Israel Chemicals Ltd. (TASE: ICL) has filed an arbitration claim over its concession agreement with the government for Dead Sea minerals. Israel Chemicals potash unit Dead Sea Works Ltd. has demanded full compensation for both current and future damage for what it terms “the government’s violation of the concession agreement.”
According to Dead Sea Works, the need for arbitration arises from the examination the government is conducting through the Sheshinski 2 Committee to increase the royalties it pays for extracting Dead Sea minerals. The company claims this is a unilateral process, while Article 26 of the concession agreement defining operations between it and the government, dictates that any dispute should be referred to arbitration. Dead Sea Works suit claims the government is ignoring the agreement and is not only implementing the process unilaterally through the Sheshinski Committee, but also plans raising royalties Dead Sea Works will be required to pay.
Dead Sea Works said: “At this stage, it is an anticipated violation of the concession agreement, however, regrettably, this violation is expected to become concrete and final very quickly.”
The suit was submitted by Advs. Dr. David Tadmor and Michal Zaltzman, and the company has appointed Adv. Moshe Shachal to act for it in arbitration. The government must appoint its own representative in arbitration who together with Shachal will agree on the arbitrator.
The suit filed by Dead Sea Works also mentions the salt harvesting agreement signed with the government 18 months ago, and the agreement to raise the royalties it pays. The company claims this change also arose after agreement was reached between the two sides, despite no heavy pressure being applied by the government. The claim states that, “The government ignores all this, as if it does not exist. The government acts as though the Dead Sea concession law and the concession agreement do not exist.”
Another arbitration procedure agreed upon recently between Israel Chemicals and the government concerns the royalties that the government claims it is owed by the Dead Sea Bromine division. The arbitration team is due to submit their ruling soon.
Published by Globes [online], Israel business news - www.globes-online.com - on March 20, 2014
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