Israeli Government Continues to Defend Natural Gas Deal in Court

Even though legal authorities had been warning about possible exposure that Israel could face in an international arbitration case, the legal opinion that would purportedly support its stance was very late in coming.

Protesters hold signs and chant at a demonstration against the government’s natural gas plan in Tel Aviv on December 5, 2015.
Ofer Vaknin

In its ongoing effort to convince the High Court of Justice to reject legal challenges to the government’s plan for the offshore natural gas industry, the State Prosecutor’s Office has submitted an urgent request for the panel of justices handling the case, asking them to consider a professional opinion on the international legal aspects of the case that the Justice Ministry commissioned just within the past week from an American law firm.

The government is seeking to have the justices consider the matter on an ex parte basis, meaning without input, or access to the opinion, by those challenging the government’s plan. The final hearing on the plan is scheduled in less than a week, but the opinion is an apparent effort to address arguments that the petitioners challenging the plan have raised in court and relating to the regulatory stability clause in the gas framework.

After years of political infighting, Prime Minister Benjamin Netanyahu, who is also economy minister, signed the framework deal last month, relating to the two major offshore gas fields, Tamar, which is already in production, and the much larger Leviathan site, which is not. The sites are being developed by Noble Energy of Houston and Israel’s Delek Group through its units Delek Drilling and Avner Oil and Gas. Noble and Delek were given assurances by the government that the Israeli regulatory environment in which they will be operating for the next ten to 15 years will be stable, something that will on its face bind future governments and future Knesset sessions to its terms.

It is the international legal consequences of the government commitment that are the subject of the new legal opinion, and the claim that the provision opens Israel up to damage claims from Noble Energy.

The Justice Ministry submitted its own legal opinion at the end of November in the case, but in an unusual move, the state prosecutor’s office is now saying, five days before the final hearing in the High Court, that the American law firm was asked to issue an opinion complementing and further expanding the arguments made.

It should be noted that earlier this week, Efi Michaeli of the College of Law and Business in Ramat Gan, who is one of the petitioners challenging the gas framework, approached Noble Energy demanding that the company disclose its position regarding the status of the government’s gas framework as it relates to international law. At the same time, Michaeli demanded that the government present the High Court with an explanation regarding its economic exposure (including exposure to damage claims) in the event that a future Israeli government decides to make changes to the framework.

At a court hearing last week, it was disclosed that the legal opinion commissioned by the Justice Ministry in the case had only been received in November, half a year after the security cabinet voted to proceed with the plan and to bypass antitrust concerns regarding the plan on the grounds that the diplomatic and security interests of Israel required it. The opinion was also only commissioned three months after the approval of the gas framework by the full cabinet and two months after the Knesset voted to support it.

In other words, even though government legal authorities had been warning all along about possible legal exposure that Israel could face in an international arbitration case filed by Noble if Israel took steps that were deemed detrimental to the American company, the legal opinion that would purportedly support the stance was very late in coming.

When the court reconvenes on to hear the case on Sunday, Netanyahu will be among those appearing on behalf of the government.

With reporting from Reuters.