The EU and its Member states increasingly raise security and economic concerns about foreign investors from emerging non-EU States. These concerns focus on investments that give the foreign investor control over the domestic asset: Foreign direct investment (“FDI”). It is argued that politically influenced investors and know-how transfer to the investor’s home country could threaten the EU’s security and economy. These concerns arise amid the global shift of geopolitical and -geoeconomic powers that materialises in the current US-China “trade war”, the Chinese “Belt and Road Initiative” and the ongoing economic transformation through digitalization.
In this context, screening FDI is perceived as one policy means to protect the EU’s and its Member states’ interests. Accordingly, the EU adopted a framework for the screening of third-country FDI into the EU at Member State level (“EU Screening Regulation”). This screening mechanism ultimately allows for the prohibition of FDI “on the grounds of security and public order”. In light of this screening mechanism and the above mentioned concerns about FDI, two questions urge to be answered:
- Presumed the concerns regarding FDI are valid, do the grounds of security and public order cover them sufficiently, as promised by the legislators of the existing screening mechanism?
- And if not, would European Primary law, particularly the Freedom of Establishment and Capital movement, as well as Public international law allow for FDI screening on broader grounds?