German Administrative Courts Take the Plunge – First Rulings on German Investment Screening Procedures and their Time Frame
Authors: Dr. Roland M. Stein (BLOMSTEIN) and Henriette Wohlschläger (BLOMSTEIN)
Introduction
In light of the prevailing tense global geopolitical climate, investments are no longer regarded exclusively as catalysts for growth and innovation, but instead as potential sources of security risk. As a key instrument for safeguarding national security as well as economic and technological sovereignty, mechanisms for screening foreign direct investments (“FDI”) are becoming increasingly important. The number of both screening regimes and review procedures has, thus, risen sharply in recent years. At the European level, Regulation (EU) 2019/452 (“FDI Screening Regulation”) establishes a common cooperation framework for the screening of investments flowing into the European Union (“EU”). It is set to be further strengthened in the course of 2026.
The responsibility for the design of the national screening system lies with individual member states, particularly given their obligation to protect their security and public order as outlined in Article 4(2) of the TEU. By the end of 2024, 24 member states had established national FDI regimes (European Commission, Fifth Annual Report, p. 23). In Germany, investment screening is governed by the Foreign Trade and Payments Act (Außenwirtschaftsgesetz – “AWG”) and the Foreign Trade and Payment Ordinance (Außenwirtschaftsverordnung – “AWV”), with a draft for a dedicated Investment Screening Act to be presented by mid-2026. Reflecting broader trends, the number of screening procedures in Germany has more than tripled over the last six years, resulting in a total of 339 screening procedures in 2025 (BMWE, Investment Screening in Germany: Facts & Figures, All figures as at 15 January 2026).
It was, hence, inevitable that courts would eventually rule on the specifics of investment screening procedures. These procedures represent a delicate intersection where state regulation aimed at protecting national security meets international investment protection and, consequently, the promotion of investment flows. In recent years, German (higher) administrative courts placed a premium on the right to a screening decision within a reasonable time frame. Delays of screening procedures can lead to considerable legal uncertainty and disrupt financing structures. In the worst case, it can cause the venture to fail. The structure of procedural investment law is therefore of crucial importance not only for the viability of the individual investment, but also for a country’s overall attractiveness as an investment destination.
In investor–State disputes before the International Centre for Settlement of Investment Disputes (“ICSID”), Article 44 of the ICSID Convention together with Arbitration Rule 3 of the 2022 ICSID Rules requires proceedings to be conducted ‘in an expeditious and cost-effective manner’. Comparable guarantees cannot be found for investment screening procedures. At most, procedural protection for investors can arise from the fair and equitable treatment standard (“FET”) in bilateral investment agreements, although a comparison of elongated administrative decisions to the wilful rejection of fair judicial proceedings is challenging (see OECD Secretariat, Designs of FET provisions, 2025, p. 12 et seq.).
Article 6(1) of the European Convention on Human Rights and Article 41(1) of the EU Charter of Fundamental Rights both contain a right to good administration which can encompass a decision within a reasonable time frame. In an EU context, investors may resort to these rights. Its applicability and scope must, however, be assessed in view of the specific circumstances of each individual case, having particular regard to the interests at stake for the person concerned, the complexity of the case, as well as the conduct of both the applicant and the competent authorities (Limburgse Vinyl Maatschappij v Commission, Judgment, 2002, para. 187; Baustahlgewebe v Commission, Judgment, 1998, para. 29). As Article 3(3) of the FDI Screening Regulation delegates the determination of procedural timelines to each member state, clear statutory provisions at the national level are therefore of crucial importance in FDI procedures. Section 14a of the AWG is the determinative provision in Germany.
In general, the investment screening procedure before the German Federal Ministry for Economic Affairs and Energy (“BMWE”) is structured in two stages. In the preliminary review (Phase 1), the investment is either approved – for example, by the issuance of a certificate of no objection – or a further, more substantive screening procedure is initiated (Phase 2). The procedure is concluded with the issuance of a notice of approval or prohibition, as outlined in Sections 58a et seq. of the AWV.
I. Maximum Screening Periods
In Phase 1, the review phase by the BMWE generally lasts up to two months. The process formally commences upon the authority’s awareness of the acquisition, generally upon the notification to the BMWE or the application for the issuance of a certificate of no objection, Section 58 of the AWV. Under the reformed FDI Screening Regulation, EU Phase 1 review periods are to be capped at 45 days without any possibility to extend them. In Phase 2, a decision must be made within a period of four months. The process formally commences upon receipt of complete documentation (Friton and Ackermann, Recht der Investitionskontrolle, 2024, AWG § 14a para. 16).
The practical significance of the commencement of the time limit is illustrated by the Aeonmed ruling of the Berlin Federal Administrative Court in November 2023, which concerned the takeover of the German medical technology manufacturer Heyer Medical AG by a Chinese investor (Federal Administrative Court Berlin VG 4 K 253/22, Judgment, 2023). In addition to determining that the BMWE’s prohibition decision was formally unlawful due to an inadequate hearing in accordance with Section 28 of the Administrative Procedure Act (Verwaltungsverfahrensgesetz – “VwVfG”), the court provided rulings on matters pertaining to the initiation and termination of the stipulated time frame. The BMWE had, through a newspaper article, become aware of the takeover several months before the investor applied for a certificate of no objection. The court determined that the prescribed time limit had already been initiated upon the authority’s awareness of the matter, and that subsequent applications by the investor could not lead to an extension of the stipulated time frame, declaring the Ministry’s decision to also be substantively unlawful for lack of a legal basis.
II. Criteria for Deadline Extensions
In cases of a complex nature, the standard time limit for Phase 1 may only be extended by agreement between the parties involved, Section 14a (5) of the AWG. Because of the absence of a unilateral extension mechanism, the BMWE is frequently obliged to instigate Phase 2. Alternatively, it is a frequent practice for the BMWE to inquire with the parties if they would agree to an extension of the assessment period. In order to prevent such prolongation, it is incumbent upon investors to notify the BMWE with as much notice as possible.
In Phase 2, the standard four-month deadline may be extended by up to three months in cases of complexity and by a further month where defence interests are particularly affected, Section 14a (4) of the AWG. The expiry of the deadline may be suspended if the BMWE requests additional information or the BMWE negotiates contractual arrangements with the parties involved to safeguard essential security interests or public order, Section 14a (6) of the AWG.
The practical significance of a suspension of the time limit is exemplified by the 2022 decision of the Higher Administrative Court of Berlin in the GlobalWafers case, which concerned the acquisition of a German manufacturer of wafers by a Taiwanese company (Higher Administrative Court of Berlin-Brandenburg OVG 1 S 10/22, Judgment, 2022). The court rejected the investor’s view that the screening period had expired several months earlier, on the grounds that the review period had been effectively suspended by the request for an official clearance decision from the Chinese competition authority. Consequently, the review period had not yet expired, meaning that approval could not be deemed to have been granted.
III. Consequences of Exceeding the Deadline
A pivotal and exceptional element for ensuring legal certainty in the German system is the presumption of approval. The approval of an investment is typically determined by the absence of a decision from the BMWE within the designated Phase 2 review period, Section 58a (2) of the AWV. This assertion pertains to all categories of investment; although sector-specific audits lack dedicated regulations, they follow the same rules in practice (Friton and Ackermann, Recht der Investitionskontrolle, 2024, AWG § 14a para. 34). By international standards, this presumption rule is likely unique. Most legal systems, including those in France, Poland, Sweden, the UK and the USA, provide for a presumption of rejection in such cases, or in some instances, no automatic legal consequence at all.
Along with the GlobalWafers case, the Alcemene case decided by the Berlin Federal Administrative Court 2023 demonstrates the practical relevance of the deemed approval rule (Federal Administrative Court Berlin VG 4 K 536/22, Judgment, 2023). The review process initially applied for was discontinued by the BMWE due to an internal dispute between the Austrian acquirer of a stake in the PCK Refinery in Schwedt (Alcemene) and the seller (Shell Deutschland). The investor successfully challenged this discontinuation: The court determined that there was no legal basis for discontinuing screening procedures. It further affirmed that the conditions for the presumption of approval were met as the ministry had failed to conduct a review of the acquisition within the prescribed time frame.
Conclusion
The recent judgments reflect an overall structural tension between maintaining an attractive legal framework for investors and meeting the ever-increasing need for effective state control over security-relevant transactions. They mark a significant initial step in the process of assessing this balance. Given the announcements of multiple legal reforms in 2026, there will likely be many more to come.
For the sake of good order, the authors would like to state that they had represented the BMWE in the Aeonmed and GlobalWafers procedures. They will therefore refrain from providing any comments to the decision in the blog at hand.
