CELIS Update on Investment Screening – December 2024
European Union – European Commission refers the United Kingdom to the Court of Justice of the European Union for failure to terminate intra-EU BITs
On 16 December 2024, the European Commission decided to refer the United Kingdom to the Court of Justice of the European Union (CJEU) for failing to terminate its Bilateral Investment Treaties (BITs) with six European Union Member States. The United Kingdom still has BITs in force with Bulgaria, Czechia, Croatia, Lithuania, Poland and Slovenia.
It has been the Commission’s long-standing position that BITs between EU Member States overlap and conflict with EU law. On 6 March 2018, the Court of Justice of the EU confirmed that position in case C-284/16 Achmea. The court ruled that investor-to-State arbitration under bilateral investment treaties between EU Member States is incompatible with EU law, as it calls into question the principle of mutual trust between Member States.
Subsequently, in their Declarations of 15 and 16 January 2019, all EU Member States, including the United Kingdom, committed to terminate such intra-EU BITs through a plurilateral treaty. Although the plurilateral treaty agreed between Member States on 5 May 2020 was open for the United Kingdom’s signature, the latter did not sign it.
The European Commission then sent a formal notice to the UK on 15 May 2020 for termination of intra-EU BITs and issued a reasoned opinion for the same on 30 October 2020. As per the EU-UK Withdrawal Agreement, the European Commission could commence proceedings upon this failure before CJEU until 31 December 2024.
On 29 November 2024, the United Kingdom Department for Business and Trade has announced its intention to terminate the intra-EU BITs. However, until today, the government of the United Kingdom has failed to do so.
The European commission’s decision to refer the United Kingdom to the CJEU for failure of terminating intra-EU BITs can be accessed here.
Netherlands – Dutch Government plans to expand investment screening mechanism to technology
The Dutch government is taking significant steps to bolster its national security by expanding its investment screening mechanism to cover a broader range of sectors. On 19 December 2024, the Dutch government announced its intention to expand the number of technologies that are subject to an investment screening obligation under the ‘Act on security screening of investments, mergers and acquisitions’ by proposing to amend the Decree.
Previously, the Dutch screening process was limited to specific industries like defense and telecommunications, but the new proposals recognize the growing risks associated with emerging technologies such as artificial intelligence, semiconductors, and cybersecurity. The expansion will also address concerns about foreign influence over high-tech firms that could lead to strategic vulnerabilities.
The new rules could have far-reaching implications for multinational corporations and venture capitalists seeking to invest in Dutch tech startups, as they may face longer approval timelines and stricter scrutiny. While the expansion is aimed at protecting national security, it also highlights the delicate balance between safeguarding innovation and maintaining an open investment climate. These changes reflect the Netherlands’ proactive stance in securing its technological future in an increasingly competitive global environment.
Spain – Transitional regime for foreign investments by EU/EFTA residents extended until 31 December 2026
Spain has announced an extension of its transitional regime for foreign investments by EU/EFTA residents, now valid until December 31, 2026. This extension continues the temporary suspension of certain investment screening requirements, allowing investors from EU and EFTA countries to avoid prior authorization for transactions in specific sectors.
The aim of the measure is to ensure a smoother market access and to encourage foreign investment while maintaining national security safeguards. This is particularly relevant for transactions in strategic sectors such as defense, energy, and telecommunications. The Spanish government has emphasized that this transitional regime will help maintain investor confidence while still allowing authorities to intervene when necessary to protect key sectors. For businesses and investors in EU/EFTA countries, the extended regime offers greater legal certainty and flexibility when planning cross-border investments in Spain.
The decision to extend the measure aligns with Spain’s broader efforts to enhance its economic competitiveness within the European Union.
Global – UNCTAD Investment Policy Monitor’s Issue Note on key trends and developments in Investment Laws
On 17 December 2024, the United Nation Trade and Development (UNCTAD) issued its Investment Policy Monitor (No. 29) on Investment Laws: Key Trends and Developments. It draws data from the UNCTAD’s Investment Policy Navigator up to 16 October 2024 to analyse key trends in the evolution of investment laws.
UNCTAD has identified 132 investment laws in force across 130 economies, the majority of which (125) were adopted after 1990. While earlier investment laws were foreign investors specific, recent decades showcase that they increasingly apply to all investors.
Investments laws show a growing reference to sustainability in their objectives, nearly 40% in the past decade as opposed to 5% prior to 1995. Investment laws also increasingly focus on investor’s obligations relating to environment, labour, CSR and public health. At present, around two-thirds of investment laws (84 laws) contain one or more provision outlining investors’ obligations.
The inclusion of incentives in investment laws has surged, appearing in 81% of laws enacted between 2015 and 2024. The share of incentives linked to targeted development goals rose from 44% before 1995 to 60% in the past decade.
Investment facilitation provisions are present in 48% global investment laws. Facilitation-related provisions include streamlining to simplify administrative processes and providing investors with one-stop shops, facilitation services for dispute prevention, administrative assistance, and transparency provisions.
Clauses granting the State’s consent to arbitration have become less common, appearing in just one-quarter of investment laws from the past decade, down from over half in earlier years. In contrast, provisions favouring domestic courts for dispute resolution now appear in over two-thirds of recent laws, up from less than one-third before 1995.
The Investment Policy Monitor’s Issue Note on key trends and developments in Investment Laws can be accessed here.
