Proposed Law Prohibiting Trade With Israeli Settlements In Palestine

On 19 June 2026, the Norwegian Ministry of Foreign Affairs ("the Ministry") submitted for public consultation a proposal for a new law prohibiting trade with Israeli settlements in Palestine. The proposed law may – if adopted – have significant impacts for Norwegian businesses with direct or indirect commercial relationships with companies, individuals or public authorities in the Israeli settlements in Palestine.

In this newsletter, we provide an overview of the proposed law and other key developments at EU levels, their potential impact on the legal and commercial landscape in Norway, and the steps businesses should consider taking in response. 

Proposed Law Prohibiting Trade with Israeli Settlements in Palestine

On 19 June 2026, the Ministry submitted for public consultation a proposal for a new law establishing a prohibition on trade with Israeli settlements in Palestine. The proposal follows resolutions from the Norwegian Parliament in June and December 2025 instructing the government to put forward such a prohibition.

Comparable prohibitions are simultaneously being considered, or have already been implemented, in a number of other countries (although the exact scope of the prohibitions varies), including Spain (adopted on 23 September 2025, entered into force on 30 December 2025), the Netherlands (adopted on 22 May 2026, will enter into force on 22 September 2026), Belgium (adopted on 18 July 2026, date of entry into force to be confirmed), and Ireland (adopted on 23 July 2026, date of entry into force to be confirmed). Slovenia had also initially adopted a similar prohibition, but this was reversed on 11 June 2026 following a parliamentary election and change in government.

At the EU level, an EU-wide ban on imports from Israeli settlements is also under consideration. The issue was discussed among EU foreign ministers on 13 July 2026, following a proposal from Belgium, France, Ireland, Luxembourg, the Netherlands, Spain and Sweden. According to EU foreign policy chief Kaja Kallas, a full trading ban received the most support among the options discussed, while countries such as Germany, Austria, Italy, the Czech Republic, Hungary and Slovenia raised objections to imposing any restrictions at all. A further point of contention is whether any such measures should be characterised as a foreign policy tool – requiring unanimity among member states – or as a trade policy measure requiring only a qualified majority. These discussions are expected to continue in the weeks and months to come.

The proposed Norwegian law is not the first policy response from Norway to the Israeli settlements in Palestine. In March and October 2024, the government issued recommendations that Norwegian businesses should avoid trade and commercial cooperation with the settlements. Norway has also imposed sanctions against individuals involved in Israeli settler activity in Palestine. Nevertheless, the new law is the first of its kind in Norway, as it introduces a broad and legally binding prohibition on trade that is not limited to specific listed individuals. 

The legal basis for the proposed law is notably not the Norwegian Sanctions Act, although some of the prohibitions are inspired by restrictions typically found in sanctions regulations (such as the prohibitions on import and export of goods, see below). The Sanctions Act only authorises the government to impose sanctions in certain scenarios, including where the measures have "broad international support" – a threshold not considered met in the context of trade restrictions related to Israeli settlements in Palestine (although this may change depending on the extent to which similar prohibitions gain support in other countries, in particular within the EU). An entirely new law has therefore been proposed, which – unlike sanctions imposed under the Norwegian Sanctions Act – must be approved by the Parliament.

What the proposed law prohibits

The proposed law establishes four categories of prohibitions, each targeting activities considered central to the economic maintenance of the settlements:

• Import and export of goods. The import of goods originating in Israeli settlements in Palestine and the export of goods destined for those settlements will be prohibited. Norwegian Customs (Tolletaten) will enforce these prohibitions using existing powers, including powers to detain, seize and destroy non-compliant goods.
• Purchasing and acquisition of real estate. Norwegian persons and entities will be prohibited from purchasing and acquiring real estate in the settlements, whether by purchase or gift and regardless of ownership structure. The proposal also signals that sale of such real estate will be prohibited.
• Provision of certain property-related services. It will be prohibited to provide construction, engineering, architecture, real estate brokerage or conveyancing services directly connected to the construction, renovation, purchase or sale of real estate in the settlements.
• Acquisition of stakes in settlement businesses. Acquiring ownership interests in Israeli businesses with both their registered office and production operations in the settlements will be prohibited. 

The Ministry has proposed two exceptions to the above prohibitions. First, activities with a sufficient Palestinian nexus (which may include, e.g., goods traded under the EFTA–Palestine free trade agreement or transactions involving Palestinian persons) and which do not contribute to the establishment, expansion or maintenance of Israeli settlements in Palestine, are carved out. Secondly, a broad humanitarian exception ensures that activities conducted in accordance with the humanitarian principles of humanity, impartiality, independence and neutrality are excluded. These two exceptions are the only ones envisaged by the proposal. Accordingly, there will be limited scope for conducting activities that fall within one of the four prohibitions outlined above.

Enforcement and jurisdictional scope

Under the proposed law, violations would constitute a criminal offence subject to fines or imprisonment for up to three years, or both. Negligent violations are also criminalised, subject to imprisonment of up to six months.

Notably, because many of the prohibited activities will take place in the settlements themselves (i.e., outside Norway), the proposal also disapplies the ordinary double criminality requirement under Section 5 of the Norwegian Criminal Code. This means that violations of the proposed law, like sanctions violations, may be prosecuted in Norway regardless of whether the offences are criminalised in Palestine or Israel (as long as other conditions for criminal jurisdiction are met).

Practical implications for businesses 

The Ministry's proposal is subject to an ongoing public consultation, with a deadline of 19 September 2026. A final proposition is subsequently expected to be submitted to the Norwegian Parliament. Adoption of the act will likely not take place before late 2026 or early 2027 at the earliest. 

If the proposed law is adopted, businesses importing goods from Israel or exporting to Israeli counterparties should review their supply chains (both downstream and upstream) to assess exposure. The EU postal code list already used to identify settlement products in the context of the EU–Israel and EFTA–Israel free trade agreements may provide a practical starting point for compliance. Further, companies involved in the acquisition or sale of real estate, the acquisition of stakes in Israeli settlement businesses, or the provision of property-related services should assess whether their activities fall within the scope of the proposed prohibitions.

Businesses engaged in indirect imports from, or exports to, Israeli settlements in Palestine – whether downstream or upstream – should also assess their exposure. The scenario of indirect trades is not explicitly addressed in the Ministry's proposal, but the wording of Section 1 of the proposed law – "origin" (Norwegian: "opprinnelse") and "destination" (Norwegian: "bestemmelsessted") – suggests that indirect trades may be covered, at least where the Norwegian company knew or should have known that the goods originate from, or are destined for, the settlements. 

Further, complicity in violations of criminalised provisions is subject to criminal liability under Section 15 of the Penal Code. The complicity provision may also extend to companies that do not themselves import or export goods, but provide related services – such as insurers, banks or freight forwarders – where those services contribute to trade that violates the proposed law. The specific exposure will, however, depend on the circumstances and must be assessed on a case-by-case basis. Businesses across the supply chain should therefore consider whether their existing due diligence frameworks are adequate to identify and prevent indirect exposure to prohibited trades – not only for direct importers and exporters, but also for service providers and other companies with indirect involvement.

As noted above, comparable prohibitions have simultaneously been adopted in a number of EU countries, including Ireland, Spain, Belgium and the Netherlands. At the same time, businesses should beware a potential jurisdictional tension between such prohibitions and anti-boycott laws in other jurisdictions – most notably U.S. anti-boycott laws, which broadly encourage and/or require U.S. persons to refuse participation in foreign boycotts against countries considered friendly to the U.S., such as Israel. The Norwegian Ministry has not addressed the interaction between the proposed law and U.S. anti-boycott rules, but this is a consideration that businesses with a U.S. nexus should keep in mind.