The European Union (EU) "Foreign Direct Investment Regulation" or "FDI Regulation" applies from 11 October 2020.
On 13 September 2020, Ireland announced that it was introducing primary legislation (i.e. an Act of Parliament) to provide for a domestic Irish legislative screening mechanism under the FDI Regulation.
The FDI Regulation facilitates EU Member States in screening or scrutinising FDI by "third countries" (i.e. non-EU Member States) on the basis of two criteria, namely, "public order" or "security".
The legislation also enables EU Member States to co-operate between themselves including sharing information.
The FDI Regulation facilitated but did not compel screening. Member States which did not have FDI screening (such as Ireland) were not obliged to introduce such screening. However, the EU is encouraging Member States to do so and Ireland has chosen to do so. Of the 28 Member States when the FDI Regulation was adopted in 2019, 14 had such screening (e.g., France and Germany) but 14 did not (e.g., Belgium and Sweden).
The Irish legislation, provisionally called the Investment Screening Bill 2020, will have to be enacted by the Irish Parliament (the Oireachtas).
The legislation would allow Ireland's Minister for Enterprise, Trade and Employment to screen FDI on the basis of security and public order considerations.
The current Minister, Leo Varadkar TD, in announcing the legislation said that Ireland has "a strong reputation as a welcoming home" for FDI and he said that it his Government's intention that this will continue. So one can expect that intervention in regard to FDI by third countries would be only where necessary under the new regime.
Minister Varadkar's vision of the legislation will be welcomed by foreign investors. He said that “it is important that the structures put in place in accordance with this regulation are proportionate and tailored to ensure they meet that objective, while ensuring Ireland that maintains its position as a small, open economy, that is very welcoming of investment from abroad."
Technically, the Irish legislation does not "implement" the EU Regulation – Member States only implement directives – but it does give practical effect to the EU Regulation.
We will provide further updates as the legislation is initiated and enacted.