Article 66 — Prioritisation of defence products

1. Where the Council activates the measure under this Article in accordance with Article 64(4), a Member State may submit a request to the Commission to request an economic operator whose production site is located on its territory to accept, or to prioritise, a certain order of crisis-relevant defence products in order to address the severe difficulties that Member State or another Member State faces either in the placing of an order or in the execution of a contract for the supply of such products. 2. Upon a request as referred to in paragraph 1, the Commission may, where the production or the supply of crisis-relevant defence products cannot be achieved by any other measure provided for in this Chapter, address a request to the economic operator concerned after: (a) consulting, and receiving prior agreement of, the Member State on the territory of which the production site of the economic operator concerned is located; and (b) consulting, and receiving prior agreement of, the Member State on the territory of which the executive management structure of the economic operator concerned is located. The Commission’s request shall explicitly indicate that the economic operator is free to refuse the request. 3. The request referred to in paragraph 2 shall include information about the legal basis for the request, specify the products, their specifications and quantities, specify the schedule and time-limit for performing and completing the order, and state the reasons justifying the use of the priority-rated request. 4. The Commission shall demonstrate that the choice of the recipients and beneficiaries of the request referred to in paragraph 2 is non-discriminatory and complies with Union competition rules. 5. The Commission shall base the request referred to in paragraph 2 on objective, factual, measurable and substantiated data, showing that such prioritisation is indispensable in order to ensure the proper functioning of the internal market, and having regard to the legitimate interests of the economic operator concerned and to the cost and effort required for any change in the production sequence of the supply chain. 6. Where the economic operator to which the request referred to in paragraph 2 is addressed has expressly accepted that request, the Commission, by means of an implementing act and after the consultation and prior agreement of the Member State on the territory of which the production site of the economic operator concerned is located and of the Member State on the territory of which the executive management structure of the economic operator concerned is located, shall adopt a priority-rated request setting out: (a) the legal basis of the priority-rated request to be complied with by the economic operator; (b) the list of crisis-relevant products subject to the priority-rated request, their specifications and the quantities in which they are to be supplied; (c) the time limits within which the priority-rated request is to be completed; (d) the beneficiaries of the priority-rated request; (e) the scope of contractual obligations over which the priority-rated request shall have precedence; (f) the waiver of contractual liability under the conditions laid down in paragraph 8 of this Article; and (g) the penalties provided for in Article 72 for non-compliance with the obligations stemming from that implementing act. The implementing act referred to in the first subparagraph of this paragraph shall be adopted in accordance with the examination procedure referred to in Article 77(4). 7. The priority-rated requests referred to in paragraph 6 shall: (a) be placed at a fair and reasonable price, adequately taking into account the economic operator’s opportunity costs when fulfilling the priority-rated request as compared to existing contractual obligations; and (b) take precedence over any contractual obligations related to the crisis-relevant products subject to the priority-rated request under private or public law, under the conditions laid down in the implementing act referred to in paragraph 6. 8. The economic operator subject to a priority-rated request pursuant to paragraph 6 shall not be liable for any breach of contractual obligation that is governed by the law of a Member State, provided that: (a) the breach of contractual obligation is strictly necessary for compliance with the required prioritisation; (b) the implementing act referred to in paragraph 6 has been complied with; and (c) the acceptance of the priority-rated request did not have the sole purpose of unduly avoiding a prior performance obligation. 9. The economic operator subject to a priority-rated request may request the Commission to modify the implementing act referred to in paragraph 6 where it considers it to be duly justified based on one of the following grounds: (a) the economic operator is unable to perform the priority-rated request on account of insufficient production capability or production capacity, even under preferential treatment of the request; (b) completion of the request would place an unreasonable economic burden on, and entail particular hardship for, the economic operator. 10. The economic operator shall provide all relevant and substantiated information to allow the Commission to assess the merits of the request for modification referred to in paragraph 9. 11. Based on the examination of the reasons and evidence provided by the economic operator, the Commission may, after consultation and prior agreement of the Member State on the territory of which the relevant production site of the economic operator concerned is located and the Member State on the territory of which the executive management structure of that economic operator concerned is located, amend its implementing act to release, partially or in totality, the economic operator concerned from its obligations under this Article. 12. Where an economic operator, after having expressly accepted to prioritise the orders requested by the Commission, intentionally or through gross negligence does not comply with the obligation to prioritise those orders, it shall be subject to fines set in accordance with Article 72, except where: (a) the economic operator is unable to perform the priority-rated request on account of insufficient production capability or production capacity, or on technical grounds; or (b) performance or completion of the request would place an unreasonable economic burden on, and entail particular hardship for, the economic operator, including substantial risks relating to business continuity. 13. When an economic operator established in the Union is subject to a measure of a third country which entails a priority-rated request of a crisis-relevant defence product, it shall notify the Commission thereof. The Commission shall inform the Board of the existence of such measures. Where relevant, the Commission may consult with the Board on any appropriate step to be taken in response to that measure. 14. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1)(b) TFEU.