Abstract
In 2016, the Israeli High Court of Justice (HCJ) delivered its most influential ruling on administrative regulation to date. Following the biggest natural gas discoveries in Israeli history, by a group of multinational energy corporations, the court was petitioned to rule on the legality of a regulatory agreement made between these corporations and the Israeli government. Issues covered in this agreement included pricing, exportation, taxation, timetables, corporate holdings, transportation, competition, investments, and regulatory stability. The HCJ’s important ruling on the legality of the gas agreement extensively discussed the regulatory functions of Israel’s administrative authorities, as well as the regulatory contract doctrine, which enables governmental regulators and private entities to engage in an enforceable agreement that stipulates the terms under which the private entity can operate in the market. This chapter analyzes this precedential ruling and its implications for business entities, regulators, and regulatory law. It shines a light on the circumstances leading up to the signing of the regulatory contract, taking the reader through the major legal landmarks in the regulation of natural gas in Israel, all pointing to the pressing corporate need for regulatory stability as the main rationale for the agreement.
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Notes
- 1.
The Israeli High Court of Justice (HCJ) is also Israel’s Supreme Court. When deciding administrative or constitutional cases, the Supreme Court judges act as the HCJ, which is the superior administrative court.
- 2.
See, e.g., Petroleum Law, 5712-1952, 6 LSI 129 (1951–1952); Income Tax Regulations (Deductions from the Income of Owners of Petroleum Rights), 5716-1956, KT 625, 1097.
- 3.
During the 1950s and up until the late 1980s, Israeli oil and gas explorations were executed by government companies. Since the early 1990s, Israeli oil and gas explorations are executed by private corporations.
- 4.
A new government resolution stipulated that 540 billion cubic meters of gas should be reserved for the domestic market, based on a calculation of expected Israeli consumption over 29 years. This represented some 57% of the estimated gas reservoirs at the time. See Petroleum Profits Taxation Law, 5771-2011, SH 2295, 806.
- 5.
Although it should be noted that it was non-profit organizations and Knesset members who petitioned against the State of Israel regarding the change in export caps, not the energy corporations.
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Yadin, S. (2021). Israel’s Law and Regulation After the Gas Discoveries. In: Tevet, E., Shiffer, V., Galnoor, I. (eds) Regulation in Israel. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-56247-2_10
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