Repeal of the UAE’s Israel Boycott Law

Summary

On 27 August 2020, Federal Decree Law No. 4 of 2020 entered into force and consequently repealed the Israel Boycott Law that had previously prohibited all dealings between individuals and companies in the UAE and Israel.

In taking this step, the UAE formally lifted the pre-existing trade and travel restrictions between it and Israel. These restrictions had been in place since 1972, shortly after the foundation of the UAE as a state.

The repeal of the Israel Boycott Law precedes the diplomatic agreement between the leaders of the UAE and Israel, referred to as the Abraham Accord (named as such due to the understood commonalities between the Abrahamic religions of Islam, Judaism and Christianity). The Abraham Accord was formalised on 15 September 2020. It is notable, however, that prior to the formalisation of this diplomatic agreement, the UAE Government had already taken steps unilaterally to remove the Israel Boycott.

The Legal Effect

The issuance of Federal Decree Law No. 4 of 2020, which repealed Federal Law No. 15 of 1972, constitutes the first amendment to the legal framework which has regulated the trade relationship between the two countries since 1995. In 1995, the Ministerial Council of the Gulf Cooperation Council recommended that its member states remove what was referred to as the second and third limbs of the Israel Boycott. This recommendation intended to enable trade between GCC member states and entities that had dealings with Israel. However, the implementation and practical effects of the 1995 recommendation varied in application between GCC member states. In the UAE, a Cabinet Resolution was passed which demonstrated the UAE’s intent to follow this recommendation and reduce the restrictions on trade with Israel. This recommendation was adopted on a practical basis, but not a legal one as, as despite the Cabinet Resolution, there was no formal amendment to the 1972 law nor the criminal penalties that would apply to those who breached the law. Therefore, irrespective of the Cabinet Resolution, there remained a residual risk for UAE companies and individuals which interacted with entities that had dealings with Israel.

Consequently, many companies with a presence in the UAE ensured that they were compliant with the 1972 law and ringfenced any Israel-related operations from any direct or indirect involvement with their UAE offices and employees.

Looking forward

This change will in particular be relevant to multinational companies with a presence in both the UAE and Israel. Some MNCs, specifically with a US base, had previously been in a precarious position whereby they were simultaneously caught between both Israel boycott and anti-boycott legislation.

MNCs operating in the UAE and Israel may now want to revisit their internal operations, policies and reporting lines, especially if they are looking to further develop cross-border business between the two countries.

For further advice and guidance on this issue please contact Muneer Khan, Adam Wolstenholme or your usual contact at Simmons & Simmons.