In short: CA 6821/93 United Mizrahi Bank Ltd. v. Migdal Cooperative Village was decided on 9 November 1995 by an expanded panel of nine justices of the Supreme Court of Israel. The bank argued that a statute limiting the collection of agricultural debts violated its right to property. The court held that the Basic Laws have constitutional status and that courts may strike down legislation that unlawfully infringes them, but dismissed the bank’s appeal: the statute did infringe creditors’ property, yet it satisfied the limitation clause.
Background: the moshav debt crisis
In the late 1980s many moshavim and farmers fell into heavy debt to the banks. The Knesset passed the Family Agricultural Sector (Arrangements) Law, 5752-1992, and amended it in 1993 (the Family Agricultural Sector (Arrangements) (Amendment) Law, 5753-1993). The amended law restricted creditors, including banks, from collecting the full debts from farmers.
What Mizrahi Bank argued
Mizrahi Bank, the appellant in CA 6821/93, argued that the amending law violated creditors’ property rights under section 3 of Basic Law: Human Dignity and Liberty and did not meet the limitation clause in section 8, and was therefore void.
What the court held
- The Basic Laws are a constitution. President Aharon Barak wrote that because a Basic Law is of a higher normative level, it can only be changed by another Basic Law.
- Judicial review. Where a Basic Law does not specify a remedy for a conflicting statute, the remedy is invalidation by the courts.
- The limitation clause. An infringement of a protected right is allowed only by a law befitting the values of the State of Israel, enacted for a proper purpose, and to an extent no greater than required.
- The outcome in the case itself. The court unanimously held that the amending law infringed creditors’ property rights but was consistent with section 8. The bank’s appeal was dismissed. In two applications for leave to appeal heard together (LCA 1908/94 and LCA 3363/94) the appeals were allowed.
The panel
Former President M. Shamgar, President A. Barak and Justices D. Levin, G. Bach, E. Goldberg, E. Mazza, M. Cheshin, Y. Zamir and Tz. E. Tal. Barak wrote the principal opinion; Shamgar based the Knesset’s power on the doctrine of unlimited sovereignty; Cheshin rejected the Knesset’s constituent authority but agreed with the result.
Why it still matters
Every debate on judicial review in Israel starts with this case, which makes it one of the most cited judgments in Israeli law. For bank customers it carries another message: a bank’s property right as a creditor is not absolute, and the legislature may restrict debt collection for a proper purpose.
What this page is not
The judgment concerns the constitutionality of a statute, not the bank’s conduct toward a particular customer. Judgments in which the bank was held liable to customers are collected in the rulings archive.