Can ChatGPT be sued in Israel? Israeli court has issued its ruling

The Central District Court in Israel recently ruled that it has jurisdiction to adjudicate a class action filed against OpenAI, the creator of ChatGPT, despite the company’s claims that the Israeli court does not have jurisdiction.

The class action

The class action was filed against OpenAI in April 2023, claiming that although ChatGPT’s terms of use stipulate that the software is intended for use by people at the minimum age of 13 and that minors must obtain permission to use the software, in practice, no check of the user’s age is performed during registration. As a result, the plaintiffs claim that minors can be exposed to inappropriate content and false answers.

The class action further alleges that OpenAI uses information received from users and transfers it to third parties without obtaining users’ consent and without informing them of the manner in which their information is being retained or used, including in relation to sensitive information about minors who use the software.

Jurisdiction and the applicable law

OpenAI filed a motion to deny the Israeli court jurisdiction on the grounds that it is a company incorporated in California without any connection to Israel.  

OpenAI further argued that, since ChatGPT’s terms of use stipulate that California law applies, it could not be sued based on Israeli law.

The Israeli court’s ruling

The court ruled that the plaintiffs fulfilled the three conditions required in order to acquire jurisdiction over a foreign defendant:

1. Cause of action – the parties’ arguments on the question of cause of action focused on the applicable law. While OpenAI argued that the applicable law was California law pursuant to the software’s terms of use, the plaintiffs argued that the stipulation of applicable law is a discriminatory condition in a uniform contract that should be annulled. The court did not rule on the question of applicable law but rather ruled that regarding the question of jurisdiction, the burden of proof of the existence of a cause of action was not high, and that the class action raises a serious question and is not a futile claim.
2. Grounds for service of process – the court ruled that the claim appears to relate to a contract (terms of use) that was entered into, at least in part, in Israel, considering that users of the software approved the terms of use in Israel.
3. Forum conveniens – the court ruled that Israel is the forum conveniens to adjudicate the proceeding. Although there are ties to both Israel and the United States, a company that provides global services and bills Israeli users should expect to be sued in Israel.

The ruling’s implications

The court’s ruling concurs with other rulings handed down recently against Facebook and Agoda, in which the courts tend to apply tests for acquiring jurisdiction in Israel over a foreign company, making it easier for consumers to sue global online service-providers.

Although the court has yet to decide on the applicable law for the class action, it indicated it will not hesitate to authorize lawsuits in Israel against global technology companies. 

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By: Adv. Gal Livshits, Partner in the firm’s Litigation department.