International companies doing business in the West Bank and East Jerusalem face a unique predicament. They can stay and risk complicity in major breaches of international law, or they can leave and risk legal and economic sanctions under so-called anti-boycott laws in the United States and Israel.

Companies such as Mexico’s Cemex and Germany’s HeidelbergCement facilitate settlement expansion and the pillage of land and natural resources.Most companies have so far chosen to stay put, just like those that continue to operate in Western Sahara, Crimea, and other parts of the world rife with human rights violations stemming from territorial occupations. With Israeli annexation of large swaths of occupied Palestinian territory seemingly around the corner, however, they may soon find it wiser to leave.

Construction and infrastructure companies operating in the West Bank and East Jerusalem, such as Mexico’s Cemex and Germany’s HeidelbergCement, facilitate settlement expansion and the pillage of land and natural resources. Makers of heavy machinery, including Sweden’s Volvo and Britain’s JCB, knowingly supply equipment used to carry out home demolitions and displace Palestinian communities. Specialized technology firms, such as Italy’s Videotec, contribute to a system of control and surveillance designed to restrict Palestinians’ movement and maintain separation between Israelis and Palestinians in the occupied territory. This year the Office of the United Nations High Commissioner for Human Rights published a database of more than 100 Israeli and international companies involved in the settlements.

Many of these activities constitute clear breaches of international law, and in some cases even war crimes. In an occupied territory, the confiscation of land, extraction of resources, destruction of property, displacement of population, and imposition of restrictions on movement and access to basic services are all prohibited (with only narrow exceptions). A common misconception is that international law applies to state actors alone—but companies directly perpetrating or otherwise enabling these abuses may themselves be in violation of international law.

The evolution of international law over the past century has clarified that private actors, including businesses, are bound by both human rights law and the laws of armed conflict. Companies are required to refrain from committing or assisting violations of these laws. An early example is the prosecution of corporate actors for their complicity in crimes committed during World War II, including genocide and forced labor.

In recent years, a growing number of countries have passed laws making it illegal for their companies to be involved in these types of violations, even when committed overseas. These companies and their executives may now be subject to civil or criminal sanction under the domestic laws of their home countries.

 To date, however, no corporate actor has been held liable for violating international law or human rights in Palestinian territory. Instead, companies that dare to do the right thing and leave the occupied territory face legal and financial sanctions, and attacks on their reputation. Leaving turned into a fiasco for Airbnb: Immediately after heeding civil society calls and announcing a new policy to delist some 200 rental properties located in illegal Israeli settlements, Airbnb was served with discrimination lawsuits in both the United States and Israel. Plaintiffs in the U.S.-based lawsuits invoked the Fair Housing Act, claiming discrimination based on race, religion, or national origin. In Israel, plaintiffs sued under an equivalent section of Israel’s anti-discrimination law intended to force businesses to provide goods and services to settlements in occupied territory. Airbnb made an about-face and settled the suits before any legal decision.

Even without lawsuits, individuals and companies are heavily discouraged from ending their business with the settlements by so-called anti-boycott laws enacted in Israel and 29 U.S. states. More than half of these laws explicitly conflate Israel and the settlements outside its borders, so that any company seeking to disengage from illegal activities in the settlements finds itself treated as if it were boycotting Israel proper. Israel recently amended its immigration laws to deny entry to visitors who advocate boycotts, including those calling on businesses to disengage from settlements based on international human rights standards.

In practice, the anti-boycott laws are rarely employed. U.S. federal courts have already invalidated several states’ laws, and additional challenges are pending. In Israel, the law has only been invoked twice in nine years. Nevertheless, these laws have created a chilling effect on companies, which typically say that their hands are tied when it comes to exiting occupied territory in order to ensure that their products, services, funds, or expertise are not violating human rights there.

Most companies will not give weight to the risks of staying unless they face a credible threat of legal liability. The reason these risks remain low is the lack of enforcement in their home countries.
Between the years 2005 and 2011, legal proceedings were initiated against corporations operating in the West Bank, East Jerusalem, and Gaza.Between the years 2005 and 2011, legal proceedings were initiated in North America, Europe, and Africa against corporations operating in the West Bank, East Jerusalem, and Gaza. (I was a member of the legal team against two of these corporations.) These efforts sought to replicate the type of transnational corporate accountability litigation that had already been successful in human rights and environmental justice contexts at the time. Instead, the cases ran into reluctance on the part of prosecutors and judges, were out-resourced by their opponents, and faced obstacles typical in any attempt to break legal ground. All were dismissed at early stages, underscoring the impunity enjoyed by companies that continue to violate international law in the occupied Palestinian territory.

But since those early cases, the field of business and human rights has developed by leaps and bounds. In 2011, the U.N. Human Rights Office released its Guiding Principles on Business and Human Rights, which obligates companies to respect human rights norms in all their business activities. In 2017, France passed the Duty of Vigilance Law, which requires French companies to evaluate and reduce human rights and environmental harm throughout their supply chains anywhere in the world. Similar legislation is expected to pass in Australia, Britain, Germany, and Switzerland.

The world has also witnessed a surge in criminal indictments of corporations for war crimes, crimes against humanity, and other offenses. In 2018, top executives of the French cement-maker Lafarge were indicted for crimes against humanity and other crimes allegedly committed in Syria. That same year, the Swedish public prosecutor indicted Lundin Petroleum for alleged crimes against humanity in Sudan.

Against this changing legal backdrop, European companies should be particularly concerned about their activities in the Palestinian territory should Israel go forward with annexation. Not only do numerous European countries now have tougher civil and criminal laws against corporate complicity in human rights abuses and war crimes, but European Union courts have also ruled in recent years that Israeli settlements are not a part of Israel and that activists demonstrating for a boycott of Israeli products inside European supermarkets are engaging in legitimate and protected speech.

Companies doing business in annexed land will automatically become complicit in additional violations.Should the Israeli government proceed with its plans for annexation, companies doing business in annexed land will automatically become complicit in additional violations. That would make their current illicit activities more egregious, and prosecutors and judges more likely to take interest in these cases.

That’s because annexation is essentially an act of war that violates the very premise of the laws of occupation—that an occupation is temporary and does not convey sovereignty. Under both international law and local law in numerous companies’ home countries, unilaterally annexed territory is still considered occupied—except it now has a major new violation superimposed on it. In addition, some activities that are permitted under occupation are prohibited in annexed occupied territory. For instance, until now the Israeli military’s eviction of Palestinians and demolition of their homes could ostensibly be justified as part of the occupying power’s duty to maintain safety and order. But in annexed areas no longer administered by the military, laws or orders to evacuate Palestinian residential areas in order to make way for Israeli development would unequivocally constitute the war crime of forced displacement. If committed systematically, these actions could constitute crimes against humanity. Companies doing business in annexed territory are therefore liable to be held accountable for far graver violations than they would be today.

When advocates of anti-boycott laws suggest that companies think twice before withdrawing their business from territories annexed by Israel, that is dangerous and misleading advice. Anti-boycott laws create an outrageous situation in which a company faces sanctions for ending its complicity in human rights violations and war crimes. With annexation on the table, companies would be wise to rethink the risk of doing business in occupied Palestinian territory—the risks of staying put may soon far outweigh those of doing the right thing.