Investments in enterprises, which are relevant for public security and services, are an important source of growth, jobs and innovations. But such investments can be detrimental to the security of supply for the community members – for example, when a state owned enterprise, which is located in a third state, gets control over the only electricity station in a Member State.
How to allocate the powers to collect information, surveil and restrict investment between the EU and the Member States? This question has far reaching ramifications for the underlying political relationship between the EU and its Member States.
In the face of rising global tensions the free flow of direct investment capital across borders is in dispute. The self-evidence of free capital movements since the start of the euro can no longer be taken for granted. Concerns have emerged about the intentions of foreign investors acquiring domestic key industries.
In its white paper published in July 2018, the government has acknowledged the key role of foreign investment for the UK’s growth and development, whilst also noting that ‘a small number of investment activities, mergers and transactions in the UK economy pose a risk to our national security.’ The aim of the proposed reforms is to ensure that in these cases the UK government is able to intervene in order to prevent or mitigate such risks.
The EU has one of the world's most open investment regimes, and collectively EU Member States have the fewest restrictions in the world on foreign direct investment. A proposal for a Union Act on the Screening of foreign investment in strategic sectors was tabled by ten Members of International Trade Committee (INTA) at the European Parliament (EP). The inter-institutional “provisional” agreement is going to be voted by the full House of the EP on the 14th of February 2019.
The proposal for a regulation of the European Parliament and of the Council establishing a framework for screening of foreign direct investments into the European Union (Draft Proposal) presupposes (some would even say: proposes) investment screening and control mechanisms (ISCMs) at member state level. Approaching ISCMs from the angle of legal redress raises three questions: Legal redress to what end? Legal redress by who? Legal redress by which material standards? Sorting out these questions is of vital interest for stakeholders. For investors and their counsel confronted with a new layer of regulation and uncertainty, as much as for member states ... continue reading
The national investment screening mechanisms for the defence and security sector are the Doyen of the existing screening mechanisms, and their bases in EU secondary and primary law are not so hidden. The discrimination of investors on grounds of nationality have some specific bases in topical EU Regulations or Directives, but most importantly in the EU-Treaties themselves: Article 346 TFEU allows Member States to prevent foreign investments on grounds of national security considerations, and that, interestingly, irrespective of a takeover attempt from a company from inside the European Union, or from a third country. Before taking a closer look at ... continue reading
On 19 December 2018, the German government has passed amendments to the German Foreign Trade and Payments Act (“AWG”) and to the German Foreign Trade and Payment Ordinance (“AWV”) whose compatibility with European law is highly questionable. The structure and scope of investment review provided for under the AWG in conjunction with the AWV is that the Federal Ministry of Economics, the competent German authority, possesses an extensive ex-post examination competence regarding the acquisition of shares of German companies by third-country nationals. Of particular importance for foreign direct investments (FDI) is the screening of sector specific and cross-sectoral investments by ... continue reading
Screening of foreign direct investments could take place through European company law. The harmonization of company law in the European Union as well as the CJEU’s case law offer mechanisms which could be used for the screening of foreign direct investments. Although their primary objective is “the protection of the interests of members and others”, they could also contribute significantly to an effective screening of foreign direct investments. There are five main avenues in European company law that could be used to screen foreign direct investment: the Takeover Bids Directive in the context of listed companies, the lawful golden shares ... continue reading
Volvo Personvagnar AB, Kuka, Aixtron, OSRAM Licht, Daimler, Saxo Bank, the harbour terminal in Zeebrugge, Spain’s Noatum Port, Italy’s Vado Ligure Port or the Port of Piraeus – the list of discussed controversial company takeovers and acquisitions of major stakes in Europe is getting longer and longer. The political will in the European Union (EU) and its Member States is growing to more actively screen, control, or even prevent investments flowing into Europe. Third country investments stirring controversies archetypically share three common characteristics. The target companies typically operate in “politically sensitive areas”, the owner structure of the immediate buyer is ... continue reading
13. September 2025
Giovanni Capoccia
12. September 2025
Anne Peters
12. September 2025
Anne Peters