The legal regulation of dual-use items and technologies is complex. Extensive EU and domestic Hungarian legislation governs this area; in this article, we have summarised the most important key points in 10 sections. Failure to comply with registration and licensing rules may have serious consequences, as it may even constitute a criminal offence.<\/p>\n
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Dual-use items and technologies are products and technologies that may be used for both civilian and military purposes.<\/p>\n
The precise definition is set out in Regulation (EU) 2021\/821, which has direct effect and is directly applicable at EU level and constitutes the primary legal source for dual-use items and technologies, including software. Under this regulation, this category includes items which, in addition to civilian use, may be used for the design, development, production or use of nuclear, chemical or biological weapons or their means of delivery, including items that may be used both for non-explosive purposes and for assisting in any way in the manufacture of nuclear weapons or other nuclear explosive devices.<\/p>\n
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The list of items subject to licensing is contained in Regulation (EU) 2021\/821, which is an indispensable legal instrument in this field. According to Annex I to that regulation, it contains an extensive list specifying exactly which products, with which specifications, require prior licensing. Since Hungary is a party to all non-proliferation agreements regulating trade in dual-use items, the licensing categories include: nuclear materials, facilities and equipment; special materials and related equipment; materials processing; electronics; computers; telecommunications and information security; sensors; navigation and avionics; marine; aerospace and propulsion systems.<\/p>\n
In addition to the EU regulation, their domestic distribution is also governed by several Hungarian government decrees, which must be interpreted and applied together with the EU legislation. Therefore, when examining a specific issue, both EU and domestic rules must be taken into account.<\/p>\n
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The detailed rules on the distribution of dual-use items are, in principle, left by the above EU regulation to national competence. In Hungary, these rules are set out in detail by Government Decree No. 13\/2011 (II. 22.) on the licensing of foreign trade in dual-use items.<\/p>\n
Pursuant to Section 2(2)(b) of Government Decree No. 365\/2016 (XI. 29.) on the designation of the Budapest Metropolitan Government Office as the authority acting in certain industrial and commercial matters and on regional metrology and technical safety authorities, the Government designated the Budapest Metropolitan Government Office as the foreign trade administrative authority. The Export Control Department of the Commercial, Military Technology, Export Control and Precious Metal Assay Directorate of the Government Office handles matters relating to export, transfer, brokering and transit licences for dual-use items, monitors the import of such items into Hungary from third countries outside the European Union, issues International Import Certificates, conducts consultations relating to international obligations, performs tasks arising from the domestic implementation of international agreements, and handles matters relating to the export licensing of non-dual-use items subject to international trade sanctions.<\/p>\n
In the case of nuclear items, separate rules apply to the international trade in nuclear and nuclear dual-use items, as set out in Government Decree No. 144\/2011 (VII. 27.).<\/p>\n
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The first and indispensable step is the registration of the person intending to distribute the item, whether a natural or legal person, which is carried out by the specialised administrative body of the above Government Office. The application concerns the registration of the exporter in the register of companies engaged in the foreign trade of dual-use items. The complete list is available on the Government Office\u2019s website, as the authority is required to publish the registered companies. Several annexes must be attached to the application, as exhaustively specified in Government Decree No. 13\/2011 (II. 22.).<\/p>\n
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Once registration has been completed under domestic law, the EU legal rules must again be applied together with the Hungarian government decree. Three main types of export licence can be distinguished: EU general export authorisation, individual export licence and global export licence. The picture is further nuanced by the fact that, for larger projects, additional annexes must be submitted.<\/p>\n
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The import of dual-use items into Hungary may also be subject to licensing, in the form of a national import certificate.<\/p>\n
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Transport within the territory of the European Union or intra-EU transfer may also constitute an activity subject to authorisation; therefore, the detailed statutory provisions should also be examined in this respect.<\/p>\n
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Technical assistance means any activity related to the repair, development, production, assembly, testing, maintenance or any other technical service concerning dual-use items or technologies. This may include instruction, advice, training, the transfer of working knowledge or skills, or the provision of consulting services, including assistance provided by electronic means, by telephone or in any other oral form.<\/p>\n
It is important to emphasise that, as a general rule, technical assistance is also subject to authorisation, although the legislation provides for exceptions in this respect.<\/p>\n
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Until 2022, this category existed merely as a theoretical one in relation to the European Union, its neighbouring countries and other European countries. However, as a consequence of the Russia-Ukraine conflict, embargo considerations have become a real and practical factor in this area. If the source or destination country is located in a territory subject to an embargo, particular care must be taken due to the applicable EU sanctions regulations. A clear example is Council Regulation (EU) 2022\/328 amending Regulation (EU) No 833\/2014 concerning restrictive measures in view of Russia\u2019s actions destabilising the situation in Ukraine. This regulation significantly tightens, and in some cases prohibits, the conditions for export and import relating to Russia.<\/p>\n
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This heading is also the name of one of the offences under Act C of 2012 on the Criminal Code. Pursuant to Section 330, any person who, without authorisation or exceeding the scope of an authorisation, places dual-use items into foreign trade, including their transfer within the customs territory of the European Union, or uses dual-use items in a manner different from the authorisation, commits a felony punishable by imprisonment from one to five years.<\/p>\n
It is clear that the legislator may impose severe sanctions on persons who fail to comply with the licensing rules applicable to these items, given that the conduct is classified as a felony and the statutory penalty starts with imprisonment. For this reason as well, particular caution is required when exporting or importing such items.<\/p>\n
If you have any further questions on this topic, or if the distribution of such items and technologies is relevant to you or your company, please feel free to contact our office.<\/p>\n
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