Recent CJEU judgment: towards a restriction of the scope of foreign investment control regulation?
25 July 2023

The CJEU’s recent judgment of 13 July contains important clarification concerning the application of Regulation (EU) 2019/452 on the coordination of control mechanisms for foreign direct investment (“Regulation”) and the ability of Member States to exercise veto power.

The Court adopts a restrictive interpretation of the concept of foreign direct investment and narrows the Regulation’s scope of application, in fact going so far as to confine applicability to investments made directly by undertakings incorporated in non-European countries. In any case, the non-applicability of the Regulation leaves the scope of application of the various mechanisms under national legislation unaffected.

What impact will this restrictive interpretation have on national control mechanisms?

What conditions justify application of the limits that the fundamental freedoms of the internal market enshrined in the Treaties impose on the power of Member States to prohibit investments in strategic companies?

Our Golden Power Task Force breaks down the CJEU’s judgment and describes its impact here.