Activation of the security-related supply-crisis state
1. A security-related supply-crisis shall be considered to occur where:
(a)
there are serious disruptions or an imminent risk of such disruptions in the provision of defence products, such as disruptions due to the impact of events related to the security of the Union; and
(b)
such serious disruptions or the imminent risk thereof are resulting or are likely to result in the adoption of divergent national measures related to crisis-relevant defence products leading to a severe negative impact on the proper functioning of the internal market, in particular obstacles to cross-border trade in such crisis-relevant defence products within the Union causing significant shortages of defence products.
2. Where, pursuant to Article 59, the Commission or the Board becomes aware of a risk of serious disruption in the supply of crisis-relevant defence products or has concrete and reliable information of any other relevant risk factor or event materially affecting the supply of such products, the Commission, after consulting the Board, shall assess whether the conditions set out in paragraph 1 of this Article are met. That assessment shall take into account the potential impact and consequences of the security-related supply-crisis state on the defence supply-chains within the Union, the results of stress tests conducted pursuant to Article 58, and assessments performed in other relevant Union crisis management frameworks. Where that assessment provides concrete and reliable evidence, the Commission may, after consulting the Board, propose to the Council to activate the security-related supply-crisis state. Where it proposes to the Council to activate the security-related supply crisis-state, the Commission shall inform the Parliament thereof.
3. When assessing if the conditions set out in paragraph 1 of this Article are met pursuant to paragraph 2, the Commission shall, in particular, take into account whether a crisis affecting the security and defence interests of the Union and its Member States has been identified within the area of CFSP, such as whether that crisis has triggered the activation of the mutual assistance clause pursuant to Article 42(7) TEU.
4. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may activate the security-related supply-crisis state. The duration of the security-related supply-crisis state shall be specified in the implementing act and initially shall not exceed 12 months. That implementing act shall also specify which of the measures set out in Articles 65 to 71 are activated. In addition, the implementing act may identify for which crisis-relevant defence products those measures are activated.
5. The Council, acting by qualified majority, may amend the proposal referred to in paragraph 4.
6. The Commission shall report on a regular basis and at least every three months to the Council and to the European Parliament on the state of the security-related supply crisis.
7. No later than three weeks before the expiry of the duration of the security-related supply-crisis state, the Commission, taking into consideration the recommendation of the Board, shall submit to the Council a report, assessing whether that duration should be prolonged. The report shall in particular analyse the impact of the measures previously activated under this Chapter. Where such assessment provides concrete and reliable evidence that the conditions for the activation of the security-related supply-crisis state are still met, the Commission may, after consulting the Board, propose to the Council to prolong the security-related supply-crisis state.
8. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may prolong the security-related supply-crisis state. The duration of the prolongation shall be limited to a maximum of 6 months and specified in the implementing act. That implementing act shall also specify which of the measures set out in Articles 65 to 71 continue to be applied or, where relevant, are activated. The Council, acting by qualified majority, may repeatedly decide to prolong the period for which the security-related supply-crisis state is activated where so justified to address the security-related supply crisis.
9. The Commission may propose to the Council to prolong the security-related supply-crisis state as many times as considered necessary to address the security-related supply crisis, subject to the conditions set out in paragraph 7. Upon such proposal from the Commission, paragraph 8 shall apply.
10. During the security-related supply-crisis state, the Commission shall, after consulting the Board, assess the appropriateness of an early termination of the security-related supply-crisis state. If the assessment so indicates, the Commission shall propose to the Council to terminate the security-related supply-crisis state.
11. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may terminate the security-related supply-crisis state before the expiry date specified in the implementing act referred to in paragraph 4 or 8.
12. Upon expiry of the period for which the security-related supply-crisis state is activated or prolonged or upon its early termination, the measures taken in accordance with Articles 65 to 71 shall immediately cease to apply. Implementing acts that have been adopted in accordance with Article 66(6) shall nevertheless continue to apply until the priority-rated requests concerned have been completed.
In the course of the preparation and implementation of the measures set out in Articles 65 to 71, the Commission shall, whenever possible, act in close coordination with the Board, which shall provide advice in a timely manner. The Commission shall inform the Board on the action taken. During the security-related supply-crisis state, the Commission shall, upon request from a Member State or on its own initiative, convene extraordinary meetings of the Board where necessary. In line with Article 76(10), the Board shall invite, where relevant, high-level industrial representatives to meet in special configuration in order to discuss issues related to the defence products concerned. Member States shall work closely with the Commission within the Board in order to ensure the coordination of any Union and national measures taken with regard to the defence supply chains related to the crisis-relevant defence products concerned.
13. Where the security-related supply-crisis state is activated, the Commission may propose to the Council to activate the measures provided for in Articles 62 and 63, under the conditions laid down therein and in Articles 60 and 61.
Information requests
Where the Council activates the measure under this Article in accordance with Article 64(4), the Commission may take the measures provided for in Article 62 in relation to crisis-relevant defence products, in accordance with the conditions defined therein.
Prioritisation of defence products
1. Where the Council activates the measure under this Article in accordance with Article 64(4), a Member State may submit a request to the Commission to request an economic operator whose production site is located on its territory to accept, or to prioritise, a certain order of crisis-relevant defence products in order to address the severe difficulties that Member State or another Member State faces either in the placing of an order or in the execution of a contract for the supply of such products.
2. Upon a request as referred to in paragraph 1, the Commission may, where the production or the supply of crisis-relevant defence products cannot be achieved by any other measure provided for in this Chapter, address a request to the economic operator concerned after:
(a)
consulting, and receiving prior agreement of, the Member State on the territory of which the production site of the economic operator concerned is located; and
(b)
consulting, and receiving prior agreement of, the Member State on the territory of which the executive management structure of the economic operator concerned is located.
The Commission’s request shall explicitly indicate that the economic operator is free to refuse the request.
3. The request referred to in paragraph 2 shall include information about the legal basis for the request, specify the products, their specifications and quantities, specify the schedule and time-limit for performing and completing the order, and state the reasons justifying the use of the priority-rated request.
4. The Commission shall demonstrate that the choice of the recipients and beneficiaries of the request referred to in paragraph 2 is non-discriminatory and complies with Union competition rules.
5. The Commission shall base the request referred to in paragraph 2 on objective, factual, measurable and substantiated data, showing that such prioritisation is indispensable in order to ensure the proper functioning of the internal market, and having regard to the legitimate interests of the economic operator concerned and to the cost and effort required for any change in the production sequence of the supply chain.
6. Where the economic operator to which the request referred to in paragraph 2 is addressed has expressly accepted that request, the Commission, by means of an implementing act and after the consultation and prior agreement of the Member State on the territory of which the production site of the economic operator concerned is located and of the Member State on the territory of which the executive management structure of the economic operator concerned is located, shall adopt a priority-rated request setting out:
(a)
the legal basis of the priority-rated request to be complied with by the economic operator;
(b)
the list of crisis-relevant products subject to the priority-rated request, their specifications and the quantities in which they are to be supplied;
(c)
the time limits within which the priority-rated request is to be completed;
(d)
the beneficiaries of the priority-rated request;
(e)
the scope of contractual obligations over which the priority-rated request shall have precedence;
(f)
the waiver of contractual liability under the conditions laid down in paragraph 8 of this Article; and
(g)
the penalties provided for in Article 72 for non-compliance with the obligations stemming from that implementing act.
The implementing act referred to in the first subparagraph of this paragraph shall be adopted in accordance with the examination procedure referred to in Article 77(4).
7. The priority-rated requests referred to in paragraph 6 shall:
(a)
be placed at a fair and reasonable price, adequately taking into account the economic operator’s opportunity costs when fulfilling the priority-rated request as compared to existing contractual obligations; and
(b)
take precedence over any contractual obligations related to the crisis-relevant products subject to the priority-rated request under private or public law, under the conditions laid down in the implementing act referred to in paragraph 6.
8. The economic operator subject to a priority-rated request pursuant to paragraph 6 shall not be liable for any breach of contractual obligation that is governed by the law of a Member State, provided that:
(a)
the breach of contractual obligation is strictly necessary for compliance with the required prioritisation;
(b)
the implementing act referred to in paragraph 6 has been complied with; and
(c)
the acceptance of the priority-rated request did not have the sole purpose of unduly avoiding a prior performance obligation.
9. The economic operator subject to a priority-rated request may request the Commission to modify the implementing act referred to in paragraph 6 where it considers it to be duly justified based on one of the following grounds:
(a)
the economic operator is unable to perform the priority-rated request on account of insufficient production capability or production capacity, even under preferential treatment of the request;
(b)
completion of the request would place an unreasonable economic burden on, and entail particular hardship for, the economic operator.
10. The economic operator shall provide all relevant and substantiated information to allow the Commission to assess the merits of the request for modification referred to in paragraph 9.
11. Based on the examination of the reasons and evidence provided by the economic operator, the Commission may, after consultation and prior agreement of the Member State on the territory of which the relevant production site of the economic operator concerned is located and the Member State on the territory of which the executive management structure of that economic operator concerned is located, amend its implementing act to release, partially or in totality, the economic operator concerned from its obligations under this Article.
12. Where an economic operator, after having expressly accepted to prioritise the orders requested by the Commission, intentionally or through gross negligence does not comply with the obligation to prioritise those orders, it shall be subject to fines set in accordance with Article 72, except where:
(a)
the economic operator is unable to perform the priority-rated request on account of insufficient production capability or production capacity, or on technical grounds; or
(b)
performance or completion of the request would place an unreasonable economic burden on, and entail particular hardship for, the economic operator, including substantial risks relating to business continuity.
13. When an economic operator established in the Union is subject to a measure of a third country which entails a priority-rated request of a crisis-relevant defence product, it shall notify the Commission thereof. The Commission shall inform the Board of the existence of such measures. Where relevant, the Commission may consult with the Board on any appropriate step to be taken in response to that measure.
14. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1)(b) TFEU.
Intra-EU transfers of crisis-relevant defence products
1. Where the Council activates the measure under this Article in accordance with Article 64(4) of this Regulation, and without prejudice to Directive 2009/43/EC and Member States’ prerogatives under that Directive, Member States shall ensure that applications related to intra-EU transfers are processed in an efficient and timely manner. To that end, all national authorities concerned shall ensure that the most rapid treatment legally possible is given to such applications. The Council implementing act referred to in Article 64(4) of this Regulation shall specify the timeframe within which national authorities concerned shall treat the applications once they have received all necessary information from the applicant. That timeframe shall not be longer than two weeks.
2. Where a Member State imposes, in accordance with Article 4(8) of Directive 2009/43/EC, export limitations on components which are crisis-relevant products, that Member State shall not require further authorisations for the intra-EU transfer of the components concerned where the recipient provides a declaration of use in which it declares that the components subject to that transfer licence are integrated or are to be integrated into a defence product and cannot be transferred or exported as such. This shall be without prejudice to the obligations of recipients laid down in Article 10 of Directive 2009/43/EC.
Support to emergency defence innovation actions
Where the Council activates the measure under this Article in accordance with Article 64(4), innovation actions related to one of the following activities shall be deemed eligible under the Programme:
(a)
activities aimed at very significantly shortening the delivery lead time of defence products;
(b)
activities aimed at significantly simplifying the technical specifications of defence products in order to enable their mass production;
(c)
activities aimed at significantly simplifying the production process of defence products to enable their mass production; or
(d)
activities aimed at replacing components with alternatives that are available in the Union or that are easily adaptable or can be developed in a timely manner by economic operators established in the Union.
Certification
1. Where the Council activates the measure under this Article in accordance with Article 64(4), Member States shall ensure that administrative procedures related to the certification of crisis-relevant defence products and, where necessary, technical adaptations of such products are processed in the most rapid way possible, in accordance with their applicable national laws and regulations.
2. Where such a status exists in national law, certification of crisis-relevant defence products shall be allocated the status of the highest possible significance.
3. Where this measure is activated, crisis-relevant defence products certified in a Member State shall be deemed certified in another Member State without being subject to additional control.
4. The implementing act referred to in Article 64(4) may lay down more precise provisions on the scope of this measure.
5. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1), point (b), TFEU.
National fast-tracking of permit-granting procedures
Where the Council activates the measure under this Article in accordance with Article 64(4) of this Regulation, the security of supply of crisis-relevant defence products may be considered an imperative reason of overriding public interest within the meaning of Article 6(4) and Article 16(1), point (c), of Directive 92/43/EEC and of Article 4(7) of Directive 2000/60/EC. Therefore, the planning, construction and operation of related production facilities may be considered of overriding public interest, provided that the other conditions set out in those provisions are fulfilled.
Continuity of production of crisis-relevant defence products
1. Where the Council activates the measure under this Article in accordance with Article 64(4) of this Regulation and where Directive 2003/88/EC of the European Parliament and of the Council ( 46 ) applies to the relevant production activities, Member States may decide to use, or to encourage economic operators whose production sites are located on their territory and which produce the crisis-relevant defence products concerned to make use of, derogations provided for in Article 17(3) of Directive 2003/88/EC in order to allow for the expansion of working shifts thereby facilitating continuity of production of the crisis-relevant defence products concerned, if they deem it necessary to achieve the objectives of this Regulation.
2. Where prior authorisation is required, all national authorities concerned shall ensure that the most rapid treatment legally possible is given to applications from economic operators producing crisis-relevant defence product to use the derogations referred to in paragraph 1.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
