Executive Summary
This legal opinion concludes that Luxembourg’s approval of a prospectus for Israel Bonds for trading on the EU market carries a high risk of violating its fundamental obligations under international law. The analysis is grounded in the International Court of Justice’s (ICJ) recent findings: that Israel’s occupation of Palestinian territory is illegal and violates peremptory norms (jus cogens), and that there is a plausible risk Israel is violating the Genocide Convention in Gaza. These findings trigger two critical legal duties for all states: the duty of third-states not to aid or assist in maintaining such serious breaches of international law, and the positive duty to prevent genocide.
Approving the bond prospectus would constitute prohibited “aid or assistance” because the fungible proceeds enhance Israel’s overall budget, directly supporting its unlawful activities. Furthermore, as a signatory to the Genocide Convention, Luxembourg has a duty to employ all reasonable means within its capacity to prevent genocide; denying market access is a clear and powerful economic lever. Granting approval despite this context would demonstrate a manifest failure of due diligence. Consequently, the opinion strongly recommends that Luxembourg deny authorization to uphold its international legal commitments.
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Introduction
Amid mounting political and public pressure in Ireland over its role in facilitating Israel’s bond sales during the war in Gaza, Israel has transferred its application for EU approval of its diaspora bond programme from Ireland to Luxembourg. Lawyers in Ireland have already illustrated the strong legal case against the hosting of Israel Bonds.[1]
In September, Luxembourg’s financial regulator, the Commission de Surveillance du Secteur Financier (CSSF), approved Israel’s latest bond prospectus. While Israeli officials stated the move was intended to maintain access to international investors, Luxembourg authorities stressed the CSSF’s independence in deciding whether to approve or revoke such bonds.
This shift, however, stands in stark contrast to the growing global scrutiny of Israel’s financing activities, which are linked to its ongoing military campaign in Gaza, as well as to Luxembourg’s own obligations under international law.
The following legal opinion, authored by international law scholars, outlines the relevant legal framework and examines the potential consequences for Luxembourg should it proceed with approving the bond programme.
This opinion addresses the legal implications of the Luxembourg government’s upcoming review of the approval by Luxembourg’s Commission de surveillance du secteur financier (CSSF) of the prospectus for the sale of Israel Bonds on the EU market. This opinion is grounded in the principles of public international law and EU law relevant for a review of Israel Bonds, in light of Luxembourg’s obligations under international law based on the doctrines of third-state responsibility for internationally wrongful acts and the duty to prevent genocide. Specifically, the opinion presents an analysis of international law obligations that are directly relevant to the obligations of the CSSF under the EU Prospectus Regulation.[2] The latter includes the obligations to interpret and apply the Regulation in accordance with the rights and principles enshrined in the Charter of Fundamental Rights of the European Union, and to review material environmental, social and governance (ESG) risks entailed in offerings to be made available on the European securities markets (para 54).
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* This legal opinion was crafted by Dr Shahd Hammouri, Lecturer in International Law at the University of Kent; Ms Helena Van Roosbroeck, International Legal Advisor; Professor Tendayi Achiume, Professor of Law at Stanford Law School and former United Nations Special Rapporteur on Contemporary Forms of Racism, Racial Discrimination, Xenophobia and Related Intolerance; and Dr John Reynolds, Assistant Professor at Maynooth University.
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[2] Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (Text with EEA relevance).
