Israel’s Law and Regulation After the Gas Discoveries

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.