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2024 | Buch

Weaponising Investments

Volume II

herausgegeben von: Jens Hillebrand Pohl, Thomas Papadopoulos, Janosch Wiesenthal, Joanna Warchol 

Verlag: Springer Nature Switzerland

Buchreihe : Springer Studies in Law & Geoeconomics


Über dieses Buch

This second volume of highly topical two-volume set “The Investment Weapon” continues to present pioneering research for the purpose of developing a common analytical foundation and framework for the emerging interdisciplinary research field of investment control. This second volumes shifts the focus from the policy context to the legal and regulatory aspects of investment controls, specifically from an international, transnational, and comparative law perspective. The topics range from control of subsidized investments to non-national security related investment controls and alternatives to investment screening.


The EU Foreign Subsidy Regulation: Why, What and How?
With the new Regulation on Foreign Subsidies distorting the Internal Market (FSR), the EU wants to close several gaps in its current toolbox, foster its new industrial strategy and create a level-playing field on its internal market, thereby increasing competition on the merits. Contrary to FDI control, at least at the outset, security concerns play a minor role in the discussions around regulating foreign subsidies on the EU internal market. The focus lies on economic concerns: the level playing field in the EU internal market. Specifically, the EU fears far-reaching involvement of non-EU State-owned enterprises in its internal market to the detriment of EU competitors.
This article will first give an overview of the new FSR and, second, explore the alignment and interdependencies of the new instrument with existing EU screening instruments, with a focus on merger and FDI control tools. The article supports foreign subsidy control in general but takes a sceptical view towards the new regulation in regard to coordination and alignment with existing policies. It concludes by placing the proposal in the context of other recent developments and a general increased governmental involvement and control of economic activities in the EU.
Lena Hornkohl
Economic Sanctions as an Instrument of Foreign Investment Control
Treating economic sanctions as an instrument of investment control is somewhat novel. Even if investment control has not been traditionally the objective of the use of economic sanctions, this contribution intends to demonstrate that economic sanctions can have a role in controlling investments.
First, certain economic sanctions, called investment sanctions in a strict sense, directly limit the flow of investments towards and/or from the target state or persons. Such investment sanctions have a variety of forms (general bans of investments, sector-specific investments bans, ban on purchasing and selling securities) that make them suitable to be used as a means of investment control.
Second, the legislature can include considerations related to the application of and compliance with economic sanctions into the formal investment screening procedure, as the US example demonstrates. The use of economic sanctions in investment control is subject to certain economic, political and legal limits. Even so, it seems that they are not only comparable to traditional investment screening mechanisms, but they can constitute an effective element of the regulatory framework of controlling investments.
Tamás Szabados
Balance of Payments-Related Restrictions on the Freedom of Investment
This chapter takes a closer look at the potential conflict between the freedom of investment and the relatively wide margin of manoeuvre of states to restrict transfers of funds and to impose balance-of- payments restrictions in the event of external financial difficulties. The chapter examines the evolving IMF and WTO perspectives in this field situated at the intersection of trade, money and foreign investment regulation. Furthermore, it analyzes the relevant legal framework for restrictions on foreign investment resulting from exchange controls and exchange reserve management. As part of its analysis, the chapter also takes a closer look at the evolving legal framework on capital controls post-Washington consensus in light of destabilizing phenomena such as hot-money flows. The chapter concludes that, as an exceptional, temporary policy tool, balance-of-payments restrictions remain vitally important. From the perspective of foreign investors, this does not necessarily entail negative consequences as long as reliable investment conditions, including with respect to both inwards and outwards flows of funds can still be ensured.
Claus Zimmermann
Next-level Screening? The Case of Outbound Investment Screening
Over the past couple of years, inbound investment screening has become a standard legal and economic instrument in many Western countries. In light of geopolitical challenges, the United States is currently debating the introduction of an outbound screening mechanism that would subject certain outbound investments by US companies to governmental scrutiny. In addition, the European Commission has announced that it intends to consider whether outbound investments by European companies need to be regulated more thoroughly. This article provides an overview of these developments and analyzes the draft legislation that is currently being debated in the United States. Furthermore, it examines the feasibility of outbound investment screening under European and German law and makes an initial proposal for such a law in the European setting.
Jonas Fechter
Determining the Role of FDI Screening in International Investment Law
Investment screening and control mechanisms are in sharp contrast to the international investment law regime that seeks to promote the free flow of foreign capital. Investment screening decisions may significantly affect investment transactions and thus may be contrary to states’ obligations contained in international investment agreements (IIAs). Most IIAs provide for investor-state-dispute-settlement (ISDS), allowing foreign investors to claim compensation for the breach of investment protection standards. However, the relations between investment screening and international investment law remain largely obscure. This contribution aims to provide a better understanding of the application of investment treaties in the context of screening mechanisms and international obligations limiting states’ screening power. Several jurisdictional hurdles exist and state defenses are available if an investor seeks to bring a claim before an arbitral tribunal. Nevertheless, states should take account of their international obligations when introducing and operating screening mechanisms.
Kilian Wagner
States’ Shareholding as a Tool of Investment Control in Strategically Important Companies: Any Consequences for International Responsibility?
The investment screening regulations are not the only tool the states use to control the influx of foreign investments. Arguably, it is rather the states’ shareholding that has traditionally been the main tool of investment control. Furthermore, in order to preserve their stake in the companies many states resort to mechanisms enhancing their corporate control over strategic companies. The question whether implementation of such mechanisms could not automatically translate into states’ responsibility for their actions is what this article explores. In order to answer this question, following issues will be thematized: First, legal framework governing the corporate control over companies, governed mainly by the domestic laws. Second, the effects of the state’s shareholding in enterprises on the imputability of their actions to the sovereigns under the international rules on attribution, with particular emphasis on WTO, ECHR, ISDS and EU legal frameworks. Third, whether the utilisation of the corporate control enhancement instruments would translate into the states’ responsibility for their actions under the aforesaid rules. As the analysis demonstrates, however, this is not the case. While my reconstruction of the corporate control enhancing rests on the Polish domestic regulations, I am convinced that the conclusions of my research may be relevant also for other legal systems.
Bartosz Soloch
Screening Authorities in the EU: Considerations on Governance, Powers, and Accountability
Investment screening regimes have proliferated over the past few years across the European Union, following the adoption of the EU Screening Regulation, as well as due to a geopolitical context that favoured the adoption of measures for protecting EU strategic assets. In the EU, investment screening regimes remain at the Member State level, hence creating a patchwork of rules and procedures, each administered and applied by national screening authorities. This article aims to investigate how screening authorities across the EU are designed and operate, and how their setup may impact the administration and implementation of screening regimes. It starts by identifying the key governance models to which Member States have resorted in designing competent screening authorities, and then examines how the adopted governance model may influence the substantive and procedural powers conferred upon screening authorities, their competence and efficiency in carrying out their tasks, the transparency of relevant processes, as well as the authorities’ accountability. It concludes by suggesting that a compromise to ensure efficient and accountable investment screening reviews may be to delegate certain functions and tasks to administrative (expert) bodies, while maintaining government involvement and oversight, especially at the decision-making stage.
Jacques Bourgeois, Alessandra Moroni
The Evolving Concept of National Security and Foreign Investment Screening Procedures with Particular Reference to the Italian Regime
Since the 1970s, foreign direct investment (FDI) flows have experienced substantial growth due to the liberalization and protection measures introduced by states. However, this growth came to a temporary stop with the financial and economic crisis of 2007–2010 due also to restrictive measures adopted by states to protect national economies (among which screening procedures). COVID-19 has further impacted FDI flows since many governments have made health decisions to contain the diffusion of the pandemic and economic measures to limit its negative consequences on the domestic economy. In the present context, states more often perceive a need to protect their national security by limiting foreign investments. In fact, national security is a dynamic and evolving concept. Over the years, the scope of this concept has extended going beyond the idea of military protection to include the safeguarding of other public goals that are crucial for state safety or domestic welfare. Currently, economic considerations are increasingly taken into account by governments when assessing their national security. This essay examines the evolving concept of national security and its impact on the FDI approach followed by states, focusing particularly on the recent amendments of the Italian legal framework on foreign investments. This author postulates the idea that, in extraordinary times, extraordinary measures devoted to protecting the national economy are justified. However, adopting an overly expansive interpretation of national security could create new instability in the foreign investment legal framework with negative repercussions on FDI flows.
Maria Rosaria Mauro
National Security and Essential Security Interests in CJEU Jurisprudence
The chapter analyses the case law of the CJEU on national security and essential interests of member states security. It answers the following questions: what do the national security and essential security interests clauses in EU law actually mean, what is their content? What role do they play? What is the extent of discretion of the member states when applying those clauses? What are the requirements concerning an effective review of measures undertaken to protect security?
The analysis leads to the conclusion that recent case law could be seen as the beginning of differentiation or stratification between clauses of public and national security. This case law is, however, contradicted to some extent by the interpretation of the ‘public security’ clause by the Court. Instead of demoting the public security to less crucial threats to ‘make room’ above for national security, the Court seems to continue to attribute to it fundamental importance (notably a threat to the survival of the population, as well as the risk of a serious disturbance to foreign relations or the peaceful coexistence of nations). Also, as concerns the role of the national security clause, the difference between national and public clauses seems to be only quantitative, not qualitative. For the Court, the national security clause does not seem to be about the question of delimitation of competencies between the EU and the member states.
Marek Jaśkowski
Weaponising Investments
herausgegeben von
Jens Hillebrand Pohl
Thomas Papadopoulos
Janosch Wiesenthal
Joanna Warchol 
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