White & Case partner Orion Berg commented in IFLR on the recent Xella Magyarország ruling and its consequences for European foreign direct investment screening regulations.
Berg said that the judgment isn't ground-breaking when stating that FDI screening should not be employed solely for economic motives. "However it's an important reminder against the protectionist temptation. It's not appropriate, for instance, to use it merely as a shield for preserving jobs."
"The ruling can be interpreted as suggesting that there might need to be a stronger justification for applying FDI screening to purely commodity sectors compared to more sensitive, technology-driven fields," said Berg. "Nevertheless, categorisation can vary from one country to another and from time to time."
Berg concluded: "This area is constantly evolving, often for valid reasons. The challenge lies in its inherently subjective nature; what might not be critical today could very well become so tomorrow. It underscores the need for measures to constrain unfettered movement."
The full article is online here (paywall).
Further information about the Xella Magyarország ruling can be found here.
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