Israel’s Law and Regulation After the Gas Discoveries

  • Sharon YadinEmail author


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.


Regulation Law Energy 


  1. Ayres, I., & Braithwaite, J. (1992). Responsive regulation: Transcending the deregulation debate. Oxford and New York: Oxford University Press.Google Scholar
  2. Bank of Israel. 2015. A response by the Bank of Israel to the outline draft for developing gas fields that were discovered in the Israeli economic waters (in Hebrew).Google Scholar
  3. Barak-Erez, D. (2005). The doctrine of legitimate expectations and the distinction between the reliance and expectation interests. European Public Law, 11(4), 583–602.Google Scholar
  4. Bendor, A., & Yadin, S. (2019). Regulation and the Separation of Powers. Southern California Interdisciplinary Law Journal 28, 357.Google Scholar
  5. Cohen, E. (2018). Development of Israel’s natural gas resources: Political, security, and economic dimensions. Resources Policy, 57, 137–146.CrossRefGoogle Scholar
  6. Even, S., & Eran, O. (2014). The natural gas revolution in Israel. In S. Brom & A. Kurz (Eds.), Strategic survey for Israel 2013–2014. Tel Aviv: Institute for National Security Studies.Google Scholar
  7. Even, S. (2010). Israel’s natural gas resources: Economic and strategic significance. Institute for National Security Studies, 13(1), 7–20.Google Scholar
  8. Fischhendler, I., & Nathan, Daniel. (2014). In the name of energy security: The struggle over the exportation of Israeli natural gas. Energy Policy, 70, 152–162.CrossRefGoogle Scholar
  9. Frid de Vries, R. (2017). Stability shaken? Israeli High Court of Justice strikes down the stabilization clause in the Israeli government’s gas plan: HCJ 4374/15, the movement for quality government in Israel v Prime Minister, judgment, 27 March 2016. Journal of World Investment & Trade 18: 332–341.Google Scholar
  10. Galnoor, I. (2010). Public management in Israel: Development, structure, functions and reforms. Abingdon, Oxon: Routledge.CrossRefGoogle Scholar
  11. Galnoor, I. (2018). Privatization policy: The burden of proof. In A. Paz-Fuchs, et al. (Eds.), The privatization of Israel: The withdrawal of state responsibility (pp. 19–48). New York: Palgrave Macmillan.CrossRefGoogle Scholar
  12. HCJ 3734/11 Dudian v. The Knesset of Israel (2012).Google Scholar
  13. HCJ 4374/15 The Movement for Quality of Government v. The Prime Minister of Israel (2016). Summary available in English at
  14. HCJ 4491/13 College of Law and Business v. The Government of Israel. (2014).Google Scholar
  15. Majone, G. (1997). From the positive to the regulatory state: Causes and consequences of changes in the mode of governance. Journal of Public Policy, 17(2), 139–167.CrossRefGoogle Scholar
  16. Malkiel, Y. (2012). Hindsight regulation of hydrocarbon exploration: Lessons from Israel’s gas bonanzas. Energy Law Journal, 33(2), 405–430.Google Scholar
  17. Ogus, A. (2004). Regulation: Legal form and economic theory. Oxford and Portland, OR: Hart Publishing.Google Scholar
  18. Portman, M. E. (2014). Regulatory capture by default: Offshore exploratory drilling for oil and gas. Energy Policy, 65, 37–47.CrossRefGoogle Scholar
  19. Reich, A. (2018). Israel’s foreign investment protection regime in view of developments in its energy sector. Journal of World Investment & Trade, 19, 1–51.Google Scholar
  20. Shaffer, B. (2011). Israel—New natural gas producer in the mediterranean. Energy Policy, 39, 5379–5387.CrossRefGoogle Scholar
  21. Shaffer, B. (2016). Israel’s energy resource management policy: Lessons for small markets. Energy Law Journal, 37(2), 331–350.Google Scholar
  22. Shiffer, V. (2018). The impact of privatization on the non-profit sector and on civil society in Israel. In Amir Paz-Fuchs, et al. (Eds.), The privatization of Israel: The withdrawal of state responsibility (pp. 341–364). New York: Palgrave Macmillan.CrossRefGoogle Scholar
  23. Sunstein, C. R. (2014). Valuing life: Humanizing the regulatory state. Chicago and London: University of Chicago Press.Google Scholar
  24. Tevet, E. (2018). Incorporation and privatization in the infrastructure sectors in Israel: Processes and consequences. In Amir Paz-Fuchs, et al. (Eds.), The privatization of Israel: The withdrawal of state responsibility (pp. 73–97). New York: Palgrave Macmillan.CrossRefGoogle Scholar
  25. Yadin, S. (2010). Self-regulation in Israeli banking. Banking Quarterly, 45, 19–33.Google Scholar
  26. Yadin, S. (2012). Regulatory contracts in Israeli financial markets. Tel Aviv University Law Review, 35, 447–492. (in Hebrew).Google Scholar
  27. Yadin, S. (2015). Too small to fail: State bailouts and capture by industry underdogs. Capital University Law Review, 43, 889–932.Google Scholar
  28. Yadin, S. (2016). Regulation: Administrative law in the age of regulatory contracts. Tel Aviv: Bursi Press (in Hebrew).Google Scholar
  29. Yadin, S. (2018). New regulation: A revolution in public law. Jerusalem: Nevo Press (in Hebrew).Google Scholar
  30. Yadin, S. (2019a). Regulatory shaming. Environmental Law, 49, 407–452.Google Scholar
  31. Yadin, S. (2019b). Saving lives through shaming. Harvard Business Law Review Online 9, 57–68.Google Scholar
  32. Yadin, S. (2019c). Shaming big pharma. Yale Journal on Regulation Bulletin, 36, 131–147.Google Scholar

Copyright information

© The Author(s) 2021

Authors and Affiliations

  1. 1.Research Fellow, Faculty of LawUniversity of HaifaHaifaIsrael

Personalised recommendations