The Grupo CAF (Construcciones y Auxiliar de Ferrocarriles, S.A.), one of the most important railway companies in Europe, is going through one of its most solid financial moments, but also one of the most complex in terms of reputation.
The company’s participation in the Jerusalem tram project has generated increasing criticism at the international level and across various sectors of Basque society, in a context of the intensification of the Israel-Palestine conflict and with more than 60,000 Palestinian civilians dead since the start of the Israeli military offensive in Gaza.
CAF has recently confirmed, through an official communication included in a press release, that its inclusion in the United Nations High Commissioner for Human Rights (OHCHR) database is planned, which collects companies with activities in the occupied Palestinian territories. The database will be presented to the Human Rights Council at its 60th session.
According to OHCHR report A/HRC/57/21, this inclusion does not constitute “a judicial or quasi-judicial process of any kind, nor does it establish a legal characterization of the activities listed or of the companies’ participation.”
The contractor for the Jerusalem tram project is TransJerusalem J-Net Ltd., a company 50% owned by Israeli Shapir Civil & Marine Engineering Ltd. and 50% by CAF. The project, awarded in 2019 and valued at approximately 1.8 billion euros, includes the construction of the new Green Line, the expansion of the existing Red Line — both with segments running through East Jerusalem — and the operation and maintenance of the system for up to 25 years.
The start of operation was in 2021 and construction is scheduled to be completed in 2027. CAF emphasizes that before signing the contract it carried out a legal analysis through consultations with independent experts, including professors of International Law and United Nations advisers, who, according to the company, confirmed that there was no legal breach arising from its participation.
It also cites a Versailles Court of Appeal ruling that dismissed violations of International Law by the companies involved in the Red Line. For its part, Spain’s legal services did not identify legal objections.
POSITIVE IMPACTS?
CAF notes that in 2020 a procedure was opened before the Spanish government’s National Contact Point (NCP), the body responsible for monitoring compliance with the OECD Guidelines for Multinational Enterprises. The NCP’s final report, issued in 2022, did not identify legal breaches by CAF.
In its note, the company states that it is “fully aware of the complex legal and ethical implications linked to the Jerusalem Project, particularly regarding International Humanitarian Law and corporate responsibility,” and it claims to have applied specific due diligence procedures in accordance with the Guideline on Due Diligence in Conflict-Affected Contexts, published by the UN.
CAF also asserts that the project has positive impacts. Reports prepared in 2023 and in July 2025, conducted by independent experts after on-site visits and interviews with users and community representatives.
According to these reports, the tram “constitutes essential public service infrastructure” and facilitates access to employment, education, medical services, and places of worship. The company notes that “members of the Arab community … are the ones who use it most frequently,” and that about 25% of the employees of the operator company are Arab, within a recruitment policy that CAF says is inclusive and non-discriminatory.
The reports also indicate that CAF complies with international standards on corporate social responsibility and sustainability, in accordance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines. The company states that it has not identified to date any material negative impact on human rights.
Institutionally, the Basque president, the Lehendakari Imanol Pradales, stated in a recent interview on Euskadi Irratia that, although CAF has followed international guidelines, “perhaps, as a Basque company, it should consider a deeper analysis of its involvement.” Pradales added: “It is a difficult matter. CAF has followed international guidelines, but perhaps … it should undertake an ethical reflection.”
In the academic realm, the University of the Basque Country (UPV/EHU) decided in 2024 not to sign a collaboration agreement with CAF due to its involvement in the Jerusalem tram. The decision fits the stance adopted by several university groups in favor of respecting international law within the framework of the Palestinian-Israeli conflict.
For its part, CAF’s works council issued a statement stating that the company “is indirectly collaborating with human rights violations that, according to the International Court of Justice, are perpetrated by Israel in the occupied Palestinian territory.” In parallel to this controversy, CAF has distanced itself from the Basque Government strategically. The group’s president, Andrés Arizkorreta, rejected the purchase of the railway company Talgo, a move that had been promoted by the Basque Government.
This refusal was interpreted as a move to reinforce CAF’s corporate independence, apart from the traditional political backing of the PNV. Arizkorreta, recently awarded the Gipuzkoa Gold Medal, thus ended any attempt at acquisition in that sense. The rail group is currently undergoing a period of strong expansion. In the second quarter of 2025, it recorded revenues of 1,056 million euros and a net profit of 37 million, with a year-on-year increase of 27%.
Its subsidiary Solaris has signed a contract to supply 107 trolleybuses to the Canadian city of Vancouver, and the company is in the process of closing a deal worth up to 3.5 billion euros with the Belgian rail operator SNCB.
Despite these achievements, CAF’s relationship with the Jerusalem tram project and its presence in a territory considered occupied by the United Nations continue to raise open questions across political, social, and economic sectors, both locally and internationally.
