|Israelis who call for boycotts of settlements in the West Bank could be fined up to $14,500 [EPA]
Israel's parliament has approved a contentious law that would allow illegal settlers in the West Bank to seek damages from Israelis who promote boycotts of settlements.
Critics of the law, including opposition parliamentarians and civil liberties groups, say the measure is anti-democratic.
Palestinian negotiator Saeb Erekat said in a statement that making "the boycott of Israeli settlement products punishable by law will send a clear message that Israel is not committed to a two-state solution".
Rights group Amnesty International released a statement on Tuesday saying the law "will have a chilling effect on freedom of expression in Israel".
"Despite proponents’ claims to the contrary, this law is a blatant attempt to stifle peaceful dissent and campaigning by attacking the right to freedom of expression, which all governments must uphold," said Philip Luther, Amnesty International's Deputy Director for the Middle East and North Africa.
"The broad definition of boycott could apply to anyone seeking to use this non-violent means of dissent to criticise any individual or institution involved in human rights violations or violations of international law in Israel or the Occupied Palestinian Territories."
The bill, sponsored by Israeli Prime Minister Benjamin Netanyahu's Likud party, was carried by 47 to 38 in the 120-seat parliament on Monday night. Netanyahu did not vote.
The fierce debate reflected growing polarisation between Israelis who favour expanding settlements and keeping the West Bank in Israeli hands, and those who believe Israel must withdraw from much of the territory and dismantle some or all of the settlements as part of any peace agreement with the Palestinians.
"What this law will enable is for anybody harmed by a deliberate boycott campaign to seek damages through the courts," said its sponsor, Zeev Elkin, a Likud parliamentarian.
Supporters of the bill said its reference to boycotts based on "geography" was aimed at countering calls in Israel and abroad for cultural and economic boycotts against settlements in the West Bank.
All settlements in the West Bank, including East Jerusalem, are considered illegal under international law.
The issue grabbed headlines in Israel several months ago after leading performers said they would not appear at a theatre in Ariel, one of the biggest settlements in the West Bank.
Under the new law, those calling for boycotts could be sued by any individual or institution claiming economic, cultural or academic damage as a result of the boycott.
The bill does not require the petitioner to prove the damage was caused, but only that the damage could reasonably have been expected as a result of the boycott call.
Anyone convicted of breaking the new law faces being fined with up to 50,000 shekels ($14,500).
Reuven Rivlin, parliament's speaker, said he had appealed unsuccessfully to Netanyahu to seek a rewording of the legislation after the assembly's legal adviser issued an opinion that it "impinged on political expression" in Israel.
The Association of Civil Rights in Israel (ACRI), an opponent of the bill, said that "regardless of one's position on the question of promoting or opposing a boycott, it is unquestionably a protected form of free speech".
In an editorial, Israeli newspaper Haaretz said politicians who voted in favour of the bill were "supporting the gagging of protest as part of an ongoing effort to liquidate democracy".
"They are trying to silence one of the most legitimate forms of democratic protest, and to restrict freedom of expression and association of those who oppose the occupation and the settlers' violence,'' the paper wrote.