Export control navigator for deals

Classify before the data room opens

Until the products, software and technology are classified, nobody can say who may see what. Ask for the classification records first, and treat technical material as controlled until they arrive.

eCFR: 22 CFR 120.11 (order of review)

For subscribers: 4 points for the deal, the rule quoted.

Key term: Export control

Sharing ITAR technical data with foreign persons is an export

Showing ITAR technical data to a foreign person, even in the United States and even on a screen, is a deemed export that needs a licence or an exemption first.

eCFR: 22 CFR 120.50 (export)

For subscribers: 4 points for the deal, the rule quoted.

Key term: Export control

Releasing EAR technology to foreign persons can need a licence

Releasing EAR-controlled technology or source code to a foreign person in the United States is a deemed export. Whether it needs a licence depends on the classification and the person's nationality.

eCFR: 15 CFR 734.13 (export)

For subscribers: 3 points for the deal, the rule quoted.

Electronic transfers of UK military technology need a licence

Sending military software or technology out of the UK by electronic means, including through a data room hosted or opened abroad, needs an export licence.

legislation.gov.uk: Export Control Order 2008, article 3

For subscribers: 3 points for the deal, the rule quoted.

EU dual-use items and technology need an authorisation to leave the EU

Exporting dual-use items listed in the EU Regulation, including transmitting the technology, needs an authorisation from the member state where the exporter is established.

EUR-Lex: Regulation (EU) 2021/821

For subscribers: 3 points for the deal, the rule quoted.

Tell DDTC within five days of a change in ownership or control

A registered company must notify the Directorate of Defense Trade Controls within five days of a change in its ownership or control, among other changes to its registration.

eCFR: 22 CFR 122.4 (changes in registration)

For subscribers: 3 points for the deal, the rule quoted.

Give 60 days' notice before a foreign person acquires the company

A sale or transfer of ownership or control of a registered company to a foreign person needs notice to DDTC at least 60 days in advance. On enforcement, the same applies to a foreign buyer of the shares.

eCFR: 22 CFR 122.4 (changes in registration)

For subscribers: 3 points for the deal, the rule quoted.

Technical assistance and manufacturing licence agreements must be amended

After a change of ownership, the company's technical assistance and manufacturing licence agreements must be amended within the time allowed, or they may be treated as invalid.

eCFR: 22 CFR 122.4 (changes in registration)

For subscribers: 2 points for the deal, the rule quoted.

Enforcement can itself be an export

Transferring control or ownership of a satellite subject to ITAR to a foreign person is an export, so foreclosure in favour of a foreign lender or buyer needs approval first.

eCFR: 22 CFR 120.50 (export)

For subscribers: 3 points for the deal, the rule quoted.

Launching outside the US brings special export controls

Exporting an ITAR-controlled satellite for launch in, or by nationals of, a country that is not in NATO or a major non-NATO ally needs a technology transfer control plan and Department of Defense monitoring, on top of the licence.

eCFR: 22 CFR 124.15 (space systems and launches)

For subscribers: 3 points for the deal, the rule quoted.

See the Launch services agreement checklist

Financing particular sales of defence articles can be brokering

ITAR treats financing as a brokering activity when it facilitates the transfer of a defence article or service on behalf of another. General corporate lending usually falls outside, but receivables and export finance tied to particular sales need a look.

eCFR: 22 CFR 129.2 (brokering definitions)

For subscribers: 3 points for the deal, the rule quoted.

The AUKUS exemption may remove the need for a licence

Transfers among registered US persons, government bodies and Authorized Users in Australia, the United Kingdom and the United States can go without a licence, subject to the conditions and the excluded items.

eCFR: 22 CFR 126.7 (AUKUS exemption)

For subscribers: 3 points for the deal, the rule quoted.

Check no party is connected to a proscribed country

The United States denies licences for defence articles and services destined for or originating in certain countries, and exemptions cannot be used for them. Screen every lender, investor and buyer, including their owners.

eCFR: 22 CFR 126.1 (prohibited exports and sales)

For subscribers: 2 points for the deal, the rule quoted.

Past violations: weigh a voluntary disclosure

Voluntary disclosure is a mitigating factor under both ITAR and the EAR. Open issues should be dealt with before signing, with a specific indemnity or escrow.

eCFR: 22 CFR 127.12 (voluntary disclosures)

For subscribers: 3 points for the deal, the rule quoted.

Export records must be kept for five years

Both regimes require records to be kept for five years. Missing records are a violation in themselves and make every other compliance claim hard to test.

eCFR: 15 CFR 762.6 (record retention)

For subscribers: 2 points for the deal, the rule quoted.