1 See “Inter-Ministerial Committee Report on Questions of Traffic and Work Accidents” (1966) 1 Is.L.R. 636.

2 Id., at p. 641.

3 Id., at 642–43. It is interesting that while the Committee did not carry out any empirical research, the fact that the main defects listed by the Committee do exist was recently borne out by field research conducted by the National Insurance Institute. According to the results of this research it transpires that only 44% of the slightly injured, 54% of the severely injured and 56% of the fatally injured receive compensation; in 5% of the slightly injured, 18% of the severely injured and 21% of fatal injury cases, compensation is sometimes delayed for four or more years after the accident; many compromise settlements are affected by financial difficulties of the victim, and finally, that in general, amounts received as compensation are not saved or invested for future regular income: see Nizan, Study of Compensation and Rehabilitation Procedures and Their Impact on the Rehabilitation of Road Accident Victims in Israel, Final Report, July, 1975, (hereinafter this study will be referred to as the Nizan Study).

4 See Inter-Ministerial Report, supra n. 1 at p. 646.

5 See (1973) 27 HaPraklit 592.

6 See Ministry of Justice, Report of the Committee on Simplification of Matters and Improvement of Procedure in Tort Actions (Jerusalem, 1972). A précis of the Committee's report appears in (1973) 8 Is.L.R. 296. (The report will hereinafter be referred to as the Berinson Report).

7 (1973) H.H. no. 5733, p. 406. An English translation of the Bill was published as an Appendix to Englard, , “Reform of the Automobile Accident Compensation System” (1974) 9 Is.L.R. 234, at pp. 268–273.Google Scholar For a detailed consideration of the Bill see Englard, “Traffic Accident Victims' Compensation Bill 5733–1973” (1974) 5 Mishpatim 431.Google Scholar (All further references to Englard will be to the second article cited, unless otherwise stated.)

8 The idea of compensation boards was actually recommended by the Ben-Ze'ev Committee too, but this is not mentioned in the introduction to the Bill.

9 See Compensation for Victims of Road Accidents Law, 1975, S.H. no. 5735, p. 234. (Hereinafter we will refer to this statute as the Compensation Law).

10 See sec. 23(a) of the Compensation Law.

11 The basic difference between absolute and strict liability is that the latter allows for certain defences excluded by the former, the most important of these defences being some version either of contributory fault or assumption of risk.

12 See Englard, supra n. 7, at p. 433.

13 For some of the most important contributions to this debate see Calabresi, , The Costs of Accidents (Yale University Press, 1972)Google Scholar; Posner, , “A Theory of Negligence” (1972) 1 Journal of Legal Studies 29CrossRefGoogle Scholar; Fletcher, , “Fairness and Utility in Tort Theory” (1972) 85 Harv. L.R. 537CrossRefGoogle Scholar; Epstein, , “A Theory of Strict Liability” (1973) 2 Journal of Legal Studies 151CrossRefGoogle Scholar; Stoljar, , “Accidents, Costs and Legal Responsibility” (1973) 26 Mod. L.R. 233CrossRefGoogle Scholar; Tune, , “Tort Law and the Moral Law” [1972, A] Camb. L.J. 247.Google Scholar

14 See Calabresi, (preceding note).

15 Economic efficiency “means exploiting economic resources in such a way that human satisfaction as measured by aggregate consumer willingness to pay for goods and services is maximized”: Posner, , Economic Analysis of Law (Boston, 1972) 4.Google Scholar

16 See, e.g. Calabresi, supra n. 13; Franklin, , “Tort Liability for Hepatitis: An Analysis and Appraisal” (1972) 24 Stan.L.R. 439CrossRefGoogle Scholar; Symposium, , “Products Liability: Economic Analysis and the Law” (1970) 38 U. Chi. L.R. 1.Google Scholar But cf. Posner, , “Strict Liability: A Comment” (1973) 2 J. of Legal Studies 205.CrossRefGoogle Scholar

17 See, e.g. Calabresi, and Hirschoff, , “Toward a Test for Strict Liability in Torts” (1972) 81 Yale L.J. 1055, 1065.CrossRefGoogle Scholar These authors stress that a proper understanding of strict liability involves recognition of the defence of assumption of risk, though this defence must be distinguished from the defence of contributory fault, with which it has generally become confused. “Risk Assumption”, when properly understood, involves the voluntary and conscious choice of a plaintiff to encounter a known risk: id., n. 35. Also see Epstein, , “Defences and Subsequent Pleas in a System of Strict Liability” (1974) 3 J. of Legal Studies 165, 189–90.CrossRefGoogle Scholar

18 Cf. Calabresi and Hirschoff, supra n. 17, at p. 1065, who stress that under their system of strict liability, contributory fault, as opposed to risk assumption, should be ignored.

19 For a comprehensive exposition of the “cost-internalization through liability theory” see Calabresi, supra n. 13. Also see Kretzmer, , Book Review, (1974) 9 Is. L.R. 148.Google Scholar

20 See Calabresi, supra n. 13, at p. 135; Calabresi and Hirschoff, supra n. 17, at p. 1060, n. 19. Cf. Posner, , “Strict Liability: A Comment” (1973) 2 J. of Legal Studies 205CrossRefGoogle Scholar; Blum, and Kalven, , “The Empty Cabinet of Dr. Calabresi: Auto Accidents and General Deterrence” (1967) 34 U. Chi. L.R. 239.CrossRefGoogle Scholar

21 See Posner, supra n. 16.

22 See Calabresi and Hirschoff, supra n. 17, at pp. 1060–61.

23 See Calabresi, supra n. 13 at p. 147.

24 The rates must also be approved by the Knesset Finance Committee.

25 According to Calabresi, a liability system must strive for a “mix” of three goals: 1) reducing the number and severity of accidents; 2) reducing the social dislocation caused by accidents once they occur, and 3) reducing the cost of administering the system. Contributory fault might be thought to further the first goal (though in the road accident field we would tend to doubt if it really does so). However, it is justified to disregard such fault so as to promote the two latter goals.

26 For the distinction between moral responsibility for the accident, and the moral duty to make good, see Hamson, , “The Moral Law and Professor Tunc” [1973] Camb. L.J. 52.CrossRefGoogle Scholar

27 Sec. 3 (b).

28 See Englard, supra n. 7, at p. 439.

29 Sec. 18, which amends sec. 3 of the Motor Vehicle Insurance Ordinance.

30 A prime example of a strict liability system which abounds in causation problems is the American rule of products liability: see O'Connell, , “Expanding No-Fault Beyond Auto Insurance: Some Proposals” (1973) 59 Va. L.R. 749, 759.CrossRefGoogle Scholar

31 [1943] A.C. 92.

32 See, e.g. King v. Phillips [1953] 1 Q.B. 429; Hambrook v. Stokes [1925] 1 K.B. 141.

33 “Bodily damage” is defined in sec. 1 of the Law as “death, illness, injury or physical, emotional or mental deficiency”.

34 See secs. 3(b) and 9(c) of the Law.

35 Supra n. 31.

36 It may be argued, on the other hand, that as long as fault is not the criterion determining the entitlement to compensation for bodily injury, there is no harm in its retention. As we shall see, fault remains the criterion for entitlement to compensation for damage to property.

37 The Law provides that certain provisions of the Civil Wrongs Ordinance will apply to an action under the Law, but the causation section of the Ordinance (sec. 64) is not included among them. The remoteness section (sec. 76) is included, however, and we surmise that it is to this section that the courts will turn when they have to deal with this type of causation question. The fact is that even when dealing with causation questions under ordinary tort law the courts have often ignored the relevant causation section and have turned straight to the remoteness section: see e.g. Malkah v. Attorney General (1956) 10 P.D. 1543.

38 Sec. 8 of the Law.

39 In appropriate circumstances he might, however, have a contractual claim against the doctor. Such a claim is not affected by his right to claim under the Law.

40 See Fleming, The Law of Torts (4th ed.) 332.

41 Englard, supra n. 7, at p. 439.

42 See sec. 2 of the Motor Vehicles Insurance Ordinance (Consolidated Version) 1970, (2 L.S.I. (N.V.) 74).

43 See sec. 3 of the Ordinance as amended by sec. 18(3) of the Compensation Law.

44 See sec. 19 of the Ordinance.

45 See sec. 12 of the Compensation Law.

46 It is possible, however, to give a restrictive interpretation to sec. 9 (b) of the Compensation Law and thereby to give some meaning to the owner's vicarious liability. Under this interpretation sec. 9(b) applies only to the duty of the immediate tortfeasor to pay damages and does not apply to the liability of others for the acts of the tortfeasor. Thus, if it is established that under the ordinary law of torts the driver has a duty to compensate the victim, the owner who allowed him to use the car will be vicariously liable on the strength of the Compensation Law.

47 See text supra at nn. 1–4.

48 Our attitude in this matter is similar to that of Englard, “Reform of the Automobile Accident Compensation System”, supra n. 7.

49 It is not far-fetched to require a car owner to insure against the liability of anyone who uses his car. Thus, for example, in Australian jurisdictions a car owner is liable for personal injury or death caused by anyone who drives his car and it is compulsory to insure this liability: see Fleming, supra n. 40, at p. 332.

50 See Englard, supra n. 7, at p. 439.

51 It should be pointed out, however, that the two-year period which passed between the tabling of the Bill in the Knesset and the final passing of the Law was a period of serious inflation.

52 Sec. 4(b).

53 Sec. 4(a)(2).

54 In presenting the Bill to the Knesset the Minister of Justice explicitly stated that preventing a steep rise in the premium rates was the aim of placing ceilings on compensation amounts: see (1973) 68 Divrei HaKnesset 4002. This has also been the aim of compensation ceilings in compensation systems proposed and adopted in other jurisdictions: see Blum, and Kalven, , “Ceilings, Costs and Compulsion in Auto Compensation Legislation” (1973) Utah L.R. 341.Google Scholar

55 The ceiling of compensation for pain and suffering is linked to the cost-of-living index. With the Government policy moving away from fully-linked investments it is possible that a person who receives compensation will not be able to invest it in a fully-linked investment. If he is likely to receive the highest amount of compensation which may be awarded under the Law, he will therefore probably be better off waiting until the last minute before suing.

56 Cochavi v. Becker (1957) 11 P.D. 225.

57 Supra n. 3.

58 Id., at p. 129.

59 See Englard, supra n. 7, at p. 442.

60 See the opening statement in the second reading of the Bill by the Chairman of the Knesset Constitutional, Legal and Judicial Committee: Stenographic Minutes of the Sessions of the Eighth Knesset, 29 July 1975, p. 103.

61 Under sec. 5(b) the Minister of Justice must fix the procedure.

62 See Interest Order (Change of Rates) (No. 2) 1973, K.T. no. 3001, p. 1264.

63 It must be noted, however, that the fines paid by the insurance companies will probably not be deductible as recognized costs for income tax purposes: see Otzar L'Ashrai Shel Ha'Poel Hamizrachi v. Returning Officer (1963) 17 P.D. 533; Oligoshoelli v. Returning Officer (1968) 2 P.D. (Be-Inyanei Misim) 206. The companies do, on the other hand, have to pay income tax on their investment earnings. Thus whether they will gain or not by delaying payments is not clear.

64 Sec. 5(b).

65 Eee Englard, “Reform of the Automobile Accident Compensation System”, supra n. 7, at p. 266.

66 See Nizan Study, supra n. 3, at pp. 61–63.

67 According to the National Insurance Law, work accident invalids with a degree of disability of more than 20% receive a monthly pension. Sec. 70 of the National Insurance Law (Consolidated Version) 1968 lays down that the National Insurance Institute may pay such invalids a lump sum instead of the pension, if it is of the opinion that the invalid has a permanent income sufficient for his support or a well based chance of attaining such an income.

68 We concede, of course, that these are not the only class of people who will be worse off. The comparatively rare victim who would be entitled to more than IL.100,000 for pain and suffering will be worse off too.

69 See e.g., Hedley Byrne v. Heller [1963] 2 All. E. R. 575; Wainstein v. Kadimah (1954) 8 P.D. 1317; Kornfeld v. Shmuelov (1967) (I) 21 P.D. 310. And cf. Spartan Steel and Alloys Ltd. v. Martin and Co. [1972] 3 All. E. R. 557. In Simpson v. Thomson (1877) 3 App. Case 279, the House of Lords decided that an insurance company forced to pay an insured loss has no independent right of action against a person who negligently caused that loss. This decision, which would seem to be the closest decision to point, has been subjected to rigorous criticism: see James, , “The Fallacies of Simpson v. Thomson” (1971) 34 Mod. L. R. 149.CrossRefGoogle Scholar

70 Sec. 7(b) provides, however, that the dependants of such categories of individuals may sue for compensation. This provision involves a departure from the regular rule regarding dependants—they can only sue if, at the time of his death, the victim could have maintained an action (sec. 78 of the Civil Wrongs Ordinance). The justification for restricting the right to sue to dependants is questionable. If a person is seriously injured and becomes an invalid for life incapable of earning a penny, he is not entitled to sue under the Compensation Law if he belongs to one of the categories listed in sec. 7(a). If the same person is killed in the accident, his dependants may sue. It is not at all clear that the dependants are worse off than the family of the seriously injured victim. The latter have to support the victim and pay his medical costs, besides supporting themselves. It seems that a much healthier principle would have been to restrict the right of certain classes of individuals to compensation for non-pecuniary losses, while retaining their right to compensation for pecuniary losses.

71 A person who caused the accident intentionally will not be able to establish liability of another individual for the accident.

72 There is no “typical causal connection” between their acts and the accident and at least according to one view adopted by the Israel Supreme Court, the illegality will therefore not affect the right of action: see Tedeschi (editor), The Law of Civil Wrongs (The General Part) 341, per Barak.

73 The exceptions would apply if the person liable was: (1) not entitled to compensation under the Law; (2) responsible for operating a train or aircraft; (3) a person whose driving was in breach of the liability insurance; (4) a person who created a nuisance on the road; (5) an authority responsible for road maintenance.

74 The language of this phrase is extremely important. The question is whether the compensation was due under the Compensation Law, and not whether the person who paid it was liable under the Law. Thus, an insurance company, which is not liable under the Compensation Law, has no right of contribution against an insured driver if he drove the car in breach of the conditions of insurance. (That this indeed is the policy of the Law is strengthened by the Law's amendment of sec. 16 of the Motor Vehicle Insurance Ordinance, so as to remove the right of insurers to contribution in cases in which they are forced to pay damages when the insured has been in breach of the conditions of insurance).

75 See Tedeschi, supra n. 71, at p. 493 ff.

76 See Berinson Report, supra n. 6, at p. 49.

77 The Motor Vehicles Insurance Ordinance exempts the Government, Government bodies and certain corporations which meet fixed criteria from the duty to insure.

78 Sec. 23(b).

79 For a description of the savings under the Massachussetts no-fault scheme which includes severe limitations on the right to sue, see Gillespie, and Klipper, , No Fault: What You Save, Gain and Lose with the New Auto Insurance (Praeger, 1972).Google Scholar