On April 15th 2018, changes in legislation and guidelines on military equipment has been introduced. The amendments apply to the Military Equipment Act (1992:1300) and the Regulation on Military Equipment (1992:1300), as well as the Swedish guidelines on export and other international cooperation.
A system for administrative sanction fees is introduced in the Military Equipment Act. The Inspectorate of Strategic Products (ISP) will be responsible of imposing the sanction fees. Systematic violations may cause significant consequences for the companies.
The violations that may lead to sanction fees are, including but not limited to, non-fulfillment of the obligations under accounting for marketing, end-use declaration etc. in case of export within the EEA, cooperation agreements or ownership in foreign legal entities, notification of use of general authorization etc.. These violations will not be subject to criminal penalties. However, revocation of a licence and prohibition on using a general authorization may be considered. For violations that have occurred before the entry into force of the administrative sanction fees, prior regulations apply; section 12, 15a, 17, 20b and 20c of the Military Equipment Act are subject to criminal penalties, whilst no penalties will be imposed for section 11 and 19.
It is the company, i.e., the licensee, that will be subject to the sanction fees. Even governmental agencies may be subject to sanction fees. Neither intent nor negligence is required for liability to be applicable; it is a matter of strict responsibility. Any mitigating circumstances in the individual case may result in being wholly or partly exempted from paying the fee.
The fee is set at a minimum of SEK 3,000 (approximately EUR 300) and a maximum of SEK 200,000 (approximately EUR 20 000) per violation. The amount of the fee will be determined by the extent of the company’s business; i.e., SEK 3,000 if the company has an invoiced value not exceeding SEK 250,000, otherwise three percent of the invoiced value up to the maximum amount.
If it is deemed disproportionate to charge a full amount, ISP may, in whole or in part, exempt the company from paying the sanction fee. In its assessment, the ISP will take into account, in particular, if the violation is due to a circumstance that the company neither predicted nor should have had or could not influence, what the company has done to avoid the violation and whether the fee is not proportionate to the violation. However, inadequate internal compliance procedures, lack of knowledge of the regulations, time shortage etc. will in general not result in any exemptions from paying the fee.
In order to mitigate the risk of being imposed with multiple sanction fees, companies should review its internal compliance procedures to ensure that all applicable requirements are complied with.