The question of how much money Israel would make from the discovery of natural gas in its economic waters was at the center of a heated public debate. The royalties were indeed only part of the story, but the price of that part is not insignificant. In 2022, the state earned NIS 1.7 billion from natural gas royalties and the total amount since the discovery of gas reserves is NIS 20 billion. This money, of course, is public money.
Yet, despite the importance of the case, the legal proceedings regarding the level of royalties in question and the mechanism for their calculation took place entirely within the framework of a general publication ban. The decision was also withheld and could only be published 14 months after its delivery.
The principle practiced in Israel is that of public debate and that everything is open, unless there is a good reason to deviate from it. In practice, there is a great distance between this statement and reality, and many proceedings take place behind closed doors. The State Comptroller’s report from March 2022 indicates that in a third of the files opened between 2017 and 2019, a general publication ban was imposed, including with regard to their very management. In only a third of the cases that remained confidential, the report found, was confidentiality granted in accordance with the court-imposed obligation. More often than not, the permit was completely hidden due to a concrete detail that needed to be hidden.
As a confidential file, it cannot be viewed at all. A search on the « Net Law » system brings up the result « error », which means that it is not even possible to know that it is a case which exists but which has been protected. The decision on the publication ban is also confidential and the matter does not appear on the discussion forum either. If an appeal is filed with the Supreme Court in a confidential matter, it automatically becomes confidential there as well and the parties are marked « anonymous. »
The reason for this is precisely to enable advertising. Unlike court hearings, Supreme Court judgments are also published in confidential issues, so people often prefer not to risk revealing personal details. The problem, of course, is that discretion is not exercised when opening the case, and this is how even companies, in purely commercial disputes, become anonymous. For this to change, someone has to trigger it. In most cases this does not happen.
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For a matter to be confidential, it must be counted among the exceptions to the open court principle that appear in the law, and in most cases the court has the discretion to decide whether to protect and to what extent. Exceptions include, for example, state security, foreign relations, sexual offenses and also “protection of commercial secrets”, as in the case of gas royalties.
They asked for closed doors
In 2015, gas exploration and production companies filed a lawsuit against the Department of Energy, demanding the return of royalties they claimed they overpaid for the years 2013-2015. During the preliminary proceedings, Chevron Mediterranean Ltd., NewMed Energy and Avner Oil requested that the proceedings be held behind closed doors, saying that otherwise their trade secrets would be exposed.
The Jerusalem District Attorney’s Office, which represented the state through Advs. Sharon Avni and Meni Menachem opposed it. Among his reasons were arguments of principle. it was asserted that this was a matter of particular public importance and that conducting the hearing in confidence would prevent any disclosure to the public.
Judge Rafael Yaakobi accompanied the companies and ruled that the case would be conducted under a publication ban and that it would be possible to request its withdrawal at the end of the procedure. The prosecutor’s office did not give up and appealed to the Supreme Court, but Judge David Mintz rejected the request.
At the same time, he clarified that « even if the entire hearing takes place behind closed doors, this does not necessarily mean that the publication ban will be maintained even after the verdict is delivered. » He then added: « There is no doubt that in due course the court will also be required to give its opinion on this matter. »
This decision was rendered in December 2017. Until the verdict, in November 2022, seven years after the start of the procedure, the case remained confidential, and was still kept secret more than a year later.
Justice Yaakobi retired shortly after the judgment was delivered. In December 2022, the Jerusalem District Attorney filed a request to lift the publication ban, which was heard by Judge Nimrod Felix, who was not familiar with the case. He decided that in February the decision would be published and the parties would have to agree on a text to be published, but they had difficulty reaching agreement.
Companies wanted to reveal a lot; The Jerusalem prosecutor’s office, which initially wanted to allow publication of the entire proceedings, only agreed to limited publication of the judgment.
When the hearing was finally scheduled, war broke out and the parties finally reached agreement on a text, which was made public. The procedure itself and the decisions taken therein remain confidential.
Lawyers not involved in the case told « Globes » that even in the case of completely closed cases and in which the parties argue over the wording, a period of more than a year during which no one knows that a verdict was rendered is unacceptable. extremely unusual, even in circumstances where the judge presiding over the case has changed.
Meanwhile, an appeal of the verdict has been pending before the Supreme Court since February 2022 – confidential of course. The companies are mentioned anonymously. What trade secrets would be revealed by simply knowing that there is a royalty debate?
The energy exploration and production companies, through their lawyers, preferred not to comment on the subject.
The Israeli Judicial Authority said: « The Judicial Authority takes very seriously the State Comptroller’s report regarding the non-publication of court cases due to a confidential detail that affects the confidentiality of the entire case, and works in several ways to improve the system and ensure the widest possible publication of judgments and decisions by completing confidential details in advance.
« This is a complex and large-scale case in which a request for financial and declaratory relief that several gas companies had filed against the State to recover royalties on the production of natural gas was discussed. The procedure took place in secret for approximately eight years, during which the issue of the publication ban was discussed by both the District Court and the Supreme Court.
« The state’s request to publish the judgment was filed after the court proceedings ended and the judge hearing the case withdrew. The request was forwarded to a new judge who, after about two months, issued a ruling that a copy of the verdict should be published omitting confidential details, including trade secrets, and also ordered that an appropriate version be submitted to the court within 20 days. In the absence of agreement between the parties, a date was set for the hearing, which was canceled due to the war, and before it was postponed, the parties announced that they had reached an agreed version. As noted, the delay in publishing an authorized version of the judgment was mainly due to the lack of agreement between the parties.
“Regarding the petition pending before the Supreme Court: at the time of the opening of the proceedings before the Supreme Court (February 6, 2023), the case was classified before the district court as “confidential to the public and open to the parties” . Accordingly, the classification of the case was also adapted to the Supreme Court. Despite this, and as is the case with most Supreme Court decisions, judgments on cases handled confidentially by the courts are published on the Supreme Court’s website. , while keeping the names of the parties confidential, for reasons of publicity and transparency. This is also done in the present case. »
Published by Globes, Israel Business News – fr.globes.co.il – February 5, 2024.
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