Representation of directors and officers of Better Place Group in a precedent-setting decision for dismissal of a NIS 200 million claim

In a precedent-setting decision, the District Court ruled in favor of the dismissal of a NIS 200 million claim filed by the liquidators of the Better Place Group, against the Group’s directors and officers. The Court ruled that the claim should be dismissed on the basis of the Business Judgment Rule. The BJR, which was recently formally adopted in Israeli jurisprudence, sets forth that the Court shall not criticize decisions made by an officer of a company if that decision was made in an informed manner, in favor of the company and without a conflict of interests. The Court adopted the directors’ and officers’ argument that is it a grave danger to allow the examining of business decisions with the benefit and wisdom of hindsight. The Court also agreed that such examination will have an unwanted chilling effects on business ventures, especially start-up ventures.

Advocates Giora Erdinast, Tomer Weissman and Naama Ehrlich of EBN represented certain of the directors and officers that filed the motion to dismiss the claim. According to them, this new ruling reduces the gap between Israeli law and US law in respect to D&O liability and prevents Israel’s “startup nation” from becoming a “litigation nation”.

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