Internet Law

HCJ 7846/19

 

 

Petitioners:                  1.         Adalah Legal Center for Arab Minority Rights in Israel

                                    2.         Association for Civil Rights in Israel

 

                                                            v.

 

Respondents:              1.         State Attorney’s Office – Cyber Department

                                    2.         Attorney General

 

Requests to Join:         1.         Lori Shem Tov

                                    2.         Movement for Freedom of Information

 

Petition for order nisi

 

Israeli Supreme Court cases cited:

[1]        EA 8/21 Shachar Ben Meir, Adv., v. Likud, (Feb. 27, 2019)

[2]        EA 27/21 Yisrael Beiteinu Faction v. Shamir Systems and Operators Ltd., (Feb. 26, 2019)

[3]        AAA 3782/12 Tel Aviv-Jaffa District Commander v. Israel Internet Association, (March 24, 2013) [https://versa.cardozo.yu.edu/opinions/tel-aviv-jaffa-district-commander-v-israel-internet-association]

[4]        LCA 4447/07 Mor v. Barak I.T.T. [1995] International Telecommunications Services Corporation, IsrSC 63(3) 664 (2009)

[5]        HCJ 8600/04 Shimoni v. Prime Minister, IsrSC 59(5) 673 (2005)

[6]        HCJ 6824/07 Manaa v. Israel Tax Authority, IsrSC 64(2) 479 (2010)

[7]        HCJ 399/85 Kahana v. Broadcasting Authority Management Board, IsrSC 41(3) 255 (1987)

[8]        HCJ 5185/13 A. v. Great Rabbinical Court, (Feb. 28, 2017)

[9]        MApp 2065/13 A. v. State of Israel, (March 22,2013)

[10]      HCJ 6972/07 Akiva Laxer, Adv. v. Minister of Finance, (March 22, 2009)

[11]      HCJ 84/82 Histadrut Po’alei Agudat Yisrael v. Minister of Religious Affairs, IsrSC 37(1) 813 (1984)

[12]      HCJ 828/90 Likud Faction of the Haifa Municipal Council v. Haifa Municipal Council, IsrSC 45(1) 506 (1991)

[13]      HCJ/149 Bejarano v. Police Minister, IsrSC 2 80 (1949) [https://versa.cardozo.yu.edu/opinions/bejerano-v-police-minister]

[14]      LCrimA 10141/09 Ben Haim v. State of Israel, (March 6, 2012)

[15]      HCJ 2918/93 Kiryat Gat Municipality v. State of Israel, IsrSC 47(5) 832 (1993)

[16]      HCJ 5128/94 Federman v. Minister of Police, IsrSC 48(5) 647 (1995)

[17]      HCJ 8600/04 Chair of the Hof Azza Regional Council v. Prime Minister, IsrSC 59(5) 673 (2005)

[18]      HCJ 11163/03 Supreme Monitoring Committee for Arab Affairs in Israel and others v. Prime Minister of Israel, (Feb. 27, 2006) [https://versa.cardozo.yu.edu/opinions/supreme-monitoring-committee-arab-affairs-israel-and-others-v-prime-minister-israel]

[19]      HCJ 144/50 Dr. Israel Sheib v. Minister of Defence, IsrSC 5 399 (1951) [https://versa.cardozo.yu.edu/opinions/sheib-v-minister-defence]

[20]      HCJ 4374/15 Movement for Quality Government v. Prime Minister, (March 27, 2016) [https://versa.cardozo.yu.edu/opinions/movement-quality-government-v-prime-minister]

[21]      CA 9183/09 Football Association Premier League Ltd. v. Anon., IsrSC 65(3) 521 (2012)

[22]      HCJ 7721/96 Israeli Insurance Adjusters Association v. Supervisor of Insurance, IsrSC 55(3) 625 (2001)

[23]      HCJ 6579/99 Filber v. State of Israel, (Nov. 1, 1999)

[24]      HCJ 551/99 Shekem Ltd. v. Director of Customs and VAT, IsrSc 54(1) 112 (1999)

[25]      5860/16 Facebook Inc. v. Ben Hamu, (May 31, 2018)

[26]      LCA 1239/19 Shaul v. Nayadli Communications Ltd., (Jan. 8, 2020)

[27]      HCJ 11163/03 Supreme Monitoring Committee for Arab Affairs in Israel and others v. Prime Minister of Israel, IsrSC 61(1) 1 (2006) [https://versa.cardozo.yu.edu/opinions/supreme-monitoring-committee-arab-affairs-israel-and-others-v-prime-minister-israel]

[28]      HCJ 5100/94 Public Committee against Torture v. State of Israel, IsrSC 53(4) 817 (1999) [https://versa.cardozo.yu.edu/opinions/public-committee-against-torture-v-israel]

[29]      LCA 3145/99 Bank Leumi v. Hazzan, IsrSC 57(5) 385 (2003)

[30]      CA 6821/93 United Mizrahi Bank v. Migdal Cooperative Village, IsrSC 49(4) 221 (1995); IsrLR 1995 (2) [https://versa.cardozo.yu.edu/opinions/united-mizrahi-bank-v-migdal-cooperative-village]

[31]      HCJ 10203/03 Hamifkad Haleumi v. Attorney General, IsrSC 62(4) 715 [https://versa.cardozo.yu.edu/opinions/hamifkad-haleumi-v-attorney-general]

[32]      HCJ 2442/11 Haim Shtanger, Adv. v. Speaker of the Knesset, IsrSC 66(2) 640 (2013) [https://versa.cardozo.yu.edu/opinions/shtanger-v-speaker-knesset]

[33]      HCJFH 9411/00 Arco Electric Industries Ltd. v. Mayor of Rishon LeZion, IsrSC 63(3) 41 (2009)

[34]      MApp 1190/18 Ethics Committee of the Tel Aviv District of the Bar Association v. David Yedid, Adv., (March 28, 2019)

[35]      HCJ 442/71 Lansky v. Minister of the Interior, IsrSC 26(2) 337 (1972)

[36]      CA 5739/18 Operators of the Website www.oligarchescorts.com v. State of Israel, (Oct. 15, 2018)

[37]      CrimFH 7383/08 Ungerfeld v. State of Israel, (July, 11, 2011)

[38]      LCrimA 5991/13 Segal v. State of Israel, (Nov. 2, 2017)

[39]      LCrimA 7052/18 State of Israel v. Rotem, (May 5, 2020)

[40]      HCJ 4455/19 Tebeka Advocacy for Equality and Justice for Ethiopian Israelis v. Israel Police, (Jan. 25, 2021)

[41]      HCJ 1901/94 MK Landau v. Jerusalem Municipality, IsrSC 48(4) 403 (1994)

[42]      HCJ 151/11 Ruth and Emanuel Rackman Center for the Advancement of the Status of Women v. Minister of Justice, (Dec. 27, 2011)

[43]      HCJ 384/82 Pachmas Metal & Plastic, Registered Partnership from Ein Horesh v. Minister of Finance, IsrSC 37(4) 297 (1982)

 

 

The Supreme Court sitting as Hugh Court of Justice

Before: President E. Hayut, Deputy President H. Melcer, Justice A. Stein

 

 

Judgment

(April 12, 2021)

 

Deputy President H. Melcer:

1.         The petition before the Court concerns the constitutionality of the activity of the Cyber Department of the State Attorney’s office (hereinafter: the Cyber Department, or the Department) in regard to online network operators, content providers and other online platforms (hereinafter: online platform operators or operators) with whom the Department maintains contact in order to prevent publications that may violate Israeli criminal law.

2.         In the framework of the petition, The Petitioners requested that an order nisi be issued against the Respondents, ordering them to show why the Cyber Department should not immediately desist from requesting that operators “voluntarily” remove content from the network.

            I will now present the facts relevant to deciding the matter.

 

Background and summary of relevant facts

3.         In September 2015, a cyber-enforcement unit was created in the Ministry of Justice (in the framework of the State Attorney’s Office). It’s creation “derived from the need for a focused effort to confront crime and terror in cyberspace, after identifying a sharply rising trend in cybercrime” (from the 2015-2016 Summary of the State Attorney’s Office – Appendix P/1 of the petition; hereinafter: the 2015 Summary). As arises from the preliminary response of the Respondents listed in the heading, the tasks assigned to the unit, which became a department, focused upon activity intended to reduce the harms and dangers caused by crimes perpetrated online, in two separate enforcement tracks that will be described below.

 

The statutory enforcement track

4.         The first enforcement track, which is not central to the present petition, concerns proceedings conducted by the Cyber Department by virtue of the Authorities for the Prevention of Committing Crimes through use of an Internet Site Law, 5777-2017 (hereinafter: Authorities for the Prevention of Crimes Law, or the Law), whose purpose is to prevent the commission of certain offenses, or the exposure of internet users to certain offenses committed by means of internet sites, by means of judicial orders (above and hereinafter: the statutory enforcement track). The Cyber Department’s activity conducted pursuant to the Law is consistent with the classic view of criminal enforcement in which the a prosecutor, as defined by the Law (who is one of the attorneys in the Department who, in accordance with sec. 1 of the Authorities for the Prevention of Crimes Law, has been so authorized by the Attorney General) applies to a District Court judge (so authorized by the President of the District Court) for an order instructing providers of access, searches and storage of content on the internet to remove or restrict access to content appearing on various internet sites, pursuant to the authority established therefor in the Prevention of Crimes Law (sec. 2 – 4 of the Law). This authority is specific to a number of criminal offenses perpetrated on the internet, such as: organizing or conducting illegal gaming, lotteries or betting (sec. 222 of the Penal Law, 5737-1977 (hereinafter: the Penal Law)), publishing pedophilic content (sec. 214(b) of the Penal Law), publishing prostitution services (secs. 202, 205A, 205C(a), 205D of the Penal Law), trafficking in dangerous drugs (secs. 13-14 of the Dangerous Drugs Ordinance [New Version], 5773-1973), an offence under sec. 7 of the Fight Against the Phenomenon of the Use of Dangerous Substances Law, 5773-2013, and internet activity by a terrorist organization (under the Counter Terrorism Law, 5776-2016).

            In accordance with the Law, these restraining orders are contingent upon various constraints, including that a restriction of access will not be issued if the means for executing the order constitute eavesdropping under the Eavesdropping Law, 5739-1979, whose provisions apply to the matter.

5.         In addition to the aforesaid, there are additional statutory provisions that grant the courts authority to order the removal of an advertisement, or restrict the publication of certain information, which are not specifically found in the Prevention of Crimes Law (e.g., publication of the name of a complainant in regard to sex offenses (sec. 352 of the Penal Law), or a publication in contravention of the provisions of sec. 34 of the Adoption of Children Law, 5741-1981 (which prohibits publishing the identity of various actors related to the adoption procedure)). In regard to these provisions, the Cyber Department noted in its preliminary response that it only “informs” (the providers) of the fact that the offending content does not meet the restrictions under the relevant law or a judicial order issued thereunder.

6.         In their preliminary response, the Respondents emphasized that the statutory enforcement track is not comprehensive, inasmuch as there is currently no coercive enforcement track that would allow the Cyber Department to act on the internet (subject to a court order) for the removal of additional publications that constitute other criminal offences, among them: content that incites violence, terror, or racism, or content that amounts to sexual harassment and threats. In this regard, it should be noted that the Respondents and others tried to advance legislation that would have granted the courts broader authority to remove harmful content published on the net, but for various reasons, those legislative initiatives did not come to fruition (see: Prevention of Committing Crimes by Means of the Internet (Removal of Content) Bill, 5778-2018; and Removal of Content from the Internet whose Publication Constitutes an Offense Bill, 5777-2016).

            This need, and other reasons that will be presented below, led to the creation of an additional, voluntary enforcement track, which is the focus of the petition before the Court.

 

The voluntary enforcement track

7.         The absence of general, explicit legal provisions granting authority to a judicial instance to order the removal of a publication that amounts to a prima facie criminal offense (beyond the Law, which was itself enacted only on July 26, 2017) led the State Attorney’s office to formulate another, additional conception for criminal enforcement that focuses upon the offense rather than its perpetrator. In this framework, it concentrates its efforts upon network platform operators. This activity is the focus of the petition. The term network platform is a codeword for a variety of civil bodies, mostly very powerful multinational corporations that operate a variety of frameworks for net activity, including:

A.        Online social networks that allow users to communicate with and be visible to other users, and inter alia, also share information, positions, and opinions (e.g., Facebook).

B.        Online search engines that facilitate searching for and retrieving information available on the internet (e.g., Google).

C.        Providers of hosting services for building and storing various internet sites. (In accordance with a work procedure appended to the Respondents’ preliminary response, titled: “Treatment of unlawful contents published in cyberspace” (hereinafter: the Work Procedure)).

 

8.         There would not appear to be any need to discuss the centrality of the above online platforms, which in our current digital age are a center for transmitting and exchanging views, and operate the space in which that discourse occurs. In the absence of regulatory legislation in the area, they also have the power to define the boundaries of the discourse and establish, inter alia, the rules for what is permitted and prohibited in all that concerns expression and the sharing of content on the net. Accordingly, each such platform operator establishes conditions for use or service, and “community rules” that apply to and obligate those seeking to use the social network or the search engine it operates. (See Prof. Balkin’s article: Jack M. Balkin, Free Speech is a Triangle, 118 Colum. L. Rev. 2011 (2018) (hereinafter: Balkin, Triangle)).

            In the framework of the preliminary response, the Respondents presented such rules, which were brought to its attention, that prohibit publication of content, including statements of intentions to commit violent acts, or support for terrorist organizations, as well as incitement and hate speech, or information likely to infringe the privacy of others. It further arises from the material presented to us that various operators also established a general prohibition in their “community rules” upon activity that violates local law. Common to all these conditions for use (or, at least, to all the operators whose community rules were presented to us) is that every user of the online platform, or any person exposed to the publication (whether a person, a corporation or a governmental authority) is afforded the possibility of reporting that a publication violates the platform’s rules, and that the decision as to how to act after the online platform operator is informed of a publication that appears to be harmful is, apparently, given to the exclusive discretion of the platform operator.

            Thus, for example, as the Respondents present it in their preliminary response, the community standards of the Facebook social network establish that a user cannot use the end-user services for a purpose “that is unlawful, misleading, discriminatory or fraudulent”. The said company also has the power to deny or restrict access to content that constitutes a violation of the rules. In addition, the community standards of that company-operator establish various restrictions on content published on Facebook, and in regard to activity on that platform, inter alia, provisions in regard to publications that will not be permitted. Thus, for example, they establish a prohibition upon publishing threats that are likely to lead to “high-severity” violence, and declarations of intentions to commit violent acts.

            These rules generally create a “Notice and Take Down” mechanism (and see: EA 8/21 Shachar Ben Meir, Adv., v. Likud [1], para. 86 (Feb. 27, 2019); and compare: EA 27/21 Yisrael Beiteinu Faction v. Shamir Systems and Operators Ltd. [2], paras 28-29 (Feb. 26, 2019)). By virtue of this mechanism, if the network platform operators receive notice of an alleged violation, they decide whether to leave the publication or remove it. Of late, it is possible to challenge a “take down decision”, at least on Facebook, before a kind of “appeals committee” that has the authority to conclusively decide upon complaints concerning decisions to remove contents from the platform. In early 2020, the board of directors published the said appeals committees, and the rules and procedures that govern such “appeals” (see: Oversight Board Bylaws (2021); and see: Evelyn Douek, What Kind of Oversight Board Have You Given Us?, U. Chicago L. Rev. Online 1 (2020)).

9.         The Cyber Department thus operates on the above track of a “notice and take down mechanism”. In the context of the matter before us, this is carried out in a manner agreed upon between the Department and the relevant internet platform operators, according to which, when the Department takes notice of information concerning a publication that, prima facie, violates Israeli law (whether included in the Prevention of Crimes Law, or not included in that Law), the staff of the Department refers the matter to the attention of the internet platform operators, by means of a structured mechanism for reporting harmful publications, that a prima facie offense is being committed on the infrastructure that it operates. The internet platform operators, in turn, address the report and decide, at their independent discretion, how to act and what to do in regard to the said report – whether to restrict access to that publication, remove it, block the user who violated their “user rules” in regard to publication, or not to take any action. Occasionally, according to the 2015 Summary, the report leads the internet platform operators to suspend or remove the user who published the prohibited expression that was the subject of the report.

10.       The present petition concerns the initiating of the said referrals by the Cyber Department to the internet platform operators in regard to alleged offenses of the aforesaid types that are perpetrated on the net. As noted in the Respondents’ preliminary response and detailed in the Work Procedure that regulate its activities, the Cyber Department periodically receives various requests regarding publications disseminated on the internet from various governmental sources (most of the requests come from security agencies). In accordance with he Work Procedure, upon receiving the request, a preliminary examination is conducted in regard to the existence of a prima facie offence in the publication. The examiner sends its recommendation for further action, and the matter is re-examined by a designated attorney in the Department. Pursuant to the Work Procedure, in appropriate cases, the decision on the request is sent for the personal approval of the Department’s director when the request concerns a publication that relates to senior civil servants, including employees of the Ministry of Justice and judges, or when there are doubts as to the lawfulness of the publication, or where the publication raises some other material question. Additionally, when the matter falls within a departmental area of responsibility and raises a question of interpretation, the Cyber Department consults with that department. In addition to the above, prior approval by the State Attorney is required on the following matters: taking action in regard to a publication concerning an elected official, requests in regard to content that relates to or is directed at particularly senior public servants, or in precedent setting cases or case that would involve the expansion of the activities of the Cyber Department.

            The above enforcement mechanism is referred to above and hereinafter as the voluntary enforcement mechanism. It is additional to the statutory enforcement mechanism, and in general (in the appropriate cases established in the Law) precedes it and renders it superfluous when results are achieved.

 

11.       In accordance with the Work Procedure, the Cyber Department considers a request to the internet platform operators only when three cumulative conditions are met:

            A.        The content constitutes a prima facie offense under Israeli law;

            B.        The content violates the internet platform’s term of use and there are additional considerations for reporting or referring it to the internet platform, such as: the actual circulation of the publication, its severity, the date of publication, the “viral” potential of the publication, or how the publication is likely to be interpreted by those who receive it.

            C.        The balancing conducted by the Cyber Department between the values of freedom of expression and access to information on the net as opposed to the values of the constitutional right to privacy, dignity and the reputation of the subject of the publication, as well as the public interest, justifies issuing the report so that the online platform operators will consider whether to remove the publication rather than leave it on the net.

 

12.       It would be appropriate to note at this juncture that, as arises from the arguments of the parties before us, the Work Procedures (some of which also concern enforcement actions under the Prevention of Crimes Law) have not yet been published. I, therefore, find it appropriate to note, already at this stage, that I believe it would be proper that the Work Procedures be brought to light in the manner that, for example, the Attorney General’s Guidelines are published (with the exception of those parts of the Procedures that concern state security or contacts between the Department and security agencies). See: Dalit Ken-Dror Feldman & Niva Elkin-Koren, Transparency in the Digital Environment: Governmental Removal of Illegal Speech via Online Platforms, 25 Hamishpat 25, 42-43 (2020) (Hebrew) (hereinafter: Ken-Dror Fedman & Elkin-Koren).

13.       In their preliminary response, the Respondents stated that the Cyber Department’s activity in the framework of the voluntary enforcement mechanism primarily focuses on reports and requests in regard to publications concerning the activities of terrorist organizations and incitement to violence and terrorism (according to the statement, this represents some 99% of the reports referred to the internet platform operators in 2018). The reports to the internet platform operators in regard to such contents point out that such publications appearing on those platforms amount, prima facie, to offenses of incitement and terror, identification with a terrorist organization, and so forth, and would appear to violate the “community rules” of the platform. The Respondents further note in their preliminary response that it is the estimation of the security agencies that a significant part of the terrorist activity perpetrated in the course of the “knife intifada” beginning in October 2015 was influenced by increasing consumption of social-network contents that incited violence and terror. This led to a need to act to reduce exposure to those publications on internet platforms by reporting to the internet platform operators that they amounted to prima facie criminal offences and deviated from the platform’s Terms of Use.

14.       In addition, it was explained that the Department also operates in the area of harm to minors, in cooperation with the National Child Online Protection Bureau, when it reports instances of violence and crime against children and youths (that amount to prima facie offenses of threats, sexual harassment, and infringement of privacy) on the internet to the internet platform operators. According to what was submitted, the Cyber Department also sends reports in regard to sexual images and videos that constitute prima facie offenses under the Prevention of Sexual Harassment Law, 5758-1988.

15.       Another area in which the Cyber Department operates is the prevention and restriction of harmful advertising that amounts to prima facie offenses of threats, infringement of privacy, or harassment of “certain types” of civil servants, where the advertisements can potentially deter the civil servants from exercising their authority and perform their duties, as part of the defensive shield that the state affords its employees, and when required for the proper functioning of the civil service. The Respondents noted that the Cyber Department acts with “great restraint” in this area, in view of the importance of public accountability of civil servants and the civil service in general. Thus, reports in this area are sent only in “the most extreme cases”, and at times, only after obtaining the consent of the State Attorney and given the existence of a real threat of harm to the public interest and the proper functioning of the civil service (we should note here that in all that relates to harmful publications against judges, the Courts Administration established Procedure 12-2019 of the Administrator of the Courts in the matter of “Work Procedures and Supervision for Treating Harmful Publications on the Internet” (2019), which is intended to promote, in cooperation with the Cyber Department, the removal or restriction of content that amounts to danger, humiliation, debasement, or harm to holders of judicial appointments (contempt of court constitutes an offense under sec. 255 of the Penal Law).

16.       Lastly, the Respondents’ preliminary response noted that the Cyber Department also acts to protect the integrity of Knesset elections. Thus, for example, in the last elections (for the 21^st and 22^nd Knessets), which took place after the Department was established, it was agreed – with the joint consent of the Central Elections Committee and the Attorney General – that reports would be sent to internet platform operators in regard to accounts of computer-generated fictitious users (“bots”), particularly when the identity of the person operating them (if there is one) is unknown, and in regard to fraudulent user accounts or human impersonators. All of the above was carried out in special circumstances and under restrictive conditions established “with great caution”. It is important to note in this regard that in all that concerns voluntary enforcement actions connected to the election process, the Department’s referrals concern technological actions prohibited by the criminal law, and not publications that, by virtue of their content, amount to prima facie offenses, and for the enforcement of restraining orders by virtue of sec. 17B of the Election (Means of Propaganda) Law, 5719-1959.

17.       There would not appear to be any disagreement among the parties as to the dimensions and effectiveness of the activities of the Cyber Department. As noted in the Cyber Department’s reports, upon which the parties rely: in 2016, the Department sent 2,241 reports, regarding which 76.5% of the publications were removed (in whole or in part); in 2017, reports were sent concerning 12,351 publications, regarding which 88% of the publications were removed; in 2018, reports were sent concerning 14,283 publications, of which some 92% of the reported publications were removed; in 2019, 19,606 reports were sent, regarding which some 90% of the reported publications were removed. It should be noted, as the Petitioners argue in their response, that it cannot be inferred from this that the data reflects the number of reports or requests for removal of content, inasmuch as it is possible that each said report comprised more than one link to harmful content (in fact, the 2015 Summary Report notes that, at times, each such report includes tens and even hundreds of links).

            The above data also demonstrate the widening of the phenomenon of prohibited content on the networks.

            As for the identity of the internet platform operators to whom the Respondents send requests – the Cyber Department’s reports show that in 2018, 87% of the reports were sent to Facebook, 8% to Twitter, and the remainder were sent to other internet platform operators (e.g., YouTube, Instagram, and Google).

 

Arguments of the parties in the petition before the Court

18.       This petition was filed after the requests sent by the Petitioners over the course of the last few years to bring about the cessation of the Respondents’ voluntary enforcement mechanism did not succeed. In the framework of the petition, the Petitioners argue that the manner in which the mechanism is employed can potentially infringe the constitutional rights to due process and freedom of expression, while not meeting the conditions of the “Limitations Clause” established in sec. 8 of Basic Law: Human Dignity and Liberty. Their main argument in this regard concerns the lack of express statutory authorization to act in this manner, such that the voluntary enforcement mechanism operates, in their opinion, in breach of fundamental principles of constitutional and administrative law.  In this regard, it is further argued that we are concerned with a mechanism that grants the prosecution (the State Attorney’s Office) broad authority to delineate the bounds of freedom of expression, in that it is the Department that decides that certain content is unlawful, without turning to the courts and without granting a right to be heard.

            In the Petitioners’ view, it is uncontestable that a referral initiated by the Respondents to the internet platform operators for the purpose of removing content is, in fact, governmental activity that requires express statutory authorization, inasmuch as even if the Cyber Department’s action does not amount to a coercive order, every action by the Department constitutes a governmental action that requires authorization. In the absence of such authorization, the Court must order the cessation of the Cyber Department’s activity, even without a showing of the extent of the violation of the protected rights and the activity’s conformance to the other conditions of the Limitations Clause established in sec. 8 of Basic Law: Human Dignity and Liberty.

            In the support of their arguments, the Petitioners referred to two petitions that, in their view, treated of related subjects, as follows:

            The first is AAA 3782/12 Tel Aviv-Jaffa District Commander v. Israel Internet Association [3] (hereinafter: the Israel Internet Association case), which held (per Justice U. Vogelman, President A. Grunis concurring, Justice N. Sohlberg dissenting) that the authority of a police district commissioner to order the closure of a gambling site does not extend to internet providers in regard to an online gambling website that violated sec. 229(a)(1) of the Penal Law (as it then stood), inasmuch as the provision of the said law does not expressly grant statutory authority to the District Commissioner to order third parties (providers of access who are not the website operators) to block an online gambling website.

            The second is LCA 4447/07 Mor v. Barak I.T.T. [1995] International Telecommunications Services Corporation [4] (hereinafter: the Mor case), which held that in the absence of a legislative framework that creates a possibility for ordering a provider of internet access to expose the identity of an anonymous user, it should not be pursued by “judicial legislation” (see, ibid., at p. 688).

19.       As for the possibility that the Cyber Departments authority to act in a “voluntary” manner is granted by virtue of the government’s residual power under sec. 32 of Basic Law: The Government, the Petitioners’ take the view that such authority does not apply to cases in which the exercise of the authority results in a violation of basic rights. In this regard, they referred to HCJ 8600/04 Shimoni v. Prime Minister [5], 687, and HCJ 6824/07 Manaa v. Tax Authority [6] (hereinafter: the Manaa case) (regarding the enforcement authority). In addition, the Petitioners also rejected the possibility that the Cyber Department’s authority is granted by virtue of the auxiliary powers set out in sec. 17(b) of the Interpretation Law, 5741-1981 (hereinafter: the Interpretation Law), which provides: “Any empowerment to do or enforce the doing of something implies the conferment of  auxiliary powers reasonably required therefor”. In the opinion of the Petitioners, that provision cannot support the Respondents, inasmuch as in the framework of the reports that the Department sends, it, in practice, trespasses the boundaries of the courts, which alone, according to the Petitioners, hold the authority to decide, after hearing the parties, whether or not a particular publication constitutes a crime.

20.       In addition to the above, the Petitioners also argue extensively in regard to the manner in which, in their opinion, the voluntary enforcement mechanism violates constitutional basic rights, first and foremost, the right to freedom of expression, which they believe, under the case law of this Court, is broad enough to encompass even harmful expression that rises to the level of incitement to violence or racism. In this regard, they cited HCJ 399/85 Kahana v.  Broadcasting Authority Management Board [7]. In this regard, it is argued that removing and restricting the said publications not only prevents the publisher from expressing his opinion freely, but also harms the other users of the internet online platforms due to restricting their access to the information that has been restricted or removed. They also argue that the voluntary enforcement mechanism is also indicative of a violation of the separation of powers inasmuch as it represents a situation in which the “last word” in all that regards the lawfulness of any publication rests in the hands of an administrative agency or the internet platform operators, and not the court, which is normally supposed to decide such matters. It is further argued that removal of the publication by the internet platform operators (pursuant to a request by the Cyber Department) constitutes a violation of the right of users to due process. Moreover, the Petitioners argue that there are additional defects in the Respondents’ activities, such as: not maintaining an appropriate record in regard to publications for which reports were sent by the Department to internet platform operators.

21.       As opposed to what is argued in the petition, the Respondents are of the opinion that the enforcement procedure that is the subject of the petition is a completely voluntary procedure that should not be seen as a governmental act, per se, and that the discretion in regard to removal or other steps pursuant to the report is entirely in the hands of the internet platform operators alone (inter alia, the Respondents rely in this regard upon HCJ 5185/13 A. v. Great Rabbinical Court [8], which treats of the “Rabbeinu Tam sanctions”[1] (hereinafter: the Rabbeinu Tam Sanctions Affair)). This argument was expanded upon elsewhere by the founder and head of the Cyber Department, Dr. Haim Vismonski, who said as follows:

In practice, an act on the voluntary-consensual level is not an exercise of authority in the sense of an order or an obligatory demand. In practice, it is a request based upon the understanding that the service provider will examine it in accordance with its own terms of use and criteria. (Haim Vismonski, Alternative Enforcement of Expression Offenses in Cyberspace, Law, Society & Culture 691, 725 (2018) (Hebrew).

            The Respondents further point to the unique advantages of the Cyber Department over persons (harmed individuals) or other bodies that might serve as reporters of offenses of the type under discussion in cybernetic space, and the great benefit of the Department’s actions for the public interest. It is argued in this regard that in view of the fact that the Department is a “repeating player” that is proficient in the terms of use of the online platforms, and keeps abreast of changes to those terms from time to time, it enjoys an inherent advantage and reliability in operating the voluntary track. It is, therefore, appropriate that it speak on behalf of other governmental bodies, as well as for plain citizens, who cannot contend on their own with internet platform operators and with those who abuse the platforms or access to them. It is thus argued that the Department serves the public in general. In this regard, the Respondents emphasize that the referrals to internet platform operators are made only when the publications meet the criteria set out in para. 11 above, and when it is appears that the publications conspicuously violate the Terms of Use of the online platforms.

22.       Moreover, the Respondents point out that the Cyber Department has been granted the status of “reliable reporter” by several of those internet platform operators, which gives examination of the Department’s reports precedence over others, and the speed of the response results in reducing the harm (however, according to the Respondents, that does not influence the manner of examining the report submitted to the internet platform). In addition, the Respondents note that due to its nature, in view of the resources and significant knowledge at the disposal of the various governmental organs, it is important to maintain the voluntary enforcement mechanism as a means for which there is currently no alternative for reporting and acting against acts of impersonation, fraud or other criminal offenses perpetrated on the internet. Moreover, due to the location of such criminal acts – generally beyond the borders of the state – and given the limited international judicial authority, in the absence of the voluntary enforcement track, “bad actors” in cyberspace would continue to succeed and their acts would not be subject to enforcement.

23.       Parenthetically, but not of marginal importance, the Respondents argue that the petition should be dismissed for not meeting the threshold requirements for filing a petition due to a substantial factual deficiency and for not joining relevant respondents – the internet platform operators. The Respondents argue that joining those parties could shed light on the independent discretion that they exercise in regard to the Department’s referrals, as well as other subjects comprised by the petition, which will be explained below.

 

Additional developments

24.       Following the hearing of the parties to the petition on Aug. 3, 2020, we ordered the Respondents to supplement their arguments, inter alia, in regard to parallel arrangements in other countries.

25.       The Respondents did so, and in that context, presenting examples from comparative law, they reiterated their arguments that internet platform operators have broad discretion in deciding whether or not to remove publications, and that the Respondents’ authority to act in the framework of the voluntary mechanism is grounded in their power to enforce the rule of law and to protect the public interest. Therefore, in their view, they are permitted to act to bring about the removal of harmful internet publications that appear to violate criminal law, and that this is in accordance with the auxiliary power granted to them as an administrative agency (in our case, in reliance upon sec. 17(b) of the Interpretation Law). The Respondents also repeated their arguments that the reporting of publications overwhelmingly concerns instances of expression that can harm state security, and that the referrals are made subject to the fulfilment of a number of cumulative criteria, demonstrating that the governmental agencies and the State Attorney’s Office will only act in this area in exceptional, extreme circumstances.

26.       Turning to comparative law, it is argued that a number of democratic states and international bodies also address this subject through voluntary enforcement, without any specific, express authority in primary legislation, and that the world now agrees that this is the only effective means for the removal of violating publications from the internet, and that otherwise a situation of total anarchy would emerge, in which everyone would do as he sees fit, while violating local criminal law. In this regard, it is further argued that international arrangements and regulatory guidelines applicable under European law serve as the source of authority for voluntary enforcement by states and various bodies in the European Union in the matter of removing harmful publications from the internet. Examples of this were provided from France, Belgium, Spain, Germany, and Great Britain.

            Thus, for example, in 2016, the European Union signed an arrangement with Facebook, Microsoft, Twitter, and YouTube that outlines the treatment of hate publications by means of the internal reporting mechanisms of the internet platforms. These arrangements were later joined by such companies as Instagram, Snapchat, and TikTok. Pursuant to the arrangement, various bodies in the European Union were recognized as “reliable reporters” – mostly third-sector organizations, and some state agencies. According to the Respondents, this arrangement constitutes a framework for the activity of European states on the voluntary track, although some of them have specific, internal arrangements.

            The Respondents also noted the existence of coercive arrangements in some European states, which do not refer to the possibility of voluntary action even though it takes place, such as the activity of the Swiss Federal Office of Police, for example (in Belgium, there is a governmental agency whose authorities are defined in a cooperation agreement between the federal government and the districts and communities. This agreement grants the governmental agency general authority “to take legal action”).

            As opposed to this, it was noted that the law enforcement agency of the European Union, Europol, acts on the voluntary level by virtue of express authorization in reg. 4(1)(m) of Europol Regulation 2016/794. In France, the Central Office for the Fight against Crime linked to Information Technology and Communication (OCLCTIC) is authorized by sec. 1 of an order pursuant to the counter-terrorism law (loi n° 2004-575 du 21 juin 2004, amended in 2014) to request that search engines or hosting service providers remove content that amounts to certain criminal offenses, such as encouraging terror or pedophilia, without need for a judicial order.

27.       At this point we should note that, prior to the hearing, requests to join the proceedings were filed by Lori Shem Tov and the Movement for Freedom of Information (hereinafter: the Movement), as noted in the heading.

            The request of the Movement (which sought to join as an amicus curiae) is primarily based upon the argument that the question of authority at the focus of the petition should also be examined in light of the fact that, according to the Movement, the Cyber Department operates without transparency, and this is expressed by a lack of documentation of the content of the publications that the Cyber Department seeks to remove (according to the Movement, this can be inferred from the reply it received to its freedom of information request of Nov. 1, 2019). It is argued that this, inter alia, raises a fear that the Respondents’ referrals are “slanted and tainted by discrimination”, or arise, in part, from imprecise translation of the publications concerned. In addition, it is argued that there is a lack of clear guidelines for structuring the Cyber Department’s discretion prior to submitting a report to the internet platform operators. Moreover, the Movement argues that the transparency reports published by the Department are insufficient, and that they should include much more data, such as: the characteristics of the report sent to the operators and the demands therein (whether the agency requests the blocking of content, or, for example, also blocking the user); noting the relationship of the publications to the residents of the state, insofar as possible; clarification of whether the Department acts when the policy rules of the platform are violated, even if the publication does not constitute an offence, and so on.

            Lori Shem Tov (who did not attend the hearing before the Court, although she was invited), noted in her request to join that she wished to join as a petitioner because she claims to have been harmed by the conduct of the Cyber Department, and that she believes that the Department’s actions led to the removal of publications from the website she operates, on the claim that they constituted prima facie offenses against public servants.

28.       After examining the said requests to join, we decided to suffice with examining them without granting the requests to join, inasmuch as, inter alia, we have in any case decided to deny the petition for the reasons that will be set forth below. Moreover, in regard to the said requests to join, including the operators as respondents is absolutely necessary, and the fact that they chose not to do so is a fundamental defect under the circumstances.

 

Discussion and Decision

29.       After examining the parties’ briefs and appended documents, including the Cyber Department’s Work Procedure, and after hearing the arguments of the parties’ attorneys in the hearing and reading the supplementary briefs, I am of the opinion that the petition should be denied, subject to a number of comments for the future that the Respondents should consider, and so I recommend to the President and my colleague.

30.       Before delving into the various aspects that must be decided, I will note fundamental principles, which are no longer very new, in regard to the arena addressed by the petition, in which the Cyber Department operates – the internet. I will not elaborate upon the great blessing bestowed by technology in general, and upon the fundamental changes to the world and humanity following the arrival of online platforms – the narrowing of gaps, the availability of various services to individuals and society, the empowerment of marginalized populations, the enhancement of freedom of information, communication, expression, the press and association by connecting the close to the far, etc. (see the groundbreaking article by Prof. Niva Elkin-Koren, The New Intermediaries in the Virtual Public Forum, 6 Mishpat Umimshal pp. 381-420 (2003) (Hebrew)).

            As opposed to this, the petition before the Court treats of the manner in which the virtual space provided by the internet can serve as fertile ground for poisonous plants, weeds, and rotten fruit (compare: MApp 2065/13 A. v. State of Israel [9]). In this regard, the internet provides malicious actors with a platform for perpetrating crimes by “remote control”, in far wider dissemination than was available in the “old” world prior to the internet revolution, while the possible ill effects of their acts may embrace sectors and communities that were not previously exposed to the harmful activity.

            It would appear that this new sphere of activity therefore also requires means of enforcement that differ from the previously accepted methods, which hold the potential for quick, effective frustration of criminal activity on the internet. However, we should emphasize that this petition does not primarily concern adapting the means to the objective and examining the possibility that granting court orders in appropriate cases (pursuant to the statutory enforcement track) constitutes a less harmful means than the voluntary enforcement mechanism.

            The petition before us concerns the question of the authority to conduct the voluntary activity in the manner and form employed by the Cyber Department. I will, therefore, address these arguments in their order, below, but I will first examine the preliminary arguments raised against the petitioners, which claimed that the petition lacks a sufficient factual foundation, and that the fact that the Petitioners did not join the internet platform operators as respondents requires the dismissal of the petition.

Insufficient Factual Grounds

31.       In my opinion, it was possible to dismiss the petition on the basis of the absence of sufficient factual grounds for the argument that the Department acts without authority.

            In practice, the data submitted with the petition do not testify to the scope of the harm to the values of freedom of speech and access to information (to the extent that they do not amount to a crime). Of course, no one denies that the Cyber Department’s activity may ultimately cause the removal of various criminal publications from the internet. However, even if that is so, it is not at all clear to what extent the Cyber Department’s voluntary enforcement activity leads to a violation of protected rights, including the freedom of speech of the holders of the rights, in regard to publications that are not unlawful. There is no need to elaborate upon the fact that a fundamental condition of the protection granted under Basic Law: Human Dignity and Liberty is that the object of the claimed harm to the constitutional right be a “person” (see sec. 1 of the Basic Law, which speaks of the fundamental rights of the human being in Israel, and the end of sec. 2, which establishes: “There shall be no violation of the life, body or dignity of any person as such. (emphasis added – H.M.)). The reality provided by the internet shows that, at times, in order to prove that a fundamental right was violated (which is at the heart of the Petitioners’ arguments, along with the claim of lack of authority), the petitioner must show that the object of the harm is, indeed, a “person” (and in my view, impersonators of people, like avatars and bots, are excluded).

            In other words, avatars and robots do not enjoy human rights, not to mention that some of those robots are not even operated by humans but by artificial intelligence. In this regard, see: Ryan Abbot, The Reasonable Robot: Artificial Intelligence and the Law (2020); Harry Surden, Artificial Intelligence and Law: An Overview, 35 Ga. St. U. L. Rev. 1305 (2019); Ryan Calo, Artificial Intelligence Policy: A Primer and Roadmap, 51 U.C.D. L. Rev. 399 (2017).

32.       In the matter before us, concerning the area of the internet in which varied and various entities, organized in different configurations, operate (among them, foreign governmental actors, “bot” networks, forged accounts, and impersonators), a minimal evidentiary basis for a claimed violation of freedom of expression is required, particularly in regard to a publication that does not constitute a crime. Note that I do not think that the voluntary enforcement actions of the Cyber Department are incapable of potentially violating the activity of certain individuals, whether in Israel or abroad. However, in the absence of a specific example by the Petitioners that such voluntary enforcement activities, as such, affected any of them (assuming that no prima facie offense was committed), it is difficult to accept the Petitioners’ argument that the entirety of the Cyber Department’s voluntary enforcement activities harm the Petitioners as such, and it is difficult to identify which aspects of the Department’s many activities require express statutory authority (compare: HCJ 6972/07 Akiva Laxer,Adv. v. Minister of Finance [10]). In this sense, the petition is not ripe.

33.       As described above, it appears from the Cyber Department’s data that the overwhelming majority of referrals by the Department to online platform operators concerns publications related to terrorist acts and extreme violence. In my view, the fear expressed in the Petitioners’ arguments that under the cover of this enforcement activity – which almost entirely concerns the protection of national security – the government also contends with political messages protected within the bounds of freedom of expression was not proven. If such were the case, it is clear that express, concrete authorization would be required for the agency’s actions in such circumstances. The problem is that other than the Petitioners’ general arguments of principle, no trace of evidence was brought for the conjecture that publications that pose a challenge to freedom of speech were blocked under the excuse of preventing offenses of incitement to violence or terror. Moreover, in the absence of contradictory evidence, it may well be the case that a large part of the Cyber Department’s activity concerns publications that are not produced by any human subject, but rather a computerized object (robot), or a widespread system of hostile users who seek to promote various unlawful messages.

34.       Another uncertainty, which also cannot be examined in the framework of the present petition due to a lack of adequate data and the fact that the point was not argued by the parties, is the scope of the applicability of Basic Law: Human Dignity and Liberty to expression concerning Israel by users who are not citizens or residents of Israel, or who live in the country or have some other territorial connection to it. In my view, it is highly doubtful if, for example, a publication by a person outside of Israel that calls for violent action against the Israeli embassy in his country, or against another Israeli target there, is indeed a publication that must be examined in accordance with the constitutional balancing required under of Basic Law: Human Dignity and Liberty. This issue was not developed by the parties, although it may be that the reason for the failure to address this issue also derives from the lack of data held by the parties, or the difficulty of identifying the locale and name of a person publishing on the internet.

35.       The above notwithstanding, I did not find that the petition should be dismissed in limine for an insufficiency of factual foundation, but it did make it difficult to issue an order nisi over the entire matter, and contributed to the dismissal of the petition for other reasons that will be presented below.

Failure to join relevant respondents

36.       Another reason for why it may have been correct to dismiss the petition in limine concerns the failure to join relevant respondents. As noted above, the Petitioners (and those requesting to join) refrained from naming the online platform operators as respondents, and it would seem that this is to their detriment. As will be explained, the question of the exercise of discretion by those bodies is of no minor consequence for the questions at the focus of these proceedings. The issue of whether reporting harmful publications is a governmental act is significantly contingent upon how and to what extent the multi-national operators are independent, and whether their discretion relies upon their own local law or upon Israeli law, or only upon their own Terms of Use.

37.       In the course of the hearing, the Petitioners were asked to explain the failure to name the online platform operators as respondents, but they provided no adequate explanation. In my opinion, that was sufficient for dismissing the petition in limine, inasmuch as had the online platform operators been joined as respondents, their arguments could have shed light on some of the Petitioners’ central arguments.

            Adding Respondents at a later stage, after the Petitioners knowingly chose not to do so, is unacceptable (and compare: HCJ 84/82 Histadrut Po’alei Agudat Yisrael v. Minister of Religious Affairs [11]; HCJ 828/90 Likud Faction of the Haifa Municipal Council v. Haifa Municipal Council [12]; and see: Raanan Har-Zahav, Procedure in the High Court of Justice, 34-35 (1991)).

38.       The preliminary defects in the petition are, indeed, severe. However, due to the substantive arguments raised in regard to the activity of the Cyber Department, the importance of the matters raised in the petition, their consequences, and their raising a matter of first impression, I will address the Petitioners’ arguments on the merits so as not to leave the constitutional and administrative law issues hanging in midair.

            I will, therefore, address the issues from first to last.

The question of authority

39.       The main argument raised by this petition concerns the constitutionality of the voluntary enforcement policy in the absence of express statutory authority, in the opinion of the Petitioners. This argument derives from the principle of rule of law, which establishes (inter alia) that a governmental agency must act on the basis of statutory norms (see: HCJ 1/49 Bejarano v. Police Minister [13]; LCrimA 10141/09 Ben Haim v. State of Israel [14]). It is argued that the Cyber Department’s actions to remove what it deems unlawful forms of expression by means of reporting them to the online platform operators constitute governmental enforcement that is prohibited in the absence of express statutory authorization, in view of the rule-of-law principle and the principle of administrative legality.

            The Petitioners also argued that this situation at least appears to contravene the normal criminal-procedure distinction between the investigative authority and the prosecution. Thus, for example, sec. 59 of the Criminal Procedure Law [New Version], 5742-1982, authorizes the police to conduct investigations, while sec. 60 of the said law instructs the police to deliver the investigative material to the duly authorized prosecutor. In the present case, it is argued that the examination is conducted by the Cyber Department (in a manner somewhat akin to the police authority to initiate an investigation if it becomes aware of a crime, pursuant to the said sec. 59), and argued that it is also the “prosecutor”, i.e., the body that applies to the relevant private body (the online platform operators) to exercise its discretion whether or not to remove the publication.

40.       As described above, the Government Respondents countered in this regard that it is difficult to view the Cyber Department’s actions as constituting an exercise of governmental power, inasmuch as the online platform operators exercise exclusive discretion in the matter, whereas its actions are limited to a voluntary application to the online platform operators, which therefore lacks the force of an administrative act of consequence.

41.       On the face of it, the Respondents would appear to be correct that in the absence of a coercive governmental act, the question of authority does not generally arise. However, it seems to me that the Respondents erred in categorizing the Cyber Department’s activity and its initiation of referrals as acts that lack any governmental force, and their opinion that, as such, they do not fall within the purview of the principle of administrative legality, and do not require any statutory authorization. In my opinion, the Respondents were imprecise in sufficing with laconically citing the fact that we are concerned with a voluntary act for which the discretion on enforcement is entirely left to an external (private) body. Nevertheless, I am of the opinion that the Cyber Department’s activity does, at present, have adequate authorization.

            I will clarify this point.

42.       To identify what constitutes a “governmental act” that is subject to the principles of administrative law, it not enough that the act in question is seemingly performed “voluntarily”, or that it, itself, lacks any operative force. Indeed, as I will explain, an examination of the very many functions fulfilled by the public administration reveals that many of them are not addressed in specific legislation, yet there is no question that they are, nevertheless, at the heart of the role that a properly functioning state is required to fulfil, and therefore have a statutory basis.

In his book Administrative Authority, vol. I, 419 (2^nd expanded ed., 2010) (Hebrew) (hereinafter: Zamir), Prof. Zamir describes this as follows:

In practice, the scope of authority granted to the government is far broader than the scope of the specific authorities that the statutes expressly grant it. Many of the functions imposed upon the government, among them basic functions of any government, and the authority required to carry them out, are not mentioned at all in the law. This is dictated by reality. The legislature cannot, and is therefore not asked, to arrange all of the all-embracing areas of governmental activity, and expressly establish the necessary authority for each individual area. The result is that the government conducts a wide-ranging variety activity that lacks an express foothold in the law. Such are, for example, almost all of the activities of the Ministry of Foreign Affairs, the Ministry of Construction and Housing, the Ministry of Immigrant Absorption, and the Ministry of Culture. Other ministries largely act on the basis of laws, but even among those, you hardly find a ministry whose functions are not partly – whether to a small or large extent – performed without express support in the law. Here are but a few of the many examples: The Government Press Office, professional training institutions, tourist information offices, research institutes, importing essential food items, The Institute of Advanced Judicial Studies. Sometimes, such activity is ancillary, so to speak, to some other activity, as if it were an auxiliary function of an activity authorized by law, but not infrequently, it stands alone, apparently without any supporting law. How does this situation conform with the principle of administrative legality? The answer is provided by sec. 32 of Basic Law: The Government. This section establishes: “The Government is authorized to perform in the name of the State, subject to all laws, any act, which is not assigned by law to another authority” (ibid., pp. 418-419; emphasis added – H.M.).

            And see: HCJ 2918/93 Kiryat Gat Municipality v. State of Israel [15], 841; HCJ 5128/94 Federman v. Minister of Police [16], 651, per President Shamgar, before an expanded panel (hereinafter: the Federman case); HCJ 8600/04 Chair of the Hof Azza Regional Council v. Prime Minister [17], 682-683; HCJ 11163/03 Supreme Monitoring Committee v. Prime Minister [18], para. 6 of the opinion of Deputy President M. Cheshin; and also see: Margit Cohn, General Powers of the Executive Branch, (2002) (Hebrew) (hereinafter: Cohn).

            We thus see that in order to evaluate the character and nature of the administrative activity before us, we must review some of the case law that constitutes the foundation of our constitutional and administrative system.

43.       In categorizing the various administrative authorities, Prof. Hans Klinghoffer included the existence of a “disguised administrative act”. Such activity can be defined as a governmental act performed under the cloak of a non-coercive governmental act, where in fact, the substance of the act – or at least the way it is understood by those to whom it is addressed – is a governmental act of coercive significance, or as Klinghoffer expresses it:

A unique type of unclear act is the disguised act. When an agency does not see a legal path for achieving its desired objective, it will, at times, try to present the action in a disguised manner in order to increase the chances for it to be interpreted as a lawful act. Our judicature is unwilling to accept such trickery (see: Hans Klinghoffer, Administrative Law, pp. 109-111 (1957) (Hebrew), and in general on the theory of administrative acts, pp. 82-117).

            An example of this can be found in HCJ 144/50 Sheib v. Minister of Defence [19] (hereinafter: the Sheib case). In that famous case, the Director of the Department of Education in the Ministry of Education demanded that the administration of a school not employ the petitioner due to the opposition of the (then) Prime Minister and Minister of Defense (David Ben Gurion) (due to his position in regard to the petitioner’s political activity). What is relevant to the matter before us is one of the arguments made by the respondents in that case, who admitted that the order not to employ the petitioner was not based upon express legislation, while pointing out that this act was not obligatory, but rather only a (“voluntary”) request that the school to which it was sent could have declined.

            The Court refused to accept the position of the respondents, stating:

As I have said, the respondent admitted that his action was not based upon law, and he therefore emphasised the nature of his approach to the principals of private schools, stating that he only “requested” them not to employ teachers in their schools save with the consent of the Inspector. It is not necessary to say that a “request” such as this is tantamount to an order at least in so far as the petitioner before us is concerned, because for reasons which are self-evident, schools would tend to yield to a “request” of this kind, as the present case proves. It is possible that had the respondent approached the principals of schools in a form that was less compelling, and had emphasised that his request had no binding force, it would have been difficult to find any fault with his approach. It is clear to me, however, from the evidence of the respondent in his affidavit, that he in fact did not employ language which gave the principals any choice – that if they so wished they could follow his opinion, and if not they could disregard it and employ a teacher against his will. In this case the respondent did not set out in the circular that the principals of schools had a choice in the matter. I have no doubt, therefore, that the respondent exceeded his authority in approaching the principals of schools (ibid., p. 419 [para. 9 of the opinion of Justice Witkon] (emphasis added – H.M.)).

            It would appear from the above that had it concerned a non-obligatory request, “it would have been difficult to find any fault with his approach”. However, it is clear from the justice’s statement (in the section in italics) that even if it were a “voluntary” request, as long as the addressee will “tend” to “yield” and comply with the request, such a request can be viewed as a governmental act (compare: the Rabbeinu Tam Sanctions Affair in para. 1 of the opinion of President M. Naor, and para. 5 of the opinion of Justice I. Amit).

44.       However, it is important to make it clear that the case before us is different for several reasons:

            First, since not even initial evidentiary grounds were presented to rebut the presumption of administrative regularity, it can be assumed that the Cyber Department’s referrals to online platform operators are, indeed, conducted in accordance with the Department’s understanding that this only constitutes reporting that does not involve any element of coercion of the online platform operators (in this regard, see: Daphne Barak-Erez, Citizen, Subject, Consumer – Law and Government in a Changing State (2012) (Hebrew)).

            I would also note in this regard what is stated in sec. 6 of the Cyber Department’s Work Procedure, which instructs as follows:

In all that regards referrals on the voluntary level, no demand should be presented to the online platform for the removal of content, restriction of access to it, and so forth (emphasis added – H.M.).

            Second, the “relationship” before us is, indeed, distinguishable to no small degree from the example presented above (the Sheib case). In the present case, the online platform operators are very powerful multi-national entities that appear to act independently, that exercise their own independent discretion, and that decide how to act under the circumstances of the matter. Therefore, the voluntariness involved in the Department’s referral, and the manner of the exercise of independent discretion of those entities is qualitatively different from what occurred in the Sheib case.

45.       Nevertheless, I cannot accept the Respondents’ position on this point in its entirety. In my view, the referrals to the online platform operators should be seen as a type of governmental act. My position, which I will explain below, is that the interaction among the state, the online platform operators, and the end users can be categorized as a unique relationship in which the “geometric place” of the state is on one of the sides of a triangle connecting the above three entities, and in this framework, the state has no inconsiderable influence (see: Balkin, Triangle).

            For convenience, I have attached Chart 1 – the diagram that Prof. Balkin presented in his article, and Chart 2, which simplifies it for our needs. The diagrams map the relationship triangle among the end user, the platform operators, and the governmental authorities, and describe the relationship and power structure among these entities in regard to “classic” regulation in which the state acts directly opposite the individual in matters of freedom of expression, and the “new” regulation that shapes the relationship between the state and the online networks, where the state seeks to encourage the platforms to conduct their own supervision of unlawful expression by private governance. This has developed over the years, and shapes the relationship between the users of the platform and the supervision of expression and information by the former (what I noted as the Terms of Use and the “community rules”).

 

 

 

 

Diagram 1:

(See: Balkin, Triangle, p. 2014).

Diagram 2:

 

 

 

 

 

           

In my opinion, in this situation in which there is a possibility that the voluntary referrals of the Cyber Department are a trigger for the “enforcement” actions of the online platform operators (as noted, we do not have any data in this regard), and that the Department’s referrals may influence the discretion of the online platform operators, there is a need for some statutory authorization for the said cooperation.

            I will explain this in detail below.

“Inverse Regulation” and the Activity of the Cyber Department

46.       Normally, it is the state that regulates and directs the conduct of the individuals and entities that exist within it. The accepted means for this are legally operative norms (like primary and secondary legislation). Frequently, the state also chooses to regulate markets and various spheres of activity of “private players” by establishing rules that apply only to those markets, direct the activity of the parties that operate within them, and even conducts supervision and enforcement over such activity. However, at times, the state permits an organizing body to police itself, subject to the permission of the governmental authority (as is the case, for example, in regard to the Tel Aviv Stock Exchange). This practice, in its various aspects, is one of the meanings of the concept “regulation”, which has significantly developed over the last years (on regulation as a separate conceptual framework in Israeli law, see recently: Neta Ziv, Judicial Review meets Regulation: A Preliminary Conceptual Mapping, Elyakim Rubinstein Volume, 1125, 1130-1136 (2021) (Hebrew) (hereinafter: Neta Ziv, Regulation), and also see: Cass R. Sunstein, After the Rights Revolution – Reconceiving the Regulatory State (1990); Ayelet Hochman, Alon Jasper & Dan Largman, Talking about Regulation: The Term “Regulation” and its Role in Israeli Law, The Governance of Regulation: Law and Policy Law, Society and Culture, Yishai Blank, Roy Kreitner & David Levi-Faur (eds.), 47, 48 (2016) Hebrew); Sharon Yadin, Regulation: Administrative Law in the Age of Regulatory Contracts, 21-28 (2016) (Hebrew) (hereinafter: Yadin).

            By creating rules that are designed ad hoc for a sphere of activity, regulation that sought to direct the players in a market sphere by means of a system of rules intended to direct the parties subject to it in a “vertical manner” gained prominence. In this manner, rules were created for directing such markets as health, commerce, savings, insurance, banking, and energy. These rules, which include primary legislation, and at times, directives and orders issued by the regulatory authority in the framework of regulations, are often accompanied by various mechanisms for supervision and post facto enforcement of the applicable arrangements. As Prof. Neta Ziv points out, the move to regulation reflects a change in the role of the executive branch, primarily in distributing new functions and powers between the state and the non-state arena, where, in general, the regulatory rules define the means for the government’s exercise of power in regard to the supervised body (individual or corporate), and employ language, terminology and internal logic that can be identified as a distinct field of knowledge (see: Neta Ziv, Regulation, p. 1128).

            The regulatory model described above reflects regulation in its primary sense, known as “command and control”, which is the classic model in which the moderator is positioned “above” the players in a particular sector, directing their actions, and enforcing post facto the rules that it or the legislature established (for definitions of the accepted model of “command and control”, see: Neta Ziv, Regulation, p. 1142).

            However, over the years, a variety of more sophisticated models of regulation developed, which apply “softer” methods of enforcement. This is the “new regulation”. Thus, for example, beginning in the last century, we see the development of self-regulation in which the regulator “recommends” that the “market players” adopt a general policy as a (non-obligatory) condition for the proper administration of the particular market (on “the new regulation”, see: Yadin, pp. 21-32; Sharon Yadin, Miscommunication: Between Public Interest and Private Interest in the Regulation of Channel 10, 8 Haifa Law Review (Din Udvarim) 391, 409-410 (2015); Neta Ziv, Regulation, pp. 1142-1145).

47.       Another development is expressed in the ascension of the regulatory contract, which grounds the element of governmental direction upon an agreement between the regulator and the supervised entity. The framework of the regulatory contract represents a move from the “vertical” model to a “horizontal” model in which the state and the supervised entity negotiate the conditions that will apply between the parties, and the parties form a contractual, or quasi-contractual relationship, as expressed by my colleague President E. Hayut in para. 2 of her opinion in HCJ 4374/15 Movement for Quality Government v. Prime Minister [20], (hereinafter: the Gas Outline case):

This combination of regulatory provisions and obligations of commercial corporations in the area addressed by those provisions bears clear characteristics of a “regulatory contract”, which is a relatively new legal phenomenon, first found in the United States in the nineteen-nineties, as a tool that bases regulatory provisions in various fields on contractual relations. One of the salient characteristics of the regulatory contract, as opposed to other governmental contracts, is the identity of the parties to the contract. “A regulatory contract is made between an administrative agency, in its role as regulator, and a private corporation. [..] The legal framework of the regulatory contract is largely the result of the challenges faced by the authorities in the modern age due to the complexity of the regulation required in various fields, including, and perhaps primarily, in developed, free markets that intensify the need for supervisory regulation. Against this background, new models of administrative regulation have developed, among them regulation based upon cooperation with private entities that is grounded in contracts. One of the advantages inherent to such a regulatory model is the achieving of voluntary cooperation by the supervised entities which, on their part, may derive benefit from activity that is coordinated with the supervising body, as opposed to coercive provisions that are drafted and established unilaterally by it. However, the regulatory contract model raises many questions from both the legal and public aspects that may have consequences, inter alia, on the scope of judicial review applicable to such a regulatory model… (and see: Yadin, p. 38; emphasis added – H.M.).

 

48.       The case before us is characterized by relationships between the state and private entities (primarily multi-national corporate giants) that do not match any of the distinct cases listed above and do not fall within the scope of those regulatory schemes. It is therefore clear that the agency’s referrals to the online platform operators do not reflect a “command and control” relationship. The online platform operators are not subject to rigid regulation, and the Terms of Use and their “community rules” are, it would appear, independently established by those operators.

            The legal literature recognizes a regulatory phenomenon known as “voluntary regulation”, in which the market actor establishes its own manner of operation (see: Yair Amichai-Hamburger & Oren Perez, Environmental Self-Management: Effectiveness, Organizational Change, and Lessons for the Environmental Regulation System, 25 Bar Ilan Law Rev. 633 (2009) (Hebrew); and see Vismonski, who categorizes the relationship between the state and the operators as “contractual”, Vismonski, Alternative Enforcement, pp. 716-717). Nevertheless, in my opinion, what we have here is not a “voluntary regulation” model in the full sense. Although the online platform operators act independently in defining the rules that govern the relationship between them and the users, when the Respondents draw their attention to breaches of local law, their Terms of Use and “community rules”, it would seem that in the specific area of activity that concerns us (social networks and the area of network content), we cannot yet rule out the possible influence of such a referral on the online platform operators and their fear of the authority, which can act to limit their actions, whether by primary legislation or by administrative means (see and compare: Hannah Bloch-Wehba, Global Platform Governance: Private Power in the Shadow of the Global State, 72 SMU L. Rev. 27, 79 (2019) (hereinafter: Bloch-Wehba); Ken-Dror Fedman & Elkin-Koren, pp. 31-32; Balkin, Triangle, p. 2020).

49.       As we see, the case before us represents a new model in which law enforcement and regulation of the relationship among the various market players – the state, the social network participants (the authors of the various publications and the web surfers), and the online platform operators themselves – are carried out with the state acting as a reporter that refers the apparent breach for the examination and decision of the online platform operators. This framework, which might be called “inverse regulation” – inasmuch as the final decision rests in the hands of the online platform operators – neither increases nor lessens the problems that frequently arise in other regulatory models (such as violating personal freedom and the autonomy of the individuals subject to “command and control” regulation, and the problem of restricting the discretion of the authority in the framework of a regulatory contract). However, the “inverse regulation” model raises a fundamental question that derives from the aforementioned question of authority – given that we are concerned with non-obligatory, “voluntary” referrals by the government, can it be said that we are concerned with regulation? In other words, is the Cyber Department actually acting under a “soft” regulatory model when it initiates referrals to the online platform operators, and should such referrals be deemed governmental actions that justify the conferral of express legislative authority, or not?

            The theoretical position as to the nature of the “regulation” (to the extent that it exists under the circumstances) can be of consequence for the legal analysis of the legality of the administration’s actions.

50.       As described above, in situations that do not concern a “disguised governmental act” that is actually coercive, which must be voided for a lack of legal authority, it is entirely possible that a completely voluntary act whose result entirely depends upon the independent exercise of discretion by the body referred to does not require specific, express authorization by law, and thus, for example, the residual authority granted to the government under sec. 32 of Basic Law: The Government would therefore be sufficient. For example, under this approach the Cyber Department’s referrals to the online platform operators are not essentially different from requests sent by Israeli security and diplomatic actors to their foreign counterparts asking, for example, that they thwart plans by hostile foreign actors seeking to harm the State of Israel abroad or at home (on the subject of acting by virtue of the general authority granted under sec. 32 of Basic Law: The Government, or sec. 17 of the Interpretation Law, see Shimon Shetreet, The Government: The Executive Branch – Commentary on Section 18 of Basic Law: The Government, (2018) (Hebrew) (hereinafter: Shetreet).

            As opposed to this, where we are concerned with a regulatory act that can interfere with the freedom of action of players in the marketplace or restrict it, it may be assumed that, in this regard, the state must act in accordance with the principles of administrative law (see: Neta Ziv, Regulation, p. 1139).

51.       To my understanding, as long as it has not been proven otherwise (and as noted, this petition lacks respondents essential to examining the issues in dispute), the framework in which the Cyber Department operates does have a some potential for influencing and directing the actions of players in the marketplace and for creating an “inverse regulation” environment. This is so because, in my view, as opposed to the way that the Government Respondents seek to present themselves, a referral by a private individual to those online platform operators cannot be compared to a referral by a governmental agency that appears before the online platform operators as a “repeating player” who may also act against them in other ways. My position is, therefore, that the very possibility that the “sword of coercive regulation”, which the government, or someone on its behalf can draw against the online platforms if their operators frequently fail to accede to the referrals is sufficient to show that we are concerned with a governmental act that requires some legislative authorization. Indeed, there is the possibility that the state will seek to establish rigid normative rules to require the online platform operators to comply with the Respondent’s referrals or be exposed to various steps and sanctions, and that constitutes a lever for applying pressure that raises the fear that – at least potentially – we are not concerned with cooperation between the state and the private commercial entities that is completely voluntary (for examples of attempts at regulation to restrict publications on online platforms, see: Defamation (Prohibition) (Amendment – Disclosing the Name of a Tortfeasor) Bill, 5770-2010; Defamation (Prohibition) (Amendment – Prohibiting Defamation on the Internet) Bill, 5775-2015; Defamation (Prohibition) (Amendment – Correcting Defamation on the Internet) Bill, 5781-2020). As opposed to this, see the Copyright (Amendment No. 5) Law, 5779-2019 (which was enacted pursuant to comments by the Court in CA 9183/09 Football Association Premier League Ltd. v. Anon. [21] (hereinafter: the Premier League case)).

            In this regard, I will quote Dalit Ken-Dror Feldman & Niva Elkin-Koren:

The platforms that are commercial companies exposed to the exercise of governmental power are subject to a threat that if they do not cooperate with the alternative enforcement arrangement, they may be required to perform enforcement actions due to changes in the law, which would leave them less flexibility and discretion (Ken-Dror Feldman & Elkin-Koren, p. 38).

In this regard, also see the statement of the Commission for Establishing Means for protecting the Public and Officeholders in the Civil Service against Harmful Activity and Publications as well as Bullying on the Internet – Report (2020) (hereinafter: the Arbel Commission Report), which established as follows:

It should be borne in mind that the expression “voluntary” regulation, which is sometimes employed to describe referrals by the authority to request the removal of content, is not entirely appropriate to the situation it purports to describe. Indeed, the various platforms reserve the right to refuse the state’s request to remove content, however, there is no doubt that a state request bears significant weight, much greater than that of a referral by a citizen. This being so, use of this tool should be reserved for exceptional cases. The threshold requirement of the existence of a criminal offense appears to be an appropriate balance point [emphasis added – H.M.].

            Also see the statement by the head of the Cyber Department, Dr. Haim Vismonski, who is of the opinion that:

The distinction between voluntarily agreed defensive actions and actions pursuant to a coercive provision is not a dichotomy […] The service providers, on their part, fear legislative changes that would broaden the state’s authority to impose coercive provisions upon them that would intervene in the manner they regulate the content that they publish. The said fear encourages the providers to increase their agreed, voluntary cooperation with the states […] This somewhat undermines the voluntary basis, and it is possible to present the move as a coercive one by the state, even if somewhat covert (Vismonski, Alternative Enforcement, pp. 722-723).

52.       This is the place to explain that, in the framework of this petition, since the online platform operators were not named as respondents, this possibility is but a theoretical fear that we cannot properly examine. It is indeed possible that in examining referrals regarding breaches of the “community rules” and the Terms of Use, those powerful multinational corporations that operate the said platforms act without fear of the individual who may be harmed or of the administrative agency (for a view of online platform operators as acting independently in regard to governmental referrals, see: Alan Z. Rozenshtein, Surveillance Intermediaries, 70 Stan L. Rev. 99, 154 (2018).

53.       The conclusion to be drawn from the above is that although not even preliminary evidence was presented to show any defect in the discretion exercised by the Cyber Department, the fact that it transfers – if only temporarily – the decision in the matter to the online platform operators, which are civil bodies that seek to maintain good relations with the authority, raises the fear that, in practice, the Department’s referrals influence the discretion of those operators. Therefore, in my opinion, the Cyber Departments actions are of a governmental nature that requires authority, even if of a general sort.

            If we add to all the above the apparently uncontested fact that restricting or removing publications by the online platform operators may ultimately lead to limiting the fundamental rights of the publisher (insofar as a human entity is concerned), primary among them the right to freedom of expression, it is clear that the Department’s activities, even in the framework of “inverse” regulation, can influence, even if indirectly, the restriction of those protected fundamental rights.

54.       In conclusion, in their preliminary response, the Respondents discussed at length the view that it should be recognized that: “The activity of the Cyber Department in the voluntary track of referring reports of prima facie offenses that breach the Terms of Use established by the companies themselves does not involve the exercise of governmental authority” [emphasis added – H.M.]. It would seem that the Respondents’ intention was to say that if, indeed, the exercise of governmental authority is not concerned, then there is no need for specific legislative authority and the publication of the rules under which the agency operates.

            As stated, I hold a different view, and I therefore expanded upon identifying the Department’s conduct in the voluntary enforcement track as an exercise of some power in the regulatory field.

            There is an additional reason for this. The current scholarship on regulatory theory sees “the change in the power paradigm”, which we pointed out, as one of the primary adjustments to which administrative law must adapt in the modern age. If we take the case before us as an example, the rise of online platforms that provide convenient, available and effective infrastructure for disseminating messages and content of every type, creates a change in the balance of power, in which a limited number of private, multinational actors hold tremendous power to administer the “marketplace” in all that regards the exchange of opinions and messages, while any person with a keyboard (or touchscreen) can disseminate harmful, inciting and violent messages, as well as terror, while using a fabricated or fictional identity, and thus create a “market failure” and significant problems of enforcement (see and compare: Terry Flew, Fiona Martin & Nicolas Suzor, Internet Regulation as Media Policy: Rethinking the Question of Digital Communication Platform Governance 10 J. Digital Media Pol. 33 (2019); Bloch-Wehba, pp. 71-78).

55.       In view of the rise of various factors operating in the markets in previously non-existent forms and methods, Dr. Yuval Roitman is of the opinion that it would be appropriate “to distinguish between circumstances in which there is a need for restraining governmental power that is abused, and circumstances in which judicial review should encourage the exercise of governmental power, inasmuch as it is the state’s omission that is the flaw,” Yuval Roitman, Administrative Law in the Regulatory State, Mishpat Umimshal 219, 234 (2017) (Hebrew) (hereinafter: Roitman) [emphasis added – H.M.].

            In this regard, attention must also be paid to the consequences of the actions of entities operating in the marketplace (in our case, the online platform operators) as they relate to the general public. Prof. Neta Ziv gives the example of the view of Justice I. Zamir in HCJ 7721/96 Israeli Insurance Adjusters Association v. Supervisor of Insurance [22], who was of the opinion that in view of the excess power of insurance companies at the time, a “supra-arrangement” should be established to better protect the insured public. Therefore, in addition to the fact that we are faced with a special case of “inverse” regulation in which the regulatory authority (apparently) subjugates itself to the decisions of the market players, there is no doubt that there is a need for an agreed arrangement in regard to the behavior of the main players and the users of the social networks, and therefore, the activity of the Department on the voluntary enforcement track fulfils its obligation to act for the prevention of criminal offenses in a speedy and effective manner.

56.       What has been said so far shows, however, that the principle of administrative legality also requires that there be formal authorization in the case before us to facilitate the activity of the Cyber Department. As we see, its activity in the voluntary enforcement track may constitute a form of administrative act of operative effect. Therefore, in accordance with the fundamental principles of administrative law, in order to establish that the activities of the Cyber Department are lawful, authority, even if only general, must be found in the law.

            I will address this immediately, below.

 

The activity of the Cyber Department by virtue of the government’s residual authority

57.       The courts are not infrequently called upon to respond to situations in which it is claimed that an administrative authority is not performing its duty in accordance with the law. The touchstone established in the case law concerns the complete “shirking” of this duty by the authority, or its unreasonable refraining to carry out its duty (see: HCJ 6579/99 Filber v. State of Israel [23]; Roitman, pp. 265-266). This is another exceptional aspect of the present petition. In the matter before us, we are asked to address arguments of alleged “over-enforcement” by the Respondents. If the general position of the Court is that it is not its role to “take the place of the authorized agency and establish a law-enforcement plan for it” (HCJ 551/99 Shekem. v. Director of Customs [24]), then in the present petition, we are asked to examine whether the activity framework of the Department conforms to the authorities it has been granted.

            Before entering main hall, we should present some additional background data while still in the corridor, as I shall now do below.

58.       The internet, for all its advantages and disadvantages, as noted above, created a space in which access to the net and the activity there is, as my colleague Justice Sohlberg stated in the Israel Internet Association case:

… all over the world, but its existence is “nowhere” (para. 22 of his opinion).

            Moreover, in this situation, again quoting my colleague:

Offenders against the law adapt to progress more rapidly than its enforcers […] The former have no restraints; the latter do.

            In this situation, criminal and civil law do not, at present, provide a sufficient response to the offenses and torts perpetrated by means of the internet, and there are, therefore, those who are of the opinion that in view of the virtual nature of the said space, the laws of space, time and state should not be applied to the internet (see: Yuval Karniel and Haim Vismonski, Freedom of Expression, Pornography, and Community in the Internet, 23 (1) Bar Ilan Studies in Law 259 (2006) (Hebrew); Michal Agmon-Gonen, The Internet as a City of Refuge?! Legal Regulation in Light of the Possibilities of the Technological Bypass Technologies and Globalism of the Net, Legal Network: Law and Information Technology, Michael Birnhack and Niva Elkin-Koren, eds., 207 (2011) (Hebrew); and see: Vismonski, Alternative Enforcement, pp. 692-704).

            Some solutions for these problems have recently been offered in the literature by means of using cloud technology (see: Yochai Benkler, Degrees of Freedom, Dimensions of Power, 145 Daedalus 18 (2016)), and in our case law.

            In a judgment handed down three years ago by my colleague President E. Hayut (Justice A. Baron concurring) and myself in LCA 5860/16 Facebook Inc. v. Ben Hamu [25] (hereinafter: the Facebook case), the Court held that Facebook’s community rules constituted an adhesion contract between Facebook and the network users, which opened many possibilities for enforcement (and see and compare: LCA 1239/19 Shaul v. Nayadli Communications [26]).

            However, the advancement of case law, which by its very nature is “bottom up” (from the trial court to the Supreme Court), cannot suffice to stop the “bad actors” operating on the net.

            In addition, the decentralized nature of the production and virtual distribution on the internet makes it very difficult to carry out enforcement by the traditional means of bringing the offender to trial, not to mention that anonymity on the internet makes it difficult to identify offenders and tortfeasors (see, e.g., the Mor case). Another challenge for enforcement is the global nature of the network. Thus, for example, various legal issues arise concerning the application of local law to alleged offenders where it is unclear whether they are citizens or residents, or operate within the territory of the state. Moreover, due to the global character of the internet, it is possible that expression that is deemed potentially criminal in one legal system does not constitute prohibited speech in another (see: Ken-Dror Fedman & Elkin-Koren, p. 35). In addition, in the United States, for example, certain online platform operators enjoy immunity (see: Madeline Byrd and Katherine J. Strandburg, CDA 230 for a Smart Internet, 88 Fordham L. Rev. 405 (2019)), which may apply extraterritorially.

            Thus, the voluntary enforcement mechanism was created to provide answers to most of these problems.

            What, then, is the source of authority for the Cyber Department’s activity in the framework of this enforcement mechanism?

59.       The primary source of authority is to be found in the residual authority granted to the government pursuant to sec. 32 of Basic Law: The Government.

            As intimated above, the scope of authority granted to the government is far wider than the individual authorities that the legislature granted expressly, such that by its nature, the government is daily involved in “all embracing” activities that lack any express, specific foothold in the law (see: Zamir, p. 419). This range of activities is conducted, as noted, by virtue of the doctrine of residual power entrenched in sec. 32 of Basic Law: The Government. The direct meaning of this provision is that, in the absence of another provision granting authority to some other agency, the government is authorized to act in the name of the state.

            The substance of the doctrine of governmental residual power derives from the tremendous scope of administrative activity, the surprising nature of developments in daily life, as well as the recognition of the fact that legislation cannot keep up with the pace of technological advances (see: Daphne Barak-Erez, Administrative Law, vol. 1, 139 (2010) (hereinafter: Barak-Erez); Shetreet, pp. 561-562). I addressed this in the Premier League case, where I stated as follows:

It is well known that technology generally precedes the law. In such cases, the legislature and the courts are called upon to pour the essence of the existing, good and grounded principles into new legal vessels (as though they were aged wine that improves with time and only needs a more modern container. Compare: Stephen Breyer, Active Liberty 64 (2009).

            My colleague Justice N. Sohlberg added to this in the Israel Internet Association case in stating:

As we know, the law slowly staggers behind the world’s innovations, and legislation cannot keep up with the pace of scientific progress and its applications.

60.       The force and incidence of the residual power have been addressed in a number of judgments by this Court. Thus, for example, in the Gas Outline case, the Court held that:

The term “residual power” is not a magic word and is not a key to every gate. It is examined after examining the direct powers and should not be ambiguous (para. 142 of the opinion of Justice E. Rubinstein).

            In that case, there was a disagreement among the members of the panel, inter alia, on the question whether establishing an outline for treating an essential natural resource found in large quantities on the state’s coast exceeds the government’s residual power and requires that the outline be established in specific primary legislation, inter alia, because it constitutes a primary arrangement. The majority held that the arrangement did not require express primary legislation (see: the Gas Outline case, para. 11 of the opinion of my colleague Justice E. Hayut; paras. 10-14 of the opinion of Justice U. Vogelman; paras. 50-62 of the opinion of Justice N. Sohlberg. On the dissenting opinion, which was of the view that the outline required particular primary legislation, see: paras. 127-143 of the opinion of Justice E. Rubinstein; and paras. 3-13 of the opinion of Justice S. Joubran. And see: HCJ 11163/03 Supreme Monitoring Committee v. Prime Minister [27], para. 10 of the opinion of Deputy President M. Cheshin).

            It has further been held that the government cannot act by virtue of its residual power in order to violate entrenched or implied basic rights granted to individuals by Basic Laws. Thus, for example, in HCJ 5100/94 Public Committee against Torture v. State of Israel [28], which treated of the authority of the General Security Service[2] to conduct interrogations in general, and particularly the use of special interrogation methods that included employing physical means, President Barak held: “The ‘residual’ power of the government is not a source of authority that infringes the liberty of the individual. The residual powers of the government authorize it to act whenever there is an ‘administrative vacuum’ […] There is no such ‘administrative vacuum’ in this case, as it is ‘filled’ by the principle of individual freedom. Infringing this principle requires a specific provision”.

            However, it is important to note that until the enactment of the General Security Service Law, 5762-2002, it appeared that the general authority of the General Security Service to act in its sphere of activity derived from the residual power doctrine (see: Report of the Commission of Inquiry into the Methods of Investigation of the General Security Service regarding Hostile Terrorist Activity, p. 41 (1987)), and the authorities of the Institute for Intelligence and Special Operations [the “Mossad” – ed.] rely upon that source of authority to this day).

61.       Specifically, in the matter of infringing freedom of expression, it was previously held in the Federman case that this vested right cannot be infringed by virtue of the general authority under the residual principle:

There are actions that are not within the scope and power of the government because exercising them without legal authority is contrary to fundamental normative concepts that derive from the nature of our regime. So it is in regard to basic rights that are part of our positive law, whether it has or has not yet been included in a Basic Law. Thus, for example, the government does not have the authority to close a newspaper on the basis of an administrative order if there is no express legal provision that addresses such a matter, and even were there not a Basic Law that defines freedom of speech. Such an act would be contrary to our fundamental concepts regarding human liberty inherent to our regime, which can only be limited by statute […] therefore, the basic right to freedom of speech, which is part of our positive law, creates a restriction that ties the executive’s hands and does not permit it to deviate, without legal authority, from the prohibition upon infringing a freedom it grants. (ibid., p. 652; emphasis added – H.M.; and see Zamir, pp. 421-423).

            Indeed, these restrictions upon the residual power of the government were intended to ensure that the broad general authority granted under this provision of Basic Law: The Government will not completely erode the principle of administrative legality, and does not replace the constitutional values grounding the system (see: Barak-Erez, pp. 139-143).

62.       The answer that should be given to this question is negative in the circumstances. At present, and in accordance with the evidentiary foundation presented in the petition, there are no grounds for finding that the Cyber Department’s activity is unconstitutional. In my opinion, while we cannot deny the possibility that the Cyber Department’s activity has operative force, in that it initiates a process that may result in a real act of removing publications or preventing access, I do not believe that there is a violation of basic rights, in the usual sense,  in most of the areas in which the department acts (as for the exceptional cases, see my comments in para 73(b), below).

            I will now explain in detail.

63.       What is an infringement of a constitutional right? A review of the case law of this Court reveals that the question of the infringement of the constitutional right has not raised any real problems to date. For example, in LCA 3145/99 Bank Leumi v. Hazzan [29], 398, it was held that infringement concerns the absence of ability to realize the full scope of the constitutional right (and see: Aharon Barak, The Constitutional Right and its Violation: The Three-Step Theory, 19 Mishpat Umimshal 119 (2018) (Hebrew) (hereinafter: Barak, The Constitutional Right)). According to Prof. Barak, examining an infringement of a constitutional right is almost independent of the circumstances, stating:

An infringement occurs in every situation in which the authority forbids the holder of a right to realize it fully or prevents him from doing so. An infringement is any detraction from full realization of the right. There is no significance to the question whether the infringement was the result of fault (intention, recklessness, willful blindness, negligence) or without fault, whether it was serious or minor, at the heart of the right or its periphery, by an omission or by an act, or whether it was certain or that there was but a possibility – that is not de minimis – for its realization. Every infringement, regardless of its scope, moves the constitutional review from the first step to the second, unless the infringement is de minimis. (Barak, The Constitutional Right, p. 148).

64.       However, some resonances of a view that disagrees with the broad scope of the concept of infringement of right, as defined above, can be found in the case law. Thus, for example, in CA 6821/93 United Mizrahi Bank v. Migdal Cooperative Village [30], President Shamgar noted in regard to the right to property: “Violation of the right to property, for our purpose, was illustrated by reference to constitutional acts possessing substantive personal repercussions, for example, those by virtue of which the property of a person is confiscated without proper compensation, in an arbitrary or other substantive breach of his rights.” (ibid., p. 332 [para. 38]; and see the opinion of Justice A. Procaccia in HCJ 10203/03 Hamifkad Haleumi v. Attorney General [31], 852-854; and see the opinion of President A. Grunis in HCJ 2442/11 Shtanger v. Speaker of the Knesset [32]).

            Another possible criticism if the broad view proposed by Prof. Aharon Barak was mentioned by Prof. Barak Medina. In accordance with the deontological-necessity approach presented in his book, an infringement of a constitutional right does not refer to the consequences of the act, alone (that is, the restriction of the full realization of the right), but also concerns evaluating the nature of the act and the reasons for diminishing the protected interest. In the context of the matter before us, Prof. Medina explains that in order for an act by a governmental agency to rise to the level of an infringement of a vested right, the infringement must be “a violation by virtue of an intentional act, whose consequences are certain, and under the circumstances of the matter, comprise some breach of a moral constraint concerning the proper relationship between the government and the individual” (Barak Medina, Human Rights Law in Israel, 88 (2016) (emphasis added – H.M.).

65.       Of course, the above debate might be relevant to the sufficiency of the government’s residual power as a source of authority for the activity of the Cyber Department, however, we have no need to decide among the various approaches for a number of reasons:

A)        In the present case, it would appear that there is no disagreement that, as earlier noted in para. 21, robots and avatars do not enjoy human rights, and therefore infringement of their right to freedom of expression is not relevant, and some of the harmful publications derive from such bots and avatars. Nevertheless, in my opinion, where there is doubt as to whether the act is likely to lead to a real violation of fundamental rights, extreme caution must be exercised, as stated in para 73(b), below.

            The situation of enforcement in regard to social networks is unique and differs in its very nature from the constitutional or classic administrative paradigms in which the individual stands in opposition to the government (see and compare: Michael D. Birnhack & Niva Elkin-Koren, The Invisible Handshake: The Reemergence of the State in the Digital Environment, 8 Va. J.L. & Tech, 48-54 (2003)). As Prof. Balkin describes it, on questions of freedom of expression and other issues in the scientific age, there is a triangular relationship: The state is at one vertex, the private internet companies and various platforms are at another vertex, while the speaking individual (or organization) is at the third (see: Balkin, p. 2014). In my opinion, in such a unique power triangle, where the state does not demand or impose removing or restricting expression, and the online platform operator is the one who removes the publication at its discretion, it cannot be said that it is the state that infringes the right, and in any case, those harmed have other remedies, including against the online platform operators.

B)        In the present case, the state’s involvement in protecting or restricting political expression is slight, as it plays no role in providing the infrastructure for political expression (which is provided, as noted, by the online platform operators).

66.       As for the lack of authorization – the Petitioners brought the example of the Israel Internet Association case, which held, as noted, that a police officer lacks authority to order the closure of a “gambling site” operating on the internet, inter alia, in view of the possibility that it might lead to a violation of the right to occupation and freedom of expression of the website operator and its users. However, in my opinion, the said case is entirely different from the one before us for several reasons:

            First, because that matter concerned a closure actively imposed by an administrative organ where it, and it alone, had discretion as to how to act, and to order the provider of access to the gambling site not to permit access to that site. In the case before us, there is no disagreement that the authority to exercise discretion is given to the civil organ to whom the matter is referred – the online platform operators (on the possibility that this is a prohibited delegation of authority, compare: the Israel Internet Association case, para. 15 of the opinion of Justice U. Vogelman).

            Second, and pursuant to our discussion of the infringement of freedom of expression as a fundamental constitutional right, even in the Israel Internet Association, Justice Vogelman held: “With respect to gambling websites, and only to them, my opinion, as mentioned above, is that the infringement of free expression that resulted from blocking lawful content on the gambling websites, is of a limited degree, if at all” (ibid., para. 10).

            Parenthetically, I would note that even the Mor case (which held that authority to issue an order for revealing the identity of an anonymous internet user should not be established by “judicial legislation”) cannot be of aid to the Petitioners as a source for establishing that the absence of legislative authorization for the restricting activity nullifies the conduct. That affair addressed the limits of interpretation, and in particular, the limits of “judicial legislation”, exercised by the court, and not the authority of the executive branch.

67.       Similarly, we should distinguish the other cases referenced by the Petitioners, as follows:

A)        The Kahane case concerned prior restraint, whereas in the case before us, the alleged offenses have already been committed, and the purpose is to frustrate their continued perpetration and their harm (on this distinction, see: Avigdor Klagsbald, Criminal Offense and Prior Restraint, 2 Plilim 93 (1991) (Hebrew)).

B)        The Manaa case concerned activities that restricted freedom of movement (placing roadblocks) by the police. Here, the infringement, to the extent that there is one, is performed by the internet platform operators and not by a governmental organ, not to mention that the potential victims are deemed to have agreed to the “community rules” (assuming that they are a type of adhesion contract, as held in the Facebook case).

C)        The Hof Azza Regional Council case interpreted sec. 32 of Basic Law: The Government, and approved the payment of advances to those seeking to evacuate the Gaza Strip and Northern Samaria voluntarily, as it concerned an executive authority for which there is no legislative arrangement and the government’s residual authority therefore applied. This is also the case in the matter before us in regard to the Department’s voluntary referrals to the internet platform operators (and compare: HCJFH 9411/00 Arco Electric Industries Ltd. v. Mayor of Rishon LeZion [33], 64-65). Even the Prevention of Crimes Law is not a negative arrangement in this regard, as it does not in any way address the subject of voluntary referrals.

68.       Moreover, in those cases in which residual power cannot be of help, the auxiliary authority under sec. 17(b) of the Interpretation Law comes into play. In such cases, and in the circumstances appropriate to the case before us, primary authority for performing voluntary enforcement derives from the general enforcement authority of the Attorney General by virtue of the criminal procedure laws, the Penal Law, and sec. 13 of the Interpretation Law (as argued by the Respondents), or by virtue of the general authority of the Minister of Justice under the Prevention of Crimes Law, including sec 16 therein (and compare: MApp 1190/18  Ethics Committee v. David Yedid, Adv. [34]).

            There are also no grounds for the claim that the executive is trespassing, so to speak, the boundaries of the judiciary in finding that a prima facie offense has been committed by the publisher. The State Attorney’s Office holds such authority and exercises it as a matter of course, as for example, in filing an information when there is a reasonable expectation of a conviction. Moreover – ever since the judgment in HCJ 442/71 Lansky v. Minister of the Interior [35], the accepted view is that a “criminal past” can be established on the basis of the administrative evidence test, even in the absence of a conviction (for a comprehensive survey of the subject, see: Ron Shapira, From Criminal to Administrative Enforcement: Administrative Evidence of the Commission of a Criminal Offense – the Need for a Fair Administrative Process (2019) (Hebrew)), and indeed, at times it is not possible to find the offender or bring him to justice, and yet it would appear that a crime has been committed, consequences can be attributed to it, and it is certainly possible to attempt to prevent the harm or its continuation.

            This is the appropriate place to add that in most of the above cases, the granting of a right to be heard prior to taking administrative action is irrelevant, as the victim (whether because anonymous or unreachable) is not available (see and compare: CA 5739/18 Operators of the Website www.oligarchescorts.com v. State of Israel [36]; Barak-Erez, p. 499).

69.       And now to return to the matter before us.    

            In my opinion, as long as it has not been proven that it is the activities of the Cyber Department that directly and certainly lead to a violation of fundamental rights, and as long as no evidentiary foundation has been laid showing that the discretion of the online platform operators is not actually independent, a voluntary referral from the Department to the online platform operators is not prohibited. In these cases, it is difficult to view the authority’s actions as a form of intentional infringement of fundamental rights in a manner that would negate the authority of the Cyber Department to act to frustrate publications that amount to a prima facie criminal offense.

            This is the place to reiterate that a very high percentage of the publications whose removal or restriction was requested by the Cyber Department concerned offenses of violence and terrorism, and it was not argued that those who committed the offenses are subject to Israeli law. The offenses that the Cyber Department seeks to frustrate by restricting publications that incite violence or terrorist acts are therefore at the heart of the residual powers granted to the government in the areas of security and foreign relations (see: Shetreet, pp. 567-597; Cohn, p. 164).

            In all that concerns offenses of incitement to violence or terrorist acts, this conclusion derives a fortiori from the conclusions of the Arbel Commission Report, in which the majority recommended expanding the voluntary enforcement mechanism even beyond its present state, so that voluntary referrals by the government would be permitted even when a criminal offense is not concerned. As opposed to this, the minority was of the view that the provisions of the Work Procedure are appropriate to the desirable situation. We are treating of the Work Procedure as it is, and we were not asked for any expansion. That is sufficient in the present matter.

70.       Moreover, although the “principle of legality” in administrative law takes on different forms from state to state (and certainly between a state and a supra-national body), the citations and examples appended to the Respondents’ supplementary brief show that at least in a number of western democracies, the authority to initiate the “voluntary” removal of harmful publications is not conferred upon the administrative agencies by virtue of express authorization to act in the said manner.

71.       In addition, I cannot accept the argument that residual power is displaced in the matter before us due to the express legislative provision treating of the authority to investigate and bring charges as detailed above, or by virtue of sec. 17(b) of the Interpretation Law. As noted above, enforcement of the type before us is entirely different from the criminal process – its purpose is not penal, but rather it attempts to prevent publication of material whose affect is immediate and requires speedy action for its removal in order to minimize ongoing harm (respectively): to public safety, public order, protection of the vulnerable, or the proper, fair conduct of elections.

 

A View to the Future

72.       To summarize what has been stated thus far – in my opinion, the Respondents stand, although at times just barely, within the bounds of the law. It cannot be denied that the Cyber Department’s activity, as presented in the preliminary response to the petition, is vital to the protection of national security and social order. The voluntary method by which the Cyber Department acts in this regard is not, however, problem free, primarily in regard to the absence of specific authority for its activity in primary legislation. However, until the enactment of detailed legislation on the matter (as has been done in some countries), the current situation can continue by virtue of residual power or auxiliary authority.

73.       Beyond that, a number of overall problems have been uncovered that the Respondents should consider and correct, as set out below:

A)        The Cyber Department should consider what was stated in the Movement’s request to join, which described a series of defects in the Department’s work, among them: a lack of documentation of the content of the publications that the Cyber Department seeks to remove, inadequate details in the transparency reports produced by the Department, and the non-publication of the Work Procedure (for example: the type of criminal offense grounding the voluntary act; a more detailed account of the alleged offenses related to the publication; the identity of the publisher and its relationship to the State of Israel, to the extent known to the Department). In addition, there is a problem in clarifying the role of the online platform operators (which might have been clarified had those operators been joined as respondents to the petition), and the agreements between them and the Department.

            In view of the fact that most of the Cyber Department’s activity concerns security offenses, exposing the full extent of the Department’s activity certainly presents a problem. However, I believe that the Cyber Department should present paraphrases and examples of the character of the referrals it sends and its discussions with the online platform operators in its transparency reports.

B)        In making its referrals to the online platform operators, the Department should guide itself in accordance with the case law of this Court, which constitutes law that supersedes residual authority in this regard, including the judgments given in CrimFH 7383/08 Ungerfeld v. State of Israel [37]; LCrimA 5991/13 Segal v. State of Israel [38]; LCrimA 7052/18 State of Israel v. Rotem [39] (further hearing pending)).

C)        A legislative initiative should be weighed to provide a detailed arrangement for the voluntary enforcement mechanism, as has been done in some other countries.

74.       Another argument, which was not addressed in the framework of this petition, is the need for establishing a post facto oversight and supervision mechanism for the Department’s activities, and it is recommended that this be considered (on the need for regulating the sphere of activity of actors on the internet in terms of procedure and proper constitutional balances, see my opinion in the Premier League case).

            The above problems are not insignificant, but they do not, in themselves, justify issuing an order nisi in this petition in its present state. Nevertheless, the Respondents must draw conclusions for ameliorating the system in regard to all the aspects set out above.

 

Conclusion

75.       In view of all the above, if my opinion be accepted, we will order the dismissal of the petition in all its parts, subject to my comments in paras. 73 and 74, without an order for costs.

 

Justice A. Stein:

I concur.

 

President E. Hayut:

1.         In his comprehensive, in-depth opinion, my colleague Deputy President H. Melcer well described the uniqueness and complexity of the questions raised by this petition, among them the question of defining a governmental act; the question of the incidence of Basic Law: Human Dignity and Liberty beyond the borders of the state; the question of the rights of computer-generated fictitious users (“bots”), where it is unclear whether and to what to extent a human agent stands behind them; as well as questions related to the area of the regulatory relationship between the state and private bodies operating online. They are unprecedented to a large extent, and even according to the Respondents, the activity that is the focus of the petition “is of a character unlike the usual activity of the State Attorney’s Office” (see the letter of the Ministry of Justice of Jan. 10, 2019, Appendix R/9 of the Respondents’ response to the petition).

            I will, therefore, begin by saying that in my opinion, it is very difficult to examine these substantive questions of first impression given the partial picture presented to us. Therefore, if my opinion were accepted, the petition would be dismissed in limine.

2.         The activity that is the subject of the petition is that of the Cyber Department of the State Attorney’s Office (hereinafter: the Cyber Department or the Department) in the “voluntary” enforcement track. As my colleague the Deputy President explained, in accordance with a Work Procedure that it established, the Department initiates referrals to online platform operators (social networks, search engines, and website hosting providers) to report publications that, in the opinion of the State Attorney’s Office, constitute an offense under Israeli law and also breach the Terms of Use of the platform itself. According to the Department’s preliminary response, such referrals are sent to the online platform operators only when there are additional considerations that justify the referral, among them the severity of the publication, the scope of its distribution and its “viral” potential. In practice, the Department focuses primarily upon publications related to the operations of terrorist organizations and in the matter of inciting violence and terror. Referrals are also sent in regard to publications that may harm minors, certain public servants, or the integrity of Knesset elections.

            My colleague the Deputy President noted that the petition suffers from two defects that are sufficient for its dismissal in limine. They are the failure to join the online platform operators as respondents to the petition, and an insufficient factual foundation for the argument that the Cyber Department acts without authority. This, inter alia, in view of the uncertainty as to the questions of whether the publishers that are the subjects of the referrals are people or “bots”; whether they are located in the country or abroad; and whether the online platform operators decide to remove publications independently or are perhaps influenced by the fact that the referring body is the State Attorney’s Office. However, my colleague was of the opinion that in view of the fundamental constitutional questions raised by the petition, they should be addressed on the merits. In his opinion, the activity of the Cyber Department constitutes a governmental act, and where there is a possibility that the Department’s referrals may influence the decisions of the online platform operators whether to remove the publications, there is a need for some form of authorization for the Department’s activity. Therefore, my colleague addressed the question whether it is possible to discover a source that authorizes the Cyber Department to act in this manner, and concluded that it can be premised upon the residual power granted to the government under sec. 32 of Basic Law: The Government, as long as the Cyber Department’s activity does not infringe fundamental rights, inasmuch as residual power cannot serve as the basis for such infringement.

3.         On the basis of the foundation laid out before us in regard to the manner of the Cyber Department’s activity and its consequences for the online platform operators, and in view of the significant deficiencies in that foundation, my colleague is of the opinion that it cannot be said that the state is the entity that infringes a constitutional right. In this regard, he emphasizes the significant difficulty inherent in recognizing the possibility of the infringement of freedom of expression of a non-human entity (e.g., “bots” and “avatars”). He further emphasizes that the entity that holds the power to decide whether or not to remove the publication is the platform operator and not the state. Therefore, my colleague holds that “as long as it has not been proven that it is the activities of the Cyber Department that directly and certainly lead to a violation of fundamental rights, and as long as no evidentiary foundation has been laid showing that the discretion of the online platform operators is not actually independent, a voluntary referral from the Department to the online platform operators is not prohibited” (para. 69 of his opinion).

4.         I concur with the conclusion of my colleague the Deputy President that the activity of the Cyber Department that is the subject of the petition constitutes a governmental act. In this context, the words of Justice I. Zamir in regard to the definition of “administrative authority” are apt:

When an administrative agency exercises its authority, […] it fulfils a public function under law. That being so, it is subject to the special system of laws that is the system of administrative law […] It is possible that this is the simple and appropriate way to define administrative authority: Administrative authority is a public function in accordance with law (Izhak Zamir, Administrative Authority, vol. I, The Public Administration, 205 (2^nd expanded edition, 2010) (Hebrew) (emphasis added).

            In the matter before us, as my colleague the Deputy President noted in his opinion, the Cyber Department’s referral activity is systematic, focused, broad, and organized: Attorneys of the State Attorney’s Office send referrals to the online platforms in regard to publications that are prima facie criminal offences, regarding which there is a public interest in their removal, and that prima facie breach the Terms of Use of the platform. This is part of a declared plan of the State Attorney’s Office, and in in accordance with a dedicated procedure established for the purpose (see para. 15 of the Respondents’ supplementary brief). In these circumstances, it is clear that the Cyber Department’s activity constitutes a “public function”, and thus is a form of decision or exercise of authority on behalf of the state.

5.         The center of gravity of the petition, in its present form, is the question of infringement of a fundamental right. According to the Respondents, even if the Cyber Department’s activity constitutes a governmental act, and therefore requires a conferral of authority, it is possible to suffice in this regard with the government’s residual power (sec. 32 of Basic Law: The Government, which my colleague the Deputy President discussed at length), or the authority of the State Attorney’s Office as the representative of the Attorney General, who holds the auxiliary authorities required for the performance of his role (based upon secs. 3 and 17 of the Interpretation Law, 5741-1981). Auxiliary authority and residual power cannot form the basis of an infringement of a fundamental right (see HCJ 5128/94 Federman v. Minister of Police [16], 652; sec. 8 of Basic Law: Human Dignity and Liberty, according to which any violation of rights under that law requires express authorization by a law or by virtue thereof; and see Daphne Barak-Erez, Administrative Law, vol. 1, 146 (2010) (Hebrew); HCJ 4455/19 Tebeka Advocacy for Equality and Justice for Ethiopian Israelis v. Israel Police [40], paras. 14 and 34)). Deciding whether there is sufficient authorization for the activity of the Cyber Department is, therefore, largely contingent upon whether that activity infringes fundamental rights. According to the Respondents, the “informing” and recommending referrals by the Cyber Department to the online platform operators do not amount to a violation of rights. That is so because the platform operators exercise independent discretion in all that concerns the removal of the content that is the subject of the referrals, whereas the Cyber Department only makes recommendations.

            The petition before us suffers from two material defects that my colleague the Deputy President addressed, each of which – and a fortiori cumulatively – frustrate the possibility of deciding this fundamental question on the merits. Therefore, in my opinion, there is no recourse but to dismiss the petition in limine. These defects are, as noted, the failure to join relevant respondents, and a lack of a factual foundation. I will address these respectively.

6.         Failure to join relevant respondents – as has been held on more than one occasion, refraining from joining those who may be affected by the decision upon the petition constitutes a material defect that can justify dismissing the petition in limine. This, inter alia, because the respondents who were not joined can shed essential light on the issues to be addressed: “In order for the court to ground its decision upon a full, reliable picture of the situation, there is no one better to present the opposing view than one who is related to the matter and may be harmed by a court order” (HCJ 1901/94 MK Landau v. Jerusalem Municipality [41], 415 (hereinafter: the Landau case); and also see Izhak Zamir, Administrative Authority, vol. III, Judicial Review – Threshold Rules, 1747 (2014) (Hebrew)). This defect is particularly salient when the petitioner has been granted the opportunity to correct the omission and chose not to do so (HCJ 151/11 Ruth and Emanuel Rackman Center v. Minister of Justice [42], para. 17; and compare: HCJ 384/82 Pachmas Metal & Plastic v. Minister of Finance [43], 300-301)).

            In their preliminary response to the petition, the Respondents raised several arguments in regard to this threshold requirement, and the Petitioners’ attorney was even asked about this in the course of the hearing on Aug., 8, 2020, responding:

We considered whether to join, we considered before whom to petition. We are not arguing against Facebook or any other company. We are arguing that we have here a governmental act by the state that refers to the content providers in this entire sphere of removal of content without connection; the governmental act here is that of initiated referral by the Cyber Department – that is an act that requires authorization. […] We do not believe that there is harm [to the operators] (p. 4, lines 29-32 of the transcript).

7.         I am unable to accept this argument. The Cyber Department’s Work Procedure lists a “mixed multitude” of “online platforms”, and the differences outnumber what they share in common in no few aspects (see sec. 1 of the Procedure). The online social networks (Facebook, etc.) are unlike online search engines (like Google) or website “hosting” providers (like WordPress). And an online social network, in which mostly text and pictures are shared (like Facebook and Twitter) is unlike a social network for sharing only videos (like YouTube). These platform operators are differentiated by a number of criteria that have consequences for the questions at the heart of this petition, among them: the type of contents regarding which the Cyber Department sends notifications; the policy for treating those referrals; and the importance that each operator assigns to the identity of the party requesting the removal of content. The question whether and to what extent these operators are expected (all or some) to be harmed by the granting of the petition was also not sufficiently examined, and I am not convinced that the Petitioners succeeded in showing that those operators cannot be expected to be harmed at all by a decision on the merits in this petition. As my colleague the Deputy President noted, we have before us a “triangular relationship” or a “power triangle” with three vertices: the state, the publishers (in whose names the Petitioners argue), and the online platform operators. Without representation for one of the vertices of the triangle, it is impossible to decide material questions that affect the entire triangle.

            Indeed, at times the Court is willing to address a petition on the merits despite the defect of not joining relevant respondents, for example, “if the harm to the third party is negligible, if there are grounds for assuming that he is not interested in arguing before the Court, or if it is clear that one of the Respondents will fully and adequately present the arguments in regard to that party” (the Landau case, p. 415). Without expressing an opinion on the question of the scope of the harm that would be caused to the platform operators if the petition were granted, it is clear that there are no grounds for assuming that all of these operators are not interested in voicing their position on the matter at the heart of this petition, or for assuming that the parties to the petition can present the full picture in regard to those operators.

8.         Thus, we find that this petition suffers from a material defect of not joining respondents who may be harmed by the decision rendered, and the information they have may even materially affect the decision on the merits of the Petitioners’ arguments. This is particularly so in regard to the question whether the Cyber Department’s activity infringes constitutional rights, and the question of the scope of the alleged infringement. The Petitioners were confronted with the said defect at the preliminary stage and chose not to remedy it.

            Even if one were to argue that this defect can be remedied by alternative means, such as joining the respondents at the Court’s initiative, that would be to no avail as the petition, in its current state, suffers from an additional, no less material defect in regard to the insuffciency of the factual foundation necessary for deciding upon it.

9.         As my colleague the Deputy President emphasized in his opinion, we were not presented with data on the scope of the infringement of fundamental rights caused as a result of the operators’ acceding to the Cyber Departments referrals. In particular, it was not made clear what part of the referrals concern publications that originate beyond the borders of the state, anonymous publications, or publications that were not uploaded by human beings – in which case, as my colleague noted, material questions arise in regard to the applicability of Basic Law: Human Dignity and Liberty to those publications. In addition, although the Respondents presented data in regard to the total number of referrals issued by the Cyber Department over the last few years (see para. 17 of the opinion of my colleague the Deputy President) and asked to present ex parte “a number of concrete examples of the Cyber Department’s reports to the online platforms in various areas” (para. 26 of the preliminary response), it appears from the Movement for Freedom of Information’s request to join that the Cyber Department does not maintain a database of all the publications regarding which it sends referrals. The activity reports published by the Cyber Department present only laconic information about the publications regarding which referrals are sent, the identity of the publishers and the reasons for sending the referrals (see para, 73(a) of the opinion of my colleague the Deputy President).

10.       The absence of a factual foundation in regard to the activity of the Cyber Department does not fall upon the Petitioners but rather upon the Department itself, and the relevant data is in its possession or can be obtained by it. However, the Petitioners did not focus their arguments upon the transparency of the Cyber Department’s activity, did not request an operative remedy in this regard, did not exhaust the procedures with the Respondents in this regard, and it is not clear whether they submitted requests in this matter under the Freedom of Information Law, 5758-1998. In these circumstances, and given the factual gaps addressed in the opinion of my colleague the Deputy President, I do not believe that it is possible to continue to examine the petition on the merits in its current state.

11.       The primary question raised by the petition before us is, as stated, whether the referral activity of the Cyber Department – as expressed in the Work Procedure that it established – leads to a violation of fundamental rights. To the extent that the answer is in the negative, it is possible to suffice with the sources of authority cited by the Respondents, and hold that this activity does not constitute a deviation from authority, while to the extent that the answer is positive, the Respondents will be required to find some alternative source of authority, in the absence of which there will be no recourse but to hold that the Cyber Department acts ultra vires. A significant component of the Petitioners’ argument thus treats of the alleged infringement of freedom of expression. The Petitioners further argue that the Cyber Department’s activity also involves an infringement of the right to due process and the right to be heard, because it does not afford the publishers the right to be heard prior to sending the referral, which includes the Department’s position that the publication constitutes a prima facie criminal offense.

            My colleague the Deputy President is of the opinion that there is no violation of a constitutional right in this case, without seeing a need to decide the question of the criteria for the existence of an infringement of a constitutional right (paras. 63-65 of his opinion). To my mind, the accepted approach, long established in the case law of this Court, is that when there is an infringement of a constitutional right that is not de minimis, the constitutional review moves from the first step – that of the violation – to the second, i.e., examining the justification for the violation in the framework of the tests of the Limitation Clause. In any event, under the circumstances of the matter before us, the insufficient factual foundation in regard to the manner in which the Cyber Department operates, together with the insufficient factual foundation in regard to the conduct of the online platform operators, which largely derives from their not being joined to the petition (particularly the question of the importance they assign to the fact that the referrals are sent by the Cyber Department of the State Attorney’s Office of the State of Israel), all lead, in my opinion, to the conclusion that, at this point in time, it is not possible to decide the question whether the Cyber Department’s activity leads to an infringement of freedom of expression or of the right to be heard and the right to due process. In other words, in view of the partial picture of the necessary facts presented to us, and in view of the absence of the online platform operators as parties to the petition, it is not possible, in my opinion, to examine the material questions raised by the petition, and there is no alternative but to dismiss it in limine. I would also join the comments in para. 73 of the opinion of my colleague the Deputy President in regard to the difficulties presented by the activities of the Cyber Department, and his call for the publication of the details of the Work Procedure of the Cyber Department (para. 12 of his opinion). Therefore, were my opinion accepted, we would order the dismissal of the petition in limine, without an order for costs.

 

The petition is denied.

Given this day, the 30^th of Nissan 5781 (April 12, 2021).

 

 

                                                                                    AAA 3782/12

 

The Appellants	1. Tel-Aviv Jaffa District Commander – Israel Police 2. Central District Commander – Israel Police 3. Israel Police
	v.
The Respondent	The Israel Internet Association
The Formal Respondents	1.      012 Smile Telecom Ltd. (pro forma) 2.      018 Xphone Ltd. (pro forma) 3.      Bezeq International Ltd. (pro forma) 4.      013 Netvision Barak Ltd. (pro forma)

 

In the Supreme Court sitting as the Court of Appeals in Administrative Matters

[24.3.2013]

Before: President A. Grunis, Justices E.Vogelman, N. Sohlberg

 

Appeal against decision of the Tel-Aviv- Jaffa District Court of 2 April 2012 in Case AAF 45505-10-10 handed down by Deputy President Hon. Judge Michal Rubinstein

 

Facts: In August 2010, the Israel Police ordered major Israeli Internet access providers to block access to eight gambling websites operating outside the State of Israel. The orders were based on section 229 of the Penal Law that permits the District Police Commander to order the closure of any illegal gaming, lottery, or gambling place. The access providers complied with the orders and the Israel Internet Association petitioned the Administrative Affairs Court against the District Commander, contesting the closure, in the interests of Israeli web-users and the general public. The Internet access providers did not petition against the closure of access to the gambling websites. On April 2, 2012 the Administrative Affairs Court (per Judge Michal Rubinstein) granted the petition, holding that the police had no authority to order Internet service providers to block access to gambling websites. 

 

In granting the petition, the Administrative Affairs Court ruled that the Israel Internet Association had an independent right of standing, given the important public interest in enforcing constitutional values and maintaing the rule of law, notwithstanding that no petition was filed by access providers themselves. Furthermore, the closure of Internet websites violated freedom of expression. Even if the content curtailed was of little social utility, websites closure can only be done with legal authority. Primarily the provision in the Penal Law allowed the closure of a physical “place” and did not include the closure of an Internet website. In this context no analogy can be drawn from the closure of prohibited physical places to the closure of prohibited websites, notwithstanding their similar purposes, because the potential for violating freedom of expression and freedom of occupation, and because blocking access to the Internet poses technical, political and legal difficulties, including the possibility of blocking legitimate websites and innocent users. Blocks by third parties – the access providers – also raises questions relating to liability, the manner of blocking and its costs. In view of all these factors the petition was granted.

An appeal was filed against the decision in the Supreme Court.

 

Held:

Regarding freedom of expression, the Supreme Court agreed unanimously that the content blocked on the gambling websites is limited in this case and hence the violation of free speech that resulted from blocking lawful content on gambling websites is of limited degree and lawful. Moreover, the primary infringement here relates to the website operators’ freedom of occupation. In this regard, the case law has already held that the infringement of freedom of occupation, the infringement satisfies the constitutional tests.

 

With respect to the concern that protected information on websites would be blocked, the Court noted that website owners can make such information available on alternative websites, or even on the same website while blocking only prohibited gambling.

 

Regarding standing, Justice Vogelman ruled that the Internet Association satisfies the conditions for recognizing a public petitioner, given that it seeks to promote the public interest of Internet users, an interest shared by the general public, or significant parts thereof, rather than protect its own special interest. Given this case presents a first attempt to define the boundaries of the district police commander’s authority under section 229 of the Criminal Law to block access to Internet gambling websites, the question is a fundamental one that justifies hearing through public petition. As to the sufficiency of the factual infrastructure, had the Appellants felt that any issue was not sufficiently clarified, they could have acted to remedy the situation. Moreover, the public petitioner is required to present the factual infrastructure sufficient for the proceeding. In the current case the factual infrastructure was indeed sufficient for purposes of judicial review.

 

The dispute and the result involved two basic issues: first, whether the language of the Penal Law authorizing police to close a “place” can and should be interpreted broadly to include a virtual Internet website, which is not a physical place, without a specific legislative amendment. The second and more important question was whether the police can and should be permitted to exercise their authority of closure with respect to a website by way of a third party, namely the access providers. 

Justice Vogelman (for the majority, with concurrence by President Grunis), wrote that a gambling website may be viewed as a “place,” and its blocking can also be viewed as its “closing” within the meaning of section 229(A)(1). Additionally, an online gambling site may be considered a “prohibited gaming venue,” under a purposive interpretation of the Criminal Law’s relevant provisions and in the context of time and advancing technology, which render section 229 of the Criminal Law applicable in the “virtual” world. Nonetheless, the main obstacle to such interpretation is the lack of express authority to order private third parties – access providers – to assist in implementing the authority to block websites. According to Justice Vogelman, when the law empowers a governmental agency, it is assumed that the legislature intended that agency, and not another, would implement that authority, and that the agency may act only within the boundaries of the authorizing law. Even if the authorization to close a place can be interpreted as authorizing closing websites, it is not identical to authorizing third parties to block access to websites.

 

This is consistent with the principle of administrative legality which only permits an agency to act within legislation that empowers governmental agencies to order third parties to assist in exercising that agency’s authority. Such authority is not even implied in the Penal law’s provision concerning police authority to order the closing of a place.  Absent explicit statutory source, it is impermissible to compel a person or private entity to act for the authorities. Hence the orders to access providers here violated the principle of administrative legality. The current statutory framework is insufficient because it lacks authorization to order a third party to assist enforcement agencies in exercising their powers.

Even though the rule is that the authority is permitted to receive assistance from private persons or entities as far as the technical aspects of fulfilling their task, there is also an interpretative presumption against delegating authority to private entities and in the absence of appropriate legislative framework, enforcement authority cannot be granted to those not part of the enforcement mechanism

Even if the access providers were not required to exercise discretion, and the police only requested help from them in the exercise of its authority – in the technical act of blocking a website identified through its IP address specified on the order – it is still necessary to prove that the access providers agreed to assist the police. Once the police imposed an obligation upon access providers, it can no longer be considered assistance – hence the need for explicit statutory authorization.

 

Justice N. Sohlberg, writing for the minority, found that as a rule the court will not grant a public petition where there is a private victim in the background who chose not to apply to the court for relief, and that in light of the website owners failure to file an appeal, it is doubtful whether the Internet association has standing. Furthermore, granting standing when the relevant party did not file a petition might mean that the required factual infrastructure would not be presented to the Court. Nonetheless under the circumstances, where the Administrative Court recognized the Internet Association’s standing and ruled on the merits, it would be inappropriate to reject the appeal for of lack of standing without examining the matter on the merits.

 

Regarding the substantive issue, though a specific legislative arrangement would be preferable, the law’s existing language provides a satisfactory solution as to the police authority to issue orders, and waiting for legislative authority frustrates appropriate response in law enforcement and service of justice.

Both in terms of language and purpose the word “space” should be interpreted to also mean virtual space, given that terms that serve in virtual space are borrowed from the tangible world. Accordingly there is no deviation from the principle of legality by finding that “place” also includes virtual space. As the damage wrought by gambling on the Internet is immeasurably greater than that which is caused in physical places and that the legislative purpose was to prevent illegal gambling regardless of its location, a purposive interpretation would and should interpret “place” as meaning virtual space. Accordingly, apart from certain, isolated exceptions, the rule should be that the Internet fits the definition of place.

With respect to the difficulty in using third parties for carrying out a criminal proceeding, the law recognizes the possibility to use a third party to present an object necessary for interrogation or trial. Considering the license the State has granted them, access providers bear public responsibility. It is therefore justified to use them to execute orders to restrict access, given that the order requires the technical acts that do not involve any discretion regarding the closing of a site with a particular IP address specified in the order. Regarding the requirement for third party consent, Justice Sohlberg analogized the status of the website owners to receptionist in a physical place whom the police would have been authorized to require to open.

 

Justice Sohlberg also found that failure to petition against blocking access may be viewed as the website’s owner’s consent to to being used to carry out the police order. Justice Sohlberg based this conclusion on the Talmudic rule of "silence is regarded as admission.”

 

Legislation Cited

Administrative Affairs Court Act, 5760-2000, s. 5 (1)

Basic Law: Human Dignity and Liberty

Civil Procedure Regulations, 5744-1984, reg. 3(a)

Criminal Procedure (Arrest and Search) (New Version) Act, 5729-1969, s.20 23

Criminal Procedure (Powers of Enforcement- Communication Data), 5768-2007, s.1, 3 (2)

Interpretation Act 5741-1981, s.17

Penal Law, 5737-1977 s. 224, 228, 229

Police Ordinance [New Version], 5731-1971, s. 3

Prohibition of Discrimination (Products and Services) in Entrance to Places of Entertainment and Public Places, 5761-2001, s.2

Regulation of Sports: Gambling Act, 5727 – 1967

 

Supreme Court Decisions Cited

[1] HCJ 243/62 Israel Films Studios Ltd v. Levi [1962] IsrSC 16 2407.

 

[2] HCJ 651/03 Citizens Right Bureau in Israel v. Chairman of Central Elections to the Sixteenth Knesset [2003] IsrSC 57 (2) 62.

 

[3] AAA 4436/02 Tishim Kadurim Restaurant, Member’ Club v. Haifa Municipality [2004] IsrSC 58 (3) 782.

 

[4] HCJ 8070/98 Citizens Rights Office in Israel v. Ministry of the Interior (10.5.04).

 

[5] LCA 4447/07 Mor v. Barak I.T.T. [1995] Society for the Bezeq International Services Ltd (25.3.10).

 

[6] CA 9183/09 The Football Association Premier League Limited v. Anon (13.5.12).

 

[7]  Cr.A 1439/06 Zaltovski v. State of Israel (28.3.06).

 

[8] CrA. 7430 /10  Anon. State of Israel (5.2.2010).

 

[9] LCrApp 787/79 Mizrahi v. State of Israel [1980] IsrSC 35 (4) 421.

 

[10]  (HCJ 131/85Savizky v. Minster of Finance [1965] IsrSC 19 (2) 369.

 

[11] HCJ 651/03 Citizens Rights Bureau in Israel v. Chairman of the Sixteenth Knesset Central General Elections Committee [2003] IsrSC 57 (2) 62.

 

[12] HCJ 3809/08 Citizens Rights Bureau v. Israel Police (28.5.2012).

 

[13] Association of Renovations Contractors for Restoration v. State of Israel (14.3.2011).

 

[14] HCJ 1/81 Shiran v. Broadcasting Authority [1981], IsrSC 35 (3) 365.

 

[15]  HCJ 910/86 Ressler v. Minister of Defense [1988], IsrSC 42 (2) 441.

 

[16] HCJ 287/91 Kargal Ltd v. Investments Center Council [1992], IsrSc 46 (2) 851,

 

[17] HCJ 962/02 Liran v. Attorney General(1.4.2007).

 

[18] HCJ 4112/99 Adalah Legal Centre for Arab Minority Rights in Israel v. Tel-Aviv Municipality [2002] IsrSC 56(5) 393.

[19] HCJ 80/70 Elizur v. Broadcasting Authority [1970],IsrSC 24 (2) 649.

[20] HCJ 852/86 Aloni v. Minister of Justice  [1987], IsrSC 41 (2) 1.

 

[21] HCJ 606/93 Kiddum Yezumot v. Broadcasting Authority  [1994], IsrSC 48(2) 1.

 

[22] HCJ  2303/90 Philipovitz v. Registrar of Companies [1992], IsrSC 46 (1) 410.

 

[23] (HCJ 2605/05 Academic Center of Law and Business v. Minister of Finance, (19.11.2009).

 

[24]  AAA 6848/10 Erez v. Giva’ataim (30.5.2012).

 

[25] HCJ 5031/10 Amutat Ir Amim v. Israel Nature and Parks Authority (26.3.2012).

 

[26]CA 630/97 Local Committee for Planning and Building Nahariya v. Shir Hatzafon Construction Company Ltd [1998] IsrSC 52 (3) at 399.  

 

[27]  HCJ 5394/92 Hoppert v ‘Yad Vashem’ Holocaust Martyrs and Heroes Memorial Authority [1994] IsrSC 48(3)353.

 

[28] 7368/06 Luxury Apartments Ltd v. Mayor of Yabneh (27.6.2011).

 

[29[ HCJ 6824/07 Mana v  Taxation Authority (20.12.2010).

 

[30]  HCJ 7455/05 Legal Forum for Land of Israel v. Israeli Government [2005] 905.

 

United States Decisions Cited

[[31] Center for Democracy & Technology cy & Technology v. Pappert, 337 F.Supp.2d 606 (E.D Penn. 2004).

 

 

For the Appellants: Advs. Yuval Roitman; Adv.Orli Aharoni

 

For the Respondent: Adv. Haim Ravia, Adv. Dan-Or Hof; Adv. Yossi Markovitz

 

Judgment

 

Justice N. Sohlberg

 

1.         The Israel Police issued orders restricting access to gambling websites on the Internet. The Tel-Aviv-Jaffa District Court, sitting as the Court for Administrative Affairs (Judge Michal Rubinstein) granted the petition by the Israeli Internet Association and ruled that the orders were issued ultra vires and should therefore be voided. The Israel Police appealed and requested the orders be resotred.

Background

2.         Crime is burgeoning and taking new forms. As a result, on 1 January 2006 Government Decision No. 4618 was adopted, establishing a Standing Committee for Direction and Coordination of Activity in the Battle Against Severe Crime and Organized Crime and their Offshoots. The Committee determined that because its far-reaching and grave consequences the phenomenon of Internet gambling would be a central enforcement target combining several tools – criminal, fiscal, and administrative. This is a growing crime-generating phenomenon that is accessible to a broad segment of the population. Within this context, with the knowledge of the Attorney General and the State Attorney, the Committee decided to restrict Israeli users’ access to gambling websites. Internet access providers were issued warning letters and given a list of gambling sites and their IP addresses to be blocked. The access providers and the website operators were also allowed the opportunity to object. In August 2010 the orders were issued. In October 2010 the Israel Internet Association petitioned to the Administrative Affairs Court to revoke the orders, and in April 2012 the petition was granted

The Ruling of the District Court

3.         The principle elements of the Administrative Affairs Court’s ruling are:

(a)        Locus Standi: The direct victims – the access providers and the website operators – chose not to exercise their right to petition against the orders. Nonetheless the court found there were grounds for recognizing the locus standi of the Israel Internet Association, given that it does not represent the interests of the access providers and website operators, which have primarily commercial interests, but rather as the representative of users in Israel and their rights to free expression and access to information. This is a matter of general public importance pertaining enforcing constitutional values and maintaining the rule of law. 

(b)        Restricting access to Internet gambling sites infringes freedom of expression: The Internet is an excellent tool for exercising the right to access information in a practical, efficient, cheap and reliable manner. It is a democratic tool that promotes equality, enables a decentralized and diverse discourse, facilitates economic growth, and is an excellent platform for business ventures. Access to information is a constitutional right and limitations on the use of Internet are therefore rare. yet, the Internet is also subject to abuse, to violation of copyright, publication of slander, pornography, encouragement of violence, drug abuse etc. The desire to minimize the harm caused by damaging uses of the Internet has led the authorities of different countries to adopt various means, including blocking access to websites that function as platforms for illegal activity, or use technological screening measures. The Israeli approach has been that freedom of expression is “all encompassing” and applies even to expressions that encourage illegal activity.  Still, freedom of expression is not an absolute right. When there are interests that justify it, such as security, or social, political and other interests, freedom of expression may be curbed. When applying a proportionality test, the balance may vary according to the type of expression and its inherent social value weighed against the benefit of restriction. The content of illegal gambling sites – for example game instructions, various lists, graphics and other audio-visual aides – are, generally speaking, of little social value. The expressions are of a purely commercial nature, encouraging acts restricted under criminal law. Conceivably, limiting access to such expressions may be justified by legitimate purpose. But the mere fact that an expression may be harm does not exclude it from protection. As such, restrictions on free speech, even on expressions with little social value such as those in illegal gambling sites, must pass constitutional muster and be legally authorized.  

(c )       The Police has no authority to order Internet access providers to restrict access to gambling websites.  The relevant sections of the Police Ordinance [New Version], 5731-1971 (“Police Ordinance”), and the Penal Law, 5737-1977 (“Penal Law”), through their language and purpose, authorize the Israel Police to order the closing of places where gambling is takes place, but these are only physical places, as opposed to preventing access to an Internet website. A website is not a “place” but rather an amalgamation of information and applications installed in a computer that communicates with other computers via the Internet. Information is transferred from the computer to the server. The police is authorized to order the closing of a “place” of prohibited games or a “place” where lotteries or gambling are held, but preventing access to a website is not equivalent to the closing of a place, and is not covered by that authorization, neither explicitly nor implicitly. That the law grants the police the power to shut down physical places cannot, in itself, be understood as legislative intention to broaden the authority to allow “censorship” power to the police, without clear guidelines for its exercise. Even if the purpose of the orders – reducing the prevalence of gambling – is identical to that of the authorizing closing down physical gambling places, blocked access to a website implicates freedom of expression and freedom of occupation differently.  Blocking access to the Internet poses technical, political and legal difficulties: the concern for possibly blocking legitimate websites or innocent users. Executing blocks by a third party – the access providers – raises questions of liability, methods for blocking and costs. The appropriate legal policy would be to wait for explicit regulation of restrictions to free expression on the Internet in primary legislation, following in depth public debate. “Acrobatic” interpretations should not be invoked to authorize the police to violate civil rights. Furthermore, over the past few years the legislature has considered proposals for legislative amendments on this issue, but the legislative initiatives were hindered for being insufficiently balanced. The subjective and concrete legislative intention indicates a desire not to authorize the police to block access to gambling websites at its own discretion.

In short, the orders to restrict access to gambling websites were issued ultra vires and should be voided. This was the ruling of the Tel-Aviv-Jaffa District Court, sitting as the Court for Administrative Affairs.

Principal Arguments of the Parties

4.         Attorneys for the State argue that the Administrative Affairs Court erred in determining that the Israel Internet Association has standing.  The latter is a public petitioner with no personal interest in the orders, and his petition should therefore have been dismissed in limine, especially given the existence of petitioners who could have presented the factual infrastructure required, yet they ultimately refrained from filing a petition. The petition seeks to permit illegal activity, rather than preserve the rule of law, and there was no justification for conducting a judicial hearing for this kind of petition by a public petitioner. Attorneys for the State further argue that the Administrative Affairs Court erred in holding the orders infringe freedom of expression. The websites subject to the orders do not serve as a venue for expression and their entire raison d’etre is conducting prohibited gambling. There is no justification to fully exempt the Internet from rules that apply to other media. Blocking access to gambling is accepted practice all over the world, and is necessary for crime prevention.

5.         The primary claim the State’s attorneys make is that the police is authorized to order blocking access to websites. The Administrative Affairs Court adopted a “rigid” interpretation that failed to fully account for the law’s language and purpose. The Administrative Affairs Court failed to consider a possible alternative in the authorizing statute. In any case the relevant provision can be seen to include Internet space, as well as physical space: a “place of gambling” is also a “virtual place”. The authority to close a place also encompasses orders to block access to virtual space. The attorney for the State argues that when the law was passed it was impossible to anticipate the existence of virtual space, but the purpose is the same: preventing illegal gambling, which causes immense harm to both the individual and the public. Waiting for primary legislation to explicitly grant parallel authority to virtual space means perpetuating Internet gambling, its grave consequences and its harm, while forcing the police to combat it with hands tied behind its back.

6.         On the other hand, the Israel Internet Association discussed the public interest in Internet access, and as a natural outcome, its right of standing in this petition vis-à-vis its activities to promote Internet use in Israel as a technological, research, educational, social, and business resource. The limited economic interest of website owners and access providers is not comparable to the public interest in having unfettered access to the Internet. This is the purpose of granting standing rights to a public petitioner, thus enabling judicial review in a matter of public and constitutional importance that implicates the rule of law. The Israel Internet Association also emphasized the right to know. “A governing authority which claims the right to decide what the citizen ought to know, will eventually decide what the citizen should think; and there is no greater paradox to true democracy, which is not ‘guided’ from above” (HCJ 243/62 Israel Films Studios Ltd v. Levi [1] at p. 2416). A website consists of layers of information, each of these a protected expression, including: the code, the graphic design, games, trailers, data and explanations. The suspicion of a criminal offense does not excuse limits on expression in advance.

7.         The Israel Internet Association further claims that the law does not authorize the Police to order a third party to block access to gambling websites. An Internet website is neither a “place”, nor “premises” but rather a collection of “pages” which contain information collected from files on a service computer that communicates with other computers via the Internet (Abraham Tenenbaum “On Metaphors in Computer and Internet Law”, Sha’arei Mishpat 4 (2), 356, 374 (2006)). The analogy between “site” and “place” is fundamentally flawed. Blocking access to knowledge is distinguishable from closing a physical place, inter alia because of the infringement upon freedom of expression. Physical closing does not implicate the rights of the general public. Blocking access to knowledge does. Internet access providers are not enforcement agents of the police. They serve as a channel for providing information to Internet users, and they have an immensely important role in exercising the right to access information.

8.         The Israel Internet Association requests we uphold the Administrative Affairs Court’s decision regarding standing based also on the fact that the consequences of blocking access to a website differ from the consequences of blocking a physical place. Blocking access to websites involves technical challenges that may block access to innocuous sites. Blocking may be ineffective, as well. It may have implications for international obligations, and raise questions about access providers’ liability. Costs are likely to be “rolled” onto users. As a matter of judicial policy, infringements upon freedom of expression and access to information should only done in explicit primary legislation. The Knesset debates around private bills on the matter reflect substantive reservations against conferring the police with the requested powers. Upholding the appeal would turn the police into investigator and prosecutor, judge and executor, while performing interpretive acrobatics and infringing free expression.

Discussion and Ruling

9.         I divide the discussion into three categories, following the path taken by the Administrative Affairs Court:

(a) Standing; (b) Freedom of Expression; (c) Police Authority.

 (a)       Right of Standing

10.       As mentioned, the orders compelled Internet providers to block access to a number of websites used for illegal gambling. The access providers and the website owners chose not to challenge the orders. Prima facie, as claimed by the attorney for the State, the Israel Internet Association is stepping into a dispute in which it has no part. The Administrative Affairs Court deviated from the rule that “the court will generally not grant a public petition where there is a private victim who chose not to turn to the court for relief ” (HCJ 651/03 Citizens Right Bureau in Israel v. Chairman of Central Elections to the Sixteenth Knesset [2] at p. 68).  Recognition of standing rights for the Israeli Internet Association prompted the petitions’ adjudication without presenting the Administrative Court with the required factual infrastructure. The precise contents of the websites subject to the orders were not presented, nor was a full description of the technical ability to block access. No basis was presented for the argument – which the Administrative Court found acceptable – that blocking access to gambling sites could also be expected to block other sites.

11.  The Israeli Internet Association further argued before the Administrative Affairs Court that the Internet providers’ right to hearing had been violated. It further argued that the decision to block certain sites was discriminatory. The problem however is that these are not arguments that can be raised by a public petitioner. These are arguments that only the website owners and the access providers could have raised, had they so wished to do so.

12.       It seems that a priori the petition should have been dismissed in limine in the absence of standing. However, post factum, once the Administrative Affairs Court recognized the Israel Internet Association had standing, and ruled as it did on the merits, it seems inappropriate at this stage to uphold the appeal merely based on his issue, without ruling on the merits of the appeal itself. It is incumbent upon us to rule on the legality of the orders.

Freedom of Expression

13.       The attorneys for the parties spoke loftily and at length about freedom of expression and the right to access information that derives from it. Indeed, we must make every effort to avoid infringing the free dialogue in the new “town square” and the flow of information on the Internet. Freedom of expression is the air we breathe, and the right to access information – our daily bread. All the same, in its decision, the Administrative Affairs Court stated that illegal gambling on the Internet certainly is not a protected right, and that in such circumstances indeed there is no “discourse of rights” (para. 21). However, the gambling sites also feature additional content: expressions, pictures, texts, explanations, lists and other audio-visual information. According to the Administrative Affairs Court all of these are of social value, concededly of “low value”. Nevertheless, “in the prevention of access to gambling websites the Respondents infringed the freedom of expression of users interested in entering the website and in browsing the information and of the site owners who uploaded the content” (para.23).

14.       This infringement upon free expression was scathingly criticized by the Israel Internet Association, but it appears to me that the alleged infringement is not quite what it was made out to be.  Attorneys for the State dispute this, claiming that the aforementioned gambling websites contain gambling content and nothing else, and that in any event, it is not content of a kind to which access cannot be denied based on freedom of expression. As mentioned, the petition was filed by the Israel Internet Association and not by access providers or website operators, with whom the relevant information is stored. This matter again exemplifies the problematic nature of granting standing to a party meddling in a dispute that is not its own, because the factual infrastructure laid before the court was insufficient and a court may follow it blindly.

15.       Regardless, even had the gambling websites under discussion included legitimate content alongside platforms of illegal gambling, there is nothing to prevent website owners from making the information accessible to users by one of two methods: either on an alternative site, or on the same site, together with blocking possible engagement in prohibited gambling there. The infringement of free expression is therefore quite marginal, if at all.

16.       We should not forget that the closure of a physical gambling place violates the right to property, a basic constitutional right, but is nonetheless permitted and frequently done according to the law. Case law, too, has permitted the closure of a physical gambling place, even when it serves for other legitimate activities (per former Justice Grunis in AAA 4436/02 Tishim Kadurim Restaurant, Members’ Club v. Haifa Municipality [3] at p.798 (hereinafter: Tishim Kadurim). As mentioned above, the Israeli Internet Association argues that not all of the content on the gambling sites at issue is illegal and that these sites serve as platforms for chatting and other legitimate uses. This is a factual claim that requires factual substantiation. But assuming it is correct, we again analogize to a physical gambling place, which may undisputedly be legally closed. In addition to serving for illegal gambling, such a place can also serve as a place for social interaction, where conversations, even on matters of highest importance, may be held. But this would not rise to the level of speech protected by the right to free expression that would prevent closing a physical place of gambling. Visitors would be able to continue to meet, to speak, and to exchange opinions in alternative venues.  Similarly, there is nothing to prevent taking the same action regarding a website where illegal gambling takes place.  Access to the latter would be blocked, and to the extent that other legitimate activities took place on the website, there would be no impediment to continuing those, whether on this site or on another site.

17.       Hence, in terms of practical implementation the concern for violating a fundamental principle has been alleviated. The elevated status of freedom of expression is far beyond dispute. It remains intact and its status is securely enshrined, and access to illegal Internet gambling can be restricted without infringing freedom of expression or the right to access information. I make additional comments on guarding against any infringement of free expression below, in my discussion of discretion in exercising police authority.  

(c)  Police Authority

18.       Law enforcement agencies source their actions in two statutory provisions. Section 3 of the Police Ordinance provides that: “The Israel Police shall work toward prevention and detection of offences, apprehension and prosecution of offenders, safe custody of prisoners, and maintenance of public order and the safety of persons and property”. This is a basic and important provision, but because of its generality is of limited value to us. A more important provision for our purposes is the specific provision of section 229(a)(1) of the Penal Law, which addresses “closure of places”, as follows:

 “A district police commander may order the closing of a place for prohibited games or a place for the conduct of lotteries or gambling.”

19.       There are two, similar alternatives. The first: “a place of prohibited games”, and the second, “a place for the conduct of lotteries or gambling”. The Administrative Affairs Court focused on the first alternative, which is defined in section 224 of the Penal Law:

“‘Place of prohibited games’: premises where prohibited games are held regularly, whether open to the public or only to certain persons, regardless of whether those premises are also used for some other purpose.”

Based on dictionary definitions in both Hebrew and English, the Administrative Affairs Court ruled that the statutory definition refers to a physical, delineated place; such as a house, building, field (para. 36 of the Administrative Affairs Court opinion). The court relied on Y. Kedmi’s book, which interprets premises “in the broad and comprehensive sense of the concept... Immovable property as distinct from movable property.” (Yaakov Kedmi, The Criminal Law (Part IV)  2283 (2006).

20.       Can the term “premises” be said to include the world of Internet? In my opinion “virtual premises” are also “premises” but this question can be left for future decisions. Section 229(a)(1) of the Penal Law, as mentioned above, consists of two alternatives. The second alternative, as worded, does not necessitate reference to the definitions section. The question therefore arises as to whether “place” can be broadly interpreted to mean “virtual space”. The Administrative Court answered this question in the negative, with sound, logical and, at first blush, persuasive reason: 

“Moreover, relating to a website as a ‘place’ is inconsistent with its mode of operation. A website, by definition, is an agglomeration of information and applications, installed on a computer, that connects with many other computers over the Internet. When a user ‘enters a website;, their personal computer contacts another computer (‘the website server’) which is found elsewhere, and requests information. The user’s computer has a unique number (IP address) and the website server has a unique number (a different IP address). The website server transmits the information to the personal computer, which uses a browser to arrange the information for reading. When “actions” take place on the website, the personal computer asks for new information from the website server, receives it, and arranges it on the personal computer. Information is transmitted between the personal computer and the server, but there is no “place” here at all. Justice Tenenbaum described this well in his article: ‘The choice of the Hebrew word “site”, intuitively conjures the notion of a geographical site. Perceiving the site as a “place” induces us to say “enter a site”, “exit a site” and the like… all the sites on the Internet are connected to each other and the vulnerability of one also harms the other… the Internet was created, developed and exists by virtue of all the individuals which support it and maintain its integrity. Correct and appropriate public policy must be based on this and facilitate these efforts… a “website” is not a place. In fact, a “site” is nothing more than a computer that holds software that regularly communicates with many other computers’” (para. 37 of the Administrative Affairs Court opinion).

21.       These comments were repeated and reiterated by the attorney for the Israel Internet Society, and I am prepared to endorse them unreservedly. A website, in essence, is not a “place” according to its technological definition. However, even if this is our point of departure, the necessary conclusion does not specifically exclude virtual space from the scope of section 229(a)(1) of the Penal Law, as will be explained. But prior to doing so a few comments must be made about the Internet, progress and the attempts of law and justice to keep up with the times. 

22.       Humanity in its entirety, laymen and experts, almost all of us are still learning, wondering and marveling at the Internet. Its influence is felt all over the world, but it will certainly take a long while before we can assess its full effect and implications: “We are living at the height of a revolution: Technological development in the computer realm, digital information and digital networks are generating a social, economic and political upheaval (Niva Elkin-Koren and Michael Birnhack, Introduction, in Legal Network: Law and Information Technology (with Niva Elkin-Koren, 2011);

The computer – and with it the Internet – are not merely a mutation of previous life forms that we have known, which we have given a home to in the legal system. They are a new life form, and their movement is not the movement of the life forms with whom we are accustomed to live. They move in the manner of the knight (the horse) in a chess game; its movement is not altogether forward, nor altogether backward or altogether to the side. It is not altogether diagonal. Its movement is a tinkling of this and a tinkling of that, and it exists in its own right. But here is how the new life form differs from the knight: we know in advance how the knight will move and we know, more or less, how to protect ourselves when it attacks us. As for these new life forms of the computer and the Internet – we have yet to fully explore them; we have yet to reach the bottom of the pit. One click in Jerusalem, and you are in Tel-Aviv, a second click and you are in Australia, a third click – and the system rebels and everything is erased as if it never was. We have begun to move at the speed of light whereas our bodies are in the carriage, and our stream of thought moves at the speed of the carriage (Mishael Cheshin, “Introduction” The Computer and the Legal Proceeding: Electronic Evidence and Procedure  (2000).

Some view the Internet as a new universe. “In a short time the Internet has created a new universe of inconceivable dimensions. This universe dominates almost every aspect of civilization, replicates it and corresponds to it” (Rubick Rozental, A Few Comments on the Language of Internet, Legal Network: Law and Information Technology, eds Michael Birnhack and Niva Elkin-Koren, 2011, 61).  The Internet has come to our world, entering into its inner domains, but we still have trouble defining it. It exists all over the world and simultaneously in no place at all. More precisely, there is access to Internet and its activity all over the world, but its existence is “nowhere”.     

23.       As is well known, the law follows sluggishly in the footsteps of innovations, and legislation does not keep up with the pace of scientific progress. Offenders against the law adapt to progress more rapidly than its enforcers. This is axiomatic. The former have no restraints; the latter do. Many years passed between the invention of the computer and the enactment of the Computers Law, (1995). Less than a generation or two passed in terms of computers, and the law is already out of date, because the legislature did not foresee, nor could it have foreseen the innovations in technology. But not only is the legal world perplexed. Psychology too has encountered new phenomena of addiction and psychological injuries, and is attempting to develop updated, “on the go” reponses.  The same is true for sociology, and other disciplines in social sciences, natural sciences and the humanities. Not surprisingly, the world of law too is still unequipped. Some have taken an extreme view, claiming that given the virtual nature of the Internet, it cannot be subjected to the laws of space, time and state (see written references for this approach in the article of Yuval Karniel and Chaim Wismonski, Freedom of Expression, Pornography, and Community in the Internet, Bar Ilan Law Studies 23 (1) 259 (2006); Michal Agmon-Gonen, The Internet as a City of Refuge?! Legal Regulation in Light of the Possibilities of the Technological Bypass Technologies and Globalism of the Net, Legal Network: Law and Information Technology, eds. Michael Birnhack and Niva Elkin-Koren, 2011, 207).

24.       This extraterritorial approach is unacceptable. Concededly, an abundance of legislation that would impair the tremendous benefit inherent in the Internet is undesirable, nor is there any point in legislation which is unenforceable given the characteristics of the network. However, for good or bad, virtual space exerts a tangible influence over the concrete world, and our world will neither consent to nor tolerate the virtual realm’s exemption from the law. Act of pedophilia committed online are still pedophilia, drugs sold via the Internet still have the same addictive and destructive affect as drugs sold on city streets, the terrible harms of Internet gambling are no less damaging than danger from gambling in a physical place. Quite the opposite, the Internet opens new horizons for the world of crime. They should be blocked. The approach of excluding law and justice from virtual space must be kept off bounds.

25.       All the same, undeniably, the legal regulation of activity in virtual space is complex and complicated. Normative claims as to what the law ought to be are difficult to make, nor is it easy to apply the existing law. Not by chance, there are those who have concluded that this is an area best suited for legislation; while others feel that case law is the appropriate method for adjusting the law to the Internet era. Both camps are uncertain about the extent to which Internet users should participate in formulating the rules governing virtual space and their application. (For a comprehensive review of the possible models, see: Iris Yaron Unger Uncovering the Identity of an Anonymous Internet wrongdoer – Comparative Review, The Knesset, Legal Department, Legislation and Legal Research, 2012).  A variety of models in case law and legislation have been adopted by states around the world (Miguel Deutch, Computer Legislation in Israel, Tel-Aviv Law Studies 22 (2) 427, 428 (1999)). The issue is weighty and broad and its influence far-reaching, but I will not elaborate on it beyond what is required for discussing the concrete questions of this appeal: the authority of the police to issue an order restricting access to gambling websites on the Internet.

26.       It seems that a comprehensive statutory regulation of this field, in a precise manner adjusted to the virtual era is preferable.  The question is whether, absent updated and comprehensive legislation, the law as currently worded satisfactorily considers the police’s authority to issue the orders in question. The Administrative Affairs Court decided to defer the legislative process, but to void police powers to order closure of virtual gambling places until the statute is expressly amended to confer such authority. This ruling involves difficulties.

27.       The ‘waiting period’ created restricts, and occasionally frustrates, appropriate responses toward law enforcement and justice.  This approach, coupled with the previously described pace of technological progress, can be expected to lead to a situation where many legislative acts will be neither relevant nor applicable. Even after the legislature has amended the legislation, it is entirely possible that within little time that amendment will no longer be useful. Hence waiting for the legislature to act will not necessarily provide a solution. “The judge interprets the law. Without his interpretation of the law, it cannot be applied. The judge may give a new interpretation. This is a dynamic interpretation that attempts to bridge between the law and changing reality without having to change the law itself. The law remains as it was, but its meaning has changed because the judge gave it a new interpretation that is consistent with society’s new needs. The court ... realizes its judicial role in bridging law and life (Aharon Barak, The Judge in a Democratic Society 57 (2004); and see HCJ 8070/98 Citizens Rights Office in Israel v. Ministry of the Interior [4], para. 12 of former Justice Grunis’ opinion; LCA 4447/07 Mor v. Barak I.T.T. [1995] Society for the Bezeq International Services Ltd (hereinafter: Mor) paras. F-I, of Justice Rubinstein’s opinion; CA 9183/09 The Football Association Premier League Limited v. Anon [6] paras. 4-6 of Justice Melcer’s opinion (hereinafter:  Anon)).

28.       On one hand, Internet crime is becoming increasingly sophisticated. On the other, criminal law develops slowly. The chasm between the two must be bridged. The Knesset achieves this through legislation, while the courts through case law. The reality of life does not allow us to wait for the Penal Law to be amended to determine which offences can escape sanction when committed over the Internet and which cannot.  Nor is it legally necessary to wait until the legislature has reviewed all of the criminal law’s provisions and decided which of them are applicable to the Internet. The court must respond to the specific matter brought before it and rule one way or another. This is not a question of ‘judicial legislation’, but rather of ‘judicial creation’. The same criminal offences proscribed many years ago and committed on city streets, are now committed on a larger scale and with greater force via the Internet. Occasionally, the actus reus is identical, the mens rea is identical, the legislative purpose is identical, and the damage, is quite often more extensive and severe in the virtual realm.  

29.       Needless to say, we are still bound by linguistic restraints and cannot deviate from their boundaries to cast our net over whatever we see as a crime or a tort in the “real world” and possibly appears as such in the virtual domain. All the same, the legislative purpose, generally common to all offences, whether committed here or there, requires an interpretative effort to prevent greatly harmful artificial loopholes in enforcement. The tremendous damage that can be wrought by the Internet was descussed by Justice E. Hayut: “The infringement concerned enlists human progress and technological innovations in computing in the service of crime, thus yielding a new and dangerous form of criminality that cannot be taken lightly. This form of criminality does not involve physical-tangible harm that leaves its marks on the victim’s body. It is committed remotely, with the click of a button, but its damage is extensive and carries different levels of implications, including to, as stated, a victim’s personal security and privacy, his property, his business, and his commercial secrets” (Cr.A 1439/06 Zaltovski v. State of Israel [7]). In the same vein, former Justice Grunis wrote: “The Internet is fertile ground for committing different types and categories of criminal activity, and inter alia, activities directed against state security. That the Internet era has made it significantly easier, technically, to commit offences such as a conspiracy to commit an offence cannot be ignored. Hence, in the case before us it is undisputed that “A” and “S” became acquainted by chance… via the Internet. In other words, conceivably, if not for the chance Internet meeting they would not have met and could not have conspired to commit the acts described in the indictment. Hence, the case before us demonstrates a need to impose punishment that deters from the negative and criminal side-effects that accompany technological developments” (CrA. 7430 /10 Anon v. State of Israel [8]). There are numerous other examples, and we take judicial notice of the Internet being exploited for grave and dangerous harm on a broad scale.

30.       Pedophilia is a pernicious scourge on the Internet. Is pedophilic material in virtual space nothing more than a collection of ‘pixels’ – with no substance – that the law is powerless to reach?  In practice, the courts do not stand idly by, and they ideed apply the Penal Law’s provisions to offences committed over the Internet. Naturally, this is not done reflexively, but rather the required physical and mental elements have been examined, under the circumstances of each case, and the principles of criminal law have been applied. (See Assaf Hardoof, Cybercrime, 17 (2010) who sharply criticizes the approach that the Internet’s characteristics undermine the foundations of criminal law. According to his approach, the mental complexities leading to criminal conduct committed in a physical environment also exist on the Internet.)

31.       We will return to the meaning of a “place… of gambling” in section 229(a)(1) of the Penal Law, which the police is permitted to close. If, according to the Administrative Affairs Court’s decision, it refers to a physical and not virtual place, then logic dictates that this would also be the meaning of a “place… of gambling” immediately above in section 228 of the Penal Law. If so, then not only would the police be prevented from issuing orders restricting access to gambling websites, but it is doubtful it would even be possible to convict a person operating, over the Internet, “a place for prohibited games or a place for the conduct of lotteries or gambling” (section 228 of the Criminal Law). On its face, this would conclusively preclude not only restricting access to illegal gambling websites, but also the enforcing the prohibition of possessing or operating illegal gambling websites. This state of affairs would remain until we are saved by a statutory amendment, which may or may not come soon.

32.       Moreover, in Israeli legislation, the term “place” is used for different offences and in numerous contexts. For example, “public place” is defined in section 34(24) of the Penal Law and is mentioned in numerous other sections concerning offences and punishments; Chapter C of the Preliminary Part of the Penal Law, deals with “Applicability of Penal Laws according to Place Where the Offense Was Committed  (emphasis mine – N.S.). A place in which an Internet website is viewed, or is used is a “place” that establishes judicial jurisdiction. Should we exempt the Internet from the Penal Law going forward because it is excluded from the definition of a “place”? Similarly, would we permit discrimination on the Internet just because it is excluded from the definition of a “public place” in section 2 of the Prohibition of Discrimination (Products and Services) in Entrance to Places of Entertainment and Public Places, 5761-2001? (See e.g. the conviction for supporting a terrorist organization on the Internet, where the internet was found to be a “public place” CrimF (Nazareth) 12641-11-10 State of Israel v. Abu-Salim (Deputy President Yung-Gefer) paras. 47-56 (1.4.12)).

33.       The civil law, too, is frequently required to apply the concept of “place” to the Internet. On more than one occasion courts have held that Internet-based conduct fall within the jurisdiction of courts all over the country. For example, in a breach of copyright and intellectual property case, concerning a website for a virtual shop selling household goods and gifts, the court held that “the picture was presented on the Internet, namely – in each and every place within the area of the State of Israel. It is therefore clear that the place of the omission was in the entire state and by extension in each and every district… the territorial jurisdiction extends to the entire area of the State of Israel” (Comments by Judge Tenenbaum in App. (Magistrates – J-Lem) 8033/06 Steinberg v. Levi (10.4.2007). These remarks, made in his role as judge are inconsistent with his decisive remarks in his role as scholar in the article cited above: that “an Internet site ‘is not a place’, which the Administrative Affairs Court relied upon in the decision appealed here (para. 37)). Even more accurately, all the alternatives stipulated in Regulation 3(a) of the Civil Procedure Regulations, 5744-1984 employ the language of “place” (place of residence, place of business, place of creating obligations, place intended for fulfillment of obligations, place of delivery of asset, place of act or omission).  Is it possible to exclude the Internet from territorial jurisdiction because it does not fall into the category of “place”?

34.       Due to space constraints and in the absence of satisfactory arguments it cannot be responsibly councluded that wherever the term “place” appears in primary or secondary legislation it must be applied to the Internet as well. Conceivably, there could be certain, isolated exceptions, but the rule should be that the Internet fits the definition of “place”. The Israeli Internet Association’s claim, which the Administrative Affairs Court accepted, that both in truth and according to its dictionary definition, virtual space is not a “place” is not sufficiently persuasive. The settled, entrenched and well-accepted law is that “the words of the law are not fortresses, to be conquered with the help of dictionaries, but rather the packaging of a living idea which changes according to circumstances of time and place, in order to realize the basic purpose of the law” (comments by then Justice A. Barak (LCrApp 787/79 Mizrahi v. State of Israel [9] at 427). There, the Court held that the “one who escapes from lawful custody” refers not only to an inmate who literally escapes from prison but also to a prisoner who fails to return from furlough: “it may be argued that our concern is with a criminal provision that should be accorded a narrow construction, by attaching only ‘physical’ meaning to the terms ‘custody’ and ‘escape’. I cannot accept this line of thought. A criminal statute, like any other statute should be interpreted neither narrowly nor broadly but instead by attaching to it the logical and natural meaning that realizes the legislative purpose" (ibid).These statements have retained their vitality and are applicable to our case too, and even a fortiori: in that case the issue concerned a criminal offense, whereas our concern here is with an administrative measure.

35.       As stated, the legal world is still not best prepared to handle the Internet, and this is also true of the world of language.  The terms that serve us in virtual space are borrowed from the tangible world. On the Internet we use a “desk top”; the user “cuts”, “copies”, “pastes” and “deletes”; “writes” “notes”; “stores” in “files”; and “sends” to the “recycling bin” and receives “documents” and “junk mail” into a “mail box”. Given this background, the word “place” is by no means exceptional. It would not be a deviation from the ‘principle of legality’, nor from the rules of interpretation were we to determine that “place” also includes virtual space, and that its meaning also encompasses a website. Since we speak of an Internet “site” in our daily conversations, we should remember its dictionary definition and its Talmudic root (b.Zevahim 7a): a “site” is a “place”.

36.       Therefore, in interpreting section 229(a)(1) of the Penal Law, I see no justification for taking a literal and narrow approach, which interprets the word “place” as a physical place only. In the current modern era, a website is also a type of place. The section’s language also tolerates the classification of virtual space – or perhaps better termed as “computerized space” – as a “place”.

37.       From language to purpose: In the case of Tishim Kadurim [3] then Justice A. Grunis explained the purpose for prohibiting certain games as a value-based goal. Man is born to labor rather than easy enrichment based on luck. Addiction to gambling is a serious scourge that harms the individual, their family and society as a whole. Before the Penal Law there was the Criminal Law Amendment (Prohibited Games, Lotteries and Bets), 5724-1964, and before Justice A. Grunis there was Justice Haim Cohn who made the following remarks about the legislative purpose behind the previous statute:

                        The legislative purpose, as reflected clearly in the nature and the language of the law, is to combat, by criminalization, the scourge of gambling and betting – the scourge of winning money or its equivalent other than by work or other reasonable consideration, but rather by the luck of the draw. Mr. Terlo rightly mentioned the well-known fact that mankind has an evil tendency to try his luck in gambling. One need not have a particularly developed commercial instinct to assess the tremendous prospect for profit in the commercial exploitation of this natural human tendency.  Mr. Terlo said, and I agree with him, that such commercial exploitation, in all of its various forms, produces demoralization. I further add that from my perspective, the wrong that the law seeks to prevent is not only the encouragement of desire for lawful easy enrichment without labor, but also – and perhaps primarily – the placing of an obstacle before the blind, where instead of spending his money on his own sustenance and that of his household, he invests in dubious ventures based on luck (HCJ 131/85 Savizky v. Minster of Finance [10] at 376).

38.  As we can see this plague is nothing new to us. The following is a reliable testimony from two hundred years ago about this phenomenon and the harm it causes, relating to the fate of those who wager on dice: “The number of those involved has multiplied, where their foolish preoccupation is such that they spend nights and days gambling, in their homes, on their roofs and on street corners, until they lose everything. Even if they are wealthy, eventually they lose all and must steal and resort to violence, while their family members starve; their children beg for bread, and there is none to give them, for they do not work to bring food to their families. And one sin leads to another, in that they neglect prayer and fulfillment of the commandments, for when temptation seizes them and they engage in gambling, it is extremely difficult for them to forsake it, as difficult as separating one’s fingernail from one’s flesh. They do not take care of themselves and do not tear away from gambling, even to eat at the time for eating and to sleep at the time for sleeping. One who is addicted to gambling will not leave it even when he is old, for only will-power can separate from it.” (Rabbi Eliezer Papo, Pele Yo’etz, Constantinople, 5584 - 1824).[1] […]

39.   In 1975 the legislature added a provision to the Penal Law Amendment (Prohibited Games, Lotteries and Bets), 5724-1964, which granted the District Commander of the Police the authority to issue an order to close “a place for prohibited games or a place for the conduct of lotteries or gambling” (S.H 5735, No. 779, 222). According to the introduction to the Explanatory Note of the bill, the legislature was dissatisfied with the existing criminal sanction, and sought to close places where prohibited games were conducted, as a preventive measure: “The Law imposes a punishment on the possessor or operator of a place for conducting games with cards, dice, game machines, and the like, But there is no law that prevents the actual existence of such place… The proposed law seeks to establish provisions… by enacting legislation directly designed to address the phenomenon of the crime that thrives in such places, and to confer the authority for the advance prevention of the opening of businesses that are liable to harm public safety and generate crime. It also proposes to stiffen the punishments and to adapt them to any given situation (H.H. 5735-1975).” Incidentally, the Explanatory Note refers to the closing of “a certain place”. In light of our conclusions above, it is not inconceivable that “a certain place” encompasses the Internet, it being a place where anonymity is preserved and where we have no knowledge of a website owner’s or users’ identities, nor do we know what that place is, or where is it located, all of these are considered  “anonymous".

40.       The harm wrought by gambling on the Internet is immeasurably greater than that which is caused in physical place. Gambling websites on the Internet are accessible to all sections of the population, from adult to child, the rich and the poor, the honest and the corrupt, the wise and the legally incompetent. With just a click of a button and press of a key any novice can gamble on the Internet. But not only accessibility is concerning, there is also availability – at  any time and any hour.  Identity can be disguised to enable the use of all features of virtual spaces. All of these come together to exacerbate the phenomenon and its range of harms: addiction, vast loss of funds, money laundering, tax evasion, incidental crime, and more. A large physical gambling venue can hold hundreds, perhaps even thousands of clients, but it pales in comparison to the Internet, which is available to millions of people. With these capacities, the number of victims also rises exponentially, as well as the amounts of funds dubiously invested.

41.       When section 229(a)(1) of the Penal Law was enacted, the legislature did not anticipate the Internet and by extension did not consider the illegal gambling that would be conducted there. However, the legislative purpose evidently was to prevent illegal gambling, regardless of location.  The police pursuit of offenders does not end at virtual space; the Internet cannot become a city of refuge. The material factor is not the platform for illegal gambling but rather the phenomenon itself. “Do not look in the canister, but at what is inside (Mishnah, Avot 4.2)” If it is technically possible to close a gambling place, even if the closure is not an enclosure but rather a prevention of access, the legislative purpose should be realized, to the extent possible, through proper interpretation. And again, if we assume that it refers to a physical place, then illegal gambling need not necessarily be conducted in a closed structure, for example, a vast area in which illegal gambling takes place.  The possibility of ordering its closure exists and can be done by preventing access through the gate. The police would be authorized to close the gate and prevent access to a space used for criminal activity. In the same vein, the Internet too is a space: a computerized space (some have used the expression “global public space”. See Jurgenb Habermas, The Structural Transformation of the Public Sphere, Thomas Burger & Frederick Lawrence translations (1989); Tal Samuel-Azran, Global Public Sphere on the Internet: Potential and Limitations, Legal Net:  Law and Information Technology, 433, 434 (Niva Elkin-Koren and Michael Birnhack eds, 2011)). Entrance into computerized space is also through a “gate” embodied by the access provider and the website operator. Concededly, the entrance is not physical, actually consists of communication between computers, but this is immaterial, because the technological definition is inconclusive as to the interpretative question.

42.       Jewish Law can enlighten us. The Torah was given at Mt. Sinai. In the ancient world, modern technology and the Internet era were unimaginable. Nonetheless, the Torah seeks to adapt to present and future reality by way of interpretation, for otherwise it would become a dead letter instead of a living document. Interpretation must adhere to language in order to fulfill the Divine words and to not deviate from them in any way. It was specifically because of this that the Talmudic Sages saw no difficulty in adapting terms such as ox or donkey or camel, used in those times for labor and transport, to the context of vehicles and planes. This is the present need for otherwise Jewish law will no longer be relevant or valuable. Rabbi Aharon Lichtenstein made remarks pertinent for our purposes, and they should guide us: 

                        In the developing technological reality the ability to cause damage, physical or even virtual continually increases, without incurring any liability under the criteria of Nahmanides or of Rabbi Yitzhack.[2] The harm may be more abstract and the process of causing it may be more indirect than the minimal threshold for liability under garma.[3] Nonetheless, the result is quite severe.

                        Accordingly, a learned and sharp-minded thief would be able to plan and execute the perfect burglary, with the assistance of grama tools for breaking in, without consequences, whether due to direct damage or force of garmi.  Should we persist to grant exemptions in this kind of scenario based on the law of grama in torts?...

                        The request is simple, the authority exists and eyes are raised in anticipation. In the event that leading Jewish authorities succeed in enacting an amendment for this matter it would provide a  remedy for a real concern for society, and at the same time, would  elevate the glory of the Torah (Lessons of Rabbi Aharon Lichtenstein, Dina d'Grami, 200 (5760); See also in the comments of Justice N. Hendel, para. 6 Anon.)

43.       Thus far on the laungauge and the purpose. We now proceed to address some of the difficulties the Administrative Affairs Court considered in the decision appealed here, in terms of applying of the law to the virtual sphere. These difficulties also lead the court to conclude that the solution lies with the legislature and not the court, and that it is appropriate to wait for legislative amendment.

44.       A primary difficulty is that the orders restrict access to the Internet through third parties – the access provider. According to the Administrative Affairs Court, based on the Israeli Internet Association’ claim, the law authorizes closing a place, but does not authorizes ordering a third party to prevent access to an Internet site. The claim is a weighty one. Access providers’ legal responsibility poses questions in different legal contexts. For example, in the Mor [5] case the Court held that the provider is not obligated to disclose the identity of anonymous “talkbackers”, and called upon the legislature to regulate the matter. Similarly, in Anon [8] the Court ruled that a supplier cannot be compelled to reveal the particulars of a site owner who breaches copyright in order to file an action for that breach. This decision was also accompanied by a call for legislation of the matter. At the same time, the Court held that if a certain matter did not find a legislative solution, courts would have to provide solutions in case law, and the legal doctrines required to fill in the lacunae were presented. The matter before us is different. Here, it cannot be said that there is no legislative provision that confers authority. There is no need for primary legislation of the issue. The section’s interpretation leads to the conclusion that the section applies to the virtual realm. Legal issues concerning the access provider may be adequately resolved in the context of how the police may exercise its authority to order restricted access to gambling websites. That such difficulties exist should not be a determinative factor in whether the authority exists.

45.       I also believe that the legal challenges involved in restricting access to gambling websites vis-a-vis the access providers were exaggerated. First, using a third party to execute criminal proceeding is not illegitimate. The law recognizes, for example regarding a summons to present evidence for investigation or a trial (section 43 of the Criminal Procedure (Arrest and Search) (New Version) Act, 5729-1969. Second, given the license they receive from the State, access providers have a public duty. They sit at a central intersection – the “Internet points of control” – and under these circumstances using them to execute orders restricting access is justified.  Third, it appears that had it concerned the closure of a physical place by the police, with third party assistance, there would have been no problem.  The attorneys for the State demonstrated this in another context thus: Illegal gambling is being conducted in an isolated villa. A guard is in charge of the path leading to the villa. Would the police not be authorized to order the policeman to prevent gamblers’ access to the path leading to the villa? Fourth, a police order directed at access providers instructing the to restrict access to illegal gambling websites does not require them to conduct any investigation or inquiry and does not unlawfully breach any of their rights, ordering them only to “execute a technical act that does not involve any discretion of the closing of a site with a particular IP address, explicitly specified in the order” (section 41 of the State’s summations). Case law has stressed that imposing legal responsibility on the supplier raises concerns that should be regulated statutorily (see Rachel Alkalai, Civil Liability of Internet Services Suppliers for Transfer of Harmful Information Hamishpat 6, 151, 154 on the Report by the Knesset Sub-Committee for Communications and Information on the Need for a Legislative Arrangement). However the situation in the case before us differs from the one described there. We do not hold that Internet providers are legally responsible to prevent, on their own initiative, access to websites used for illegal gambling.  Moreover, our ruling does not prevent access providers from petitioning a court in appropriate cases in order to subject it to judicial review. This right is stipulated in section 5(1) of the Administrative Affairs Court Act, 5760-2000 (item no. 7 of the First Schedule). Recall that the access providers did not exercise this right and did not challenge the order.

46. The Israeli Internet Association claims that this is an “unprecedented and exceptional measure” (page 1 of the summations). This is not so. The Administrative Affairs Court recognized that restricting access to Internet websites used for gambling is accepted practice around the world: “The desire to minimize the harm from negative uses has led certain authorities, even in liberal democratic countries, to take various measures against websites that support anti-social activities (see: Betting on the net: An analysis of the Government’s role in addressing Internet gambling, 51 Fed. Comm. L. J. (1999)). One of those measures is blocking access to websites that are breading grounds for illegal activity, by various technological means…” (para. 19 of the opinion) (ed. note: translated form the Hebrew opinion’s translation).  In Australia, a law was enacted in 2001, stipulating that “access providers shall block access to illegal gambling sites should they receive an express demand to do so from the authorities” (ed. note: translated from Hebrew opinion’s translation), subject to the conditions set forth in the Interactive Gambling Bill 2001. In 2006, the United States passed a law prohibiting Internet gambling – the Unlawful Internet Gambling Enforcement Act of 2006, which inter alia allows that under certain circumstances, the court may grant orders to compel internet providers to block access to gambling websites (paras. 54- 55 of the Administrative Affairs Court opinion).

47.       Additional restrictions are common around the world. The Council of Europe’s Convention on Cybercrime deals with the adoption of legislation intended to protect society from crimes committed online (http://conventions.coe.int/Treay/en/Treaties/Html/185.htm). It provides inter alia that all parties to the convention will adopt legislative and other measures as may be necessary to criminalize various acts of child pornography, which is disseminated over computer systems (Article 9). In 1998, Sweden passed a law addressing liability for electronic bulletin boards, including various categories of Internet pages (Act (1998:112) on Responsibility for Electronic Boards).  This statute requires service providers who store information (as distinct from Internet access providers) to make illegal content inaccessible or to remove the content. If further refers to a number of provisions in Sweden’s Penal Law, for example, incitement to racism, or child pornography (http://www.nai.uu.se/forum/about-nai-forum-1/SFS-1998_112-Act_E-boards.pdf.).

48.       Australia established an agency known as Australian Communications and Media, which is charged with, inter alia, regulating Internet content. The agency is authorized to investigate potentially prohibited content on the Internet, and to issue access providers “notice of warning and removal” relating to the contents of Internet websites used for illegal gambling. In Italy, since 2006, Internet gambling has been prohibited, unless on authorized websites.  Internet access providers are required to restrict access to unauthorized websites listed in a “black list” kept by an administrative body: Autonomous Administration of State Monopolies, http: www.aams.gov.it/site.php?id=6560).  As it turns out the restriction of access to websites is an accepted measure, occasionally following an order by an administrative body. The a priori involvement of a judicial body is not always necessary, and there is no need for a criminal investigation to precede the administrative directive. States around the world acknowledge the necessity of restricting prohibited activities on the Internet as well. The State of Israel is not a pioneer in this realm.

Police policy is to exercise this authority with caution. The investigations and intelligence branch prepare the infrastructure required for issuing an order.  Legal counsel to the police examines the material, and so does the State Attorney.  Immediately before issuing the order, the access providers and websites operates are given the right to present their arguments. The decision to issue the order is given at the level of the district commander.  A party who could have been aggrieved may file an application for a second review, and following that, as stated, may also petition the courts. After issuing the order, the police examines it periodically, and at least once a month considers whether to extend it, revoke it or amend it. Against this background, if the police orders, consistent with its authority, a third party to assist it in preventing an offence, and if the latter agrees, why should the court prevent it from doing so? If the same access providers wish to object, the doors of the court are open to them in order to hear their claims.

50.       As we have said, the authority is there; the manner of exercising it is subject to discretion and judicial review. Recall, that the access providers filed no petition to any court, and in this sense, the Internet Association is indeed meddling in a dispute to which it is not a party (HCJ 651/03 Citizens Rights Bureau in Israel v. Chairman of the Sixteenth Knesset Central General Elections Committee PD 57(2), 62.) Regardless, in the absence of appropriate factual infrastructure, there is no practical possibility or legal need to elaborate further on this matter.

51. The Administrative Affairs Court stated that restricting access through the orders in question could incidentally block innocent websites. Attorney for the State responded to this argument, claiming that from a technological perspective this fear was negligible because the IP address can be crossed with the website’s URL address in order to prevent restricted access to innocent sites. Personally, I see no need to rule on this point, given that it was not fleshed out in the Administrative Affairs Court.  The state can consider these claims in light of its discretion to exercise the authority. In preparing the order, the police must ensure that execution by access providers does not harm innocent websites, but only restricts access to the targetted website. Where it is impossible to avoid harm to innocent websites, as a side-effect of blocking access to a gambling website, to the extent that the Israeli Internet Association is correct and such situations indeed occur, the police would not be permitted to order restricting access to the site. Presumably, a provider wishing to avoid harm to innocent websites would present such claims under the right to be heard, in a petition for second review by the police, or in a petition to the court.

52.       The Israeli Internet Association also claimed that restriction of access was ineffective. The attorney for State argued in response that the inefficacy claim directly contradicted the Israel Internet Association’s claim concerning the damage such orders would cause: If the orders are ineffective, then naturally no harm would be caused. In any event, the court has no expertise regarding the efficacy of the orders. The position of the Israel Police – the professional body charged with the matter – is that the orders have a substantial effect and that this is another effective tool against illegal Internet gambling.  The Israel Police is aware of the methods used in an attempt to ’bypass’ the orders (for example, changing the URL website address, or its IP address). But this involves costs and not all end users know how to do it, and the police also has the tools for dealing with ‘bypass’ attempts. Actually, enforcement difficulties are not unique to virtual space and are common in all areas of crime: “For by wise counsel thou shalt make thy war” (Mishlei 24:6).

53.       The Administrative Affairs Court had difficulty not only with “place”, but also with “the closure”. According to the court, “closure is one thing, blocking access is another” (para. 41), and “even a broad interpretation of the law cannot confer the police commander authorities not specified in the law”  (ibid). My opinion is different. If the police is authorized to fully close illegal gambling websites on the Internet, then let alone it should be authorized to block or restrict the access to them. This is a less harmful measure. Section 17(b) of the Interpretation Law 5741-1981 provides that “any authorization to act or compel action implies the auxiliary authorities reasonably required therefore.” Authorization to close (and afortiori if closing is not possible) also means granting powers to block access.

54.       The Israeli Internet Association opposed various claims by the State’s representatives regarding the legislative regulation of the issue. This may be so, and it would have been preferable had they spoken in one voice, but we must remember that the issue raises real doubt. There is nothing to prevent changes in views or thought processes, and in making deliberations more productive. The binding position of the State’s representatives, at the end of the day, is that of the Attorney General, and the arguments were made on his behalf. Without derogating from its claims here, the State also submitted the draft bill to clarify the situation, but one cannot know how the legislative process will develop. The same applies to the four previous draft bills presented to the Knesset. Each one of them attempted to explicitly authorize the police to order access suppliers to block access to gambling websites, but none of them materialized into a legislative act. The Knesset members expressed varying opinions but I do not think it is possible to distill a clear conclusion from their comments regarding the subjective intention of the legislature, as concluded by the Administrative Affairs Court: “The fact that the legislator debated the proposal substantively and decided not to enact it, indicates that its subjective intention was not to apply its principles in fact… the subjective and concrete intention of the legislature in this matter, indicates that it sought not to give the District Commander authority to block access to gambling sites pursuant to his own discretion”  (para. 61). In my view, this conclusion is by no means inevitable. According to the record, some of the Knesset Members felt that a legislative amendment was entirely unnecessary, and that the authority already exists. In view of the differing views, additional possibilities exist. Summing up the debate, the committee chairperson pointed out the difficulties that were raised, but the general position was to conduct another hearing. A small part of the legislative proceedings and a few Knesset members who are members of the Constitution, Law and Justice Committee cannot provide a basis for a generalized legislature’s subjective intention.

Final Word

55.  I do not think that there was any justification to cancel the orders issued by the police, with the State Attorney and the Attorney General’s knowledge, to restrict access to gambling websites. First, it is doubtful whether the Israel Internet Association has locus standi in this petition; second, the alleged infringement of free expression is certainly not as serious as was alleged; third, the main point is that section 229(a)(1) of the Penal Law constitutes an authorization for the police to issue the orders. This is consistent with the section’s language, its logic, the legislative history and the legislative purpose.  I therefore propose to my colleagues to strike down the decision of the Administrative Affairs Court and to order the restoration of the orders to restrict access to gambling websites.

Note

56.       After reading the opinion of my colleague, Justice U. Vogelman, my impression is that he was slightly tough on the State regarding the use of a third party – access providers – for purposes of exercising the authority under section 229 of the Law. I addressed this point in paragraphs 44-45 above. I will add just this: My colleague mentioned the well known distinction between delegating authority which also includes the exercise of discretion, and receiving assistance in technical matters related to exercising that authority. My colleague acknowledges that the access providers were not required to exercise discretion, and the police only requested their help in exercising its own authority – in the technical act of blocking a website identified by its IP address as specified in the order. However, according to my colleague, it is still necessary to show that the access providers agree to assist the police, and once the police imposed an obligation upon the access providers, it can no longer be considered assistance.

My view is different. First, let us assume that the police district commander seeks to order the closure of a room used for gambling. To do so he orders a third party, in possession of the keys to that place, to lock the door, without requesting consent. Is there anything wrong with that?  Had the place of gambling not been an Internet site, but rather a room in a hotel, would the police not be authorized to order a reception clerk to assist it in exercising its authority to close that room or to open it? Would this require a legislative amendment?

Second, as mentioned in para. 49 above, prior to issuing the order the access providers were given the right to present their claims; the access providers are entitled to request a second review of the decision to issue an order, and the access providers are also permitted to petition the Administrative Affairs Court. In fact, the access providers took none of these steps. They may have reconciled themselves to the orders as a token of good citizenship; they may have an interest in preventing access to gambling websites, because in doing so they reduce their exposure to law suits (for example: parents suing them for their damages as a result of their children’s Internet gambling). I will not belabor the point speculating because the facts suffice: The access providers did not institute any legal proceedings to express their objection to the orders. My colleague seeks to be meticulous about the access providers’ rights, and requires that their consent be “explicit”, “sincere and genuine willingness”. Under the circumstances, my view is different. In the Haggadah of Pessach, tomorrow night, with respect to the son who does not know how to ask, we say “you shall open your mouth for him”. By way of analogy, this is how we relate to a mute, who is incapable or does not know how to present claims or to ensure their rights are protected. Access providers do not fall into this category and I see no justification for treating them under the criterion of “you shall open your mouth for him”, when the gates of the court were open to them, and they knowingly refused to enter. More precisely, in the future too, whenever the police seek to issue an order, Internet providers will be able to object and to present their case before the order is issued, after it is issued, and also to file an administrative petition. It therefore seems that we may appropriately apply the Talmudic rule that “silence is regarded as consent” (Bavli, 87b), to infer their agreement, and thus remove the obstacle to the exercise of the police authority to restrict access to gambling websites.

 

Justice U. Vogelman

Is the District Police Commander of the Israel Police authorized to order Internet access providers to restrict Israeli users’ access to gambling sites on the Internet, under their authority under section 229(a)(1) of the Penal Law, 5737-1977 (hereinafter: the Penal Law), to close down gambling places? This is the question before us.

General

1.         The appearance of the Internet has radically changed our world.  It enables easy and convenient communication between people. Some use it for interactive entertainment; others use it for electronic trade. Many use it – occasionally on a daily basis – to send electronic mail and for sending instant messages. A countless number of websites enable video and audio, and others enable telephony, files sharing, and the like (Assaf Hardoof, Hapesha Hamekuvan) [CYBERCRIME], 114, 117 (2010)). The web also enables access to immense quantities of information pooled on the Internet – an ever growing collection of documents created by independent authors and stored in servers’ computers. In that sense, the Internet is the most outstanding feature of the “information era” in which we are living, an era in which advanced technological reality enables the immediate transfer of data on a massive scale compared to the world around us (see HCJ 3809/08 Citizens Rights Bureau v. Israel Police [12] para.1 (hereinafter: the “Big Brother” law). In this way the Internet has and continues to contribute to social, economic, scientific and cultural developments around the world. Alongside these numerous advantages, phenomena of lawbreaking are likewise are not absent from the virtual world. The Internet enables activity that is defined as a criminal offence or civil tort, as well as technologies that enable the commission of torts or offences (Michal Agmon-Gonen, The Internet as a City of Refuge?! Legal Regulation in Light of the Possibilities of the Technological Bypass Technologies and Globalism of the Net, in Legal Network: Law and Information Technology, eds. Michael Birnhack and Niva Elkin-Koren, 2011). Illegal gambling enabled by the Internet is part of the content available on the Internet. Gambling websites offer their services from their locations in countries that permit it, and are accessible from different states around the world, including those in which participation in gambling is prohibited or restricted. Over the past few years these websites have become increasingly ubiquitous, given the high financial incentive for establishing them. Online gambling is one of the most profitable branches of trade on the Internet (Chaim Wismonsky, Sentencing Guidelines for Computer Crimes, Bar-Ilan Law Studies 24(1), 81, 88 (2008)).

2.         There is no need to elaborate on the negative social value involved in gambling. My colleague Justice N. Sohlberg also discussed this at length. This phenomenon has seen plenty of opposition, including the claim that a one’s livelihood should be based on work, a vocation or some other legitimate activity rather than easy enrichment based on luck. Whereas participating in gambling is not creative and undermines one’s work-ethic, a person participating in prohibited games may become addicted to this “occupation”, and the addict could cause extensive losses to themselves and their family and ultimately become a burden upon their family and upon society. As known, there are a few legal arrangements that permit gambling games under state auspices, encompassed in the Regulation of Gambling in Sports Act, 5727-1967 and in section 231(a) of the Penal Law. Mifal HaPayis,[4] for example, operates under such a permit. Notwithstanding that state-sponsored permitted gambling enables quick enrichment based on luck and also poses the danger of addiction, it should be distinguished from illegal gambling. Permitted gambling enables fundraising for public causes; they are not usually accompanied by negative elements such as coming under the control of organized crime, and finally, the state can oversee their mangagement and the distribution of funds (see AAA 4436/02 Tishim Kadurim [3] at p. 804,806; Ofer Grusskopf, Paternalism, Public Policy and the Government Monopoly over the Gambling Market, Hamishpat (7) 9, 28 (2002)).  As an aside, it should be noted that in many states gambling is permitted on a wider scale, but needless to say, our decision at this stage is restricted to Israeli Law and the legislatures’ values-based determinations.

3.         Techonolgically, it is now possible to block access to a particular website (compare:  Rachel Alkalai, Civil Liability of Suppliers of Internet Services for Transfer of Damaging Information, Hamishpat  (6) 151, 159 (2001)). This is the background for the orders subject to this proceeding. The events concerning us unfolded as following. At the end of June 2010 Israel Police district commanders sent warning letters to Internet access providers, notifying them of their intention to order blocking Israeli users’ access to various gambling websites (hereinafter: the warning letters). In the warning letters the district commanders specified the URL addresses and IP addresses of these websites. Notably, the Appellants claimed that the website operators also received a similar warning. The Internet access providers received a 48-hour extension to submit their challenges of the orders, and a further extension was granted to providers who so requested. One provider, Respondent 2, exercised its right to object to the orders. In a letter to the district commanders, Respondent 2 claimed that the orders because were unlawful because the district commander is only authorized to order closure of physical places; and also because the Penal Law does not authorize a district commander to use the providers to prevent users in Israel from having access to gambling websites. In August 2010 the police gave notice that it had rejected these claims and the orders forming the subject of the appeal were subsequently issued.

4.         Our decision in this appeal therefore relates to the legality of these orders. My colleague, Justice N. Sohlberg, found that there is a doubt regarding the locus standi of the Israeli Internet Association in this petition; and that there was no justification to declare the orders invalid because they were issued by the district commander without authority, as per the ruling of the District Court. Having read the comprehensive opinion by my colleague, and having considered the matter, I have concluded I cannot concur with the result that he reached. My conclusion precedes the analysis. As detailed below, in my view, section 229(a)(1) is short of authorizing the police to issue the relevant orders. In the first part of my remarks I will discuss the locus standi of the Israeli Internet Association. Next, I discuss the source for the claimed authority – section 229 of the Penal Law, and examine whether it sufficiently authorizes ordering the Internet providers to block access to gambling websites.

Locus Standi of the Public Petitioner

5.         The Israeli Internet Association is a non-profit organization that works to promote the Internet and its integration in Israel. The Association seeks to further the interests of Internet users. It has no self-interest beyond the interests it shares with the general public, or at least with significant parts thereof, and as such its petition is a “public petition”. As a rule, this Court’s jurisprudence has taken a permissive approach to standing rights of public petitioners (HCJ 5188/09 Association of Renovations Contractors for Restoration v. State of Israel  [13] para. 7.) Our firmly settled rule is that a public petition will be recognized where “the matter raised in the petition is of a public nature, which has a direct effect on advancing the rule of law and establishing policies to ensure its existence in practice” (HCJ 1/81 Shiran v. Broadcasting Authority [14] at p. 374; see also HCJ 910/86 Ressler v. Minister of Defense [15], at 462-463). Who can serve as the public petitioner? It could be any one of many people aggrieved by a certain administrative act (HCJ 287/91 Kargal Ltd v. Investments Center Council [16] at p. 862), including any one who is unable to indicate a personal interest in the matter or harm caused to them personally (HCJ 651/03 Citizens Rights Bureau in Israel v. Chairman of Central Elections Committee for Sixteenth Knesset [11] at p.68)). The judicial policy on this issue was and still is influenced by fundamental value-based concepts about the role of judicial review in protecting the rule of law and supervising appropriate functioning of public administration. As such, the court should refrain from refusing the hear a person who claims that an administrative authority has violated the rule of law for the sole reason that they have no personal interest in the matter, given that this would lead to providing the authority with a stamp of approval to continue violating the rule of law (HCJ 962/02 Liran v. Attorney General [17] para. 14 (hereinafter: “Liran”). Yitzchack Zamir Administrative Power Vol.1 120-121 (2^nd ed. 2010) (hereinafter: Zamir)). Along with broadening of the scope of standing rights, the principle that the court will not generally grant a public petition where there is a particular person or body who has a direct interest in the matter should be preserved, unless they themselves have failed to petition the court for relief in the matter concerning them (see Liran [17]). In the words of former Justice M. Cheshin in HCJ 4112/99 Adalah Legal Centre for Arab Minority Rights in Israel v. Tel-Aviv Municipality [18]: “…in a case of this kind we would tell the public petitioner seeking to claim the right of the individual injured: Why are you meddling in a quarrel which does not involve you? If the victim did not complain about the infringement that he suffered, why have you come to provoke dispute?” (ibid., p. 443).  

6.         My colleague Justice N. Sohlberg felt that the Internet Association was “meddling in a quarrel which does not involve it”. I do not share this position. In the case before us, the Internet Association has raised grave claims about the alleged overstepping of authority in issuing orders to Internet access providers. Our concern is with a first attempt to define the scope of the district commanders’ authorities under section 229 of the Penal Law, in terms of blocking access to Internet gambling websites. This is a fundamental question. It is undisputed that the administrative authority’s activity within the boundaries of its authority are central to maintaining the rule of law. This Court has already held that claims of exceeding of authority are categorized as claims that justify broadening standing rights, for “...a court takes a more lenient attitude to the right of standing of persons not directly and substantially harmed where it concerns exceeding authority of a tribunal or agency, or where it concerns an act committed unlawfully, as distinct from other cases” (per Justice Kister in HCJ 80/70 Elizur v. Broadcasting Authority [19] at p.649; compare HCJ 852/86 Aloni v. Minister of Justice  [20], at p.63).

7.         One of the underlying considerations in Justice N. Sohlberg’s position on the Internet Association’s standing was the concern that conducting a proceeding on the part of the Internet Association might mean that the court would not be presented with the required factual foundation.  While I do not deny this concern, it seems that it need not undermine the Association’s standing.  First, we may assume that had the Appellants who participated in the proceedings in the lower court wished to clarify any factual matter or otherwise, they would have done so. For example, consider the Appellant’s complaint that the trial court was not presented with a full description of the technological ability to order blocking access to the websites. Without making an iron clad determination on the question at this stage, it suffices to say that nothing prevented the Appellants themselves from presenting data on this point, to the extent that they disputed the factual infrastructure in the petition. Second, nothing prevents the public petitioner from presenting the necessary factual foundation. In this case, too, I do not find the legal foundation presented to the Court to have hindered judicial review. Consequently, in my view, there is no ground for us to intervene in the District Court’s ruling that the Internet Association has locus standi in this proceeding.

With this in mind we can proceed to the merits of the matter.

The Question of Authority

8. Section 229(a)(1) of the Penal Law, titled “Closure of Places” provides that “A district police commander of the Israel Police may order the closing of... a place for prohibited games or a place for the conduct of lotteries or gambling”. In section 224 of the Law, a “place of prohibited games” is defined as “premises in which prohibited games are habitually conducted, whether open to the public or only to certain persons; regardless of whether those premises are also used for some other purpose”. In order to determine that the orders directed at the access providers requiring them to block access to gambling websites, are within the authority detailed in section 229 of the Law, three interpretative moves are necessary. First, we must determined that a website fits the definition of “place” as defined by the law; second, that blocking access to the website is the equivalent of “closing” as defined in the Law; and third, that the access providers can be used to exercise such authority.

9.         I am prepared to assume, in line with my colleague Justice N. Sohlberg’s holding that a website could constitute a “place” as defined in different contexts in our legislation, and that an online gambling website may be viewed as a “place of prohibited games” as defined in section 229 of the Penal Law. In this regard, I tend to agree that a purposive interpretation of this legislation, in the spirit of the times and technological progress, may indeed lead us to the conclusion my colleague reached that section 229 of the Penal Law could be also applied to “the virtual world” (compare Assaf Hardoof Criminal Law for Internet Users: The Virtual Actus Reus, HaPraklit (forthcoming) (52) 67, 122-124 (2012) (hereinafter - Hardoof)).

10.       Regarding the infringement of free expression. Internet sites indeed serve for voicing opinions and exchanging ideas, but – as is well known – the law does not treat each and every expression similarly. Even had some of the gambling websites included pictures, explanations concerning the rules of different games, information about gambling relations, chat rooms, and others – this is content located at the periphery of the protected value. As such, even if blocking gambling websites may cause blocking access to lawful content, it must be remembered that the value of the “expression”, which we are asked to protect, is not high and that the extent of protection afforded corresponds to the extent of the interest in question (HCJ 606/93 Kiddum Yezumot v. Broadcasting Authority [21] at p. 28). Moreover, to the extent that it concerns the blocking concrete websites, it seems that the primary infringement relates to the website operators’ freedom of occupation. Our precedents have already held that this is an infringement that passes constitutional tests (Tishim Kadurim [3] at pp.814-815). However, despite this and though I am prepared to assume that the extent of the infringement of freedom of expression is limited, I think it important to note that I share the general approach of the District Court, that when dealing with the sensitive topic of blocking Internet websites, we should particularly scrutinize the concern for infringement of freedom of expression. With respect to gambling websites, and only to them, my opinion, as mentioned above, is that the infringement of free expression that resulted from blocking lawful content on the gambling websites, is of a limited degree, On the other hand, it is certainly possible that other cases will reache us in the future, where there may be reason to significantly broaden the scope of protection afforded to expressions displayed on any particular website. Each site has its own characteristics.

11.       Aadditionally, the sensitivity of the matter – blocking websites – has another aspect , given that the trial court also found that blocking illegal gambling websites could also block access to “innocent” sites which the order did not target.  An unintentional block may occur because a number of websites, not linked to each other, may be located on a server with the same address. Regarding this point, the trial court referred to Center for Democracy & Technology v. Pappert [31] 337, F.Supp.2d 606 (E.D Penn. 2004), in which the United States Federal Court struck down a law that enabled censorship of pedophile websites, among others because of the filtering of “innocent” websites. The Appellants, for their part, challenge this holding. They claim that from a technological perspective, the fear of blocking sites that are unconnected to gambling activity is negligible, because the access providers were requested to block websites based on the combination of the IP address and the website address (the URL). This combination of the IP address and the URL address, allegedly, minimizes any possibility of blocking innocent websites. Apparently, this point was not fully clarified because even after examining of the papers filed with the trial court, it is unclear whether it is technologically possible to block only “targeted” gambling websites, as alleged by the Appellant, or perhaps, technologically, it poses difficulties. If indeed, there is danger of blocking “innocent” websites, then this would clearly constitute a grave infringement of free expression and the right to access information – an infringement that would necessitate explicit statutory authorization as well as compliance with the limitations clause.

12.       Had the question of blocking “innocent” websites been the only difficulty arising from this case, it might have been appropriate to remand to the trial court for an in-depth examination of this issue. However, the central obstacle the Appellants face is fundamental and disconnected to the previous question, namely using a third party to execute an authority, without explicit statutory empowerment to do so. In my view, section 229 cannot be sourced to exercise the authority by giving an order directed at a third party – the Internet access providers. My colleague, Justice N. Sohlberg, found that restricting access to gambling websites through a third party does raise concerns, but in his view these difficulties do not negate the authority to do so. My view is different, and I will clarify my reasons.

13.       Our concern is with a district police commander who issued orders to the Internet access providers to block access to gambling sites. These are “personal orders” – in other words, orders directed at a particular person or entity, imposing a prohibition or a duty upon them. This is an individualized rule of conduct. This kind of order, like any administrative decision, requires a written statutory source (Zamir, at 284).  The question therefore is whether the district police commander is authorized to order the providers – a private body that is not accused of any offence – to perform various actions on behalf of the Israel Police, and to actually serve as its long arm. This authority, arguably, is found in section 229 of the Penal Law, which authorizes the district commander to order the “closure” of places used for gambling.  As mentioned, I accept that had law enforcement authorities been able to affect the closure of websites used for gambling criminalized under Israeli Law (for example by disconnecting the website from its connection to the Internet or by shutting down the server’s activity) there would be no question regarding authority.  However, in this case, the relevant websites were not actually “closed”. Instead, the district police commanders ordered third parties – the Internet access providers – to block access to those websites. The issue then becomes whether the powers granted by by section 229 support doing so.

14.       When a governmental authority is conferred with a power, according to settled case law, the authority must exercise this power itself. When the legislature specifies an authorized office holder, it is presumed the legislature wishes that particular office holder, and that alone, exercise it (HCJ 2303/90 Philipovitz v. Registrar of Companies [22] (hereinafter: Philipovitz), at p. 420; see also Daphne Barak-Erez Administrative Power, 178 -170 (hereinafter: Barak-Erez)). These comments are particularly true for criminal enforcement. In the absence of appropriate legislation, law enforcement authority cannot be given to those not part of the enforcement mechanism. Criminal enforcement authority is one of the classic authorities of the state. This authority enables the state to fulfill its responsibility to enforce criminal law through its own execution. It is the state that exercises the Government’s authority over the individual in the criminal proceeding. Therefore, the state – having established the behavioral norms and having been charged with their enforcement – is the entity directly responsible for caution and restraint required for exercising this power. It is the entity that is accountable to the public for the way it executes its powers (HCJ 2605/05 Academic Center for Law and Business v. Minister of Finance [23], para. 28 of former President D. Beinisch’s opinon and para. 14 of Justice A. Procaccia’s opinion.)

15.       By attempting to source the authority in section 229 of the Penal Law, the State maintains it is exercising the authority by itself, and that enlisting Internet access providers to block gambling websites is merely exercising auxiliary powers that administrative agency must employ in order to exercise its authority (section 17 of the Interpretation Law, 5741-1981). I cannot accept this construction. As well known, there is a distinction between delegating authority that includes exercise discretion regarding a particular authority, and receiving assistance in technical matters related to exercising the authority (Philipovitz [22] at p. 424). Whereas the authority is permitted to receive assistance from private bodies about technical aspects of fulfilling their task, there is also a presumption against delegating authority to private entities (AAA 6848/10 Erez v. Giva’ataim [24] para 18; HCJ 5031/10 Amutat Ir Amim v. Israel Nature and Parks Authority [25] para. 18). Here, the access providers were not required to exercise discretion regarding the websites to which access was to be blocked. As such, it could be argued on its face that the authority did not delegate power but only requested assistance in exercising it, and that such assistance is in principle permitted. However, where assistance is concerned, the first and foremost element to demonstrate is that the person or entity whose assistance is required consents to assisting the authority, regardless of whether consent is motivated by commercial and economic motives (compare to Philipovitz [22] at 415), or by voluntary motives. The most important thing is that the authority may receive assistance only from those seeking to offer assistance based on pure and genuine motives and after securing explicit consent. When the authority imposes a duty on a person or entity to perform any act, one can no longer speak of assistance. In our case, the Appellants claim that the expression “closing of a place for prohibited games” mentioned in the relevant section of the Penal Law, also contains the possibility of ordering closure of access routes to that place using auxiliary authority. This is not so. Our concern is with orders that compel a private body – the Internet access providers – to “assist” the authority. Consequently the argument that the providers are an entity that grants its services voluntarily must fail. This is doubly important when the orders themselves warned, in bold print, that failure to comply with the order could constitute an offence of breaching a statutory provision, an offense of assisting the conduct of prohibited games, and an offence of assisting to maintain a place for prohibited games (sections 287, 225, and 228 of the Penal Law, combined with section 31 thereof).

16.       Additionally, I wish to clarify that were there an explicit statutory authorization it could be possible to “impose a duty” and receive assistance from any person for the purpose of realize various legislative goals. Indeed, different pieces of legislation empower an authority to order a third party to assist it, even in the criminal context. For example, section 20 of the Criminal Procedure (Arrest and Search) Ordinance [New Version], 5729-1969 provides that every person must help a police officer to arrest any person whom they are authorized to arrest. In a matter close to our own, a similar arrangement exists: the Criminal Procedure (Powers of Enforcement-Communication Data), 5768-2007 (also known as the “Big Brother Law”) allows Israeli investigatory authorities to be assisted by “holder[s] of a Bezeq license” (as defined there) in order to receive communications data on Bezeq subscribers for various purposes, such as discovering and preventing offences (section 1 and section 3(2) of this law). The various Internet providers are among the companies that may be required to submit communications data (see in the matter of the “Big Brother” law, para.2). This affirmation however also implies the opposite. Imposing a duty, coupled with a sanction, requires legislative bases. Without explicit legislative authority, it is impossible to charge a private entity with performing actions for the authority (compare: Civ.App. 90868/00 (District-T.A.) Netvision Ltd. v. Israel Defense Force- Military Police, para.9 (22.6.2000); Crim.F. 40206/05 (District-T.A.) State of Israel v. Philosof para. 8 b) (5.2.2007)). We are thus left with the need for explicit lawful authorization. In our case however, the language of section 229 of the Penal Law does not contain so much as the slightest hint of an authorization to impose a duty on a third party. And for good reason. Such authorization involves complex matters of law and policy.  In 2008, when the Knesset deliberated over the legislative amendments that would confer authority to block access to gambling websites, representatives of the Minister of Justice (as well as representatives of the police) expressed reservations about conferring authority as stated, for various reasons which will not be addressed here. Today the position of the authorities – with the support from the Attorney General – is different. Of course, the authorities are not bound by their former position, but the only lawful way to confer the district commander with the authority to order a third party service provider, in my view, is an amendment to primary legislation (an amendment which, needless to say, would have to satisfy the limitations clause in Basic Law: Human Dignity and Liberty). Accordingly, the manner in which the orders were issued here deviated from the principle of administrative legality, which is a fundamental norm of administrative law. “This principle teaches that the power of the public authority flows from the powers conferred upon it by law and nothing else. It is the law that grants the license to act, and defines the boundaries of its scope. This is the ABC of administrative law” (Baruch Beracha, Administrative Law, Vol.1 35 (1987); CA 630/97 Local Committee for Planning and Building Nahariya v. Shir Hatzafon Construction Company Ltd [26], at pp. 403-404; HCJ 5394/92 Hoppert v.'Yad Vashem' Holocaust Martyrs and Heroes Memorial Authority[27] at , 362 (1994);  HCJ 7368/06 Luxury Apartments Ltd v. Mayor of Yabneh [28], para. 33; see also HCJ 6824/07 Mana v  Taxation Authority[29]; HCJ 7455/05 Legal Forum for Land of Israel v. Israeli Government [30] at p. 910; Zamir, at 74-890; Barak-Erez at p. 97 and on). This is especially so in context of a mandatory authority, as anchored in the Penal law (see and compare Hardoof at p. 124).

17.       Could future legislation enable imposing the task of blocking gambling websites upon Internet access providers? An arrangement of this kind might take several forms. The legislature might determine that a court must grant such an order; it might grant the district police commanders – or any other authority – the authority to issue these orders, without petitioning a court (compare with “Big Brother” Law, para. 2). We assume that this legislation would also resolve additional concerns stemming from imposing the duty on access providers, while considering the costs likely involved in ensuring effective blocks, including the definition of access providers’ responsibility towards third parties, such as users and website owners whose access to them is blocked, and the like. In any event, it is clear that in our legal system the legislature is branch competent to consider the appropriate way to handle blocking access (Hardoof, ibid). Therefore we shall not jump the gun. We are not required at this point to pronounce on future legislation that has yet to be enacted and the details of remain unknown (and which, as mentioned, will also have to satisfy the limitations clause).

Other Legal Systems

18.       My colleague, Justice N. Sohlberg, found that restricting access to websites used for gambling is acceptable practice all over the world. Before we consider his comparative analysis, we should again note that the treatment of gambling in some countries is more lenient and as such no conclusive analogy can be drawn from the existing law in those countries to our legal system. On the merits of the matter, while certain countries receive assistance from Internet access providers to block gambling websites, as noted by my colleague, these are generally arrangements explicitly mandated by legislation, rather than acts designed to exercise general administrative powers. I will provide some examples.

19.       In the United States, gambling is regulated primarily at the state level rather than the federal level. There are significant differences between the various states in whether and how they view gambling and how they treat it. Federal legislation is therefore designed to assist states in enforcing local gambling laws where gambling activity extends beyond state-lines. Four primary pieces of federal legislation serve the authorities dealing with the gambling phenomenon: The first is the Federal Wire Act, of 1961 (18 U.S.C. §1084), which targets interstate gambling through linear communication. Though this law was enacted years before the Internet came into common use, and long before the online gambling became prevalent, this is legislation that authorities relied upon in the earlier days of the problem (see e.g. United States v. Cohen 260 F. 3d 68 (2d Cir. 2001)). The second act regulating the issue is the Illegal Gambling Business Act of 1970 (18 U.S.C. §1955) that was passed to battle organized crime that used gambling businesses as a main source of income, and it regulates the criminal responsibility of owners of large gambling businesses. The third is the Travel Act of 1961 (18 U.S.C. §1952), which prohibits the use of mail and interstate travel and travel outside the United States for unlawful purposes, including illegal gambling. The forth piece of legislation is the Unlawful Internet Gambling Enforcement Act (31 U.S.C. §5361-67), which prohibits gambling businesses from knowingly receiving payment linked to one’s participation in online gambling. It is interesting to note that law enforcement authorities occasionally found it difficult to rely on old statutes to receive Internet access providers’ assistance in closing gambling websites. Hence, for example, in April 2009 authorities in Minnesota instructed Internet service providers to block state residents’ access to 200 online gambling sites – an instruction given under the Federal Wire Act. However, this was challenged in court based on the argument that this act is inconsistent with the First Amendment’s protections for freedom of expression, and with the Commerce Clause (Edward Morse, Survey of Significant Developments in Internet Gambling, 65 Bus. Law, 309, 315 (2009)). In response, the Minnesota enforcement authorities withdrew the orders issues to the access providers (Lindo J. Shorey, Anthony R. Holtzman, Survey of Significant Developments in Internet Gambling 66 Bus. Law. 252 (2010)  

20.       In Australia, the Australian Communications and Media Authority’s power to order providers to block access to illegal gambling sites is regulated in detail in the “Interactive Gambling Act 2001 (sections 24-31) and in the regulatory code enacted under it (Interactive Gambling Industry Code (December 2001)). In Italy, a state my colleague referred to in his opinion, authorities’ authorization to order access providers to block illegal gambling sites is also set in legislation. Section 50(1) of Law No. 296 of 27 December 2006 (the Budget Law for 2007) established the authority of AAMS (Amministrazione Autonoma dei Monopoli di Stato), an organ of the Italian Ministry of Finance, to instruct, in an order to the communications bodies, to take measures toward removing illegal gambling websites, while setting an administrative fine of €30,000-80,000 for any breach by the communication providers. Under this law, Administrative Order No. 1034/CGV of 2 January 2007 was issued. It details the manner of exercising the power. According to the AAMS data, as of October 2010, 24000 websites were included in the “black list”. Every month hundreds of websites are added.

21.       Therefore we must conclude that even were there countries around the world that recognize the possibility of assistance from Internet access providers in blocking illegal gambling websites – this possibility is authorized there in explicit legislation. Where the subject was not regulated in explicit legislation, questions s about the power of the authorities to do so were raised in various countries, for reasons similar to those given by the District Court.

Afterword

 22.  Before concluding I would like to respond briefly to my colleague Justice N. Sohlberg’s comment regarding my position (para. 56 of his opinion). I wish to clarify that the thrust of my opinion does not turn on the interest of the access providers and the question of their concrete consent to blocking the websites. The conclusion I reached is based on the rule that an authority can only act within the boundaries of the powers the law conferred upon it, and that when exercising police powers the strict application of this rule is especially important. I would point out that I do not accept, as a given, my colleague’s assumption that a third party can be compelled to become “the long arm” of the police without its consent. Take a situation in which the reception clerk of a hotel (an example my colleague provides) fears a confrontation with criminal elements and has no interest in coming into contact with them. Would it also be possible then to compel the clerk to close the room? In my view this question is not free of doubt, but regardless, this we are required to rule on this question. In our case the totality of the circumstances that I presented and the sensitivity of the material discussed, in my view, lead to the conclusion that the existing authorization lacks the power necessary for exercising the alleged authority. 

Epilogue

I have reached the conclusion that section 229 of the Criminal Law does not authorize a district police chief to issue orders directed at Internet access providers, ordering them to block access to gambling websites. In my view, this requires express statutory authorization and the current arrangement is insufficient, because it does not contain authorization to order a third party to assist the enforcement authorities in exercising the power.

            For this reason, were my opinion to be followed, I would dismiss the appeal against the decision of the Administrative Affairs Court and would order the Appellants to pay the Respondents’ attorneys fee, for the sum of NIS 25,000.

 

                                                                                                Justice

 

President A. Grunis

My colleagues, N. Sohlberg and U. Vogelman are in dispute both about the preliminary issue of the locus standi of the Appellant and about the substantive issue of the district police commander’s authority. Regarding the first matter I see no reason to express a position. My colleague, Justice N. Sohlberg who addressed the position that the Appellant had no locus standi in the Administrative Affairs Court, analyzed the substantive issue, and concluded that it would not be proper to allow the appeal based on the preliminary issue without having considered the legality of the orders issued by the district police commanders. Under these circumstances I agree that it is appropriate to address the issue on its merits. Regarding the substantive issue, I concur with Justice U. Vogelman. That is to say, that I agree that the district commanders of the Israel Police do not currently have the authority to issue orders to Internet access providers to block access to gambling websites. The solution lies with the legislature.

 

                                                                                                            The President

 

It was decided by a majority opinion (President A. Grunis and Justice U. Vogelman) against Justice N. Sohlberg’s dissent, to dismiss the appeal, and to order the Appellants to pay the Respondent’s attorneys fees in the sum of NIS 25,000.

 

Handed down today 13th Nissan 5773 (24 March 2013).

 

 

In the Supreme Court

Sitting As a Court of Civil Appeals

CA 5365/11

CA 5489/11

 

Before:			His Honor, Justice E. Rubinstein His Honor, Justice Z. Zylbertal Her Honor, Justice D. Barak-Erez
The Appellant in CA 5365/11 and the Ninth Respondent in CA 5489/11:			ACUM – The Association of Composers
v.
The Appellant in CA 5489/11 and the Ninth Respondent in CA 5365/11:			EMI Music Publishing Ltd
v.
The Respondents:	1. The Director-General of the Antitrust Authority
	2. The Association of Restaurants in Israel
	3. Partner Communications Company
	4. The Association of Function Hall & Garden Owners
	5. Golden Channels
	6. Matav Cable Communication Systems
	7. Tevel Israel International Communications
	8. Anana Ltd
	9. EMI Music Publishing Ltd

 

Appeals against the judgment of the Antitrust Tribunal in Jerusalem on June 2, 2011 in AC 513/04 by Her Honor Judge N. Ben-Or

 

Date of Session:	Nisan 3, 5773 (March 14, 2013)
On behalf of the Appellant in CA 5365/11 and the Ninth Respondent in CA 5489/11:	Adv. Uri Sorek, Adv. Assaf Neuman
On behalf of the Appellant in CA 5489/11 and the Ninth Respondent in CA 5365/11:	Adv. Michelle Keynes

 

 

On behalf of the First Respondent:	Adv. Uri Schwartz, Adv. Yael Sheinin, Adv. Elad Mekdasi
On behalf of the Third Respondent:	Adv. Eyal Sagi, Adv. Amir Vang
On behalf of the Fourth to Seventh Respondents:	Exempt from appearance and representation
On behalf of the Eighth Respondent:	Adv. Ronit Amir-Yaniv, Adv. Ido Hitman

 

JUDGMENT

 

Justice D. Barak-Erez

 

1.         Which principles should guide the activity of ACUM with regard to the management of copyright in musical works in Israel? This question has been presented to us in full force against the background of the finding by the Director-General of the Antitrust Authority that ACUM’s activity creates a cartel, in order to review the conditions prescribed for the approval of the cartel in a way that will balance the rights of authors with the general interest of works being used in public.

 

Background and Previous Proceedings

 

2.         “The Association of Composers, Authors and Publishers,” known as ACUM, is a corporation that operates in order to manage the copyright of its members – lyricists, composers, arrangers, translators, and others – in Israel. ACUM members transfer their rights in their works to it, whilst ACUM acts on their behalf in order to license the use of those works in consideration for royalties that it collects for its members. Ordinarily, the licenses that ACUM grants are sweeping licenses ("blanket licenses") that permit licensees to make use of the whole repertoire of works managed by ACUM (mainly by making them accessible to the public in various ways). In addition, ACUM is bound by agreements with foreign copyright collective management entities (hereinafter "affiliates"), by virtue of which it administers in Israel the rights that are managed by the affiliates abroad.

 

3.         On April 30, 2004 the Director-General of the Antitrust Authority (hereinafter "the Director-General") published a ruling pursuant to section 34(a)(1) of the Antitrust Law, 5748-1988 (hereinafter "the Antitrust Law" or "the Law") according to which ACUM’s activity involves the creation of cartels (both between ACUM members and between ACUM and the affiliates) and a declaration under section 26(a) of the Law that ACUM’s activity as a cartel creates a monopoly in the market of managing copyright in musical works (or more precisely, with regard to management of  broadcasting, public performance, copying, recording, and synchronization rights in those works). The decision was made by the then Director-General, Mr. Dror Strom. However, it also reflects the position of the officers who have succeeded him, Ms. Ronit Kan and currently, Prof. David Gilo, as detailed below. Reference to the position of the Antitrust Authority will henceforth be made without specifically referring to those successors, using the general title – the Director-General.

 

4.         At that stage, ACUM instigated legal proceedings before the Antitrust Tribunal (hereinafter "the Tribunal") – an appeal against the determination of the Director-General that its activity involves cartels (AT 512/04) or, alternatively, an application for the approval of a cartel in accordance with sections 7 and 9 of the Antitrust Law, on the grounds that the cartel's approval is necessary in the public interest (AT 513/04). Both proceedings were heard together. Subsequently, to ACUM’s request, the appeal it filed was withdrawn, leaving only its application for approval of the cartel. The Director-General did not oppose the cartel's approval considering the public importance involved in ACUM's activity, as explained below, but the Tribunal was moved to set conditions to the approval so as to protect not only the public interest but also the individual rights of authors.

 

5.         To make its continued activity possible until completion of the litigation, ACUM filed a request for a provisional permit for operation of the cartel. The Tribunal granted the request and on December 28, 2004 it granted a provisional permit for ACUM’s activity subject to certain conditions (hereinafter "the Provisional Permit"). As detailed below, those conditions regulated, inter alia, situations in which authors could exclude rights in certain works from ACUM’s management so that those authors, rather than ACUM, would themselves deal with granting licenses to exercise those rights (hereinafter "the Exclusion Mechanism"). Over the years the Provisional Permit was extended from time to time based on of the Director-General’s recommendation, various amendments and modifications introduced to its terms. The last of those provisional permits (before the Tribunal's judgment), granted on February 24, 2009, introduced several significant changes, including making the Exclusion Mechanism "tougher," as detailed below.

 

6.         In addition to the position of the Director-General, oppositions to the cartel's approval were filed to the Tribunal by several other entities, including the Association of Function Hall & Garden Owners, Partner Communications Company (hereinafter "Partner"), the Association of Restaurants in Israel, and several cable companies – Golden Channels, Matav and Tevel (hereinafter "the cable companies") (whose activity has since been consolidated).

 

7.         At a later stage, an application to join the proceedings was made by two publishers that represent authors, the publishers themselves being members of ACUM – Anana Ltd (hereinafter "Anana") and EMI Music Publishing (Israel) Ltd (hereinafter "EMI Israel"). Those applications, like the time when they were made, were explained by the changes that had been made to the Provisional Permit’s conditions on February 24, 2009 as regards the Exclusion Mechanism. On December 1, 2009, the Tribunal partially allowed the applicants to join the proceedings in the sense that it permitted each of the two applicants to file a brief document with reference to the conditions that were acceptable to them and to make summations without extending the existing factual basis of the discussion.

 

8.         In its decision of January 25, 2009, the Tribunal stated that by consent of the parties it would rule based on the parties’ summations and supplemental oral arguments, without hearing evidence. The decision further stated that all of the parties agreed to ACUM's approval as a cartel, and took issue merely with regard to the terms of that approval. Consequently, the conditions of the Provisional Permit of February 24, 2009 (hereinafter "the Provisional Conditions") would serve as point of reference for the parties' positions. Accordingly, each of the parties filed its reservations regarding the Provisional Conditions in such manner that enabled the Tribunal to decide which of the conditions would be adopted as is within the permanent conditions, and which would be modified.

 

9.         On June 2, 2011 the Tribunal approved ACUM’s activity as a cartel, subject to a series of conditions (hereinafter "the Permanent Conditions"), which would remain in force for five years from the date of their approval. The Tribunal stated that the basic premise for reviewing the parties' arguments with regard to the conditions was that the anticipated benefit from the cartel substantially exceeded the damage likely to be caused by it, as required by section 10 of the Antitrust Law. In this context, it was explained that ACUM’s activity benefited not only its members – copyright owners (hereinafter "the authors") but also the general public who uses the works it manages (hereinafter "the users"): on the one hand, the sweeping licenses permit the users to make use of the whole repertoire of works that ACUM holds, thereby sparing the public from having to locate the owners of various rights and to negotiate individually with each of them; on the other hand, the sweeping licenses also benefit the authors since they streamline (and, to a great extent, enable) collection of royalties and enforcement of their rights.

 

10.       Since all parties agreed on principle to the approval of the cartel, the Tribunal hearing focused on the nature of the conditions to which the approval should be subject in order to dispel concern as to its abuse with regard to authors or users. The point of departure for the hearing was, as aforesaid, the Provisional Conditions, some of which were agreed upon by all parties, whilst others were in dispute. The disputes on which the appeal before us focuses pertain to the conditions prescribing the extent of the duty owed by ACUM to appoint external directors and the extent of ACUM members’ ability to exclude their rights from its management, as detailed below.

 

11.       Other controversies, including those concerning the definition of acts that would be construed as an abuse of ACUM's position and the way in which ACUM should act in taking legal action against users, were ultimately not considered by us since only few of the arguments concerning them were raised within the written appeal, while the arguments before us did not in fact concentrate on them.

 

12.       The appointment of external directors – the position of the Director-General was that a condition should be added to the Permanent Conditions to the effect that ACUM should appoint external directors in a proportion of no less than one third of the total members of its board and those directors would be responsible for the internal plan to enforce antitrust law that ACUM is obliged to implement (in accordance with section 10 of the Provisional Conditions). ACUM objected to this requirement, on the grounds, inter alia, that it is not a public company where the appointment of external directors is necessary in order to protect minority rights, and in any event ACUM's articles of association ensure due representation for each category of its members, and even guarantee numerical balance between the categories.

 

13.       The Tribunal accepted the Director-General's position on this matter, noting that a corporation for the collective management of copyright naturally raises concern as to the abuse of power against the authors themselves. Appointing a substantial number of external directors and entrusting them with the internal enforcement plan, it was held, would help deal with that concern, especially considering the fact that the corporation's members are dispersed and lack management expertise. The Tribunal also attributed importance to the fact that from ACUM's position in the proceedings it appeared that ACUM itself acknowledged the need to appoint external directors and was willing to do so even before the Tribunal’s judgment in order to reinforce the "managerial, professional, economic character of ACUM's board of directors".

 

14.       The extent of ACUM members’ ability to exclude rights from ACUM’s management – the Provisional Permit that ACUM had originally obtained (in 2004) included, in section 2.3 of the Provisional Conditions, a mechanism permitting a member to give notice "at any time, of his desire to assume all or any of the copyright with regard to any of his works, with regard to all users or specific categories of users," such that the works included in the notice would cease to be part of ACUM's repertoire, and copyright ownership would revert to the notifying member (hereinafter "the broad exclusion mechanism"). Underlying this mechanism was the concept that a “liberal” option to exclude any right in a work, even specifically, would intensify competition and increase the authors' power against ACUM. Later on, based on the experience accrued from the implementation of this arrangement, the Antitrust Authority reached the conclusion that the broad exclusion mechanism was not yielding the anticipated results with regard to enhancing market competition, and in contrast was aggravating the concern for abuse of the exclusion ability. For example, it turned out, according to the Director-General, that the broad exclusion mechanism that enabled interested authors, inter alia, to exclude from ACUM's management merely the use of "new media" (such as mobile phones and the Internet) and to leave it with the power to grant sweeping licenses for broadcasting rights only in "traditional media" (like television and radio), might undermine the justification for ACUM's existence as a corporation whose purpose is to reduce the substantial transaction costs involved in individually contracting with each of the authors. Accordingly, in 2009 the exclusion mechanism in section 2.3 of the Provisional Conditions was limited in two ways: first, the Provisional Conditions provided that an exclusion notice could only be given with the consent of all joint authors in a collective work whose exclusion was sought (for example, the lyricist, the composer of the music, and the arranger); second, it was provided that partial exclusion, namely exclusion of some of the uses of the work, could only be done in accordance with four "exclusion baskets" concerning different categories of use (hereinafter "the narrow exclusion mechanism"): presentation of the work in an audio format (for example radio broadcasting); its presentation in an audio-visual format (for example in a television program); copying the work; and recording it. The narrow exclusion mechanism therefore did not permit the author to exclude the work in various formats at his discretion, as specifically chosen by him (for example, excluding the work's use only with regard to mobile phones).

 

15.       The Director-General's position, joined by ACUM, Partner, and the cable companies on this issue, was that the narrow exclusion mechanism should be included in the Permanent Conditions. In contrast, EMI Israel and Anana believed that the broad exclusion mechanism should be adopted with regard to both aspects that distinguish it from the narrow exclusion mechanism and they challenged both the requirement for unanimous consent of all authors of a joint work and the restriction of exclusion according to "exclusion baskets."

 

16.       EMI Israel pleaded that the narrow exclusion mechanism improperly infringed on the constitutional property rights of the authors it represented, both because the predefined "exclusion baskets" limit the prerogative of the right’s owner to permit or prohibit certain uses of his work, and because the vast majority of musical works managed by ACUM are jointly owned by several authors. Under these circumstances, it was argued, making the exclusion conditional upon the consent of the other owners in fact negates the ability of a given author to permit or prohibit the use of his work. EMI Israel further asserted that adopting the narrow exclusion mechanism would compromise the competition among ACUM's members in the sense that only large corporations would be able to afford managing rights outside of ACUM, while individual authors would not be able to bear the financial and logistical burden it involves.

 

17.       Anana pleaded that adopting the narrow exclusion mechanism would lead to infringement on its reliance interest, given the fact that, relying upon the wording of the broad exclusion mechanism, it had already excluded works it managed from ACUM's repertoire with regard to the use of "new media" that it would now have to restore. In addition, it made a series of arguments concerning the restrictions set forth in the narrow exclusion mechanism – a lack of distinction between authors whose contribution to a joint work was significant and authors whose contribution was negligible (who nevertheless obtain a de facto veto right to exclude the work); impairing the ability of authors to maximize their profits; as well as infringing on the moral aspect of the author’s right (in the sense that an author who wishes to preclude the use of his work for religious, image-related, or moral reasons would find it difficult to do so under the narrow exclusion regime). Anana further contended that making the exclusion conditional upon the consent of all joint authors effectively makes it a dead letter since joint authors would frustrate any attempt to reach the necessary agreements.

 

18.       The Tribunal held that the approval should be made conditional upon a narrow exclusion mechanism and in that respect it adopted the position of ACUM and the Director-General (joined by Partner and the cable companies). The Tribunal explained that such exclusion mechanism provided an appropriate answer to the necessary balance between enhancing market competition and protecting the individual author's proprietary right. The Tribunal went on to state that a corporation for the collective management of copyright is in any event not intended to enable its members to realize their rights in full. On the contrary, such arrangement is based upon a waiver of complete and total freedom with regard to the works in consideration for reducing the cost of managing and enforcing copyrights. EMI Israel and Anana, the Tribunal held, were in fact seeking to enjoy the benefits of belonging to a cartel without bearing the costs. The Tribunal further explained that copyright grants an author a monopoly that may harm the general public, a concern which is intensified when authors are incorporated in a cartel. Therefore, there is no reason to avoid subjecting the cartel's approval to conditions that restrict the individual author's proprietary right in his work.

 

19.       As aforesaid, the Tribunal ultimately approved ACUM's activity as a cartel, subject to a series of conditions, including those mentioned above. The two appeals before us – the appeal by ACUM and the appeal by EMI Israel – were filed against its said judgment – as detailed below.

 

The Appeals

                       

20.       ACUM's appeal (CA 5365/11) concerns, as aforesaid, only one aspect of the Tribunal's judgment – the condition regarding the duty to appoint external directors. Its arguments in this respect are directed both against the basic obligation to appoint external directors and against their number.

 

21.       EMI Israel’s appeal (CA 5489/11) originally revolved around several of the other conditions to which the Tribunal made the permanent permit subject, but at the hearing before us EMI Israel concentrated its arguments on the details of the condition regulating the rights exclusion mechanism. It should be noted that Anana, which did not appeal the Tribunal’s judgment, appeared at the hearing as a respondent and in that capacity it presented arguments in support of EMI Israel's basic position.

 

22.       Generally, EMI Israel believes that the narrow exclusion mechanism impairs the protection of the authors' rights and reinforces ACUM's monopoly. More specifically, EMI Israel pleads that implementing the narrow exclusion mechanism would lead to infringement on authors' proprietary rights and would impair the possibility of creating a competitive copyright market. According to EMI Israel, the protection of copyright necessitates both recognition of the power of each author to implement the exclusion mechanism with regard to a work he helped create, even without obtaining the other authors’ consent, as well as authors’ right to exclude their works outside of the "exclusion baskets" that necessitate "crude" and imprecise choices that do not express important distinctions, primarily the distinction between "old" media (like radio and television) and "new" media (such as mobile phones).

 

23.       On the other hand, the Director-General believes that both appeals should be dismissed. He supports the Tribunal’s judgment and emphasizes that the conditions it approved are required in order to protect authors and users against the monopolistic power of ACUM and in order to protect the public interest involved in the use of the works.

 

Our Ruling

 

24.       Having reviewed the parties' arguments we have reached the conclusion that both appeals should be dismissed. We are convinced that, at the moment, the Permanent Conditions, including the conditions against which the appeals have been addressed, are all necessary in order to dispel the concerns raised inherently by a cartel related to the collective management of copyright. These conditions are necessary in order to ensure that the cartel’s benefit to the public will exceed the perceived damage from it. Indeed, as detailed below, reviewing the parties' arguments has made it clear that the distinction between "new" and "old" media within the exclusion mechanism is an evolving issue, the regulation of which should be monitored. However, as noted, the approval and its conditions have been set for a period of five years, of which two have already passed (as the conditions relating to the narrow exclusion mechanism were approved by the Tribunal in June 2011). At the end of that period, it will be possible to revisit the conditions and the way they are being implemented in order to make decisions towards the future. In that sense, our ruling reflects the facts presented in the proceedings, including the experience accumulated in the Israeli market and its existing uses of copyright.

 

The Normative Framework: Between Copyright Law and Antitrust Law

 

25.       Two normative frameworks frame our discussion: copyright law – as a framework that seeks, inter alia, to balance the author's rights in his work and the public interest to enjoy the fruit of the work for the benefit of all, in order to promote culture and knowledge; and antitrust law – which recognizes, inter alia, the possibility of approving a cartel, subject to conditions aimed at protecting the public from the abuse of monopolistic power. Copyright law is currently governed by a relatively new statute – the Copyright Law, 5768-2007 (hereinafter "the Copyright Law"), which replaced the relevant British Mandate statute, while the issues concerning the activity of cartels are regulated by the Antitrust Law.

 

26.       The activity of ACUM should be evaluated and examined according to these two perspectives. As mentioned in the introduction to our judgment, ACUM was established for the collective management of copyright in musical works. From the perspective of copyright, that management should be for the benefit of authors and in the name of protecting their rights, but without neglecting the public's ability to enjoy the works; from the perspective of antitrust law, that management, which constitutes a cartel and monopoly, should be for the benefit of the public and should ensure that public access to the works is not unreasonably denied. More specifically, in order to comply with the provisions of sections 9 and 10 of the Antitrust Law with regard to the approval of a cartel, it has to be ensured that the benefit to the public from such collective management substantially exceeds the damages that it might cause to all or some of the public.

 

27.       In many ways, the controversies that have arisen before us pinpoint once again the dilemmas that underlie copyright law. Recognition of copyright is aimed at encouraging the creation and dissemination of expression but also at balancing this benefit against the costs of limiting access to protected works (cf: Guy Pesach, The Theoretical Basis for the Recognition of Copyright, 31 Mishpatim 359, 410 (2001)). In the words of Vice President (retired) S. Levin:

 

            "In Anglo-American law the basic justification for these laws is perceived as the desire to provide an incentive to the author in order to achieve maximum access to the work by the public at large. This is the heritage of Israeli copyright law" (CA 326/00 Holon Municipality v. NMC Music Ltd, PD 47(3) 658, 671 (2003)).

 

Copyright Management Corporations: ACUM as a Test Case

 

28.       The case before us should be examined not only in light of the general principles of copyright law, on the one hand, and antitrust law, on the other hand, but also in light of the experience accumulated from copyright management through corporations established for such purpose. ACUM is a local corporation that was established back in pre-state Israel (see: Michael Birnhack, Colonial Copyright: Intellectual Property in Mandate Palestine 185-186 (2012)). Nevertheless, more broadly speaking it is merely one of many examples of corporations known as "copyright collection societies" or collective management organizations" (hereinafter "collective management corporations"). Such corporations operate in many countries and thereby provide an answer to a genuine need of authors who cannot routinely manage the grant of licenses to use their works, collect royalties, and enforce copyright law on those who infringe their rights. These corporations manage the rights of many authors collectively and thereby contribute to reducing the costs of negotiating with users and reducing enforcement costs. At the same time, the mechanism of collective management also benefits the public who uses the works because it allows bringing these works to the public on a regular basis. The collective management corporation typically offers users "a blanket license" in relation to the corporation's whole repertoire, thereby saving them the need to negotiate individually with each of the authors of works included in the repertoire. Such users are for the most part broadcasting stations owners, producers, hall owners, and others, through whom the works are made accessible to the public at large (see: Ariel Katz, Monopoly and Competition in the Collective Management of Public Performing Rights, 2 Din Ve'Devarim 551 (2006); Guy Pesach, Associations for the Collective Management of Rights – Another Look at Effectiveness and Fairness, 2 Din Ve'Devarim 621 (2006) (hereinafter "Pesach"); Walter Arthur Copinger, Copinger on Copyright, pp 1790-1794 (16th ed., 2011) (hereinafter "Copinger")).

 

29.       Alongside recognizing the fact that collective management corporations are a well-known and widespread phenomenon, the concern that accompanies their activity is also acknowledged. Collective management of copyright involves a significant challenge from the perspective of antitrust law, considering the fact that it has centralized characteristics and therefore raises the concerns involved in the creation of a cartel, including the concern of acquiring and abusing monopolistic market power, either by demanding high royalties or in other ways. Against those disadvantages, we usually weigh the necessity of such activity for effectively managing copyright and it is therefore common to regard collective management corporations as "natural monopolies" (and, to a certain extent, something of a necessary evil) and to allow them to operate subject to supervisory mechanisms and regulation (see: Ariel Katz, The Potential Demise of Another Natural Monopoly: Rethinking the Collective Administration of Performing Rights, 1 J. Comp. L. & Econ. 541, 544-548, 551-553 (2005) (hereinafter "Katz"); Copinger, pp 1798-1800). It is along these lines that the activity of the two major collective management corporations in the U.S. – the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc (BMI) – is regulated by special judicial orders ("consent decrees") as part of antitrust law. These orders, whose conditions are revised from time to time, place collective management corporations under a host of constraints in order to ensure their compliance with the competition criteria set forth in antitrust law (for a discussion of the supervisory mechanisms of collective management corporations in the U.S., see: Stanley M. Besen, An Economic Analysis of Copyright Collectives, 78 Va. L. Rev. 383 (1992).) Similarly, collective management corporations that operate in Europe are under supervision, subject to the antitrust law of the European Union (see: Lucie Gaibault & Stef Van Gompe, Collective Management in the European Union, in Collective Management of Copyright and Related Rights 135 (2nd edition, Daniel Gervias ed. 2010); Copinger, pp 1801-1808).

 

The Conditions in Dispute: Public Directors and the Exclusion Mechanism

 

30.       As already mentioned, the controversy before us does not concern the basic authority for ACUM’s operation as a cartel but rather the conditions that have been prescribed for its activity, or, more precisely, two of these conditions. In that sense, the discussion is based on the accepted notion, explained above, which views collective management corporations as something of a "natural monopoly," the existence of which is essential but their activity necessitates supervision and restraint in order to protect the public from the potential negative effects of substantial market power being accumulated by a single entity. The conditions for ACUM’s operation should therefore express the balance between the proprietary right of authors and the public interest in a market free of monopolistic influences, which acquires a unique aspect with regard to the market of creative works that naturally need to be accessible to the public (albeit for a fee).

 

31.       Ultimately, the hearing in this case revolved around two matters: the requirement to appoint directors, and the scope of the rights exclusion mechanism. Both of these need to be examined from the unique point of view that combines the purposes of copyright law with those of antitrust law, paying attention to the balance that both those sets of laws seek to achieve between individual proprietary rights and economic interests, on the one hand, and the public interest, on the other hand.

 

The Appointment of Public Directors: Between the Public Interest and the Interest of the Rights Owners

 

32.       The first condition that was prescribed for the approval of the cartel was to appoint public directors who will constitute a third of the total number of board members (which in practice means appointing four such directors). As aforesaid, ACUM has objected to this condition both in principle and in practice.

 

33.       In principle, ACUM asserted that it is not a public company and therefore there is no justification to enforce on it a supervisory mechanism appropriate to public companies. In this context, it was further asserted that its board of directors includes a delicate balance between all the sectors ACUM represents, which in itself ensures protection of the public interest (article 30.2 of ACUM's current articles of association provides that the company's board of directors shall consist of nine members that include two lyricists, a writer, two easy listening composers, one composer of concert music, one publisher, and two external directors). ACUM also noted that its corporate governance is dispersed and therefore does not raise an "agency problem" of the type with which the mechanism of external directors is designed to deal. ACUM also asserted that in any event it has in place adequate mechanisms to resolve potential disputes and conflicts of interest, including an internal arbitration mechanism as well as the Permanent Conditions that prohibit ACUM from discriminating between its members. According to ACUM, the appointment of public directors would "dilute" the authors' control over their property rights. In practice, ACUM further noted the costs involved in the appointment of the requisite number of public directors, which lead ACUM to be willing to appoint no more than two public directors.

 

34.       According to the Director-General, the need to appoint public directors stems from two factors: first, it will help ensure that ACUM serves the interests of all its member authors, taking into account the interests of individual authors rather than only the group interests of certain categories of authors. Second, the appointments will ensure that at least some of the directors have professional skills in the area of corporate management.

 

35.       With regard to the proportion of public directors on the board, the Director-General's position is that the requirement that no less than a third of the board would be comprised of external directors is justified, since the need for external directors is specifically greater under ACUM’s circumstances, where the corporate structure is dispersed and lacks a distinct controlling shareholder. In this respect the Director-General went on to explain that, in his opinion, ACUM's members need even more protection than "ordinary" shareholders, considering the fact that their livelihood depends on the corporation and they cannot sell their shares to "realize their profits."

 

36.       Having reviewed all this, we have reached the overall conclusion that ACUM's case in this respect should be dismissed.

 

37.       The appointment of public directors – that is, directors who are not employees or shareholders of the company – is one mechanism which allows supervising the behavior of the company, its managers, and its controlling shareholders and helps dispel the various agency problems involved in its activity (see: Irit Haviv-Segal, Company Law, 429, 438 (2007) (hereinafter "Haviv-Segal")). It can be said that the essential contribution of the public director lies in the "external dimension" that he brings to the board's work – as someone who reviews matters referred to the board from a broad, objective, and balanced perspective that also takes into account the public implications of its activity. The provisions of section 240(a1)(1) of the Companies Law, 5759-1999 (hereinafter "the Companies Law"), according to which a public director shall have professional skills or accounting and financial expertise, ensure that his appointment will add a professional dimension to the company that will contribute to its satisfactory management (see: Joseph Gross, The New Companies Law, 386-387 (Fourth Edition, 2007) (hereinafter "Gross")).

 

38.       The mechanism of appointing public directors is typically operated in the context of the activity of public companies – section 239 of the Companies Law requires a public company to appoint at least two public directors, whilst sections 114 and 115(a) of that Law require a public company's board of directors to appoint an audit committee from amongst its members, on which all the public directors shall serve. In addition, there are laws that impose a duty to appoint public directors to serve on the board of certain corporations whose shares are not held by the public, but whose activity has other public importance. Thus, for example, a mutual fund must appoint at least five directors to serve on its board and the proportion of public directors is the same as required of a public company (see: section 16(a) of the Joint Investments Trust Law, 5754-1994); while an insurance company, as defined in the Control of Financial Services (Insurance) Law, 5741-1981, must appoint public directors who will constitute a third of the total members of its board (see: section 2(1) of the Control of Financial Services (Insurance) (Board of Directors and Its Committees) Regulations, 5767-2007). In addition, the board of directors of a company that manages provident funds is required to appoint an investment committee for each fund it manages, the majority of committee members being qualified to serve as public directors (see: section 11(a) of the Control of Financial Services (Provident Funds) Law, 5765-2005).

 

39.       Having reviewed the case, we are satisfied that the condition concerning the appointment of public directors to serve on ACUM's board is consistent with the purpose underlying the approval of the cartel. Although ACUM is not a public company, it does essentially manage a resource that has clear public aspects. From the point of view of the authors, ACUM provides an essential service, without which it would be difficult for them to produce financial benefit from their works. In many ways, that is also the case from the point of view of the public at large: the protected works belong to the authors (and to whoever has acquired rights in them) but it is important that they are used in such a way that will also benefit the general public. Indeed, these public aspects of ACUM's activity underlie its approval as a cartel. At the same time, ACUM's monopolistic characteristics and its status as a cartel in the domain of musical copyright grant it a public dimension in and of themselves. The requirement to appoint external directors to provide a further layer of supervision over ACUM's activity is therefore called for and inherent to the rationale of the cartel's approval in order to protect both authors and users. It should be noted that making the approval of a cartel conditional upon the appointment of external directors, even when the corporation in question is not a public corporation in the ordinary sense, is not unprecedented. Thus, for example, the approval as a cartel of the recycling corporation that was established as a joint venture of manufacturers and importers of soft drinks in Israel was made subject to a similar condition (see section 4 of the Conditions for the Operation of the Recycling Corporation, as approved in AT (J'lem) 4445/01 Shufersal Ltd v. The Director-General of the Antitrust Authority (November 5, 2001)). The same applies to the approval as cartels of two other collective management corporations: the Israeli Federation of Independent Record Producers Ltd. (hereinafter "PIL") (see section 11.3 of the Conditions for the Operation of the Israeli Federation of Independent Record Producers Ltd., as approved in AT (J'lem) 3574/00 The Israeli Federation of Independent Record Producers Ltd. v. The Director-General of the Antitrust Authority (April 29, 2004)), and the Israeli Federation for Records and Cassettes (hereinafter "IFPI") (see: section 13.3 of the Conditions for the Operation of the Israeli Federation for Records and Cassettes Ltd, as approved in AC (J'lem) 705/07 The Israeli Federation for Records and Cassettes Ltd. v. The Director-General of the Antitrust Authority (February 3, 2011).

 

40.       With regard to authors' protection, there appears to be grounds to the argument concerning the importance of protecting the common interests of ACUM's members, regardless of the “category” to which they belong. Public directors can express "cross-category" interests that concern the benefit of authors generally in their relationship with ACUM, as opposed to the benefit of particular categories of authors. Moreover, without laying out hard and fast rules, it can be said that there is prima facie grounds to the assertion that the importance of the public director institution is in fact greater in a corporation characterized by dispersed ownership, in the absence of controlling shareholders, as is the case with ACUM. The agency problem in companies of this type is characterized by interest gaps between management and shareholders (as opposed to interest gaps between the controlling shareholder and minority shareholders, which are typical of companies that have controlling shareholders). Some view the appointment of public directors as a central mechanism for dealing with such gaps (see Haviv-Segal, pp 438-439). Clear expression of this distinction can be found in the First Schedule to the Companies Law, which contains suggested provisions for the corporate governance of public companies. Paragraph 1 of the Schedule prescribes the recommended percentage of independent directors, distinguishing between companies that do and do not have controlling shareholders. With regard to the latter, the Schedule provides that a majority of the directors should be independent, whilst in the former it provides that it is sufficient for a third of the directors to be independent.

 

41.       Furthermore, even assuming that the present structure of ACUM's board of directors faithfully represents its member authors, that structure does not prima facie guarantee that the protection of authors will also take into account the public interest more broadly. Indeed, a public director's fiduciary duty to the company is no different than that of an ordinary director, in the sense that he too must act for the benefit of the company (see: Gross, p. 406; cf: CA 610/94 Buchbinder v. The Official Receiver, para. 43 (May 11, 2003)). However, the public director will presumably represent a broader, more objective point of view, cognizant of the public implications of the corporation's activity.

 

42.       Moreover, as already explained, the appointment of public directors also has great importance as regards guaranteeing a minimum number of directors with professional managerial skills. In fact, ACUM itself acknowledged the professional advantages of appointing public directors even before the Tribunal's judgment was handed off and the revised version of ACUM's articles of association now require the appointment of two such directors. The fundamental aspect of this controversy has thus somewhat eroded and it has become a matter of extent and degree. We believe that the proportion of directors set forth in the Permanent Conditions – a third of the board members – is not excessive or unreasonable, considering ACUM’s character as a corporation whose ownership is dispersed and especially given the lingering concern of abusing monopolistic power.

 

43.       This discussion, which is "internal" and concentrates on corporate and antitrust law, can be supplemented by an "external" discussion, based on the significance that entities with public aspects have from the perspective of public law. According to this Court's case law, a private corporation whose activity has clear public aspects might be regarded as a "hybrid" entity, which places it under additional duties over and above those it is subject to in accordance with private law. Care must be taken not to overextend the category of hybrid entities in order to avoid eroding the significance of acknowledging a public status and blurring the lines between the public and private spheres. Moreover, under the current circumstances, there is no need to rule on whether ACUM should be regarded as a hybrid entity and a complete discussion of the criteria for the recognition of an entity as hybrid is unnecessary. However, it should be noted that ACUM's activity does entail many of the criteria mentioned in previous case law as characterizing a hybrid entity. Thus, for example, in HCJ 731/86 Micro Daf v. Israel Electric Corporation Ltd PD 41(2) 449 (1987) (hereinafter "Micro Daf"), where the question of hybrid entities was discussed for the first time – in the context of the Electric Corporation's activity – the factors taken into account were the monopolistic aspect of the corporation's activity, the nature of the resource it manages, and the fact that statutory powers have been entrusted to it. These factors were not considered an "exhaustive list" and since then entities which lacked those characteristics, at least to the same extent, have also been recognized as hybrid (see: CA 294/91 Jerusalem Community Hevra Kadisha Burial Society v. Kastenbaum PD 46(2) 464 (1992)). For further discussion, see: Daphne Barak-Erez, Administrative Law vol. 3 - Economic Administrative Law 463-492 (2013)). With regard to ACUM, the monopolistic aspect of its activity is beyond dispute. In Israel, although there are other collective management corporations, including the abovementioned PIL and IFPI, the product they supply – licenses for the broadcasting and public playing of sound recordings – does not substitute the product ACUM supplies. As the Director-General stated in his declaration, ACUM has no direct competitors in its relevant market and although formally nothing stops authors from managing their works themselves, few of them find such course of action practical or worthwhile, so that in fact the vast majority of works for which royalties are paid in Israel are under the management of ACUM. The same applies to the implications that the resource managed by ACUM has on the general public. Although the licenses that ACUM offers are acquired by a relatively small category of users, those licenses feature the right to play the works in public (or make them otherwise available to the public). Hence, they have a very significant effect on public access to the works. In other words, the public aspect of ACUM's activity also derives from the fact that the product it supplies is not in fact the musical works themselves but rather the collective management mechanism, which facilitates (and to a great extent enables) playing those works in public and therefore constitutes a product of clear public importance. Finally, although ACUM does not exercise statutory powers, its approval as a cartel entrusts it with power that derives from a statutory decision established in the Antitrust Law. These characteristics, even if they are insufficient to define ACUM as a hybrid entity in the ordinary sense of the term (and, as aforesaid, we have no need to rule on this issue), do support the basic justification for the Director-General's requirement under the current circumstances. Indeed, the appointment of public directors is ordinarily not imposed on a hybrid entity. However, the fact that ACUM constitutes an entity that owes important duties to the public can serve as a factor in the Director-General's decision to subject a cartel to conditions.

 

The Rights Exclusion Mechanism

 

44.       The other condition at the center of the litigation before us concerns, as aforesaid, the rights exclusion mechanism. Underlying the controversy were two questions: first, is the requirement for the consent of all joint authors of a work in order to exclude it from ACUM's repertoire justified or should that power be held by each of the authors individually? Second, how delicate and precise should the "segmentation" mechanism be with regard to the exclusion ability, as regards the distinction between different types of uses? We shall clarify those questions below.

 

The Rights Exclusion Mechanism: the Consent of All Authors or a Personal Right?

 

45.       The requirement that the exclusion of the work should be conditional upon the agreement of all its authors prima facie imposes a constraint on the right of each of the authors to control the rewards of his work. For that reason it has been criticized by EMI Israel and Anana. In contrast, the position of the Director-General and ACUM is that making the exclusion conditional upon the consent of the other authors is essential to protect both users and authors. The main argument regarding the protection of users relates to the concern that a "liberal" exclusion mechanism that would give an independent exclusion right to each author would impair ACUM's ability to offer sweeping licenses and thereby undermine the basic justification for its existence from the perspective of public interest. With regard to the protection of authors, it is asserted that the ability to exclude rights without the agreement of the other authors would encourage abuse of that power by "powerful" authors at the expense of the other authors of the work. ACUM explained that if each author of a joint work could exclude his rights from ACUM’s repertoire without the agreement of the other authors, it would grant veto power to that author to prevent works from being used by those to whom other authors wish to grant permission. ACUM also emphasized that where the rights in a work are vested in several authors veto power will forever be involved and the remaining question is only which veto power is least damaging: that of an author wishing to prevent the work's exclusion and leave it with ACUM's repertoire, or that of the excluding author to prevent any use of a work contrary to the position of the other authors. According to ACUM, the former is infinitely preferable. Having reviewed the case, we have reached the overall conclusion that we accept the position of the Director-General and ACUM in this respect.

 

46.       We accept as a starting point for our discussion the (reasonable) assumption that the rights in the type of works that ACUM manages are often shared by several authors. This can be illustrated by the typical case of a song. According to copyright law, every song is made up of several independent works, the rights in each of which are vested in different authors – the words of the song are a literary work owned by the lyricist; the music is a musical work owned by the composer. Moreover, there are also cases in which several composers or lyricists collaborate in the process of creating a work and in such cases the circle of rights owners expands even further. Considering this situation, it is easy to understand EMI Israel and Anana's grievances: making the exclusion power conditional upon the agreement of all authors undoubtedly burdens the individual author who seeks to exclude his work. However, this does not suffice. The question before us is whether this burden is justified, considering the purpose of the permanent permit – and our answer to that question is in the affirmative.

 

47.       In order to discuss this question it is necessary to return to the original reasons that led to managing rights through a corporation like ACUM. The most important tool available to ACUM for the collective management of rights is the grant of a sweeping license known as a "blanket license," the advantages of which in terms of transaction costs constitute the basic reason that legitimates ACUM's activity, despite difficulties in terms of antitrust law. Extending the ability to exclude rights from ACUM's management will naturally impair its ability to offer blanket licenses and thereby reduce the public benefit from its operation as a cartel. Over-extending that possibility will impair the public benefit from ACUM’s activity to such extent that it will no longer be the case necessarily that the benefit substantially exceeds the potential damages to the public interest from the cartel's operation. Having considered matters, we are satisfied that the grant of a personal "exclusion right" to each author would amount to such over-extension. Considering the typical ownership structure of musical works, an exclusion mechanism that is not conditional upon the agreement of the other authors effectively means granting authority to a single author, regardless of his part in the work, to exclude the work as a whole from ACUM's blanket license regime. Thus, a user who wishes to make lawful use of the work would have to negotiate with the excluding author in addition to acquiring the sweeping license from ACUM. Such a state of affairs would greatly limit the benefit of the cartel for users to the point of raising doubts as to whether the cartel is indeed "in the public interest," as required by section 9 of the Antitrust Law whenever a cartel is approved.

 

48.       Furthermore – accepting the position whereby the consent of all the authors of a joint work is unnecessary to exclude it would also raise difficulties for the relationship between the authors themselves as it may enable some of the authors – usually the more "powerful" ones – to exploit their exclusion power at the expense of the other authors. This may occur in situations where the user has already acquired most of the rights to use the work by means of a blanket license and merely needs to "supplement" the excluded right. This may give rise to phenomena of "extortion" and "free-riding," so that the remaining owner of the right will demand exceptionally high license fees for his share. We have already discussed the problem of such a state of affairs from the user's point of view. However, in truth, the problem also exists from the perspective of the excluding author making excess profit at the expense of the other authors. This difficulty is intensified in light of the fact that the ability to exclude rights from ACUM's management – given the complexity involved in negotiating with users individually – would essentially be of benefit to powerful rights owners, like large publishers, as opposed to individual, independent authors.

 

49.       It should be noted that we have so far used the expression "joint authorship" in order to describe all the cases in which the rights in a particular song are shared by several authors, although in fact it is prima facie possible to distinguish between two models of joint authorship. One model, of "joint authorship in indefinite shares," relates to two or more authors who collaborated in such way that it is impossible to distinguish the share of each of them in the finished work. In such a case, the work is considered a "joint work" according to section 1 of the Copyright Law. The other model, of "joint authorship in definite shares," involves a finished product, like a song, which is made up of several units, each of which was created by a different author and is a protected work in itself (for example the words of the song, which were written by one author, constitute a literary work; while the music, which was composed by another author, constitutes a musical work). The authors in such a case are not regarded as joint authors according to the Copyright Law, despite the fact that their relationship is substantively founded upon sharing. It is interesting to note that the American copyright law does distinguish between works where the shares of the various authors are inseparable and works where the shares of the various authors are interdependent. Nevertheless, both situations are considered "joint work" (see: Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 6.4 (2002) (hereinafter "Nimmer"). In any event, for the purpose of the present discussion concerning the ability of authors to exclude rights from ACUM’s management we need not consider this distinction. In both cases, splitting the licensing authority would place practical obstacles for using the joint work.

 

50.       In fact, the controversy before us derives not only from the different interests that the various parties represent but also from the fact that the Copyright Law does not expressly regulate the issues to which joint authorship gives rise (see: Michael Birnhack, A Cultural Reading: the Law and the Creative Field, Authoring Rights: Readings in Copyright Law 83, 105-106 (Michael Birnhack & Guy Pesach, Editors, 2009) (hereinafter "Birnhack"); Gilad Wexelman, Corporate Creation and Cooperative Creation, Authoring Rights: Readings in Copyright Law, 167, 177-178 (2009) (hereinafter "Wexelman"). Cf  Margaret Chon, New Wine Bursting from Old Bottles, Collaborative Internet Art, Joint Works and Entrepreneurship, 75 Or. L. Rev. 257 (1996)). In fact, the only arrangement the Law establishes with regard to joint works (as defined in section 1) relates to the period of protection of the work, which is measured according to the age of the surviving joint author, plus 70 years (section 39 of the Copyright Law).

 

51.       Additionally, reference to comparative law does not yield an unequivocal answer, considering the numerous potential approaches to this issue. Thus, for example, subject to certain restrictions, the law in the U.S. vests each of the joint authors with an independent right to permit use of their work even without the consent of the other authors, provided that they are paid their proportional share of the profit produced from the work (see: Nimmer § 6.10; Russ VerSteeg, Intent, Originality, Creativity and Joint Authorship 68 Brooklyn L. Rev. 123, 149-150 (2002)). In contrast, according to the approach prevailing in English law, the agreement of all authors is necessary in order to permit use (see: Copyright, Design and Patents Act 1988, section 173(2). See also: Copinger, p 334.) For the purpose of the ruling before us, we must be cognizant of the fact that the variety of existing approaches regarding copyright management of joint works attests not only to the great complexity of the matter but also to the fact that recognizing authors' proprietary rights does not inherently dictate a particular result.

 

52.       Since there is no specific regulation of the issue of jointly owned copyright within the Copyright Law, we may turn to legislation in other contexts concerning the joint ownership of property rights. Detailed regulation of this sort exists regarding the joint ownership of land in sections 27 to 36 of the Land Law, 5729-1969 (hereinafter "the Land Law"). According to section 9(e) of the Movable Property Law, 5731-1971 (hereinafter "the Movable Property Law"), arrangements concerning joint ownership of land essentially apply to movable property too, "save as may be otherwise provided in a co-ownership agreement." By virtue of section 13(a) of the Movable Property Law, such arrangements also apply to joint ownership of "rights." Nevertheless, reference to the Land Law with regard to the legal regime governing joint authorship should be made with care. As Prof. Michael Birnhack has noted:

 

            "Even if a model of joint authorship is prescribed, the socio-legal institution can be designed in various ways, ranging from management based on the decisions of all owners, through consent-based management, to each author having freedom of use. Selecting the appropriate point on this range should be influenced by an understanding of the law concerning the creative process and the reciprocal relationship between joint authors, between each of them and the work, or anywhere else where the work and its significance are formed" (Birnhack, p 106).

 

Similarly, Dr. Gilad Wexelman has also written:

 

            "A joint work raises problems of a different type, when compared with the joint ownership of tangible resources and applying the doctrines that exist regarding joint ownership of tangible resources to joint authorship is therefore improper and inappropriate. These doctrines do not provide the necessary solutions for joint authorship. The inference deriving from this is that it is appropriate to adopt a broader, different conception of the joint authorship process, rather than a conception influenced by the private property model" (Wexelman, p 178).

 

53.       One way or the other, before we seek to draw an analogy based on the arrangements relating to joint ownership of land, it is important to emphasize that we need not consider the legal regime that governs the relationship between joint authors as an independent issue. The question of joint authorship should be analyzed in the case before us merely in the particular context of a joint work's management by a collective management corporation like ACUM – which naturally goes beyond the default rules that apply to joint authorship. In any case, under the circumstances,  reference to the existing legal arrangements regarding the management of joint rights should serve merely as a framework and a starting point for the discussion.

 

54.       The arrangement prescribed in the Land Law concerning joint ownership is based on a concept of management by majority decisions, except for matters that go beyond ordinary management and use, in which unanimous agreement is required. In this respect, section 30 of the Land Law provides:

 

            (a)       The owner of a majority of the shares in any joint property may determine all matters relating to the ordinary management and use of the property.

 

            (b)       A joint owner who considers himself aggrieved by a determination under subsection (a) may apply to the Court for directions and the Court shall decide as seems just and expedient under the circumstances of the case.

 

            (c)       Any matter outside the scope of ordinary management and use requires the consent of all the joint owners.

 

55.       The joint owners of a land can agree upon a different method for the management of their rights but, as provided in section 29 of the Land Law, this is the arrangement that applies "unless otherwise provided in a joint ownership agreement" (subsection (c)) (see also: CA 810/82 Zol Bo Ltd. v. Zeida PD 37(4) 737 (1983); CA 663/87 Nathan v. Greener PD 45(1) 104 (1990)).

 

56.       At the same time, section 31(a)(1) of the Land Law provides that each joint owner may, without the consent of the other joint owners, make reasonable use of the joint property, provided that he does not prevent another joint owner from conducting such use. In other words, none of the joint owners of land may stop his fellow owners from using the property, so long as it applies to reasonable use.

 

57.       What can be learned from these arrangements for the case in question? Applying the arrangement prescribed in section 30, mutatis mutandis, leads to the conclusion that the requirement of a "unanimous" decision is appropriate insofar as management or use out of the ordinary is involved. It can therefore be argued that the management of copyright through an entity like ACUM is the ordinary, accepted method worldwide for the management of individual authors' rights, and departing from that arrangement therefore constitutes an "extraordinary" decision outside the ordinary realm of rights management. It should therefore be made unanimously, exactly as provided by the conditions that have been approved.

 

58.       Indeed, as stated above, the considerations relevant to joint ownership of land are not necessarily apt with respect to joint authorship. Thus, for example, the arrangement contained in the Land Law can be seen as "hostile" to a state of joint ownership, recognizing that joint ownership of land may burden its efficient management. Section 37 of the Land Law therefore provides that "each joint owner of immovable property is entitled at any time to demand the dissolution of the joint ownership." Yet, joint authorship is not a "pathological" condition. On the contrary, the process of authorship frequently involves collaboration – either direct or indirect – between several authors and dissolving the joint authorship should not be regarded as socially desirable. It is also likely to be more difficult to appraise the value of the work for the purchase of one of the joint authors' shares than severing the joint ownership of land. Consequently, as already mentioned, the analogy from the Land Law should be drawn with all due care. However, even taking into account the difference between joint ownership of land and joint authorship, it does appear that the requirement of unanimous consent for the exclusion mechanism is proper. Particularly because joint authorship is a "natural" condition and typical of many works, it is appropriate to be apprehensive about an exclusion mechanism that is based on each of the authors having an individual right of action, reinforcing the status of strong authors and burdening public access to the works, as explained below.

 

59.       Examining the rule with regard to the reasonable use of jointly owned land also leads, prima facie, to a similar conclusion. By drawing an analogy based on section 31(a)(1) of the Land Law it can be inferred that leaving the work under the management of ACUM constitutes reasonable use, considering the fact that it is the typical, widespread method for the collection of royalties. According to this logic, there appears no justification for adopting an exclusion mechanism that enables a joint author, who so desires, to prevent his fellow author from making reasonable use of the work, by excluding it from the collectively managed repertoire.

 

60.       It should be noted that this Court has previously considered the question of collaboration between joint authors, in CA 1567/99 Sivan v. Sheffer PD 57(2) 913 (2003) (hereinafter "Sivan"). Under the circumstances of that case, we recognized the right of each of the joint authors to terminate a contract that had been made in connection with the use of the rights when the contract was breached. Can it therefore be inferred that it would be proper in the current case to permit each of the joint authors to individually decide on exclusion? Despite the apparent similarity between the situations, in fact they are quite different and the conclusion should therefore be different too. In Sivan the issue was the rescission of a contract due to its breach and ipso facto it was possible to rely on the principle that whosever right has been infringed on is not required to forgive the infringement. This result is supported by considerations deriving from the law of obligations and in particular from the issue of multiple creditors. In contrast, in the case at hand, the question is posed for the purpose of delineating the ordinary rules of management, in the absence of any alleged breach. The relevant considerations are thus different, and so is the result that they dictate. Indeed, in Sivan the Court has made a clear distinction between these two questions. In fact, it noted that it was not ruling on the question of unilateral exercise of copyright in a joint work, which is more similar to the present case, and it went on to state that section 31(a)(1) of the Land Law prima facie makes it possible to adopt a flexible approach in such cases (Sivan p 942).

 

61.       Taking a broader view, it appears that the position presented to us by EMI Israel and Anana does not give proper weight to the effect of high transaction costs and free-riding in the management of multiple ownership resources, a phenomenon referred to as "the tragedy of the anti-commons" alongside the better-known term "the tragedy of the common property" or "the tragedy of the commons" (see generally: Michael Heller, The Tragedy of the Anticommons: Property in the Transition from Marx to Markets, 111 Harv L. Rev 621 (1998); James Buchanan & Yong J. Yoon, Symmetric Tragedies: Commons and Anticommons, 43 J. L. & Econ. 1 (2000)). Indeed, the narrow exclusion mechanism that the Tribunal approved appears more suitable for dealing with these phenomena. In connection with joint authorship, “the tragedy of the anti-commons” is manifested in sub-optimal use of the work as a result of uncoordinated behavior by its owners. In a legal regime where a license to use a particular work necessitates the agreement of all its owners, each of the owners might act to maximize his own profits by claiming a high fee for agreeing to its use, without considering the negative externality that such behavior for the other owners. Ultimately many users will find it difficult to meet the overall price required of them and the work will be used to a lesser extent, thus harming both the joint authors and the public, whose access to the work has been limited. It is common to believe that the solution to this problem is one of the major advantages embodied in the activity of collective management corporations (see: Katz, p 561; Francesco Parisi & Ben Depoorter, The Market for Intellectual Property: the Case of Complementary Oligopoly in The Economics of Copyright 162, 168-169, Wendy J. Gordon & Richard Watt eds. 2003 (hereinafter "Parisi & Depoorter")). Since dealing with the market failings associated with joint authorship is one advantage that justifies the monopolistic activity of corporations like ACUM, great importance is attributed to the design of an exclusion mechanism that will not frustrate that advantage by vesting veto power in each joint author who wishes to preclude use of a joint work.

 

62.       Ultimately, even under the narrow exclusion regime joint authors can agree in advance, contractually, on the scope of their understandings with regard to the work's exclusion from collective management. In fact, the narrow exclusion regime merely provides the default with regard to the inclusion of a joint work in the repertoire managed by ACUM. Insofar as the authors wish to agree on a different decision-making mechanism with respect to the management of joint works, they are at liberty to do so. Presumably such an arrangement, made before any of the parties is in a position for extortion or "free-riding," will help limit the coordination difficulties asserted by EMI Israel and Anana with regard to obtaining the consents necessary for the exclusion of a joint work. In view of the aforesaid, the default mechanism prescribed – according to which in the absence of an agreement between the joint authors to the contrary, the consent of all authors is necessary to exclude the work from management by ACUM – is appropriate.

 

The Rights Exclusion Mechanism: the Degree of Segmentation and the Distinction between New and Old Media

 

63.       As mentioned above, the arguments by EMI Israel and Anana also revolved around the fact that the "exclusion packages" defined in the Permanent Conditions do not distinguish between uses for the purpose of "old media" and uses for the purpose of "new media." In this respect Anana reiterated the case that it made before the Tribunal concerning the impairment of authors' ability to exhaust the full financial potential embodied in their works by excluding the works from management by ACUM solely with regard to "new media," and concerning the damage caused to Anana itself, having prima facie relied upon the previous exclusion mechanism in excluding rights that it will now have to restore to ACUM’s management.

 

64.       In contrast, the Director-General and ACUM argued before us that categorizing the necessary permissions according to types of media will allow ACUM members to abuse their power against users by forcing them to purchase specific uses (for example using the work on a cellular platform) in addition to the general fee for the license awarded through ACUM. In addition, ACUM mentioned that the adoption of a "liberal" exclusion regime enabling a precise "segmentation" of the excluded uses of any work would involve a significant logistic and financial burden on its ability to manage copyright of its repertoire.

 

65.       Deciding between the conflicting positions in this respect has proven to be more complex than the parties' arguments revealed. In truth, as we explain below, both positions are extreme and fail to fully address the difficulties they entail. Consequently, at present, we believe that the exclusion mechanism approved by the Tribunal should be upheld, provided that the question of excluding "new media" – subject to conditions and constraints – will be comprehensively reviewed towards the renewal of the cartel’s approval. We shall explain our said position.

 

66.       The present exclusion mechanism, as expressed in section 2.3 of the Permanent Conditions, enables an author to exclude his rights completely, in respect of all their potential uses. Moreover, the mechanism allows excluding the rights in respect of some of the uses, yet solely in accordance with one of four alternatives – "the exclusion packages" that stand at the center of the discussion. Because of their importance, we shall lay them out in full below:           

 

            "2.3.1  Excluding the rights for audiovisual broadcasting, including synchronization and recording for the purposes of such broadcasting, and including the provision of interactive and/or on demand services and any similar service, including by television, Internet, telephony or mobile phone.

 

            2.3.2   Excluding the broadcasting rights by means of audio, including recording for the purposes of such broadcasting, and including the provision of interactive and/or on demand services and any similar service, including by television, Internet, telephony or mobile phone.

 

2.3.3   Excluding the right of copying. For the avoidance of doubt, it is clarified that excluding the right of copying does not include the right of copying for broadcasting purposes.

 

2.3.4   Excluding the right of imprinting and/or recording. For the avoidance of doubt, it is clarified that excluding the right of imprinting and/or recording does not include the right of imprinting and/or recording for broadcasting purposes".

 

67.       The alternatives at the center of the present controversy are the first and the second (and to a limited extent also the fourth, insofar as the exercise of the right of copying is aimed at integrating a musical work in the soundtrack of an audiovisual work). These alternatives deal with uses that make the work available to the general public – its broadcasting on television or radio, making it accessible by means of "streaming" technology, which enables viewing or listening to content through the Internet without copying it to the user's computer, and the like. The main distinction that the exclusion mechanism makes in this context is between presenting the work by audiovisual means and presenting it by audio only. Thus, for example, given the present situation, an author can be represented by ACUM for the purpose of playing songs on the radio but not for using them in the format of television content.

 

68.       Presumably, maximum protection of the author's rights and his financial interests should have enabled every author to make specific exclusion decisions as much as possible – even with reference to a specific work in a particular use. Along these lines, ACUM's present exclusion mechanism permits, as aforesaid, limited "segmentation" by types of use. However, it has been argued before us that this does not suffice. The dispute revolved around the degree of precision required by segmentation. While the present segmentation mechanism essentially distinguishes between audio and audiovisual uses, EMI Israel (supported by Anana) also wishes to distinguish between "old media" – like television and radio – and "new media" – such as the Internet and cellular phone services. This position was presented to us as warranted by technological progress and the launching of new channels to use works, as well as the protection of the author's prerogative to manage the works he owns. However, as we explain below, this position raises fundamental and practical difficulties and thus cannot be adopted in the format in which it was presented.

 

69.       It should be stated that the question of excluding "new media" should first be considered in light of the two perspectives that fashion the discussion as a whole – that of copyright law and that of antitrust law. However, in this context, it is important to bear in mind another point of view which relates to the interface between law and technology and focuses on the adaptation of the legal framework to technological developments as well as its implications to future technological development, for better or worse (see and compare: Dotan Oliar, The Copyright-Innovation Trade-Off: Property Rules, Liability Rules and Intentional Infliction of Harm, 64 Stan. L. Rev. 951 (2012)).

 

70.       At the outset, we should consider the fact that the ability to exclude "new media" that EMI Israel seeks to adopt relies primarily on a technological distinction between "old" and "new" communication platforms. This distinction is replete with difficulties. The world of communications is characterized by constant, rapid technological development. More importantly, the technological aspect of this area is characterized by a phenomenon sometimes called "technology collapse": with the development of technology the walls that separate various media platforms gradually collapse and different types of technology "collapse" into each other, creating new interfaces. Thus, for example, a movie that is distributed through the Internet is also available for viewing on a smartphone, while traditional radio stations also broadcast songs and programs by streaming technology over the Internet. Given this technological reality, the distinction between "old media" and "new media" is not dichotomous, nor is it permanent or stable. In fact, EMI Israel and Anana did not even explain how these categories should be defined in their view, and settled for giving clear-cut examples (such as using a song as a ringtone), which were insufficient to delineate the boundaries of the distinction. Their case therefore left many practical questions unanswered. For example, no explanation was given as to whether the transmission of television broadcasts through the Internet to be viewed on smartphones would, according to the proposed approach, require a license for "new media" or "old media" or in any event how would this example be classified to one category or the other. The rapid, constant development of new communication technology guarantees that questions of this type will not remain theoretical. In this context, we should note the interesting case of the American company MobiTV, which at the beginning of the 21st century developed technology that enabled receiving satellite or cable broadcasts and viewing them on mobile phones. A dispute (which gave rise to several legal proceedings) arose between MobiTV and ASCAP, one of the two largest collective management corporations in the U.S. The dispute concerned the purchase of a blanket license necessary to legitimate the transmissions, as a result, among other things, of MobiTV's objection to being charged a "new media" rate even though the content it offered its customers was the same as broadcast by traditional means (although ultimately the judgment did not rule on this question directly. See: United States v. ASCAP, 712 F. Supp. 2d 206 (SDNY 2010)). With regard to the controversy relating to the classification of MobiTV's services as "new media," see also its preliminary response in the legal proceeding it initiated (Applicant Mobitv, Inc's Pre-Trial Memorandum at 25, United States v. ASCAP, 712 F. Supp. 2d 206 (SDNY 2010)).

 

71.       Insofar as the distinction between "new media" and "old media" is intended to extend to situations in which the content of radio and television programs is transmitted through the Internet to computer screens or by cellular phone services to mobile phone screens, adopting this distinction is likely to have a "chilling effect" on the use of the works in "old media" too. This is because users would presumably refrain in advance from integrating excluded works in productions intended for "old media," if only given their concern of future marketing constraints in "new media." Thus, for example, when a television program is produced, certain songs might not be included in it – as a cautionary measure – so as not to impair the possibility of broadcasting the program over the Internet too. Such indirect implications are not always clear "in real time" to an author who wishes to exclude his work, but recognizing them might also be weighed against the distinction proposed by EMI Israel and Anana.

 

72.       Another aspect to be considered is the likely implications of the exclusion mechanism on cyberspace users. In their arguments before us EMI Israel and Anana concentrated on institutional and corporate users, such as large communications companies, thereby presenting only a partial perspective on the matter in dispute. However, the exclusion mechanism they sought to adopt is not intended to apply only to such users. In fact, a sweeping exclusion of "new media" uses is likely to lead, without distinction, to difficulties for small website operators, including, for example, Internet radio operators, for which the ability to contract with collective management corporations constitutes a lawful, practical way for making regular use of a wide variety of works (and indeed some believe that the activity of collective management corporations is of especial importance for authorized use of musical works over the Internet. See, for example: Daniel Gervais, The Landscape of Collective Management Schemes 34 COLUM. J. L. & ARTS 591, 601 (2011) (hereinafter "Gervais, Landscape"). For a discussion of the importance of collectively managing works in a digital environment, see also: Recommendation 2005/737/EC on collective cross-border management of copyright and related right for legitimate online music services [2005] OJ L276/54 (hereinafter "the 2005 EC recommendation"); Proposal for a Directive of the European Parliament and of the Council on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market (July 11, 2012) (hereinafter "the 2012 proposed directive"). See also Copinger, pp 1816-1826).

 

73.       The effects of the requirement to distinguish the use of new technologies on making works accessible to the public should also be considered in view of past experience in similar contexts. Thus, for example, in New York Times Co. v. Tasini 533 US 483 (2001) (hereinafter "Tasini"), the US Supreme Court considered whether a newspaper (the New York Times) could upload articles by freelance writes to a computer database. After lengthy litigation, the US Supreme Court accepted the position of the writers who argued that the license previously given to the newspaper was merely for the purpose of printed publication, as opposed to electronic media. Following the judgment the newspaper had to acquire permission from the writers to publish their articles in the database. Yet, since the newspaper believed that taking such action would not be financially viable, the result in practice was the removal of the articles from the database, thereby denying public access to them. We do not need to go into the merits of the judicial ruling in Tasini insofar as it relates to the understandings between the newspaper and its writers at the relevant times. In fact, the ruling in Tasini is not directly relevant to the technological aspects of the publication format and is instead focused on whether uploading the articles to a general computerized database (of numerous articles from various newspapers and journals) could be construed as a newspaper publication (indeed, in another case of similar circumstances the Supreme Court of Canada held that a newspaper could copy articles published in its printed edition to digital CDs containing articles of that newspaper alone. See: Robertson v. Thomson Corp. 2006 SCC 43 (2006)). Nevertheless, the results of this case embody an important lesson. Taking the broader view it teaches us that an arrangement that does not take into account the dynamic nature of uses might prove to burden and damage the public interest. Taking a forward-looking view, it appears that experience teaches us that it is difficult to base licenses for use on a distinction between technologies as this might subsequently frustrate broad access to cultural assets (see also: Francesco Parisi & Catherine Sevcenko, Lessons from the Anticommons: The Economics of New York Times Co. v. Tasini, 90 Ky. L. J. 295 (2001-2002)).

 

74.       What is the experience of other legal systems regarding the exclusion of "new media"? On the face of it, this is an important question, considering the fact that the challenges of technology in the area of copyright are by no means unique to Israel. However, for the reasons detailed below, the benefit of a comparative study has proven limited at the present stage of developments in the area.

 

75.       Truth be told, reference to legal developments in Europe and the U.S. shows that the exclusion of "new media" is often recognized as possible. Presumably, this reinforces the position of EMI Israel and Anana. However, studying matters in depth indicates that this experience has limited application to the case before us, because, among other reasons, the issue under consideration here is still in the early stages of formulation, trial, and controversy in other systems too.

 

76.       The two major collective management corporations in the U.S. – BMI and ASCAP – recently permitted two of their members (including global EMI) to exclude the rights owned by them from collective management for the purpose of certain aspects of the works' use in "new media" (as detailed on their websites – http://www.bmi.com and http://www.ascap.com). Yet, it is important to note that the ability to do so is embodied in the decisions of the corporations themselves rather than the result of external regulation. Moreover, the American rights management corporations operate in a different way than ACUM in the sense that they manage only one type of rights – public performance rights, which concern the permission to perform the work in public, to broadcast it, or to make it available to the public (but not the permission to copy the works or integrate them in audiovisual productions). That is, the starting point for the exclusion is a market of rights that is more "split" than the market in which users and authors operate in Israel. This background is likely to influence the factors relating to the desirable exclusion mechanism. Subsequently, it should be noted that reference to the exclusion of "new media" from administration by collective management corporations in the U.S. is not made in "all or nothing" terms, and in fact includes certain restrictions. For example, BMI's most up to date announcement on the matter (as published on its website) has clarified that the ability to exclude "new media" is aimed at cases where the work's use necessitates more than one type of license, while ASCAP has emphasized in addition that exclusion is possible with regard to making works accessible to the public exclusively through "new media," and does not apply to users that are broadcasters. Finally, and this is a major point, it cannot be ignored that some of the decisions on these matters are very recent (for example, BMI's announcement, of February 11, 2013, was published long after the litigation between the parties before the Tribunal had ended). It is therefore difficult to draw inferences from other legal systems' sustainable experience in this area. In fact, it can be said that at this stage the secondary effects of the "shock waves" that the new reforms have created for users have not yet been fully clarified, although the existence of such "shock waves" is already apparent. For example, we may point to a new development – lawsuits brought by users against management corporations to reduce the fee charged for a "blanket license," since "the blanket" no longer covers "new media" too (for instance, the claim brought against ASCAP by a large Internet radio company called Pandora at the end of 2012, which is still pending. For reports in the media about the case, see, for example: Don Jeffrey, Pandora Media Sues ASCAP Seeking Lower Songwriter Fees (November 6, 2012, available at http://www.bloomberg.com/news/2012-11-05/pandora-media-sues-ascap-seekin... Ed Christman, Pandora Files Motion to Keep Low Publishing Rates (June 20, 2013) available at http://www.billboard.com/ biz/articles/news/digital-and-mobile/1567890/pandora-files-motion-to-keep-low-publi-shing-rates).

 

77.       In principle, European law permits a rights owner to join a collective management corporation even when he seeks to reserve the use of the rights on the Internet or through CDs (see: Commission Decision of August 6, 2002 in case COMP/C2/37.219 Banghalter/Homem Christo (Daft Punk) v. SACEM. See also: section 5(3) of the 2005 Commission recommendation and the 2012 proposed directive, mentioned above). Nevertheless, it is important to bear in mind that this arrangement is also the result of factors irrelevant to Israeli reality, primarily the desire to reach a standard, coordinated pan-European regulation where there are multiple collective management corporations.

 

78.       Another factor that should be mentioned parenthetically involves the broader context in which the exclusion mechanism is embodied, with regard to the acceptance of the Conditions towards authors' freedom of action and freedom of choice. In this context, for example, it is significant that the Permanent Conditions ensure the right of each of ACUM’s members to contract with users individually and to offer them individual licenses to use certain works alongside the management of those works by ACUM, without excluding them from its repertoire (section 2.4 of the Permanent Conditions). This is similar to the U.S. practice and different from the norm in Europe, where most collective management corporations require exclusivity from their members in respect of all rights in their work (see: Gervais, Landscape, p 598). Indeed, it is possible that this course of action will not be frequently used and it is likely to be significant mainly from the perspective of users who do not require blanket licenses but rather individual licenses for certain works. However, from a more general perspective, this mechanism creates something of a balancing effect on ACUM's coercive power (see also and compare: Parisi & Deporter, pp 170-172).

 

79.       More generally, it can be said that EMI Israel and Anana’s requirement to allow a sweeping exclusion of "new media" uses was based on the assumption that they are entitled to enjoy the fruits of the cartel while realizing the financial potential embodied in the works they manage to its fullest. That is a mistake. Indeed, once ACUM's activity was recognized as a cartel, which raises concern of abuse of monopolistic power against the public, it can no longer be said that ACUM members are entitled to fully exercise their proprietary rights while enjoying the benefits of the cartel. Although the cartel has been approved, its approval was made subject to conditions. Those conditions bear a price that ACUM and its member authors must pay in order to balance the excess benefits such membership confers and to ensure that the public is protected against the concerns involved in the cartel's activity. In fact, what we have previously stated regarding the exclusion of a work without the consent of all joint authors is also appropriate with regard to the issue of segmentation – the adoption of a segmentation mechanism that enables the exclusion of works based on a technological distinction between new and old media, without reservation, might reduce the benefit that ACUM’s activity yields for the public to such extent that may undermine the justification of its approval as a cartel.

 

80.       We can therefore sum up and say that even if the ability to exclude "new media" uses should not be outright dismissed, EMI Israel and Anana have at present failed to lay a substantial foundation for the considerations and details of the exclusion mechanism they wish to adopt, regarding, inter alia, the ability of such a mechanism to provide an answer to the concerns indicated above. For that reason, we cannot accept their position. We should parenthetically emphasize that we have not ignored the possibility that the ability of an author to manage his works independently in the realm of "new media" might prove to be significant for some authors, including "small" or independent ones. The Internet is a flexible technological platform that is far more accessible to private agents than traditional media. It allows direct, convenient, and relatively easy communication between the rights owner and the individual user and thereby yields more direct patterns of consumption, sometimes dramatically reducing transaction costs and thus enabling "small" authors to profit from their works without the assistance of collective management mechanisms (see: Casey Rae-Hunter, Better Mousetraps: Licensing, Access and Innovation in the New Music Marketplace, Journal of Business & Technology Law 7(1) 35, 39 (2012)). However, this is merely one of many considerations and it has not been argued before us. Thus, for example, in contrast, the ability to exclude "new media" might actually be damaging to small authors in particular given the "dilution" it would generate in the value of blanket licenses. Consequently, as a general rule and as already mentioned, the question of "new media" should be revisited comprehensively as part of the cartel's re-approval at the end of the five-year period allotted to it. This is based on the understanding that one cannot rule out in advance the possibility that a delineated and limited format of "new media" exclusion (insofar as such a format is proposed in the future) might enable interested authors greater independence in the management of their works, without impairing the interests of the public at large, to an extent that will undermine the reasons underlying the cartel's approval.

 

81.       In other words, the precise definition of the "exclusion category" sought in respect of "new media" is likely to have a decisive impact on whether the overall exclusion mechanism yields a balanced result. An important, albeit not the only, aspect of this definition relates to the phenomena of "technology collapse" and "content leakage" that we have already considered. As previously mentioned, a sweeping, generalized definition of "new media" regarding the exclusion ability would yield uncertainty in respect of the scope of the excluded uses, might lead to many users being charged double fees (not only by ACUM but also by authors themselves), and would create a "chilling effect" from the users’ perspective, as they might refrain from including an excluded work in productions intended for "old media" based on their concern that new media marketing will be limited in future. In contrast, a narrower definition of excludable uses, particularly a definition that focuses on uses designated for new media (for example the production of a ringtone based on an existing tune) would help reduce the awkwardness that numerous exclusion possibilities yield, moderate the negative effects of "content leakage" between different technological platforms from the users’ perspective, and reduce the damage caused to their financial interests. In this context, we may add that part of the negative experience accumulated from the operation of the broad exclusion mechanism (in the scope of the Provisional Conditions for ACUM’s activity before their 2009 amendment) resulted from the fact that it granted complete flexibility with regard to the exclusion format and did not consider the significance of the term "new media" nor did it regulate the boundaries of the exclusion options related to it.

 

82.       To complete the picture it should be noted that the issue of excluding rights in "new media" from collective management as part of a cartel's approval in Israel has not arisen for the first time in ACUM’s case. As already mentioned, the Tribunal had authorized in the past the activity of two other collective management corporations that were also considered a cartel – PIL and IFPI. In both cases the conditions for the approval regulate the corporation members’ ability to exclude rights from collective management in accordance with a predetermined "exclusion basket," and include several categories concerning various Internet and mobile phone uses (see: section 3.3 of the conditions for the operation of IFPI and section 2.2 of the conditions for the operation of PIL). Recognition of this is prima facie relevant to the discussion. However, we should consider the fact that both those entities deal with the management of producers rights (the owners of sound recordings), an area which is not identical to the area in which ACUM operates (management of composers, songwriters, and arrangers rights). We expected the parties before us to refer to this comparison – one way or the other – but they failed to do so. Each of them clung to the position of "all or nothing" and sided, respectively, either with a complete exclusion of "new media" or an absolute negation of the ability to exclude new media uses. Thus, the option of excluding "new media" and the conditions for it were not fully addressed.

 

83.       What emerges from all the aforementioned is this: reviewing the implications of excluding "new media" shows that it is not necessarily justified to completely negate the option to exclude works for the purposes of "new media." Nevertheless, there are clear indications that this applies only to a limited exclusion mechanism, which concentrates on certain types of "new media" uses and strives to minimize the harm caused to users. Such an exclusion mechanism cannot be based merely on a technological distinction between "old media" and "new media" which allows a sweeping exclusion of all uses of the latter type – as proposed by EMI Israel and Anana. In any event, examining the possibility of another exclusion category concerning "new media" and fashioning the boundaries of that category should be done with care after studying the positions of all interested parties and all the relevant facts. As aforesaid, this matter is for the Tribunal to consider when the extension of the cartel's approval arises. Our position is also supported by the temporary nature of the approval – for only five years. At the end of that period (two years of which have already passed), the Tribunal will revisit the approval of the cartel, at which time it can also reconsider the scope of the exclusion mechanism's "segmentation," on the basis of five years’ experience with the operation of a "narrow" exclusion mechanism. That experience will join with lessons already learned from the operation of an unlimited exclusion mechanism (as part of the Provisional Conditions) and will help the Tribunal evaluate the possibility of adopting a balanced, intermediate alternative that will permit the exclusion of limited uses for the purposes of "new media," without undermining ACUM’s purpose as a collective management corporation. Presumably, by the time the Tribunal considers the extension of the cartel's approval, international experience on this issue will also be established which will enrich the set of facts before the Tribunal.

 

84.       To sum up, our opinion is that the conditions for the permanent approval should be left as they are for the time being, including the issue of excluding works for the purposes of "new media," based on the assumption that the Tribunal will be able to revisit this issue when the current conditions expire. It should be emphasized that this does not express any substantive holding regarding the result to which the Tribunal should reach on this or any other issue, beyond the general statement that the possibility of permitting a limited, well-defined exclusion of "new media" uses should not be ruled out. On the basis of the up-to-date facts laid out before it, the Tribunal will presumably reach a correct decision regarding the proper and most effective way to do so, insofar as it deems fit to follow such path.

 

Conclusion

 

85.       The appeals before us revolved around ACUM’s activity, yet they necessitated a broad discussion with regard to the collective management of copyright, considering not only the complexity of jointly owned works that derive from the talents of several authors but also the complexity of the variety of uses in a constantly changing technological world. At the present time we have reached the overall view that according to the facts before us we should not intervene in the conditions attached to the cartel's approval – from the perspective of balancing the proprietary rights of all authors against the public interest of accessibility to works that are part of the general cultural repertoire and it is therefore important to avoid placing substantial barriers to their use. We have not ruled out the possibility that in future the proper balance between authors’ rights and the public interest might dictate a different result with respect to integrating the distinction between different types of "new media" and "old media" in the rights exclusion mechanism. To a great extent, this issue represents the challenge of collectively managing rights in the modern era with its changing technological and business environment, where the practice of collective management is more essential than ever but also raises more serious difficulties and complexities than ever. The answer to these challenges (both with regard to "the segmentation mechanism" and with regard to other matters discussed before us) lies in a delicate, changing balance between the relevant interests. As we have mentioned, this balance might be affected by changes in technological platforms and business practices, by studying new information, and by lessons derived from ACUM’s activity in Israel and the operation of collective management corporations worldwide.

 

86.       In conclusion, I would suggest to my fellow justices to dismiss both appeals. ACUM would bear the Director-General's costs in the amount of NIS 20,000. EMI Israel would bear the Director-General's costs in the amount of NIS 40,000 and Partner's costs in the amount of NIS 10,000.

Justice Z. Zylbertal

 

I concur.

 

Justice E. Rubinstein

 

A.        I concur with the comprehensive opinion of my colleague, Justice Barak-Erez.

 

B.        Without wishing to gild the lily, I would like to add brief remarks. We are dealing with ACUM, a special entity established in 1936, during the British Mandate, to protect the rights of authors and artists in their intellectual property and it is as though it has always been a fundamental Israeli institution. Indeed, perhaps if we could start over today it would have been possible to think of other ways of organization for this purpose, not necessarily a private company, but such is the situation we are facing, in which we are called upon to have our say. However, even given the current situation, the challenges of dealing with the rights of those in need of ACUM’s services are ever-changing, especially with the dynamic technology, and it is not without reason that my colleague qualified the second part of her opinion with regard to the exclusion mechanism, by looking to the future.

 

C.        With regard to public directors, the Tribunal was indeed right in its decision. In my opinion, the more the better, provided that these directors do their work faithfully as agents of the public and it is to be hoped that this is the norm, in which case the financial expense involved is justified. Regarding their duties, see Prof. J. Gross, Directors and Officers in the Era of Corporate Governance (Second Edition, 2011) Chapter I, p 1 et seq and the references there; and see also Amendment No. 8 to the Companies Law (2008) with regard to the possibility of appointing independent directors; I. Bahat, Companies, 12th edition, 5771-2011, 386. My colleague described in detail the circumstances of this case but also added notes drawn from general public law, namely when a particular entity appears to be hybrid, and as derived from this analysis – the fact that ACUM is similar to that model in view of its duties to the public, without deeming it necessary to rule that it is indeed a hybrid entity. I myself would tend to say that we are indeed dealing with a hybrid entity, whether we take a relatively narrow view of it, through the eyes of its direct beneficiaries, or a broader view of the general population of users; see also my comments in ALAA 1106/04 Haifa Local Planning and Building Committee v. The Electric Corporation (2006), paras. C and D.

 

D.        The author A. Harel in his work Hybrid Entities – Private Entities in Administrative Law (5768) enumerates (pp 118-125) criteria for analyzing the hybrid nature of an entity, including a vital public function, providing a service to the public, not-for-profit activity, a monopoly, the concentration of great power that might be abused, and functional public funding. When dealing with a monopoly, as in the case before us, although ACUM is incorporated as a private company, it is painted in bold colors of hybridity, in particular considering the narrow choice given to individuals (ibid, 115). Indeed, in a rapidly changing world of varied technological possibilities for using works, the interest of authors and artists, as well as the general public, is one of fairness towards everyone; see also D. Barak-Erez, Citizen, Subject, Consumer and Government in a Changing Country (2012), 119, 121, who characterizes an entity as hybrid, when, inter alia, it serves as an actual substitute for government involvement. In the case before us, as implied above, the matter could have presumably been dealt with through a regulatory framework and this component justifies, in my view, a thorough discussion of the issue of public representatives. Indeed, before us is a private company, yet this is merely its framework and shell while its content is significantly broader; even the name attests to its belonging to the public realm – the Association of Composers, Authors and Publishers. ACUM's articles of association (as last approved on July 21, 2013 according to its website) include external directors and the controversy consists merely of their number. According to its website, ACUM presently has approximately 7,500 author members; don’t they deserve extensive protection against a potential clash of interests between various groups within the company?

 

E.         Now a few words on the role of external directors, which is the current legal term, or public directors; as we know, the Companies Law, 5759-1999 refers to an external director (article five, sections 239 et seq) but the literature uses this expression interchangeably with public director, as it was termed in the Companies Ordinance (section 96(b)(c)). Indeed, according to the learned author J. Gross (Directors and Officers in the Era of Corporate Governance (2011) 92), the external director "does not represent the regulator or the general public. He owes a fiduciary duty to the company and to it alone and he only has to bear the interest of the company in mind"; and see also Dr. O. Haviv-Segal, Company Law (2007) 438. However, even if this narrow definition is correct in principle, without going into a comprehensive discussion, the current case involves a special instance of a "private-non-private" company, which does not strive to maximize its profits. In this context, see by analogy the statement by Haviv-Segal, ibid, about the external director’s function in restraining "opportunistic behavior" by a controlling shareholder or management: "in this respect the external director can be regarded as the representative of the public shareholders on the company's board of directors." We should also mention (Gross, p 93) that the external director "brings with him knowledge, experience, and objective judgment and might balance the various views within the company, especially when the board of directors is made up of several cohesive groups"; he is "removed from the shareholders' personal interests… can express objective opinions in cases where differences have arisen between various groups in the company and balance the different interests in the company…". By analogy, this statement is presumably consistent with the present case, despite ACUM's "private" corporate framework. Therefore, the external directors have a particularly important role from the broad, overall perspective of the interests of ACUM's members generally as well as the public at large; see also Hadara Bar-Mor, Corporate Law III (5769-2009) 307-309. Thus, we should not intervene in the ruling of the Tribunal on this matter.

 

Regarding my colleague's remarks concerning the rights exclusion mechanism and old and new media, what can be inferred from them is a lesson in complexity and arbiter humility. We are dealing with money and maximizing authors’ benefit but the question is whether the baby won’t be thrown out with the bathwater. My colleague pointed out the difficulties and her conclusion is that more experience and study is necessary in order to reach a proper balance (see para. 82). My sense is that this appears difficult and challenging; the technological means are constantly changing before our very eyes, along with their implications to the issue before us, and hence solutions are likely to be short-lived. The regulator, the Director-General of the Antitrust Authority, has an extremely important role in this respect since the Tribunal has only what its eyes can see, while the Director-General is equipped with available monitoring tools. Finally, this summer I have had the opportunity to serve as a "secondary partner" in three intellectual property decisions. Their common denominator is the complexity caused by time, complexity of different types, technological and economic. Studying the fascinating collection Copyright – Readings in Copyright Law (M. Birnhack & G. Pesach, 5769-2009) reveals a variety of insights that will concern us a great deal in the future. Apart from the need to plough through the specific material, the constant changes, perhaps more than in any other area of civil law, also place the courts, and equally so – the regulatory entities, under weighty responsibility. The tension between property and competition, and between the long, short and medium term, poses real challenges. The professionalism of the regulators – be it the Patent Office or, as aforesaid, the Director-General of the Antitrust Authority – helps courts in making their rulings but does not relieve them of their responsibility. In these matters comparative law may also be useful. The bottom line is that this judgment ought to be a starting point for lessons to be learned; over, but not done.

 

Held as per the opinion of Justice D. Barak-Erez

 

September 3, 2013 (Elul 28, 5773)