On 29 August 2020, the UAE Government’s Emirates New Agency (Wakalat Anba’a al Emarat, or ‘WAM’) publicly announced that H.H. Sheikh Khalifa Bin Zayed Al Nahyan, President of the United Arab Emirates (UAE), issued Federal Decree Law No. 4 of 2020 (the UAE Israeli Boycott Repeal Law), abolishing Federal Decree Law No. 15 of 1972 Concerning the Arab League Boycott of Israel (the Israel Boycott Law). The UAE Israeli Boycott Repeal Law follows the announcement of the historic peace agreement between the UAE and Israel (also known as the UAE-Israel Abraham Accord) on 13 August 2020, issued jointly by H.H. Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu. Under the UAE-Israel Abraham Accord, the two states agreed to establish full diplomatic relations in exchange for Israel’s suspension of further annexation of Palestinian territories.
The new UAE Israeli Boycott Repeal Law will allow individuals and companies in the UAE to enter into agreements with Israeli firms, citizens and residents as part of commercial or financial operations or dealings. It will be permissible to enter, exchange or possess Israeli goods and products of all kinds and trade in them in the UAE.
Overview of Israeli Boycott Law
Formed in March 1945, the Arab League has issued boycott resolutions against Israel ever since Israel’s declaration of independence in 1948 (and even before this in 1946, against Zionist produced goods under Arab League Council Resolution 16). On 19 May 1951, the Arab League Council passed Resolution 357 establishing the Central Boycott Office (CBO) in Damascus, Syria, with branch offices to be established in each Arab League Member State.
On 11 December 1954, the Arab League Council passed Resolution 849, approving the Unified Law on the Boycott of Israel (Arab League Council Resolution 849). Arab League Council Resolution 849 contained what is often referred to as the ‘secondary’ and ‘tertiary’ elements of the Israeli Boycott in providing new recommendations prohibiting entities and individuals from or based in Arab League Member States from also dealing (i) with agencies of persons working for Israel, and (ii) with foreign companies and organizations with interests, agencies, or branches in Israel.
Following the foundation and independence of the UAE on 2 December 1971, the UAE became the eighteenth Member State of the Arab League on the same date. By September 1972, the UAE issued its Israel Boycott Law which included the ‘secondary’ and ‘tertiary’ elements mentioned above (in-line with Arab League Council Resolution 849). In 1995, the UAE Cabinet issued Resolution 462/17M of 1995 (1995 Cabinet Resolution), reducing the scope of its Israel Boycott Law to only its ‘primary’ elements. Under the ‘primary’ elements of the UAE Israel Boycott Law, it remained a criminal offence to deal (i) with or in goods or services from Israel or of Israeli origin, and (ii) with the State of Israel and its citizens. Although the 1995 Cabinet Resolution did not formally amend the Israeli Boycott Law itself, it demonstrated the UAE Government’s official position on the matter.
Following the new UAE Israeli Boycott Repeal Law, the Israel Boycott Law will be revoked in its entirety, paving the way for economic, political and cultural cooperation between the UAE and Israel across an extensive range of sectors and issues.
A key point to note is that the new UAE Israeli Boycott Repeal Law has, at the time of writing this note, yet to be made publicly available and has not been published in the Federal UAE Official Gazette. As such, it has yet to be determined whether the UAE Israeli Boycott Repeal Law will be effective as of the date of publication in the Federal UAE Official Gazette or at a later date. We will continue to monitor this situation and provide an update as and when further guidance is obtained.
The historic UAE-Israel Abraham Accord aims to further advance peace in the Middle East and to open up the region in a number of ways, including in wider trade and investment and technological innovation. This development is also a step towards potential diplomatic breakthroughs between Israel and other Arab nations in the future. Currently, the only Arab states with full diplomatic relations are Jordan and Egypt, with a few other Gulf nations, including Qatar and Oman, having ties with Israel.
On 1 September 2020, it was announced on the Emirates News Agency that H.E. Abdulhamid Saeed Alahmadi, Governor of the UAE Central Bank, and Ronen Peretz, Director-General of the Israeli Prime Minister’s Office, signed a Memorandum of Understanding for future cooperation in the banking and financial services sector, and to form working groups and bilateral committees to facilitate banking between the UAE and Israel. Key institutions in the Israeli banking sector have already made announcements of a forthcoming delegation to the UAE to explore opportunities.
The new UAE Israeli Boycott Repeal Law has far-reaching political and economic implications, particularly for companies with multiple operations and nationalities across the Gulf including in Israel. Notwithstanding the new UAE Israeli Boycott Repeal Law, companies will still need to consider carefully their position on doing business with Israel in light of the continuing prohibitions that exist in other Gulf countries on doing business or otherwise engaging with Israeli persons. These prohibitions may continue to apply to the citizens of those Gulf states that continue to adhere to the Arab League Boycott of Israel, wherever they reside.
Furthermore, it should be noted that US anti-boycott regulations, administered by the US Department of Treasury and the US Department of Commerce, place a number of reporting requirements on US taxpayers with regards to, amongst other things, requests to participate or cooperate with certain international boycotts, including boycotts on the State of Israel (with willful failures to report potentially carrying with it financial penalties and criminal liability). We are in the process of putting together a blog note with our US-based colleagues to address this issue in more detail in light of the new UAE Israeli Boycott Repeal Law.
For further information, please reach out to one of the lawyers below or your usual Baker McKenzie contact.