Shackling the Future

Abstract

Abstract The dispute under examination in this chapter concerned a challenge to commitments made by the government of then Prime Minister Netanyahu to refrain from making regulatory changes to the gas industry for a period of 10 years in exchange for the development of four natural gas fields in the Mediterranean Sea. The litigation before the Israeli High Court of Justice concerned these commitments made pursuant to contract, not yet the subject of an investment dispute, triggering review under Israeli administrative law, rather than under Israel’s Basic Laws. At issue in the legal proceedings were elements ordinarily associated with investment treaty law (including ‘stabilization’ and ‘umbrella’ clauses and legitimate expectations doctrine as a component of the treaty standard of ‘fair and equitable treatment’). The High Court maintained that the executive could not bind future legislatures to this sort of commitment. Even though a potential investor–state dispute was looming in the shadows, the ruling rubs against investment law trendlines: no investment tribunal, for instance, has found such clauses to be invalid or unenforceable. The Court’s ruling exhibits soft resistance because it was not inhibited from concluding that such a measure contradicted the sovereign powers of ‘well developed’ states. The reasoning of the High Court of Justice may empower future Israeli governments to resist some investment treaty law disciplines that are viewed as incongruous, even if accepted by other capital-importing states.