Strategic Defense Exports: Long-Term Legal Responsibility
This article was originally published on Funder in September 2026.
Strategic Defense Exports: Long-Term Legal Responsibility
When an Israeli System Becomes Defense Infrastructure in Another Country A defense export deal can transform from a one – off sale into a long – term relationship between governments and defense industries. For an Israeli company, legal responsibility begins long before deployment in the field.
By Michael D. Ehrenstein
For years, the Israeli defense industry was evaluated by its ability to develop advanced systems and market them to other countries. Today, some of the major deals place Israeli technology at the core of defense arrays for countries that view it as a component of their national security infrastructure. For example, the agreement with Greece, valued at approximately €3 billion, illustrates this shift. Israeli technology is expected to form the foundation of a multi – layered air defense system, which will include interception systems, radars, and a national command and control system. Concurrently, a complementary agreement valued at €26 million was signed for the supply of Rafael’s Iron Dome systems for defense against drones and unmanned aerial vehicles. In Germany, the Navy completed a successful test of Israel Aerospace Industries’ Naval LORA ballistic missile system – a capability that does not currently exist in the German arsenal. Israeli defense exports reached $19.2 billion in 2025, with missile, rocket, and air defense systems accounting for 29% of total deal volume. The significance goes beyond the financial growth in transaction scope. Israel is moving up the defense value chain – from supplying standalone systems to integrating into infrastructures that other nations rely upon.
When the system remains long after the sale, a country that purchases an interception system gains an operational capability. A country that builds a national defense array around Israeli technology creates an ongoing dependence. This dependence may include software updates, maintenance, inventory, future adaptations, technical support, and cooperation during crises. As the degree of dependence grows, the relationship between the parties becomes more strategic, accordingly requiring a comprehensive legal agreement that defines their mutual responsibilities more precisely. This shift also carries geopolitical significance. When an Israeli system integrates into a European nation’s air defense array, Israel becomes part of its long – term defense planning. Questions regarding upgrades, technology transfer, system use during wartime, and addressing future threats extend beyond a standard commercial relationship. They become part of an ongoing connection between governments, regulators, and defense industries. The Israeli advantage developed largely out of operational necessity. Missiles, drones, terrorism, and limited geographical depth created a need for systems capable of operating under real – world conditions, with a narrow margin for error. Europe is currently facing a more complex security reality, following years in which the possibility of a direct military threat was perceived as more remote. Consequently, battle – tested Israeli technology carries a different weight than technology developed and tested primarily under controlled conditions.
The contract is tested after the system is already integrated. Significant defense exports require thinking in terms of critical infrastructure. A major transaction in Europe can turn an Israeli company into part of a framework that another country considers vital to its security. In such a scenario, the terms of the deal must address much more than the delivery of the system itself. They must address availability, operational continuity, support, and the ability to stand behind the technology when the customer needs it most. The deeper a system is integrated into another country’s defense framework, the greater the commercial, legal, and political ramifications of any failure, delay, or export restriction. Complex questions often arise precisely after the agreement is signed. A regulator may restrict the use of a specific component, a government might alter its export policy, and a software update may become vital for the continued safe operation of the system. A clause that appeared commercial during negotiations may later become a matter of operational continuity. If the parties have not defined in advance how costs are allocated, who bears responsibility, who is authorized to make decisions, and who controls critical updates, the dispute could far exceed the original transaction. Therefore, the agreement must proactively address operational failures, software updates, information security, intellectual property, export restrictions, local manufacturing, and dispute resolution from the outset. Clauses that appear technical at the time of signing can become a central component of the relationship when a project is delayed, a regulator intervenes, or the system does not perform as the parties anticipated. For years, Israel developed advanced defense systems because operational reality demanded it. Today, other nations seek to base part of their security on those same capabilities. For Israeli companies, this opportunity already demands a full understanding of the responsibility created by the technology, along with an agreement that regulates that responsibility even years after the deal is signed.
Michael Ehrenstein, Esq. is a founding partner at the U.S. law firm Ehrenstein | Sager, specializing in commercial law, complex litigation, and high-stakes international arbitration.
Legal Disclaimer: This article does not constitute legal or tax advice. Its purpose is to raise awareness regarding U.S. compliance issues. Israeli businesses should consult with qualified U.S. legal and tax professionals to receive advice tailored to their specific operations.
