“Knock, Knock… Who’s There?” Key Elements of the EU FDI Screening Regulation

In this article, the authors – European Commission experts in this new field – set out the background for the adoption of the European Union FDI Screening Regulation and explain its key features, including the cooperation mechanism established, and, the substantive test applied to review the potential impact of FDI transactions on security or public order. The article also highlights the sustained increase in the number of EU Member States with national screening mechanisms, prompted also by the European Commission’s call upon all Member States to have a national screening mechanism in place. The authors conclude that while the Regulation does not change the European Union’s openness to FDI, the Regulation represents an important step towards safeguarding the collective security of the European Union and its 27 Member States.

By Stefan Amarasinha & Damien Levie¹

The adoption on March 19, 2020, and the full implementation and application as of October 11, 2021, of the EU FDI Screening Regulation² (hereinafter “the Regulation”) represents a first in terms of the European Commission playing a direct role in the security screening of Foreign Direct Investment (“FDI”) into the European Union. The Regulation establishes a network between EU Member State screening authorities and the European Commission, and sets out the mechanics for the operation of the network. The European Commission role is effectively two-fold, i.e. ensuring that screening EU Member