The French Dilemma: Preserving FDI in France While Exercising Greater Control

While boasting of its (renewed) first place at the top of the ranking of attractive European countries from the point of view of foreign direct investments (“FDIs”), France has adopted various amendments to its FDI regime over the past three years, which have had as their effect to subject foreign investments to increased scrutiny but also, as a side-effect, to increased legal uncertainty. This move towards greater scrutiny is not surprising as protectionism is on the rise globally. But it may appear a bit contradictory with the objective to preserve France’s attractiveness to FDIs. It hence raises the question of reconciliation between those seemingly contradictory intentions. In this article, it is suggested that an initial approach could consist in reducing the legal uncertainty currently faced by foreign investors subject to the French FDI regime. It may not solve entirely the dilemma, but it is undoubtedly part of the solution.

By Marie-Laure Combet¹

I. INTRODUCTION

It is no mystery that, for some time now, sovereign states have been tempted by protectionism. This is reflected in a general strengthening of foreign investment control regimes, which must be given particular attention by any foreign investor wishing to invest in a so-called “sensitive” activity.

In the EU, this reinforcement has even been encouraged by the European Commission, which not only took the initiative in setting up a new EU filtering framework for foreign direct investment²