Doing Business in Illegal Israeli Settlements, the Dutch Way

[Alessandra Spadaro works as Assistant Professor in public international law at Utrecht University. She is conducting a three-year project on “Business in and for war: the role and limits of international humanitarian law”, funded by the Dutch Research Council.]

On 6 November 2025, The Hague Court of Appeal handed down its judgment in a case brought by a coalition of Palestinian and Dutch NGOs against the Netherlands for failing to take sufficient steps to prevent genocide and other international law violations by Israel in the Occupied Palestinian Territory (OPT). The plaintiffs aimed to secure a court order that would force the Dutch state to cease the export of military and dual-use goods to Israel and to take further and effective measures to end trade relations between Dutch companies and illegal Israeli settlements in the OPT. The Court of Appeal confirmed the decision of the lower court to reject all claims. 

In spite of this outcome, the plaintiffs can rightly welcome having secured a clear judicial statement about the existence of a serious risk of genocide in Gaza. Contrary to the government’s view, international law experts had previously advised the Netherlands that the indication of provisional measures by the International Court of Justice (ICJ) should be taken as establishing the existence of a “serious risk of genocide” triggering the state’s obligation to prevent it (CAVV, p. 6; de Hoon and Sluiter, p. 3). This interpretation was confirmed by the Court of Appeal with reference to the provisional measures ordered in South Africa v Israel in early 2024, leading to the conclusion that such a serious risk does exist in relation to Israel’s actions against the Palestinian population in Gaza (5.7). The government also insisted, both in political discussions and in court, that only the ICJ can make a definitive finding of genocide. Conversely, the Court of Appeal pointed out that it would make little sense for states to await a final ICJ ruling before taking action to prevent genocide (5.6). 

Judicial restraint nevertheless prevailed, and the Court of Appeal concluded that the state has wide discretion in choosing which measures to take to comply with its obligations under the Genocide Convention and under international humanitarian law (IHL) (5.15-5.16). Here I offer some thoughts on the Court’s reasoning concerning trade relations between Dutch companies and illegal Israeli settlements. I deal in turn with the Court’s findings in relation to the so-called discouragement policy of the Dutch government and with respect to the non-existence of a prohibition to do business in illegal settlements. 

The Discouragement Policy

The Dutch government applies a “discouragement policy” to the activities of Dutch companies that directly contribute to or facilitate the construction and maintenance of Israeli settlements in the OPT. Based on this policy, companies that proactively inquire with the government about doing business in the settlements are informed that settlements are illegal and about potential (legal) risks of operating there. A freedom of information request submitted by two NGOs (also among the plaintiffs in the case under discussion) revealed that Dutch authorities refused to approach the companies directly to inform them of the policy, fearing that this might be “interpreted as an implicit call to cease their activities”. The government might have become slightly more proactive in this respect. In court, it claimed that the Netherlands Enterprise Agency is in contact with around 100 companies every year and informs them of the discouragement policy, which since July 2025 is also advertised on the websites of the Agency and of the Dutch embassy in Tel Aviv (8.3). 

The government considers the discouragement policy effective, in light of the fact that only three Dutch companies (Kardan N.V., Tahal Group International B.V., Booking.com B.V.) are listed in the database of businesses operating in Israeli settlements set up by the United Nations (UN) Human Rights Council (HRC). The Ministry of Foreign Affairs is reportedly considering whether the policy should be adjusted in light of the ICJ’s Advisory Opinion of 19 July 2024 (8.4). In this Advisory Opinion, the ICJ affirmed that states should “abstain from entering into economic or trade dealings with Israel” concerning (parts of) the OPT which may entrench its unlawful presence there and “take steps to prevent trade or investment relations that assist in the maintenance of the illegal situation created by Israel” in the OPT (para. 278). 

According to The Hague Court of Appeal, the ineffectiveness of the discouragement policy was not sufficiently demonstrated in the summary proceedings of this case, since “only” three Dutch companies are listed in the HRC database and it was not proven that additional Dutch businesses maintain trade and investment relationships with illegal settlements (8.9). This finding is questionable in at least two respects.

First, the scope of application of the discouragement policy seems to be quite narrow. The policy apparently covers only a subset of business dealings, namely those directly contributing to or facilitating the maintenance of Israel’s illegal presence in the OPT. At least some investments and other financial relationships would then arguably fall outside the scope of the policy in so far as involvement in the settlements is only indirect. Therefore, Dutch financial institutions – such as ING, Rabobank, ABN Amro and several pension funds – that invest in or loan money to companies operating in illegal settlements might not be in violation of the discouragement policy. 

Second, while reliance on the HRC database by the Dutch court is understandable, the database is not exhaustive nor the most comprehensive one. Since its last update of September 2025, the HRC list now includes 158 entries. This number appears to significantly underestimate the extent of corporate involvement in the illegal colonization of Palestinian land. The Who Profits Research Center’s “Database of Complicit Companies” has 465 entries. Francesca Albanese, the UN Special Rapporteur on the situation of human rights in the OPT, reported having developed a database of approximately one thousand corporations involved in human rights violations and international crimes in the OPT, a small number of which she explicitly named in her July 2025 report (para. 8). As she compellingly argues, the economy of occupation in Palestine spans well beyond the settlements and encompasses a wide-ranging corporate-fueled process of displacement and replacement of the Palestinian population in the service of settler colonialism (para. 22). 

Relatedly, compliance by third states with the obligations identified by the ICJ in its 2024 Advisory Opinion requires more than taking measures in relation to settlements. In a resolution demanding compliance with the Advisory Opinion, the UN General Assembly called on states to comply with the ICJ’s conclusions concerning economic, trade and investment relations that may entrench or assist Israel’s illegal occupation of the OPT, “including with regard to the settlements and their associated regime” (para. 4 (d) (ii), (iv), emphasis added). Similarly, the UN Committee on Economic, Social and Cultural Rights recently recommended that the Netherlands take “all necessary steps to avoid recognising, aiding, or assisting the Israel occupation in Palestinian territory, including by ensuring that all business enterprises domiciled in its territory or under its jurisdiction are not involved in the illegal Israeli settlements” (para. 17(a), emphasis added). This wording confirms that preventing business involvement in the settlements is necessary but not sufficient to comply with the obligations not to recognize, aid or assist Israel’s illegal occupation. Indeed, the General Assembly specified that states should “take steps to ensure that their nationals, and companies and entities under their jurisdiction, as well as their authorities, do not act in any way that would entail recognition or provide aid or assistance in maintaining the situation created by Israel’s illegal presence in the Occupied Palestinian Territory” (para 5(a), emphasis added). The Hague Court of Appeal did not take into account the mismatch between the obligations of states not to recognize, aid or assist the illegal occupation as a whole and the narrow scope of the discouragement policy of the Dutch government which concerns only certain activities in relation to the settlements.

Even by limiting the analysis to businesses directly involved in the settlements and listed in the HRC database, the validity of the Court of Appeal’s conclusion as to the adequacy of the discouragement policy appears dubious. Of the 158 companies listed, only 19 are not Israeli. 6 of these are from the United States, which is Israel’s closest ally and has a strong domestic framework aimed at preventing the boycott of Israel. The fact that 3 of the remaining 13 foreign companies in the HRC database are Dutch can hardly be considered evidence of the reasonable effectiveness of the discouragement policy. 

The Prohibition of Doing Business in Illegal Settlements 

The Court of Appeals also ruled, siding with the government, that no national or international regulation prohibits companies from doing business with illegal settlements in the OPT and that no national or international legal basis exists for prohibiting this (8.7). This is perhaps the most troubling finding by the Court. 

The illegality of the Israeli settlements in the OPT is premised on the violation of Article 49(6) of Geneva Convention IV, which prohibits the occupying power from deporting or transferring (parts of) its own civilian population into the occupied territory (ICJ, paras. 115-119). The violation of this prohibition, which also exists under customary international law, is a grave breach under Article 85 of Additional Protocol I. At the International Criminal Court, the direct or indirect transfer by the occupying power of (parts of) its own civilian population into occupied territory can be prosecuted as a war crime (Article 8(2)(b)(viii) of the Rome Statute). This war crime is also included in the International Crimes Act adopted by the Netherlands in 2003 (Section 5(2)(d)(i)).

The occupying power is the addressee of Article 49(6) of Geneva Convention IV (ICRC 2025, para. 3238) and its involvement in the population transfer is thus required, but private actors can also contribute to a breach of this prohibition (Tomuschat, p. 1563). In turn, under Common Article 1, all states have the obligation to respect and ensure respect for the Geneva Conventions. The obligation to ensure respect encompasses ensuring that even private persons whose conduct is not attributable to the state do not commit violations, for instance by disseminating the Conventions among the population and by repressing breaches (ICRC 2025, paras. 221-222). Under Dutch criminal law, both natural and legal persons can be prosecuted, including for international crimes. The Dutch National Prosecutor’s Office also confirmed that “Dutch companies are required to refrain from any involvement in violations of the International Crimes Act or the Geneva Conventions” (see also ICRC 2024, at 24). 

The possibility that Dutch businesses and business persons may be subjected to prosecution under the International Crimes Act for being involved in or supporting the Israeli settlement policy had been flagged in an internal memorandum by the legal counsel of the Ministry of Foreign Affairs. Additionally, businesses can face civil liability for causing, contributing to, or being directly linked to IHL violations (ICRC 2024, at 27; OHCHR 2012, at 15-18). These avenues for accountability are hard to reconcile with the Court of Appeal’s categorical conclusion that doing business in illegal settlements is not prohibited under domestic or international law. 

The largely passive attitude of the government in relation to its (ineffective and insufficient) discouragement policy can also scarcely be considered to live up to the Netherlands’ obligation to ensure respect for IHL by private actors under its jurisdiction. Further, in relation to the repression of IHL breaches, it is not clear that the Dutch Prosecutor’s Office has taken steps to investigate a criminal complaint filed at the end of 2024 against Booking.com in relation to its operations in Israeli settlements. While the state might have discretion in choosing what measures to take to comply with its obligations, it is hard to justify the Court of Appeal’s finding that the state may reasonably conclude that no further measures are necessary in this respect (8.11). International law not only provides a legal basis for the Netherlands to take further measures to prevent business dealings with settlements, but also rather requires them. 

Concluding Thoughts 

This decision ends up subordinating compliance with international law to profit-making at the expense of Palestinians. It should perhaps not be surprising, in light with the notorious Dutch pioneering of corporate involvement in colonization. The decision further casts doubts on the ability of aspirational international law principles and rulings to deliver justice, which in practice is left to the whims of states that have so far showed little regard for the rights of the Palestinian people. 

Photo attribution: Photo by Levi Meir Clancy for Unsplash