Navigating Legal Risks and Opportunities in U.S. Courts for Palestinian-Tied Entities: A Post-Fuld v. PLO Landscape

The U.S. Supreme Court's unanimous decision in Fuld v. Palestine Liberation Organization (2025) has redefined the legal and financial landscape for entities with ties to Palestinian authorities. By upholding the Promoting Security and Justice for Victims of Terrorism Act (PSJVTA), the ruling allows U.S. victims of overseas terrorism to sue the Palestinian Authority (PA) and Palestine Liberation Organization (PLO) in U.S. federal courts. This shift has profound implications for liability exposure, insurance costs, and investment strategies in sectors with Middle East operations.

The Legal Framework: A New Era of Accountability

The Fuld ruling hinges on the PSJVTA's provision that the PA and PLO are deemed to consent to U.S. jurisdiction if they engage in activities such as funding terrorists or maintaining a U.S. presence (excluding U.N. activities). The Court's emphasis on federal authority's extraterritorial reach under the Fifth Amendment—distinct from state-level jurisdiction—opens the door to lawsuits targeting entities linked to these groups.

For companies operating in sectors tied to the PA, such as infrastructure reconstruction in Gaza, energy projects, or agricultural exports, this means heightened legal risks. Even indirect ties—such as partnerships with local contractors or suppliers—could expose firms to litigation. The Court's refusal to define jurisdictional limits leaves ambiguity, creating uncertainty for investors.

Liability Exposure: Sector-Specific Risks

The ruling disproportionately impacts industries with significant operational ties to the PA:

1. Infrastructure and Reconstruction:
2. Projects in Gaza's reconstruction—such as upgrading the Gaza Power Plant to natural gas—could face lawsuits if PA entities are involved. Investors must scrutinize contracts for PA-linked partners.

4. Energy and Utilities:

5. The PA's role in energy infrastructure, including renewable projects, raises liability risks. Litigation could disrupt timelines and budgets, deterring investment.

6. Agriculture and Trade:

7. Palestinian agricultural exports (e.g., olives, citrus) rely on cross-border logistics. Companies handling these goods may face claims if tied to PA activities.

Insurance Costs: A Balancing Act

The ruling's impact on insurance markets is twofold:

• Increased Demand for Coverage: U.S. firms may seek expanded policies to cover terrorism-related liabilities, driving up premiums. Palestinian insurers like the National Insurance Company (NIC)—which already offers coverage for damages from settler attacks—could see demand rise, but underwriting criteria will tighten.

• Reinsurance Challenges: Global reinsurers may retreat from underwriting risks in Palestinian-linked sectors, forcing local insurers to absorb greater volatility.

Investment Strategies: Navigating the New Reality

Investors must adopt a risk-aware approach:

1. Due Diligence First:

2. Thoroughly vet partnerships with PA-linked entities. Avoid ventures where the PA's involvement could trigger U.S. litigation.

3. Sector Prioritization:

4. Favor sectors with minimal PA ties: IT, telecommunications (e.g., 4G rollout in the West Bank), and stone/marble exports (a PA export priority) face lower legal risks.

5. Consider renewable energy cautiously: While Gaza's energy needs are critical, projects must avoid PA-controlled funding streams.

6. Legal Hedging:

7. Invest in firms with robust legal risk management and existing insurance coverage for terrorism liabilities.

8. Monitor Regulatory Developments:

9. The PA's reliance on donor funds and fiscal instability complicates stability. Track U.S. legislative updates and PA policy shifts (e.g., bankruptcy laws, tax reforms).

Conclusion: A Delicate Balance

The Fuld ruling has transformed the Middle East investment calculus. While opportunities persist in sectors like infrastructure and energy, the legal and insurance costs of PA-linked operations now require meticulous risk assessment. Investors should prioritize transparency, diversify into lower-risk industries, and engage closely with local regulators. In this evolving landscape, vigilance—and a clear-eyed view of liability—will define success.