EU Dual-Use Regulation and Export Control

By Dr. Julius Hagen, Attorney at Law

Export controls on civilian products

A machine developed for civilian use may still be subject to export controls. EU Dual-Use Regulation 2021/821 covers items with both civilian and military uses, including software and technology. Whether a product requires authorisation depends in particular on its technical characteristics and the applicable controls.

An authorisation requirement may arise from the product's listing, its intended use or a notification from the authorities. We help companies assess proposed transactions and represent them and affected individuals in investigations concerning exports or technology transfers.

Which items require authorisation

Exporting items listed in Annex I to the Dual-Use Regulation generally requires authorisation. For Annex IV items, this also applies to transfers within the EU. National controls may apply as well, particularly under section 8 of Germany's Foreign Trade and Payments Ordinance (AWV) and Part I, Section B of the German Export List. Classification requires the product's technical characteristics to be compared with the relevant list entry.

Whether an individual, global or general authorisation can be used depends on its conditions. A general authorisation must cover the goods, recipient and destination, and its other conditions must also be met. If a dispute arises, we compare the authorisation with the transaction carried out and the law in force at the time.

Controls based on end use

The catch-all provisions can cover items that are not listed. The duty that arises depends in part on the end use specified in the legislation and whether BAFA has notified the exporter or the exporter has relevant knowledge of its own. Such knowledge may require the exporter to inform BAFA and await its decision on whether authorisation is needed before proceeding.

Special rules for cyber-surveillance

Article 5 of the Dual-Use Regulation concerns specified non-listed cyber-surveillance items intended for use in connection with internal repression or serious human rights violations. It does not cover every surveillance product. The assessment must consider whether the item was specially designed for covert surveillance of individuals and what the exporter learned about the intended use through its due diligence. Product documentation and information from the customer are relevant to that inquiry.

Sharing technology through the cloud

Sending controlled software or technology electronically to recipients outside the EU customs territory, or giving them access to it, can constitute an export. Technical documents in a shared data room are one example that needs examination. Belonging to the same corporate group does not automatically exempt the parties from export controls.

For a cloud service, we need to know exactly what the recipient can access. Do they receive controlled technical knowledge or software, or merely use an application without receiving the underlying knowledge? The assessment requires details of server locations, access rights, download functions and the recipients' locations.

Applying to BAFA

BAFA is Germany's central export-control licensing authority. Applications must accurately describe the technical characteristics, end use and scope of the proposed transaction. If the order later changes, the authorisation needs to be checked to establish whether it remains sufficient.

We coordinate the legal assessment with the company's technical and export-control staff. In an investigation, we also examine who reviewed and approved the transaction at the time. A written export-control programme is a starting point; what matters is how it was applied to the transaction in question.

Criminal consequences of an export breach

Specified breaches of the Dual-Use Regulation are criminal offences under section 18(5) AWG. Negligence may constitute a regulatory offence under section 19 AWG. Section 18(8a) AWG also covers certain grossly negligent breaches of EU sanctions involving listed dual-use items. This special rule is confined to the cases identified in that provision.

For the defence, we establish which authorisation would have been required, what the individual knew and what they did. Both the technical classification and the legal assessment must be sound: military goods, dual-use exports and sanctions-based supply prohibitions may be subject to different requirements.