Reinforced controls on exports of defense material and other material where this is required by the sensitivity of the transaction and national interests
Spain Corporate Alert
Royal Decree 494/2020, of April 28, 2020, amends the system of control of foreign trade and, among other measures, provides the Inter-ministerial Regulatory Board on Foreign Trade in Defense and Dual Use Goods (JIMDDU) with greater functions, having the authority also to establish, on an exceptional basis, mechanisms for verification, monitoring and cooperation in relation to goods exported in certain transactions even with the involvement of the government of the importing country.
The amendment carried out by Royal Decree 494/2020 is part of the body of legislation headed by Law 53/2007 of December 28 on control of foreign trade in defense and dual use material. The above-mentioned law provides that:
transfers of defense material, other dual-use material, products and technologies must undergo prior administrative authorization and be accompanied by certain control documents; and
for each authorization the advisability of establishing verification, monitoring and cooperation mechanisms between governments must be assessed.
In accordance with the new RD 494/2020, the amendment is made for the purpose of reinforcing controls in relation to exports of defense material and other material in certain cases due to Spain’s need to adequately monitor exports where the sensitivity of the transactions and national interests so advise.
In summary, the essential amendments are:
Greater functions have been assigned to the JIMDDU because, since the entry into force of the new royal decree, it has the obligation to assess, for each authorization, the advisability of establishing verification, monitoring and cooperation mechanisms between the governments involved.
The JIMDDU can also establish, on an exceptional basis, verification, monitoring and cooperation mechanisms in relation to the goods exported in certain transactions with the cooperation of the government of the importing country. In these cases, the JIMDDU must commence a procedure in which all the terms of the verification will be defined.
In such cases, the control document which will be required will be the “ex post control end-use certificate (CUD)” which includes a verification clause at destination, and which must be issued by the competent authority of the country receiving the product. This certificate:
must be drawn up in line with the standard form in Annex VI.23 of Royal Decree 679/2014;
includes the option for the JIMDDU to seek an undertaking not to use the product outside the importing country’s territory, as well as a verification clause at destination of the exported product in transactions for which this may be decided by the JIMDDU; and
must be duly authenticated, in all cases, by means of the apostille procedure or by consular channels.
Therefore, the additional controls established include verification mechanisms at destination, which will involve the prior knowledge of the governments, recipients and end users of the goods of the fact that their destination and use will be verified. Accordingly, it is most important to understand that the new procedure established by RD 679/2020 may require, if the JIMDDU so decides, that the foreign government must sign and certify the documents relating to the export (specifically Annex VI.23 – CUD).