Abstract
An examination of the respective roles of Member States and the EU in establishing investment screening mechanisms must consider several aspects. On the one hand, investments are an important source of growth, jobs and innovations. On the other, investments can be detrimental to the security of supply in relation to services essential for Member States – for example, when a state-owned company, which is located in a third state, gains control over the only electricity station in a region through investment. This could possibly lead to Member States getting exposed to the risk of being blackmailed or being entirely dependent on other states or foreign companies. To mitigate such risks, the German Federal Ministry for Economic Affairs and Energy lowered the threshold for the national screening mechanism to 10% for investments in certain companies that own critical infrastructure. Simultaneously, the European Union has adopted Regulation 2019/452 establishing a framework for screening of foreign direct investments (hereafter the EU Screening Regulation). These events pose the question of whether the Union itself or the Member States are vested under Union law with the power to adopt investment screening mechanisms, and also which additional legal requirements must be considered in that respect. These questions are answered in three steps. First, an overview of the essential terminology and the intensity of the risks of investments out of third states can cause for the Member States is provided. Second, the competences of the Member States in this area must be examined in light of the fundamental freedoms and the exclusive competence of the Union for the Common Commercial Policy. Third, a closer look will be taken as to the conformity to primary law of the EU Screening Regulation, against the backdrop of the principle of conferral and EU fundamental rights. The analysis will show that Member States are only allowed to adopt rules dealing with direct investments out of third states; the European Union enjoys a wider scope to introduce investment screening mechanisms. However, the conditions provided in the specific provision providing for legislative power may not be disregarded. With this in mind, the EU Screening Regulation is built on uncertain ground, as it allows the Member States to establish individual “commercial policies”, which is contrary to the spirit of Article 207 para 2 TFEU on which this secondary legislation is based.
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Notes
- 1.
Gramlich in: Pechstein et al. (2017), Art. 63 para. 17.
- 2.
- 3.
Sedlaczek/Züger in: Streinz (2018), Art. 63, para. 4 for further information and critical remarks.
- 4.
Ibid.; Judgment of the Court (Grand Chamber) of 18 December 2007, Skatteverket v A., C-101/05 ECLI:EU:C:2007:804, para. 31 et. seqq.
- 5.
See 12th Regulation of the German Federal Ministry for Economic Affairs and Energy to change the Außenwirtschaftsverordnung, 19th of December 2018, BAnz AT 28th of December 2018, part A I.
- 6.
To further grasp the arbitrariness of such percentage quotations, see e.g. Frenz (2011), para. 5040.
- 7.
A sign towards that approach can be found at Judgment of the Court (Fifth Chamber) of September 2018, EV v Finanzamt Lippstadt, C-685/16, ECLI:EU:C2018:743, para. 36 et seq.
- 8.
For further details on these specific terms, see Jung in: Callies and Ruffert (2016), Art. 106, para. 36 et seq.
- 9.
Schuelken (2018), pp. 577–578.
- 10.
Slobodenjuk (2019), pp. 202–203.
- 11.
Weller (2008), pp. 857–858.
- 12.
Classen/Nettesheim in: Oppermann et al. (2018), § 4, para. 28.
- 13.
See Korte (2019), pp. 78, 82 for further information.
- 14.
See in this volume Eisenhut, The Hidden European Investment Screening Mechanism Already in Place – Existing EU Secondary Legislation on Discriminatory Treatment of Third Country Investments – Defence, Military, Dual Use for further information.
- 15.
Callies and Korte (2011), § 5, para. 247 et seq.; Judgment of the Court (Grand Chamber), 22 October 2013, Staat der Nederlanden v Essent NV and others, joined cases C-105/12, C-106/12 and C-107/12, EU:C:2013:677, para. 30 et seq.
- 16.
Kotzur in: Geiger et al. (2017), Art. 63, TFEU. para. 1.
- 17.
Korte in: Callies and Ruffert (2016), Art. 49, para. 24 et seq.
- 18.
Judgment of the Court (Fourth Chamber), 8 November 2012, European Commission v Hellenic Republic, C-244/11, ECLI:EU:C:2012;694, para. 27 et seq.
- 19.
Similar Behme (2013), pp. 161–162.
- 20.
Judgment of the Court (Fourth Chamber), 8 November 2012, European Commission v Hellenic Republic, C-244/11, ECLI:EU:C:2012;694, para. 19 et seq.
- 21.
See also Callies and Korte (2011), § 3, para. 37 et seq.
- 22.
Hindelang (2014), Art. 63, para. 221 et seq.
- 23.
Judgment of the Court of 30 November 1995, Reinhard Gebhard v Consiglio dell’Ordine degli Avvocati e Procuratori di Milano, C-55/94, ECLI:EU:C:1995:411, para. 25 et seq.; Judgment of the Court (Fifth Chamber) of 11 December 2003, Bruno Schnitzer, C-215/01, ECLI:EU:C:2003:662, para. 30 et seq.
- 24.
A similar approach on national law however is provided by Sedlaczek/Züger in: Streinz (2018), Art. 63, para. 35.
- 25.
Hahn in: Callies and Ruffert (2016), Art. 207 para 23 et seq.
- 26.
Frenz (2011), para. 5062.
- 27.
Nettesheim in: Grabitz et al. (2017), Art. 3 TFEU, para. 19.
- 28.
- 29.
Judgment of the Court of 18 February 1986, Bulk Oil (Zug) AG v Sun International Limited and Sun Oil Trading Company, C 174/84, ECLI:EU:C:1986:60, para. 23 et. seq.; see also Schaefer (2008), pp. 721, 724 et seq.
- 30.
- 31.
- 32.
Günther (2018), p. 34.
- 33.
Bayer and Ohler (2008), pp. 12, 26.
- 34.
See Korte (2019), pp. 78, 95 for further information.
- 35.
Calliess in: Callies and Ruffert (2016), Art. 2, TFEU, para. 3 et seq.
- 36.
- 37.
- 38.
This is an argument neglected by Brauneck (2018), pp. 188, 195.
- 39.
Puttler in: Callies and Ruffert (2016), Art. 4, TEU, para. 22.
- 40.
Ludwigs, Rechtsangleichung nach Art. 94, 95 EG-Vertrag (2004), S. 273 ff.
- 41.
Calliess in: Callies and Ruffert (2016), Art. 4, TFEU, para. 2.
- 42.
Streinz in: Streinz (2018), Art. 2 TFEU, para 8 ff.
- 43.
Such an approach is for example taken by Brauneck (2018), pp. 188, 195 in section 3 b) of his conclusion.
- 44.
See also Benyon (2010), pp. 78 et seq.
- 45.
See Korte (2019), pp. 78, for further information especially concerning the question if there is a primacy of exclusive competences to avoid the risk of their circumvention.
- 46.
Judgment of the Court of 23 February 1988, United Kingdom of Great Britain and Northern Ireland v Council of the European Communities, Case 68/86, ECLI:EU:C:1988:85.
- 47.
Wojcik in: von der Groeben et al. (2015), Art. 64, para. 18.
- 48.
Bröhmer in: Callies and Ruffert (2016), Art. 64, para 8.
- 49.
In this direction Sedlaczek/Züger in Streinz (2018), Art. 64, para. 20.
- 50.
Callies and Korte (2011), § 4 para 98 et seq.
- 51.
Korte in: Callies and Ruffert (2016), Art. 114, para 39 et seq., 46.
- 52.
Sedlaczek/Züger in: Streinz (2018), Art. 64, para. 20.
- 53.
Calliess in: Callies and Ruffert (2016), Art. 4, TEU, para. 2 and Art. 5, TEU, para. 7.
- 54.
Calliess in: Callies and Ruffert (2016), Art. 2, TFEU, para. 13 et. seq.
- 55.
Judgment of the Court (Fourth Chamber), 8 November 2012, European Commission v Hellenic Republic, C-244/11, ECLI:EU:C:2012:694, paras. 65, 73.
- 56.
See Brauneck (2018), pp. 188, 194 for a different approach.
- 57.
- 58.
Korte in: Callies and Ruffert (2016), Art. 49 para. 99 et. seqq.
- 59.
Hahn in: Callies and Ruffert (2016), Art. 207, para. 123.
- 60.
Weiß in: Grabitz et al. (2017), Art. 207, para. 8.
- 61.
Khan in: Geiger et al. (2017), Art. 207, TFEU, para. 13.
- 62.
Opinion of the Court of 11 November 1975, Opinion given pursuant to Article 228 (1) of the EEC Treaty, Avis 1/75, ECLI:EU:C:1975:145, pp. 1355, 1363 et. seq.
- 63.
Cottier/Trinberg in: von der Groeben et al. (2015), Art. 207, paras. 103 and 110.
- 64.
- 65.
Ackerman (2018), pp. 373, 380.
- 66.
See Korte (2019), pp. 78, 119 et. seq. For further information.
- 67.
Judgment of the Court of 5 October 2000, Federal Republic of Germany v European Parliament and Council of the European Union, C-376/98, ECLI:EU:C:2000:544, para. 95 et. seqq.
- 68.
See also Bast in: Grabitz et al. (2017), Art. 4 TEU, para. 10.
- 69.
See Korte (2019), pp. 78, 119 et. seq. For further information.
- 70.
Regulation (EU) No. 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries, OJ L 351, 20.12.2012, p. 40–46.
- 71.
See also Bungenberg (2014), pp. 382, 384.
- 72.
Keller/Schmidt in: Krenzler et al. (2015), Nr. 120 G, para. 47 et seq.
- 73.
Herrmann and Müller-Ibold (2016), pp. 646, 647.
- 74.
Regulation (EU) 2015/1843 of the European Parliament and of the Council of 6 October 2015 laying down Union procedures in the field of the Common Commercial Policy in order to ensure the exercise of the Union’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization (codification), OJ L 272, 16.10.2015, pp. 1–13.
- 75.
Herrmann and Müller-Ibold (2016), pp. 646, 651.
- 76.
Karmann in: Streinz (2018), Art. 31, para. 26.
- 77.
Council Regulation (EC) No 116/2009 of 18 December 2008 on the export of cultural goods, OJ L 39, 10.2.2009, pp. 1–7.
- 78.
Especially on the changes of the wording to the Lisbon Treaty, see Müller-Ibold in: Bungenberg and Herrmann (2011), p. 85 et seq.
- 79.
See also Elmenhorst and Heimann (2016), pp. 3398, 3400.
- 80.
Similar Weiß in: Grabitz et al. (2017), Art. 207, Para. 150.
- 81.
Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items, OJ L 134, 29.5.2009, p. 1–269.
- 82.
Judgment of the Court of 17 October 1995, Fritz Werner Industrie-Ausrüstungen GmbH v Federal Republic of Germany, C-70/94, ECLI:EU:C:1995:328, para. 10.
- 83.
Karpenstein/Kottmann in: Krenzler et al. (2015), Art. 1, para. 6 and Art. 4, para. 2.
- 84.
Bungenberg in: Pechstein et al. (2017), Art. 207, para. 61 et seq.
- 85.
Lux in: Dorsch (2012), Art. 9, para. 1.
- 86.
Council Regulation (EC) No 1061/2009 of 19 October 2009 establishing common rules for exports, OJ L 291, 7.11.2009, pp. 1–7.
- 87.
Karpenstein/Kottmann in: Krenzler et al. (2015), Art. 8, para. 3 et seq.
- 88.
Lux in: Dorsch (2012), Art. 9, para. 1.
- 89.
Karpenstein/Kottmann in: Krenzler et al. (2015), Art. 9, paras. 1, 4.
- 90.
Concerning the problems of struggling national economies in this context see Opinion of Advocate General Kokott, Final Application in the case Commission v Council, C-13/07 ECLI:EU:C-2009:190, para. 113.
- 91.
Obviously limited to this content Sedlaczek/Züger in: Streinz (2018), Art. 64, para. 19 et seq.
- 92.
Wojcik in: von der Groeben et al. (2015), Art. 64, para. 21.
- 93.
Gramlich in: Pechstein et al. (2017), Art. 64 para. 19.
- 94.
Wojcik in: von der Groeben et al. (2015), Art. 64, paras. 10, 15.
- 95.
Geiger in: Geiger et al. (2017), Art. 5, TEU, para. 20.
- 96.
Calliess in: Callies and Ruffert (2016), Art. 5, TEU, para. 65 et. seqq.
- 97.
Kühling in: Pechstein et al. (2017), Art. 15, paras. 6, 9; Judgment of the Court (Second Chamber) of 30 June 2016, Lidl GmbH & Co. KG v Freistaat Sachsen, C-134/15, ECLI:EU:C:2016:498, para. 26 et seq.
- 98.
Kingreen in: Callies and Ruffert (2016), Art. 52, para. 65.
- 99.
Kühling in: Pechstein et al. (2017), Art. 16, para. 14.
- 100.
See Korte (2019), pp. 78, 132 et seq. For further information.
- 101.
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Korte, S. (2020). Exploring the Possibilities and Limits of the EU and Member States to Set Up an Investment Screening Mechanism in the Light of Union Law. In: Hindelang, S., Moberg, A. (eds) YSEC Yearbook of Socio-Economic Constitutions 2020. YSEC Yearbook of Socio-Economic Constitutions, vol 2020. Springer, Cham. https://doi.org/10.1007/16495_2020_30
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