Israeli Supreme Court Limits Possibility of Pleading Reliance on Assistance of Counsel as Defense against Indictment

In a ruling handed down a few days ago, the Israeli Supreme Court ruled that a release from criminal liability on the grounds of reliance on assistance of counsel shall not apply when an attorney fails to warn about the illegality of an intended action. This means that when a lawyer, even if present during or aware of the performance of criminal acts, fails to warn a client about their criminality, the client will be unable to evade indictment by claiming his lawyer did not warn him.

In the case at hand, the state accused construction contractors of colluding not to tender bids to tenders for the construction of reinforced security rooms in communities surrounding the Gaza Strip in 2008. The contractors held joint meetings in which they reached agreements, and drafted documents and letters to send to the authorities. A lawyer on their behalf was present during the meetings and did not warn them of the illegality of their actions. The contractors claimed they relied on their attorney’s conduct and that this should therefore release them from criminal liability.

The Supreme Court upheld the district court’s ruling that a lawyer’s “silence” does not constitute a defense for the accused. The Supreme Court further ruled it was evident to the contractors that their actions would deal a mortal blow to competition. That is in addition to the fact they did not meet other requirements for the defense’s applicability).

In addition, the Supreme Court issued a ruling in principle that it sees no merit in the approach of releasing a person who breached the law from criminal liability based on the fact his or her lawyer failed to warn that the planned action was criminal.

By doing so, the Supreme Court deviated from a previous ruling. The former ruling left room to argue, in the appropriate circumstances, that a person that breached the law after retaining a lawyer may plead reliance on assistance of counsel, since that person would have reasonably expected the lawyer to scrutinize all relevant legal aspects and warn about the illegality of any contemplated action.

Implications of the Ruling

The significance of this ruling is that only when a person can show he or she bona fide acted based upon actual legal advice that a particular action does not constitute a criminal offense may he or she be released from criminal liability (under particular circumstances as specified by the courts). This ruling specifically addresses competition laws (which were the core of the specific case), but also applies generally.

In other words, a person cannot evade indictment based on the expectation the lawyer he or she retained, e.g. to prepare a contract or to advise during a transaction, negotiations, or preparations for a tender, will also warn that his or her actions or words constitute a violation of competition laws (or other laws).

Therefore, clients should hire attorneys who specialize in the relevant legal fields that require review. They must ensure they receive clear and explicit advice that their actions do not constitute an offense.

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Our Competition and Antitrust Department is at your service if you have any questions in relation to these matters.