The Movement for Quality Government in Israel and the Israel Union for Environment Defense have won a major court victory. The Jerusalem District Court today ordered Israel Chemicals Ltd. (TASE: ICL) unit Dead Sea Works to publish the minutes of the arbitration with the state regarding the calculation of the company's royalties on potash.
Judge Yigal Mersel dismissed Dead Sea Works' appeal against the publication of the minutes and the testimonies in the arbitration. He ruled that the issue was not a private dispute, but a dispute with clear public aspects. "The issue is about the amount of royalties received by the state - as the trustee of the general public - for the exploitation of the general public's natural resources."
The government initiated the arbitration on the royalties, and demanded $291 million in what it claimed were underpayments for the exploitation of the Dead Sea's natural resources. The case was held by arbitration under the terms of the franchise agreement and the Dead Sea Franchise Law.
In August 2012, The Movement for Quality Government and the Israel Union for Environment Defense petitioned for the disclosure of the arbitration's minutes. The Ministry of Finance agreed, but Dead Sea Works refused, and petitioned the Jerusalem District Court against the ministry's decision to accept the request under the Freedom of Information Law. The company sought to prevent the publication of the documents and the public's participation in the process.
The court ruled against the company, stating that when the state is a party in arbitration, it is not a "public authority" and must disclose information under the Freedom of Information Law. Israel Chemicals said in response, "Right at the start of the arbitration, Israel Chemicals said that it was willing to disclose to the arbitrators and the government representatives all the information needed for the purpose of the arbitration. However, Israel Chemicals expressed its concern that this information included commercial secrets, the exposure of which to its competitors would hurt it. Israel Chemicals therefore sought assurances that, notwithstanding the openness, confidence, and full cooperation between it and the state, no harm would come to the company and its competitors would not gain an advantage from the disclosure of commercial secrets. In view of this, the government representatives promised that these materials would be disclosed solely for the purpose of the arbitration.
"It is important to clarify that a substantial part of the government's claims in the arbitration, especially the claims about transit prices require mention and disclosure of clients, expenses, production costs, profit margins, and so on, which are an integral part of the issues in dispute, and the disclosure of even part of which would cause real damage to the company.
"Israel Chemicals puts its trust in the government representatives and in the arbitration institution, and throughout the arbitration it fully disclosed all the information and documents, including commercial secrets, to the arbitrators and the government representatives.
"The public disclosure of commercial secrets will cause real harm to the company and all the parties at interest in it, including the Israeli public, the company's employees, shareholders, and the Israeli government. Regrettably and with disappointment, the government representatives did not oppose the publication, which will harm the company.
"Israel Chemicals refrained from presenting its position to the media during the arbitration, in which it refuted each and every one of the government's claims, even though if the government's claims were published, the public would discover that the government's claim against Israel Chemicals is less than half the amount reported in the media."
Published by Globes [online], Israel business news - www.globes-online.com - on July 15, 2013
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