Primer for Businesses: How Corporate Participation in BDS Risks Legal Liability

In recent months, Boycott, Divestment, Sanctions (BDS) activists have targeted American corporations doing business with Israel in their smear campaign against the Jewish State. Activists use dishonest rhetoric about “human rights” to justify this boycott. While corporate participation in legitimate social justice movements is admirable, business should avoid boycotting Israel for both moral and legal reasons.

First, the BDS movement is disingenuous and advocates destructive measures. It is anti-coexistence and undermines efforts towards peace. Instead of advocating justice and self-determination for both sides, BDS aims to eliminate Israel, the only Jewish homeland in the world.

Furthermore, BDS advocates claim to promote social justice and the interests of Palestinians. Yet BDS actually hurts the people they claim to help. For instance, the Israeli company SodaStream recently closed its factory in the West Bank due to relentless BDS pressure. Hundreds of Palestinians lost their jobs and have been unable to secure work with equivalent salaries.[i] Indeed, Palestinian activists like Bassem Eid have decried BDS because it hurts the Palestinian cause.[ii]

Beyond the immorality of BDS, such activity also creates potential legal liability for businesses. To understand these risks, a brief history of the Arab League Boycott and US anti-boycott laws is helpful.

Economic boycotts of Israel are not new. The Arab League instigated the first international boycott of “Zionist goods” in 1945,[iii] before Israel’s independence. They later expanded this boycott by creating the Central Office for the Boycott of Israel. In 1960, the Seafarer’s International Union and other dockworkers’ organizations handling Israeli cargo complained that the boycott directly harmed their work.[iv] These concerns helped lead to the passage of a Congressional resolution that limited U.S. assistance to Arab states.

The influence of the Arab League Boycott steadily increased throughout the 1970s. In reaction, Congress enacted the Export Administration Act of 1977 (“EAA”), a federal law containing anti-boycott regulations. Leaders of the largest American unions, industry associations, and institutes testified in support of the EAA. The AFL-CIO said the boycott amounted to “racial and religious bigotry.”[v]

The EAA is intended to “encourage, and in specified cases, require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction...”[vi] It prohibits boycotts against a country friendly to the U.S. if the boycott is foreign in origin and is either “imposed” or “fostered” by a “foreign country.”[vii]

BDS activists argue that the EAA does not limit their campaign because it is not “imposed” or “fostered” by a “foreign country.” This is premised on a distorted definition of “foreign country” that is limited to official governments. This conflicts with the legislative history and plain meaning of the EAA. Interpreted correctly, the EAA bans boycotts by foreign nations,[viii] including entities that are not official governments. BDS activists claim to represent all Palestinian civic society.[ix] Thus, even if BDS is not directly tied to an official government, the EAA, having limited the Arab League Boycott, may logically proscribe BDS activity.

In addition, several U.S. states recently passed resolutions condemning BDS,[x] while others have enacted laws that punish BDS activity.[xi] Only two years ago, Congress reiterated its commitment to ending the Arab League Boycott, stating that, “the Arab League boycott…is an impediment to peace…and should be immediately and publicly terminated.”[xii]

While the U.S. government has yet to enforce the EAA to prohibit BDS, current legislative trends indicate significant and growing opposition to the movement’s activities due to its discriminatory nature. Given these developments, robust anti-boycott legislation already in place, and the potential legal implications of complicity in BDS, American corporations and unions would be well served to avoid affiliating with the BDS movement.

Roz Rothstein and Jeremy Burke are CEO and Legal Counsel for StandWithUs, an international Israel education organization which, among its many activities, provides information and resources to businesses approached by BDS activists. Please fill out an intake form at EndBDS.com or call 1.844.END.BDS7 to receive legal advice on how to respond to BDS.