Autonomous Drones in Urban Warfare

If your foreign commercial enterprise develops, manufactures, or trades technology related to autonomous systems—specifically Unmanned Aerial Vehicles (UAVs)—operating within the EU, you face immediate and severe risks from Dual-Use Items and strict Export Control regulations. This complexity, enforced rigorously by the Czech authorities, demands expert legal guidance. ARROWS, a leading Czech law firm in Prague, EU, provides specific, actionable answers to these legal concerns, helping you build a robust, compliant operating model.

Need advice on this topic? Contact the ARROWS law firm by email office@arws.cz or phone +420 245 007 740. Your question will be answered by "JUDr. Jakub Dohnal, Ph.D., LL.M.", an expert on the subject.

Executive Summary: The Critical Compliance Shield for Foreign Operators

The commercial environment for autonomous drone technology in Central Europe is characterized by a challenging intersection of trade, security, and emerging technology law. Modern systems inherently possess capabilities that classify them under the European Union’s Dual-Use regime, meaning standard commercial operations are often subject to highly restrictive licensing requirements. 

Failure to recognize the dual nature of components or software, or errors in licensing procedures overseen by the Ministry of Industry and Trade (MPO), can result in catastrophic financial penalties.

Foreign companies, particularly those involved in high-tech manufacturing, require specialized legal expertise to navigate not only the supranational EU framework (Regulation (EU) 2021/821) but also its rigorous national implementation, such as Act No. 594/2004 Coll. in the Czech Republic. Entrusting this agenda to experienced counsel significantly reduces operational friction and mitigates high-stakes regulatory exposure. 

ARROWS combines deep knowledge of local market intricacies with international cross-border capabilities, providing a secure and reliable legal harbor in the heart of the European Union.

The Unavoidable Regulatory Convergence: Why Your Technology is Dual-Use

The regulatory focus on dual-use items stems from the global commitment to prevent the proliferation of Weapons of Mass Destruction (WMD) and maintain international peace, reflected in regimes like the Wassenaar Arrangement. Autonomous systems and their components are intrinsically linked to this goal because they inherently blur the distinction between civilian logistics, infrastructure monitoring, and potential military applications.

Consequently, EU export controls encompass not only physical hardware but also sophisticated software and technical data related to the design, development, and production of these items.

The export control framework treats the transfer of intangible technology with the same stringency as the transfer of physical goods, dramatically widening the compliance perimeter for technology and software companies. This wide regulatory scope means that any foreign enterprise engaged in high-tech development must operate under the assumption that some part of its product or technical process may be controlled.

Defining the Dual-Use Legal Perimeter of Autonomous Systems

The Dual-Use Items list, contained in Annex I of the EU Regulation (EU) 2021/821, reflects internationally agreed control lists and is continuously updated to capture emerging technologies relevant to Unmanned Aerial Vehicles (UAVs). Companies must screen their entire Bill of Materials (BOM) against this comprehensive list.

Specific hardware components critical for autonomous operation are explicitly listed. This includes high-tech items such as specialized DC motors and servomotors designed for UAVs, specialized engines, advanced semiconductors, machine tools, and intricate electronic components identified in weapon systems. 

Furthermore, the control regime targets sophisticated navigation and guidance systems vital for autonomy, such as GPS receivers, inertial measurement units (IMUs), and high-resolution imaging systems like thermal imaging or LIDAR. These items are subject to control precisely because of their high value in military reconnaissance and surveillance applications, regardless of their primary commercial design.

A significant area of risk lies in the inclusion of seemingly lower-tech items in related EU sanctions lists, which apply in parallel with the Dual-Use Regulation. Items such as toy/hobby drones, video-game controllers, complex generator devices, laptop computers, cameras, and lenses are also prohibited from export to sanctioned destinations if they are deemed to have military end-use. 

This application demonstrates that the regulatory threshold for what constitutes a military risk is lowered significantly, encompassing even consumer-grade electronics. Foreign firms selling seemingly innocuous commercial hardware to third countries must conduct extreme due diligence, as their components could be inadvertently swept up in sanctions breaches if they enter restricted supply chains. This simple-looking step of selling commercial hardware hides significant regulatory risk for laypeople who do not understand the regulatory convergence.

When Does Technical Assistance and Brokering Become a Criminal Risk?

The scope of EU controls extends beyond physical exports to govern the provision of brokering services and technical assistance related to dual-use items. A 'broker' is broadly defined as any party negotiating or arranging transactions concerning dual-use items between third countries.

The Czech regulatory framework adds a critical layer of complexity through Act No. 594/2004 Coll. Pursuant to this law, authorization shall be required for the brokering of dual-use items even if they are not listed in Annex I of the EU Regulation. 

This applies if the competent authority informs the broker that these non-listed items are, or may be intended, in whole or in part, for military end-uses or for use in connection with Weapons of Mass Destruction programs. This provision creates a significant legal exposure for foreign consultancy firms or specialized technical support providers operating from Prague, European Union. 

If these entities facilitate a transfer of knowledge or arrange a sale of non-listed technology between two non-EU countries, and the MPO suspects a military application, they may incur mandatory licensing obligations and exposure to high fines.

This rule emphasizes that the provision of expert advice or technical know-how—the intellectual component of technology transfer—carries the same legal liability as shipping physical goods. Companies must ensure their legal opinions and contracts regarding technical assistance accurately reflect the severe limitations imposed by the Czech state, which can impose additional controls on non-listed items due to public security concerns.

The Czech Licensing Labyrinth: Mandates and Procedural Pitfalls

The export authorization process in the Czech Republic is executed by the Ministry of Industry and Trade (MPO) under the strict guidelines of Act No. 594/2004 Coll. This Act outlines the specific authorization procedure, including the forms required for both individual and global export authorizations.

The authorization procedure requires meticulous detail due to the complex nature of the products involved. The MPO does not act in isolation; it cooperates with several key agencies, including the Ministry of the Interior and the State Office for Nuclear Safety. This inter-agency complexity ensures that licensing for dual-use drone technology requires navigating potential links to other national acts concerning weapons or controlled substances, such as the Atomic Act or measures related to chemical and biological weapons. 

This interconnected compliance environment means that in-house counsel focused solely on trade regulations could easily miss requirements imposed by other ministries, making the process time-consuming and risking delays. ARROWS handles this complex, interconnected agenda daily, which can significantly reduce the client's time and minimize the risk of errors.

The Power of the End-Use Declaration (EUD): Why Detail Matters

The End-Use Declaration (EUD) is arguably the single most critical document in the Czech dual-use export process. It is mandatory from customers in all countries and, crucially, is also required for certain domestic sales within the Czech Republic to prevent the unlawful transfer outside the declared end-use.

The MPO insists on explicit and detailed information regarding the final application of the technology. The regulator has issued warnings that stating a general purpose, such as "Research," is strictly insufficient; applicants must specify the exact purpose for which the dual-use goods will be utilized. Furthermore, if the buyer of the goods is not the end-user, the buyer is obligated to provide a declaration from the actual end-user, establishing a clear chain of responsibility.

A highly overlooked procedural detail creates an ongoing liability for the exporter: upon delivery of the goods, the exporter must receive written confirmation from the end-use customer and their customs office acknowledging receipt. The exporter is obligated to declare this confirmation to the issuing authority immediately after export. 

This procedural detail extends the exporter's compliance liability far beyond the EU border. The compliance obligation is transactional and ongoing, relying on a foreign third party for final verification. Failure to secure this post-export confirmation is a breach of the license condition, a hidden risk that professional legal teams are best equipped to manage.

FAQ – Legal tips about EUD Compliance and MPO Procedures

1. Do original documents need to be mailed to the MPO?

Yes, the standard procedure requires that original printed documents (including the signed, letterhead End-Use Declaration) must be sent by standard mail to the licensing administration, even after preliminary scanned documents are submitted via email. For immediate assistance, write to us at office@arws.cz.

2. If my buyer resells the dual-use item, who is liable for the EUD?

If the Buyer is not the end user, they are obligated to include a declaration from the actual end user. The ultimate responsibility for providing an accurate and verifiable EUD and for ensuring compliant end-use rests with the exporter. Get tailored legal solutions by writing to office@arws.cz.

3. How does ARROWS help speed up the MPO process?

By leveraging our expertise in drafting verifiable End-Use Declarations and Purchase Order Summaries, we ensure the application meets all administrative and legal requirements immediately, significantly reducing the common delays caused by insufficient detail or incomplete documentation. Our lawyers are ready to assist you – email us at office@arws.cz.

Quantifying the Compliance Failure: Fines, Sanctions, and Liability

Foreign firms operating in the Czech Republic often underestimate the scale of financial penalties for export control violations. Enforcement is primarily conducted by the Czech Customs Administration (Celní správa České republiky), which operates within a strict regulatory environment based on the EU's Union Customs Code.

The maximum administrative fine for severe Dual-Use violations and breaches of sanctions is substantial: up to CZK 50,000,000 (approximately EUR 2,000,000) or 10% of the company's annual turnover, whichever amount is higher. This penalty structure reflects the government’s view that dual-use compliance failures pose existential risks to international security, justifying potentially catastrophic corporate penalties. 

Lesser, yet still significant, violations like incorrect tariff classification can result in fines up to CZK 4,000,000 and the assessment of unpaid customs debt. A critical point for foreign managers is that the system frequently operates on a principle of strict liability, meaning an unintentional error—an "honest mistake"—is not necessarily a valid defense against the imposition of a penalty.

The Geopolitical Pressure: Navigating the Sanctions Overlap

The geopolitical focus on sanctions, particularly concerning the export of dual-use goods to Russia and Belarus, imposes an additional layer of severe risk. These sanctions apply in parallel with the Dual-Use Regulation and require companies to be hyper-vigilant regarding their supply chains and end-users.

A recent legislative development in the Czech Republic is particularly critical: legislative amendments explicitly aim to sanction persons who export military material or dual-use goods to Russia or Belarus (either directly or indirectly, through third parties) with gross negligence. 

This represents a crucial shift in liability from simple administrative error to a potentially criminal standard. It forces companies to maintain an auditable defense mechanism, such as a robust Internal Compliance Programme (ICP), to prove they actively sought to prevent circumvention via third countries. 

Without this demonstrable due diligence, compliance failures can expose management to potential criminal charges, a risk clearly evidenced by prosecutions in other EU jurisdictions. Foreign companies must be more cautious than ever when choosing business partners in third countries that could serve as transshipment points.

How ARROWS Mitigates Damage

The immense financial and criminal risk associated with dual-use non-compliance necessitates the highest level of professional legal service. Foreign clients choosing ARROWS benefit from robust risk mitigation measures. 

ARROWS is insured for damages up to CZK 500 million. This high level of professional indemnity insurance demonstrates the firm's confidence in handling complex regulatory matters and provides foreign clients with an essential financial safety net against potential legal errors or omissions arising from the complexity of this agenda.

Dual-Use Compliance and Financial Penalties

Risks and penalties	How ARROWS helps
Maximum fine up to CZK 50,000,000 (approx. EUR 2M) or 10% of annual turnover, whichever is higher, for severe Dual-Use violations.	Legal consultations to prevent inspections or penalties, and specialized representation in administrative proceedings with the Czech Customs Administration. For immediate assistance, write to us at office@arws.cz.
Inaccurate or incomplete End-Use Declarations (EUDs) leading to license denial, delayed operations, and potential fines.	Drafting legally required documentation, including detailed and verifiable EUDs, and assisting in obtaining licenses or regulatory approvals. Get tailored legal solutions by writing to office@arws.cz.
Potential criminal investigation and seizure of goods due to gross negligence in monitoring third-party exports to sanctioned entities.	Preparation of internal company policies focused on rigorous third-party due diligence, sanctions compliance, and comprehensive risk assessments. Our lawyers are ready to assist you – email us at office@arws.cz.
Coercive fines (up to CZK 25,000,000 aggregate) imposed for failure to cooperate fully during regulatory investigations.	Representation before registers, regulators, and oversight bodies, ensuring timely and compliant interaction with authorities like the Customs Administration or MPO. Do not hesitate to contact our firm – office@arws.cz.

Operational Safety: Implementing Robust Internal Compliance Programmes

The Recast Dual-Use Regulation (EU 2021/821) mandated the implementation and maintenance of Internal Compliance Programmes (ICPs) for exporters as a necessary condition for certain general export authorizations. The concept of an ICP has thus formally moved from being merely a recommended best practice to a regulatory mandate across the EU.

Internal Compliance Programmes (ICPs) are defined in the regulation as "ongoing effective, appropriate and proportionate policies and procedures adopted by exporters to facilitate compliance... including, inter alia, due diligence measures assessing risks related to the export of the items to end-users and end-uses". 

A well-structured ICP is the single most important tool for a company to demonstrate due diligence and good faith to regulators. When facing investigations concerning sanctions breaches, particularly those involving allegations of gross negligence, the presence and effectiveness of a customized ICP can be the determining factor in mitigating corporate and individual criminal liability.

Developing ICPs: Key Pillars for Drone Technology

An effective ICP for dual-use drone technology must be a tailored defense mechanism, focusing on technology classification, user screening, and auditable procedures.

First, the program must ensure robust Classification and Screening. This involves maintaining internal systems that accurately classify all commodities, software, and technology against Annex I of the EU Regulation and continuously screen all transaction parties (buyers, end-users, brokers) against EU and related international sanctions lists. 

Secondly, effective Training and Audit measures are crucial. ARROWS offers professional training for employees or management (with certificates) to minimize human error, which is often the source of non-compliance. The ICP must also define rigorous internal audit schedules and comprehensive record-keeping, as required by the legislation.

Jurisdictional Differences: EU vs. US Export Controls

Foreign clients often face complex, overlapping export control regimes when operating from the Czech Republic. This is particularly true if the autonomous drone systems or their components contain U.S. origin technology, which may be regulated by the Export Administration Regulations (EAR).

The complexity of Re-Export controls means that even if a product is manufactured in the EU, the inclusion of U.S. components can subject the final product to U.S. export licensing requirements, significantly complicating compliance and operational scheduling. This dual regulatory burden often results in friction among normally cooperative international teams and has a real cost impact due to prolonged administrative delays.

Companies must also manage Divergent Enforcement Philosophies across Member States. While the Czech Republic adheres to the stringent EU standard, regional partners may show slightly divergent enforcement approaches. 

For instance, German authorities have historically pursued an extremely restrictive licensing policy for military equipment, although they have recently moved to accelerate General Authorization packages for selected NATO/EU allies. 

Foreign firms require a local partner, such as this international law firm operating from Prague, European Union, that can navigate these subtle differences, ensuring the Prague-based operation leverages the regulatory stability of the EU while strategically managing the logistical complexities of cross-border defense trade. ARROWS is equipped to provide legal guidance in cross-border or EU-related matters.

ICP Gaps and Cross-Border Complexities

Risks and penalties	How ARROWS helps
Failure to implement a certified Internal Compliance Programme (ICP) risking revocation of general or global export authorisations.	Preparation of internal company policies and customized ICP manuals tailored to EU and Czech requirements, demonstrating due diligence to authorities. Need legal help? Contact us at office@arws.cz.
Loss of critical time and money due to complex, often intertwined US (EAR/ITAR) and EU licensing requirements.	Legal guidance in cross-border or EU-related matters, leveraging our international network and dual-jurisdiction expertise. Do not hesitate to contact our firm – office@arws.cz.
Personnel errors resulting from inadequate knowledge of evolving EU Dual-Use lists and sanctions updates.	Professional training for employees or management (with certificates) to ensure continuous compliance and reduce human error risk. Get tailored legal solutions by writing to office@arws.cz.
Unforeseen liability arising from brokering activities involving non-listed items intended for military end-use in third countries.	Legal opinions assessing brokering and technical assistance activities to ensure compliance with Act No. 594/2004 Coll. and prevent unauthorized transfers. Our lawyers are ready to assist you – email us at office@arws.cz.

The AI Act and Future Liability for Autonomous Systems

The EU AI Act (Regulation laying down harmonised rules on artificial intelligence), signed in June 2024, introduces a binding, horizontal regulatory framework for AI systems, which operates alongside the Dual-Use controls.

The AI Act primarily applies a risk-based approach, categorizing systems by their potential for detrimental impact. For systems intended for defense and security, the AI Act generally provides a Military Exemption: it does not apply to AI systems placed on the market, put into service, or used exclusively for military, defense, or national security purposes.

However, the legal situation regarding dual-use technology and AI is highly complex. If advanced AI software designed for autonomous drones is subsequently marketed for civilian dual-use applications—creating a "civilian drift"—it is immediately subject to the AI Act. 

Specifically, if the AI is intended to be used as a safety component in the management or operation of critical infrastructure, such as road traffic, or the supply of essential public services, it is automatically classified as "high-risk". This means that developers cannot simply rely on the military exemption unless they can strictly prove the AI system has no civilian market purpose. 

Once the technology is deployed for a high-risk civilian purpose, the developer must meet the stringent requirements of the AI Act, including detailed risk management, data governance, and conformity assessments, exponentially increasing compliance complexity.

Civil Liability: Drone Surveillance and Data Protection

Beyond export controls and AI risk classification, autonomous systems operating in public or urban spaces must strictly comply with existing EU data protection liabilities, primarily the GDPR.

A critical ruling by the Court of Justice of the EU (CJEU), originating from a case in the Czech Republic, confirmed that drone operation that captures images or video capable of identifying individuals in public spaces is engaged in the processing of personal data and is fully subject to EU data protection laws. 

This ruling confirmed that drone operations cannot claim the "purely personal or household activity" exemption if the camera monitors any public space, even partially. This means simple-looking steps concerning drone operation also contain legal traps regarding privacy risks for laypeople who assume commercial operation falls outside the scope of strict GDPR compliance. 

Organizations must implement internal protocols and technical safeguards to ensure compliance with the Data Protection Directive and GDPR when utilizing UAVs for commercial surveillance or data collection.

FAQ – Legal tips about AI and Autonomy

1. If our defense AI system is briefly used for a humanitarian aid mission, does the AI Act apply?

Yes. If AI systems developed for military, defense, or national security purposes are temporarily used for civil, humanitarian, law enforcement, or public safety purposes, they become subject to the scope and compliance requirements of the AI Act. Do not hesitate to contact our firm – office@arws.cz.

2. Do we need a license to import pyrotechnical products or military equipment into the Czech Republic?

Yes. While most products and services are exempt from the standard import licensing process, military equipment, pyrotechnical products, oil, and natural gas specifically require an import license issued by the Czech Ministry of Industry and Trade. Need legal help? Contact us at office@arws.cz.

3. What is the critical compliance step before releasing a new drone for commercial urban use in the Czech Republic?

The operator must ensure compliance with civil aviation regulations (Regulation (EU) 2018/1139, which defines unmanned aircraft) and must conduct a thorough risk assessment under GDPR and the AI Act, based on the specific capabilities of the onboard AI. Our lawyers are ready to assist you – email us at office@arws.cz.

Conclusion: Choose Expertise over Risk

The development and transfer of autonomous drone technology within the European Union is a demanding compliance function that requires continuous, expert-level oversight. For foreign commercial enterprises, this is not merely an administrative task; it is a critical, high-stakes exercise in risk management and geopolitical compliance. 

The integration of the EU Dual-Use Regulation, stringent sanctions, meticulous national Czech procedural laws (End-Use Declaration requirements, the enforcement scope of Act No. 594/2004 Coll.), and emerging AI liability laws creates a complex environment. The legal issue in question is far more complex in practice than it appears at first glance, exposing laypeople to hidden exceptions, procedural details, and links to other regulations that often result in unnecessary risk and cost.

ARROWS handles this specialized agenda daily, supporting over 150 joint-stock companies and 250 limited liability companies with their most sensitive compliance needs. We are known for speed and high quality, operating as an international law firm operating from Prague, European Union, with a global network capable of assisting clients in 90 countries. 

By entrusting your dual-use and export control compliance to our experts, you significantly reduce internal time burdens, ensure proactive defense against the gross negligence standard, and minimize the risk of costly administrative errors and debilitating fines. We are also regular partners of corporate lawyers for handling special matters.

If the reader does not want to risk errors, damages, or fines up to 10% of their annual turnover, they can safely leave the whole matter to ARROWS. Contact our office today to secure your compliance strategy and benefit from our insurance for damages up to CZK 500,000,000: office@arws.cz.

FAQ – Most common legal questions about Dual-Use Drone Technology

1. How can foreign companies operating in the Czech Republic best defend against fines imposed by the Customs Administration for classification errors?

Defense requires proving rigorous internal procedures, often challenging the Customs Authority’s strict liability assessment by documenting due diligence. We provide legal analysis of your customs declaration and experienced representation in administrative proceedings to challenge valuation and classification assessments. For immediate assistance, write to us at office@arws.cz.

2. Are sanctions breaches always considered willful misconduct, or can gross negligence also lead to penalties?

Recent Czech legislative trends emphasize that gross negligence in monitoring supply chains—especially those involving Russia or Belarus—can lead to criminal sanctions for dual-use violations. This highlights that simply claiming lack of knowledge is insufficient; robust compliance programs are required to mitigate liability. Need legal help? Contact us at office@arws.cz.

3. Does the EU Dual-Use Regulation apply if I am selling a component (e.g., a motor) to another EU company for drone assembly?

While listed items are generally traded freely within the EU, the Czech implementation requires an End-Use Declaration (EUD) for certain domestic sales to prevent the diversion of dual-use goods outside the declared place and manner of end use. Our lawyers are ready to assist you – email us at office@arws.cz.

4. What specific steps should we take to ensure our End-Use Declaration meets the high standard required by the Czech Ministry of Industry and Trade?

The MPO requires you to specify the exact intended use beyond generic terms like "research." Furthermore, if the buyer is not the end-user, the declaration must come from the actual end-user. We specialize in drafting this legally required documentation to meet the MPO’s high procedural and detail standard. Get tailored legal solutions by writing to office@arws.cz.

5. My drone system uses AI for critical infrastructure monitoring. How does this intersect with the AI Act’s definition of "high-risk"?

AI systems intended to be used as safety components in the management and operation of critical digital infrastructure, road traffic, or utility supply (gas, water, electricity) are explicitly categorized as "high-risk" under the EU AI Act, requiring stringent pre-market conformity assessments. Do not hesitate to contact our firm – office@arws.cz.

6. How does ARROWS ensure consistency in compliance when dealing with dual-use goods manufactured in the Czech Republic and exported globally?

We use the framework provided by the EU General Export Authorizations and reflect commitments agreed upon in key multilateral export control regimes like the Wassenaar Arrangement. We prepare tailored Internal Compliance Programmes (ICPs) that align with current Czech national requirements, regional policies, and the client's international supply chain management. Contact our experts in our international law firm operating from Prague, European Union, at office@arws.cz.

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