Menora Insurance Sues Clal for 70 Million Shekels Over Legal Negligence in EMG Gas Deal

An unprecedented settlement dispute has revealed serious negligence claims against the prestigious Israeli law firm Gornitzky & Co. According to a lawsuit filed by Menora Insurance, a drafting error in contracts with the Egyptian gas company EMG led to the expiration of a major claim by Israel's Bazan Oil Refinery. Menora, which paid 73 million shekels to Bazan to settle the matter, is now suing Clal Insurance for 70 million shekels, demanding reimbursement as Clal insured Gornitzky during the relevant period.

The conflict dates back to complex negotiations between Bazan and EMG in 2017-2018 concerning natural gas exports. The legal handling was led by attorney Jack Smith, then at Gornitzky and now a senior partner at Shibolet Law Firm. Bazan emphasized to Smith that preventing the statute of limitations on the claim was critical, and Smith drafted agreements intended to freeze the limitation period. However, in 2019, during arbitration, EMG argued the claim was time-barred. Bazan's English lawyers alerted Smith to a serious drafting error that could cause the claim, valued between 60 and 450 million dollars, to be dismissed.

In February 2021, arbitrators accepted EMG's statute of limitations defense, rejecting Bazan's claim and explicitly noting that some of Bazan's allegations would have succeeded if not for the legal error. Following this setback, Bazan sent Gornitzky a draft lawsuit demanding 265 million shekels for professional negligence. The dispute went to internal arbitration, resulting in Menora, which insured Gornitzky at the time, agreeing to pay Bazan 73 million shekels to close the case and avoid greater damages.

Menora now refuses to bear the loss and accuses Clal Insurance, which covered Gornitzky from 2017 to 2020, the period when the error occurred, of evading its payment obligations. Menora claims Clal's refusal is baseless and opportunistic since Smith was aware of the case while Clal's policy was active. Clal counters that coverage is denied because the official ruling came in 2021, after their policy expired. Clal has yet to file a formal defense in court.