Ben & Jerry’s sues Unilever to block sale of Israeli business

Ben & Jerry’s is suing its parent company in an attempt to cancel the sale of its business in Israel to a local partner that would continue to distribute its products in the West Bank.

The Vermont-based ice cream maker filed a complaint Tuesday in the US District Court in New York, where it sought an injunction against Unilever (UL) “to protect the brand and social integrity Ben & Jerry’s has spent decades building.”

Ben & Jerry’s has been doing business in Israel since 1987, but in recent years it had come under pressure for selling in West Bank settlements, considered illegal under international law. In July 2021, it announced it would stop selling in the West Bank altogether.

That triggered a dispute with its longtime distributor in Israel, American Quality Products (AQP), which sued Ben & Jerry’s and Unilever in March, arguing that they were “unlawfully terminating its 34-year business relationship in order to boycott Israel.”

A labourer works on a production line filling ice-cream pots at the Ben & Jerry's factory in Be'er Tuvia in southern Israel, on July 21, 2021.

Related article Ben and Jerry's sells its Israeli business

Unilever, one of the world’s top sellers of consumer goods including Dove soap and Magnum ice cream, tried to draw a line under the controversy with its announcement last week that it had sold Ben & Jerry’s Israeli business for an undisclosed amount to AQP.

The retail giant said that going forward, Ben & Jerry’s would be sold under its Hebrew and Arabic names throughout Israel and the West Bank.

But that decision to sell to AQP took the board of Ben & Jerry’s by surprise, according to its court filing, which said that its chair had been “stunned” to hear the news.

Since 2021, Ben & Jerry’s has been fiercely opposed to the sale of its products in the West Bank, saying that it would be “inconsistent with” the brand.

In its complaint Tuesday, it noted that its brand values are legally overseen by an independent board of directors under a 2000 agreement with Unilever.

The board decided to pursue legal action last week at a meeting where five directors voted to authorize litigation, and two appointees from Unilever dissented, Ben & Jerry’s said.

An Israeli flag is set atop a delivery truck outside US ice-cream maker Ben & Jerry's factory in Be'er Tuvia, on July 21, 2021. Ben & Jerry's announced that it will stop selling ice cream in the Israel-occupied Palestinian territories since it was "inconsistent with our values", although it said it planned to keep selling its products in Israel.

Related article Ben & Jerry's stops making ice cream in Israel. Its Israeli manufacturer is suing

In a statement last week, Unilever acknowledged that “Ben & Jerry’s and its independent board were granted rights to take decisions about its social mission.”

But it maintained that the parent company “reserved primary responsibility for financial and operational decisions, and therefore has the right to enter this arrangement.”

In a new statement Wednesday, a Unilever spokesperson reiterated that it “had the right to enter this arrangement.”

“The deal has already closed,” the representative said, adding that it would not comment on pending litigation.

In its statement last week, Unilever said that it had conducted a review of its business there “over several months, including with the Israeli government.”

“Unilever has used the opportunity of the past year to listen to perspectives on this complex and sensitive matter and believes this is the best outcome for Ben & Jerry’s in Israel,” it added.

— Jordan Valinsky contributed to this report.