Erasmus Law Review

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Issue 4, 2022 Expand all abstracts

Access_open Foreign Direct Investment Screening Mechanisms in Europe and Beyond: Navigating Uncharted Territory

Editorial Comments

Keywords foreign direct investments (FDI), screening mechanisms, national security, cybersecurity implications, international legal constraints
Authors Pim Jansen
Author's information

Pim Jansen
Pim Jansen is Associate Professor ‘Innovation of Public Law’ at Erasmus School of Law and a Senior Associate Lawyer at Van Doorne.

Access_open FDI Screening in Belgium: It Is Complicated

Keywords FDI, Belgium, M&A, public order, security
Authors Jeroen Delvoie and Claire Fornoville
AbstractAuthor's information

    Belgium’s foreign direct investment (FDI) screening mechanism entered into force on 13 June 2023. Transactions in scope of the new mechanism will have to be notified as of 1 July 2023. The genesis of this mechanism was slowed down by the complex institutional landscape in Belgium. A scenario in which various levels of government would have created their own separate screening procedure was fortunately avoided. The newly adopted cooperation agreement between the federal state and eight ‘federated entities’ aims to establish a single inter-federal screening mechanism. While policymakers should be commended for this effort, there are reasons for concern. First, the scope of the mechanism is broad, much broader than many domestic parties and foreign investors probably anticipate and remains unclear on a number of aspects. We expect that a substantial number of transactions will be notified, if only for reasons of legal security. Second, we fear rather lengthy and unpredictable proceedings, injecting considerable transaction uncertainty into the Belgian investment climate. Finally, the single mechanism exists more in appearance than in reality. In practice, multiple procedures will often run side by side, with all the political complications that will entail. We are thus not optimistic that the mechanism will result in a seamless, predictable and legally secure FDI screening mechanism in Belgium.

Jeroen Delvoie
Jeroen Delvoie is Professor at the Vrije Universiteit Brussel and attorney.

Claire Fornoville
Claire Fornoville is PhD researcher at KULeuven, researcher at the University of Antwerp and attorney.

Access_open Keeping up with CFIUS: A Practitioner’s Report on National Security Trends in the United States

Keywords CFIUS, FDI, FIRRMA, national security, TID U.S. business
Authors Farhad Jalinous and Timothy Sensenig
AbstractAuthor's information

    Since the enactment of the Foreign Investment Risk Review and Modernization Act of 2018, the Committee on Foreign Investment in the United States (or CFIUS or the Committee), has enjoyed some of its broadest authority since its establishment almost fifty years ago. Tasked with screening cross-border transactions that ‘threaten to impair the national security of the United States’, the Committee has discretion to define ‘national security’, and historically the definition has evolved with, among other elements, the geopolitical tenor of the day. Most recently, the Committee’s focus has been mostly on foreign investment in U.S. businesses involved with sensitive personal data, critical technologies or critical infrastructure.

Farhad Jalinous
Farhad Jalinous is a Partner at White & Case LLP in Washington, DC. He is the Global Head of the firm’s Foreign Direct Investment (FDI) Reviews & US National Security/CFIUS practice.

Timothy Sensenig
Timothy Sensenig is an associate at White & Case LLP in Washington, DC and also member of the firm’s FDI Reviews & US National Security/CFIUS practice. He owes gratitude to colleagues Farhad Jalinous, Karalyn Mildorf, and Keith Schomig for helpful discussions and tutelage.

Access_open National Security Review of Foreign Investment in China

Rule of Law in Ambiguity

Keywords China, FDI screening, foreign direct investment, national security, rule of law
Authors Cheng Bian
AbstractAuthor's information

    China formally adopted its national security review regime of foreign investment in 2011, which has been updated by the ‘Measures for National Security Review of Foreign Investment’ in 2020. The review mechanism has been developed in the context of China’s attempt at, and practice of, a radical reform of its foreign direct investment (FDI) regulatory regime at large and market access liberalisation in particular, inter alia, a transition from the previous case-by-case review of all foreign investment to currently a principled national treatment in the pre-establishment phase. As a result, the regulatory system has evolved from a generic and catch-all review, to all foreign investment based on implicit and unspecified regulatory objectives, to a review only towards those foreign investment projects that may pose a threat to national security, thus showing more deference to the rule of law. However, this transformation is accompanied by residual ambiguities and vagueness in the current national security review system, some of which may seriously impede an effective enforcement of the review system or give leeway for circumvention of the review. To that end, revision proposals are provided in this article to further clarify the law in order to reduce those procedural ambiguities that go against the fundamental principles of the rule of law.

Cheng Bian
Cheng Bian, PhD, is Assistant Professor at Erasmus University Rotterdam, the Netherlands.

Access_open Investment Screening Against Strategic Cyber Risks

Keywords foreign direct investments, network and information security, cybersecurity, ecosystem, supply chain resilience
Authors Wouter Scherpenisse, Evert Stamhuis and Alberto Quintavalla
AbstractAuthor's information

    This article reviews the manner in which two types of legislation in the Netherlands, namely laws on foreign direct investment and laws on network and information security, address the risks that arise from changes in control over companies in the cybernetwork. It also identifies the potential vulnerabilities of the existing regulatory framework, which are due to the failure to adopt a sufficiently ecosystemic approach. While the EU legislation on network and information security contains appropriate and proportionate risk-management measures that ensure the security of supply chains, the Union regulation of foreign-direct-investment screening instruments appears to neglect direct suppliers and service providers.

Wouter Scherpenisse
Wouter Scherpenisse, LL.M is a PhD candidate at the School of Law of the Erasmus University Rotterdam, the Netherlands.

Evert Stamhuis
Evert Stamhuis is Professor at the School of Law of the Erasmus University Rotterdam, the Netherlands.

Alberto Quintavalla
Alberto Quintavalla is Assistant Professor at the School of Law of the Erasmus University Rotterdam, the Netherlands. Corresponding author:

Access_open A Legal Comparative Approach towards the Screening of Outbound FDI

What Can the EU and Its Member States Learn from the US National Critical Capabilities and Defense Act Proposal?

Authors Najib Zamani
AbstractAuthor's information

    After decades of investment liberalisation, the attitude towards foreign direct investment (FDI) has changed. FDI is nowadays perceived more and more as a threat to the national interests owing to the risks associated with it. In order to address and mitigate these risks, various countries have adjusted their existing FDI screening mechanisms and created new ones. While so far legislators and regulators have been focused mainly on inbound FDI, the US National Critical Capabilities and Defense Act (NCCDA), a bipartisan proposal, is meant to address the risks associated with outbound FDI. Taking into account the current geopolitical environment and the risks associated with it, it is necessary that the EU and its Member States also consider screening outbound FDI. In doing so, valuable lessons can be drawn from the US NCCDA proposal.

Najib Zamani
Najib Zamani, LLM, MSc, is a Lecturer and PhD candidate, European and International Economic Law, at Radboud University, Nijmegen. E-mail:

Access_open Sovereignty and Security: Constraints on Foreign Investment Control Arising from International Law

Keywords FDI, FDI screening GATS, investment law, investment protection, sovereignty
Authors Dylan Geraets and Leo Gargne
AbstractAuthor's information

    Does international law impose constraints on States adopting, implementing or maintaining investment screening measures (ISMs)? Is the sovereignty of States in respect of whose investments and what types of investments to ‘permit’ into their territories unfettered? Or does that sovereignty only exist insofar as it is compatible with the (national) security exceptions provided for in many instruments of international economic law, as encompassing both international trade law and international investment law? These are the main questions that this contribution seeks to answer. ISMs have increased both in number and in scope in the past decades and the fact that they are included in the regulatory toolbox of many States raises questions as to the compatibility of these mechanisms, and the manner in which they are applied in specific instances, with norms of international law. The relevant norms are found, for example, in the World Trade Organization’s (WTO) General Agreement on Trade in Services (GATS) and in international investment (protection) agreements (IIAs). This contribution assesses the international legal norms that ISMs need to be compatible with if they are implemented and applied by host States seeking to exercise control over inward foreign investment on the basis of (national) security considerations. Thereto, after an Introduction (Section 1), the contribution sets out in Section 2, the key considerations in terms of sovereignty and international law, and the relationship between international legal norms and the desire to safeguard the domestic (legal) order from unwanted foreign influence. Thereafter, in Section 3, the contribution discusses the key considerations under the GATS in terms of ISM, and, in particular, the need to grant services and service suppliers of WTO Members treatment no less favourable than that is granted to the like services and like service suppliers from any other country. In addition, Section 3 examines potential considerations in respect of the Market Access and National Treatment obligation of the GATS, as well as the possibilities of relying upon the (security) exceptions in Articles XIV and XIVbis GATS to justify otherwise GATS-inconsistent ISMs. Finally, in Section 4, the contribution considers norms of international investment law that may restrict the ability of host States to implement or apply ISMs.

Dylan Geraets
Dylan Geraets, PhD, is Professor at the University of Antwerp in Belgium.

Leo Gargne
Leo Gargne is a PhD Candidate at the Faculty of Law of Tilburg University in the Netherlands.

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