Sources inform “Globes” that Israel Corp. (TASE:ILCO) and its attorney Adv. Ram Caspi want to summon the State of Israel and Oil Refineries to the International Court of Arbitration in The Hague. Israel Corp. is demanding full implementation of the Oil Refineries agreement.
Ofer Brothers and its legal advisors want to employ an old clause in the 1933 franchise issued by the British Palestine Mandate High Commissioner in 1933 and the 1938 supplementary convention that they claim stipulate that any dispute between the giver of the franchise and the franchise holder should be settled by the International Court of Arbitration.
A High Court of Justice hearing on a petition against the Oil Refineries agreement filed by the Movement for Quality Government is pending. At the same time, Israel Corp. and the Ministries of Finance, Justice and National Infrastructures are trying to reach a compromise acceptable to the High Court of Justice. Last week's meeting ended without results.
It is believed that Israel Corp.'s intention of bring the case before the International Court of Arbitration (which has no connection with the International Court of Justice that sits in the same city) is designed to pressure the government to reach a settlement favorable to Israel Corp.
Israel Corp. declined to comment on the report.
Since the franchise was awarded to Oil Refineries, the company itself must file the petition for arbitration, because its shareholder, Israel Corp., has no legal standing to do so. Therefore, the party that will decide whether to summon the State of Israel to The Hague is the Oil Refineries board of directors, which comprises representatives of Israel Corp. (26%) and the state (74%). In the past, the state's representatives on the board have voted in favor of Israel Corp.'s interests.
The Oil Refineries agreement was signed in late 2002, to replace the 1933 franchise with a 50-year license under new terms. An appendix to the agreement stipulated that in exchange for Israel Corp. waiving its first refusal rights to the government's holding in Oil Refineries, it would receive an option to buying either the Haifa or Ashdod oil refinery without a tender.
If Israel Corp. decides not to buy either of the refineries, the state must buy Israel Corp.'s holding for $130 million in cash. Israel Corp. made an announcement to this effect several months ago. Many parties object to the agreement, lead by Minister of National Infrastructures Joseph Paritzky and current Ministry of Finance Accountant General Yaron Zalika.
Israel Corp. wants to float Oil Refineries, while preserving its controlling interest in the company. The state prefers waiting for the High Court of Justice ruling.
Published by Globes [online] - www.globes.co.il - on February 19, 2004