Summary

In the coalition agreement of 2021, the German government declared its intention to create a law on regulatory sandboxes. Regulatory sandboxes aim to enable testing of innovative technologies under real-life conditions, supervised by a competent authority. They should facilitate a broader scope for innovation and create a network where all actors can learn from each other.

To find out more about regulatory sandboxes, you can find more information here.

The Federal Ministry for Economic Affairs and Climate Action (Bündesministerium für Wirtschaft und Klimaschutz, BMWK) published a legislative proposal on regulatory sandboxes, focusing on four central elements: determining overarching standards, establishing a legal basis for new regulatory sandboxes, applying experimentation clause-checks and creating a One-Stop-Shop for regulatory sandboxes, a central contact point. This proposal forms the subject of a public consultation, which is complemented by a green paper which describes the current state of affairs and explain the purpose of the public consultation in more detail. Since the BMWK believes that there are a lot of unanswered questions, the public consultation should assist them in figuring the stance of stakeholders on the topic of regulatory sandboxes and the four elements.

Overarching standards

To enable and facilitate regulatory sandboxes in different domains, uniform and innovation-friendly conditions and supportive measures need to be established. The consultation therefore asks participants to rank different conditions or supportive measure regarding their level of importance. These measures concern various topics such as entry to regulatory sandboxes, requirements for publication and use of the sandbox results or requirements for involving relevant stakeholders. Subsequently, the consultation enquires whether (i) there should be certain general, minimum requirements that would need to apply to all regulatory sandboxes, regardless of their application domain; and (ii) whether the legislative bodies should receive support when conceiving and setting up the regulatory sandboxes and the related general standards.

Legal basis

The future law also foresees the (increased) use of experimentation clauses in order to legally enable regulatory sandboxes. Experimentation clauses allow for the temporary derogation from a rule or the non-application of a rule (if existing rules hinder effective testing). However, adequate safeguards are still necessary to ensure that risks are effectively countered and controlled. Experimentation clauses could guarantee that no sanctions are imposed in case of infringement, as long as the infringement remains within the determined boundaries.

A central task of the consultation is to have participants identify the specific areas of innovation for which new experimentation clauses would be welcome, as well as which advantages and opportunities should be offered in a regulatory sandbox. Additionally, participants are asked to indicate whether it is indeed necessary to be able to deviate from existing regulatory requirements when performing tests, and if so, which concrete requirements hinder testing (and would need to allow for deviation). A final set of questions gauges which type of support authorities should provide inside of a regulatory sandbox (e.g. joint creation of a test plan or assurance to refrain from regulatory intervention)

Experimentation clause-check

The German government previously decided on an “experimentation clause-check” which entails that policymakers (e.g. federal ministries), when drafting new laws, need to check if an experimentation clause would merit inclusion in the new law in order facilitate innovation. Such a check is currently being applied in the new law regarding “Electronic Federal Legislative Procedure”, which is meant to enable a fully digital legislative process in the future. The consultation asks respondents if they deem it useful that policymakers complete this check, whether this has so far been done in an appropriate manner and if not, how it could be ensured that federal ministries adequately examine and consider corresponding options in the future.

One Stop-Shop Regulatory Sandbox

Companies have expressed their confusion regarding the possibilities and modalities of regulatory sandboxes (e.g. how to participate, who to contact etc.) while authorities are not always able to translate the regulatory lessons learned from the sandbox into law. As a permanent solution, a One-Stop-Shop (OSS) will be created to advise interested parties on the operation of regulatory sandboxes. It can have four functions: (online) information provision, advice, network creation (to support companies and professionals) and knowledge collection and -transfer. This last activity covers regular evaluation of existing regulatory sandboxes and the establishment of a virtual letterbox in order to give stakeholders the possibility to send in proposals or ideas for e.g. new experimentation clauses. The OSS will not be a physical contact point, but exist digitally via a website. Via the consultation, stakeholders can indicate which tasks they see fit for the OSS to take on and the related modalities/conditions that should apply.

Practically, the trajectory of this project consists of four phases: the current preparatory phase, a phase to extend the OSS, the pilot-operating phase of two years and a last phase to review the performance and check the options for a permanent operation.