Official: Israel Exposed to Legal Claims by Gas Investors
Israel is exposed to legal claims by investors, whether the regulatory framework for the natural gas industry is approved or not approved by the Israeli government. That was the message delivered yesterday to the economic committee of the Knesset (The Israeli Parliament) during a consultation that is part of the process of approving the framework. The assessment was given by Avi Licht, deputy of the state Attorney General.
Mr. Licht said that the exposure to legal claims is one of a few arguments in favor of approving the framework. Despite the demands for transparency, during the hearing Mr. Licht refused to detail what kind of claims Israel is exposed to, saying that it would help the other side. However, he said that after due consideration it appears that legally Israel's stance will be stronger with the framework's approval.
"There are two risks that have to be taken into account", said Mr. Licht. "The first one is, what happens if the framework goes through? The second one is, what happens if it goes through and then the state violates it? With assistance from an American law firm, we have examined all the risks. Noble Energy makes use of Israel's bilateral [trade] agreement with Cyprus [in order to sue the state]."
Israel is a signatory to a bilateral trade agreement with Cyprus in which commercial disputes are discussed before the ICC Arbitration body in Geneva, Switzerland. This is a private body, not subject to national states laws, and its discussions are being held behind closed doors. The arbitration process in the ICC can be costly, lengthy, and their decisions are not open to appeals. Since the U.S. has no such bilateral agreement with Israel that enables claims through the ICC Arbitration body, Noble Energy has created a Cypriot entity in order to facilitate such litigation.
Licht also said that the chances for the state to leave out one of the investors from either the Tamar gas field or the Leviathan gas field, in order to promote competition in the natural gas market, was not high and an alternative was not applicable. He reckoned that such a move might have lasted 12 years, would have delayed the development Israel's gas assets, and caused the state huge economic and geopolitical damages.
Ya'acov Zalel