Internet Companies: Beware of Mandatory Israeli Court Jurisdiction
Recently, the Israeli Attorney General, in a legal opinion filed with the Israeli Supreme Court as part of an appeal filed by Facebook, opined that foreign companies (specifically those that do business via the internet) may not escape Israeli court jurisdiction even if the terms and conditions posted on their website state otherwise.
The appeal was filed by Facebook against a decision of a District Court in a class action initiated against Facebook, which is focused on privacy issues. Facebook argued that the Court should not allow the plaintiff to litigate in Israel, because the terms and conditions of Facebook, to which the plaintiff agreed, state that any legal dispute between Facebook and the members of the social network has to be litigated in California courts in accordance with Californian law.
However, the District Court ruled that, contrary to the legal claim of Facebook, the plaintiff can lodge the class action in Israel. The District Court noted that the court jurisdiction provision is aimed to deter the Israeli plaintiff from exercising his / her legal rights and as such, this provision, being part of a uniform contract, is null and void. In reaching its conclusion, the District Court noted the facts that Facebook provides its services to millions of Israelis and operates a Hebrew interface.
Facebook lodged an appeal with the Israeli Supreme Court against this decision, following which the Supreme Court asked the Attorney General to file his opinion on this matter
The Attorney General’s conclusion is that this provision of the terms and conditions of Facebook does not bind Israelis that use Facebook. Several reasons were provided by the Attorney General for this conclusion, including, inter alia, the following:
- This provision is aimed to deter Israelis from exercising their rights, due to various factors such as the cost of hiring a foreign lawyer and travel abroad;
- The Israeli members of the social network are at a clear and substantial disadvantage vis-à-vis Facebook when agreeing to the social network’s terms and conditions;
- Any foreign company that decides to allow Israelis to use its products and services and invests in marketing in an effort to increase its revenues should be prepared to allow its customers to exercise their right to litigate in Israel; this should not be construed as an excessive burden, as the foreign company can assess the relevant legal risks and price its products and services accordingly;
- Facebook has greater access to Israeli courts compared to the access of its Israeli members to Californian courts
The Attorney General also noted the facts that Facebook has 4 million Israeli members, operates a Hebrew interface and support services in Hebrew and that it translated its terms and conditions to Hebrew – all suggesting that Facebook is doing business in Israel.
Naturally, should the Israeli Supreme Court decide to adopt the legal opinion of the Attorney General and reject the appeal of Facebook, one has to acknowledge the significant effect on the activities of all businesses that provide products and services to Israelis through the internet; such businesses will most likely be bound to litigate in Israeli courts according to Israeli law if their Israeli customers take legal action against them, regardless of provisions to the contrary in their terms and conditions.