Arkansas Israel Boycott Law: Certification, Exceptions, Divestment

The Arkansas Israel boycott law requires any company signing a contract worth $1,000 or more with an Arkansas public entity to certify in writing that it is not boycotting Israel and will not do so for the length of the contract. The rule sits in Arkansas Code 25-1-503, covers services, supplies, information technology, and construction, and applies to every level of state and local government. A separate provision, 25-1-504, forces state retirement systems and other public entities to divest from companies identified as boycotters. The law survived a First Amendment challenge in the Eighth Circuit and is fully enforceable.

What Counts as Boycotting Israel

The statute defines the conduct broadly. It reaches refusing to do business with Israel, terminating existing business relationships, or taking other actions meant to limit commercial dealings with Israel, Israeli-controlled territories, or companies operating there, when those actions are discriminatory in nature.¹

The word “discriminatory” carries weight. A company that stops working with an Israeli firm for ordinary commercial reasons is not boycotting Israel under this statute. The law targets decisions driven by political opposition to Israel specifically. Arkansas public entities themselves are also barred from participating in such boycotts, so the same standard runs in both directions.²

Which Contracts and Which Entities Are Covered

The definition of “public entity” is expansive. It takes in the State of Arkansas and every political subdivision: boards, commissions, agencies, institutions, authorities, colleges, universities, statewide public employee retirement systems, and units of local and municipal government.¹ If you are contracting with any arm of Arkansas government, the requirement is in play.

On the contractor side, the statute refers simply to a “person or company.” There is no carve-out for sole proprietors, nonprofits, or particular business structures.² The dollar threshold is what determines whether the certification is required, not the type of vendor.

What the Certification Says

The written certification has to attest to two things: the company is not currently boycotting Israel, and it will not begin boycotting Israel during the term of the contract.² Without that certification in the contract file, the public entity cannot proceed.

The obligation is ongoing. If a company that already certified later starts participating in a boycott of Israel, the company is responsible for notifying the public entity of the change.³ Compliance is not a one-time signature at award.

Exceptions

Two situations sit outside the certification requirement.

Contracts with a total potential value under $1,000 are exempt.²
A company that will not certify can still win a contract if it offers the goods or services at least 20% below the lowest price offered by a certifying competitor.²

The 20% gap is a high bar. In most competitive procurements, qualified vendors do not price that far apart, so the cost-savings escape hatch operates only in unusual cases.

What Happens if You Refuse or Break the Certification

The enforcement mechanism is direct. A company that will not certify is simply ineligible for the contract, unless it clears the 20% price gap.² There is no separate fine or state-initiated lawsuit for refusing to sign. You just lose the deal.

Certifying and then boycotting is a different matter. The certification is a binding term of the contract itself, so breaking it exposes the company to ordinary breach-of-contract consequences, including possible termination. Companies with ongoing Arkansas work should treat the certification as a live obligation for the entire contract period.

Divestment by State Retirement Systems and Other Public Entities

Arkansas Code 25-1-504 goes beyond procurement. Public entities, particularly statewide retirement systems, have to identify companies boycotting Israel and divest from them. Asset managers compile a restricted companies list, each listed company receives written notice, and direct holdings must be sold, redeemed, or withdrawn within three months of the listing.¹

For indirect holdings such as mutual funds or index funds, the public entity writes to fund managers asking them to consider removing restricted companies from their portfolios, but the mandatory sell-off is limited to direct holdings. A restricted company can come off the list by ending the boycott activity and submitting a written certification that it will not resume boycotting while the public entity holds an investment.¹ The cost of divesting is borne by the public entity, not the restricted company.

Is the Law Constitutional

The most prominent challenge came from the Arkansas Times, which was asked to sign the certification as a condition of an advertising contract with the University of Arkansas-Pulaski Technical College. The paper argued the requirement compelled political speech and punished constitutionally protected boycott activity.

In Arkansas Times LP v. Waldrip, the Eighth Circuit Court of Appeals, sitting en banc, upheld the law. The court distinguished between speech about boycotts, which the First Amendment protects, and the purchasing decisions that make up a boycott, which it found insufficiently expressive to qualify for First Amendment protection. The U.S. Supreme Court declined to review the case in February 2023, leaving the Eighth Circuit’s ruling in place. The Supreme Court’s refusal to take the case is not an endorsement of the reasoning, but the practical result for Arkansas businesses is that the certification requirement is enforceable and will not be dislodged by current case law.

1
Arkansas General Assembly. Act 710 (Senate Bill 513) – Regular Session 2017
2
Justia. Arkansas Code 25-1-503 – Prohibition on Contracting with Entities That Boycott Israel
3
University of Arkansas System Division of Agriculture. Restriction of Boycott of Israel