Arkansas Israel Boycott Law: Certification, Exceptions, and Divestment

The Arkansas Israel boycott law requires any company signing a contract worth $1,000 or more with an Arkansas public entity to provide a written certification that it is not boycotting Israel and will not do so during the contract. The requirement is set out in Arkansas Code 25-1-503, and it has been upheld against a First Amendment challenge, so it is fully enforceable today.1Justia. Arkansas Code 25-1-503 – Prohibition on Contracting with Entities That Boycott Israel

What You Have to Certify

The certification is a written statement, included in the contract itself, that says two things: your company is not currently boycotting Israel, and your company will not boycott Israel for the duration of the contract.1Justia. Arkansas Code 25-1-503 – Prohibition on Contracting with Entities That Boycott Israel Without that certification in the contract, the public entity is barred from signing with you.

The certification applies to any “person or company.” The statute does not exempt sole proprietors, partnerships, nonprofits, or any specific business form.1Justia. Arkansas Code 25-1-503 – Prohibition on Contracting with Entities That Boycott Israel If you are the contracting party, you certify.

Which Contracts Trigger the Requirement

Three conditions have to line up before the certification is required:

If any of the three is missing, the certification requirement does not apply to that contract.

What Counts as Boycotting Israel

The statute defines boycotting Israel as refusing to do business with Israel, terminating existing business relationships with Israel, or otherwise taking action meant to limit commercial relations with Israel, Israeli-controlled territories, or companies doing business there, when those actions are discriminatory.2Arkansas General Assembly. Act 710 (Senate Bill 513) – Regular Session 2017

The word “discriminatory” does real work in that definition. Ending a relationship with an Israeli supplier for ordinary business reasons, like price, quality, or delivery problems, is not a boycott under the law. What the statute targets is a decision driven by political opposition to Israel itself.

The Two Exceptions

You can skip the certification in only two situations:

The 20% price difference is a steep margin. In most competitive procurements, the gap between qualified bidders doesn’t come close, so plan on the exception being rarely available.

Your Obligations Don’t End at Signing

The certification is a continuing promise, not a one-time filing. If your company begins participating in a boycott of Israel at any point after you certify, you are responsible for notifying the public entity of the change.3University of Arkansas System Division of Agriculture. Restriction of Boycott of Israel

Because the certification is written into the contract, breaking the promise mid-term is a breach of contract. Standard contract remedies, including termination, follow from there. If you have an ongoing or renewing relationship with any Arkansas public entity, treat the certification as a live compliance item, not a closed task.

What Happens If You Don’t Certify

The enforcement mechanism is simple. The state does not fine you or sue you for refusing to certify. The public entity is just prohibited from entering the contract, so you lose the deal, unless the 20% cost-savings exception applies.1Justia. Arkansas Code 25-1-503 – Prohibition on Contracting with Entities That Boycott Israel

Divestment Rules for Public Investments

The contracting rules are only half of the law. Under Arkansas Code 25-1-504, public entities, especially the statewide retirement systems, must identify companies that boycott Israel, place them on a restricted list, and divest direct holdings in those companies within three months. For indirect holdings like mutual funds, the public entity asks the fund manager to consider removing the company, but the mandatory sell-off applies only to direct holdings. A listed company can come off the list by ending its boycott activity and certifying in writing that it will not resume while the public entity holds an investment.2Arkansas General Assembly. Act 710 (Senate Bill 513) – Regular Session 2017

Is the Law Still Enforceable

Yes. The Arkansas Times challenged the certification requirement on First Amendment grounds in Arkansas Times LP v. Waldrip. Sitting en banc, the Eighth Circuit Court of Appeals upheld the law, and in February 2023 the U.S. Supreme Court declined to hear the case. Within the Eighth Circuit, which covers Arkansas, the certification requirement stands. Companies dealing with Arkansas public entities should expect the clause to appear in their contracts and should plan to sign it or walk away from the deal.