A New Zealand High Court judgment dated 13 April deserves the attention of Ambassador-nominee Jared Novelly, Secretary of State Marco Rubio, Senator Ted Cruz, and Ambassador Mike Huckabee’s teams across the region.
Justice Mount ruled that the NZ Superannuation Fund, New Zealand’s $86 billion sovereign wealth vehicle, operates investment policy documents that fail statutory legal requirements. The case was brought by Palestinian New Zealanders Maher Nazzal and Rawaa Elhanafy, together with Palestinian Solidarity Network co-chair John Minto. The court found for the applicants on the policy documents but stopped short of ordering divestment from any specific company.
The four investments at the centre of the case are Airbnb, Booking Holdings, Expedia, and Motorola Solutions. All are US-listed. All appear on a UN database relating to activities in the occupied Palestinian territories. The Fund must now rewrite its investment framework. The Fund will likely need to make fresh decisions under a lawful framework.
The Fund now faces a dilemma with no clean exit. If it rewrites its framework to satisfy the court and proceeds to divest from the four US companies, it risks breaching anti-BDS legislation in multiple US states whose fund managers currently hold significant positions in New Zealand equities. If it rewrites its framework honestly, applying consistent standards across all human rights situations globally, especially those worse than Israel then the Superfund will be forced to confront why Sudan, Myanmar, and the Western Sahara, for example, did not generate equivalent litigation pressure – as the Israel Institute pointed out in 2021. The answer to that question points not to principled ethical investment but to selective political targeting. Either path is uncomfortable. One is legally dangerous.
The structural exposure matters regardless of appeal outcome. Around 18% of the total market capitalisation of publicly listed New Zealand companies is held by US fund managers. Several operate from states where anti-boycott legislation prohibits doing business with entities that divest from Israel or Israeli-affiliated companies. A divestment process targeting US companies via a UN-derived Palestinian territories database may meet the legal definition of exactly such a boycott under some states’ anti-boycott frameworks.
New Zealand’s second-largest trading partner is the United States. Novelly has stated his priority is promoting a free and open Pacific and putting America First. Winston Peters will be doing the arithmetic. Whether Wellington has fully considered how this reads in Washington is another question entirely.
