I INTRODUCTION

Israel's geopolitical situation makes air transportation a vital factor in maintaining its connections with the rest of the world.

The Israeli aviation sector has undergone major changes in recent years. The first of these was the enactment of the Aviation Services Law (Compensation and Assistance for Flight Cancellation or Change of Conditions) 2012 (ASL), establishing passenger rights, similar to those under Regulation (EC) No. 261/2004, to compensation and other benefits in the case of flight delays or cancellations and denial of boarding (as a result of overbooking, etc.).

Another major change was the liberalisation of Israel's policy on bilateral and multilateral air services agreements and the resulting signature of the EU–Israel Open Skies Agreement in 2012.2 This change in policy has resulted in a significant increase in the operations of foreign airlines (including low-cost airlines) and the frequency of flights to and from Israel, as well as a decrease in air fares. Thus, for example, international passenger traffic passing through Israel's main international airport, Ben Gurion Airport (BGA), increased by more than 90 per cent between 2012 (12.4 million) and 2019 (24.036 million).3 This number was expected to grow further during the past year, taking into account the opening in January 2019 of Ramon Airport, a new international airport located in the south of Israel close to the town of Eilat, but in view of the current covid-19 pandemic, it is unlikely to happen, at least this year.

The Israeli Ministry of Transportation (MOT) has primary responsibility for regulation of the aviation sector. In 2005, the MOT established Israel's Civil Aviation Authority (CAAI) to oversee, regulate and supervise all aviation-related matters, including the issue of aviation licences and permits. The body responsible for airports is the Israel Airports Authority. The Aviation Security Operation Centre (ASOC) in the Security Department of the MOT oversees aviation security. Aviation security is a priority in Israel in the light of constant terrorist threats. Operating permits will not be granted unless ASOC has received and approved written confirmation of compliance with ASOC's security requirements from the relevant foreign airports and airlines.

Allocation of slots at BGA is carried out in accordance with the Aeronautical Information Publication (AIP), which gives priority to scheduled flights and to maintenance of existing allocations.4

II LEGAL FRAMEWORK FOR LIABILITY

i International carriage

Israel is party to several international aviation-related conventions governing the liability of air carriers in international carriage, including the Warsaw Convention 1929, the Guadalajara Convention 1961, the Montreal Convention 1999 and their respective protocols. These conventions have been given effect in Israeli domestic law by the Air Transport Law 1980 (ATL). Section 3B of the ATL provides that where both the Montreal Convention and another of the conventions adopted by the ATL apply, the Montreal Convention will govern.

Section 10 of the ATL provides that the liability for damage, including liability for the death of a passenger, of a carrier under the ATL (i.e., the liability of a carrier under a convention made applicable in Israel by the ATL), substitutes the liability of the carrier under any other Israeli law. The Israeli Supreme Court has implemented this rule ('the exclusivity of grounds of action rule' or 'the pre-emption of claims rule'), holding that where a claim is governed by the ATL, a passenger will not be able to rely on other provisions of domestic law.5

Israel is also party to the Chicago Convention on International Civil Aviation 1944, adopted into domestic law by the Air Navigation Law 2011 (ANL), and to the Tokyo Convention 1944 on offences and certain other acts committed on board aircraft given domestic effect by the Air Navigation Regulations (Offences and Jurisdiction) 1971.

ii Internal and other non-convention carriage

The ATL provides that the Montreal Convention shall apply, mutatis mutandis, to internal flights within Israel.6 The Aviation Services Regulations (Compensation and Assistance for Flight Cancellation or Change of Conditions) (Internal Flights) 2013 (enacted under the ASL), provide (in modifying the rule under the ASL applying to international flights) that a flight delay of three hours or more in an internal flight shall be treated as cancellation of the flight and vest passengers with the right to compensation accordingly.7

Under Section 338(a)(2) of the Penal Law 1977, the reckless or negligent operation of an aircraft, in a way that could endanger human life or result in injury, is a criminal offence punishable by a prison sentence of up to three years.

iii General aviation regulation

Civil aviation operations (including the operation of helicopters and gliders) are governed by the ANL and the regulations enacted thereunder. The ANL regulates the identification and registration of aircraft, licensing and training of personnel, airworthiness of aircraft, general operating and flight rules, commercial air services and air navigation services.

iv Passenger rights

Passenger rights are regulated pursuant to the ATL by the Montreal Convention (or other applicable convention) and the ASL. The ASL is a pro-consumer act of legislation that regulates passengers' rights and carriers' duties, including those relating to payment of compensation (without the need to prove damages) in the case of flight delays, cancellations, denial of boarding and downgrading.8 The ASL also provides that in cases of flight delays of two hours or more and flight cancellations, the carrier is obliged to provide passengers with ground assistance, including communications services, food and beverages and, in some cases, hotel accommodation.

Although very similar to Regulation (EC) No. 261/2004, the ASL includes a number of innovations, such as the determination that a delay of eight hours or more is considered a flight cancellation, the authority granted to the court to impose exemplary damages on the carrier in case of non-compliance with the ASL and the obligation of a flight operator to station representatives for provision of assistance to passengers in the exercise of their rights under the ASL at every airport from which the operator commences flights to and from Israel (including flights to Israel with stopovers and serving passengers holding a return ticket to and from Israel).9

In the spirit of the pro-consumer nature of the ASL, the Israeli courts have given a narrow interpretation to the provision in the ASL exempting the carrier from the obligation to compensate passengers in cases of cancellation of flights where the cancellation was caused by 'special circumstances' beyond the carrier's control and which could not have been prevented even if the carrier had done everything in its power to do so, so that, in general, technical malfunctions in an aircraft will not constitute such circumstances, unless the malfunction is proved to be rare and not to have been preventable by performance of proper maintenance. A judicial decision, reflecting the same approach, in which the court holds that in order for an airline to avoid payment of compensation for cancellation of a flight and, in particular, in order for it to prove that it has done everything within its power to prevent such cancellation, it may be necessary for the airline to prove that it was not able to lease an alternative aircraft or to purchase tickets for its passengers on the flight of another airline, has been issued recently.10

It should be noted, however, that due to the covid-19 outbreak, on 23 April 2020 the Israeli government approved a proposal to amend the ASL temporarily and enact the Aviation Services Law (Compensation and Assistance for Flight Cancellation or Change of Conditions) (Temporary Order – the New Coronavirus), 2020 (the CV Temporary Order).11 According to the explanatory notes published in conjunction with the proposed amendment, the CV Temporary Order is directed to modifying the internal balance in the ASL between the interests of consumers and airlines, in light of the unprecedented financial distress caused by the covid-19 crisis to airlines, many of which are on the verge of bankruptcy. Among the main amendments to the ASL proposed in the CV Temporary Order are a provision exempting airlines from paying passengers statutory compensation for cancellation of all flights scheduled to depart between 1 March 2020 and 31 August 2020 and a provision extending the period for refund by airlines of fares paid for cancellation of flights in the said period from the current 21 days to 90 days. At the time of writing, the proposal for amendment has been approved by the government but has not yet been adopted by the Israeli legislature. If and when adopted, the amendment will have retroactive effect, and subject to changes that may be introduced in the course of the legislation, the period to which it relates may be extended by the Minister of Transport by one month at a time up to a total of nine months.

Passengers' rights relating to the purchase and cancellation of flight tickets are regulated by the Israeli Consumer Protection Law 1981 (CPL), which, in certain circumstances, including transactions made 'at a distance' (by telephone, email, etc.), and subject to certain conditions, entitles consumers to cancel transactions without cause and to reimbursement of the price paid, minus a small cancellation fee.12

The carriage of disabled passengers is governed by the Israeli Regulations for Equal Rights for People with Disabilities (Regulation of Access to Public Transport Services), 2003 (RER). The RER lays down certain technical qualifications for the use of aircraft, including a provision that an aircraft shall not be operated for the carriage of passengers if it is not adequately adapted for the disabled.13 Section 14 provides that disabled persons have the right to a suitable escort at the terminal and at the crossing from the terminal to the aircraft; the right to have the appropriate person at the airport of destination notified regarding their expected arrival; and the right to have their wheelchair loaded in a manner enabling it to be placed at their disposal immediately upon disembarking from the aircraft, provided the carrier has received at least 48 hours prior notice of the disabled person's expected arrival.

v Other legislation

Loud noise generated on low-altitude flight routes near populated areas may constitute a nuisance to residents of those areas. With a view to reducing the extent of this nuisance, the Israeli Ministry of Environmental Protection, in conjunction with the Israel Airports Authority, has issued rules governing the construction and planning of airports. Other measures directed to the same purpose include the imposition of night and weekend curfews and the requirement that compliance by an aircraft with the Flight Regulations (Aircraft Noise) 1977 is a condition for issue of a flight permit.

Israel has strict anti-bribery rules. It is a member of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and gave domestic effect to the Convention on 11 June 2008 by adding Section 291A to the Penal Law 1977, providing that a person giving a bribe to a foreign public official for an activity related to his or her position, in order to obtain, secure or promote business activity or other advantage in respect of business activity, shall be deemed to have committed bribery under Section 291 of the Penal Law.

For competition legislation, see Section VI.

III LICENSING OF OPERATIONS

i Licensed activities

Commercial operation of aircraft

The Licensing of Aviation Services Law 1963 (LASL) and the ANL regulate the licensing of aviation-related activities. An Israeli individual or entity will not be permitted to operate aircraft for commercial purposes without a commercial operating licence (COL) from the MOT and an air operator certificate (AOC) from the CAAI.14

Foreign individuals and entities are not eligible for an Israeli COL or AOC. In order to obtain a COL, the applicant operator must submit evidence of its financial resources, details regarding its operations, crew qualifications and experience and consumer-related details. The MOT has the power to grant, suspend and cancel the COL and determine its period of validity.

The issue of an AOC is conditional on possession of a COL and subject to proof that the applicant possesses adequate aircraft and facilities for the operations in question. A detailed list of requirements for the AOC application is set out in the Air Navigation Regulations (Operation of Aircraft and Flight Rules) 1981 (ANR).15 The CAAI will grant an AOC only if it is satisfied that the applicant is capable of performing the operations in question in a safe manner. The AOC will be valid for a period of two years and may be renewed by application filed at least 60 days prior to expiry.16

For commercial aviation operations from, to and within Israel, the operator must obtain operating permits from the CAAI (see subsection iii).

Licensing of aviation-related activities

According to the ANL, an individual shall not perform a function in connection with the operation of an aircraft, the performance of aircraft inspections or the provision of air traffic management services, without possessing a licence from the CAAI unless he or she is in possession of this licence from a competent authority in a contracting party to the Convention on International Civil Aviation 1944 (the Chicago Convention).17

Other activities that require a licence are the following:

  1. the training of aviation workers;
  2. the operation of an entity for aircraft maintenance and repair of a unit for the provision of air traffic management services and of an airport or a landing strip;
  3. the manufacture of aircraft for marketing;
  4. the transportation of dangerous goods; and
  5. training for operating, or the commercial operation of, a hang-glider, powered hang-glider, paraglider, powered paraglider, powered parachute, unmanned flying model, kite or rocket, radio models, small aeroplanes and training aeroplanes.18

The conditions for the grant of licences are set out in the ANL and the ANR. The CAAI has the authority to revoke, suspend and limit licences granted if, inter alia, one of the conditions for receiving the licence has ceased to exist or the licensee has violated any of the conditions of the licence or any of the provisions of the ANR.19

ii Ownership rules

According to the LASL, a COL will only be granted to an Israeli operator that is one of the following: (1) an individual who is a permanent resident of Israel without a principal place of business outside Israel or an Israeli citizen who has a principal place of business in Israel, or (2) a company incorporated in Israel without a principal place of business outside Israel and controlled by an Israeli citizen or a permanent resident of Israel, or by another person in accordance with the provisions of an international aviation convention to which Israel is a contracting party.20

Regarding foreign carriers, there are no explicit rules relating to nationality or citizenship, but the LASL authorises the MOT to refuse to grant an operating permit if the applicant carrier is deemed a potential danger to the security of Israel.21 For commercial flights, details of the air carrier's ownership, including the nationality of owners and their respective shares of ownership, must be provided in the application for an operating permit.22

iii Foreign carriers

Pursuant to the LASL, foreign carriers must obtain an operating permit from the CAAI for operation of passenger23 or cargo flights24 from, to or within Israel.

Commercial flights

According to the LASL and the AIP, a foreign operator wishing to fly to and from Israel must be eligible to carry out the flights under the provisions of a bilateral or multilateral agreement to which the state of the foreign operator and Israel are contracting parties.

An application for an operating permit for commercial scheduled flights must be submitted to the CAAI according to the provisions of CAAI Directive AT.1.1.400.25 The granting of the permit will be subject to the submission of commercial details relating to ownership; principal place of business, etc.; an AOC issued by an appropriate foreign authority; proof of adequate insurance coverage; confirmation of the appointment of local representatives for service of process and for communications with the Israeli aviation authorities; confirmation of valid licences and medical certificates for the crew according to the Chicago Convention; and certifications relating the registration of aircraft, airworthiness and noise. Additional documents may be required by the Security Division of the MOT for the approval of the operator with respect to security, such as annually renewed confirmations by the operator and the relevant airport that they will comply with the MOT's Security Directive, which prescribes security-related standards on subjects such as passenger and baggage checks, aircraft protection and security procedures for in-flight catering services.26

In addition, the applicant must provide a commitment in accordance with the LASL to appoint a representative for provision of assistance to passengers in the exercise of their rights under the ASL at every airport from which the operator commences flights to and from Israel (including flights to Israel with stopovers and serving passengers holding a return ticket to and from Israel),27 as well as appoint an Israeli representative authorised to act on its behalf under the LASL and constituting an address for service of court documents.28

Non-scheduled commercial flights

In order to carry out non-scheduled commercial flights, a foreign operator must apply for and be granted an operating permit according to CAAI Directive AT.1.1.402.29 The application requirements are similar to those relating to an application for an operating permit for scheduled commercial flights and also include, where applicable, the submission to the CAAI of any relevant charter agreement.

Cargo charter flights

CAAI Directive AT.1.1.402 also applies to cargo charter flights. A 'cargo charter flight' is defined as a flight where a person or a tour operator hires the entire capacity of the airplane for the sole purpose of cargo transportation.30 Additional requirements, pertaining specifically to cargo, are stipulated in AIP Israel GEN 1.4,31 which covers issues relating to customs, agricultural shipments and live animal importation. Further, as part of the approval process, and in obtaining ASOC's approval, the flights must meet the security requirements set out in Security Directive 0303-16, which apply to all commercial flights (scheduled or charter).32 The main purpose of Security Directive 0303-16 is to prevent the loading of explosives, incendiaries and other destructive substances or items onto aircraft.33

Overflight

According to the AIP, prior permission is not required for overflight of Israeli airspace or technical stops in Israel if the flight is operated by an aircraft registered in a country that is party to the International Air Services Transit Agreement or if the relevant bilateral air services agreement allows overflying the Israeli air space or making stops in Israel for non-traffic purposes. In theory, prior permission should not be required for non-scheduled flights operated by aircraft registered in a country that is party to the Chicago Convention and has diplomatic relations with Israel.34 In other cases, prior permission will need to be obtained. In practice, prior notification of all overflights should be submitted to the ASOC at least five working days prior to the date of the flight.35 In view of Israel's special geopolitical situation such flights may be made subject to the high risk security requirements set out in MOT's Security Directive and applicable to flights landing in Israel.

IV SAFETY

Israel complies with the accepted international standards in the field of safety. The Israeli safety regulations are based on the Chicago Convention, the safety rules of the International Civil Aviation Organization (ICAO) and the US Federal Aviation Regulations. Israel is a participating state in the European SAFA Programme. Furthermore, in 2016, Israel entered into a collaboration agreement with Eurocontrol, the European Organisation for the Safety of Air Navigation, which engages in airspace planning and air traffic management. The collaboration agreement provides Israel with access to aviation services, including air navigation services and control, in a way that increases its ability to prevent flight delays and manage air traffic more efficiently and safely.

i Airworthiness

The CAAI is responsible for the issue and renewal of airworthiness certificates. The grant of an operating permit by the CAAI will be subject to the submission by the carrier of an airworthiness certificate, according to standards specified in the ANL, the LASL and the Air Navigation Regulations (Procedures for Documentation of Aircraft and Aircraft Parts) 1977 and the CAAI's directives.36

ii Maintenance

The aviation maintenance requirements are regulated in the ANL, in Chapter 7 of the ANR and in the CAAI directives. The air operator is under a duty to perform routine aircraft inspection and maintenance and to repair any malfunctions detected in the aircraft, and to ensure that all staff members have the proper qualifications.37 In December 2017, in order to bring the Israeli standards in line with the European regulations, the MOT enacted the Air Navigation Regulations (Safety Management System) 2017, which deal with organisational aspects of safety management such as assignment of responsibilities, raising awareness, education and documentation duties.

iii Accident reporting

There is a duty in Israel to report to the chief investigator of the MOT and to the CAAI on the occurrence of safety-related incidents in the aviation field.38 The ANL grants the supervisor of the CAAI investigatory powers, including the authority to demand 'any information or document'.39 The CAAI maintains and operates a system for reporting investigated incidents for the purpose of improving civil aviation safety.40

V INSURANCE

The MOT regulates the insurance obligations of aircraft operators in Israel. The Air Navigation Regulations (Compulsory Insurance in the Commercial Operation of Aircraft) 2017 (ARCI), which entered into effect on 27 June 2018, are based on the European regulations on this subject. According to the ARCI, an operating permit will be granted only if the aircraft is insured.41 This insurance cover is required with respect to every aircraft that may be used in the carrier's operations, including under charter arrangements, joint ticketing arrangements or any other similar arrangement between air operators.42 The insurance must cover damage caused to passengers, baggage and third parties, as well as damage caused by terror events.43

According to the ARCI, confirmation of existing insurance must include a declaration that it complies with the requirements of the ARCI or Regulation (EC) No. 785/2004 dated 21 April 2004 (as amended in Commission Regulation (EU) No. 285/2010 on 6 April 2010) regarding the insurance obligations of air operators and air carriers.44

VI COMPETITION

Supervision of competition in Israel, including in the aviation sector, is by the Israeli Competition Authority in accordance with Israel's Economic Competition Law 1988 (ECL).45 The ECL deals with restrictive arrangements, mergers and acquisitions of companies and monopolies. Entering into a restrictive arrangement is prohibited unless the arrangement is expressly permitted by or pursuant to the ECL, by the Competition Tribunal established under the ECL or exempted by the Commissioner of the Competition Authority.

Amendment No. 10 to the ECL enacted in 2007 rescinded the exemption in that Law applying to arrangements in the field of aviation. As a result, arrangements for cooperation in marketing flight capacity became restrictive arrangements necessitating receipt of regulatory approval. Following signature of the US–Israel Open Skies Agreement in 2010 and the EU–Israel Open Skies Agreement in 2012, two block exemptions relating to aviation were enacted: (1) a block exemption for code-share arrangements between air carriers relating to destinations covered by the Open Skies Agreements;46 and (2) a block exemption relating to technical arrangements between carriers, arrangements for the lease of aircraft, frequent flyer arrangements, interline arrangements and flight capacity marketing arrangements.47

A restrictive arrangement that is not covered by the block exemptions or the additional exemptions listed in Chapter B of the ECL requires the prior approval of the Competition Tribunal; although arrangements (1) the principal purpose of which is not the reduction or elimination of competition and which do not contain restrictions not necessary for achieving their principal purpose; and (2) whose restrictions do not limit competition in a substantial portion of the market affected by the arrangement or may limit competition in a substantial portion of the said market, but will not cause significant harm to competition in the said market, are also permitted and do not require the approval of the Competition Tribunal.48

The ECL also regulates mergers and acquisitions. A merger will be subject to notification to and the approval of the Commissioner of the Competition Authority.49 A merger will not be approved if it there is a reasonable fear that it will significantly affect competition in the sector or will harm the public with regard to: (1) the level of prices of the asset or service; (2) low quality of the asset or service; (3) the quantity of the asset or the scope of services supplied; or (4) the frequency and conditions of the supply.50

The ECL provides that any person who is party to a restrictive arrangement that has not been approved or has not been exempted in accordance with the ECL or by a block exemption pursuant to the ECL or acts otherwise in contravention of the ECL will be liable to imprisonment or a fine, or both.51

In January 2020, the Central District Court in Israel certified a class action suit against four airlines (El-Al Israel Airlines, British Airways, Lufthansa and Swiss Airlines), alleging that the airlines were parties to a global cartel concerning the carriage of cargo to and from Israel between 2000 and 2006.52 According to the action, the airlines coordinated prices of several items in the cargo carriage tariff, agreed to avoid discounts and exchanged information on earnings and prices. The amount claimed in the class action is 613 million shekels. An appeal against the certification has been filed to the Supreme Court.53

Following the exposure of the existence of the alleged cartel in 2006, investigations against various airlines, including the four defendants in the class action, have been initiated around the world; criminal proceedings have been conducted, some of which have ended in convictions in accordance with plea bargains; and several civil lawsuits, most of which by way of class action, have ended in settlements.

VII WRONGFUL DEATH

Owing to the 'pre-emption of claims rule' (also known as the 'exclusivity of grounds of action rule'), which applies by virtue of Section 10 of the ATL, claims relating to the death of passengers in international carriage by air will be subject only to the provisions of the ATL and the Montreal Convention (or other conventions as applicable) adopted by the ATL. Accordingly, in the event of death of a passenger, the carrier will not be able to exclude or limit its liability for damages not exceeding 100,000 special drawing rights (SDR).54 The carrier is not liable for damages exceeding 100,000 SDR if the death of the passenger is proved not to have been caused by the negligence or other wrongful act or omission of the carrier, its employees and agents, or is proved to have stemmed from the negligence or other wrongful act or omission of a third party.55

The ATL provides that a court dealing with a claim filed for damages resulting from the death of a passenger may issue orders it deems just or helpful having regard to the provisions of the ATL limiting the liability of the carrier, to the rights of other persons entitled to claim damages, whether in or out of Israel, for the death of that passenger and regarding other claims that have been or may be filed, whether in or out of Israel, with respect to the death of that passenger.56 The ATL also provides that where there are several claimants as a result of the death of one passenger and the aggregate amount of damages due to all of them exceeds the liability of the carrier under the other provisions of the ATL, the court will award to each of them, out of the aggregate amount of damages due, an amount proportionate to the amount of damages that it would have awarded to such claimant.57

We are not aware of Israeli case law relating to the death of a passenger during carriage by air and providing authoritative interpretation of the relevant provisions.

VIII ESTABLISHING LIABILITY AND SETTLEMENT

i Procedure

There is no sector-specific regulation regarding the fora and mechanisms to be used in the settlement of claims, so the general rules of Israeli Civil Procedure are applicable.58 There is also no compulsory alternative dispute resolution scheme in force in Israel with regard to aviation disputes. However, there is an experimental programme being implemented in several magistrate's courts, which requires parties to certain civil disputes to attend a mandatory 'information, familiarity and coordination' meeting with a court-appointed mediator, in order to consider the possibility of mediation.

In September 2020, new Civil Procedure Regulations are expected to come into force.59 The new regulations provide60 that within 14 days of the filing of the last pleading, the parties shall conduct a preliminary meeting, the purpose of which is, inter alia, to assess the possibility of resolving the dispute by an alternative dispute mechanism. While not sector-specific, this preliminary hearing would be relevant for all civil proceedings, including aviation-related claims.

Claims under the ATL and the Montreal Convention (and other applicable conventions) must be brought within two years from the time the cause of action arises.61 Claims under the ASL must be brought within four years of the time the cause of action arises.62 In other cases, the general rules relating to prescription of claims laid down in the Israeli Prescription Law 1958, will apply. That Law provides, subject to certain qualifications, that any action, other than an action relating to land, shall not be brought after the expiry of seven years from the date on which the cause of action arose.

Subject to the court having jurisdiction to entertain an action filed against the defendant concerned, there is no restriction regarding whom may be joined as a defendant to the action (e.g., carrier, owner, pilot or manufacturer).63 Where the damage is caused to a claimant by the fault of two or more persons, then, in principle, and unless the court directs otherwise, each tortfeasor is liable to the plaintiff for all the damage (i.e., liability is joint and several). However, on the application of one of the tortfeasors, the court may direct the contribution by one tortfeasor to another as it deems just and fit in the circumstances.64

ii Carriers' liability towards passengers and third parties

The nature of a carrier's liability will depend on the cause of action concerned. It is strict in respect of convention liability, where the relevant conditions of liability contained in the convention are met.65 Any convention liability will also be subject to an applicable limit of liability contained therein.66 Otherwise, liability will generally be fault-based.67 The plaintiff usually bears the burden of proof, but there are circumstances in which the burden is transferred to the defendant. The requisite standard of proof is the balance of probability.

Even though the plaintiff usually bears the burden of proof, in claims that are based on negligence, the res ipsa loquitur rule may result in transfer of the burden of proof to the defendant carrier. In claims based on the ASL, the burden to prove that a delay or cancellation was caused because of special circumstances lies on the flight operator.

iii Product liability

There is no Israeli legislation dealing specifically with liability for defective or damaged products in the aviation sector, so that such liability is governed by the general regime under the Liability for Defective Products Law 1980 (LDPL) and the Civil Wrongs Ordinance (New Version). The LDPL establishes strict liability and provides that a manufacturer must compensate any person who has suffered bodily harm as a result of a defect in a manufactured product.68

iv Compensation

According to the Israeli aviation legislation (giving effect to the international conventions), the duty of the air carrier to compensate an injured party is based on the principle of strict liability, subject to the monetary limits laid down in the conventions and reflected in the Israeli legislation.

The Supreme Court has held that the term 'bodily injury' within the meaning of Article 17 of the Warsaw Convention69 should be construed broadly, so as to enable the award of damages for mental injury alone.70 In November 2019, the Tel Aviv District Court rendered a fundamental ruling reaffirming that, in accordance with Israeli law, compensation for mental anguish in baggage claims may be awarded by virtue of the Montreal Convention. However, the total compensation would still be limited to the maximum amount specified in the Convention for baggage claims.71 An application for leave to appeal the said ruling has been filed with the Supreme Court.72

The ASL provides for compensation without proof of damage in the case of denied boarding and delay or cancellation of flights, as well of exemplary damages in the case a carrier fails to fulfil its obligations under the ASL.73

In addition to compensation stemming from aviation legislation, passengers who have sustained physical or mental injury in connection with air carriage may also be eligible for additional compensation under Israeli law. For example, the National Insurance Law 1968 (NIL) provides for payment by the National Insurance Institute of a general disability pension to a person covered by the NIL who has a physical, psychological or mental disability resulting in limited earning capacity.

IX DRONES

Realising that small drones (weighing from 250 grams to 25 kilograms) pose a threat to air safety and after takeoffs and landings at Israel's Ben-Gurion Airport were suspended due to the proximity of drones,74 the CAAI is currently circulating draft regulations governing the public use of drones.75 Having regard to the simplicity of the US Federal Aviation Administration regulations76 dealing with this topic and the experience gained from their implementation since their introduction in 2016, the draft regulations prepared by the CAAI rely on the US model, rather than the European one.77 The proposed regulations will deal with the essential aspects of drone operation, such as the requirements relating to the drone operator (principally, minimum age and the need for a licence), requirements regarding drone software and hardware and strict rules regarding the operation of drones in public places (including a ban on operation without direct eye contact, in proximity to an airport or within residential neighbourhoods).78 The draft regulations have been published for review and hearings of objections raised against the draft were held on 10 April 2019 and 6 May 2019.79 Although comments were received from the public and from the Israel Drone Alliance, no changes in the draft were made, and it will be considered as planned.80

X VOLUNTARY REPORTING

To the best of our knowledge, there are no voluntary reporting provisions or initiatives in Israel.

XI THE YEAR IN REVIEW

The past year has borne witness to a rise in motions for certification of class actions against airlines, for example, in the context of the covid-19 pandemic and the consequential financial crisis81 – several airlines withheld refunds from passengers for cancelled flights and offered vouchers for future flights in lieu thereof, in prima facie violation of the CPL and the ASL and leading to class action proceedings.

Further, the Israeli District Court approved a motion to certify a 30.5-million-shekel class action against El-Al Israel Airlines.82 The basis of the action was the allegation that El-Al does not refund no-show customers with airport taxes collected from them upon purchase of the ticket, even though El-Al does not transfer these taxes to the aviation authorities. In its decision to certify the class action, the court identified two relevant types of airport taxes:83 fees relating to incoming passengers – for which an airline is liable to the airport authority and which are collected by the airline from the passengers (e.g., porter fees and incoming passenger services fees); and fees relating to outbound passenger in international aviation – for which the passenger is liable to the airport authority, and are collected by the airline and transferred by it to the airport authority. The court ruled that in both cases El-Al should be treated as a trustee and as such obliged to refund the taxes collected from its customers. The court clarified that, as a matter of law, the passengers' right to a refund of airport taxes arises even if they have not yet contacted El-Al with a request for the refund.84

Three other fundamental aviation law rulings were rendered this year by the Israeli District Courts. The first dealt with the question whether it is possible, under Israeli law, and taking into consideration the provisions of the Montreal Convention, to award compensation for mental anguish in baggage claims filed against airlines. 85 The court answered this question in the affirmative, but held that the amount awarded would be limited to the maximum specified in the Montreal Convention. Leave to appeal to the Supreme Court has been filed86 and the decision of the Supreme Court on the matter will create a binding precedent. In another case, the District Court held that the CPL does not apply to foreign carriers with no permanent presence in Israel.87 This ruling significantly reduces the rights and remedies under Israeli law available to passengers against such foreign carriers, but it may be appealed to the Supreme Court. In the third of these cases, the District Court held that the statutory compensation provided for in the First Schedule to the ASL (such as the fixed sums payable for cancellation of flights and denied boarding) should be treated as 'compensation which does not require proof of damage' for the purpose of Section 20(e) of the Class Actions Law, 2006, which does not allow the filing of class actions based on claims for compensation of that kind.88

XII OUTLOOK

The impact of covid-19 pandemic on the Israeli aviation market was dramatic. Passengers' flights were completely suspended for a while. Given Israel's geopolitical situation, it can be seen as an island surrounded by water: in these circumstances air traffic is essential and even critical. Passengers' flights are planned to resume during the next couple of months, although there is a lot of uncertainty and no guarantee that returning to the previous routine will be possible any time soon. Health concerns are still great, and for the first time ever they are in the main focus, rather than security. The repurposing of passenger planes to fly cargo, to help the local airlines weather the financial storm caused by the sharp reduction and suspension of passengers flights is assisting the local airlines to get much necessary cash flow89 and survive for the time being, although El Al Israel Airlines is in a dire financial situation and heading towards a huge debt settlement under government sponsorship.90

The pro-consumer tendency of the Israeli regulators and legislators is expected to resume once the covid-19 crisis is over. A bill for the amendment of the ASL in favour of the passenger, including the grant of enforcement powers to the Consumer Protection and Fair Trade Authority, is still pending approval. Also pending is a bill that would prohibit flight operators from charging a price for a one-way ticket exceeding the price charged by it for a return flight ticket for the same destination. Likewise, the extent (if any) of the applicability of the Israeli CPL to foreign carriers is expected to be clarified by the district courts.91


Footnotes

1 Eyal Doron is a partner and Hugh Kowarsky is of counsel at S Horowitz & Co.

2 Signed and initialled by Israel and the EU Member States on 30 July 2012 and approved by the Israeli government on 21 April 2013.

3 'Ben Gurion International Airport Activity Summary Annual Report 2012' and 'Annual Report Ben Gurion International Airport' for 2018 – http://brin.iaa.gov.il/monthlyreport/ViewReportEng.aspx.

4 The AIP is published by the CAAI and is prepared in accordance with the Standards and Recommended Practices (SARPs) of Annex 15 to the Convention on International Civil Aviation and the Aeronautical Information Services Manual (ICAO Doc 8126).

5 Civil Appeal 36/84 (Supreme Court) Teichner v. Air-France, French Air Lines (6 January 1987); see also Civil File 1818/03 (District Court) El-Al Israel Airlines Ltd v. David (7 July 2004).

6 Section 5(a) of the ATL.

7 Because domestic flights are relatively cheap, the sums awarded in cases of flight delay or cancellation are low (again modifying the provisions under the ASL for international flights).

8 As in European Regulation 261/2004, the sum of compensation is dependent on the flight distance.

9 The relevant provision has been inserted in the Licensing of Air Services Law 1963 by Section 23 of the ASL.

10 See Small Claim Leave to Appeal 50976-02-19 Anat Sharon v. Aeroflot Russian Airlines (26 February 2019).

11 The Aviation Services Law Bill (Compensation and Assistance for Flight Cancellation or Change of Conditions) (Temporary Order – the New Coronavirus), 2020; government proposals, 1300, 23 April 2020, page 50.

12 A report issued on August 2013 by an inter-ministerial committee, appointed by the State of Israel to Examine the Requirement of Israeli Airlines for Regulatory Relief following the approval of the 'Euro-Mediterranean Aviation Agreement between the Government of Israel and the European Union and its Member States' suggests that the application of the CPL to foreign airlines with no permanent representative office in Israel is neither possible nor desired. Statements of consumer protection bodies such as the Authority for Consumer Protection and Fair Trade (https://www.gov.il/he/departments/general/cpfta_konim_bareshet#anchor1) and the Israel Consumer Council (http://www.consumers.org.il/category/cancelling-vacation) do not dispute this view. The issue has recently been dealt with by an Israeli District Court in C.A. 54491-01-15 Bashan v. EasyJet Airline Company Ltd, where it was decided that the CPL does not apply to foreign airlines with no permanent presence in Israel.

13 Chapter 3 of the RER.

14 Section 2 of the LASL.

15 Section 374 of the ANR.

16 ibid. Sections 373 and 375.

17 Sections 2 and 4 of the ANL.

18 Sections 13, 21, 52, 74, 87, 88 of the ANL

19 Section 8 of the LASL.

20 Section 1 of the LASL.

21 ibid. Section 5.

22 ATF 1.1.400A, 'Commercial specifications of a Foreign Air Carrier applying for an operating permit to and from Israel', Air Transport Handbook, Revision 3 (12 October 2015), Section 4.

23 According to relatively new 'Criteria for the approval of foreign air carrier flights that may constitute operating a base in Israel' (AP 1.1.400, Revision 1, Air Operation Certification, issued by the CAAI on 10 February 2019), as of 31 March 2019 operating permits are not granted to foreign air carriers for passenger air services using a method of operation in which the same aircraft is based in Israel continuously and operates flights to multiple (approved) destinations, thus effectively operating as if it was an Israeli air carrier.

24 See the following subsection on cargo flights.

25 Directive AT.1.1.400 'Granting an Operating Permit for Scheduled Flights to and from the State of Israel'.

26 Security Directive 0101-16 (2016) of the MOT Emergency, Security and Cyber Division.

27 Section 8C(a1) of the ASL.

28 ibid. Section 8c(b)(1).

29 Directive AT.1.1.402 'Granting an Operating Permit for Charter Flights to and from the State of Israel' (Directive AT.1.1.402).

30 Section 2.4.3 to Directive AT.1.1.402.

31 AIP Israel GEN 1.4 'Entry, Transit and Departure of Cargo' (20 January 2020).

32 Security Directive 0303-16, 'Security Measures for Foreign Air Carriers Transporting Air Cargo by Passengers' Flights to Israel', Section 3.1.

33 Security Directive 0303-16, Section 4.2.

35 ASOC controls the security procedures for the arrival of aircraft into and passage through Israeli airspace.

36 CAAI Directive AW 1.4.103 (2015) 'Issuance/Renewal/Modification of Certificate of Airworthiness', CAAI Directive AW 1.4.231 (2015) 'Airworthiness Directives Publication', CAAI Directive AW 1.4.301 (2014) 'Issuance of Initial Certificate of Airworthiness'.

37 Regulation 125 of the ANR.

38 Section 107 of the ANL empowers the MOT to appoint a chief investigator to coordinate the investigation of safety-related incidents.

39 Sections 96 and 114 of the ANL.

40 CAAI Directives GEN 4.0.500 (2014) 'Report on Safety-Related Incident – Receipt and Handling'.

41 Regulations 1–2 of the ARCI.

42 Regulation 5 of the ARCI.

43 Regulation 4 of the ARCI.

44 Regulation 12 of the ARCI.

45 As amended from time to time, most recently in January 2019 (when the name of the Law was changed from the Restrictive Trade Practices Law to the Economic Competition Law and similar changes were made in terms used in the Law).

46 Restrictive Trade Practices Rules (Block Exemption for Arrangements between Air Carriers Concerning Marketing Flight Capacity to Destinations Covered by Open Skies Agreement) (Temporary Order) 2012. This block exemption is valid until 9 November 2022.

47 Restrictive Trade Practices Rules (Block Exemption for Arrangements between Air Carriers) (No. 2), 2013 (the Block Exemption Rules 2013). This block exemption is valid until 1 December 2023.

48 Section 7a of the Block Exemption Rules 2013.

49 Section 19 of the ECL.

50 Section 21(a) of the ECL.

51 Section 47 of the ECL.

52 CA 10538-02-13 Hatzlaha Foundation v. El-Al Israel Airlines et al. (19 January 2020).

53 CA 3183/20 Lufthansa et al. v. Hatzlaha Foundation (18 May 2020).

54 Article 21(1) of the Montreal Convention.

55 Article 21(2) of the Montreal Convention.

56 Section 13 of the ATL.

57 Section 14 of the ATL.

58 Established by the Israeli Courts Law [Consolidated Version] 1984 and the Israeli Civil Procedure Regulations 1984.

59 Civil Procedure Regulations 2018 (the New Regulations). The New Regulations were originally planned to come into force in late 2019, but were postponed several times by the Minister of Justice. The last postponement took place in September 2019.

60 Regulations 34–35 of the New Regulations.

61 Section 15 of the ATL and Article 35 of the Montreal Convention.

62 Section 19 of the ASL.

63 See Civil File 2474/86 Nezer v. Kanfonit (1994).

64 Sections 11 and 84 of the Civil Wrongs Ordinance (New Version). The allocation of liability between wrongdoers inter se may be the subject of a contract between them (e.g., a contract whereby one party undertakes to indemnify and hold another harmless).

65 See Section II.i and ii.

66 See, for example, Articles 21 and 22 of the Montreal Convention, as incorporated into Israeli law under Section 6 of the ATL.

67 However, see Section II.iv.

68 Sections 1 and 2 of the LDPL. Section 4 of the LDPL lists a number of defences available to a manufacturer, e.g., that arising if the manufacturer can prove that the defect that caused the damage manifested itself after the product had left the manufacturer's control, and provided the product had undergone reasonable safety inspections.

69 Equivalent to Article 17(1) of the Montreal Convention.

70 Civ. App. 20/83 Solomon Dadon v. Air France French Air Lines Ltd (22 October 1984).

71 Small Claim App. (Tel Aviv) 23465-07-17 Iberia Airlines v. Flaisher-Peled et al. (20 November 2019).

72 Leave to Appeal 8456/19 Iberia Airlines v. Flisher-Peled (16 January 2020).

73 Section 11 of the ASL.

74 'Take-offs and landings were briefly suspended at Ben-Gurion Airport due to drone proximity', Nir Dvori, Mako News Website, https://www.mako.co.il/news-israel/local-q1_2019/Article-f841e58b33da861004.htm.

75 Aviation Regulations (Operation of a Small Drone and Remote Controlled Model Aircraft), 2019, (the Drone Regulations), http://caa.gov.il/index.php?option=com_docman&view=download&alias=
8061-katbam-main&category_slug=2015-10-13-06-39-40-5&Itemid=669&lang=he.

76 14 CFR 107 – SMALL UNMANNED AIRCRAFT; https://ecfr.io/Title-14/cfr107_main.

77 Explanatory notes to the Bill of the Drone Regulations, pp. 36–41.

78 Sections 5, 8–11, 16–19 and 24 of the Drone Regulations.

79 As can be viewed on the CAAI's website: http://caa.gov.il/index.php?option=com_content&view=article&
id=1621:2019&catid=339&Itemid=753&lang=he.

80 Aviation Regulations (Operation of a Small Drone and Remote Controlled Model Aircraft), 2019, (the Drone Regulations), https://caa.gov.il/index.php?option=com_content&view=article&id=1621:2019&catid=339&Itemid=753&lang=he.

81 For example: Class Action 18226-04-20 Israel Consumer Council v. United Airlines et al; Class Action 16494-04-20 Livne –Anolik v. Air Portugal; Class Action 33971-04-20 Tzuk v. Air Europa Lineas Aereas; Class Action 39212-04-20 Liat Becker v. Iberia Lineas Aereas.

82 Class Action 15049-01-15 Cohen v. El AL (10 September 2019).

83 A third type was mentioned but was not relevant to the decision.

84 It should be noted, that In addition to the class action certified against El-Al, numerous similar cases are pending in the Israeli courts against various airlines, including Delta, United Airlines, Swiss Airlines, Turkish Airlines, Air France, EasyJet, Pegasus Airlines, Wizz Air, Austrian Airlines, Air Europa, Transavia Airlines and Israir Airlines.

85 Small Claim Leave to Appeal 23465-07-17 Iberia Airlines v. Flaisher Peled (20 November 2019). See also footnote 74.

86 Leave to Appeal 8456/19 Iberia Airlines v. Flisher Peled. See also footnote 75.

87 Class Action 54491-01-15 Bashan v. EasyJet Airline Company Ltd (8 June 2020).

88 Class Action 44555-03-19 Dahan v. Israir Company Ltd (27 May 2020).

91 Class Action 54491-01-15 Bashan v. EasyJet Airline Company Ltd, and Class Action 57214-09-16 Zabenco v. EasyJet Airline Company.