Since 2005, a political action campaign referred to as the “Boycott, Divestment and Sanctions” movement (BDS Movement) has drawn public attention to the issue of Israeli-Palestinian relations. The BDS Movement promotes a variety of actions that are intended to restrict trade with Israel, including by targeting companies affiliated with or engaged in trade with Israel or Israeli businesses.
Businesses should be aware of existing and proposed Canadian and American legislation that potentially prohibits certain types of action endorsed by the BDS Movement.
CANADIAN ANTI-DISCRIMINATION LAWS
Both Ontario and Manitoba have legislation that prohibits discriminatory business activity on the basis of nationality, among other grounds: see Discriminatory Business Practices Act (Ontario), and The Discriminatory Business Practices Act (Manitoba). This legislation predates the BDS Movement and was introduced in the 1970s in response to the Arab League boycott of Israel.
Under these statutes, a person engaged in business may not discriminate on the basis of the nationality of another person. For corporations, this includes discrimination on the basis of the nationality of any of its officers, directors or shareholders. The legislation prohibits entering into any contract that includes a provision that one of the parties to the contract will refuse to engage in business with any other person on the basis of certain attributes, including nationality. Thus, businesses in Ontario and Manitoba cannot contractually agree not to do business with Israel or Israelis.
There are mandatory reporting requirements for any person asked to participate in prohibited activities. There are also potentially serious sanctions for companies as well as their officers, directors and agents personally for failure to comply with these laws. Additionally, the statutes create the risk of civil liability from claims by affected parties by creating a new cause of action. Both the Ontario and Manitoba Acts allow for the imposition of a ban of up to five years on doing business with the respective provincial governments on any company convicted or held to be violating the statutes.
At the federal level in Canada, recent announcements suggest an increased focus by the government on the BDS Movement.
In January 2015, the Department of Foreign Affairs, Trade and Development Canada and the Ministry of Foreign Affairs of the State of Israel announced a Memorandum of Understanding. Signed by the Foreign Ministers of Canada and Israel, the memorandum includes a commitment to develop “a coordinated, public diplomacy initiative both bilaterally and in international and multilateral fora to oppose boycotts of Israel, its institutions, and its people” within the next three to six months.
The memorandum follows the 2014 Memorandum of Understanding between Canada and Israel regarding a Canada-Israel Strategic Partnership, executed during Canadian Prime Minister Stephen Harper’s visit to Israel. The 2014 memorandum calls for closer diplomatic and political ties between the two countries.
AMERICAN ANTIBOYCOTT LAWS
There is existing legislation in the United States that restricts the ability of U.S. citizens to comply with other nations’ economic boycotts or embargoes. The so-called "antiboycott" laws date from the 1970s. One aspect of these laws is a mandatory requirement for U.S. persons to report any requests to comply with an unsanctioned foreign boycott.
Proposed legislation has been introduced recently in the U.S. House of Representatives and in the U.S. Senate to expand the scope of that country’s anti-boycott laws. Of particular note is that the amendments proposed in the House of Representatives would require foreign companies whose shares are traded on U.S. exchanges to report their compliance to the American government.