US companies face legal risks from Ireland’s anti-Israel import ban

Ireland It announced plans to pass Europe’s first law banning imports from Israeli companies operating in Jerusalem and the West Bank.

Like most boycotts, sales and sanctions (BDS) efforts, the bill is unlikely to cause measurable economic harm to Israel. But it poses a very real and potentially catastrophic threat to American businesses and investors.

Under US law, it is illegal for American companies to participate or support Israeli foreign government support boycotts. Export control regulations (enforced by the Department of Commerce’s Anti-Boycott Compliance Office) and Internal Revenue Code §999 (controlled by the IRS) accurately prohibit any actions that Irish law attempts to enforce. These laws were enacted in response to the Arab League’s boycott and are based not only on economic self-interest but also on civil rights laws. The boycott of the Jewish state was always about who the Jews were, not what Israel would do. Recent laws, such as the Trade Promotion and Trade Enforcement Act of 2016, reaffirmed America’s bipartisan commitment to the fight against BDS.

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Penalties for violating US anti-boycott laws can be abrupt, including civil fines, criminal prosecution, potential imprisonment, and loss of export privileges. Decisions to change operations in accordance with Irish law, particularly when involved with the termination of Israeli partnerships or sales, could constitute important events that require disclosure to both shareholders and the SEC under existing risk factors or geopolitical reporting guidelines. Public companies should particularly note how such changes are characterized in their submissions to avoid accusations of misrepresentation and politically motivated discrimination.

Aside from federal restrictions, it is adopted by the majority of US states. Anti-BDS Law Bar companies from receiving state contracts if they boycott Israel. This means that companies that comply with Irish laws may also have contract termination from the attorney general of these states, prohibitions and enforcement actions. The backlash faced by Unilever in 2021 provided specific warnings after supplementary Ben & Jerry attempted to boycott parts of Israel. Several states sold pension funds, and the company suffered reputational damage and ultimately had to return the decision under heavy pressure from shareholders and lawsuits.

If Ireland had been trying to chase the American capital abroad, we would not have come up with a better way to do so.

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What US companies need to do now

Even American companies operating in Ireland, or transactions that touch Ireland’s jurisdiction, need to take proactive steps to protect themselves.

First, as a threshold, American companies operating in Ireland must conduct a foreign legal compliance audit to identify decisions or actions that may be explicitly or implicitly linked to foreign legal pressures.

Second, businesses need to educate their stakeholders on the oppositionIsrael The sale creates unsafe and undesirable legal exposure and prevents internal directives from implying or enforcing foreign boycott targets.

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Third, companies must implement boycott response policies, where lawyers need to consider all foreign legal compliance cases. The General Counsel Office should track and report requests from foreign governments to the Department of Commerce, if necessary.

Fourth, American companies operating in Ireland should consider exposing their state contracts. Company is in a particular state, especially Anti-BDS Laws for Bookswe must ensure compliance with anti-BDS contract clauses.

Finally, if legal exposure cannot be reduced, companies may need to consider restructuring their businesses, such as reducing or terminating operations in Ireland. If the costs of doing business in Ireland include federal investigations, SEC scrutiny and shareholder litigation, companies may need to rethink their presence in the country.

The bottom row means that American companies are doing business with Israel and are not at risk. They are at risk when they quit their business as foreign governments put pressure on them to do so. Anti-boycott laws are not just about trade, but also about protecting American sovereignty, American investors and American civil rights. And when it comes to following the law, American companies must remember: America’s first.

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