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As announced last week, BLOMSTEIN is publishing a series of briefings introducing into European and German legal defence matters. In preparation for the new year, our defence team got together and identified the topics that we believe will be relevant for companies in the security and defence industry in the EU and Germany in international trade law, ESG, antitrust law and public procurement law:

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The Russian invasion of Ukraine has not only turned the European security architecture upside down. It has also triggered a massive and ongoing rethink of security and defence within the European Union as a whole and its Member States individually. With conflicts flaring up in the Middle East and the future of peace in the Far East uncertain, Europe now faces a host of additional challenges for its foreign and security policy, as well as controversial decisions about meaningful consequences for its internal defence and security industries. The impact will be felt not only by the EU and its Member States, but also by any defence company operating or wishing to operate in the EU market.

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In Summer 2023, the Act in Support of Ammunition Production (ASAP) was adopted. ASAP marks the final stage of a three-track plan for the delivery and joint procurement of ammunition for Ukraine. While the first two tracks concerned the intended supply of 1 million rounds of stock ammunition to the Ukraine (track 1) and the promotion of joint procurement by EU member states (track 2), ASAP aims to strengthen the supply-side by increasing the European defense industry’s production capacities of ammunition and missiles (track 3). In contrast to the first two tracks, which responded to an immediate need for military supply following the Russian invasion of Ukraine, ASAP focuses on longer-term objectives.

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On August 9, 2023, the President of the United States, Joe Biden, signed an Executive Order on Addressing United States Investments In Certain National Security Technologies And Products In Countries Of Concern. The Executive Order is the first step towards a so-called outbound investment control, which is to complement the export control and inbound investment control of the U.S. Can the U.S. outbound investment control serve as a model for the EU?

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BLOMSTEIN advised Helsing, as it did on the previous Series A financing 2021, together with YPOG on the recent Series B financing round with a total volume of EUR 209 million. BLOMSTEIN supported with regard to investment control law. A big thank you goes to Helsing as well as to the entire YPOG team for the trust placed in us!

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The Russian invasion of Ukraine has led to a rethink in Germany. Suddenly, extensive funds are to be made available with which the urgently needed equipping of the German Armed Forces can finally be realised. The equipment is now to be provided as quickly as possible. The first procurement actions have already been initiated.

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Strengthening cooperation in defence and security procurement among member States has become an important concern of the European Union. Last year, the Commission addressed the issue of joint procurement in the defence and security sector in a separate guidance note. The Commission stressed the need for more cooperation in order to reduce costs, promote cross-border competition and facilitate cooperation between the European armed forces. In particular due to PESCO and the EDF, more joint procurement procedures are to be expected.

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The latest edition of the journal of export controls and sanctions WorldECR has just been released. BLOMSTEIN lawyers Florian Wolf and Leonard von Rummel have contributed an article about the Franco-German military cooperation with regard to export control matters.

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On 11 December 2017, a Council Decision finally established the Permanent Structured Cooperation (PESCO) in defence. The Council Decision was ultimately approved by 25 Member States, less than a month after a joint notification by the ministers of 23 Member States on their intention to participate. Along with the Council Decision, the participating Member States published an initial list of collaborative PESCO projects. These include research, procurement and upgrade projects regarding a variety of sectors, including prototypes for infantry vehicles, autonomous maritime surveillance systems and mine countermeasures, cyber security, radio and indirect fire support solutions, logistic hubs, operational support, military mobility measures and the establishment of a European Medical HQ, as well as training centres.

The pending implementation of PESCO for European defence projects raises a number of questions. We will focus on the effects on future defence procurement.

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