A group of Israeli investors are threatening to sue Cyprus under its investment treaty with Israel, unless they are awarded the concession to explore for hydrocarbons in Block 8 of Cyprus’ economic waters.
CO Cyprus Opportunity, a Cyprus-listed company controlled by Israeli investors, are demanding that Cyprus should declare them the winners of a prior tender for Block 8.
The Israeli investors accuse the Cyprus government of acting in bad faith and deceptively in refusing to award the concession for Block 8 to the consortium, which comprises Cyprus Opportunity and Norway’s AGR.
According to Globes, the investors estimate the damage they have sustained in the billions of dollars, and say the conduct of the Cypriot government casts into doubt the economic viability of Israeli investments in the island
The application to the Cyprus government is being made under the 1998 investment protection treaty between Israel and Cyprus.
Cyprus Opportunity put in a bid for the block in question during the second hydrocarbons licensing round in 2012. It was the only consortium or company that had bid for Block 8 at the time. The block was not awarded.
The same block is now being auctioned for exploration rights during the ongoing third licensing round. Two groups are bidding for the block: ENI, and a consortium comprising Cairn and Delek.
Cyprus Opportunity is listed on the Cyprus stock exchange. On its website, it cites Block 8 as a company ‘asset’.
The company claims that because its elimination from the second licensing round for Block 8 is disputed, the same block cannot be put up for auction in the current third round until the matter is resolved legally.
In 2012, Cyprus called for tenders for 12 exploration licences (blocks) in the island’s exclusive economic zone.
In total, 29 companies in 15 groups had taken part in the second licensing round, with Cyprus Opportunity the only group bidding for Block 8.
According to Cyprus Opportunity, in May 2013 the government here “suddenly announced” to the partnership that its bid had been disqualified.
“In July 2013, the company filed a petition in the Supreme Court of Cyprus, but, although the petition has not yet been ruled on, the government of Cyprus published another tender, in March 2016, for issuing licenses, including Block 8.”
Globes quoted Rony Halman, chairman of Cyprus Opportunity, as saying:
“The conduct of the government of Cyprus and of the judiciary system in the country is completely in contravention of normal international business conduct. This poses major questions as to the willingness of the Cypriots to cooperate strategically with Israel and Israeli companies and raises true concern regarding the economic viability for Israeli investors to promote investments in the country.
“We intend to go all the way, using all tools at our disposal, to force the government of Cyprus to safeguard our rights.”
Lawyers representing the Israeli investors will be sending a letter to the government, demanding that Cyprus engage in immediate negotiations with the Israeli investors to settle the dispute.
According to Cyprus Opportunity, unless the dispute is resolved within six months of this notification, under the Israel-Cyprus treaty the investors can instigate international arbitration proceedings against Cyprus at the International Centre for Settlement of Investment Disputes, which operates in cooperation with the World Bank in Washington.