The Irish Government has announced that the Irish parliament (the Oireachtas) will enact legislation to enable the Irish Government to screen 'foreign' direct investment (FDI) in Ireland. In this context, the term 'foreign' refers to investment from non-EU Member States.
FDI is extremely important to Ireland. The Irish Government believes that 20% of all private sector employment in the State is directly or indirectly attributable to FDI. It is believed that about two-thirds of the Irish corporation tax received by the Irish Exchequer comes from FDI businesses supported by Ireland's Industrial Development Authority (the agency which primarily deals with FDI in Ireland).
Traditionally, Ireland has avoided the type of FDI screening regimes found in a number of jurisdictions around the world. This is because Ireland maintains a very open approach to FDI and does not want to deter legitimate investment into Ireland.
The reason for legislation at this time is largely due to the European Union's Regulation 2019/452 – the EU's FDI Screening Regulation. Unlike a Directive, Ireland is not 'implementing' the EU measure. Instead, Ireland must comply with the Regulation. The Regulation has applied since 11 October 2020 (article 17 of the Regulation). This means that Ireland already has obligations under the Regulation and must, for example, provide information to other EU Member States when they request certain forms of information. Equally, Ireland must give due (or reasonable) consideration to comments from other EU Member States or from the European Commission.
The draft Irish legislation has not yet been published. It was hoped that the legislation would be ready in the first half of 2021 but this will not happen at this stage. It may well be the second half of 2021 or even 2022 before the legislation enters into force.
The heads of a bill were approved by the Irish Government in July 2020. However, the bill is not on the Government 'priority list' and it has still not been published. However, it is anticipated that it will be presented to the House of the Oireachtas as soon as it has been drafted by the Office of the Parliamentary Counsel (the office which drafts bills on behalf of Government) and approved by Government (i.e. the Cabinet).
All will depend on what is contained in the legislation as enacted by the Oireachtas. But what are current predictions?
It is currently anticipated that:
- while Ireland will comply with its European Union, international and national legal obligations, it is likely that the legislation will take a relatively benign approach to FDI and only intervene where needed
- the Irish legislation will not be retrospective in effect – it would be unusual for Ireland to cause such a difficulty for FDI
- there may even be a transition or phasing-in period after the legislation is enacted and before the Irish legislation enters into force
- the Irish Act will probably be less prescriptive and narrower in scope that the UK's National Security and Investment Act 2021
- the Irish regime will be robust and rigorous but will not interfere unreasonably or unnecessarily with legitimate and proper FDI.