Subject 1: Export Law (EC) / Foreign Trade Law (EC)

Current legal documents, including references to our services offered

A. Legal documents (as of 19 May 2008)

EC Dual-Use Regulation = Regulation 428/2009 of 5 May 2009
Proposal for a revision of the Dual-Use Regulation dated 18 December 2006 (COM (2006) 829)
German Export & Foreign Trade Act (Außenwirtschafts-
gesetz - “AWG”), as amended on 27 May 2009
German Export & Foreign Trade Ordinance (Außenwirt-
schaftsverordnung - “AWV”) of 22 November 1993 (as amended on 19 December 2007) (without the export control list)
Summary of EC country embargos (Announcement by the German Federal Office of Economics and Export Control of 14 November 2007, translation by Hohmann & Partner)
UN Convention on the International Sale of Goods (CISG) of 11 April 1980
Incoterms 2000
UCP 600 (Uniform Customs and Practice for Documentary Credits)

B. Notes

The most important legal provisions regarding the export and foreign trade law of Germany and the EC are set out, in particular, in the EC Dual-Use Regulation (the “EC Regulation”). A duty to obtain a prior export license exists not only for the export of listed goods to all countries in the world (cf. Article 3 of the EC Regulation), but also for the export of non-listed goods, if you have reason to believe that a sensitive use possibly cannot be excluded. Article 4 of the EC Regulation focuses, in particular, on the potential (at least partial) use for weapons of mass destruction (world-wide, art.4 para.1) and the potential (at least partial) use for military purposes in EC embargo countries (art.4 para.2, for the list of the currently 19 embargo countries cf. the summary of country embargos), And Germany has added license requirements for a potential military use in 2 K countries (§ 5 c AWV) or for a potential nuclear use in 10 nuclear-sensitive countries (§ 5 d AWV). You are required to investigate in a very comprehensive manner whether any such sensitive use might be possible (cf. Article 4, section 4 of the EC Regulation) and to take appropriate action to minimise the risk. A duty to obtain a prior export license may also exist in the case of intra-Community trading (cf. Article 21 of the EC Regulation). In addition to the EC embargo Regulations (cf. also §§ 69a to 69p of the AWV), the anti-terror lists must be implemented very strictly (cf. the continuously updated annexes to the EC Regulations 2580/2001 and 881/2002, which are not printed here, and which must also be applied for any trade within Germany).

Germany amends those duties to obtain an export license by additional duties: Cf..§§ 5, 5c and 5d of the AWV in relation to the export of defence articles and of dual-use goods, § 7 of the AWV in relation to intra-Community trading; §§ 40 to 43a of the AWV in relation to commercial and brokerage transactions; §§ 45 to 45e of the AWV in relation to trade in services (transfer of technical support within, and outside, the EC and Germany); §§ 10 to 14 and § 26 of the AWG, as well as §§ 21b to 37 of the AWV, in relation to restrictions on the import into Germany; § 26 of the AWG, as well as §§ 59 to 69 of the AWV, in relation to notification requirements with regard to international payments; as well as §§ 33 and 34 of the AWG, and §§ 70 and 70a of the AWV, in relation to criminal or administrative offences and procedural rules.

The most important legal provisions regarding the structuring of export agreements under civil law result from the German Civil Code or the CISG. In our experience, it is recommendable in many cases to use the CISG as a basis. The question regarding the bearing of the liability risk will best be defined by using the Incoterms. The most important provisions regarding documentary credits are the UCP 600 by the ICC (not printed here).

No other area of German/Community economic law (except competition law) provides for so high sanctions like export law does. A breach of embargos or the anti-terror lists will mandatorily result in imprisonment of at least six months. Each single breach of export control regulations may be punished by a fine of up to EUR 500,000 or 2,000,000, if it is only an administrative offence, or even higher fines or imprisonment, if it is regarded as criminal offence. In addition, you will forfeit all your trade facilitations (like bulk licenses or simplified forms of customs declarations) owing to doubts as to your reliability in terms of export law - this may also drastically reduce the export options of your company. These criminal or administrative sanctions will be imposed on the Board’s Export Director (the CEO of the company), the export manager and possibly also on the acting persons in charge of export transactions.

You may also be punished under German criminal law, if your subsidiary, commercial agent or customer delivers your goods to an embargo country or a person listed in the anti-terror list, without you being aware of it. Your unawareness will be irrelevant for German criminal law, if you could have prevented it by a tight organisation and supervision. Many of our clients have, therefore, opted for the conclusion of contracts with their subsidiaries/commercial agents/customers to avert the risk of a sensitive transfer. For that risk minimisation to work, any such contracts must be structured very effectively.

Should you have any questions about how to minimise your risk, please do not hesitate to contact us.

C. Our services offered

Advising/passing an expert opinion as to which of your goods are listed on the export control list (including a legal opinion as to which of several potential item numbers on the list are applicable)
Advising/passing an expert opinion as to which deliveries of your non-listed goods or of your technical assistance are sensitive, and thus are potentially subject to a prior license requirement (in relation to the potential use, the country, and the customer/end user), including advice regarding different options for risk minimisation (binding decisions by the BAFA - German Federal Office of Economics and Export Control-, or: attorney’s legal expert opinions, attorney’s advice, contracts for risk transfer, etc.)
Advising/passing an expert opinion as to which EC and US embargos or sanction lists must be complied with by you, including investigations in the event of a possible match concerning the sanction lists
Advising/passing an expert opinion as to different options for the minimisation of your risks under criminal law, in particular, the risk that your subsidiaries / commercial agents / importers / customers violate export law by concluding contracts (to be prepared by us) with you for transferring the risk
Obtaining all necessary decisions from the German BAFA or from foreign licensing agencies such as those of all EC Member States, of USA, Japan, India, China and other countries (in relation to the German BAFA: application for an export license, for a decision that no license is required, for a decision regarding the listing of goods, or for inquiries on the reliability of the customer)
Advising how to structure a precautionary risk management for export control, including: the appointment of the Board’s Export Director (the CEO) with the German BAFA, drafting of the organisational instructions for export/customs compliance - including advising on their monitoring-, and of manuals on export control, trainings/in-house seminars on export compliance; advising on compliance with sanction lists including advices concerning selection and legal requirements of an export software
Other advice in relation to the structuring of the risk management for export compliance (identification, assessment and control/reduction of risks) and for a secure international supply chain (reduction of the risks arising from your subsidiaries/dealers/customers, as well as from your suppliers and forwarders)
Set-up, or realignment, of your export control and customs handling
Advising and filing of the applications for export financing (letters of credit, export credit insurance etc.)
Reviewing or drafting your international contracts (supply, licence, and agency agreements) in relation to contractual risks and warranty (under the German Civil Code, foreign jurisdictions, CISG, private international law, Incoterms etc.), intellectual property (under intellectual property rights, licensing and competition law), commercial agency law, arbitration (advising in relation to the choice of an arbitration clause) etc.
Advising in relation to commercial agency law of Germany and of all nations in the world
Advising in relation to transportation law
Advising in relation to the marketing of your products abroad
Advising in relation to public international law and issues in respect of international law (including WTO law)
Advising on identification and reduction of your high risk under criminal law in connection with export control
Advising and representing you in court proceedings following a commitment of export control violations, including representing you in criminal proceedings, and reducing your risks by a voluntary self-disclosure
Legal opinions regarding the taxation abroad
Specific advice in relation to your business transactions with the USA, Japan, China and India
Conducting international arbitration and litigation, including in relation to damages in connection with export shipments
“Worry-Free Package” in relation to your export control: from comprehensive advice to the filing of all necessary applications
In-house seminars (to increase awareness of export risks of other employees of your company) world-wide (in EC Member States, in the US, in Asia etc.)

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