20th Ordinance amending German Foreign Trade and Payments Ordinance is now in force

On 5 October 2023, the 20th Ordinance amending the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, “AWV”) of 27 September 2023 entered into force. It establishes, inter alia, some new offences (Bußgeldtatbestände) that will be subject to fines. But most important, it lays the foundation for an extensive digitalisation of the investment review procedure.

The new provisions on digitalising administrative processes and on fines are highlighted below.

Digitalising administrative processes

Extensive changes have been made to Section 3 AWV to drive the digitalisation of administrative processes in the AWV’s area of applicability. This makes it possible now for administrative acts passed under the German Foreign Trade and Payments Act (Außenwirtschaftsgesetz, “AWG”) to be passed not only in writing but also electronically (Section 3(1) AWV). However, as regards investment control, special regulations had already made this possible previously.

Likewise, under Section 3(3) AWV, applications, notifications, information, documents, reports and other documentation that are submitted on the basis of Sections 14a, 15 or 23 AWG or in the context of reviewing corporate acquisitions (chapter 6 part 2 AWV) can be submitted not only in writing but also electronically. These documents are to be submitted via an administrative portal within the meaning of the German Online Access Act (Onlinezugangsgesetz) once it has been made available. The electronic availability of this administrative portal will be determined by a general order of the German Federal Ministry of Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz, “BMWK”).

One provision that will affect everyday practice is the new Section 3(4) AWV. Under this provision, the beginning of a Phase 1 review will not be based on the date of submission via the administrative portal. Instead, the notification or application will be deemed to have been received when the BMWK has imported/downloaded the transmitted documents completely and undamaged from the administrative portal into its IT system. The BMWK shall immediately confirm receipt of the transmitted documents to the direct acquirer or inform him if documents are incomplete or not intact.

Provisions on fines

Besides the changes in regard to digitalisation, some new offences subject to fines have been established. In addition to adjustments made necessary by recent changes in European Union regulations, now the following additional provisions on fines are in force:

• First, the prohibition on acquiring a new interest or increasing an existing interest in a legal entity, organisation or institution engaged in the mining and extraction of stone or earths in Russia is now subject to a fine.
• The ban on taking a post in any management bodies of Russian state companies is also subject to a fine.
• Finally, a fine can be imposed on anyone enabling Russian citizens and individuals residing in Russia to fill a post in a management body of the owner company or operating company of critical infrastructure, European critical infrastructure or critical institutions determined as such under national law.

Impact in practice

It will be especially interesting to see the effect on everyday practice of the new Section 3(4) AWV, which provides that the Phase 1 review does not begin until the transmitted documents have been imported from the administrative portal by the BMWK. The risk of an IT error on the part of the administrative portal, which is yet to be made available, or a transmission error when the BMWK downloads the documents will now be on the applying or notifying party even though that party has no influence on the administrative portal or the downloading process. To eliminate this risk, it could be advisable in the future to (once again) submit applications and notifications at least also in writing – although they are “supposed” to be submitted electronically. As a result, the 20th Ordinance amending the AWV could prove to be counterproductive to the goal of increased process digitalisation.