Civil Law and Aerospace Export Compliance Civil Liability in Europe

1. Introduction

Aerospace export compliance in Europe concerns the legal obligations of manufacturers, exporters, brokers, technology suppliers, software developers, logistics companies, repair organisations and other participants involved in exporting aircraft, spacecraft, propulsion systems, avionics, sensors, navigation equipment, satellite technology, software and technical know-how.

The civil-liability dimension arises when non-compliance causes a contractual loss, regulatory restriction, damage to another party, invalid or unenforceable performance, loss of an export licence, sanctions-related loss, or disputes concerning responsibility between the exporter, buyer, carrier, insurer or intermediary.

The European framework is particularly important because Annex I, Category 9 of the EU Dual-Use Regulation expressly covers aerospace and propulsion items. The current principal framework is Regulation (EU) 2021/821, which controls exports, brokering, technical assistance, transit and transfer of dual-use items. Exporters must also maintain specified records concerning the items, consignee and, where known, end-use and end-user.

A useful distinction is:

• Export-control liability → breach of mandatory export rules.
• Contractual liability → failure to perform because an export licence is unavailable or an export becomes prohibited.
• Tort/delict liability → damage caused by negligent or unlawful conduct.
• Sanctions liability → violation or circumvention of restrictive measures.
• Product liability → defective aerospace equipment causing damage.
• Professional/compliance liability → inadequate classification, screening, documentation or compliance procedures.

2. Meaning of Aerospace Export Compliance

Aerospace export compliance means ensuring that an aerospace transaction is legally permissible before technology, equipment, software or technical assistance crosses the relevant regulatory boundary.

The compliance analysis normally involves:

1. identifying the product;
2. determining its technical characteristics;
3. classifying it under the relevant control list;
4. identifying the destination;
5. identifying the end-user;
6. determining the end-use;
7. checking applicable sanctions;
8. determining whether an export authorisation is required;
9. obtaining the appropriate authorisation;
10. complying with licence conditions;
11. retaining documentation;
12. monitoring subsequent transfers or diversion risks.

The EU Dual-Use Regulation is particularly relevant because its Annex I includes Category 7 navigation and avionics and Category 9 aerospace and propulsion.

3. Civil-Law Nature of the Problem

Export control is principally regulatory/public law, but it creates significant private-law consequences.

For example:

A French aerospace company contracts with a European customer to supply specialised satellite components to a third country. After contract formation, the components become subject to an export restriction.

Several civil-law questions immediately arise:

• Can the seller suspend performance?
• Is the seller liable for non-delivery?
• Does the contract contain an export-control condition?
• Does force majeure apply?
• Who bears the additional compliance cost?
• Can the buyer recover its advance payment?
• Can the seller claim that performance has become legally impossible?
• Can an arbitral tribunal order performance contrary to EU sanctions?
• Can damages be recovered for an unlawfully refused licence?
• Was the exporter negligent in failing to classify the product correctly?

Thus, export regulation can directly affect contractual obligations and civil remedies.

4. EU Dual-Use Regulation

Regulation (EU) 2021/821 establishes the EU regime for controlling exports, brokering, technical assistance, transit and transfer of dual-use items.

For aerospace businesses, important categories include:

A. Avionics

Examples can include:

• navigation systems;
• inertial navigation equipment;
• flight-control technology;
• specialised sensors;
• aircraft communication systems.

B. Aerospace and propulsion

Category 9 encompasses controlled aerospace and propulsion technologies.

C. Software

Export controls can apply not merely to physical hardware but also to controlled software and technology.

D. Technical assistance

Engineering assistance, installation, maintenance and other technical support can raise separate compliance questions.

E. Brokering

An intermediary can potentially fall within export-control rules even where it does not physically possess the aerospace item.

5. Classification Is the First Major Civil-Liability Issue

A company cannot simply describe an item as a "civilian aircraft component" and assume that no export controls apply.

The legal question may depend upon:

• technical specifications;
• performance;
• precision;
• materials;
• software;
• encryption;
• navigation capability;
• propulsion capability;
• military adaptability;
• intended use;
• destination;
• end-user.

This issue is especially important in the current European legal environment.

Flugzeugherstellerin, Case C-538/25

In Flugzeugherstellerin (C-538/25), an Austrian aircraft manufacturer challenged restrictions concerning the export of a two-seat civilian aircraft to the Myanmar Air Force.

The aircraft had originally been authorised for export in 2019. When another export was sought in 2023, the Austrian authorities treated the aircraft as potentially dual-use because it could be used for reconnaissance and military pilot training.

The Advocate General's Opinion of 24 September 2026 proposed that the concept of dual-use items should be interpreted broadly, with the physical and technical capabilities of the item being central to determining whether it can have military uses. The Opinion also distinguished that classification question from the separate question whether an export should ultimately be authorised.

Importantly, this is an Advocate General's Opinion, not yet a binding judgment of the Court of Justice.

Civil-law significance

The case demonstrates that an incorrect classification can create:

• delayed delivery;
• licence failure;
• contractual disputes;
• increased compliance expenses;
• potential damages claims;
• disputes over impossibility of performance.

6. End-User Due Diligence

Aerospace companies should not examine only the product.

They should also examine:

• purchaser;
• ultimate beneficial owner;
• consignee;
• final user;
• intermediary;
• destination;
• intended application;
• potential military connection;
• sanctions status;
• diversion risk.

A transaction can become legally problematic even when the product appears commercially ordinary.

The EU Regulation permits controls concerning non-listed items in specified circumstances where the exporter knows, or national rules provide grounds to suspect, sensitive end uses.

7. Contractual Allocation of Export-Control Risk

Aerospace contracts should clearly allocate export-control responsibility.

Important clauses include:

Export-control clause

The contract can identify:

• responsible party;
• licence responsibility;
• required information;
• end-user certification;
• compliance cooperation;
• consequences of refusal;
• re-export restrictions.

Sanctions clause

The contract may specify what happens if:

• a party becomes sanctioned;
• the destination becomes restricted;
• the product becomes prohibited;
• a new sanctions regime applies.

Force-majeure clause

The parties can address whether governmental export restrictions constitute force majeure.

Change-in-law clause

This can allocate risks arising from regulatory changes occurring after contract formation.

Termination clause

The parties can establish termination rights if performance becomes legally prohibited.

8. Impossibility and Illegality of Performance

A fundamental civil-law issue arises when export law makes contractual performance unlawful.

Suppose:

Seller → aerospace engine → Buyer → restricted destination

If an export licence is legally unavailable, forcing the seller to perform could itself constitute unlawful conduct.

Therefore, courts may have to distinguish between:

1. commercial difficulty;
2. economic hardship;
3. temporary regulatory obstacle;
4. licensing uncertainty;
5. actual legal prohibition.

The consequences differ.

Where performance is legally prohibited, contractual remedies can be substantially different from a case where performance merely becomes more expensive.

9. Advance Payments and Export Restrictions

A common aerospace dispute is:

Buyer pays 30% in advance → export becomes prohibited → seller cannot deliver → buyer demands repayment.

Questions include:

• Is the advance refundable?
• Has the seller incurred legitimate non-refundable costs?
• Did the buyer know about the export restrictions?
• Did the seller properly investigate licensing?
• Does the contract allocate regulatory risk?
• Is the claim itself prohibited by sanctions legislation?

This issue has recently received particularly important EU attention.

10. NV Reibel v JSC VO Stankoimport — Case C-802/24

NV Reibel v JSC VO Stankoimport (C-802/24) concerns a Belgian company and a Russian company.

The parties had entered into a supply agreement. Belgian authorities later determined that the goods could not be exported because they were considered dual-use items connected with helicopter-parts production and were caught by EU restrictions. The Russian purchaser sought repayment of its advance through arbitration.

The Advocate General's Opinion of 26 February 2026 considered whether such a repayment claim could itself fall within the EU prohibition on satisfying certain claims connected with prohibited transactions.

Importance for aerospace civil liability

The case illustrates a critical principle:

An export-control problem can affect not only the original obligation to deliver goods, but also subsequent private-law claims for money.

Potential claims include:

• refund of advance payments;
• damages;
• contractual interest;
• arbitration claims;
• restitution;
• termination payments.

The case is particularly relevant to aerospace contracts involving Russia or other restricted destinations.

11. Circumvention Liability

An exporter cannot necessarily avoid export controls by restructuring the transaction.

For example:

EU manufacturer → intermediary → distributor → restricted end-user

The existence of an intermediary does not automatically eliminate compliance obligations.

This principle is particularly significant for sophisticated aerospace supply chains.

12. Afrasiabi and Others — Case C-72/11

In Afrasiabi and Others (C-72/11), the Court examined EU restrictive measures concerning Iran and the supply and installation of a sintering furnace.

The Court addressed the concepts of indirectly making economic resources available and circumvention of restrictive measures.

Although the case did not concern an aircraft, its reasoning is highly relevant to aerospace export compliance.

Civil-law significance

A contractual structure should not be designed to disguise:

• the true end-user;
• the true destination;
• the real transaction;
• the controlled nature of the technology.

An aerospace intermediary may therefore face liability where its conduct facilitates prohibited supply or circumvention.

13. Möllendorf and Möllendorf-Niehuus — Case C-117/06

In Möllendorf and Möllendorf-Niehuus (C-117/06), the Court considered a property transaction where the purchaser became subject to restrictive measures after the contract had been concluded.

The Court held that EU restrictive measures could prevent completion of the transaction even though the underlying contract had been concluded earlier.

Aerospace significance

The case illustrates an important contractual principle:

The legality of performance may change after contract formation.

An aerospace contract signed lawfully in January might become impossible or prohibited in June because:

• the buyer becomes sanctioned;
• the destination becomes restricted;
• the product becomes controlled;
• an end-user becomes prohibited.

Consequently, contractual analysis must consider not only the law at the date of signing but also the legal position at the time of performance.

14. Rosneft — Case C-72/15

In Rosneft (C-72/15), the Court examined EU restrictive measures adopted in response to Russia's actions concerning Ukraine.

The measures included restrictions concerning financial transactions and the export of sensitive goods and technologies.

The Court confirmed the validity of the relevant restrictive measures and addressed the judicial review of EU sanctions.

Aerospace relevance

The case demonstrates that aerospace businesses must consider sanctions alongside ordinary export-control classification.

A transaction may therefore require two separate examinations:

Question 1: Is the aerospace item controlled?

Question 2: Is the proposed destination/end-user/transaction restricted by sanctions?

A licence under one regulatory regime does not necessarily make the transaction lawful under every other regime.

15. Bank Melli Iran v Telekom Deutschland — Case C-124/20

Bank Melli Iran v Telekom Deutschland (C-124/20) concerned the EU Blocking Regulation and US secondary sanctions.

The Court held that the EU prohibition on complying with specified US secondary sanctions could be invoked in civil proceedings. At the same time, the Court recognised that the prohibition could not produce disproportionate economic consequences for the undertaking concerned.

Aerospace significance

This is highly relevant to multinational aerospace companies.

A European company may simultaneously face:

• EU export controls;
• EU sanctions;
• US sanctions;
• foreign export controls;
• contractual commitments.

Civil courts may therefore have to determine how competing regulatory obligations affect contractual termination and damages.

16. Euro Asia Cargo v Council — Case T-232/24

In Euro Asia Cargo v Council (T-232/24), the General Court examined restrictive measures concerning Russia, including prohibitions involving dual-use goods and technology.

The case concerned the listing of an entity and raised issues including:

• right to be heard;
• obligation to state reasons;
• error of assessment;
• freedom to conduct a business. 

Civil-law relevance

A business affected by sanctions may seek judicial review of the underlying measure.

This matters because export restrictions can cause:

• loss of customers;
• loss of contracts;
• inability to receive payments;
• supply-chain disruption;
• reputational consequences;
• increased insurance costs.

However, the existence of commercial loss does not automatically establish a private damages claim. The precise statutory basis and applicable national law remain important.

17. Commission v Sweden — Case C-294/05

In Commission v Sweden (C-294/05), the Court considered the treatment of military equipment and dual-use goods for civil and military use in the context of customs duties and EU own resources.

Although this was not an aerospace export-liability case, it demonstrates that EU law has long recognised the special regulatory treatment of military and dual-use goods.

Aerospace relevance

It supports the broader proposition that an aerospace component cannot necessarily be treated like an ordinary commercial product merely because it is manufactured for civilian use.

18. Airbus Defence and Space and Marlink Events v EDA — Case T-105/24

A particularly important recent aerospace case is Airbus Defence and Space and Marlink Events v European Defence Agency, T-105/24.

The case concerned a public procurement procedure for satellite communications, equipment and related services.

On 1 July 2026, the General Court found liability concerning the procurement process and awarded compensation of:

• €3,864,315 to Airbus Defence and Space, and
• €458,185 to Marlink Events, plus interest. 

Why this matters

Although this was not itself an export-control case, it is directly relevant to the civil-liability side of European aerospace activity.

It shows that sophisticated aerospace businesses can obtain compensation where unlawful administrative conduct causes a sufficiently established economic loss.

The case is currently subject to an appeal before the Court of Justice, so its procedural position should be kept in mind.

19. Six+ Important Cases at a Glance

The first two cases are especially current: Flugzeugherstellerin remains pending, while the Advocate General's Opinion in NV Reibel was issued in February 2026.

20. Negligent Export Classification

An aerospace company may face civil claims if it negligently misclassifies an item.

Possible failures include:

• treating controlled avionics as ordinary commercial electronics;
• failing to identify controlled software;
• ignoring technical parameters;
• failing to review amendments to control lists;
• relying on an outdated classification;
• failing to obtain expert advice.

A resulting dispute could involve:

Duty → breach → causation → loss

For example:

Manufacturer incorrectly classifies a navigation system → export is stopped by customs → delivery deadline is missed → customer loses a downstream contract.

The customer may attempt to claim:

• direct loss;
• additional procurement costs;
• delay damages;
• lost profits;
• termination costs.

Whether such claims succeed depends on the governing contract and applicable national civil law.

21. Product Liability and Export Compliance Are Different

It is important not to confuse:

Export-control liability

Concerned with:

• whether the product can legally leave the jurisdiction;
• destination;
• end-user;
• sanctions;
• licences.

Product liability

Concerned with:

• whether the aerospace product is defective;
• whether it caused injury or property damage;
• whether the producer or supplier is legally responsible.

A single incident can potentially involve both.

For example:

A defective navigation system is exported without proper authorisation and later causes an accident.

There may be separate questions concerning:

1. export-control compliance;
2. contractual liability;
3. product liability;
4. negligence;
5. insurance;
6. regulatory penalties.

22. Documentation as Evidence

Documentation is extremely important in civil litigation.

The EU Dual-Use Regulation requires exporters to maintain detailed records, including information concerning the item, quantity, exporter, consignee and, where known, end-use and end-user.

Useful evidence includes:

• classification records;
• technical specifications;
• licence applications;
• licence approvals;
• end-user certificates;
• customer correspondence;
• sanctions-screening records;
• internal compliance approvals;
• customs declarations;
• shipping records;
• invoices;
• technical-assistance records;
• compliance training records.

These records can become evidence of either reasonable compliance or negligence.

23. Duty to Maintain an Effective Compliance System

Large aerospace businesses generally operate through complex supply chains.

A compliance system may involve:

First level — Product classification

Determine whether the product is controlled.

Second level — Destination screening

Identify country restrictions.

Third level — End-user screening

Check the purchaser and ultimate user.

Fourth level — End-use analysis

Determine what the aerospace technology will actually be used for.

Fifth level — Licensing

Obtain required authorisations.

Sixth level — Transaction monitoring

Monitor changes occurring before shipment.

Seventh level — Record keeping

Maintain evidence capable of demonstrating compliance.

24. Supply-Chain Civil Liability

Aerospace products frequently pass through several entities:

Manufacturer → Tier-1 supplier → distributor → freight forwarder → customer → final user

A compliance failure by one participant can affect the entire chain.

Potential disputes include:

• manufacturer against distributor;
• distributor against freight forwarder;
• buyer against manufacturer;
• insurer against exporter;
• shareholder claims against management;
• indemnity claims between suppliers.

Contracts should therefore clearly specify which party is responsible for export classification and licensing.

25. Insurance Issues

Export-control events can also generate insurance disputes.

Potential questions include:

• Does the policy cover regulatory shutdown?
• Is sanctions-related loss excluded?
• Is business interruption covered?
• Is a government prohibition an insured event?
• Does the insured have a duty to comply with export law?
• Can an insurer lawfully make a payment connected with a sanctioned party?

Sanctions clauses in insurance contracts therefore deserve careful drafting.

26. Arbitration and Export-Control Compliance

Aerospace contracts frequently contain arbitration clauses.

An arbitration tribunal may face questions such as:

• Can it order delivery of a controlled aerospace component?
• Can it award damages for non-delivery?
• Can it order repayment to a sanctioned party?
• Can it enforce a contractual penalty where performance was prohibited?
• Does EU public policy prevent enforcement of the award?

NV Reibel is particularly relevant because it concerns the interaction between EU restrictive measures, contractual claims and arbitration.

Thus:

Arbitration agreement ≠ immunity from mandatory EU export-control rules.

27. Force Majeure

Whether export restrictions constitute force majeure depends heavily on:

• contract wording;
• governing law;
• foreseeability;
• control of the affected party;
• timing of the restriction;
• licensing history;
• whether the party could reasonably have obtained authorisation.

A party cannot automatically invoke force majeure merely because compliance has become more difficult.

There is a significant difference between:

"Licence application was refused"

and

"Licence application became expensive or commercially inconvenient."

The first may potentially create legal impossibility; the second ordinarily requires a more detailed contractual analysis.

28. Good Faith and Export Compliance

Civil-law systems generally place significant importance on good faith in contractual relationships.

In an aerospace export context, good faith may involve:

• sharing relevant compliance information;
• cooperating with licence applications;
• providing accurate end-user information;
• not concealing the ultimate destination;
• not deliberately restructuring transactions to circumvent restrictions;
• notifying the other party about regulatory changes.

Bad-faith conduct can increase the risk of contractual or tort liability under applicable national law.

29. Corporate Management Liability

Export compliance is also a corporate-governance issue.

Management may face internal liability questions where there is:

• inadequate compliance supervision;
• deliberate circumvention;
• repeated export-control failures;
• inadequate internal controls;
• false documentation;
• failure to investigate warning signs.

The precise civil liability of directors depends on the applicable national company law.

For European aerospace groups, the governing law could differ between:

• France;
• Germany;
• Italy;
• Spain;
• Netherlands;
• Belgium;
• Austria;
• another EU Member State.

30. Civil Remedies

Depending on the applicable national law and contractual framework, possible remedies include:

1. Damages

Compensation for legally recoverable losses.

2. Restitution

Return of advance payments or other benefits.

3. Termination

Ending the contract where lawful performance has become impossible or prohibited.

4. Suspension

Temporary suspension while licensing or regulatory issues are resolved.

5. Specific performance

Potentially problematic where the requested performance would itself violate mandatory export controls.

6. Declaratory relief

A court may determine whether contractual performance is legally permissible.

7. Injunctions

Possible where national procedural law permits urgent relief.

31. Causation Is Critical

A claimant must normally establish a legally sufficient connection between the compliance failure and the loss.

Example:

Incorrect export classification

↓

Customs intervention

↓

Shipment delayed

↓

Customer loses downstream launch slot

↓

Claim for damages

The difficult issue may be whether the lost launch opportunity was sufficiently foreseeable and legally attributable to the exporter.

Aerospace contracts therefore frequently contain:

• liability caps;
• consequential-loss exclusions;
• liquidated damages;
• indemnities;
• insurance requirements.

32. Limitation of Liability

Export-control clauses should be coordinated with limitation-of-liability clauses.

A contract might provide:

• total liability capped at contract value;
• consequential losses excluded;
• regulatory penalties excluded;
• indemnification for export violations;
• unlimited liability for fraud or wilful misconduct.

Whether these provisions are enforceable depends upon the applicable national law.

33. European Civil-Law Approach

A useful analytical model is:

Step 1 — Identify the aerospace item

Aircraft, satellite, engine, avionics, sensor, software, technology, etc.

Step 2 — Classify it

Determine whether it falls within a controlled category.

Step 3 — Examine destination

Check EU and national restrictions.

Step 4 — Examine end-user

Identify the ultimate user.

Step 5 — Examine end-use

Determine civilian, military, surveillance or other sensitive applications.

Step 6 — Check sanctions

Determine whether the person/entity/destination is restricted.

Step 7 — Obtain authorisation

Where required, secure the appropriate licence.

Step 8 — Perform the contract

Only to the extent legally permitted.

Step 9 — Preserve evidence

Maintain records demonstrating compliance.

Step 10 — Resolve civil consequences

Determine whether suspension, termination, restitution, damages or another remedy applies.

34. Special Problem of Civilian Aerospace Technology

Modern aerospace technology creates an increasingly difficult boundary between civilian and military use.

Examples include:

• satellite imagery;
• navigation systems;
• autonomous aircraft;
• high-performance computing;
• sensors;
• satellite communications;
• propulsion;
• drones;
• aerospace software;
• flight-control systems.

A component originally designed for civilian purposes may nevertheless have military applications.

The Flugzeugherstellerin proceedings illustrate precisely this problem: the Austrian authorities considered a civilian aircraft potentially dual-use because of its potential military applications.

35. Relationship Between Export Compliance and Human Rights

Modern EU export-control law increasingly incorporates concerns relating to:

• public security;
• terrorism;
• human rights;
• diversion;
• military use.

The current Dual-Use Regulation permits certain controls involving sensitive end uses and human-rights considerations.

Therefore, aerospace companies cannot always limit their analysis to:

"Is this aircraft component technically civilian?"

They may also have to examine:

"Who will receive it and what regulatory risks arise from that destination and end use?"

36. Key Legal Principles

The main principles can be summarised as follows:

1. A civilian aerospace product can potentially be a dual-use item.
2. Technical characteristics can be legally decisive.
3. End-user due diligence is essential.
4. Export licensing and sanctions compliance are separate questions.
5. An intermediary does not necessarily eliminate export-control responsibility.
6. A later restriction can affect an existing contract.
7. A prohibited transaction can affect subsequent restitution or damages claims.
8. Arbitration does not override mandatory EU sanctions law.
9. Documentation is important evidence of compliance.
10. Civil liability depends heavily on causation and contractual allocation of risk.
11. Aerospace procurement disputes can generate substantial compensatory liability, as illustrated by Airbus Defence and Space v EDA. 
12. Current EU jurisprudence is continuing to develop around the meaning of dual-use aerospace products.

37. Conclusion

Civil liability arising from aerospace export compliance in Europe sits at the intersection of civil law, contract law, export-control law, sanctions law, corporate law, customs law and arbitration.

The most important practical issue is that an aerospace transaction must be assessed throughout its lifecycle rather than only when the contract is signed. A product may become controlled, a customer may become sanctioned, a destination may become restricted, or a previously lawful transaction may become prohibited.

The developing jurisprudence is particularly significant. Flugzeugherstellerin (C-538/25) directly concerns the classification of a civilian aircraft as potentially dual-use, while NV Reibel (C-802/24) demonstrates how export prohibitions can extend into contractual and arbitral disputes. Afrasiabi, Möllendorf, Rosneft and Bank Melli Iran provide broader principles concerning circumvention, subsequent sanctions, restrictive measures and civil contractual consequences.

Accordingly, aerospace export compliance is not merely a licensing exercise; it is also a civil-risk management mechanism. A well-drafted aerospace contract should allocate export-control responsibility, licensing risk, sanctions risk, force-majeure consequences, termination rights, indemnities, insurance and dispute-resolution mechanisms clearly and in accordance with the applicable national civil law.