The Council of the European Union recently adopted a Decision amending Council Common Position 2008/944/CFSP of December 8, 2008 defining common rules governing control of exports of military technology and equipment. The new Council Decision takes account of the developments at EU and international level since the adoption of the original 2008 Common Position. The Council Decision is accompanied by Conclusions and an updated version of the User’s Guide to Council Common Position 2008/944/CFSP defining common rules governing the control of exports of military technology and equipment.

Reassessment of Export Licenses

Most notably, the new Council Decision inserts a new article 1 paragraph 1a, which provides that “[w]here new relevant information becomes available, each Member State is encouraged to reassess export licenses for items on the EU Common Military List after they have been granted.”

This new provision leads to more legal uncertainty, which will be particularly problematic for large-scale projects of military technology and equipment that are specifically developed and manufactured for a particular customer. Such customized items cannot simply be sold to another purchaser. If the development or production is already advanced or finished when the export license is revoked or suspended, the parties may suffer considerable losses. The change will have important practical consequences. For example, the German federal government has frozen the export of defense technology and equipment to Saudi Arabia, including those for which it had already issued export licenses, since October 2018. Consequently, Germany faced threats of legal actions for damages from certain defense contractors which were affected by the German policy.

It is doubtful that the Council Decision can be construed as a free pass for the national authorities to adopt measures retroactively and indeed the national courts will need to confirm whether the Decision overrides the applicable constitutional guarantees. Nevertheless, the new Council Decision will make it more difficult for companies to receive state compensation for the damages incurred. This needs to be reflected through appropriate contractual clauses in the sales agreement between the exporter and the customer in the country of destination.

Additional Cooperation and Enhanced Transparency

The Council Decision further provides for additional cooperation and enhanced transparency. For example, the Decision states that the EU Annual Report on Arms Exports, which is based on contributions from all Member States, shall also be made available to the public in the format of a searchable online database on the website of the European External Action Service (previous reports are available here).

In the Conclusions, the Council, in particular, takes note of the guidelines on information-sharing between Member States on their arms export policies in the revised User’s Guide and welcomes the expansion of the COARM online system to allow a broader range of information-sharing and exchange between Member States. It also tasks the Working Party on Conventional Arms Exports to further investigate the possible benefits of a database for licensing officers that would facilitate the finding of relevant information.

Reinforced Role of the COARM Online System

In addition to these amendments to the information exchange among Member States, the updated User’s Guide provides for a reinforced role of the COARM online system. In particular, when an arms export or brokering license is denied, the denying Member State shall introduce a denial notification in the COARM online system without undue delay after the license has been refused. The COARM online system also facilitates sharing concrete export-related information (such as information on problematic end-users and intermediaries, convicted exporters, risk analyses that are thought to be of value to other Member States, detected diversion routes, etc.), sharing general national information and policies that are thought to be of value to other Member States as well as exchanging information and policies concerning specific destinations or recipients, or on issues of concern.