Ukraine: New Export Control Procedure for Military and Dual-Use Products
Introduction
Ukraine has created a special wartime mechanism for exporting certain Ukrainian-produced military and dual-use goods, including technologies, to foreign customers. The regime is not a complete liberalisation of defence exports. Rather, it is a controlled export route with country eligibility requirements, foreign-customer due diligence, end-use guarantees, Ukrainian defence-priority safeguards and permit suspension or cancellation risks.
What products are covered?
The Procedure applies to exports of:
- military goods from Ukraine’s controlled military list, if accepted into service or codified by the Ministry of Defence as a supply item;
- dual-use goods that may be used for the development, production or use of such military goods;
- certain non-listed goods captured by Ukraine’s "catch-all" export-control rule, if accepted or codified by the Ministry of Defence;
- military and dual-use technologies.
For foreign buyers, this means the regime is primarily relevant to Ukrainian defence technology, drones, UAVs, electronic warfare systems, military components, software, technologies and related dual-use products.
Minimum transaction size
The special export route generally applies to exports worth at least UAH 15 million (approximately EUR 294,000 or USD 334,000) under a foreign trade contract, subject to a permit from Ukraine's State Export Control Service.
However, this value threshold does not apply to component parts and accessories. As a result, even smaller component-level supply chains may fall within the regime and require export-control planning.
Eligible destination countries: "Drone Deal" partners or additional scrutiny
The Procedure is built around exports to countries that have concluded with Ukraine an international treaty or other agreement or memorandum on cooperation in the production, supply, joint development, technology exchange or use of unmanned systems, other defence technologies or defence products. These arrangements are referred to broadly as a "Drone Deal".
The list of eligible destination states will be approved and updated quarterly by the Ministry of Foreign Affairs, with input from the Ministry of Defence, the Security Service of Ukraine and intelligence bodies, and with the agreement of the Interagency Commission.
Therefore, it is not sufficient for a foreign customer’s country simply to be politically aligned with Ukraine. Potential buyers should verify whether the destination state appears on Ukraine's approved list and whether a relevant bilateral framework exists with Ukraine. If not, the transaction may still be possible, but it will be subject to additional Interagency Commission review.
Foreign customer due diligence becomes a gating issue
Foreign importers, end-users, intermediaries and other involved persons must satisfy strict eligibility requirements. In particular, they must not be subject to sanctions, linked to terrorism or listed on international sanctions lists, controlled by an aggressor or occupying state, or have sanctioned or aggressor-state persons among their shareholders, UBOs, managers or persons exercising factual control.
Customers should expect Ukrainian exporters and authorities to request extensive KYC, beneficial ownership, sanctions and control-related information. This may affect transaction timing, internal compliance approvals and the onboarding of distributors, integrators and resellers.
State-level guarantees may be required from the customer's country
A major commercial issue is that the Procedure requires a document containing state guarantees from the importing country. These guarantees must cover, among other things:
- use of transferred technology solely under a licence to use, without transfer of IP ownership or sale of the technology unless separately approved by Ukraine;
- no re-export, further transfer, sale, temporary export, transfer of technology or documentation, or related services without prior written approval from the competent Ukrainian authority;
- production using transferred technologies only in quantities and on terms agreed in the relevant contract;
- transfer back to Ukraine of information, documentation, materials and other results relating to modifications, upgrades, adaptations, software changes, design changes and other improvements.
Therefore, for private foreign customers, the key bottleneck may be obtaining government-backed end-use, no-re-export and technology-use guarantees from their own state. This must be treated as a condition precedent rather than a post-signing formality.
Technology transfers are possible, but Ukraine will retain strategic control
The Procedure expressly covers technology transfers. However, the baseline rule is that foreign recipients receive only a right to use the technology, not ownership of IP rights or an unrestricted technology transfer, unless otherwise expressly approved by the Ukrainian authorities.
The Procedure also requires Ukrainian consent for onward transfers and imposes obligations relating to improvements and modifications.
This is highly relevant for co-production, localisation, licensed manufacturing and joint-development projects. Foreign customers should determine at an early stage whether they are acquiring finished goods, assembly rights, licensed production rights or broader access to technology, as each model has different approval and control implications.
Possible 20% payment on third-country transfers of products made with Ukrainian technology
If products manufactured using transferred Ukrainian technology are later transferred to third countries, the Procedure contemplates payment of 20% of the value of those manufactured goods under the relevant contracts.
The value is calculated by reference to the authorised production quantity and Ukrainian defence procurement prices. If there have been no relevant Ukrainian defence purchases during the preceding six months, the valuation may be based on an expert opinion or valuation report.
This may materially affect pricing, margins and export strategy for foreign licensees and co-production partners. It should be addressed directly in licence agreements, joint venture documentation and downstream sales plans.
Ukraine’s own defence needs will have priority
An export control permit may be refused if the Ministry of Defence or another Ukrainian defence customer intends to procure the relevant goods for Ukraine’s defence needs. The exporter may overcome this by providing written guarantees that it will supply Ukraine in the required volumes and within the required timelines.
If a refusal is based on Ukrainian defence procurement needs, the relevant Ukrainian state customer must take steps to conclude a state contract within 30 calendar days. If no contract is concluded, the exporter may reapply and the same ground cannot be relied upon again in relation to that export.
Foreign customers should allocate the risk of Ukrainian priority demand contractually, for example through long-stop dates, allocation clauses, force majeure or regulatory-delay provisions and rights to adjust delivery schedules.
Review timeline is relatively structured, but not risk-free
The State Export Control Service must review the application for an export control permit and issue its decision within 30 calendar days of receiving the application and supporting documents.
The Ministry of Defence then has up to 20 calendar days to provide its position, or ten calendar days for military technology exports.
Failure to respond within the prescribed period is treated as deemed approval by the Ministry of Defence. Security and intelligence bodies also have a 15-calendar-day review period, with deemed approval if they do not respond.
The approval timetable appears reasonable. However, we expect longer review periods in sensitive cases. Transactions involving non-"Drone Deal" countries, critical products, restricted technologies or security objections could still be referred to the Interagency Commission for additional review.
Critical goods list may change quarterly
The Ministry of Defence will maintain and update a list of "critical goods" whose export may threaten Ukraine’s defence capability or national security. Goods or technologies on that list will be subject to additional scrutiny and may be grounds for refusal.
Customers should not assume that a product approved once will remain freely exportable. For long-term supply contracts, quarterly regulatory changes should be treated as an ongoing delivery risk.
Permits may be suspended or cancelled after issuance
Export control permits may be suspended, for example, if the exporter fails to perform Ukrainian defence contracts, fails to make required payments or if a Ukrainian defence customer announces an intention to procure the relevant product.
A permit may be cancelled for providing false information, sanctions breaches, permit breaches, breaches of state guarantees, breaches of Ukrainian supply guarantees, or risks of unauthorised re-export, third-party transfer or use contrary to Ukraine’s national security interests or international obligations.
Foreign customers should therefore not treat permit issuance as the end of regulatory risk. Contracts should address the consequences of suspension or cancellation, including payment milestones, transfer of title, delivery delays, termination rights, return of confidential technology and liability caps.
Practical checklist for foreign customers
Before signing or announcing a Ukrainian defence or dual-use supply or co-production deal, foreign customers should confirm:
- whether the product is military, dual-use, catch-all controlled, a component or technology;
- whether the destination country is on the eligible list and has a relevant "Drone Deal" framework with Ukraine;
- whether the buyer, end-user, shareholders, UBOs, managers, intermediaries and distributors pass Ukrainian sanctions and aggressor-state control checks;
- whether the importing state can provide the required state guarantees;
- whether the product may be included on, or later added to, Ukraine’s critical goods list;
- whether Ukraine’s Ministry of Defence or another Ukrainian defence customer may claim priority procurement needs;
- whether the deal involves technology transfer, local production, modifications, upgrades or third-country resale;
- whether the economics can absorb any 20% payment on third-country transfers of products made using Ukrainian technology; and
- whether the contract properly allocates permit delay, suspension, refusal and cancellation risks.
Bottom line
The Procedure will make exports of Ukrainian defence and dual-use products more structured and potentially more feasible for foreign customers, particularly those located in countries with recognised defence cooperation arrangements ("Drone Deals") with Ukraine.
However, it is a controlled and conditional route rather than a free export regime. The key questions for customers are whether the destination country and customer group are eligible, whether the required state guarantees can be obtained, whether Ukraine may reserve production for domestic defence needs, and whether the technology-transfer and re-export restrictions are commercially acceptable.
