A separate regime from sanctions
Export controls and sanctions overlap but are not the same. Sanctions target named persons, regimes, and sectors; export controls regulate the movement of particular goods, software, and technology across borders, whoever the counterparty is. The category that catches most commercial parties is dual-use items - things designed for civilian use but capable of military or proliferation use, from certain chemicals and electronics to encryption software and design tools.
The practical point is that a transaction can pass sanctions screening - the counterparty is clean, the jurisdiction is fine - and still require an export licence because of what is being moved. Both checks have to be run, not one.
Deemed exports: no border needed
The most counter-intuitive feature of export control is the 'deemed export'. Under the US Export Administration Regulations, releasing controlled technology or source code to a foreign national - even within the United States, and even with nothing physically crossing a border - is 'deemed' an export to that person's country of nationality, and may require a licence if an export to that country would. A demonstration, an oral briefing, or giving access to a document can all count.
For commercial contracts, this reaches ordinary situations: seconding an engineer of one nationality onto a project, giving an overseas affiliate access to controlled designs, or onboarding a foreign-national contractor. Technology and services agreements should therefore address export-control compliance explicitly, including who is responsible for licences and for screening the nationalities of those given access. (Public-domain and genuine fundamental-research information is generally outside the rules.)
Enforcement is real
Export-control enforcement is not theoretical, and the penalties combine criminal and civil exposure. In 2025, the US electronic-design-automation company Cadence Design Systems agreed to plead guilty and pay over USD 140 million to resolve criminal and civil charges arising from the unlawful export of chip-design tools to a Chinese military-linked university on the Entity List, routed through an intermediary. The case is a reminder that controls follow the technology through indirect channels, and that knowledge of the ultimate end-user matters.
The lesson for drafters is to treat end-use and end-user controls seriously: representations about the end-use, prohibitions on diversion, and a right to refuse performance where a licence is refused all belong in contracts involving controlled items.
The EU and UK regimes and the no-re-export clause
The EU controls dual-use items through Regulation (EU) 2021/821, which recast the regime and strengthened catch-all controls and due-diligence expectations; the UK runs an equivalent strategic-export-control regime. Both have responded to Russia's re-export of sensitive goods through third countries by adding a contractual dimension - a binding one in the EU and a recommended one in the UK.
Under the EU's 12th sanctions package (which inserted Article 12g into Regulation (EU) 833/2014 via Regulation (EU) 2023/2878), EU exporters of listed sensitive goods to third countries must contractually prohibit re-export to Russia - the so-called 'no re-export to Russia' clause. The requirement applies to new contracts (concluded on or after 19 December 2023) from 20 March 2024; pre-existing contracts had a transition period running to 19 December 2024 inclusive, with the relevant date for their continued execution extended to 1 January 2025 by the 14th sanctions package. The UK has deliberately not gone as far: UK government guidance recommends a 'no re-export to Russia' clause as due-diligence best practice but does not require it under the Russia sanctions regulations. Either way, supply contracts touching these goods increasingly carry the clause as a matter of course, backed by audit rights and termination for breach.
Use at the desk
Practical checklist
- Run an export-control check separately from sanctions screening - a clean counterparty does not mean a clean export.
- Identify dual-use goods, software, and technology, and obtain any licence before performance.
- Address deemed exports: control who is given access to technology and screen nationalities (US EAR).
- Use end-use and end-user representations and a no-diversion obligation in contracts for controlled items.
- Include the 'no re-export to Russia' clause where listed sensitive goods are sold into third countries (EU Reg 2023/2878).
- Back the clauses with audit rights and a right to terminate or refuse performance if a licence is refused.
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
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