Taking Certainty Seriously: the Italian Council of State Overturns the Practice of the National FDI Authority
Author: Andrea Gemmi (BonelliErede, Associate; University of Padova, PhD Candidate)
Introduction
The recent ruling of the Italian Council of State on the Cedacri case marks a turning point in the interpretation of the national FDI screening regime. This judgment reinforces the principle of legal certainty, challenging years of expansive administrative practice aimed at maximizing preventive control. Beyond its impact on financing transactions, the decision has systemic relevance: it addresses the tension between flexibility and predictability in FDI screening, a challenge shared across EU Member States. As Italy faces possibly an infringement procedure and prepares to align with the forthcoming EU FDI Regulation, this ruling may signal a shift toward stricter, more proportionate frameworks – essential to prevent dirigiste uses of FDI screening legislation and ensure compliance with EU law.
The ambiguous scope of Italian “Golden Power”
In our previous post on CELIS Blog dated 10th March 2025, my co-author and I commented on the decision of the Administrative Tribunal of Lazio in the Cedacri case concerning Italian FDI screening law (the so-called “Golden Power” regime, as established by Decree Law No. 15 of March 2012, no. 21), highlighting the risks of legislation characterized by a broad and often ambiguous scope of application, and a jurisprudence deferential toward the flexible practice of the Presidency of the Council of Ministers – which also acts as the Italian FDI Authority. While the new data for 2024 confirms this uncertainty, the Council of State has finally brought the issue back into the spotlight, overturning the first-instance ruling discussed in our previous post.
The latest official report on FDI screening activity confirms for 2024 the same problematic trend already highlighted: the number of notifications continues to rise despite unchanged legislation, and yet half of the notifications submitted are deemed outside the scope of the law – therefore, unnecessarily submitted. It is understandable that, in borderline cases, parties adopt a precautionary approach by notifying transactions where it is not clear whether there is a filing obligation – or simply misjudge such obligation. However, this explanation does not justify the persistent statistics illustrated in the official reports: half of the notifications are considered erroneously submitted (for 2024: 835 notifications and pre-notifications, of which 410 deemed outside the law).
However, it seems that case law has begun to address this issue. The Council of State overturned the first-instance decision on pledges based on a strict interpretation of the law. This ruling is pivotal not only because it will radically reshape practice in this area, but also in light of the current context: the Golden Power framework is under possible EU infringement procedure and will soon need to align with the upcoming EU FDI Regulation reform. Taking legal certainty seriously could play a fundamental role in reforming Italian FDI screening law. And this is not merely a domestic matter. The Council of State grounded its reasoning in EU law, which demands certainty and predictability in FDI regimes. The complex interplay between legislative constraints and screening flexibility, as highlighted by the Italian Court, appears to be the most problematic feature of these rules – an issue many Member States will face in the coming years.
The Cedacri case
The application of Golden Power rules to pledges revolves around the use of indeterminate concepts in the law, particularly in defining notification triggers. Under the law, resolutions, acts, or transactions that modify the “ownership, control or availability" of strategic assets are subject to notification. The problem lies in the concept of “availability,” which is extremely vague. The provision was originally intended to cover decisions concerning specific assets, but the FDI Authority extended its interpretation to share deals, as seen in the Telecom/Vivendi case (2017), a practice later upheld by the first-instance court in 2025. Under this practice, the provision concerns transactions altering the “availability” of a company and its assets.
For share deals, however, another provision applies, targeting the acquisition of “control”, which is a legally defined concept. “Availability,” by contrast, lacks any statutory definition. While uncertainty regarding asset “availability” is problematic, even more so is the threshold of governance rights qualifying as “availability”. Veto rights that do not confer corporate control may suffice, but the exact threshold remains unclear.
This context frames the issue of pledges. In 2023, the Presidency of the Council of Ministers exercised special powers over Cedacri S.p.A., concerning the creation of a pledge on shares to secure financing, without transferring voting rights until default. The FDI Authority imposed obligations on the use of financing, restricting it to purposes outlined in the industrial plan and those necessary to ensure continuity, development, and strengthening of strategic assets, with an obligation to report annually on key financial metrics.
Cedacri challenged the decision before the first-instance court, the Administrative Tribunal of Lazio, contesting both the initiation of screening and the justification for the obligations. In 2024, the Tribunal upheld that FDI notification applies to pledges without immediate transfer of voting rights because they entail a change in “availability” of the assets of the company. According to the lower court, the creditor could still influence the company’s activity since shares were tied to debt satisfaction, and the creditor held certain rights, including judicial actions against shareholders, challenging resolutions and even profit entitlement. According to such ruling, deferring the FDI notification until enforcement would undermine preventive screening. Thus, the court required the notification at the creation of the pledges, regardless of voting rights transfer. This ruling was consequential, shaping the practice of notifying such financing transactions and considering pledgees as investors under the FDI screening legislation.
However, on 5 December 2025, the Council of State reversed the first-instance ruling, excluding any notification obligation – and thus any exercise of screening powers – when pledges are created without transferring voting rights until default. Below, we examine the key takeaways and why this decision is crucial for FDI law development.
Takeaways of the Council of State ruling on pledges
The Council of State emphasized that creating a pledge does not alter corporate governance until voting rights are actually transferred. This transfer is uncertain and future, not inevitable or current. Only upon default the obligation arises, as voting rights shift. In the case at hand, the parties had contractually agreed to notify in case of default, avoiding the automatic transfer of the voting rights. On these grounds, the Council of State excluded any obligation at pledge creation, maintaining notification only upon enforcement or voting rights transfer.
Since the Council of State ruled out Golden Power applicability altogether, the obligations imposed by the FDI Authority were nullified. The upper court did not assess whether such obligations were legitimate in pursuing the “reasonable management” of the company. Nevertheless, if financing itself is outside Golden Power rules, its management cannot be subject to authority-imposed constraints, and the matter is to be considered entirely beyond the law’s scope.
This outcome may seem favorable to operators, whose “reasonable management” escapes FDI oversight. Yet the situation is more nuanced: lenders demand assurances about enforcing guarantees, and the prospect of FDI notification introduces unavoidable risk. Notifying pledges upfront and obtaining a clearance at that stage seemed a mitigating measure for the outcome of the possible future enforcement screening. Following the 2025 ruling, lawmakers might consider amending the law to require notification at pledge creation for greater certainty. However, this seems impractical: the FDI Authority cannot anticipate changes between pledge creation and enforcement – whether in the lender (e.g., control shifts) or the pledged company (e.g., strategic activities). Thus, notification upon enforcement remains indispensable. Nor would a dual-notification system (creation and enforcement) meaningfully mitigate uncertainty: early notification does not anticipate an assessment on the future transfer of voting rights transfer. As the Cedacri case shows, a screening of the pledge creation risks entailing an oversight into the use of the loan rather than anticipation of the possible change of control of the company. Enforcement remains a future, uncertain event.
Why this ruling is fundamental for FDI screening
The first-instance court adopted a teleological interpretation of “availability” and notification triggers – that is, an interpretation based on the intended effects of the provisions – and extended them to any transaction capable of affecting strategic activities, in order to ensure effective oversight by the Authority. Whereas the Council of State counters this approach by observing, first, that deferring notification until enforcement does not compromise strategic interests, as share transfers remain subject to screening. More importantly, however, the ruling rejects the first-instance court’s interpretation by reaffirming the primacy of certainty and predictability, which require adherence to the literal meaning of the statutory provisions. Under this strict interpretation, FDI screening legislation aims at monitoring transactions affecting the control of strategic assets, and not any transactions concerning strategic assets.
Previous Italian case law has long insisted on strict interpretation and rigorous factual assessment of filing obligations, and yet it appears to have tolerated a degree of vagueness in the interest of efficiently safeguarding vital interests. The Council of State, instead, takes certainty seriously – making the crucial point that legal certainty cannot be sacrificed for public interest protection, even for national security. Drawing on scholarly commentary, the court warns that insufficiently rigorous verification of control prerequisites may lead to the use of FDI screening as an instrument of economic or industrial policy, i.e., dirigisme (see note 1). Vague norms and expansive interpretations do not enhance administrative efficiency. They foster misuse.
This reasoning extends beyond pledges, and the trend to broaden FDI laws for economic security is not unique to Italy. The Italian Authority’s practice reflected a systemic peculiarity, but the ruling resonates internationally, addressing the tension between administrative efficiency and legal vagueness. The court correctly identifies that certainty and efficiency are not in conflict: public security cannot justify indeterminate powers. FDI screening legislation, as a market-restricting public power, must remain proportionate – lest it become a tool for industrial policy.
Yet, more is needed: the ruling follows years of contrary practice and judgments expanding authority discretion. Taking certainty seriously does not only mean that courts must curb expansive practices and abandon deference to national security dominance. Risks of dirigisme must be neutralized at the legislative level – through precise, predictable powers – before judicial review. Robust FDI frameworks require rigorous, clear, and foreseeable rules. It seems that, under the reasoning of the ruling, the Court should have addressed the core issue of the Cedacri case, which is the use of indeterminate concepts like “availability”. Such broad terms, lacking a core meaning and open to teleological interpretation, create vast grey areas that enable authority overreach with judicial support and undermine certainty and predictability.
The ruling’s reference to CJEU case law condemning Italy for lacking predictable, proportionate criteria for FDI screening (decision of 26 March 2009, C-326/07) is telling – especially as the Commission appears poised to launch an infringement procedure. This reference to the proportionality principle is even more significant given our starting point: half of notifications are unnecessarily submitted. After years of chasing flexibility for security, notification obligations remain uncertain for both operators and public authorities, and the certainty of the regulations is the issue to address.
(1) Gemmi, 2022. Elements for a study of administrative discretion in FDI screening regulations: enforcing a threat-based model, Law and Economics Yearly Review, vol. 11, part 2, p. 94 – link.
