Israel Appoints New Arbitrator on Pre-revolution Iran Oil Pact

Iran is demanding over $1b for oil sold on credit, but Israel refuses to pay enemy state.

Aluf Benn
Aluf Benn
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The oil terminal in Eilat that once carried Iranian oil to Ashkelon for export to European markets.
The oil terminal in Eilat that once carried Iranian oil to Ashkelon for export to European markets. Credit: Dr. Avishai Teicher/Wikimedia Commons
Aluf Benn
Aluf Benn

Israel has appointed a new arbitrator to handle its ongoing international arbitration with the National Iranian Oil Company.

The arbitrator, attorney Alex Hertman, will discuss Iran’s claim against Israel together with his Iranian counterpart and a third arbitrator appointed by the head of the International Chamber of Commerce in Paris. Iran is seeking compensation for assets belonging to an Iranian-Israeli joint venture that ended when Tehran severed relations with Jerusalem following the 1979 Iranian Revolution.

Hertman, a senior partner with S. Horowitz & Co., is considered one of Israel’s leading experts in arbitration and commercial law. He specializes in financial, banking and insurance cases. He has also held various public positions, including as president of the International Association of Jewish Lawyers and Jurists, head of the Israel Bar Association’s ethics committee and member of a search committee for the attorney general.

In 1968, Israel formed a partnership with NIOC via shell companies in Panama, Canada and Lichtenstein. The joint venture, called the Eilat-Ashkelon Pipeline Company, transported crude oil from Iran to Israel and other overseas customers.

A few years after severing ties with Israel in 1979, Tehran sued it for compensation over NIOC’s share in EAPC, which it accused Israel of nationalizing in violation of the original agreement. After lengthy proceedings in both Swiss and French courts, the case eventually went to arbitration in Geneva.

Over the last two years, Iran has won two other arbitration cases that sought compensation for the value of oil sent to Israel on credit before the revolution. But Israel has refused to pay the award, which totals over $1 billion, because Iran is an enemy state.

In the main case, which relates to EAPC’s assets, Israel refused for years to name an arbitrator. Eventually, a French court appointed Theo Klein, a leader of the French Jewish community, on Israel’s behalf. But Klein quit more than a year ago due to advancing age, so Hertman will now replace him.

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