What results to we expect to achieve by creating regulatory sandboxes? In order to strengthen regulatory sandboxes as a tool to drive digitalisation forward, the Federal Economic Affairs Ministry is pursuing three objectives:

1. Regulatory sandboxes need regulatory leeway

If we want to ensure that regulation does not lag behind innovation, we will need more flexibility and “breathing space” in the future. Experimentation clauses are a key component for shaping the legal framework in an innovation-friendly and future-oriented way. This instrument must be strengthened. One goal of the regulatory sandbox strategy is therefore to give new laws and regulations more flexibility through the increased use of experimentation clauses as well as to improve existing ones.

Against this background, we have developed a BMWi guideline on the formulation of experimentation clauses to support legislative bodies in the creation and further development of legally secure, effective and innovation-friendly experimentation clauses. The guideline describes five steps for the development of an experimentation clause as well as a concrete "toolbox" as a formulation guideline. It is based on a comprehensive expert report by the law firm Noerr on behalf of the BMWi. On this basis the Coordinating Office for Regulatory Sandboxes works closely with relevant ministries to create new experimentation clauses and to improve existing regulation.

The expert report “Regulatory sandboxes - Overview of international regulatory approaches and their transferability into German law” shows which legal approaches to experimentation are used worldwide. Based on this, it examines in detail for France, Denmark and Japan which approaches could help to advance German law. Further expert reports will be published soon.

European law also often plays an important role for regulatory sandboxes. During Germany's Council Presidency, the Council of the European Union adopted conclusions on regulatory sandboxes and experimentation clauses on 16 November 2020. For the first time the EU member states have thus created a common EU-wide understanding of what regulatory sandboxes and experimentation clauses are and what opportunities they offer. The Council encourages the Commission to continue considering the use of experimentation clauses when drafting and reviewing legislation, as well as to evaluate the use of experimentation clauses in ex-post evaluations. Moreover, the member states call for a joint exchange of best practices, on which the Commission is expected to report comprehensively in 2021.

2. Transfer of expertise and networking

We need to reduce uncertainties, fill gaps in information and improve networking and the exchange of information between industry, science and public administration. In the context of many ongoing and planned projects, the same questions are being raised: Is this legally possible? Who should I contact? Where can I find potential project partners? What do I have to consider with regard to state aid and competition law and what about questions of liability and insurance? Who can support me?

Finding answers to these questions takes a lot of time and effort, which is often a reason why innovative and promising ideas are not put into practice.

“Handbook for Regulatory Sandboxes”

Our aim is to fill gaps in information, use synergies and avoid duplication of work. To this end, the Economic Affairs Ministry has developed the “Handbook for Regulatory Sandboxes”, which seeks to enable the relevant stakeholders to ask the right and necessary questions and to help them find answers to them. At the same time, the Handbook provides information on legal issues and describes best practice examples.

“Data protection in Regulatory sandboxes”

Implementing the data protection requirements is often challenging for Regulatory sandboxes. However, it is often underestimated that data protection law provides the user of the law with a range of flexible instruments that allow digital innovations to be tested in compliance with the law. The Federal Ministry for Economic Affairs and Energy therefore provides a practical guide to data protection in Regulatory Sandboxes, which highlights the most important data protection requirements for testing innovations in Regulatory Sandboxes and provides advice on how companies can deal with them successfully. The practical guide is based on an extensive expert report by the law firm Noerr on behalf of the Federal Ministry for Economic Affairs and Energy.

“Network for Regulatory Sandboxes”

The “Network for Regulatory Sandboxes” is to facilitate the exchange of information and networking between stakeholders and to disseminate information on legal possibilities, future competitions in this field and examples from practice from Germany and abroad. The network can also serve to bring together project partners, for example a start-up with an innovative idea with stakeholders who are keen to experiment. The network’s first meeting was held on 28 August at the Federal Ministry for Economic Affairs and Energy. Furthermore, the existing interministerial working group strengthens networking between the federal ministries.

3. Testing regulatory sandboxes in practice

We want to link the testing of innovation and regulation more closely to actual practice and lead the way with positive examples. All this is to show that regulatory sandboxes can make a valuable contribution to innovation in Germany. The aim of regulatory sandboxes competitions is to make outstanding ideas and projects visible and to support them. The BMWi launched the first competition on 2 December 2019, for which companies, public administrations and research institutions could apply. On 26 May 2020, the "Regulatory Sandboxes Innovation Prize" was awarded to nine projects at an online event.

If you have any questions or suggestions, please do not hesitate to contact us by e-mail at reallabore@bmwi.bund.de at any time.

On 23 July 2019, the Federal Minister for Economic Affairs and Energy published a handbook entitled “Making space for innovation”. You can download the complete handbook here.

Chapter 1: Regulatory sandboxes in Germany

Everyone is talking about regulatory sandboxes. But what do people mean when they use the term “regulatory sandboxes”? What fields are they used in? And what role do they play abroad? These questions are considered in Chapter 1.

Chapter 2: Designing regulatory sandboxes

Chapter 2 is a practical guide to regulatory sandboxes. It is addressed to decision-makers in companies, research and administration who would like to set up a regulatory sandbox as a testbed for innovation and regulation. It highlights the main questions and helps to answer them. Real-life examples illustrate the explanations. An initial draft of the guide was produced during the production of the study entitled “Potential and requirements of regulatory experimental spaces (regulatory sandboxes)”. The draft was scrutinised by the experts of the Regulatory Sandboxes Network during an online consultation and then revised on this basis.

Chapter 3: Making regulatory sandboxes possible

In many cases, regulatory sandboxes need regulatory leeway. Experimentation clauses are a key legal tool to create this leeway.

The third chapter starts by explaining what an experimentation clause is and the differences between types of experimentation clause. It also describes the constitutional requirements which arise when new experimentation clauses are adopted.

Finally, it focuses on the specific experimentation clauses needed for the testing of innovative technologies. Examples are provided for four of these clauses to show the experience made so far with using the experimental clauses – and what room for improvement might exist.

Are you interested in regulatory sandboxes or have you gained experience with this topic as an administration, as a company or within the scope of your scientific work? Would you like to be informed about further developments and exchange ideas with other experts and practitioners?

Then let us invite you to become part of our community: please join our regulatory sandbox network and help to facilitate the creation of regulatory sandboxes and to strengthen Germany’s position as a centre of innovation! Today, our network already consists of more than 400 members.

If you have any questions or suggestions or would like to join our network, please do not hesitate to contact us by email at reallabore@bmwi.bund.de at any time.