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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)

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

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