New EU-wide Foreign Direct Investment Screening System Approved

After brisk movement through the EU legislative process, the proposed EU Regulation on Foreign Investment Screening was approved by the European Parliament on February 14, 2019.

This development comes amidst a global sprint to strengthen and establish foreign direct investment laws, including in France, UK, Germany, and Hungary, as well as the US and China.

Although individual Member States retain their authority to screen (i.e., investigate, condition, prohibit, or unwind) foreign direct investments, the Regulation introduces and formalizes numerous procedures and criteria for cooperation among Member States and with the Commission.  Specifically, it sets out an EU-wide framework on this process and grants competence to the European Commission to intervene with an official opinion on the grounds of “public order and security”.  Additionally, it provides an official forum for Member States to weigh in and potentially affect the course of foreign investment activities across the European Union.

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