyle of Israel’s religiously observant population. Ritual immersion in a mikve is a vital need for those who observe the laws of “family purity”, which require a women to immerse in a mikve after her monthly period. As is commonly known, the observance of the religious obligation of immersion is deemed very important in Jewish law, to the extent that religious decisors have ruled that erecting a mikve takes precedence even over erecting a synagogue (Yalkut Yosef, Reading the Torah and the Synagogue, secs. 152-153) (Hebrew). The obligation to immerse in a mikve forms an integral part of the life of an observant, married Jewish woman, and is an inseparable part of her religious ritual and the expression of her identity and customs. It is substantively related to the right to freedom of religion and worship, which our legal system has recognized as a fundamental right of every person in Israel, although the case law has not yet established that it imposes a positive obligation requiring that the State allocate public resources for the provision of religious services. In the framework of this appeal, I will not attempt to provide a precise definition of the interrelationship between the right to freedom of religion and worship and the State’s obligation to provide religious services, as in any event, as will be explained below, an administrative review of the authority’s decision in this case, in accordance with the accepted standard of review, leads to the granting of the appeal (on the recognition of the importance of the right to freedom of religion and worship in this Court’s decisions, see: CrimA 112/50 Yosifof v. Attorney General 5 (1) IsrSC 481, 486 (1951) [http://versa.cardozo.yu.edu/opinions/yosifof-v-attorney-general]; HCJ 866/78 Morad v. Government of Israel, 34 (2) IsrSC 657, 663 (1980); HCJ 292/83 Temple Mount Faithful Association v. Jerusalem District Police Commander, 34 (2) IsrSC 657, 663 (1980); HCJ Foundation of the Movement for Progressive Judaism in Israel v. Minister of Religion, 43 (2) IsrSC 661, 692 (1989); HCJ 650/88 Movement for Progressive Judaism in Israel v. Minister of Religious Affairs, 42 (3) IsrSC 377, 381 (1988); HCJ 3261/93 Manning v. Minister of Justice, 47 (3) IsrSC 282, 286 (1993); HCJ 4298/93 Jabarin v. Minister of Education, 48 (5) IsrSC 199, 203 (1994); HCJ 257/89 Hoffman v. Director of the Western Wall, 48 (2) IsrSC 265, 340-341 (1994); HCJ 1514/01 Gur Aryeh v. Second Television and Radio Authority, 55 (4) IsrSC 267, 277 (2001) [http://versa.cardozo.yu.edu/opinions/gur-aryeh-v-second-television-and-r... HCJ 11585/05 Israel Movement for Progressive Judaism v. Ministry of Absorption, para. 16 (May 19, 2009); HCJ 10907/04 Solodoch v. Rehovot Municipality, paras. 71-72 (Aug. 1, 2010); and see: Aharon Barak, Human Dignity: The Constitutional Right and its Daughter-Rights, vol. 2, 769-774 (2014) (Hebrew) [published in English translation as: Human Dignity: The Constitutional Value and the Constitutional Right (Cambridge, 2015)]; Amnon Rubenstein and Barak Medina, The Constitutional Law of the State of Israel, 354-378 (6th ed., 2005) (Hebrew); Daniel Statman and Gideon Sapir, “Freedom of Religion, Freedom from Religion and the Protection of Religious Feelings”, 21 Mehkarei Mishpat - Bar-Ilan Law Studies 5, 7-38 (2004) (Hebrew)).

27.       As noted, there is no religious council in Kfar Vradim (the Ma’ale Yosef Regional Religious Council is responsible for providing religious services in the town, under an agreement signed in 2005 with the Local Council). Therefore, the Appellants directed their request to the Local Council. No mikve has ever been built in Kfar Vradim, and the religiously observant residents of the town must travel to neighboring towns in the Ma’ale Yosef Regional Council District in which there are mikves, and that are a short drive from the town. According to the Respondents, inasmuch as there are mikves in the neighboring towns, the harm to the ability of the town’s religiously observant residents in observing the obligation of immersion is not significant, and is merely an inconvenience. It is further argued that even if there were a mikve in the town, due to the town’s topography and the winter weather, the residents would have to drive to the mikve and could not go on foot. And in any case, the ratio of the number of mikves in the area relative to the population is among the highest in the country when compared to various cities. As opposed to this, the Appellants argue that we are not concerned with a mere “inconvenience” but with an absolute denial of the possibility of performing the religious obligation of ritual immersion. They argue that the absence of a mikve in the town deprives women whose day of immersion falls on a Sabbath eve or on a holiday from performing the obligation at its prescribed time. It is argued that when the immersion day falls on a Sabbath eve or on a holiday, one cannot drive to the mikve, and since it is practically impossible to walk to the neighboring mikves, the possibility of observing the obligation of immersion on such days is entirely denied them. In this regard, the Appellants explain that Jewish religious law ascribes supreme importance to the observance of the obligation of immersion at its prescribed time, because “[…] it is a religious obligation to immerse at the prescribed time so as not to refrain from procreation even for one night” (Shulhan Arukh, Yoreh De’ah, Laws concerning Niddah, 197:2). It is further argued that the said harm is exacerbated because not immersing at the prescribed time deprives the observant families of the ability to observe the obligation of onah (marital relations), sometimes for several days (when holidays coincide with the Sabbath eve). Lastly, the Appellants argue that the absence of a mikve in the town even makes it difficult to observe the obligation of immersion on weekdays, as there is no available public transportation by which one can travel to the mikves in the neighboring communities.

28.       After considering the arguments, I find that given the geographic location of Kfar Vradim and its topographic conditions, there is no reasonable way to go to any of the mikves in the neighboring communities on foot.  Under the circumstances, the absence of a mikve in the town cannot be said merely to “inconvenience” the religiously observant residents. The absence of a mikve in the town – given its particular circumstances – completely deprives the female residents of the town whose prescribed day of immersion falls on a Sabbath eve or holiday of the ability to perform the religious obligation of immersion at its proper time, and as a result, also deprives them of the possibility of performing of the religious obligation of onah. Thus, the women of the town are deprived of the possibility of performing an obligatory ritual practice that is deemed to be of great importance by the traditionally religious Jewish community, and which is substantively connected to the expression of their personal and group identity. As Justice E. Arbel aptly stated:

 

“We recognize the importance of a mikve for the public, and certainly for the public that uses it. The mikve is of great importance for the traditionally observant family unit, and the authorities are required to provide this service for the interested public as part of the provision of religious services by the authorities. It is also important that the mikve be situated within reasonable walking distance from the homes of the public, for those who are Sabbath observant. However, these considerations, that should not be underestimated, must be weighed against other needs that are of public importance, and against the character of the community that resides in the place, as well as against other alternatives for the erection of public buildings, as noted” (AAA 2846/11 Rehovot Religious Council v. Claudio, para. 19 (Feb. 13, 2013) (hereinafter: the Claudio case).

 

            Thus, the need of the religiously observant female residents to observe the obligation of ritual immersion at its prescribed time – a practice whose realization derives from the autonomy granted every person, as such, to follow the dictates of her conscience and faith, and observe the rules and customs of her faith – must be granted significant weight in the framework of the decision-making process in regard to the erection of public buildings in the town (compare: the Gur Aryeh case, at p. 278). However, the need of the religiously observant residents for the erection of a mikve in the town must be balanced against the opposing considerations. What, then, are the opposing considerations that tilted the scales in favor of the Council’s decision not to move forward on the construction of a mikve in the town in the near future?

 

B.        The “Budgetary” Consideration

 

29.       As best we can understand from the Respondent’s response, the primary consideration that led to adopting the decision was the limited public resources available to the Council. According to the Respondents, the construction of a mikve in the town would require that the Council allocate public monies and land at the expense of other public construction of greater importance. Indeed, “it is decided law that a public authority may, and even must, consider budgetary restrictions in the framework of its discretion, as part of its public obligation” (see: HCJ 3071/05 Louzon v. Government of Israel, 63 (1) IsrSC 1, 39-40 (2008) [http://versa.cardozo.yu.edu/opinions/louzon-v-government-israel]; HCJ 3627/92 Fruit Growers Association v. Government of Israel, 47 (3) IsrSC 387, 391 (1993); HCJ 2223/04 Nissim v. State of Israel, para. 29 (Sept. 4, 2006); HCJ 9863/06 Association of Combat Leg Amputees v. The State of Israel, para. 13 (July 28, 2008); HCJ 1662/05 Levi v. State of Israel, para. 51 (March 3, 2009); Barak-Erez, at pp. 661-663, 745-746; Aharon Barak, Proportionality in Law: Infringing Constitutional Rights and its Limits, 460-461 (2010) (Hebrew) [published in English translation as Proportionality: Constitutional Rights and their Limitations (Cambridge, 2012)]).  In the matter before us, among its considerations, the Council could certainly give weight to the limits upon the available resources, and allocate them in accordance with public needs. However, as shall be explained below, under the circumstances of the instant case, the Council resources – both land and money – that were expected to be required for the purpose of building and maintaining a mikve in the town were not significant.

30.       In regard to the allocation of land for the construction of the building, the State informed us that there are, at present, at least three available lots in the town that would be appropriate for the construction of a mikve, in terms of both existing planning and practicality. In addition, there is a possibility – that the Respondents do not deny – of incorporating the mikve in other public buildings. In such a case, building the mikve will not come at the expense of public land earmarked for other purposes. As for financing, the matter can be divided into two parts: the monies required for constructing the building, and the monies needed for maintenance. As far as financing the construction is concerned, it is clear from the State’s response that if the Council’s application for funding the construction of a mikve is approved – and there is no reason to believe that it will not be reapproved, in light of the letters from the Ministry of Religious Services and the fact that an EB was already approved in the past for the construction of a mikve in the town – the construction of the mikve will be financed from state funds, and not from the Council’s budget. The Local Council will incur expenses only if the cost of construction exceeds the funding due to deviation from the budgetary framework, or if it will be required to bear certain related costs (such as environmental development and complementary costs). As for maintenance costs, according to the State’s response and the letters from the Ministry of Religious Services, the salary of the mikve attendant will be paid from the budget of the Ministry of Religious Services, prorated to the number of users, while maintenance (electricity, water, etc.) will be funded in part by users’ fees collected by the attendant. Thus, the Council can expect to pay only a small, insignificant part of the ongoing expenses of maintaining the building. Under these circumstances, in which the construction and maintenance are barely likely to come at the expense of the limited resources of the Council, the weight of the budgetary consideration is limited relative to the opposing interest.

 

2.         Preserving the Secular Character of the Town

 

31.       The parties are divided on the question of whether the Council’s decision gave weight to the consideration of protecting the town's secular character. According to the Appellants, the main consideration that grounded the Council’s decision not to erect a mikve in the town was the desire – that they consider an extraneous, improper consideration – to preserve the secular character of the town and to keep the religious community away. As opposed to this, the Respondents claim that the consideration of preserving the secular character of the town had no weight in the Council’s decision. The question if and under what circumstances a local authority may entertain the consideration of preserving a particular character of the town is complex (and compare: HCJ 528/88 Avitan v. Israel Lands Administration, 43 (4) IsrSC 297 (1989); HCJ 4906/98 “Am Hofshi” Association for Freedom of Religion, Conscience, Education and Culture v. Ministry of Construction and Housing, 54 (2) IsrSC 503, 508-509 (2000); and for an opposing view: HCJ 6698/95 Ka’adan v. Israel Lands Administration, 54 (1) IsrSC 258 (2000) [http://versa.cardozo.yu.edu/opinions/ka%E2%80%99adan-v-israel-land-admin... and see: HCJ 650/88 Movement for Progressive Judaism in Israel v. Minister for Religious Affairs, 42 (3) IsrSC 377, 381 (1988); HCJ 10907/04 Solodoch v. Rehovot Municipality, paras 68-90 (Aug. 1, 2010); the Claudio case, at para. 12; Statman and Sapir; Gershon Gontovnik, Discrimination in Housing and Cultural Groups, 113-127, 201-209 (2014) (Hebrew)). We need not decide this issue in the matter before us, as even if we assume – to the Respondent’s benefit – that the consideration of preserving the town’s character carried no weight in the Council’s decision – as they claim – the decision must, nevertheless, be voided because it did not strike a proper balance between the considerations that were taken into account even according to the Respondents, as we shall explain below.

 

C.        Balancing the various Considerations and Examining the Reasonableness of the Decision

 

32.       Having reviewed the considerations on both sides of the scales, all that remains is to examine whether the decision struck a reasonable balance between those considerations. In doing so, we should bear in mind that such balancing does not, generally, lead to a single, reasonable result. Indeed, the Council enjoys some latitude in which different and even opposing decisions may coexist. However, in the circumstances of the instant case, I find that the Council’s decision not to act toward the erecting of a mikve in the town does not fall within that discretionary latitude. As is commonly known, the weight to be assigned to budgetary considerations is examined, inter alia, in relation to the importance of the opposing rights and interests (see: Barak-Erez, at pp. 746-747; and also see the citations at fn 86, loc. cit.). In the matter before us, the harm to the religiously observant women in the town, which I discussed above, is of significant force, whereas the “price” involved in erecting the mikve is minor. In this context, we should recall that the Council already decided several years ago to erect a mikve in the town, but chose to rescind that decision for “budgetary” reasons that would seem no longer to exist. In this situation, the Council’s decision not to erect a mikve in the near future does not grant adequate weight to the harm caused to the religiously observant women, to the availability of external funding that would render the burden upon the Council insignificant, and to the possibility of incorporating the construction of the mikve within the framework of a building with another purpose, in a manner that would limit the need for a separate allocation of public land, and preserve it for other, necessary public purposes.

33.       In the final analysis, in the circumstances of the present case, in which appropriate weight was not assigned to the substantial harm to the religiously observant, female residents of the town due to the absence of mikve that is accessible on the Sabbath and on religious holidays, and where it was found that the allocation of resources was granted disproportionate weight even though land was readily available for erecting the mikve without harming other public interests, and without any need for allocating substantial resources by the Council due to external financing, I find that the Council’s decision not to erect a mikve was unreasonable and must, therefore, be quashed. In light of the long “history” of the proceedings in this matter, we do not find it appropriate to remand the matter to Council, yet again, inasmuch as, under the circumstances, the decision required is the erection of the mikve with due haste (and compare, for example: HCJ 1920/00 Galon v. Release Board, 54 (2) IsrSC 313, 328 (2000); HCJ 89/01 Public Committee against Torture in Israel v. Release Board, 55 (2) 838, 878 (2001); AAA 9135/03 Council for Higher Education v. Haaretz, 60 (4) IsrSC 217, 253 (2006) [http://versa.cardozo.yu.edu/opinions/council-higher-education-v-haaretz]; AAA 9353/10 Yakovlev v. Ministry of the Interior, para. 19 (Dec. 1, 2013).

 

Conclusion

34.       Given the conclusion reached, I would recommend to my colleagues that we grant the appeal such that the judgment of the lower court be reversed and the appeal granted. The Kfar Vradim Council is ordered to act immediately to erect a mikve on one of the lots in the town listed in the State’s reply – or some other lot that it may find appropriate – such that construction will commence as soon as possible, and no later than a year and a half from the date of this judgment. The Council may submit an application for funding support for the erection of the mikve from the Ministry of Religious Services with due speed. Respondent 2 will pay the Appellants’ costs in both instances in the amount of NIS 25,000.

                                                                                                            Justice

 

Justice E. Hayut:

I concur.

                                                                                                            Justice

 

Justice N. Hendel:

I concur.

                                                                                                            Justice

 

Decided in accordance with the opinion of Justice U. Vogelman.

Given this 14th day of Elul 5774 (Sept. 9, 2014).

 

 

 

           

 

 

Full opinion: 

Eurocom DBS v. Bezeq

Case/docket number: 
CA 2082/09
Date Decided: 
Thursday, August 20, 2009
Decision Type: 
Appellate
Abstract: 

 

Facts: Bezeq, the Israel Telecommunications Corporation Ltd., held 49.78% of the shares of “Yes” D.B.S. Satellite Services (1998) Ltd. Another 32.6% of the Yes shares are held by Eurocom D.B.S Ltd. Yes is one of only two providers in the multi-channel television broadcast infrastructure market and in the multi-channel television broadcasting market. The other multi-channel television provider in the market is “Hot”. Bezeq is a public company licensed to provide internal fixed line services, including fixed line telephony and Internet infrastructure. Bezeq also provides the public with a wide variety of communications services through its subsidiary and affiliated companies, including international telecommunications services and Internet service provision, cellular telephony, and endpoint equipment for telephony. On 27 June 1995, Bezeq was declared to be a monopoly in a number of communications markets, and on 10 November 2004, it was declared to be a monopoly in high-speed Internet service provision. On 2 August 2006, Bezeq and Yes submitted a notice of merger pursuant to the Restrictive Trade Practices Law, 1988, declaring Bezeq’s intention to exercise options that it held and that would give Bezeq 58.36% of the shares of Yes, making it the controlling shareholder of Yes. The General Director of the Israel Antitrust Authority objected to the merger as presenting a reasonable risk of significant harm to competition from both a horizontal and vertical perspective. Bezeq filed an appeal with the Antitrust Tribunal. Eurocom joined the proceedings in support of the General Director’s decision. The Tribunal overturned the decision of the General Director, ruling that the merger would be permitted subject to certain conditions. The General Director and Eurocom filed the current appeal against the decision of the tribunal. Bezeq filed a counter- appeal in regard to the amount of the bank guarantee that the tribunal required of it as one of the conditions for the merger.

 

Held: Justice E. Hayut (Deputy President E. Rivlin and Justice E. Rubinstein concurring) delivered the opinion of the Court. Companies may not merge without the consent of the General Director of the Antitrust Authority. The test for exercising the General Director’s authority under s. 21 of the Restrictive Trade Practices Law is the existence of a “reasonable risk” – i.e., estimation that there will be a significant damage to competition due to the proposed merger, or damage to the public with respect to one of the matters listed in the section. The basic assumption of the Law is that mergers are desirable, in that they increase business efficiency and benefit consumers. However, because mergers can harm competition due the increase in the power or market share of the merging companies, the legislature saw fit to review them, and in certain cases, even to limit them in order to protect the public against economic distortions resulting from excessive concentration of certain markets. Protection of competition in the communications industry is of special importance, as the media carries out an essential function for our existence as a democratic society, and serves to realize fundamental rights such as freedom of expression and the public’s right to know.

 

Historically, the Israeli multi-channel television industry has been characterized by a lack of direct, effective competition. In 2000, a satellite television company entered the market. The technological innovation changed the market from a monopoly to a duopoly. The current reality in the Israeli multi-channel TV broadcast industry is that there are only two players– Hot and Yes – in the infrastructure market and in the content market, and each of them maintains full vertical integration between the infrastructure and broadcasting levels. The merger under discussion is not a horizontal one because Bezeq itself is not currently a competitor in any of the markets that are relevant to this case (i.e., the infrastructure market or multi-channel TV broadcast the content market). Additionally, this is not a vertical merger between companies operating at different stages of production or marketing in the same industry, since Bezeq’s activity in the multi-channel TV broadcast industry consists only of holding of the Yes shares that it currently holds. This merger, which is neither vertical nor horizontal, can be referred to as a conglomerate merger. Conglomerate mergers are not infrequently considered to be mergers whose effect on competition is neutral, and occasionally, even beneficial, but there are a number of dangers to competition involved in a conglomerate merger. The doctrine that is relevant to this case is that of actual potential competition. This doctrine refers to future harm that will be caused to the market because a potential competitor will be removed from it as a result of the merger. In our case, the General Director based her objection to the merger on this actual potential merger doctrine, and the essence of her argument in this context is that without a merger, Bezeq can be expected to enter into the infrastructure market and the content market for multi-channel TV broadcasts as an independent competitor. Therefore, according to the General Director, the merger’s approval will lead to the loss of Bezeq as a potential competitor in these markets or in one of them, and will fix them as duopolistic markets.  The Court found that two of the key conditions for establishing the potential competitor doctrine are present here – there is a reasonable likelihood that Bezeq, as a potential competitor, will enter into the multi-channel television infrastructure market and will provide IPTV services, and it has been proven that it has the technological ability and the economic incentive to do so in the short term. Additionally, it appears that Bezeq’s entry into the multi-channel television infrastructure market presents considerable advantages over the situation that would develop in the market if the merger were approved.

 

The Tribunal, when adjudicating an appeal of a General Director’s decision, does not have absolute discretion to order as it wishes and it cannot stipulate conditions of a merger’s approval which, according to its own determination, does not give rise to reasonable risk of significant damage to competition in the relevant industry. The Tribunal therefore erred in subjecting merger to conditions after it found that the merger between Bezeq and Yes would not cause significant damage to competition. The Tribunal also erred in finding that the merger would not significantly damage competition. Such a risk does exist in this case. The main purpose achieved in preventing the merger is the addition of a competitor in the infrastructure market. This is a contribution to competition from a horizontal perspective through the weakening of the concentration in the existing duopolistic market, and it is hard to think of a structural condition in this case that would achieve this purpose. The behavioral conditions stipulated by the Tribunal cannot resolve the competition risk, because of the structural difficulty in ensuring such an arrangement where a single party (Bezeq) controls two out of three infrastructures in the market. The Court, therefore, cancelled the Tribunal’s decision and restored the General  Director’s original determination opposing the merger.

Voting Justices: 
Primary Author
majority opinion
concurrence
concurrence
Full text of the opinion: 

 

 

CA 2082//09 CA 2414//09

And counter-appeal

 

 

Appellant in CA 2082/09 (Respondent    2              in            CA 2414/09 and in the Counter

Appeal):              

 

Eurocom DBS Ltd.

v.

Respondent 1 in CA 2082/09 and in CA 2414/09 (and Counter- appellant in CA 2414/09): Bezeq   the         Israel                Telecommunications Corporation Ltd.

 

Respondent 2 in CA 2082/09 (and Appellant in CA 2414/09 and Respondent 1 in the Counter-appeal):    

General   Director   of   the   Israel   Antitrust Authority

 

 

The Supreme Court sitting as the Court of Civil Appeals [8 June 2009]

Before Deputy-President E. Rivlin and Justices E. Rubinstein, E. Hayut

 

 

Appeal of a ruling of the Antitrust Tribunal in Jerusalem in AT 706/07, issued on 3 February 2009 by the Honorable Judge  M. Mizrachi, Professor

R.            Horesh and Mr. N. Lisovsky

 

Facts: Bezeq, the Israel Telecommunications Corporation Ltd., held 49.78% of the shares of “Yes” D.B.S. Satellite Services (1998) Ltd. Another 32.6% of the Yes shares are held by Eurocom D.B.S Ltd. Yes is one of only two providers in the multi-channel television broadcast infrastructure market and in the multi-channel television broadcasting market. The other multi-channel

 

 

 

television provider in the market is “Hot”. Bezeq is a public company licensed to provide internal fixed line services, including fixed line telephony and Internet infrastructure. Bezeq also provides the public with a wide variety of communications services through its subsidiary and affiliated companies, including international telecommunications services and Internet service provision, cellular telephony, and endpoint equipment for telephony. On 27 June 1995, Bezeq was declared to be a monopoly in a number of communications markets, and on 10 November 2004, it was declared to be a monopoly in high-speed Internet service provision. On 2 August 2006, Bezeq and Yes submitted a notice of merger pursuant to the Restrictive Trade Practices Law, 1988, declaring Bezeq’s intention to exercise options that it held and that would give Bezeq 58.36% of the shares of Yes, making it the controlling shareholder of Yes. The General Director of the Israel Antitrust Authority objected to the merger as presenting a reasonable risk of significant harm to competition from both a horizontal and vertical perspective. Bezeq filed an appeal with the Antitrust Tribunal. Eurocom joined the proceedings in support of the General Director’s decision. The Tribunal overturned the decision of the General Director, ruling that the merger would be permitted subject to certain conditions. The General Director and Eurocom filed the current appeal against the decision of the tribunal. Bezeq filed a counter- appeal in regard to the amount of the bank guarantee that the tribunal required of it as one of the conditions for the merger.

 

Held: Justice E. Hayut (Deputy President E. Rivlin and Justice E. Rubinstein concurring) delivered the opinion of the Court. Companies may not merge without the consent of the General Director of the Antitrust Authority. The test for exercising the General Director’s authority under s. 21 of the Restrictive Trade Practices Law is the existence of a “reasonable risk” – i.e., estimation that there will be a significant damage to competition due to the proposed merger, or damage to the public with respect to one of the matters listed in the section. The basic assumption of the Law is that mergers are desirable, in that they increase business efficiency and benefit consumers. However, because mergers can harm competition due the increase in the power or market share of the merging companies, the legislature saw fit to review them, and in certain cases, even to limit them in order to protect the public against economic distortions resulting from excessive concentration of certain markets. Protection of competition in the communications industry is of special importance, as the media carries out an essential function for our existence as a democratic society, and serves to realize fundamental rights such as freedom of expression and the public’s right to know.

 

 

 

Historically, the Israeli multi-channel television industry has been characterized by a lack of direct, effective competition. In 2000, a satellite television company entered the market. The technological innovation changed the market from a monopoly to a duopoly. The current reality in the Israeli multi-channel TV broadcast industry is that there are only two players

–             Hot and Yes – in the infrastructure market and in the content market, and each of them maintains full vertical integration between the infrastructure and broadcasting levels. The merger under discussion is not a horizontal one because Bezeq itself is not currently a competitor in any of the markets that are relevant to this case (i.e., the infrastructure market or multi-channel TV broadcast the content market). Additionally, this is not a vertical merger between companies operating at different stages of production or marketing in the same industry, since Bezeq’s activity in the multi-channel TV broadcast industry consists only of holding of the Yes shares that it currently holds. This merger, which is neither vertical nor horizontal, can be referred to as a conglomerate merger. Conglomerate mergers are not infrequently considered to be mergers whose effect on competition is neutral, and occasionally, even beneficial, but there are a number of dangers to competition involved in a conglomerate merger. The doctrine that is relevant to this case is that of actual potential competition. This doctrine refers to future harm that will be caused to the market because a potential competitor will be removed from it as a result of the merger. In our case, the General Director based her objection to the merger on this actual potential merger doctrine, and the essence of her argument in this context is that without a merger, Bezeq can be expected to enter into the infrastructure market and the content market for multi-channel TV broadcasts as an independent competitor. Therefore, according to the General Director, the merger’s approval will lead to the loss of Bezeq as a potential competitor in these markets or in one of them, and will fix them as duopolistic markets.  The Court found that two of the key conditions for establishing the potential competitor doctrine are present here – there is a reasonable likelihood that Bezeq, as a potential competitor, will enter into the multi-channel television infrastructure market and will provide IPTV services, and it has been proven that it has the technological ability and the economic incentive to do so in the short term. Additionally, it appears that Bezeq’s entry into the multi-channel television infrastructure market presents considerable advantages over the situation that would develop in the market if the merger were approved.

The Tribunal, when adjudicating an appeal of a General Director’s decision, does not have absolute discretion to order as it wishes and it cannot

 

 

 

stipulate conditions of a merger’s approval which, according to its own determination, does not give rise to reasonable risk of significant damage to competition in the relevant industry. The Tribunal therefore erred in subjecting merger to conditions after it found that the merger between Bezeq and Yes would not cause significant damage to competition. The Tribunal also erred in finding that the merger would not significantly damage competition. Such a risk does exist in this case. The main purpose achieved in preventing the merger is the addition of a competitor in the infrastructure market. This is a contribution to competition from a horizontal perspective through the weakening of the concentration in the existing duopolistic market, and it is hard to think of a structural condition in this case that would achieve this purpose. The behavioral conditions stipulated by the Tribunal cannot resolve the competition risk, because of the structural difficulty in ensuring such an arrangement where a single party (Bezeq) controls two out of three infrastructures in the market. The Court, therefore, cancelled the Tribunal’s decision and restored the General  Director’s original determination opposing the merger.

 

 

 

 

Appeal allowed.

 

Legislation cited:

Restrictive Trade Practices Law , ss.21 (a) .

Insurance Contract Law, 5741-1981, chapter 1, article 6, ss. 33, 33-35, 35, 36.

 

Israeli Supreme Court cases cited:

[1]          CA 2247/95 General Director v. T’nuva [1998], IsrSC 42(5) 213.

[2]          CA 3398/06, Israel Antitrust Authority v. Dor Alon Energy Israel (1988) Ltd (2006)

[3]          FHC 4465/98 Tivol (1993) Ltd. v. Chef of the Sea (1994) Ltd., [2001] IsrSC 56(1) 56.

[4]          HCJ 7200/02 DBS Satellite Services (1998) Ltd. v. the Cable and Satellite Broadcasts Council, [2005] IsrSC 59 (6) 21

[5]          HCJ 508/98 Matav Cable Communications Systems v. Knesset, [2000] IsrSC 54(4) 577.

[6]          CFH 4465/98 Tivol v. Chef of the Sea (1998), IsrSc 46 (1) 56, [7]    CA 6222/97 Tivol v. Minister of Defense, ISRSC42(3), 145

 

 

 

[8 ]         LA 4224/04 Beit Sasson v. Shikun Ovdim (2004) IsrSc 59 (6) 625.

[9]          CA 8301/94,  Assessing Officer for Large Enterprises v. Pi Glilot

(unpublished)

[10]        CA 458/06 Stendahl v. Bezeq International Ltd. (unpublished)

 

District Court cases cited

[11] CA 1/00 (Jerusalem), Food Club Ltd. v. General Director (2003)

 

Antitrust Cases:

[12] AT 8006/03 Yehuda Pladot Ltd. v. General Director

 

American cases cited:

[13 ]FTC v. Procter & Gamble, Co., 386 U.S. (1967) 568.

[14 ]   United States v. Falstaff Brewing Corp., 410 U.S. 526 (1973); [15]  United  States  v.  Marine  Bancorporation,  Inc.,  418  U.S.  602

(1974)

[16] Yamaha Motor Co., Ltd. v. FTC, 657 F.2d 971 (8th Cir. 1981);

[17] Tenneco, Inc. v. FTC, 689 F.2d 346 (2d Cir. 1982),Mizuho [18] Re El Paso Energy Corp., 131 F.T.C. 704 (2001);

[19] United States v. AT&T Corp. and MediaOne Group, Inc., Proposed Final Judgment and Competitive Impact Statement, 65 F.R. 38584 (2000);

[20]  In re Applications of NYNEX Corp. & Bell Atlantic Corp., 12 F.C.C.R.

19, 985 (1997)).

[21] BOC International, Ltd. v. FTC, 557 F.2d 24, 25 (2d Cir. 1977) [  ];

[22] FTC v. University Health, Inc., 938 F.2d 1206, 1222 (11th Cir. 1991)

[23] FTC v. Atlantic Richfield Co., 549 F.2d 289, (4th Cir. 1977)). [24] United States v. Siemens Corp., 621 F.2d 499 (2d Cir. 1980))

[25] Mercantile Tex. Corp. v. Bd. of Governors, 638 F.2d 1255, 1271- 1272 (5th Cir. 1981))

[ ] In the Matters of Formal Complaint of Free Press and Public Knowledge Against Comcast Corporation for Secretly Degrading Peer to Peer Applications, 23 F.C.C. Rcd 13028 (2008)).

English Cases cited

[ ] Case T-5/02, Tetra Laval BV v. Comm'n, 2002 E.C.R. II-4381

 

JUDGMENT

 

Justice E. Hayut:

 

 

 

We have before us two appeals and a counter appeal regarding a ruling of the Antitrust Tribunal (the Honorable Judge M. Mizrachi, Prof. R. Horesh and Mr. N. Lisovsky) (hereinafter: “the Tribunal”), dated 3 February 2009, which had approved, subject to the conditions it established, the merger of Respondent 1, Bezeq, the Israel Telecommunications Corporation Ltd. (hereinafter: “Bezeq”) and D.B.S. Satellite Services (1998) Ltd. (hereinafter: “Yes”), through the exercise of Yes options held by Bezeq. In this ruling, the Tribunal granted Bezeq’s appeal against the decision of the General Director of the Israel Antitrust Authority (hereinafter: “the General Director”), dated 31 December 2006, disapproving the merger. (The grounds for the objection were published on 18 February 2007).

 

Background and the General Director’s decision

 

1.            Bezeq is a public company which, pursuant to the Communications Law (Telecommunications and Broadcasts), 1982 (hereinafter: “the Communications Law (Telecommunications and Broadcasts”)) is licensed to provide the public with internal fixed line services, including fixed line telephony and an Internet infrastructure, through a national system of telecommunications facilities (hereinafter: a public telecommunications network). Bezeq also provides the public with a wide variety of communications services through its subsidiary and affiliated companies, including international telecommunications services and Internet service provision (through Bezeq International Ltd.), cellular  telephony (through Pelephone Communications Ltd.), and endpoint equipment for telephony (through Bezeq Cal Ltd.). Further, on June 27, 1995, Bezeq was declared to be a monopoly in a number of communications markets and on November 10, 2004 it was declared to be a monopoly in high-speed Internet service provision. In the field of multi-channel television broadcasting, Bezeq currently holds 49.78% of the shares of Yes and 32.6% of the shares of Respondent 2, Eurocom D.B.S Ltd. (hereinafter: Eurocom). Yes is one of only two providers in the multi-channel television broadcast infrastructure market and in the multi-channel television broadcasting market, and it uses a satellite infrastructure. The other multi-channel television provider in the market is known to the public by the name “Hot,” and it includes “Hot – Communications Systems Ltd.” whose transmissions are provided through a cable infrastructure and “Hot Telecom Limited Partnership” (hereinafter,

 

 

jointly: Hot). Eurocom, which, as noted, holds 32.6% of the shares of Yes, is also involved in the communications field and provides telephony, data transmission and Internet services (through 012 Smile Communications Ltd.), and it also operates in the satellite infrastructure field with respect to multi- channel television broadcasts (through Spacecom Communications Company Ltd. - hereinafter: Spacecom Company), in the field of satellite services (through Satlink Communications Ltd. and Gilat Satcom Ltd.), and in the field of endpoint telephony equipment imports (the Nokia and Panasonic brands). It is also a partnership in portals and regional radio stations.

On 2 August 2006, Bezeq and Yes submitted a notice of merger to the General Director pursuant to the Restrictive Trade Practices Law - 1988 (hereinafter: Restrictive Trade Practices Law), with respect to a transaction (hereinafter: the merger) in which Bezeq seeks to exercise six options which it holds. The significance of the exercise of these options is that Bezeq would become the controlling shareholder of Yes and would hold 58.36% of the shares therein, as opposed to the 49.78% of the shares which it currently holds.

2.            On 31 December 2006, the General Director announced her objection to the merger transaction and on 18 February 2007 she published the grounds for her objections. In her decision, the General Director noted that that her objection was based on an analysis of the competition map in the multi- channel television broadcasting field in [both] the infrastructure market and in the content field, in light of the expected entry of a third and new broadcasting technology (in addition to the cable technology used by Hot and the satellite technology used by Yes) – i.e., the IPTV (Internet Protocol Television) technology. The General Director noted that she saw this merger as giving rise to a reasonable risk of significant damage to competition from both a horizontal and vertical perspective. From a horizontal perspective, the General Director noted that the merger is expected to significantly restrict the possibility that Bezeq would in the future enter the multi-channel television broadcasting market as a third player using IPTV technology, either as a player in the infrastructure field only or in the field of the provision of broadcasts as well. The General Director noted that “the expansion of Bezeq’s holding in the shares of the satellite company [Yes] up to the level of control, will inflict horizontal harm in two ways: first, it will exclude a potential significant competitor, such as Bezeq itself, from  the content market,   and   second   –   it   reduces   Bezeq’s   incentive   to   upgrade   its

 

infrastructure in order to support IPTV transmissions, and effectively delays the development of the infrastructure (development which would promote competition) in the coming years.” In terms of vertical harm, the General Director went on to determine, the merger gives rise to a risk that Bezeq will supply Yes, which it will control, with the IPTV infrastructure that it owns and will make it very difficult for other broadcasters to enter into the market. The General Director noted that an investigation had shown that there was a very high likelihood that Bezeq would develop the IPTV technology in the short term, and that this is not a theoretical matter but rather a “competitive development which will happen soon.” The General Director determined that the merger, “if it were to take place, would withhold another multi- channel television broadcasting platform from consumers and from the Israeli public.” The General Director emphasized that beyond the economic- consumption damage involved in the merger, it was also likely to lead to the denial of a public platform for the expression of views and for delivery of messages to the public. She added that a merger should not be approved if one of its results will be the preservation of the existing structural situation in which there are only two platforms for multi-channel television broadcasting and no real chance that in the foreseeable future either the public or the content producers will see a third competitor in the industry. Under these conditions, the General Director determined that the merger creates a reasonable risk of significant damage to competition and to the public, and, for this reason, as stated, she objected to it.

To complete the picture, we note that two years earlier, in July of 2004, a notice of a merger was submitted in which Bezeq had sought to exercise its options so that its holdings in Yes would amount to some 55% in the first stage and some 60% in the second stage. This merger was conditionally approved on January 2, 2005, with the main condition being a prohibition against the transfer of financing from Bezeq to Yes in a proportion exceeding Bezeq’s relative share in Yes, for a period of nine months. (Regarding this matter, see “Decision Regarding Conditional Approval of a Merger: Bezeq the Israeli Telecommunications Corporation Ltd. and DBS Satellite Services (1998) Ltd. (Decision 500045, dated 14 March 2005) (hereinafter: the 2005 Decision); Appeals 604/05, 605/05 and 606/05 which were filed against this decision were eventually withdrawn by the parties.) Bezeq was given a period of a year to complete the merger, but for its own reasons, it did not exercise the options at that stage.

The Antitrust Tribunal’s Ruling

 

 

3.            Bezeq filed an appeal against the General Director’s decision to oppose the merger to the Antitrust Tribunal on 15 May 2007, an appeal that was allowed on 3 February 2009. It should be noted that Eurocom also joined the proceeding before the Antitrust Tribunal, at its request, and supported the General Director’s position according to which the merger creates a reasonable risk of significant damage to competition.

In its ruling, the Antitrust Tribunal noted the fact that the multi-channel television market is composed of two markets – the broadcasting infrastructure market and the television broadcasts market, each of which are characterized by substantial barriers to entry (these barriers are even more significant in the infrastructure market). The Tribunal added that the two players currently operating in the multi-channel television market – Hot and Yes – both serve as broadcasters and as infrastructure providers. The Antitrust Tribunal further noted that Yes’ satellite infrastructure is limited compared with the cable infrastructure (and compared to the IPTV infrastructure) and it therefore cannot fully compete with them. The Tribunal stressed that the General Director’s position is based on the supposition that an additional platform for television broadcasts – with IPTV technology, to be established on Bezeq’s ADSL infrastructure – will be added during the coming years. The Tribunal noted that the assumption, from both a technological and a feasibility perspective, that Bezeq would enter into the multi-channel television broadcasts market, was based on a series of assumptions that have not yet become reality. In this context, the Tribunal found that it had not been presented with sufficient evidence to establish that Bezeq had made a business decision to make the investment required for a significant upgrading of its technology that would enable the provision of IPTV services. The Tribunal further held that even if the General Director’s assumption regarding Bezeq’s technological ability to construct an IPTV network in the near future is a realistic one (noting that “there is a certain distance that must still be travelled”), the technological perspective is not the only relevant one, and that it is necessary to examine the existing regulatory restrictions in the communications field as well as the economic feasibility of the construction of the infrastructure, from Bezeq’s perspective – particularly in light of its current holdings in Yes (49.78%).

The Tribunal rejected the General Director’s position that there are no substantial legal or regulatory barriers preventing the realization of the main part of the forecast on which her objection had been based, and it noted that

 

Bezeq is faced with a number  of legal restrictions, including the cross- ownership rules which prevent Bezeq from obtaining a broadcasting license in light of the size of its holdings in Yes. It further noted that each of Bezeq’s subsidiaries is also prohibited from obtaining a broadcasting license so long as Bezeq holds more than 24% of the means of control in Yes. The Tribunal also noted that the likelihood of a change in the statutory provisions regarding cross ownership is very low, and that the power that the law grants to the Minister of Communications (with the approval of the Cable and Satellite Broadcasts Council of the [Knesset] Finance Committee) to issue a broadcasting license to a Bezeq subsidiary – so long as such a move furthers competition and variety regarding the supply of broadcasts to subscribers – creates a hurdle which will not be easily removed. The Tribunal noted that it is hard to imagine that a reasonable regulator would allow the subsidiary of a company which is the largest shareholder in one of the competitors in the market to enter into the content field and thus to effectively control two out of three content platforms. Regarding the question of whether the completion of the infrastructure is economically viable for Bezeq, the Tribunal noted that the General Director’s position does not give appropriate weight to the fact that the critical starting point for the discussion is the situation regarding Bezeq’s current holdings in Yes. The Tribunal emphasized that it appears that Bezeq will indeed continue to develop the NGN (Next Generation Network – a generic term for communication networks based on Internet protocol technology, the main characteristic of which is the possibility of integrating different types of telephony, Internet, contractual, etc. services in one network – hereafter: NGN) but it cannot be assumed that it will do the necessary work which will enable [the provision of] IPTV services on this infrastructure – work which involves additional costs. This would be the case even if the General Director’s position that Bezeq’s investments in Yes are sunk investments and that Bezeq therefore developed interests following such investment, it is not likely – the Tribunal held - that economic feasibility considerations will lead Bezeq to complete the infrastructure [for IPTV]. The Tribunal further noted that the General Director had not submitted economic calculations which would support the claim that under current conditions, it is economically worthwhile for Bezeq to compete with its subsidiary (Yes) in the field of multi-channel television because of the benefit it would achieve from this by holding on to its telephony and Internet infrastructure customers. An additional factor that makes it doubtful that Bezeq would, in the Tribunal’s view, enter into the content market, is that the multi-channel television market is a saturated market and even if Bezeq could reduce the

 

 

infrastructure costs, the content costs are ongoing and it would need to reach a very large number of customers to reach a balance between ongoing expenses and incomes – something that would be very difficult for Bezeq to do. The Tribunal held, therefore, that it was likely that Bezeq did not have a real interest in entering the digital multi-channel television market in its current condition.

The Tribunal added that the General Director assumed that in the foreseeable future only one infrastructure – i.e., the IPTV – would be joining the multi-channel television market, but that it appears that in the more long- term future, additional technologies (Internet television, DTT and WIMAX) could also constitute alternatives to the existing technologies (although the Tribunal also noted that in the coming two or three years, none of these technologies could constitute a real alternative). It further noted that a not insignificant amount of time would be required even for the purpose of establishing a full IPTV technology. The Tribunal went on to reject the General Director’s position regarding the significance to be attributed to Bezeq’s acquisition of control in Yes as a result of the merger, noting that even though the General Director’s position that after the construction of the IPTV infrastructure Bezeq will (through the directors that it will appoint) raise the usage fees or the transfer fees that it will collect from Yes and from others even if open access conditions are established for the IPTV services (because in the case of Yes, the payment of such fees would be a transfer of funds from one pocket to the other) cannot be ruled out, this risk is not significant in light of the fact that raising such fees will not be worthwhile, and in light of the regulatory prohibition that the Tribunal had mentioned. The Tribunal further noted that this risk can be prevented through the drafting of conditions which would prevent Bezeq from having such a resolution adopted by the Yes board of directors, and which would impose controls on the prices that Bezeq will charge.

4.            The Tribunal reached the conclusion that the “General Director’s forecast according to which an independent competing infrastructure for television broadcasts will be established if the merger does not take place, is not sufficiently established.” In this context, the Tribunal referred to the provisions of s. 21 of the Restrictive Trade Practices Law -1988 (hereinafter: the Restrictive Trade Practices Law), and to the case law, which holds that only a reasonable risk of significant damage to competition or to the public will justify an objection to a merger, adding that in its view, the burden of

 

proof regarding the existence of such a risk is to be imposed on the General Director, although this issue had in the past been left unresolved as requiring a review of the Supreme Court’s rulings.  The Tribunal held that in this case, it was necessary to determine whether the data regarding the relevant market provide a basis for “a reasonable risk” according to the civil law standard of probability, such that the merger would lead to significant damage to competition. According to the Tribunal, the economic analysis on which the General Director had based her position assumes future developments regarding at least some of which there was only a low probability of less than 50% and it was therefore not possible to determine that there was a reasonable risk that the merger would do significant damage to competition. The Tribunal nevertheless pointed out that if Bezeq had sought approval for the merger without having existing holdings in Yes, it would not have approved the merger. This was, in the Tribunal’s view, due to the clear competitive advantages in Bezeq’s independent entry into the market. However, the Tribunal held, in light of the current size of Bezeq’s holding in Yes, that it is already not possible to ignore the level of Bezeq’s interest in Yes’ success and it is already difficult to imagine Bezeq acting as Yes’ competitor. Therefore, the Tribunal noted, the competitive difficulty in the multi-channel television market lies in the current situation, and even if the merger could sharpen the problem, it would not create it.

5.            The Tribunal further noted that even if it has not been proved that there is a reasonable risk of significant damage to competition, the occurrence of such damage cannot be ruled out given the fact that the increase in the size of Bezeq’s holding in Yes strengthens its interests in Yes and will also grant it control of the company. For this reason, and because of the importance of the construction of the IPTV infrastructure and of its being made available to other entities which will compete with Yes, the Tribunal saw fit to establish conditions for allowing the merger. In this context, the Tribunal noted that during the course of the deliberation, the parties were offered a settlement proposal regarding the conditional approval of the merger and that Bezeq did not raise any difficulty in terms of the Tribunal’s authority to order such and agreed that the  merger would be conditionally approved. (The General Director objected to this, and Eurocom believed that the merger could be approved with the conditions which it had specified, which were different than those proposed by the Tribunal). The Tribunal further noted that there was a basis for the concern raised by the General Director, according to which technological and economic considerations could lead Bezeq to prefer the IPTV infrastructure for Yes, if it is constructed, rather than the satellite

 

 

infrastructure, which could cause that infrastructure to atrophy. But according to the Tribunal’s view, this concern can be negated through the use of conditions which will inflict less damage on the primary property right involved in the exercise of the option. The Tribunal added that the conditions which it ordered are, primarily, behavioral conditions, which are directed at affecting the manner in which the relevant bodies operate, and not structural conditions. The imposition of structural conditions would not, the Tribunal stated, be proportionate, in light of the Tribunal’s determination regarding the absence of a reasonable risk of significant damage to competition. The Tribunal further noted that additional goals can be reached beyond the prevention of damage to competition, through the outlining of behavioral conditions. The primary one of these goals would be the securing of the construction – within a short time - of a third infrastructure for multi- channel television broadcasts. This infrastructure would be open, at a reasonable cost, for use by content providers who wish to use it, and it would be properly maintained. The Tribunal noted that the conditions it was establishing would not only reduce the damage to competition, they would also serve to remove part of the competitive difficulties existing in the market even without the merger, and would bring the “market’s condition to that of a market whose structure was good for competition.” The Tribunal stressed, in this context, that the conditions dealing with the improvement of competition are accompaniments to conditions that prevent damage to competition and that they are not the primary conditions. For this reason the General Director’s claim that the Tribunal acted without authority must be rejected. The Tribunal reasoned, with regard to the conditions to be attached to the merger, that Bezeq would have an interest in utilizing the IPTV technology it owned through granting usage rights for other broadcasters at a reasonable price which would take its investment [costs] into consideration. It is true, the Tribunal noted, that any such user would be a Yes competitor, but after the infrastructure is already constructed Bezeq would have an interest in taking advantage of it through the charging of usage fees. The Tribunal therefore believed that the imposition of a condition according to which the usage fees would be determined by a regulator would reduce the risk that as the party controlling the infrastructure, Bezeq would charge unreasonable prices. Nevertheless, the Tribunal added, Yes should be allowed to use the IPTV at the same price for the purpose of providing those services (such as VOD) which cannot be provided through a satellite, in order to allow it to

 

compete with the others.

These are, in the main, the conditions that the Tribunal ordered: giving Bezeq the option of choosing, within 90 days, whether it wishes to carry out the merger. If Bezeq were to choose that the merger be carried out, it would be required to establish the IPTV infrastructure in full, such that it would be available to 30% of the population within one year, to 50% of the population within two years and to 80% of the population within three years. Bezeq was also prohibited from transferring Yes programming to the IPTV infrastructure, other than for the purposes of providing services that cannot be provided through a satellite infrastructure. This condition is to apply for six years from the approval of the merger, unless there is an additional competitor in the market for the transmission of television programming is on the Bezeq network – and that competitor has, together or with others, at least 100,000 active subscribers or its income from its broadcasts amounts to NIS 10,000,000 per month for three continuous months. Bezeq was also required to allow other parties in the market open access to the IPTV infrastructure that it owns, in exchange for usage or transmission fees to be determined by the regulators. It was also required to properly maintain the infrastructure that is established. (The definition of the word “properly” is to be determined by the regulator). The Tribunal further ordered that Bezeq is not to supply or provide service or products to Yes or from it unless a resolution regarding the receipt or provision of such services or products has been adopted by at least a 75% majority  of the members of Yes’ board  of directors, and  that a structural separation between Bezeq and Yes be maintained in accordance with the currently established conditions. Finally, the Court ordered that if Yes was to transfer to broadcasting on the IPTV infrastructure and does not use the satellite infrastructure, Bezeq would be required, by virtue of its holdings in Yes, to cause that infrastructure to be leased out for satellite television broadcasts, and to maintain it at a price and in a manner to be determined by the regulator. (Bezeq would be entitled to ask the Tribunal to be released from the maintenance requirement if no new user is found). The Tribunal also ordered Bezeq to provide an irrevocable bank guarantee, to be approved by the General Director and to be provided to her, in the amount of NIS 200 million, in order to ensure the fulfillment of the conditions, until the end of the current agreement between Yes and Spacecom (with which Yes had contracted for the purpose of the Spacecom’s segments required for the maintenance of the satellite broadcasts), but for no longer than eight years.

For the reasons specified above, the Tribunal granted the appeal, cancelled the General Director’s ruling and approved the merger subject to

 

 

the conditions it had established.

6.            After the ruling was issued, the General Director, on 5 February 2009, filed a petition to stay  its implementation, but the Tribunal rejected the petition. In its ruling of 18 February 2009, the Tribunal noted, inter alia, that its key holding that the merger does not give rise to a reasonable risk of significant damage to competition had been based on considerations of logic and on the evidentiary material presented to it, and not on its position regarding the burden of proof. The Tribunal further noted that the granting of the petition for a delay in the implementation would damage the public interest in that it would delay the fulfillment of the conditions, which include the construction of the IPTV infrastructure, and the Tribunal believed that the delay of the exercise of the options held by Bezeq would cause financial damage to it. On 22 February 2009, even before filing this appeal, the General Director submitted an additional petition for a stay of implementation (Civil Petition 1665/09) to this Court. At the Court’s recommendation, the parties reached an agreement on 23 March 2009, which was given the force of a ruling, dealing with the delay of the implementation of the ruling, and on 3 May 2009, Bezeq gave notice, as required by the Tribunal’s ruling, that it intends to carry out the merger (although on its part, it had appealed the amount of the bank guarantee it had been required to provide).

The appeals before us were submitted by Eurocom (Civil Appeal 2082/09) and by the General Director (CA 2414/09) (hereinafter: the Eurocom appeal and the General Director’s appeal, respectively), and the counter-appeal filed by Bezeq refers, as noted, to the amount of the bank guarantee that the Tribunal had required that it provide (hereinafter: the Bezeq appeal). The deliberation of the appeals was combined in this Court’s ruling dated March 23, 2009 (CApp 1665/09).

The parties’ arguments

The General Director’s appeal

7.            The General Director argues that the Tribunal’s ruling denies the Israeli public a significant competition benefit with respect to the loss of a third infrastructure for the transmission of multi-channel television broadcasts and that the circumstances in which a company that has the ability to become the owner of a multi-channel infrastructure takes control of a company with a different multi-channel infrastructure, in a market in which there is only one additional infrastructure (the cable infrastructure) impairs

 

competition in a manner that cannot be negated by way of imposition of behavioral conditions. The General Director insists on the supremacy of “facility-based competition” as compared with “competition over the same infrastructures” in infrastructure based markets , and she further argues that competition between infrastructures gives rise to a substantial benefit for consumers, not only from the perspective of the price for consumers but also in terms of other perspectives such as the quality of the broadcasts, the variety thereof, the adoption of technological innovations and the correlation between consumer demand and supply - all of which are dependent on the infrastructure’s technology and on its capacity. The General Director believes that the solution proposed by the Tribunal – the opening of the IPTV infrastructure to competitors, which assumes that the competition that will develop between the broadcasters would be equal to the competition which would have developed between broadcasters with different infrastructures – is an artificial one that seeks to imitate free competition through regulation. The General Director further argues that the relevant considerations with respect to mergers are established in s. 21(a) of the Restrictive Trade Practices Law, which distinguishes between two types of mergers: mergers that raise a risk regarding competition, which can be made conditional or which can be opposed, and mergers that do not give rise to a competition risk, which are to be approved.  She notes that once the Tribunal determined

–             erroneously in her opinion, - that this merger does not give rise to a reasonable risk of significant damage to competition, then at all events it was not authorized to impose conditions on an approval of the merger, even if Bezeq had agreed to such. The General Director further stressed that the sole purpose for which, according to the Law, conditions may be imposed with respect to a merger is for the removal of a risk that the merger creates with respect to damage to competition, and the Tribunal is not authorized to set conditions for a merger only for the purpose of promoting industry-wide reforms, if it believes that no risk of damage to competition exists. The General Director stresses that there is no parallel within comparative law among merger review regimes to such a proceeding in the Tribunal, and it fundamentally changes  the set of balances established in the Restrictive Trade Practices Law and deviates from the Tribunal’s own previous rulings.

The General Director emphasizes what she views as a logical defect in the Tribunal’s decision: The Tribunal held that it is not reasonable for Bezeq to construct an IPTV infrastructure when it is a minority shareholder in Yes, and it therefore allows Bezeq to acquire control of Yes; at the same time, the Tribunal chose to condition the merger on the implementation of that very

 

 

expensive and not worthwhile process, which in the Tribunal’s view, lacks competitive significance. In this connection, the General Director notes that the Tribunal went even further in the context of its decision regarding the application for a stay of the implementation of its ruling, in which it noted that a stay of its implementation would harm the public interest because of the delay it would cause in the construction of the IPTV infrastructure. But according to the General Director, the Tribunal did not derive the necessary conclusions from this with respect to the implications that the construction of this infrastructure would have for competition. The General Director also noted that accumulated experience indicates that new providers receive only minimal cooperation from infrastructure owners who are themselves service providers, and that in this case, and if the merger does take place, any additional broadcaster that uses the IPTV infrastructure will not only compete with Bezeq’s subsidiary, but will also threaten Bezeq’s monopoly in the areas of telephony and Internet. This is an especially bad starting point for implementation of an open access model such as the Tribunal had sought to design. The General Director further argues that the Tribunal  erred  in placing the burden of proof on her, since even though this Court has left this issue as one that requires further review, it has more than once noted that there are good reasons for imposing that burden on the parties seeking a merger. She also argues that, like any administrative authority, she enjoys a presumption of propriety regarding her actions.

8.            The General Director argues that in order to properly estimate the economic feasibility for Bezeq to construct the infrastructure, a broader picture needs to be examined. This would include a review of the variety of markets in which Bezeq competes with other communications groups, including the telephony and Internet markets, in which it is a declared monopoly. According to the General Director, the construction of an IPTV infrastructure constitutes, for Bezeq, a defensive strategy for the purpose of preventing the loss of Internet and telephony customers, and following the merger, Bezeq will be able to market “communications packages” to its customers – packages which also include multi-channel television broadcasts. The General Director further notes that even though the Tribunal accepted the main position that she presented in this context, it rejected her claims themselves, holding that they were not proven through appropriate economic calculations, an approach that testifies to a mistaken reversal of the burden of proof.     Essentially,  the  General  Director  argues  that  internal  Bezeq

 

documents were presented to the Tribunal which describe the process of the construction of the IPTV infrastructure as a “defensive process.” She claims that the Tribunal dismissed these documents rather casually, and she further argues that these documents prove that a financial consulting firm hired by Bezeq had presented Bezeq with only one option in the event of the merger not being approved –the construction of an IPTV infrastructure and entry into the content market. Under these circumstances, the General Director argues, it is unclear how the Tribunal reached the conclusion that the possibility of Bezeq competing with Yes is “one of a number of likely options” regarding which it had not been determined whether the investigation was complete. The General Director further claims that the Tribunal should have dealt with the objective economic feasibility of the construction of an IPTV infrastructure – a subject regarding which Bezeq brought no evidence – and should not have focused on the subjective question – i.e., the mode of action which Bezeq had decided or would decide to follow At any rate, [she argued,] and to the extent subjective evidence is required, the Court should have attributed significant weight to the fact that Bezeq itself, at the start of 2007, had submitted a position paper to the commission established by the Ministry of Communications (see: “Report Regarding the Formulation of Detailed Recommendations Regarding Israeli Competition Policy and Rules in the Field of Communications”, headed by Professor Reuven  Grunau, March 2008, hereafter: the Grunau Commission), in which Bezeq noted the significance of the construction of the IPTV infrastructure for competition, while relying on the position presented by the General Director to the Tribunal in this connection. The General Director further argued that Bezeq made a false  presentation regarding the technological ability of its infrastructure. She added that Bezeq is currently at the height of a significant and expensive process regarding the upgrading of its existing infrastructure into an advanced NGN type of infrastructure that can be used for the implementation of the IPTV technology after an additional investment is made, which is ten times smaller than the investment already made in that infrastructure. The General Director also notes that according to the case law of this Court, if there is a doubt regarding the damage that a merger will inflict on competition, the doubt is to be resolved in favor of competition and the public and against the merger, and she argues that the Tribunal ignored her supposition that if Bezeq is not allowed to exercise its options and purchase the control of Yes, another party will acquire such control – for example, Eurocom – which had even declared its wish to do so in the context of its petition to be joined in the proceeding.   The General Director also

 

 

argues that the Tribunal’s expert did not analyze the size of the investment involved in adjusting Bezeq’s network to the IPTV technology, and the Tribunal’s determination that this adjustment “involves a significant financial investment” has no foundation.

The General Director notes that the Tribunal’s position that the merger can be approved given the already difficult situation in the multi-channel television market is not consistent with the rule established by this Court in CA 2247/95 General Director v. T’nuva, [1], at 240-241 (hereinafter: General Director v. T’nuva), according to which an entity which is at any rate dominant in a particular field nevertheless does not enjoy immunity from the General Director’s control. Regarding the regulatory restrictions that the Tribunal noted in its finding that the likelihood of the damage to competition is low, the General Director argues that the Tribunal ignored the fact that in the infrastructure field, there is no regulatory restriction preventing Bezeq from establishing a third infrastructure. She further noted that regulation, by its nature, can be subject to frequent changes (especially, she claims, in the communications market), and she repeated that no change in the statutory situation is required for granting of a broadcasting license to a full Bezeq subsidiary as the matter is within the authority of the Minister of Communications in situations in which competition considerations justify it. Regarding the existence of additional alternative technologies other than the IPTV technology, the General Director argues that the Tribunal’s holding regarding the abilities of the DTT and Internet television technologies to constitute infrastructures for multi-channel television broadcasts is inconsistent with the findings of the Tribunal’s expert’s findings - and that at any rate, Internet television does not constitute an additional infrastructure for multi-channel television broadcasts, as these are broadcasts that are transmitted on one of the two currently existing broadband infrastructures. According to the General Director, there are also defects in the conditions stipulated by the Tribunal [for the merger], including the fact that these conditions lack a minimal specification regarding the manner in which the purpose for which they have been imposed will be achieved. The General Director further noted that in effect the Tribunal has removed its own discretion and transferred the main legal determination – the regulation of the establishment of  the  IPTV  infrastructure – to  the  Ministry  of Communications, which the Tribunal is not authorized to do and which should not be done in light of the fact that the Ministry of Communications

 

weighs other considerations in addition to that of guaranteeing competition in the economy. Finally, the General Director asks for the cancellation of the awarding of legal expenses of NIS 20,000 against her in the context of the petition for a stay of the ruling’s implementation.

Eurocom’s appeal

9.            Eurocom’s appeal is directed at the [Tribunal’s] failure, allegedly, to impose effective structural conditions for the approval of the merger. Eurocom argues that the ruling attributes a central place to Bezeq’s right to acquire the control of two out of the three multi-channel television infrastructures in Israel and it believes that in light of the concentration of control of competing infrastructures under a “single hand” as a result of the merger, the Tribunal should have given Bezeq the choice of either one of the infrastructures and should have then required it to abandon the other one. Eurocom argues that this merger has unique characteristics, including: Bezeq being the largest communications group in Israel, having been a declared monopoly in the field of telephony and Internet for many years; Yes, which broadcasts to more than 500,000 households in Israel, being the only company using a satellite broadcast infrastructure and being contractually bound to this technology until 2016; the fact that no additional competing infrastructures are expected to enter the market, other than the IPTV infrastructure which has special competitive abilities that the Grunau Commission recognized as “the most significant competitive threat to the multi-channel television companies”; and the fact that the Grunau Commission found that the level of competition in the multi-channel television market is unsatisfactory and that the market is not a sophisticated market, which is reflected in the price paid by the consumer and in the absence of competition between the content which is broadcast to the public. Eurocom emphasizes that an approval of the merger paves the way for Bezeq to obtain 100% control of Yes without requiring any additional approval from the General Director and that under these circumstances, the approval of the merger contains some degree of a direct and significant increase of the concentration in the infrastructure field, a raising of the barriers to entry into the multi-channel television market and likely significant damage to the potential competition between infrastructures. In this context, Eurocom notes that the ability not to develop a specific technology and, at the least, to use it to harm other competitors, constitutes control.

Eurocom  argues  that  the  behavioral  conditions  imposed  by  the Tribunal are ineffective since Bezeq has been given the ability to operate on

 

 

the basis of two infrastructures and to transfer between them as it wishes, that the obligation imposed on Bezeq to establish an IPTV infrastructure lacks specification regarding the required professional standards, and that the Tribunal left the work for the Ministry of Communications, which had not been a party to the proceeding, did not undertake to carry out this task and is also guided by different considerations than those by which the Tribunal is supposed to be guided. Eurocom also argues that these conditions are opposed to basic principles of antitrust law, that they enable Bezeq to carry out a “targeted killing” of the satellite infrastructure, that no substantive arrangements were established regarding enforcement and that the Tribunal limited itself to requiring that Bezeq post a bank guarantee, the size of which Bezeq is appealing to this Court. Eurocom emphasizes in its arguments that the fact that Bezeq is now “volunteering” to establish the IPTV infrastructure in accordance with the conditions established by the Tribunal – a measure which Bezeq had, during the deliberation before the Tribunal, termed an “hallucinatory scenario” on the part of the General Director – itself indicates that that merger involves a risk of damage to competition. Eurocom further argues that the construction of the infrastructure will continue for a number of years and that therefore the condition requiring that Bezeq itself can transmit on the IPTV infrastructure only six years from the approval of the merger by the Tribunal does not provide any protection to new competitors. According to Eurocom, this situation constitutes “competitive overlap” following a merger, and it necessitates the involvement of the competition authority through opposition to the merger or, as stated, through the imposition of a structural condition, such as a requirement that the merging companies sell one of the “overlapping” assets to a third party (divestiture). According to Eurocom, the imposition of a structural condition such as this is to be preferred to alternative behavioral conditions that are inferior in their nature and which cannot, under the circumstances, lead to a solution of the competitive difficulty. In its appeal, Eurocom therefore asks that the following structural conditions be imposed with regard to the merger’s approval: (1) Bezeq should be required to choose, before the merger takes place, between [a] obtaining full control over Yes and operating it on the basis of the satellite infrastructure or [b] operating as a broadcaster external to Yes, on the IPTV infrastructure, without being allowed to transfer between the two infrastructures; (2) the establishment of a significant “protective period” for new competitors in the market (longer than the six years set by

 

the Tribunal) which will apply only from the day that the IPTV network is fully launched.

10.          On its part, Bezeq supports the Tribunal’s ruling. According to Bezeq, the ruling is based on the evidence presented to it and on factual findings resulting from such evidence, and it stresses that even now it is the largest shareholder in Yes, noting that over the years it has transferred substantial capital to Yes even though Yes is not yet a profitable company, and under these circumstances it is clear that it has no interest in damaging Yes through the construction of a third multi-channel television infrastructure. Bezeq claims that the said merger is not a horizontal one between competitors, since as of now it is not a competitor either in the infrastructure field or in the programming field, and it is not a vertical merger between a party that sells infrastructure services and a broadcasting party, and it therefore gives rise to no competition risk. Bezeq argues that the Tribunal’s holding that there is a low probability that it will establish an IPTV infrastructure if the merger is not approved is one which is based on objective factual findings. These include the legal prohibition preventing Bezeq from being a multi-channel television broadcaster; the regulatory prohibition against a Bezeq subsidiary becoming a multi-channel television broadcaster; the additional investments that Bezeq would be required to carry out in order to establish the IPTV infrastructure; the lack of economic feasibility for its entry into a saturated market as an independent competitor alongside Yes; and the fact that none of the telecommunications companies that have, throughout the world, established such an infrastructure, have been prohibited from transmitting on it or from providing discounted “service packages” through such an infrastructure. Bezeq further points to the second factual finding on which the Tribunal based its ruling, according to which it can be estimated that within three years there will be additional platforms for multi-channel television other than the existing ones and the IPTV infrastructure, and it notes that this supposition is based on the Tribunal’s experts opinion, and it is to be expected in a dynamic market such as the communications market. Bezeq further argues that even on the assumption that it will establish an IPTV infrastructure in any case, it is not clear how the merger will damage competition – noting that at any rate there will not be any competition in the infrastructure area, as the satellite infrastructure serves Yes exclusively, and satellite infrastructure services cannot be sold to additional broadcasters. In the area of content, Bezeq argues that there will be no competition as it and its subsidiaries are prohibited from being a content provider and from broadcasting  and  even  the  General  Director  herself  had  argued,  in  her

 

 

objection to the merger, that so long as Bezeq has holdings in Yes, there will be no competition between infrastructures even if Bezeq chooses to develop an IPTV infrastructure. In this context, Bezeq further notes that a vertical merger is perceived, in the literature and in the case law, as a “desirable economic phenomenon” and that in any event, in light of the fact that the IPTV technology has no limit in terms  of capacity, once  the merger is approved and the said infrastructure is established, other competitors as well as Yes will be able to make use of it, without a risk that the market will be foreclosed. Bezeq also argues that there is no risk of an oligolopic coordination in this case, because the large disparity between the market share held by Hot - a declared monopoly in the area of multi-channel television and the holder of a small telephony market share - and the low market share held by Yes (and Bezeq) in multi-channel television along with Bezeq’s large market share in the field of telephony, negates (and at least significantly reduces) the risk of such coordination.

11.          Bezeq argues that the General Director’s sweeping objection relies entirely on the thesis of the potential competitor – an exceptional doctrine in antitrust law that has never been used in the manner that the General Director seeks to use it, and which has been rejected in Israel in the few cases in which it has been argued. Bezeq further argues that three days before the General Director’s announcement of her objection to the merger, the General Director sought an extension for the purpose of formulating conditions for the merger’s approval, and in this context, she pointed out that she intended to establish conditions that were similar to those that were eventually established by the Tribunal, and that it was only when Bezeq  objected to granting the requested extension that the General Director announced her objection to the merger. According to Bezeq, the General Director’s authority to condition the approval of a merger is left to discretion, and where the injured party agrees to the Tribunal’s imposition of the conditions, as it has, the question of the Tribunal’s authority to impose such conditions does not arise at all, and at the most, what is being discussed here is a mistake of law and not an ultra vires act [on the part of the Tribunal]. Alternatively, Bezeq argues that even if the Tribunal’s imposition of conditions is tainted as an ultra vires act, it is not necessary to strike the ruling for that reason, as the doctrine of relative invalidity can be implemented. Bezeq argues that its agreement to the merger being made conditional was given in order to have the matter concluded quickly, to ensure certainty and to lessen the General

 

Director’s concerns, and at any rate, in light of Bezeq’s being subject to a regulatory regime that applies to the entire industry, it is in any event obligated to carry out most of the conditions that were established. Bezeq further argues that an analysis of its interests in light of its existing holdings in Yes is one consideration out of several that were weighed by the Tribunal when it rejected the General Director’s position and in light of the stipulation reached at the Tribunal, according to which Bezeq’s holdings in Yes will not change even if the merger is not approved, the General Director was required to prove that in terms of the economic interests, of the regulations applying to it and of the future state of competition in the market, a situation in which Bezeq holds more than 49% of the shares in Yes is equal to a situation in which Bezeq holds no shares whatsoever in Yes, and the General Director would not have been able to prove this.

Bezeq also notes that its option rights regarding Yes shares will not expire even if the merger is not approved, and it will in any event be able to decide to whom to sell such rights. Bezeq points out that there is no global precedent for a situation in which a telecommunications company has been prohibited from using an IPTV infrastructure that it constructed to broadcast or to provide a “services package”; that the market shares held by IPTV throughout the world are minimal and that it is not clear how well it will succeed in Israel; and that factors relating to the Israeli economy such as the relatively small number of households, the especially high penetration of multi-channel television, the high degree of digitization, the especially high number of people per household and the high percentage of households with two television sets all serve to render the General Director’s claim that “Bezeq will in any event construct the IPTV infrastructure” completely erroneous. Bezeq further argues that it has been proven that there is no party in the Israeli market that is seeking to provide IPTV services and that the General Director did not question Bezeq’s witnesses regarding the “internal documents” on which she now wishes to base her appeal. According to Bezeq, the position paper that it submitted to the Grunau Commission conditions its willingness to establish an IPTV infrastructure on a series of conditions, including the cancellation of the regulatory restrictions and the exclusivity regarding use of the infrastructure and the provision of services – conditions which currently have not been met. Bezeq also argues that the presentations that were prepared at its request by an outside consultant do not constitute financial opinions, that one of them was never even presented to the company’s board of directors and that they never served as a basis for the adoption of any operative resolution – yet, nevertheless, the General Director

 

 

relied on these presentations, and did this only at the stage of presenting closing briefs to the Tribunal and primarily at the appeals stage.

Regarding the General Director’s argument that the Tribunal deviated from the rule of laid down in General Director v. T'nuva [1], Bezeq notes that unlike the situation in that case, the Tribunal here has not approved a small addition to the damage to competition that exists in any event – instead this is a situation in which the Tribunal has not been persuaded that there is any damage, large or small, which is being done to competition, in comparison to the situation without the merger. Bezeq further argues that there is no basis for the General Director’s claim that the Tribunal decided the appeal on the basis of burdens of proof, and Bezeq insists that this question is only relevant where the evidence produces a “tie” result – which did not happen here. Bezeq argues that the Tribunal’s holding relies on “a set of logical considerations and an examination of the reality in light of the evidentiary material” and not on burdens of proof, as the Tribunal itself noted in its decision of February 18, 2009 regarding the stay of implementation. Bezeq further argues that the Tribunal was aware of the fact that there are no regulatory restrictions on the establishment of an IPTV infrastructure, but according to Bezeq, the prohibition against broadcasting on the infrastructure undermines the rationale for constructing it, and an objection to a merger cannot be based on future scenarios that are conditional upon changes in the statutes and regulations, when the chances for those changes taking place are non-existent or at best, low. In this context, Bezeq argues that the General Director’s objection relies on a claim regarding a future change in the market’s structure - a change regarding which there is no indication of the likelihood of its occurrence - and that the Tribunal was persuaded that the choice it faced was between one inferior infrastructure (the satellite) and two infrastructures that are restricted by conditions, if the merger is approved.

12.          Bezeq further argues that additional technologies are expected to enter the market shortly and that all the parties and the Tribunal’s expert attributed some importance to these technologies as potential competitors.  Bezeq further argues that past experience shows that where it has been allowed to establish an infrastructure that is open to other users under open access conditions, competition is not damaged and that the General Director acknowledges that she did not carry out an economic analysis that indicated a vertical risk, which would not exist as Bezeq is not a monopoly regarding infrastructure for multi-channel television programming.  Bezeq argues that

 

the General Director does not clarify what “reform” the Tribunal was allegedly advancing through the conditions it imposed on Bezeq, and that the conditions are closely tied to the risks that the General Director had indicated: the risk of the non-construction of an IPTV infrastructure and the risk that the satellite infrastructure will “atrophy.” According to Bezeq, the General Director did not hesitate in the past to impose conditions that “promote competition” (in contrast to conditions that are meant to rectify damage done to competition) and according to Bezeq it is accepted in European antitrust law as well. Bezeq argues that there is no normative hierarchical ranking among different types of remedies and the matter is dependent on the facts and circumstances of the particular case. However, in Bezeq’s view, in light of their rigidity, structural conditions the last resort and behavioral conditions are to be preferred to them, to the extent possible. This is especially true, Bezeq claims, in a small economy such as Israel’s, which is any event characterized by massive industry regulation. Bezeq further points out that the principle of open access is an accepted one in the communications industry and has been recognized in this Court’s decisions, and that in the absence of an ability to ensure the construction of an additional infrastructure, the Grunau Commission also determined that the way to ensure competition is through [the preservation of] transmission rights on existing infrastructures. According to Bezeq, the significance of a delay in the merger until the completion of the construction of the infrastructure is that Yes and the entire multi-channel television industry will be left “hanging in the air” for a period of a number of years – and this is against the [recognized] interest in promoting certainty in the market. It also argues that the Tribunal had established the outline of the conditions and that it only left the determination of specific-professional details to the Ministry of Communications – details which at any rate are within the jurisdiction and expertise of that Ministry. Bezeq notes that the Tribunal even determined that if the Ministry of Communications does not establish such conditions, the General Director is to establish them. Bezeq notes that the General Director preferred not to assist with the drafting of the conditions and thus created great difficulty for the Tribunal in their formulation. Finally, Bezeq argues that the industry regulator’s involvement in the establishment of technical-professional conditions and in supervising their implementation presents many advantages in light of the regulator’s knowledge, experience and expertise in this area.

13.          Regarding Eurocom’s appeal, Bezeq argues that Eurocom’s position is flawed in the same way that the General Director’s is, and it further argues

 

 

that Eurocom joined the proceeding at a late stage, did not present evidence and did not question witnesses. Therefore, it does not have a right, at the appellate stage, to argue against factual findings determined by the Tribunal. According to Bezeq, no significance should be attributed in this context to the affidavit that Eurocom attached in the framework of the interim proceeding regarding its joining the appeal to the Tribunal as a party. Bezeq argues that Eurocom is attempting to bring about a situation in which Bezeq is required to engage in price negotiations regarding its shares in Yes, but Eurocom does not have a right to [force] such [negotiations], pursuant either to the Yes by-laws or the agreements between its shareholders. Bezeq also points to the fact that Eurocom is the controlling shareholder in the Spacecom Company, from which Yes leases the segments required for its satellite broadcasts, and that Eurocom therefore has a clear interest in Yes continuing to broadcast through a satellite infrastructure under any conditions and at any price – whether or not that is economically efficient. Bezeq also notes that in its notices of appeal, Eurocom asked to have Bezeq permanently prohibited from transmitting on the IPTV infrastructure (other than with respect to VOD services), but in its summary, it withdraws that request as well as the demand it made in the notice of appeal, to obligate Bezeq to train the employees of competing companies in the use of the IPTV infrastructure and to allow them access to the infrastructure in order to maintain it and repair it. Finally, Bezeq argues that the purpose of the six year restriction imposed on Yes regarding the use of the IPTV infrastructure is not to protect a new competitor in the market, and that it is [actually] intended to respond to the risk of the satellite’s infrastructure’s early erosion. According to Bezeq, the period established by the Tribunal ensures that Yes will remain committed to its existing agreements with the Spacecom Company, which will end in the year 2016 – agreements from which Yes cannot at any rate free itself without the consent of the Spacecom Company.

The Bezeq appeal

14.          Bezeq’s appeal is directed against the size of the bank guarantee (NIS 200 million) which it has been required to produce pursuant to the Tribunal’s ruling in order to ensure the fulfillment of the merger conditions. According to Bezeq, there is no need at all for a bank guarantee to ensure the fulfillment of the merger conditions, as their fulfillment can be ensured through remedies established in the penal code, in tort law and in administrative law, but in light of its agreement to provide such a guarantee it does not appeal the fact

 

that it is being required to provide a guarantee, but only the amount thereof, and it proposes to provide the guarantee for NIS 50 million. It argues that the amount established for the guarantee is not proportionate or reasonable, and that it ignores the variety of alternate means of enforcement that are available in this case, the ongoing cost of providing a guarantee of this amount, and the costs of the significant investments that Bezeq is required to make as part of the merger conditions – which could affect its ability to raise the required guarantee, in light of the Israeli banking system’s limitations. Bezeq further notes that it is required to provide a ten million dollar guarantee for the purpose of complying with the terms of its general license, that the merger of the cable companies which created a monopoly was conditioned on a bank guarantee of fifteen million dollars (and that after time the amount was reduced to two million dollars), and that under these circumstances the amount that was imposed on Bezeq is unprecedented. Finally, Bezeq proposes that if the NIS 200 million amount is left in place, that an alternative arrangement be established, such as [the deposit of] a company check or a promissory note – instead of the bank guarantee which it has been ordered to provide.

15.          The General Director, on her part, argues that Bezeq seeks to detract from the effect - limited as it is - of the mechanism established by the Tribunal in its holding. The General Director notes that the open access model established by the Tribunal does not constitute a solution to the horizontal risk that she had noted, which deals with the loss of a competing infrastructure, and only deals with the vertical risk - the risk that Bezeq, as the controlling shareholder of Yes, will use economic measures to block Yes’ competitors from making use of Bezeq’s new infrastructure. According to the General Director, the guarantee mechanism seeks to create a deterrence mechanism in the face of Bezeq’s large scale interests and ability to disrupt any attempt to compete with Yes, which Bezeq will control. In this context, the General Director argues that the control over the infrastructure creates an absolute and problematic dependence, for each of Yes’ future competitors, on Yes’ controlling shareholder. This will be due to Bezeq’s ability to damage the quality of their broadcasts through the infliction of damage to the infrastructure – which will lead to significant flaws in the product provided by the Yes competitors. The General Director notes that damage of this type is very difficult to locate and even took place recently in the United States. Nevertheless, the General Director believes that the guarantee mechanism which has been set up is significantly flawed in that it does not refer to the limitations  of  supervision  and,  primarily,  not  to  the  significant  costs  of

 

 

supervision created by the conditions established by the Tribunal; it does not provide a solution to the technical difficulties in locating the occurrence of a breach; and it ends specifically at the time at which Bezeq is expected to transfer Yes from the satellite infrastructure to the IPTV system.  The General Director also notes that in other circumstances, and as a product of a criminal investigation conducted against Bezeq, it has already been revealed that Bezeq has an organizational culture which is not sufficiently careful with respect to preventing improper harm to competitors that use its network. Under these circumstances, the General Director believes that if the appeal is denied, then at the least, the partial deterrence measure established by the Tribunal should be left in place.

16.          Eurocom claims that the character of the conditions that have been imposed on Bezeq – a complicated behavioral arrangement which requires long-term regulatory supervision requires an “appropriate deterrence incentive” and an immediate and significant sanction which is not dependent on a legal proceeding, which conforms to the scope of Bezeq’s obligations and the “cost of an error” that the public will pay if it transpires that Bezeq is not meeting those obligations. Eurocom further argues that the Tribunal chose one security for the fulfillment of the conditions – the presentation of a bank guarantee – and that in these circumstances the amount is reasonable and even necessary, as legal proceedings will not be able to lead to a rectification of [a breach] situation in real time, and Bezeq’s arguments in its appeal serve as a warning signal regarding the [potential for the] erosion of the Tribunal’s conditions. Eurocom also argues that the conditions established by the Tribunal constitute “a single block” and that not one of the conditions in this set should be changed without opening up the entire conditions framework. Finally, Eurocom argues that, without obtaining permission to do so, Bezeq included in its closing briefs several factual arguments regarding its contacts with various banks and that these arguments should be ignored.

Discussion

The normative framework: the Israeli regime of merger supervision

17.          Section 1 of the Restrictive Trade Practices Law defines a companies merger as follows:

“Companies Merger” - Including the acquisition of most of the assets of a company by another company or the acquisition of shares in a company by another company by

 

which the acquiring company is accorded more than a quarter of the nominal value of the issued share capital, or of the voting power, or the power to appoint more than a quarter of the directors, or participation in more than a quarter of the profits of such company; the acquisition may be direct or indirect or by way of rights accorded by contract;

It is undisputed that Bezeq’s exercise of the options in this case will constitute a “companies merger” in accordance with that term’s definition in the Restrictive Trade Practices Law, described above – since due to the said exercise, Bezeq, which currently holds 49.78% of the shares in Yes, will cross the line of 50% of the holdings in Yes and become the owner of 58.36% of the Yes shares. As an aside, we note that the Israel Antitrust Authority does not generally require a notice of merger from a party that holds more than half of the rights in a company and which seeks to increase its holdings of any right whatsoever to a level exceeding 75%. This is because the Restrictive Trade Practices Law will in any event view a firm and a person holding more than 50% of the rights in that firm as constituting a “single substantive entity,” which leads to the perception that in these circumstances there is no real change in the relationship between the decision making mechanisms of the parties involved in the transaction. (See:  The Antitrust General Director’s Instructions Regarding the Reporting and Review Processes for Companies Mergers pursuant to the Restrictive Trade Practices Law – 1988 (hereinafter: General Director’s Instructions)). Therefore, the crossing of the 50% line regarding the holdings in a company, as in our matter, is generally the last point of supervision in this area, in accordance with the General Director’s Instructions.

Chapter C of the Restrictive Trade Practices Law establishes the regulatory framework for merger review, and it applies only to companies mergers in which one of the conditions established in s. 17 of the Restrictive Trade Practices Law is present – conditions which relate primarily to the size of the merging companies’ sales turnovers; to the fact that one of them is a monopoly as defined in s.26 of the law; and to the creation of a monopoly as a result of the merger. (See also s.18 of the Law, which establishes conditions regarding a merger with a company that conducts business both in Israel and outside of Israel.) Section 19 of the Restrictive Trade Practices Law prohibits the implementation of a companies merger if the conditions listed in the above-mentioned s.17 are present, unless a notice of merger has been sent and the General Director’s consent has been obtained. The section provides as follows:

 

 

Companies may not merge unless a Merger Notice is issued and the consent of the General Director to the merger is obtained and, if such consent is conditional- in accordance with such conditions, all as provided in this section.

Section 21 of the Restrictive Trade Practices Law lists the situations in which the General Director will object to a merger or will condition its approval, and provides as follows:

 

„The General Director shall object to a merger or stipulate conditions for it, if he believes that there is a reasonable risk that, as a result of the merger as proposed, the competition in the relevant sector would be significantly damaged or that the public would be injured in one of the following regards:

(1)          The price level of an asset or a service;

(2)          Low quality of an asset or of a service;

(3)          The quantity of the asset or the scope of the service supplied, or the constancy and conditions of such supply.’

 

The test for exercising the General Director’s authority is thus the existence of a “reasonable risk” – i.e., an estimated likelihood, which is determined ex ante, that there will be significant damage to competition due to the proposed merger or damage to the public with respect to one of the matters listed in the section. (See CA 3398/06, Israel Antitrust Authority v. Dor Alon Energy Israel (1988) Ltd par. 30.[2] (hereinafter: Antitrust Authority v. Dor Alon) The examination of the merger is thus a two stage one: first, the market which is relevant to the matter under discussion must be identified and defined; second, it is necessary to determine whether there is a reasonable risk that the proposed merger will lead to significant damage to the public in that market or that it will lead to such damage to the public (General Director

v. Tenuva) [1] at 229.

This statutory arrangement for merger review is a late development in Israeli law (as in United States antitrust law and European Union competition law – see, regarding this matter, Y. Yagur, Antitrust Law, 411-412 (3rd ed., 2002) (hereinafter: Yagur). The Restrictive Trade Practices Law, 1959, in its original version, did not contain any provisions regarding company mergers, but during the first half of the 1970’s it became clear that the attempt to

 

encourage mergers through government incentives, together with the absence of a review mechanism, had led to a high level of concentration in many areas within the Israeli economy, and in 1975 a Committee For the Review of the Restrictive Trade Practices Law was established, headed by Professor Joseph Gross, whose recommendations were the basis for the enactment of the new Restrictive Trade Practices Law in 1988. (See: Barak Orbach, “Objectives of Antitrust Law: Practical Rules” Legal and Economic Analysis of the Business Antitrust Laws 83-85 (Vol. 1, Michal (Schitzer) Gal and Menachem Perlman, ed. 2008) (hereinafter: Legal and Economic Analysis of the Antitrust Laws); Report of the Committee on Mergers and Conglomerates, 6, (1978)). The basic assumption at the foundation of the new 1988 law was that mergers are primarily desirable, to the extent that they relate to business efficiency and benefits of size, and that they can have the effect of lowering prices for consumers. Nevertheless and because in certain circumstances mergers can lead to damage to competition as a result of the increase in the power or market share of the merging companies, the legislature saw fit to review them and in certain cases even to limit them. (See: Explanatory material for the Proposed Restrictive Trade Practices Law, 1983, Proposed Bill 1647, 39-40; General Director v. T’nuva [1 ], at 227; Antitrust v. Dor Alon [2] paras. 29-31). This review is intended to realize the objective that is the basis of the Restrictive Trade Practices Law, which is “protecting the general public against economic distortions the source of which is in excessive concentration in certain markets.” (General Director v. T’nuva [1], at 229). This is done through protecting and promoting competition in order for it to constitute an incentive for development and innovation and in order to increase the efficient use and utilization of resources and to secure the best quality product for the end consumer at the most reasonable price. Free competition, as a value which the Restrictive Trade Practices Law is intended to protect, is also perceived as “a foremost sign of the individual’s freedom to realize his autonomy,” (ibid, [1] at 229), which contributes to the dispersion of centers of power and decision-making, prevents excessive concentration of power in the hands of a few entities and protects additional fundamental rights including freedom of occupation (ibid. [1], 229-230; Antitrust Authority v. Dor Alon [1] para. 29); FHC 4465/98

Tivol (1993) Ltd. v. Chef of the Sea (1994) Ltd., [3] at 56, 79-80 (2001). In the communications industry, the protection of competition has special importance. It would appear that no one disputes the fact that in a free society, the media serves as a key platform for the expression of views and opinions  and  as  a  critical  tool  for  the  delivery  of  information  and  the

 

 

disclosure of details that are of public importance. In this way, the media carries out a function which is essential for our existence as a democratic society and serves to realize fundamental rights such as freedom of expression and the public’s right to know. (See HCJ 7200/02 DBS Satellite Services (1998) Ltd. v. the Cable and Satellite Broadcasts Council [4] (hereinafter: DBS Services v. Cable and Sattelite Broadcasts) at 34-35; Dafna Barak-Erez, “Freedom of Access to the Media Balancing of Interests in the Areas of the Right to Freedom of Expression,” Iyunei Mishpat 12, 183 (1987). The existence of competition in this industry thus contributes to the development of a varied and pluralistic public discourse and reduces the risk that information with public importance will remain undisclosed because of the economic or other interests of any party whatsoever.

Does this merger give rise to a reasonable risk of significant damage to competition?

18.          Section 21 of the Restrictive Trade Practices Law which was cited above authorizes the General Director to object to a merger or to condition its approval if, in his opinion, there is a reasonable risk that the merger as proposed will significantly damage competition in that industry (market). A determination of the damage is carried out in relation to the relevant market – i.e., the market in which the control of a particular firm (according to the hypothetical monopoly test) can allow that firm to restrict production and raise the price beyond the marginal cost, while reaping a profit. (General Director v. T’nuva [1] at 232; M. Perlman, “Definition of Markets,” Legal and Economic Analysis of the Antitrust Laws, 167). The delineation of the relevant market at the first stage is therefore critical for the purpose of determining the existence of a reasonable risk of significant damage to competition, and we will now turn to this matter.

Definition of the relevant markets

19.          Two markets in the area of multi-channel television are relevant to our case: the infrastructures market (the technology through which content is transmitted) and the content market (the services and content transmitted on the infrastructure). These markets are part of the vertical chain in the field of multi-channel television, which is, according to the General Director’s definition, composed of four factors: (1)  the producers of content who create the broadcasted content and who contract for this purpose with relevant professionals and manage the production, (2) the producers of channels who construct a programming schedule, brand and market the channels (some of

 

whom also produce the content that they broadcast); (3) broadcasters who acquire the various channels, “package” them as broadcast packages, market the brand to end customers and who are responsible for providing the service to customers; and (4) the providers of the infrastructure on which the content is transmitted from the broadcasters’ base to the customers’ home.

Historically, the Israeli multi-channel television industry has been characterized by a lack of direct and effective competition, since for many years this industry was controlled by regional monopolies – cable companies

–             who had been given exclusive franchises to provide television broadcasts via cable in a specific geographic region. (See the Monopoly Declaration Pursuant to s.26 of the Restrictive Trade Practices Law, 1988 for the cable franchises in Israel, dated November 8, 1999). This exclusivity led to the fact that the competition in the market was limited to yardstick competition, which is characterized by the fact that a low price level and a high level of programming in a particular region can create public pressure on broadcasters in other regions. But this competition is, by its nature, limited, since the only risk from the perspective of the franchisees is that the consumer will stop consuming the product (a measure which will bear a cost from the perspective of the individual consumer) and there is no risk that the consumer will transfer to a different company (such a transfer would involve in a change of residence). During the second half of 2000, an additional player with national deployment entered the market – a satellite television company. The technological innovation led the market from a condition of perfect monopoly to a condition of a duopoly. The activity of the satellite television company required an amendment of the legislation and was even scrutinized by the Supreme Court. (See HCJ 508/98 Matav Cable Communications Systems v. Knesset [5] (hereinafter: Matav v. Knesset) at 577. The entry of this additional broadcasting platform was accompanied by beneficial competition effects and significant improvements regarding the offerings to consumers. In 2002 the regional cable companies applied to the General Director for approval of a merger, which was given subject to conditions that included the maintenance of a structural separation within the Hot company, between the infrastructure company (“Hot Telcom Limited Partnership”) and the broadcasting company (“Hot Cable Communications Systems  Ltd.”). Appeals filed against this ruling were primarily rejected by the Tribunal (See DBS Services v. Cable and Sattelite Broadcasts [4]) and the full merger of the cable companies was completed on December 31, 2006.

As a practical matter, the reality in the current Israeli multi-channel TV broadcast industry is that there are only two players  - Hot and Yes - in the

 

 

infrastructure market and in the content market, and each of them maintains full vertical integration between the infrastructure and broadcasting levels. (Hot holds between 55% and 65% of the market and was declared to be a monopoly in November of 1999. The rest of the market is held by Yes.) With respect to Hot, the Grunau Commission noted that despite the structural separation that Hot was required to create in the framework of the approval of the cable companies’ merger, in actuality, both Hot’s infrastructure company and its broadcasting company (the latter of which operates pursuant to a license given to it by virtue of Chapter B-1 of the Communications Law (Telecommunications and Broadcasting) are controlled by identical shareholders and they operate as a single commercial-financial entity (see the Grunau Commission Report, 110-111). Yes, as noted, holds and operates a satellite infrastructure (purchasing the space segments from the Spacecom Company controlled by Eurocom) and it also operates under a single corporate roof as the broadcaster on that infrastructure (by virtue of a license given to it for this purpose by Chapter B-2 of the Communications Law (Telecommunications and Broadcasting)).

20.          The market for the multi-channel TV broadcast infrastructure is characterized by high barriers to entry, of which the primary ones are: the especially high cost involved in establishing an infrastructure for a broadcast center; a distribution system; the provision of converters which decode the broadcast signal. In Israel there are two technologies through which multi- channel TV broadcasts are transmitted: an infrastructure based on satellite broadcasts and a cable line infrastructure. The technological abilities of these two technologies are not identical. The satellite broadcast method does not allow for broadcasted content to be differentiated in accordance with the geographical location of customers. Therefore, this technology does not support repeat channel broadcasts, which is an essential condition for the provision of video on demand (VOD) services – i.e., the broadcast of a dedicated channel according to the customer’s request, out of a store of programs that are maintained on the broadcast company’s servers. Yes, which operates on the satellite infrastructure, is therefore unable to offer VOD services and these are provided to the market only by Hot, which – as noted – operates on a cable infrastructure. (As an aside, we note that Yes is able to offer a similar service called Push-VOD, which is based on a converter with a given memory capacity). On the other hand, the satellite technology has its own advantages which include the relative ease with

 

which the satellite can broadcast to sparsely populated distant areas, without incurring the costs involved in laying a line-based infrastructure.

An additional technology which has been used throughout the world since 2004 for multi-channel TV broadcasts is the IPTV (Internet Protocol Television) technology, which has been mentioned above. This technology operates on the basis of a stationary network. The home viewer operates a converter through a remote control which connects to the IP address of the source of the broadcasts through a managed closed network. The technology allows for the transmission of a large number of channels on the infrastructure without a particular collection of channels being sent at the expense of a different collection (unlike the limited capacity that can be offered by the satellite or cable infrastructures), and it has the ability to block certain channels and to not broadcast the same signal to all subscribers. These advantages are made possible by the efficient utilization of a broadband access infrastructure on which differentiated broadcasts are transmitted to the customer, who watches them in accordance with his or her choice. In contrast, on the cable and satellite infrastructures, the same signal is broadcast at all times to all subscribers, and the channels that the customer cannot view are blocked by a conditional access management system. Worldwide, the IPTV services are supplied by telecommunications companies, in light of the deployment of the infrastructures they own, or through sub-operators who lease the infrastructure from the telephony companies. This technology does not currently exist nor is it currently operated in Israel.

21.          The content market is also characterized by barriers to entry, although these are significantly lower than those that characterize the infrastructure market. These include the need to establish a brand-name and to maintain it; the entry into  agreements with  content  [producing] parties in Israel  and abroad; the need to obtain a general broadcasting license and the regulatory rules that apply to this field. (See DBS Services v. Cable and Sattelite Broadcasts [4] at 37-38). As noted, there are only two players operating in the content market – Hot and Yes – and the full vertical integration that each of them maintains between the infrastructure and broadcasting levels makes the barriers to entry in the content market even higher. Note that the Communications Law (Telecommunications and Broadcasting) makes it possible to obtain a special license for cable broadcasts on the cable infrastructure for the purpose of transmitting single channels (through the open access method). But demand for such a license has been, until now, very limited, and there has been no successful business model in this field, in

 

 

light of the regulatory and technological restrictions that are imposed on such a broadcaster.

Damage to competition and the actual potential competitor doctrine

22.          The merger under discussion is not a horizontal one because Bezeq itself is not currently a competitor in any of the markets that are relevant to this case (i.e., the infrastructure market or multi-channel TV broadcast the content market). Additionally, this is not a vertical merger between companies operating at different stages of production or marketing in the same industry, since Bezeq’s activity in the multi-channel TV broadcast industry consists only of holding of the Yes shares that it currently holds. The merger under discussion involves the merger of six option warrants in Yes that Bezeq holds, upon the exercise of which Bezeq will increase its holdings in Yes from 49.78% today to 58.36%. This merger, which is neither vertical nor horizontal, can be referred to as a conglomerate merger. (In this context, see, DBS Services v. Cable and Sattelite Broadcasts [4] para. 12; CA 1/00 (Jerusalem District), Food Club Ltd. v. General Director [11], para. 71 (hereinafter: Food Club v. General Director). Regarding conglomerate mergers, see also FTC v. Procter & Gamble, Co. at 568, 578 (1967) [13] (hereinafter: FTC v.Procter & Gamble)). That is, it is a merger which relates to a party – in this case, Bezeq – which holds economic power and is composed of various business units that operate in a variety of markets and specialize in the production of products or the provision of services which do not necessarily have a common element and which are not similar or related to the acquiring company’s area of specialization. (See Food Food Club v. General Director [11] para. 72. See also Keith N. Hylton, Antitrust Law: Economic Theory And Common Law Evolution, 344 (Cambridge Univ. Press 2003) (hereinafter: Hylton, Antitrust Law)). There are a number of dangers to competition involved in a conglomerate merger. (See: Phillip Areeda & Donald F. Turner, Antitrust Law: An Analysis Of Antitrust Principles And Their Application, Vol. 5, s.1100 et Seq. (1980) (hereinafter: “Areeda & Turner, Antitrust Law”); Earl W. Kintner, Federal Antitrust Law, Vol. 4,

s.36.4 (1984)). Generally, the conglomerate structure enables each company in the group to benefit from the advantages of size and from convenient sources of financing. A conglomerate merger can therefore have pro- competition effects, such as the utilization of the conglomerate’s financial strength in order to prevent the elimination of an acquired company and to increase its efficiency, and thus to prevent its removal as a competitor from

 

the market. Conglomerate mergers are not infrequently considered to be mergers whose effect on competition is neutral and occasionally even beneficial. See Case T-5/02, Tetra Laval BV v. Comm'n, 2002 E.C.R. II-4381 [25] at para. 155; Food Club v. General Director [11]para. 73; but see Yagur, 502-503.)

23.A typical risk of damage to competition arising due to a conglomerate merger is the risk of damage caused by such a merger to potential competition. )See United States Department of Justice Non-Horizontal Merger Guidelines 1984, s.4, s.4.11 (hereinafter: U.S. Non-Horizontal Merger Guidelines)) American law distinguishes in this context between two doctrines: perceived potential competition and actual potential competition. Damage to perceived potential competition exists when the fact that a potential customer exists, even if it is not currently in the relevant market, restrains the market power of the firms that are active in that  market. Damage to perceived potential competition is, thus, damage which takes place in the present time and which results from the removal of the threat of the entry of the potential competitor into the market. In the absence of other potential competitors, the entry of such a potential competitor in the framework of a merger with a different company which is in the relevant market (rather than an entry as an independent competitor) can reduce the competitive pressure which the competitors that are active in the market feel due to this threat. (See Food Club v. General Director [11], para. 47; DBS , para. 13; U.S. Non-Horizontal Merger Guidelines, s.4.111; ABA Section of Antitrust Law, Antitrust Law Developments, 354 (5th Ed., 2002) (hereinafter: Antitrust Law Developments)). In order to establish the presence of perceived potential competition, it is necessary to prove that the existing competitors in the market do see the merging company as a potential competitor, and that its existence restrains their business behavior. (See Food Club v. General Director [11], para. 47; Areeda & Turner, Antitrust Law, at s.1116a).

In the case before us, no claim has been made regarding damage to perceived potential competition, and at any rate, no such claim has been proven. The doctrine which is relevant to our case is that of actual potential competition, and we will discuss it below.

24.          The actual potential competition doctrine deals with  competition which is likely to develop in the market in the absence of the merger’s occurrence, because one of the merging companies, which is not currently a competitor in the market, enters into the market, independently, in the future.

 

 

This doctrine therefore refers to future damage which will be caused to the relevant market because a potential competitor will be removed from it as a result of the merger.  The doctrine is recognized in the United States (See:

U.S. Non-Horizontal Merger Guidelines, s.4.112; United States v. Falstaff Brewing Corp [14] (hereinafter: U.S. v. Falstaff); United States v. Marine Bancorporation, Inc. [15](hereinafter: U.S. v Marine Bancorporation); Yamaha Motor Co., Ltd.  v.  FTC,  [16]  ;Tenneco, Inc. v. FTC, [17], and it has been used there by the Federal Trade Commission, the Department of Justice and the Federal Communications Commission, in accordance with the distribution of powers among them regarding the approval of mergers. (See, for example In re El Paso Energy Corp., [18]; United States v. AT&T Corp. and MediaOne Group, Inc., Proposed Final Judgment and Competitive Impact Statement, [19]; In re Applications of NYNEX Corp. & Bell Atlantic Corp., [20]). The question as to whether the actual potential competitor doctrine can be the sole ground for opposition to a merger has been left as a question for further review by the United States Supreme Court. (Falstaff [14] at 537; Marine Bancorporation [15] at 639).

The view that the loss of a potential competitor as a result of a merger constitutes damage to competition is also recognized in Canada (Canadian Competition Bureau Merger Enforcement Guidelines, part 2 (2004)) and in the European Union (EU Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings 2008/c 265/07, article 7 (2008); EU Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings 2004/c 31/3, articles 58-60 (2004)) and in Great Britain (Mergers: Substantive Assessment Guidelines, Enterprise Act 2002, article 4.8 (Office of Fair Trading 2003). (See also, Consultation Document, s.4.24, April 2009). The actual potential competition doctrine has been mentioned by the Antitrust Tribunal in Israel. (See Food Club v. General Director [11] paras. 49-51; DBS, paras. 14-15) and the Tribunal has recently even approved the General Director’s opposition to a horizontal merger because of, inter alia, grounds that were based on the doctrine by way of analogy. (AT 8006/03 Yehuda Pladot Ltd. v. General Director) [12] (hereinafter: Yehuda v. General  Director).  In relating to the doctrine and on the tests for its application, the Tribunal held there that:

 

In this situation, we believe that there is nothing to prevent the inclusion of a consideration of potential damage to competition as one of the considerations for opposing a merger. This can be compared, by way of analogy, to the potential damage to competition doctrine in non-horizontal mergers. The Tribunal has dealt with this doctrine in the past when separating between actual damage and potential damage to potential competition.

„[ . . . ] In our case, the relevant issue is damage to actual potential competition, i.e, the competition that would have developed in the market but for the merger, upon one of the merging companies entering into activity in the relevant market. In order to disqualify a merger on the basis of this doctrine, it is necessary to prove that a competitor that enters the market by way of a merger has the financial ability, interest and motivation and practical ability to enter into the market other than through the merger. It is necessary to present objective proof of such a possibility, and in addition to show that this possibility presents competition-related advantages as compared to the merger (Appeal 1/99 Food Club v. General Director [11] at s.49).

In accordance with our case, Hod is an actual potential competitor which sought to enter the market in the place of Mapam.’

(Paras. 60-61, emphases added).

25.          In the United States, the courts have pointed to a number of criteria in the presence of which the doctrine can be applied: first, the market in which the merger is taking place must have a concentrated structure. (See:BOC International, Ltd. v. FTC, 557 F.2d 24, 25 (2d Cir. 1977) [21]; Marine Bancorporation, 418 U.S. at 625 [15 ] Second, it must be shown that the company that is not in the industry has the characteristics, the ability and the economic motivation to enter into the industry by itself and not through the merger. (Marine Bancorporation, 418 U.S. at 633.) Third, it must be shown that the independent entry of the company which is not in the industry is expected to significantly reduce the concentration in the market or to lead to other significant pro-competition advantages as compared to the merger. (Ibid.) The  U.S. Non-Horizontal  Merger Guidelines add additional considerations, that are not unique to the above-mentioned doctrine, and they include the size of the barriers to entry into the relevant market, the number of additional potential competitors that are likely to enter into the market in

 

 

the future, and the acquired company’s market share. (Sections 4.132-4.134, and see also Areeda & Turner, Antitrust Law at s.1119c-f; Antitrust Law Developments, 355). An additional consideration which is relevant according to the U.S. Non-Horizontal Merger Guidelines which is also not unique to the above-mentioned doctrine examines the question of whether the efficiency involved in the merger exceeds the competition dangers that it presents. (s.4.135 of the U.S. Non-Horizontal Merger Guidelines; Revised s.4 Horizontal Merger Guidelines Issued by the U.S. Department of Justice and the Federal Trade Commission (April 8, 1997); FTC v. University Health, Inc., 938 F.2d 1206, 1222 (11th Cir. 1991) [22]; Yehuda Pladot [12], para. 64). In light of the requirements established in the United States for the application of the doctrine there are those who believe that this is an endangered doctrine which cannot be implemented. (See Herbert Hovenkamp, Federal Antitrust Policy: The Law Of Competition And Its Practice s. 13.4b (West Publishing Co. 1994); Andrew S. Joskow, Potential Competition: The Bell Atlantic/NYNEX Merger , Review of Industrial Organization, 185, 189 (2000); Darren Bush & Salvatore Massa, “Rethinking the Potential Competition Doctrine,” 2004 Wis. L. Rev. 1035, 1037 (2004) (hereinafter: Bush & Massa, Rethinking the Potential Competition Doctrine.)

26.          Indeed, it is a doctrine that if incautiously implemented could lead to damage to the efficiency achieved through mergers and in certain circumstances could even lead to damage to competition (to the extent that the analysis carried out regarding the independent  entry of the merging company in the market is erroneous). The use of the doctrine can increase the cost of entry into new markets (as independent entry is generally more expensive) and thus deter companies from attempting to enter them. The doctrine also has a significant ability to impose on companies in the market a positive obligation to “improve competition” as distinguished from an obligation to refrain from damaging competition, and this is a non-negligible expansion of the merger review regime. (See Hylton, Antitrust Law, p. 345- 346; Areeda & Turner, Antitrust Law at s. 1118).

In our case, the General Director based the grounds for her objection to the merger on this actual potential merger doctrine, and the essence of her argument in this context is that without a merger, Bezeq can be expected to enter into the infrastructure market and the content market for multi-channel TV broadcasts as an independent competitor.   Therefore, according to the

 

General Director, the merger’s approval will lead to the loss of Bezeq as a potential competitor in these markets or in one of them, and will fix them as duopolic markets. In referring to the General Director’s comments, the Tribunal did not examine the question of the conformity of the actual potential competitor doctrine to Israeli law and to the relevant provisions in the Restrictive Trade Practices Law relating to the approval of mergers. The Tribunal examined the application of the doctrine itself, and the lion’s share of its ruling is dedicated to an examination of the likelihood that Bezeq will enter into the infrastructure market or into the content market if the merger does not take place. For this reason, it can be assumed that it did not object to the principle of the approach presented by the General Director, according to which this doctrine should be adopted in the Israeli law. It seems to me that the assumption that the doctrine applies under Israeli law is not a trivial one, and that before we do so we should first examine whether it is consistent with the provisions and purpose of s.21 of the Restrictive Trade Practices Law, which establishes the criteria for the approval or disqualification of a merger to which Chapter C of the law applies. More specifically, it is necessary to determine whether the damage to competition or to the public discussed in the above-mentioned s.21 also refers to future damage in that industry, due to the loss of a potential competitor that would have entered the market but for the merger. Justice Naor, in her introduction to the first volume of the treatise Legal and Economic Analysis of the Antitrust Laws, edited by Michal Gal and Menachem Perlman, dealt with the need to adjust doctrines and rules taken from comparative law in the field of antitrust (and in general), before they can be adopted in Israeli law. She noted that a wealth of literature and many rulings can be found in comparative law relating to antitrust law, but she also added that “in seeking to implement in Israel what has been read and learned from American or European law, one necessarily encounters an barrier. The question necessarily arises as to whether the solution found in another location is appropriate for “the conditions in Israel and of its residents” and to the Israeli law?” (Ibid., 15).

The potential competitor doctrine and Israeli law

27.          In the Dor Alon [2] case, Justice Procacia noted that “given the purpose of the Restrictive Trade Practices Law to encourage competition and to protect the consumer, a substantial expectation of a future change in the relevant market should have some importance in the context of an estimation of the competitive nature of this market in the coming times.” (Dor Alon, para. 56). In that case, it was held that according to the market’s condition at the time of the petition’s adjudication, the horizontal merger that was under

 

 

discussion, between Dor Alon Energy in Israel (1988) Ltd. and Sonol Israel Ltd., presented a reasonable risk of significant damage to competition in the fuel industry (in markets that had been defined for this purpose). However, the companies seeking to merge made the argument that future developments (the privatization of the refineries) which were expected to take place in the fuel industry, having no connection to the merger, would be able to reduce this damage and even to eliminate it because of, inter alia, the benefit that the merger would create for them in terms of the ability to compete in an effective manner and for the consumer’s benefit against parties that were stronger than them, following the change that was expected to take place in the system of powers within the industry. The Court was ready to take these future changes into consideration as part of the necessary considerations for determining the damage to competition and the likelihood of its occurrence, but regarding the matter itself, the Court believed that these were changes regarding which there was uncertainty as to the fact of their occurrence, their size, and the range of time in which they would take place, and the Tribunal therefore believed that these changes were not sufficient to affect the conclusion regarding the existing reasonable risk regarding significant damage to competition, which justified the disqualification of the merger.

The argument made by the General Director in our case differs from the one made by the petitioning companies in the Dor Alon case. The main part of her argument is that future damage is expected to take place if the merger is approved, because of what she claims is the high probability that without the merger Bezeq will enter the multi-channel television broadcast infrastructure market and content market and that this will improve the competition in the industry. At the same time, I believe that s.21 of the Restrictive Trade Practices Law can, both in terms of its language and the goal that it seeks to achieve, be interpreted so as to make it possible to take into account the reasonable risk of future harm to competition, as stated. The common denominator between the claims raised by the General Director in this case and the claims raised by those seeking the merger in Antitrust v. Dor Alon [2] relates to the fact that in both cases, in order to achieve the purpose at the basis of the antitrust laws – encouragement of competition and protection of the consumer – future developments are taken into account, developments the probability of which can be estimated, and which impact on the General Director’s decision as to whether the merger should be approved or opposed.   (Regarding the estimation of future developments as

 

an integral part of the economic analysis of mergers and of the effects on competition that such developments involve, see and compare: Menachem Perlman “Merger Review in Israel: An Examination of the Dor-Alon –Sonol Decision,” Ta’agidim 5/2, 98, 105-107 (2008); Grounds for the General Director’s Objection to Merger Between Orlight Industries (1959) Ltd. – Inbar Reinforced Polyester Ltd., Chapter D.1 (November 9, 2006)). As we have now held that the actual potential competitor doctrine can be applied in Israeli antitrust law, we need to add that this should be done with the necessary caution, keeping in mind that this is a doctrine that expands the scope of the supervision of mergers and the damage to the fundamental rights of the merging entities, and further keeping in mind the local market conditions and the fact that the Israeli economy is primarily a small and concentrated one. In this type of economy, a too strict merger control may overshoot its purpose and lead to the loss of the efficiency benefits that can be inherent in mergers. (See, Michal S. Gal, Competition Policy For Small Market Economies 195 (Harvard Univ. Press 2003)).

28.          Because we cannot immediately reject the General Director’s reliance on the actual potential competitor doctrine, we will now examine whether the conditions for the application of the doctrine are present here in this case and whether they justify the disqualification of the merger, or whether, as the Tribunal saw, the existence of such conditions have not been proven and the merger should therefore be approved. (Later, we will refer to the fact that the Tribunal established conditions [for the merger] even though it concluded that there was no reasonable risk in this case of damage to competition, and to the difficulty presented by this establishment of conditions [for the merger]). But before we examine the existence of the conditions for the application of the doctrine in this case, we must first note that the condition relating to the company’s characteristics, ability and economic incentive to enter into the relevant market but for the merger is a condition that needs to be examined in accordance with objective evidence and an economic analysis of the company’s relevant conduct under market conditions. It is therefore unnecessary in this context to introduce the testimony of the company’s senior officials or its internal documents which indicate that it intends to enter the market as an independent competitor if the merger is not approved. At the same time, to the extent that such subjective evidence does exist, it can assist the Court in making a determination regarding this issue. (See: Bush & Massa, Rethinking the Potential Competition Doctrine, Wis. L. Rev. at 1069 (2004); FTC v. Atlantic Richfield Co. [23] at 297-298. We also need to point out that the probability that needs to be proven with respect to the firm’s

 

 

independent entry into the market must be at the level of a reasonable probability (see and compare, United States v. Siemens Corp. [24] at 506-

507 (2d Cir. 1980)), and in my view it is not necessary to use an insurmountable threshold, given that this is an estimation of future developments. The period of time in which, according to the estimation, the potential competitor could enter the market is another significant detail, which is derived to a substantial degree from the characteristics of the market under discussion. (See and compare: Orit Farkash-HaCohen “Technological Innovation Considerations in Examining Reviews according to the Antitrust Laws – the Bezeq-DBS Case,” Ta’agidim 5/3 135, 165 (2008) (hereinafter: Farkash-HaCohen)). Thus, for example, the United States Court of Appeals for the Fifth Circuit found that if it had been proven that a company seeking to merge would have been able to enter the market within a period of two to three years, the Court would have been willing to see it as an actual potential competitor (Mercantile Tex. Corp. v. Bd. of Governors , 638 F.2d 1271- 1272 (5th Cir. 1981) [25]). In another case, the United States Court of Appeals for the Fourth Circuit stated that the potential for entry into the market within a period of 10 to 19 years, did not, inter alia, transform a company into a potential competitor (FTC v. Atlantic Richfield Co) [23] at 295.

Finally, I will point out that I tend towards the view that a General Director who seeks to object to a merger because of a reasonable risk of damage to competition bears the burden of proof that such a risk does exist (see: Michal Halperin, “Dor Alon-Sonol Case – How Should a Litigation in the Antitrust Tribunal Appear” Ta’agidim 5/2, 60, 75-82 (2008); Shlomi Prizat, “The Dor-Alon Decision: The Right Result – Dangerous Rationale,” Ha’aretz (December 11, 2006)) It appears to me that this approach is appropriate and even more so when the General Director seeks to apply the actual potential competitor doctrine, which relates to future damage to competition. And note – in the Dor Alon case, the Court tended towards the approach that the burden of proof was imposed on the party seeking to the merger to show, through its estimations, that in light of the market’s future condition, the merger will benefit competition and this is a burden of proof of the positive estimations that support the position of the party seeking the merger. In contrast, in our case, the General Director claims that the disqualification of the merger will benefit competition in the future, and it appears to me that the burden of proving this claim is imposed on her. Either

 

way, this case, like its predecessors, does not justify a rigid determination of the matter of the burden of proof, which has more than once been held to be “a matter that goes both ways” (General Director v T’nuva [1] at 231; Antitrust Authority v. Dor-Alon [2] at para. 27), since, unlike the Tribunal’s holding and as shall be described below, the General Director did present sufficient evidence which establishes that, as she claims, there is a reasonable risk of damage to competition.

Can Bezeq be seen as an actual potential competitor in the multi-channel TV broadcast market?

29.          The Israeli multi-channel TV broadcast infrastructure market and content market are, as stated, duopolistic markets and in effect, Yes and Hot currently compete while each maintaining an integration between [their operations in] these two markets. In this situation, the markets are characterized by high barriers to entry and the Grunau Commission noted this as follows:

„The multi-channel TV broadcast sector is controlled by a duopoly. This control is reflected by high prices for service as compared to the rest of the world, and by barriers to entry faced by independent content providers

[ . . . ]

 

Consequently, the duopoly in the infrastructure area becomes a duopoly in the multi-channel TV broadcast area. The owner of the infrastructures determines not only the content of the channels that it produces, but can also impact on the content of independent producers while damaging the range of choice available to the consumer.’

(Grunau Commission, pp. 76, 103).

In the terms of the infrastructure market, Bezeq is currently the only company in the Israeli economy which has the ability to construct, within the foreseeable future, an additional infrastructure (in addition to the cable and satellite infrastructures) using Internet Protocol Television technology and using its fixed telephony network, which, because of the scope of that network’s deployment, gives Bezeq access to most households in Israel. Such an infrastructure requires the laying of copper and/or optic fiber cables reaching each household and it therefore constitutes a firm barrier to entry into the infrastructure market in the communications field. Bezeq does not face this barrier. In addition, Bezeq owns the longest public optic fiber

 

 

network in Israel and it has a customer base which already consists of almost a million customers who constitute two thirds of the subscribers to broadband access infrastructure services, which is used throughout the world for the transmission of IPTV broadcasts. Thus, Bezeq has unique starting data which allow it to advance the implementation of the IPTV technology. The Tribunal reached a similar conclusion, noting that “from a technological perspective, there is nothing preventing Bezeq from constructing a public broadband network which allows for the transmission of IPTV broadcasts or even the construction of a full IPTV infrastructure.” The expert appointed by the Tribunal, Engineer Daniel Rosen (hereinafter: Rosen), noted in this context, in his opinion dated May 27, 2008, that Bezeq can already enter the infrastructure market at the current time and provide IPTV services at Standard Definition (not High Definition) quality, along with high speed Internet access at the rate of 1.5 to 2 MB, although the provision of services at this quality will make it necessary to deal with the bandwidth limitations of the access network and with the fact that the network will be required to provide additional services that will weigh it down. The expert further noted that if Bezeq wishes to provide IPTV services based on Multicast at a significant level, together with high speed Internet access at the speed of 5 to

8 MB, Bezeq will need to make a certain investment in upgrading the infrastructure (including upgrading the network, construction of access networks, an appropriate core and attachments, and the establishment of service provision centers). And in contrast to Bezeq’s claim, Rosen noted in his opinion dated July 23, 2008, Bezeq had, in a notice which it delivered to the Israel Securities Authority on June 29, 2008 and in a press release dated June 20, 2008, stated that it had made a decision to continue with the NGN project, and this shows that Bezeq had made a strategic decision to “take the path of significant change in the access network, which will lead to a significant improvement in its operation, and not to take the path of small scale upgrades and improvements,” noting that it will be possible to use this network for the purpose of providing IPTV services. Rosen does not indicate an estimated date on which Bezeq is expected to be able to provide IPTV services in the context of this model, but his expert opinion [statement] indicates that this will be, at the latest, within a few years. This estimation is strengthened by the fact that according to the conditions established by the Tribunal in its ruling, Bezeq is required to construct an infrastructure that will make it possible to provide IPTV services to 80% of Israeli households

 

within three years, and Bezeq announced on May 3, 2009 that it accepts the conditions set by the Tribunal, including this one. This indicates that in terms of technology, Bezeq is able, within three  years, to construct the necessary infrastructure and to provide IPTV services at a level that covers most Israeli households. The Tribunal’s findings also indicate that within this time period, there will be no other technology which would be able to serve as a real alternative to the IPTV technology. As a side point, I note that I highly doubt that it would have been correct, to begin with, to define two out of the three additional technologies examined by the Tribunal in this context (DTT and Internet television) within the markets that are the subject of the merger ([i.e.,] paid multi-channel TV broadcasts).

Thus, Bezeq has the technological ability to provide IPTV services within three years, and there is no other party in the Israeli market that has the ability, within the said time period, to provide these services or other infrastructure services that can compete with cable or satellite infrastructures. Therefore, it is necessary to further examine, in terms of economic feasibility and of other matters, the likelihood that, but for the merger, Bezeq would constitute a potential competitor in the relevant markets. It is also necessary to determine whether Bezeq’s entry into these markets is expected to significantly reduce the concentration in those markets or to lead to other substantial pro-competition advantages, as compared to the merger.

30.          The Tribunal noted in its ruling that but for Bezeq’s holdings in Yes, there is no doubt that it would not have approved the merger, “even if the issue was [Bezeq’s] reaching a much lower share than 58% . . . a fortiori in a situation of acquiring control.” The Tribunal also noted that in a situation in which Bezeq would have  sought to first acquire  the shares  in Yes, the existence of an alternative buyer that is not the owner of an additional infrastructure, such as Eurocom which declared its interest in the context of the petition to join the proceeding that it filed on August 11, 2008, would have simplified the decision not to approve the merger because of the clear pro-competition effects of the control over Yes by a purchaser that does not own an additional infrastructure and without having the potential to construct such an infrastructure. Nevertheless, the Tribunal noted, this is not the case that was put before it when asked to deal with the merger under discussion. This is because the matter here is not, in the Tribunal’s words, an “ideal” one in which Bezeq seeks to acquire shares in Yes for the first time, but rather a situation in which Bezeq already has a serious interest in Yes. According to the Tribunal, “the competitive difficulty has already been planted in the current situation. Even if the merger increases the problem, it does not create

 

 

it.” Therefore, and even though it accepted the General Director’s key position that “such a control situation in a market of this type is worse, in terms of competition,” the Tribunal reasoned that the competition map described by the General Director without the merger is not a realistic one.

Indeed, the fact that Bezeq currently holds 49.78% of the shares in Yes creates a unique situation which is different than the regular case in which the actual potential competitor doctrine would apply. This is because even though Bezeq is not currently a competing party in the multi-channel television broadcasts infrastructure market or content market, the size of its current holdings in Yes certainly positions it, already, as an interested party in these markets. However, this fact does not, in my view, automatically negate the possibility of seeing Bezeq as a potential competitor in the markets in which we are dealing, nor does it justify the approval of the merger. This Court has, in the T’nuva case, rejected the view that in a market which is already defective in terms of competition, there is no ground for objecting to a merger, when it held as follows:

 

„The Tribunal held that in this case there has been no significant damage to competition because of, inter alia, the fact that the competition in the relevant industry is at any rate flawed and defective because of, inter alia, the respondent’s power and strength, and the proposed merger is therefore nothing more than a small addition of to a large degree of concentration. Such an addition, the Tribunal determined, does not constitute “significant damage” to free competition. We cannot accept his determination. Its practical significance would be that the controlling entity in a particular industry, or the entity which constitute a dominant component thereof, is “immune” from the General Director’s control because of the market power it holds. Such a conclusion is in absolute opposition to the goals of the antitrust laws, which we have noted above. Indeed, the General Director’s authority and the power granted to him do not refer only to the prevention of control in a particular industry as such, but also to the prevention of the strengthening of existing control, if such strengthening can lead to significant damage to competition. Thus, for example, it could be that  a  certain merger  will  not  bring  about  a  significant  increase  in  the

 

concentration in the relevant industry – because there is a significant level of concentration in that industry at any rate, prior to the merger – but it will nevertheless create significant damage to competition due to the existence and creation of significant barriers to entry for new competitors, barriers that will arise as a result of the strengthening of the dominant power in the market, and not necessarily only as a result of the creation of such a power.’

(General Director v. T’nuva [1] at 239-240. Emphasis in the original.)

 

The rationale at the basis of these remarks applies to our case as well. Nevertheless, the fact that Bezeq currently holds 49.78% of the Yes shares is certainly a significant detail for the purpose of analyzing the degree to which it would be economically worthwhile for Bezeq, absent the merger, to enter into the markets under discussion as an independent competitor, and we will discuss this below.

31.          The Tribunal’s holding that the competition map described by the General Director without the merger is unrealistic is based on two key foundations: one relating to the legal and regulatory prohibitions that apply to Bezeq in the content market, as a party holding shares in Yes, and to the view that Bezeq has no economic interest in constructing an IPTV infrastructure without the possibility of becoming a broadcaster. The other deals with the degree to which it is economically worthwhile for Bezeq, as a party holding shares in Yes, to establish an independent broadcasting arm or separate infrastructure. In this context, the Tribunal points out, inter alia, that Bezeq would need a critical mass of subscribers in order to justify direct competition with Yes, which is a difficult matter [to achieve] in the saturated Israeli market. The Tribunal further noted that the General Director did not present economic calculations which indicate that despite its current holdings in Yes, it would still be worthwhile for Bezeq to compete with Yes, even if one takes into consideration the incentives that Bezeq has, given its activities in additional markets (the telephony and Internet markets).

The Tribunal attributed significant weight to the existence of statutory and regulatory restrictions that apply to Bezeq in the content market in light of its holdings in Yes’ broadcasting platform, and noted the smalll probability that the statutory restrictions would change and that the ability to overcome the regulatory restrictions is unclear. I believe that in this regard,  the Tribunal  was  correct.    Indeed,  s.6H4(a)(2)  of  the  Communications  Law

 

 

(Telecommunications and Broadcasts) prohibits the granting of a general broadcasting license to a party that owns means of control in another broadcasting licensee:

„A general cable broadcasting license or a video on demand license will not be granted to a corporation regarding which one of the following is true, whether such condition is met directly or indirectly:

. . .

It is a corporation in which another broadcasting licensee holds any type of means of control, or which controls any type of means of control in another broadcasting licensee or in a newspaper.

A party owing means of control is defined at the definitions section of the Communications Law (Telecommunications and Broadcasts) as follows:

“means of control” in a corporation means any one of the following:

(1)          A right to vote in a company’s general meeting or in a comparable body in another type of corporation;

(2)          The right to appoint a director or general manager;

(3)          The right to participate in the corporation’s profits;

(4)          The right to share, at the time of the corporation’s dissolution, in the surplus of its assets after its debts have been discharged.’

This definition indicates that nowadays, and prior to the merger, Bezeq is an “owner of means of control” in Yes, which is a satellite broadcasting licensee by virtue of Chapter B-2 of the Communications Law (Telecommunications and Broadcasts), and under these circumstances, Bezeq is indeed prevented from obtaining a broadcasting license. The General Director claims that the many amendments (42 in all) that have been made to the Communications Law (Telecommunications and Broadcasts) since its enactment in 1982 show that a legislative amendment in this context cannot be ruled out even in the short term. . However, this approach is difficult to accept, especially in the short term in light of the absence of any indication whatsoever of an intention to make such an amendment. (See and compare the   Dor   Alon   [2]   case,   paras.   56-63).      Section   6H4(a)(5)   of   the

 

Communications Law (Telecommunications and Broadcasts) provides that the subsidiary of a company which is an interested party in another corporation which has obtained a broadcasting license is also prevented from obtaining an additional broadcasting license, but the Minister of Communications, with the consent of the Cable and Satellite Broadcasts Council and with the approval of the [Knesset] Finance Committee, may grant such a license if it is persuaded that [such a license] can benefit competition and the variety of the broadcasts offered to subscribers, in the following language:

 

„. . . A corporation that an interested party in which is also an interested party in another corporation which has obtained a general cable or video on demand broadcasting license, or regarding which a party holding more than 24% of any means of control whatsoever in it also holds more than 24% of any means of control in a corporation that has obtained a satellite television broadcasting license, unless the Minister has determined, with the consent of the Council, that it will benefit competition in the area of broadcasts and the variety of the broadcasts offered to subscribers, all in accordance with the provisions, conditions and restrictions established by the Minister after consulting with the Council and with the Committee’s approval.’

(Emphasis added.)

 

The General Director argues that the Tribunal erred in determining that it is unreasonable that the regulator in the field of communications would allow a Bezeq subsidiary, which is the largest shareholder in another company that has a broadcasting license, to enter into the content field and have substantive control over two out of three content platforms. According to her, the grant of a broadcast license to a Bezeq subsidiary does not involve a legislative amendment and such a grant is within the authority of the Minister of Communications, subject to the conditions established in the section. According to the General Director, there is thus no barrier blocking the receipt of such a broadcasting license, if the Minister of Communications is persuaded that this would mean the entry of a competitor into the content market, an entry which would be pro-competitive and would add to the variety of the broadcasts. Indeed, where the Minister of Communications is given  the  authority  to use  his  discretion  in  deviating  from the  statute’s

 

 

prohibition against granting a license to a subsidiary, with the approval of those bodies listed in the statutory section, it cannot be said that there is no probability that such a license will be given, but this is not sufficient for purposes of applying the actual potential competitor doctrine and it is necessary to show that there is a reasonably likelihood that such a license will be granted to a Bezeq subsidiary. Such a probability has not been proven in this case.

Thus, the Tribunal’s conclusion that there is only little likelihood that, due to the statutory and regulatory restrictions, Bezeq will, either itself or through a subsidiary, compete in the content market is a well-founded conclusion and we should not interfere with it.

32.          However, the General Director’s emphasis regarding the concern for competition is, to begin with, in the area of infrastructure. Mr. Roy Rosenberg, the deputy director of the Israel Antitrust Authority Economics Department noted this in his testimony:

„Q: In order for it, theoretically, to obtain a broadcasting company license, it is necessary to amend the law, correct?

A: Correct, but I would again state, the concern regarding competition is not from the content side, it comes from the side of the infrastructure for transmitting the content.’

(Transcript of the May 11, 2008 session, pp. 83-84. Emphases added.)

In the area of infrastructure construction, Bezeq is not subject to any statutory or regulatory restrictions. Therefore, it is necessary to determine whether, as the General Director argues, the Tribunal erred in holding that there is little likelihood , in terms of its economic feasibility, that Bezeq would compete in the infrastructure market, using the IPTV technology.

In making her arguments, the General Director points out that the degree to which it is worthwhile for Bezeq to compete in the infrastructure market results from, inter alia, the benefit that the construction of the IPTV infrastructure will give it in additional markets, such as the Internet and telephony markets, and she notes that it is worthwhile, in this context, to look at a broad picture which includes the varieties of markets in which Bezeq competes with other communications companies. According to the General Director, Bezeq’s most significant competitor is Hot, which offers its customers a “triple play package” of Internet, telephony and multi-channel

 

television broadcasts. This marketing option results from technological developments in the communications field as a consequence of which there has been a trend towards “product convergence” – i.e., the transmission of various products and services on infrastructure platforms which in the past had been dedicated to only a single product. This trend allows for the marketing of “packages” to consumers, and economic benefits to infrastructure owners because of the access to a variety of sources of income, while achieving benefits of scale and variety and savings in costs. The benefit that the market receives, from a competition perspective, results from the fact that the number of players operating in each branch can be increased and can lead to change in their relative weight.. This trend necessarily impacts on an analysis of the market in terms of competition, because of, inter alia, the increasingly significant importance attributed to business decisions made by players in the communications industry and to the impact of these decisions in a broader prism. (See, in this context: The 2005 Decision). In this context, it should be recalled that in the telephony and Internet field, Bezeq is a declared monopoly and the General Director believes that Hot’s increasing strength, which results primarily from its ability to offer the above-mentioned type of attractive “packages” comes, in these markets, at Bezeq’s expense, and Bezeq therefore needs a substantial television branch that it can control. The General Director also pointed to the additional incentives that Bezeq has for competing in the infrastructure market in this case. (For example, the differentiation offered through its infrastructure, as compared to the cable infrastructure). However, although the Tribunal accepted the General Director’s position in this matter at the level of principle, it found that “this claim was not proven through appropriate calculations or through an appropriate economic analysis.” The Tribunal therefore held that the “General Director has not carried the burden of proof on this topic.”

I cannot accept this conclusion. Indeed, the General Director did not present an economic analysis at the level of calculations and numbers regarding the economic feasibility for Bezeq of entering into the infrastructure market without the merger, given its holdings in Yes, and it may certainly be that if the General Director had not been able to present detailed subjective proof in this case showing Bezeq’s intentions in this context, it would not be possible to be satisfied with a general presentation of the benefits and economic incentives that Bezeq would receive from independent competition in the infrastructure market. But even if we start with the assumption that the burden of proof was on the General Director

 

 

(and as noted above, I tend towards accepting that view), it appears to me that the subjective proofs that the General Director did present in this case, along with her economic analysis, were sufficient to shift the tactical burden to Bezeq to show that despite such proof, it is not, in this case and in light of its holdings in Yes, have been economically worthwhile from Bezeq’s perspective to compete independently in the infrastructure market with the IPTV technology. In other words, the party that was required to present calculations and numbers regarding the lack of economic feasibility in this case was Bezeq, and it did not (present such calculations and numbers).

33.          The extent to which Bezeq is do so interested in entering the infrastructure market with the IPTV technology can be learned from the position paper that it presented to the Grunau Commission in March of 2007, and in which the following, inter alia, was stated by her:

Bezeq is prepared to be recruited to the cause of promoting the consumers’ benefit regarding this important subject as well, and to commit to and to invest the significant amounts required to establish the IPTV services. Bezeq is prepared to invest significant amounts in the construction of the IPTV system for the transmission of content to the customer’s home, including the hardware, and it will be willing to allow any content provider to transmit content on this platform on the basis of income sharing (or on any other transactional basis). . . .

Bezeq sees the investment in upgrading of its infrastructures and the expansion of its operations in the content area through the IPTV platform as an act that will expand the possibilities offered to the content and multi-channel television broadcasts consumer. In the presence of appropriate conditions for investment, Bezeq believes that the addition of a third  multi-channel television broadcast platform will help to significantly improve the Israeli consumer’s welfare, for the following reasons, inter alia:

„The IPTV technology has a technological advantage over the cable and satellite platforms in that it allows many content providing entities to offer their contents alongside each other on this infrastructure, with relative ease . . . their entry will contribute   to   increased   competition   in   the   multi-channel

 

television broadcast market and will lead to a reduction in the costs of the services that are currently offered in this market.

In addition, it is reasonable to assume that those providing content on the IPTV network will launch a wide variety of commercial offers and channel packages at varying prices. It is also reasonable to assume that the launching of the IPTV services in this spirit will force the existing competitors to respond and offer more “basic” packages of multi-channel television broadcast services . . .’

(Bezeq’s preliminary position regarding policy and competition rules in the field of Israeli communications, March 2007, pp. 170-18 (hereinafter: the Bezeq Grunau Commission position)).

 

Furthermore, Bezeq, for the purpose of presenting its position to the Grunau Commission, relied on the General Director’s approach in this context and noted the following:

 

"The Israeli Antitrust Authority [the IAA] has also recognized the importance of the IPTV platform for competition in the multi-channel television broadcast market in Israel, and has also recognized the fact that Bezeq is the only entity in Israel that has the ability to provide these services. This is also the ground on which the IAA based its objection to Bezeq’s application for an approval of a proposed merger with Yes, noting that this merger could affect the penetration of the IPTV services".

(Bezeq Grunau Commission position, p. 17)

 

Thus, Bezeq’s position to a government committee dealing with the communications market was that Bezeq would, without the merger, construct an IPTV network that would compete with the existing players in the market and would thus contribute to a reduction in prices, to an improvement of the variety and quality, and to the integration of additional players in the multi- channel television broadcast market. The conditions that Bezeq listed for this purpose in its position paper refer primarily to the regulatory horizon, but unlike its position before us today, the position paper does not mention the approval of the merger as a condition for the Bezeq’s construction and operation of the IPTV network.  To the contrary, its discussion there of the

 

 

General Director’s position, and its reliance on that position, indicates the opposite.  The Tribunal did not see fit to attribute any weight to this clear position taken by Bezeq before the Grunau Commission and was satisfied with finding that “there [when facing the Grunau Commission], Bezeq exalted the importance of the IPTV infrastructure’s implication for increasing competition in the multi-channel television broadcast field.”  It seems to me that the Tribunal erred in doing so and that in light of the correlation between the estimations presented by the General Director regarding the competition map without the merger and the position taken by Bezeq regarding this subject before the Grunau Commission, it was appropriate to attribute greater weight to these comments than the Tribunal did.   Similarly, and as noted above, Bezeq is already currently at the peak of an expensive upgrading process to the NGN network, without it having been promised the regulatory horizon which it sought to receive in the position paper that it had presented to the Grunau Commission.  Under these circumstances, I do not believe that Bezeq can rely on the conditions that it had presented to the commission (which, as stated do not include the approval of the merger) as the basis for an argument that it will not carry out another process that will put the NGN into use as an infrastructure for the provision of IPTV services as well.

34.          Additional subjective proofs that were presented, indicating that there is reasonable likelihood that Bezeq will compete in the infrastructure market by providing IPTV services without the merger, can be found in the two presentations made by the TASC consulting firm (hereinafter: the consulting firm), which summarize an economic paper that it prepared for Bezeq without any connection to the proceeding being conducted in the Tribunal. The presentations are dated May 2006 (a year before the submission of the position paper to the Grunau Commission and some three months before Bezeq’s application to the General Director for approval of the merger). The first presentation is entitled “Bezeq’s IPTV Strategy” (hereinafter: the "first presentation) and the second presentation is called “Bezeq and Yes: Future Ownership Alternatives (hereinafter: the  second presentation). The first presentation analyzes the share of paid multi-channel television broadcast in Israel compared with other markets in the communications field, and it notes that the trend in the market is beginning to indicate a turn in the direction of Hot. It also states that there is an urgent need to provide a solution to Hot’s abilities concerning VOD service, triple play service packages and content. The   presentation   further   indicates   that   many   fixed   communications

 

companies throughout the world have begun to enter into the multi-channel television broadcasts market through IPTV technology, primarily in order to protect their market share  in the  fields of telephony and Internet. The presentation describes Bezeq’s need to establish a television branch and Bezeq’s business possibilities in relation to Yes. The presentation reviews three possibilities in relation to Yes - the possibility of selling off the Yes holdings; the possibility of moving up to control of Yes; and the possibility of preserving the existing situation in the short run and taking action within a range of several years. In each model, the proposal is that Bezeq should establish an IPTV infrastructure and enter into the content field – either through the purchase of full control of Yes or through its independent entry into the market, in accordance with the strategy that Bezeq seeks to follow in relation to Yes. Regarding the last possibility - i.e., the preservation of Bezeq’s current holdings in Yes (the situation with is relevant for this matter in light of the stipulation reached by the parties regarding the possibility that the merger is not approved) - one option is presented, which is the establishment of an IPTV infrastructure along with independent entry into the content market with or without Yes – (“create retail TV operation (with or without) Yes.” The conclusion set out in the first presentation is that “a physical and commercial connection” between multi-channel television broadcasts and broadband services can improve and strengthen Bezeq’s share of the general market in the areas of its operation, and provide a solution to the encroaching of other communications companies on Bezeq’s market shares in telephony and Internet, even though the second presentation states that Bezeq’s activity in relation to its holdings in Yes will not have any impact on the telephony or Internet markets: “Under any of the options we don’t foresee a major impact to the telephony or broadband market share.” (Page 28 of the second presentation.) These documents, which were prepared for Bezeq from the strategic-economic perspective and not for the purpose of conducting the legal proceeding, can serve to indicate that according to the consulting firm, the logical economic option for Bezeq, if the merger is not approved, is to enter the field of multi-channel television broadcasts independently – both as the owner of the IPTV infrastructure and as a broadcaster.

 

The Tribunal did not attribute any evidentiary weight whatsoever to these presentations and noted: “We have not been persuaded that the presentations from Sh’chori (the CEO of the consulting firm) represent a decision made by Bezeq to do what is alleged, since   we have not been shown any  decision

 

 

made by the Bezeq board of directors as a consequence of the presentation.” It added: “It has not been clarified that from Bezeq’s perspective, Sh’chori was the party that exhausted the examination of economic feasibility, and that following his examination, a positive decision was made by the board of directors. As I noted above, this demand made by the Tribunal to find a “smoking gun” among the documents of the companies seeking to merge is unreasonable and unnecessary. There is no need and no obligation to show that the board of directors of a company seeking to merge has made a decision to carry out an independent competition move which was certainly not, at the stage of the submission of a notice of merger, its preferred option. There could be cases in which subjective evidence will not be found at all but it will still be possible to show, through objective proof, a reasonable likelihood of the existence of an actual potential competitor absent the merger. In the present  case, the presentations that were brought to the Tribunal – especially in light of the position taken by Bezeq regarding the same matter one year later before the Grunau commission – do indicate the fact that Bezeq carried out a serious economic analysis and examined, inter alia, the possibility of entering into the infrastructure market, and to the extent possible, into the content market as well, and it later on even adopted a position that promoted such a process, which it saw fit to present to the government commission dealing with the subject. (Regarding the existence of a serious examination of the possibility of entry into the market by an actual potential competitor as proof of the ability to apply the doctrine in a concrete case, see Areeda & Turner, Antitrust Law, s.1121b). In my view, all of these, along with Bezeq’s actions in promoting the construction of the NGN network, are enough to indicate a reasonable likelihood that without the merger, Bezeq is an actual potential competitor in the market of infrastructure for the provision of IPTV services, even given its current holdings in Yes. Since Bezeq did not, through any of its evidence, contradict the existence of this probability (and its general argument regarding the market’s being saturated is not sufficient for this purpose), the Tribunal should have held that such a likelihood did exist.

35.          An additional condition presented by the [application of the] actual potential competitor doctrine is that an alternative entry into the market, other than through the merger, is preferable to the merger from a competition perspective. In our case, the General Director indicated that Bezeq’s independent  entry   into  the  infrastructure   market   presents   remarkable

 

competition advantages: (a) it is expected to increase the number of the relevant players from two to three in the near future, and this is a real development in terms of reduction of concentration in this market, given that the entry of a different technology other than IPTV into the infrastructure market, in addition to cable and satellite, is not likely to happen in the short term; (b) in general, competition between infrastructures is preferable to competition on the infrastructures (even the Grunau Commission noted that this model naturally restricts the number of the relevant players to the number of infrastructure owners, and that in a saturated market characterized by a small number of competitors, it is not clear that this is the most effective model of competition, and according to the Commission the desirable solution in these markets is the development of a wholesale market in the context of which providers can lease or operate on other parties’ infrastructures – see: Grunau Commission Report, pages 5-6, 77; Rosen’s testimony on June 18, 2008, p. 58); (c) an additional independent infrastructure with new technology can contribute to the improved quality of the broadcasts (which is dependent on the capacity of the infrastructure and on the technology which it uses), improved variety of broadcasts (which is dependent on the capacity of the infrastructure and on the number of channels which it can bear), and the correlation between consumer demand and supply (uniform broadcasting, channel packages, a VOD channel, consumption of isolated channels, and more); (d) Bezeq’s independent entry into the infrastructure market only, using the IPTV technology, has advantages for the content market as well; to the extent that Bezeq will construe the IPTV network and will not be able to broadcast on it itself because of the statutory and regulatory restrictions discussed above, there is potential for an additional expansion of the number of broadcasters who can broadcast at the same time, in light of the technological abilities of the IPTV network, and this would reduce the barriers to entry into the content market; (e) Bezeq’s independent entry into the infrastructure field as a third and independent competitor can bring about a reduction in Hot’s and Yes’ market power in terms of purchasing contents from content and channel producers.

In contrast, if the merger is approved, Bezeq will become the controlling shareholder of Yes as the party holding 58.36% of the shares in it, and it will hold the right to appoint most of the members of the board of directors, compared to its current right as the owner of 49.78% of the shares to appoint only 5 out of 11 members of the board of directors. Bezeq’s crossing of the 50% holding line with respect to its holdings in Yes has a far- reaching significance in terms of its ability to steer Yes’ business’ program

 

 

and to make use of it as a tool for promoting its own interests, compared to the current situation in which Yes is free to be conducted according to its own economic interests, as distinct from Bezeq’s.

Section  278  of  the  Companies  Law,  1999,  provides  as  follows regarding this matter:

„(a) A director who has a personal interest in the approval of a transaction, other than a transaction as referred to in s.271, that is brought before the audit committee or the board of directors for approval, shall not be present during the deliberation and shall not take part in the voting of the audit committee and of the board of directors.

(b)          Notwithstanding the provisions of subsection (a), a director may be present at a deliberation of the audit committee and may take part in the voting if the majority of the members of the audit committee have a personal interest in the approval of the transaction; likewise, a director may be present at the deliberation of the board of directors and may take part in the voting if the majority of the directors of the company have a personal interest in the approval of the transaction.

(c)           Where the majority of the directors on the board of directors of a company have a personal interest in the approval of a transaction as aforesaid in subsection (a), the transaction shall also require the approval of the general meeting.’

 

Therefore, in the current situation, Bezeq’s directors [on the Yes board] could not take part in a vote relating to a transaction between Yes and Bezeq. However, an increase to control of beyond 50% of Yes and the appointment of the majority of the directors by Bezeq – upon the exercise of the options and the occurrence of the merger – would lead to a cancellation of the obligation to abstain pursuant to the above-mentioned s. 278 (b). It should be mentioned in this context that after the 50% holding line is crossed, Bezeq can increase up to a holding of 100% of Yes, apparently without an additional point of control on the part of the General Director (according to the guidelines that she follows). One possible scenario in this situation is that Bezeq will work to make the IPTV technology, instead of the satellite infrastructure, available to Yes. In terms of the relevant market, this does not

 

change the number of players in the market – the market in this situation was and will remain a duopoly, but instead of a satellite infrastructure, Yes will operate as a content brand on the IPTV infrastructure and this situation could lead to the atrophying of the satellite infrastructure. (Regarding this matter, see Farkash-Hacohen, 164-165). Even if it can be said that the exchange of one infrastructure (satellite) for a more advanced one (IPTV) has advantages in terms of the quality of the broadcasts and the level of customer service (a definite advantage is the possibility of adding VOD service on this infrastructure), the scenario described above will establish the current duopolostic structure of the market, as compared to the competition advantages that we noted above which the market will gain in the absence of the merger, upon Bezeq’s entry as an additional competitor with the IPTV technology.

An additional possible scenario that could take place if the merger is approved, which would have consequences from a vertical perspective (in contrast to the competition advantages we noted above regarding what would happen if the merger were not approved), deals with the foreclosure of content providers competing with Yes, who will seek to “ride” on Bezeq’s IPTV infrastructure. This would happen even if Bezeq were to open this infrastructure to third parties ([based on the] open access [model]) after the merger’s approval and the construction of the infrastructure. We refer here to substantive foreclosure in the form of damaging the quality of the broadcast (compare In the Matters of Formal Complaint of Free Press and Public Knowledge Against Comcast Corporation for Secretly Degrading Peer to Peer Applications, 23 F.C.C. Rcd 13028 (2008)) or by way of the cost set for the service (a price squeeze) [- practices that Bezeq could adopt] in order to preserve the duopolistic structure of the multi-channel television broadcast market vis-à-vis the end consumer and in order to preserve the market power of Yes, which will be controlled by Bezeq following the merger, vis-à-vis the content producers and the independent channel producers. Although Bezeq already has an incentive for foreclosing the market given the size of its holdings in Yes, this risk will grow in the face of the proposed merger, which will give it control over Yes and will increase its ability and its interest in carrying out such a process.

To sum up: two of the key conditions for establishing the potential competitor doctrine are present here – there is a reasonable likelihood that Bezeq, as a potential competitor, will enter into the multi-channel television infrastructure market and will provide IPTV services, and it has been proven that it has the technological ability and the economic incentive to do so in the

 

 

short term. Additionally, it appears that Bezeq’s [independent] entry into the multi-channel television infrastructure market as stated presents considerable advantages over the situation that would develop in this market if the merger is approved.

We still need to examine whether such a similar result could be achieved through the approval of the merger with conditions. As may be recalled, the Tribunal stipulated conditions for the merger in this case, even though it believed that there had been no proof that there was a reasonable risk of significant damage to competition. The General Director and Eurocom as well both correctly noted in their appeals the difficulty that the ruling raises in this context, and I will discuss this below.

 

The Tribunal’s authority to stipulate conditions for a merger which does not create a reasonable risk of significant damage to competition

36.          The Tribunal, as stated, found that the merger under discussion does not give rise to a reasonable risk of significant damage to competition, as the Tribunal noted:

 

„After examining all the material before us, including the testimony of the expert Rosen, we have reached the conclusion that the General Director’s vision that if the merger is not approved, an independent competing television broadcast infrastructure will arise is insufficiently grounded . . .

The economic analysis at the basis of the General Director’s position assumes future developments for at least some of which there is only a low probability of their taking place. In our view, all together, even if it is possible to see a risk of significant damage to competition, it cannot be said that this is a risk for which the likelihood of its realization exceeds 50%. Therefore, we cannot agree with the General Director’s position that the merger will significantly damage competition.’

(Emphases added, paras. 9 and 11 of the decision.)

 

Nevertheless, the Tribunal saw fit to stipulate conditions for the merger’s approval, for a situation in which the assumptions that are at the basis of the General Director’s position are realized, even though, as stated, it found that

 

the  chance  that  these  assumptions  would  be  realized  is  low,  stating  as follows:

 

„We accept that increasing the percentage of Bezeq’s holding in Yes strengthens Bezeq’s interests in Yes, and we agree that it is important to first ensure the construction of the IPTV infrastructure, and if it is constructed, to ensure that it is made available to other entities that compete with Yes. Therefore, in the event that all suppositions at the basis of the General Director’s position – the probability of which we have held is low – are indeed realized, we have seen fit to establish conditions for the approval of the merger, based on our view that the significance of the process of Bezeq’s achievement of control over Yes can be significantly reduced. Furthermore, the appellant has agreed to the principle of their imposition, and has even agreed to several of them concretely.

. . .

At the basis of the conditions which we intend to stipulate for the merger is, therefore, our evaluation that even without the merger, there are competitive restrictions in the market with which we are dealing, due to Bezeq’s existing holdings in Yes. Therefore, the imposition of conditions – which is made possible by the fact that Bezeq and Yes need the Tribunal’s approval – makes it possible to prevent significant damage to competition, and even to improve competition in the market, even if, in the unlikely  event, all of the General Director’s concerns are realized.’

(Emphases added, paras. 11 and 69 of the Decision.)

 

The Tribunal was aware of s.21 of the Restrictive Trade Practices Law, which provides as follows:

 

"The General Director shall object to a merger or stipulate conditions for it, if he believes that there is a reasonable risk that, as a result of the merger as proposed, the competition in the relevant sector would be significantly damaged or that the public would be injured in one of the following regards:

 

 

(1)          The price level of an Asset or a Service;

(2)          Low quality of an Asset or of a Service;

(3)          The quantity of the Asset or the scope of the Service supplied, or the constancy and conditions of such supply".

 

Nevertheless, despite the section’s language, the Tribunal believed that it could impose conditions for the merger, for which it was necessary to presume “significant damage to competition for the purpose of imposing them.” It further believed that where the Tribunal does not completely rule out the possibility of the realization of risks that the General Director has pointed out, conditions can be presented for the merger’s approval which can promote a reform that benefits competition, provided that they “basically prevent the damage to competition.”

I believe that the Tribunal erred in doing this.

Section 21 of the Restrictive Trade Practices Law clearly distinguishes between a merger that does not raise a risk of significant damage to competition, which the General Director is required to approve and a merger that does raise a reasonable risk of significant damage to competition or to the public interest regarding one of the matters listed in the section, and in such a case, the General Director may act in one of two ways – she can approve the merger while stipulating conditions that remove the risk of significant damage to competition; and if such conditions cannot be established, the General Director must oppose the merger. Section 22(c) of the Restrictive Trade Practices Law provides that “the Tribunal may reaffirm the General Director’s decision, revoke it or amend it,” but its authority to do so is also subject to the provisions of s.21 of the Law and to the normative framework established there (see Yagur, 639). In other words, the Tribunal, when adjudicating an appeal of a General Director’s decision, does not have absolute discretion to order as it wishes and it cannot stipulate conditions of a merger’s approval which, according to its own determination, does not give rise to reasonable risk of significant damage to competition in the relevant industry. Any other approach changes the balances of clashing interests as established in the Restrictive Trade Practices Law that relates to them, and changes the statutory arrangement created in s.21 of the Law which expresses these balances. These interests are the encouragement of competition and the

 

protection of the consumer on the one hand, and the preservation of freedom of occupation and the property rights of companies seeking to merge, on the other hand. Bezeq’s agreement to the imposition of the conditions under the circumstances that developed is not sufficient to grant the Tribunal authority in a case in which it has not been given that authority. However, in light of the conclusion we have reached according to which, unlike the Tribunal’s determination, there is in this case a reasonable risk of significant damage to competition according to the actual potential competitor doctrine, I did not see a need to decide what would be the legal fate of the conditions established by the Tribunal if we had reached a different conclusion (given the fact that Bezeq has not filed an appeal against the stipulation of the conditions).

37.          The principle that we follow regarding the remedy was well defined by the Tribunal, by the honorable Judge M. Shidlovsky-Or in Yehuda Pladot

v. General Director [12] , in the following words: “It is necessary to exhaust the possibility of stipulating conditions for the merger before concluding that it should not be approved, by virtue of the principle of proportionate harm to basic rights – in this case, the [right to] freedom of occupation and freedom of property.” (Yehuda Pladot v. General Director [12] at para. 70.) Therefore, we need to examine whether it is possible to avoid the result of a merger disqualification through the imposition of conditions for its approval and we also need to examine whether, for this purpose, the conditions set by the Tribunal can be adopted. As a rule, there is a tendency among antitrust authorities throughout the world to prefer structural conditions over behavioral ones as a response to the risk of damage to competition. (See: UK Merger Remedies: Competition Commission Guidelines, para. 2.14 (Nov. 2008); EU Commission Notice on remedies acceptable under Council Regulation (EEC) No 4064/89 and under Commission Regulation (EC) No 447/98; U.S. Department of Justice Antitrust Division Policy Guide to Merger Remedies at III.A (2004)). But this is not a rigid rule. (See: Katri Paas, Implications of the Smallness of an Economy for Merger Rememdies, Juridica International XV (2008)). In the DBS v. Cable and Satellite Broadcasts Council [4], the Tribunal noted that the regulatory policy and the standard remedies in the communications industry are based on open access for independent content providers to subscribers, and on restrictions on the scale of ownership of channels, and not on absolute separation between transmission and content (DBS v. Cable and Satellite Broadcasts Council par. 60 [4]). In the case before us, the main purpose which is achieved in preventing the merger is the addition of a competitor in the infrastructure market.  This

 

 

is a contribution to competition from a horizontal perspective through the weakening of the concentration in the existing duopolistic market, and it is hard to think of a structural condition in this case that will achieve this purpose. The behavioral conditions imposed by the Tribunal in this case raise significant difficulties, and not only because they require continued supervision regarding the activities of the merging companies and because the supervisory mechanism established in these conditions is complex and inefficient and relies to a great degree on future regulatory determinations by “the parties authorized by the Communications Law” who are supposed to give it substance even though these parties were not at all involved in this proceeding and it is doubtful whether it is possible, in this way, to impose on them powers and duties to determine “regulatory conditions for an entity which is broadcasting television broadcasts to have open access to Bezeq’s infrastructure” and to determine “uniform and reasonable usage fees.” The General Director expressed her position to the Tribunal and before us, that under the circumstances of this case, the competition risk cannot be resolved through the imposition of behavioral conditions that seek to ensure open access, because of the structural difficulty in ensuring such an arrangement where a single party (Bezeq) controls two out of three infrastructures in the market ( the IPTV and the satellite infrastructures, following the merger and the purchase of control of Yes). After examining the conditions stipulated by the Tribunal and all the arguments made by the parties in this context, I have not been persuaded that we can avoid disqualifying the merger in this case through the imposition of conditions. I therefore propose to my colleagues that we grant the General Director’s appeal, order that the Tribunal’s decision be cancelled and restore the General Director’s determination opposing the merger. I also propose to cancel the order charging the General Director with expenses, which was included in the Tribunal’s ruling dated March 23, 2009 regarding the petition submitted by the General Director for a stay of the decision’s implementation. In light of the result that I have reached, Bezeq’s counter-appeal against the size of the bank guarantee it was charged to present as part of the Tribunal’s conditions has become irrelevant, and I recommend to my colleagues that we order its denial. Finally, I propose to my colleagues that we do not issue an order concerning expenses in this case.

 

 

Deputy President E. Rivlin

 

I join in the clear, comprehensive and thorough decision of my colleague, Justice E. Hayut. I also believe that once the Antitrust Tribunal found that the merger between Bezeq and Yes does not do significant damage to competition, it was not authorized to subject the merger to the conditions which it had stipulated.

I also believe that the Tribunal erred in its said conclusion that the merger does not significantly damage competition and I agree that for the purpose of determining this damage in this case, we nee