This thesis focuses on the role of the European Court of justice (ECJ) in the Palestinian-Israeli conflict. It thoroughly examines the ECJ’s ruling on the legality, or lack thereof, of extending duty-free entry to the European Union to Israeli products that are manufactured in settlements in the occupied West Bank. The thesis studies the political and legal background to the ECJ ruling. It further argues that the ECJ verdict that these products are not covered by the free trade agreement between the EU and Israel will have significant legal, political and economic ramifications for Israel and for the Palestinians. Equally important, it will help define the applicability of international law to the Palestinian-Israeli conflict, especially as far as delineating the borders of a future Palestinian state.