High Court Throws Netanyahu a Curve on Gas Deal


The saga of Israel’s natural gas deal took an unexpected turn as the High Court recommended to the state that it seek approval for it from the Knesset, Globes reported on Monday.

The judges gave the government seven days to make its case against pursuing a legislative solution.

Sources close to Israeli Prime Minister Binyamin Netanyahu, who made a personal appeal for implementation of the deal forthwith in court on Sunday, were dismayed at the judge’s recommendation.

“It’s a death sentence for the agreement,” one source said, in light of the bleak prospects of Knesset passage of the critical stability clause, which the energy companies are insisting on.

The state will oppose making the gas agreement subject to legislation, according to those sources.

Furthermore, the U.S. company Noble Energy is said to be exasperated at the thought of yet another delay and more debate over the agreement worked out over months of difficult negotiations.

Such a delay could expose Israel to legal action by the company.

On Sunday, the Ministry of Justice presented to the High Court an opinion by a U.S. law firm saying that Noble Energy would indeed have a case against the state.

“The more we delay, the greater becomes the threat of a lawsuit,” one of the sources said, “Noble Energy will have a strong case in court, and we will end up being humiliated.”

A court case like that would have a ruinous effect on Israel’s reputation, the source added. “Just as Egypt is perceived as a country that does not stand by its word, so will Israel, and that’s something that can’t be reversed. As soon as Noble Energy sues Israel in arbitration, Israel will forever be remembered as an unreliable country.”

Globes opined that “it is doubtful whether the judges understood the consequences of their recommendation. As far as they are concerned, passing the stability clause as a law in the Knesset is intended ‘to remove doubts and avert a danger that must be taken into account,’ as Judge Elyakim Rubinstein phrased it. And there are doubts. In the stability clause, the state undertakes to make no substantial changes in the gas industry for 10 to 15 years, among other things in taxation, gas exports, and ownership of the reservoirs. The government thus binds future governments.”

Those very undertakings, along with the taxation rates, have opponents of the gas deal up in arms. And passage in the Knesset may not be obtainable.

The state will likely argue that implemention of the gas agreement is so urgent that holding it up for months in the legislative process would be disastrous. It will delay development of the Leviathan reserve and expansion of Tamar, that the letters of intent for exports of gas to Egypt are in danger, and that investors will flee to other countries.