Deutsche bahn International has withdrawn from a project to build the new Tel-Aviv-Jerusalem railway line after coming under pressure from the German government.
The company, a subsidiary of Deutsche Bahn, pulled out of the project after Federal Minister of Transport, Building and Urban Affairs Peter Ramsauer wrote a letter to its CEO recommending that he discontinue the firm's involvement, "as the railway project potentially does not accord with international law".
About 6km of the railway - which has been designed to cut the journey time between Tel Aviv and Jerusalem to half an hour - is planned to pass through the West Bank, mostly in tunnels, according to Der Spiegel.
German protesters claim this section of the line would violate international law because it would take land away from the Palestinians.
Residents of two Palestinian villages told Der Spiegel that they fear not only a disruption during construction, but also the possibility that they could be barred from their land when the project is finished, for security reasons.
The campaign against the railway picked up steam in March when Left Party politician Inge Höger, who took part in the Mavi Marmara flotilla, tabled an official question to Christian Democratic Union politician Enak Ferlemann about the legality of the rail project.
In his response, Mr Ferlemann confirmed that that Mr Ramsauer had met German railway executives to discuss this issue, and that DB International had announced that "they would no longer be involved in this politically sensitive project". He added that theywould advise employees to avoid such "politically questionable projects" in the future.
Ms Höger came under criticism from some human rights activists after it was revealed that she had accepted being relegated to a women's section on the Mavi Marmara.