The EU FDI screening regulation and international investment law: between sovereignty and investor rights [Articol]

Abstract

This article examines the European Union’s evolving framework for screening foreign direct investment (FDI), focusing on the legal and institutional tensions between the EU FDI Screening Regulation (Regulation (EU) 2019/452) and international investment law (IIL). Introduced to address growing concerns over security risks posed by foreign—particularly state-backed—investments, the Regulation grants broad discretion to Member States while promoting a cooperative EU-level approach. However, this flexible structure has led to fragmentation, legal uncertainty, and inconsistent application across the internal market. The article analyzes the Regulation’s procedural design, national discretion, and rationale for reform in light of recent institutional critiques. It further explores the compatibility of the EU screening regime with treaty-based investor protections, focusing on the scope of pre- and post-establishment rights, as well as the role of exclusion clauses, carve-outs, and security exceptions in limiting state liability. Ultimately, the article argues that while investment screening is a legitimate regulatory tool, its design and implementation must be carefully aligned with international legal obligations to preserve both strategic autonomy and legal predictability in the EU’s investment landscape.