Foreign Direct Investment Screening in the EU – Future Perspectives and Implied Obligations

Abstract

Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union establishes a framework for the screening by Member States of foreign direct investments into the Union on the grounds of security or public order. In addition, it introduces two separate cooperation mechanisms, depending on whether the foreign direct investment is undergoing screening. Although it largely provides for non-controversial procedural requirements (relating to transparency, non-discrimination, relevant time frames, coordination, confidentiality, assistance and mutual communication), Regulation 2019/452 also contains specific implied obligations, which may prove to be especially burdensome for the Member States which have no foreign direct investment screening legislation. Regulation 2019/452 does not expressly oblige Member States to adopt a foreign direct investment screening mechanism. Nevertheless, the Commission’s activities and communications seem to suggest that the ultimate goal sought to be achieved is to have all Member States introduce national foreign direct investment legislation in the foreseeable future.