Human rights campaigners in Scotland have welcomed a ruling by the UK’s Supreme Court that council pension funds can divest from firms operating in Palestinian territories occupied by Israel.

In a landmark verdict, the court ruled in favour of the Palestine Solidarity Campaign (PSC) in a legal case viewed as a major defeat for the UK government.

UK ministers wanted to limit the possibility of Local Government Pension Schemes (LGPS) divesting from companies involved in, or profiting from, Israel’s activities in places such as the West Bank.

Critics of Israel have hailed the decision as an “historic victory” for Palestinian rights and said the UK government should “not be dictating” how pension schemes choose to invest funds.

The Confederation of Friends of Israel in Scotland said the judgement was “of little importance” and claimed that boycotting Israel is “anti-Semitic”.

The verdict marks the end of a four-year legal battle between the UK government and PSC. Guidance issued in 2016 by ministers said that “using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate”.

Human rights activists and advocates of free speech viewed the guidance as an attempt to curb the rise of the pro-Palestine Boycott, Divestment and Sanctions (BDS) movement.

The UK government’s guidance did not apply to funds in Scotland. But the Supreme Court’s verdict has been welcomed north of the border by various groups who say the UK government should not be dictating how pension funds make investment decisions.

BDS is an international campaign that encourages ethical divestment from companies that financially back the Israeli occupation of Palestinian territory, in the hope it will change behaviour.

Critics of BDS claim the movement is anti-Semitic and represents an “existential threat” to Israel. They include successive Conservative UK governments which have tried to limit BDS-supporting councils from divesting funds from firms operating in the West Bank, where illegal settlements are being built.

Scots pension fund sells shares in controversial Israeli bank

In bringing the legal case, the PSC raised concerns about threats to freedom of expression, government overreach in local democracy, and the right of pension holders to have a say in how funds invest and divest.

The initial UK government guidance issued in 2016 came after councillors in several UK cities passed motions forcing pension funds to divest from companies operating in the West Bank, Gaza, East Jerusalem, and the Golan Heights.

In 2017 the High Court agreed with the PSC’s lawyers that the UK government guidance was unlawful. This decision was overturned by the Court of Appeal in 2018. But this week’s Supreme Court ruling in favour of the PSC finally decides the matter.

The ruling comes just months after the UK government announced its intention to ban public bodies from boycotting Israel and other countries, in a new attempt to counter the BDS movement.

The move was widely condemned by human rights campaigners as an attack on civil liberties and the Scottish Parliament has been petitioned on the issue.

The petition urges “urge the Scottish Government to support the right of public bodies and institutions in Scotland to debate, (and where democratically supported) to endorse and implement Boycott, Divestment and Sanctions against foreign countries and those who trade with them”.

David Myles, national secretary of the Scottish Palestine Soldarity Campaign, welcomed the judgement. He was “slightly surprised” at the decision because the “UK establishment has for years turned a blind eye to Israeli crimes against the Palestinian people,” he said.

“The decision of the appeal court to overturn the initial decision was completely perverse. So really, the Supreme Court is only stating the absolutely obvious.”

Myles added: “Despite this, Boris and his far right colleagues announced in December via the Queen’s Speech that they are complicit in protecting Israel’s abuses by seeking to bring forward legislation preventing public bodies making ethical purchasing decisions in the context of not buying goods from apartheid regimes.”

Myles accused critics of the BDS movement of falsely claiming it was anti-Semitic in order to “to protect Israel from criticism of its racist policies”.

He said: “There is little doubt that the mood of the country is swinging behind solidarity with the oppressed Palestinian people. And as with the apartheid regime in South Africa, the Israeli one will also fail.”

A spokesman for the Confederation of Friends of Israel in Scotland (COFIS) said: “Our view is that this judgement is of little importance. It relates only to whether the Secretary of State (Savid Javid at the time) has acted beyond his powers, and only to England and Wales.

“The legal action was rumbling on for some time, and it has been superseded by the UK government’s manifesto commitment, reaffirmed in the Queen’s Speech, to ‘ban public bodies from imposing their own direct or indirect boycotts, disinvestment or sanctions campaigns against foreign countries. These undermine community cohesion.’

COFIS also pointed out that in the past year, the parliaments of both Germany and Austria have branded the BDS movement as “anti-Semitic”, adding “we concur with this view”.

“The priority now must be to ensure both that the UK government sticks to its commitment and that, as a foreign policy matter, the future ban applies uniformly across the UK,” COFIS said.

For far too long, successive UK governments and arms companies across the country have played a complicit role in arming and supporting the Israeli army, while whitewashing and enabling atrocities against Palestinian people, Andrew Smith, Campaign Against Arms Trade

Andrew Smith of Campaign Against Arms Trade described the judgement as “very important”. It sets a “vitally important precedent” for local democracy and human rights campaigning, he argued

“For far too long, successive UK governments and arms companies across the country have played a complicit role in arming and supporting the Israeli army, while whitewashing and enabling atrocities against Palestinian people,” Smith said..

Last year Unison questioned Strathclyde Pension Fund on its investments in Hewlett Packard Enterprises and DXE Technology, and their involvement in Israel’s occupation of territories in Palestine.

Commenting on the Supreme Court ruling, Simon Watson of Unison welcomed the decision. It “removed an unnecessary centralised legal restriction on the action of pensions funds,” he said.

“The decisions of pensions funds, made up of workers money, should be made by representatives of the workers and employers in the interests of the pension scheme, not by government.”

Watson pointed out that Scottish pension funds had continued to look at investing ethically whilst protecting the financial future of workers. “The huge volatility around carbon-based industries has highlighted the risks these may hold, and the benefits of pension funds looking at diversifying their investments,” he said.

A spokesman for Strathclyde Pension Fund said: “The Secretary of State for Communities and Local Government’s 2016 guidance on investment strategy did not apply to funds in Scotland, so this judgement doesn’t have any direct impact.

“However, it is important to be clear that the crux of this case was not divestment; but whether it was lawful for government to direct pension funds to not adopt investment policies contrary to defence or foreign policy.

“SPF’s view has always been that pension funds are for paying pensions, so the decision is a welcome one.”

Kamel Hawwash, chair of Palestine Solidarity Campaign, said: “This historic victory represents a major win not just for the campaign for Palestinian rights, but for the fundamental principles of democracy, freedom of expression and justice.

“PSC will continue to resist any attempts to suppress BDS activism, and I extend deep thanks to all our members and supporters who have stood by us every step of the way in this legal case. We have shown how powerful this movement is.”

Jamie Potter, a Bindmans LLP solicitor who acted on behalf of PSC, said: “LGPS members now have the freedom to pursue their own principles in respect of the role of the arms trade and foreign countries in violations of human rights around the world, when determining how their pension monies are invested.”

In 2017 The Ferret revealed that Scotland’s two largest council pension funds had invested in companies reported to be on a United Nations blacklist for conducting business in illegal Israeli settlements in the West Bank and East Jerusalem.

The following year we reported that Falkirk Pension Fund had sold its shares in an Israeli bank called Bank Hapoalim at the centre of a global divestment campaign. Bank Hapoalim has been targeted due to its financing of illegal settlements in the West Bank.

The UK government did not respond to our request for a comment, while the Embassy of Israel in London, and the Convention of Scottish Local Authorities declined to comment.

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