Joint Committee on Statutory Instruments Forty-Second Report


Memorandum by the Department of Trade and Industry


The Committee has requested a Memorandum on the following point:

  Given that regulation 3(3) creates an offence of non­compliance with a condition or requirement of a licence to sell equipment (which non­compliance takes place after the sale of equipment) and that requirement or condition is added by a modification of the licence, explain the purpose and effect of sub­paragraph (c) and in particular how the situation envisaged by it (sale before the modification) can be consistent with the offence created by the remainder of regulation 3(3).


2.  The Committee may wish to note that similar provisions are contained in Article 5(3) of the Export of Goods (Control) Order 1994 (S.I. 1994/1191) and Regulation 8 of the Dual­Use and Related Goods (Export Control) Regulations 1996 (S.I. 1996/2721), and the Department envisages that the practice in respect of Regulation 3(3) of the Regulations under consideration will (if any cases arise under it) be the same as under those other provisions. The Committee may also wish to note that Article 5(3) of the 1994 Order is applied by Article 3 of the Export of Goods (Federal Republic of Yugoslavia) (Control) Order 1998 (S.I. 1998/1530), made and coming into force on the same days as the Regulations under consideration and linked to those Regulations by their common subject matter (the reduction of economic relations with Yugoslavia pursuant to Council Regulation (EC) 926/98).

3.  The general principle underlying the exception contained in sub­paragraphs (a), (b) and (c) of Regulation 3(3) (as in the case of the exceptions to the other provisions cited above) is that if the Secretary of State modifies a licence by imposing an additional onerous condition to be complied with after the licensed act (sale or supply) has taken place but the licensed act has already taken place before the modification is made, the licensee is not obliged to comply with that condition. That possibility can arise because the Department will rarely know exactly when a sale or supply has taken place, and if circumstances arise warranting the modification of a licence without the agreement of the licensee by the imposition of an onerous condition, the modification might be made after the sale or supply has taken place but before the Department becomes aware of that. In any prosecution for breach of the modified condition, it would be for the prosecutor to prove that the modification had been made before the breach but the defence to show, on balance of probabilities, that the sale or supply occurred before the modification.

4.  This is not likely to occur frequently and it may be that it will never occur at all. A possibility of its occurring under the Regulations under consideration, however, is as follows. The sale or supply of most of the goods in the Annex to Council Regulation (EC) 926/98 is prohibited absolutely. Some of the goods (certain explosives and explosive­related equipment with legitimate industrial uses) may, however, be sold or supplied under licence if the member states have evidence that the end­use of those goods is not for internal repression or terrorism (see footnote 1 to the Annex). The Department might be prepared to licence the export of explosives to an industrial concern in Yugoslavia subject to the receipt of adequate evidence before the licence is granted that the consignee would use the goods for a legitimate industrial purpose. Subsequently, concerns about diversion might make it necessary to impose a condition that suppliers should, within a certain number of days after the supply, furnish to the Department adequate evidence of delivery of the goods to the consignee (the intention being that if adequate evidence were not forthcoming, the Department might well withhold licences for future supplies to that consignee). It might be decided that the situation was sufficiently serious for such a condition to be imposed not only on future licences but also on existing licences by modifying them. This modification would be effected by sending a letter (usually by fax, followed by hard copy) to the supplier. In some cases, the supply would not have yet been made, and therefore the supplier would be obliged to comply with the modification. In others, however, the goods might already have been supplied, and in that case sub­paragraph (c) of Regulation 3(3) would relieve the supplier of the obligation to comply with the condition as long as he could show that the supply had preceded the modification.

13th July 1998

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries

© Parliamentary copyright 1998
Prepared 27 July 1998