The Evaluation of the German Fdi Regime—cornerstones of Potential Revisions Revealed

• Citation: Vol. 1 No. 1
• Publication year: 2024

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Mirko von Bieberstein and Lukas Nigl ^*

In this article, the authors discuss Germany's efforts to revise its legal framework for foreign direct investment screening.

Foreign direct investment (FDI) policies around the globe continue to adjust to the changing geo-political environment. In particular, the United States 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.

On the EU Member State level, Germany is among the more active jurisdiction leading the initiative. In early 2023, the German government issued its China strategy, among other things focusing on the treatment of Chinese foreign investments in Germany. The strategy anticipated changes of the German FDI regime but did not include more specific statements in this regard.

In the meantime, it seems the German Federal Ministry of Economy and Climate Action (BMWK), the authority leading FDI reviews in Germany, is progressing in its efforts to revise the legal framework for FDI screening in Germany. An outline of what potential revisions could look like has now been reported in the press. ¹ The following provides an overview of the cornerstones according to the press reports. ²

Introduction of a Standalone Investment Screening Law

The FDI rules shall be consolidated into one investment screening law.

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Currently, the German FDI regime is governed by various laws and ordinances. One consolidated body of rules could lead to more consistency and therefore certainty, avoiding many of the cross-references to other rules that unnecessarily complicate the application of the German FDI regime in practice.

Tighter Scrutiny for Certain Core Sectors and Critical Infrastructure

Foreign investments in sensitive sectors shall become subject to stricter regulation. This shall in particular comprise "classic" critical infrastructures as well as artificial intelligence, semiconductors, cloud computing, cybersecurity, and raw materials. In order to increase scrutiny of investments in such sectors, it is contemplated to broaden the scope of each sector and thereby addressing an increasing number of transactions. Further, the BMWK will assess whether additional specific sensitive sectors shall be introduced to the FDI rules in...