Foreign direct investment policies around the globe continue to adjust to the changing geo-political environment. In particular, the US and the European Union as well as certain Member States are in the process of revising their investment screening regimes, including the introduction of new tools such as outbound investment screening and the European Foreign Subsidies Regulation. Generally, the focus of these policy adjustments is on Chinese investments.Continue Reading The evaluation of the German FDI Regime – Cornerstones of potential revisions revealed
Investments in Luxembourg entities closed after September 1, 2023—including those signed beforehand—will need to factor in potential FDI filings in the Grand Duchy. The Luxembourg FDI law establishes a mandatory screening system for non-EEA investments made on a lasting basis in legal entities incorporated in Luxembourg and carrying out critical activities. Luxembourg follows in the footsteps of its Benelux counterparts that introduced new FDI regimes in the past two months.Continue Reading Benelux FDI: Luxembourg FDI Screening Regime Enters Into Force
More than halfway through 2023, there is no easing in sight on the FDI front.
- The game-changing EU Foreign Subsidies Regulation took effect. The first legislation of its kind ever entered into by a trading bloc.
- FDI regimes in two key EU jurisdiction, The Netherlands and Belgium, have come into force, introducing far reaching screening mechanisms.
- At the same time, the ECJ renders a decision that has the potential to counteract overly extensive FDI review practices of EU Member States.
- Current practice trends and policy developments in the EU and on national level foreshadow tighter scrutiny of foreign direct investments in Europe.
Since the current Italian cabinet was sworn-in in October 2022, it has applied the Italian foreign direct investment (“FDI”) regime in a few relevant cases, which appear to be the bellwether of the new government’s approach to FDI review.Continue Reading Italian FDI, When the Government May Rewrite Corporate Governance
The first few months of 2023 have seen significant developments in the FDI landscape that will have a major impact on cross-border transactions. Deal makers need to be aware that the scope of FDI control is increasing:
- With the United States taking major steps towards implementing an outbound FDI screening mechanism (which are echoed in Europe) and the European Commission further developing the EU Foreign Subsidies Regulation, new game changing regulatory frameworks take clearer shape.
- Following the EU Commission’s calling of recent years, by the end of the year almost all EU member States will have adopted a national FDI screening regime.
- On 27 April 2023, the UK Government published updated guidance that reflects its developing practice. Since January 2022, five transactions have been prohibited and 10 deals have been cleared subject to remedies.
On 27 April 2023, the UK Government published updated guidance on its recently introduced national security and investment screening regime.Continue Reading UK National Security Regime: Enforcement Practice and Updated Guidance
Foreign direct investment (“FDI”) control has historically been centred on inbound FDI, meaning investment inflow into a country. The tide is turning, as the United States seems ready to introduce an outbound FDI control mechanism, whereby capital outflow towards certain countries will be subjected to a screening process. Similarly, the European Commission (“Commission”) 2023 Work Programme indicates that the EC will “examine whether additional tools are necessary in respect of outbound strategic investments controls”, and is “prepared to revise the EU’s FDI screening regulation.”Continue Reading Outbound Investment Screening Regime—EU May Follow In U.S. Footsteps
Cleary Gottlieb partner Chase Kaniecki, associates Samuel Chang, Pete Young, William Dawley, and law clerk Stephanie Gullo co-authored the United States chapter in Lexology Getting the Deal Through: Foreign Investment Review 2023.
In addition to the maritime services ban targeting Russian Federation-origin crude oil, which we wrote about here, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) recently has taken actions related to, and having implications for, the international oil sector. Certain of those actions suggest a potential easing of oil sector-related sanctions on Venezuela while others show a continued focus on the Iranian oil sector.Continue Reading Recent OFAC Actions Related to the Oil Sector
On December 29, 2022, President Biden signed into law the Consolidated Appropriations Act, 2023 (the “Bill”), which allocated approximately $1.7 trillion in federal funding to various government agencies, including the U.S. Department of Commerce (“Commerce”) and the U.S. Department of the Treasury (“Treasury”).Continue Reading Potential Outbound Investment Screening Regime Receives Federal Funding