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Israel: Restrictions on Fees for Handling Holocaust Survivors’ Claims Constitutional

(July 22, 2015) On July 9, 2015, Israel’s Supreme Court, in a unanimous decision, rejected a petition filed by attorneys and public organizations arguing that the introduction of mandatory ceilings on and retroactive reimbursement of excess fees paid in connection with the Victims of Nazi Persecution (Amendment No. 20) Law 5775-2014 violated their basic rights to property, freedom of contracts, freedom of occupation, and personal autonomy under the Basic Law: Human Dignity and Liberty and the Basic Law: Freedom of Occupation. (HCJ 687/15 David Yadid v. the Knesset (July 9, 2015), STATE OF ISRAEL: THE JUDICIAL AUTHORITY (in Hebrew); Victims of Nazi Persecution (Amendment No. 20) Law 5775-2014, SEFER HAHUKIM [BOOK OF LAWS, Israel’s official gazette], No. 2487 p. 140, The Knesset website (in Hebrew); Basic Law: Human Dignity and Liberty, The Knesset website; Basic Law: Freedom of Occupation (1994), The Knesset website.)

According to Justice Noam Sohlberg, by limiting the imposition of and requiring reimbursement of excessive fees paid by holocaust survivors for the handling of their claims for state-funded compensation, the Amendment Law indeed harmed the petitioners’ rights. However, he stated, the harm caused to the petitioners’ right to freedom of occupation was limited in scope in that it did not prohibit the petitioners from engaging in their occupation but rather affected the way they practiced it. Similarly, Sohlberg concluded, the harm to their right to freedom of contracts was limited in scope, first, because limitations on the right to charge fees had already been previously established and the Amendment Law only increased them and, second, because it could not be said that “the right to charge an ‘exorbitant’ fee is an essential part of the freedom of contracts.” (HCJ 687/15 David Yadid v. the Knesset, ¶ 27.)

Compared with the indirect and limited harm to freedom of contracts and of occupation resulting from the introduction of further ceilings on handling fees, in Sohlberg’s opinion, the harm to the petitioners’ right to property that results from the requirement to reimburse clients for fees that have already been paid substantially affects the essence of the basic right to property itself. (Id. ¶ 28.)

Determining that the Amendment Law would not achieve its goal of improving the well-being of holocaust survivors if all those who have already signed fee agreements, namely, the majority of survivors, would be excluded from application, Sohlberg concluded, however, that the harm caused to the property right of the petitioners did not constitute a prohibited violation under conditions enumerated in the limitation clauses under either the Basic Law: Human Dignity and Liberty or the Basic Law: Freedom of Occupation. He concluded that the harm caused to the petitioners was based on a law (i.e., the Amendment Law) that befitted the values of the state, was done for the proper cause of preventing holocaust survivors from being overcharged for obtaining assistance provided to them by law, and was proportional in that it did not exceed the harm caused to the petitioners’ right to property. (Id. ¶¶ 32-50.)