Ireland has announced plans to adopt a first European legislation that prohibits imports from Israeli companies that are active in Jerusalem and the West Bank.
Like most efforts for the Boycott, disinvestment and sanctions (BDS), it is unlikely that the bill will cause measurable economic damage to Israel. However, it is a very real and potentially devastating – threat to American companies and investors.
According to American legislation, it is illegal for US companies to participate in or by foreign government -supported Boycots of Israel. The regulations for export administration (enforced by the Office of Antiboycott Compliance) and Internal Revenue Code § 999 (managed by the IRS) prohibit exactly the type of behavior that the legislation of Ireland wants to force. These articles of association were determined in response to the boycott of the Arab League and are not only based on economic self-interest, but also in the law of civil rights: the boycots of the Jewish state have always been about who Jews are not what Israel does. More recent legislation, such as the 2016 Trade Facilitation and Trade Enforcement Act, confirmed the Bipartisanal deployment of America to combat BDS.
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Palestinian, EU, Ukrainian and Irish flags are fluttering, after Ireland has announced that it will recognize the Palestinian state, amid the continuous conflict between Israel and the Palestinian Islamist group Hamas, outside Leinster House in Dublin, Ireland, 28 May 2024. (Reuters/Damien Eagers)
The penalties for violating American anti-boycott laws can be steep, including civil fines, criminal prosecution, possible prison sentence and the loss of ex-port rights. Any decision to change the activities in response to the law of Ireland – in particular if the termination of Israeli partnerships or disinvestment is possible – may be a material event that causes these laws and which requires disclosure to both shareholders and the SEC under existing risk factor or geopolitical reporting guides. Public companies must mainly take into account how such changes in their archives are characterized to prevent accusations of incorrect presentation of matters or politically motivated discrimination.
Apart from federal restrictions, the majority of the US states have adopted anti-BDS laws that remember companies to receive state contracts if they boycott Israel. This means that companies that adhere to the law of Ireland, also risk contract, the exclusion of the state and possible enforcement actions of the lawyers general of these states. The return with which Unilever was confronted in 2021, after the subsidiary Ben & Jerry de Boycotts of parts of Israel offers a concrete warning: several states have divested pension funds, the company suffered reputation damage, and they eventually had to decline the decision under immense pressure of shareholders and lawsuits.
If Ireland wanted to chase the American capital from the country, it could not have been a better way to do this.
Dublin, Ireland-18 May: Pro-Palestinian activists of the Ireland Paleste Solidarity campaign, supported by members of left-wing parties, including people for profit and the socialist party and students, participate in the National March for Palestine of the Garden of Remembrance To O’Connell Street and Leinster House, in the past. (Photo by Artur Widak/Nurphoto via Getty Images) (Artur Widak/Nurphoto via Getty images)
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What American companies have to do now
American companies with activities in Ireland – or even transactions that affect Irish jurisdiction – must now take proactive steps to protect themselves.
Firstly, as a threshold material, every American company that is active in Ireland must perform a compliance with foreign law to identify decisions or actions that can be explicit or implicitly linked to foreign legal pressure.
Secondly, companies must inform stakeholders that anti-Israeli disinvestment generates undesirable legal exposure, not the safety, and ensure that internal guidelines do not imply or imply foreign Boycott goals.
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Thirdly, companies must implement a Boycott response policy for which all compliance actions of foreign rights must be assessed by the legal counsel. Offices for General Counselor must, if necessary, follow and report any requests from foreign government to the Ministry of Commerce.
Fourthly, American companies that are active in Ireland must revise their exposure to the state contract. If a company does business with certain states, especially those with anti-BDS laws in the books, the company must ensure its compliance with Anti-BDS contract clauses.
New Hampshire Gov. Chris Sununu has signed an executive order that forbids the state to do business with companies that support the BDS movement. (IAC for action)
Finally, if legal exposure cannot be limited, companies may have to take into account the restructuring of companies, including the reduction or termination of activities in Ireland; If the costs of doing business in Ireland now include federal investigations, SEC supervision and shareholders lawsuits, companies may have to reconsider their presence in the country.
The bottom line is that American companies are not at risk because they do business with Israel. They run a risk if they stop doing business because a foreign government has forced them to do this. The Anti-Boycott law is not only about trade-it is about protecting American sovereignty, American investors and American civil rights. And when it comes to obeying the legislation that American companies must remember: America first.
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