EU states must identify products from Israeli settlements by stating their origin on the label, the European Court of Justice ruled on Tuesday.

Simply indicating that goods originate in the state of Israel, when in fact they came from an occupied territory, could mislead consumers about the fact that Israel "is present in the territories concerned as an occupying power and not as a sovereign entity," the European Court of Justice (ECJ) found.

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Product information must allow consumers to make informed choices relating "not only to health, economic, environmental and social considerations, but also to ethical considerations," as well as the observance of international law, the court says in a statement.

The case now reverts to the French courts for a final ruling, in line with the ECJ verdict.

The European Commission released a statement they were "taking note" of the court's decision, adding that "clear and non-misleading indication of origin is an essential part of the EU's consumer policy."

In order to clarify its position, the EU reiterated some of its commitments, including the fact that the court ruling "does not concern products from Israel itself," but that, according to its "long-standing and well-known position," it will only accept changes to the pre-1967 borders by mutual Israeli-Palestinian agreement.

"The EU considers settlements in occupied territories illegal under international law," the statement said.

Emphasizing the closeness of the relationship between Israel and the EU, the body said it was fundamentally committed to the security of Israel, and that it did not support any boycott of Israel. "The EU rejects attempts by the campaigns of the so-called ‘Boycott, Divestment, Sanctions’ (‘BDS’) movement to isolate Israel," it added.

According to the EU commission, if the verdict does represent EU policy, implementation is left to the member states.

Last June, an advocate general of the European Court of Justice released his legal opinion that a 2018 decision by a French court not to require marking wine bottles produced in Jewish West Bank settlements is invalid.

The advocate general noted that EU law requires that a product made on a territory captured by Israel since 1967 be marked as produced in the settlements.

In 2018, a French court granted the Psagot Winery's request not to enforce the EU directive to mark products manufactured in the settlements, however, ordered that the ECJ should review the decision since France is subjected to the EU law.

According to the directive, consumers must be explicitly informed whether products were made in the West Bank.

Psagot claimed marking the products is contradictory to the local constitution.

So far, the EU decision has barely been implemented. Psagot's petition to the ECJ, which led to the advocate general's decision, might cause a more significant enforcement of the EU law, exactly the opposite of what the winery wanted to achieve.

The winery did not receive financial support from the State of Israel during legal proceedings, fearing its request will lead to an unwanted outcome.

Psagot issued a statement, calling the decision “tainted with discrimination, double standards and severe hypocrisy,” choosing to note the decision was issued “on the very same day that Palestinian terror organizations are firing rockets at millions of Israeli citizens.”

Psagot Winery's CEO Yaakov Berg said that "the winery is proud of its contribution to battle the decision and intends to continue fighting it. We are encouraged by the support we've gain among relevant figures in Israel, and the United States, including the State Department , the U.S. Senate and Congress."

Berg added that that "As Jews and Israelis, we see our work as a great mission. We've acted as Israelis who are living in a community established with the approval of [the Israeli] government and who only seek to manufacture and export wine of great quality that has a reputation all over the world. This decision takes the world back and is not relevant to current times. It is not acceptable to us, and therefore we'll continue fighting it."

Israel rejected the decision via a statement from its foreign ministry, calling the ECJ “a tool in the political campaign against Israel.”

“The ruling's entire objective is to single out and apply a double standard against Israel. There are over 200 ongoing territorial disputes across the world, yet the ECJ has not rendered a single ruling related to the labeling of products originating from these territories. Today’s ruling is both political and discriminating against Israel," said the statement.

Foreign Minister Israel Katz added that "The European Court of Justice’s ruling is unacceptable both morally and in principle. I intend to work with European foreign ministers to prevent the implementation of this gravely flawed policy.”