diff --git a/internal/developmentmembership/membership.go b/internal/developmentmembership/membership.go
index d84becf4fc..5c4d28fa20 100644
--- a/internal/developmentmembership/membership.go
+++ b/internal/developmentmembership/membership.go
@@ -157,6 +157,8 @@ func populateFoundSubjects(rootONR *core.ObjectAndRelation, treeNode *core.Relat
 
 			fs.relationships.Add(resource)
 		}
+
+		toReturn.ApplyParentCaveatExpression(treeNode.CaveatExpression)
 		return toReturn, nil
 
 	default:
diff --git a/internal/dispatch/graph/expand_test.go b/internal/dispatch/graph/expand_test.go
index e38b0fd56c..04b10aaa49 100644
--- a/internal/dispatch/graph/expand_test.go
+++ b/internal/dispatch/graph/expand_test.go
@@ -632,6 +632,95 @@ func TestCaveatedExpand(t *testing.T) {
 			}
 			`,
 		},
+		{
+			"recursive caveated indirect arrow",
+			`definition user {}
+
+			caveat somecaveat(somecondition int) {
+				somecondition == 42
+			}
+		  
+			definition folder {
+				relation container: folder with somecaveat
+				relation member: user
+				permission view = container->member
+			}
+		  
+			definition resource {
+				relation folder: folder
+				permission view = folder->view
+			}`,
+			[]*core.RelationTuple{
+				tuple.MustParse("resource:someresource#folder@folder:first"),
+				tuple.MustParse("folder:first#container@folder:second[somecaveat]"),
+				tuple.MustParse("folder:first#member@user:notreachable"),
+				tuple.MustParse("folder:second#member@user:tom"),
+			},
+			tuple.ParseONR("resource:someresource#view"),
+			v1.DispatchExpandRequest_RECURSIVE,
+			`
+			intermediate_node: {
+				operation: UNION
+				child_nodes: {
+				  intermediate_node: {
+					operation: UNION
+					child_nodes: {
+					  intermediate_node: {
+						operation: UNION
+						child_nodes: {
+						  intermediate_node: {
+							operation: UNION
+							child_nodes: {
+							  leaf_node: {
+								subjects: {
+								  subject: {
+									namespace: "user"
+									object_id: "tom"
+									relation: "..."
+								  }
+								}
+							  }
+							  expanded: {
+								namespace: "folder"
+								object_id: "second"
+								relation: "member"
+							  }
+							  caveat_expression: {
+								caveat: {
+								  caveat_name: "somecaveat"
+								  context: {}
+								}
+							  }
+							}
+						  }
+						  expanded: {
+							namespace: "folder"
+							object_id: "first"
+							relation: "view"
+						  }
+						}
+					  }
+					  expanded: {
+						namespace: "folder"
+						object_id: "first"
+						relation: "view"
+					  }
+					}
+				  }
+				  expanded: {
+					namespace: "resource"
+					object_id: "someresource"
+					relation: "view"
+				  }
+				}
+			  }
+			  expanded: {
+				namespace: "resource"
+				object_id: "someresource"
+				relation: "view"
+			  }
+			`,
+		},
 	}
 
 	for _, tc := range testCases {
diff --git a/internal/services/integrationtesting/testconfigs/caveatindirectarrow.yaml b/internal/services/integrationtesting/testconfigs/caveatindirectarrow.yaml
new file mode 100644
index 0000000000..616285a71b
--- /dev/null
+++ b/internal/services/integrationtesting/testconfigs/caveatindirectarrow.yaml
@@ -0,0 +1,40 @@
+schema: |-
+  definition user {}
+
+  caveat team_is_admin(admin_teams list<string>, self string) {
+  	self in admin_teams
+  }
+
+  definition team {
+  	relation admin: team with team_is_admin
+  	relation member: user
+  	permission view = admin->member
+  }
+
+  definition resource {
+  	relation team: team
+  	permission can_view = team->view
+  }
+relationships: |-
+  // team definition
+  team:A#admin@team:A[team_is_admin:{"self":"A"}]
+  team:B#admin@team:B[team_is_admin:{"self":"B"}]
+  team:C#admin@team:C[team_is_admin:{"self":"C"}]
+  // team members
+  team:A#member@user:clara
+  // resources
+  resource:1#team@team:B
+  resource:2#team@team:C
+  resource:3#team@team:C
+  resource:4#team@team:A
+  resource:5#team@team:B
+  resource:6#team@team:B
+  resource:7#team@team:C
+assertions:
+  assertTrue:
+    - 'resource:4#can_view@user:clara with {"admin_teams": ["A"]}'
+  assertCaveated:
+    - resource:4#can_view@user:clara
+  assertFalse:
+    - 'resource:4#can_view@user:clara with {"admin_teams": ["B"]}'
+    - 'resource:1#can_view@user:clara with {"admin_teams": ["B"]}'