Update on Investment Screening – July 2021

Denmark – New Danish Investment Screening Regime enters into force

On July 1, the new Danish Investment Screening Act, adopted by the Parliament in May, entered into force. The objective of the new law is to prevent foreign investments executed after September 1 (as the law does not apply to investments prior to that date) from posing a threat to national security or public order in Denmark.

As in the past foreign direct investments in Denmark have been subject to only a few limitations, the Investment Screening Act introduces an entirely new regime. This regime consists of a sector-specific screening for investments in sensitive sectors requiring approval by the authorities as well as of a cross-sectoral screening for all the other sectors.

In addition to traditional sectors such as defense, the new law also classifies sectors such as critical technology (including artificial intelligence) as particularly sensitive sectors in relation to national security and public order.

For further information you can consult the legislative text in Danish here.

NB: The Danish Ministry for Industry, Business and Financial Affairs has promulgated three executive orders in order to define “particularly sensitive sectors” in greater detail, specify the information which needs to be provided for the screening process and establish confidentiality duties in relation to the information received. You may consult the procedural order here, the application order here or the confidentiality order here.

EU – Advocate General’s Opinion in Case C-638/19 P (Commission v European Food and Others)

According to Advocate General Szpunar, the General Court erred in law in concluding that the Commission was not competent to examine, in the light of the law on State aid, compensation paid by Romania following an arbitral award.

For further information on state aid, mutual trust, autonomy of EU law and time issues with regard to investment arbitration you can either consult the press release here or the entire opinion here.

Netherlands – Government amends Draft Foreign Direct Investment Regulation after criticism

The Dutch Government has amended the Investments, Mergers and Acquisitions Security Screening Bill presented last year after strong criticism by the Council of State. The Council of State found that the draft was lacking a thorough analysis of the various specific risks that the draft aims to address, and which measures are considered appropriate for which risks. Therefore, the draft was considered insufficiently clear and contrary to the principles of legal certainty and proportionality.

The Government made some significant changes to the draft and re-submitted it on June 30.

For further information on the draft, the legislative process and the above-mentioned criticism in Dutch you may click here.