Beny Steinmetz must pay geologist NIS 50m

The court ordered Steinmetz to compensate Joseph Langotsky for abandoning the Tamar field before gas was found.

The Tel Aviv District Court upheld the arbitration decision under which Beny Steinmetz's Scorpio Real Estate Ltd. (TASE: SCRP.B1) will pay NIS 50 million to geologist Dr. Joseph (Yossi) Langotsky. Judge Judith Shevach dismissed Scorpio's appeal of the arbitration decision by Judge Emeritus Boaz Okun in July 2013.

Huge quantities of natural gas have been discovered in Israeli waters since Langotsky, the first man to explore for gas in the Tamar area, and Steinmetz joined forces and named the well for Langotsky's granddaughter. In 2008, Scorpio announced that it was abandoning the project. After Langotsky failed to find a new investor, and because of his limited funds, he lost control of the rights to the well. Shortly afterwards, in January 2009, the Tamar gas discovery, worth an estimated $8 billion, was announced. He then sued Scorpio.

In the motion to overturn the arbitration decision, Scorpio accepted Judge Okun's ruling on the company's responsibility, but not the calculation of the damages. "The arbitrator ignored the fact that the parties explicitly waived the right to sue for losses or prevention of profits, i.e. expected compensation, if Scorpio were to decide to quit the venture.

Judge Shevach dismissed Scorpio's argument, and upheld the arbitrator's interim ruling on the matter of responsibility. "Scorpio's attempt to break the structure of the interim ruling and to reopen the hearing as part of the second section of the hearing, the damages and compensation, should be dismissed," she ruled. "Except for understanding the position of Scorpio, which is tearing its hair out, and its decision to quit the venture after investment millions of dollars in it over the years, I do not find in its claims grounds for overturning the arbitrator's decision, or even amending it.

"Scorpio failed to take into account the interests of Langotsky, it loyal partner for years, and harmed his right to find an alternative investor. Finding it liable to compensate him is the right result. The fact that at the same time its rights in the venture were foreclosed and vanished as if they never existed does not create a distortion of justice."

Published by Globes [online], Israel business news - www.globes-online.com - on March 11, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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