The Netherlands introduces trade restrictions on goods from Israeli settlements

Why has the Netherlands introduced this measure?

On 21 July 2026, the Temporary Sanctions Decree on Unlawful Settlements in the Territories Occupied by Israel was published in the Dutch Official Gazette. The decree entered into force two months later, on 22 September 2026. It is politically sensitive, but also legally significant. A notable feature is that the Netherlands introduced the measure at national level after it became clear that there was insufficient support within the European Union for comparable measures. It is unusual for the Netherlands to impose trade restrictions independently in an area that, in principle, falls within the exclusive competence of the European Union. For that reason alone, the decree deserves the attention of businesses engaged in international trade.

According to the Dutch government, the Advisory Opinion of the International Court of Justice of 19 July 2024, together with various UN resolutions, indicates that states should take measures to prevent trade and investment relationships from contributing to the maintenance of what the Dutch government considers unlawful settlements in the occupied territories. The Netherlands initially sought to pursue such measures at EU level, but insufficient support emerged. The government therefore opted for a national sanctions measure based on the Dutch Sanctions Act 1977. It expressly presents the decree as a measure aimed at promoting the international legal order, as referred to in Article 90 of the Dutch Constitution.

More than an import ban

At first sight, the measure appears to be little more than an import ban. A closer reading reveals that its scope is considerably broader.

The decree prohibits:

• bringing goods originating from the relevant unlawful settlements into Dutch territory (import ban);
• purchasing such goods (purchase ban);
• placing such goods on the market or making them available on the EU market (sales ban);
• providing brokering services related to such goods; and
• engaging in activities intended to circumvent, or resulting in the circumvention of, these prohibitions.

Importantly, the measure does not apply only to goods wholly originating from the settlements concerned. Goods that are partially produced in, or obtained from, a settlement may also fall within its scope. To identify the settlements covered by the decree, the Netherlands relies on the EU postal code list. In practice, businesses will need to assess the origin of goods against the list of locations and postal codes published by the European Commission.

The measure therefore affects the entire supply chain rather than merely importers at the external border of the European Union.

Overriding mandatory provisions

One of the more remarkable elements of the decree is Article 8. Article 8 designates the trade prohibitions as overriding mandatory provisions within the meaning of Article 9 of the Rome I Regulation. The government's objective is to ensure that these prohibitions cannot easily be set aside through a contractual choice of foreign law. According to the explanatory memorandum, the protection of fundamental rights and the promotion of the international legal order justify this approach.

The relationship with EU law

For lawyers, perhaps the most interesting question is whether the Netherlands is entitled to regulate this area independently. The EU's common commercial policy is, in principle, an exclusive EU competence. This means that Member States do not normally impose unilateral trade restrictions in relation to third countries. The Dutch government expressly acknowledges this issue and devotes a substantial part of the explanatory memorandum to the compatibility of the measure with EU law.

The government's central argument is that the restrictions can be justified under the public policy exception. According to the government, the protection of fundamental norms of international law and the promotion of international legal order constitute interests of sufficient weight to justify national action. Whether this legal construction will ultimately withstand judicial scrutiny remains to be seen. It would not be surprising if the matter were litigated in the coming years, potentially reaching the Court of Justice of the European Union.

What does this mean for businesses?

For businesses, the principal challenge lies in determining the origin of goods.

The decree assumes that companies have sufficient visibility over their supply chains to establish where goods, raw materials and semi-finished products originate. In addition, imports into the EU through the Netherlands are subject to a declaration requirement. Importers submitting a customs declaration in the Netherlands for goods originating in Israel and intended for release for free circulation within the European Union must declare that those goods do not originate from the settlements concerned.

As a result, supply chain compliance becomes increasingly important. Many companies will need to review supplier information, origin documentation and internal control procedures. The impact is not limited to importers. Distributors, traders, purchasers and intermediaries may all be affected by the new rules.

Enforcement remains challenging

The Dutch government itself acknowledges that enforcing the decree will not be straightforward.

During the legislative process, Dutch Customs, the Fiscal Intelligence and Investigation Service (FIOD) and the Public Prosecution Service all noted that determining the true origin of goods can be difficult in practice. The Advisory Division of the Council of State likewise raised questions regarding enforceability.

Nevertheless, the government decided to proceed. This underlines that the measure is driven not only by enforcement considerations, but also by the desire to send a legal and political signal.

Non-compliance may have serious consequences

The consequences of non-compliance are significant.

Violations of the import ban, purchase ban, sales ban, brokering prohibition or anti-circumvention provisions qualify as economic offences under Dutch law. Intentional violations may constitute criminal offences punishable by imprisonment of up to six years or substantial fines. In addition, confiscation of goods, suspension of business activities and other ancillary measures may be imposed. Supervision, enforcement and criminal investigations fall within the remit of Dutch Customs, the FIOD and the Public Prosecution Service.

Sanctions regulation continues to evolve

Regardless of the political debate surrounding the measure, the decree illustrates the speed at which sanctions law has evolved in recent years.

Where sanctions were once primarily associated with country programmes targeting jurisdictions such as Russia, Iran or North Korea, we increasingly see measures that directly affect ordinary commercial supply chains and place greater emphasis on preventing circumvention.

For businesses, the key lesson is practical rather than geopolitical: knowing who you do business with, where goods originate and what risks exist in the supply chain is increasingly becoming a legal obligation rather than a commercial choice.

Ploum's Customs, Trade and Logistics Team

International trade is increasingly affected by geopolitical developments, sanctions measures and changing European regulations. Ploum's Customs, Trade and Logistics team assists businesses with compliance matters, investigations, enforcement procedures and litigation relating to customs law, sanctions law, export controls and product regulation. If you have questions about the implications of the new sanctions measure for your organisation, we would be pleased to assist.