In recognition of the need to protect Ireland’s critical technology and infrastructure from potentially harmful foreign investment, this week the Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar TD received Government approval to publish a new law which will allow Ireland screen investments from non-EU countries for the first time.
The new law will introduce an investment screening mechanism, allowing the Minister for Enterprise, Trade and Employment to evaluate whether an investment poses a threat to Ireland’s security or public order and the powers to put a halt to such investment, if he or she deems it necessary. It will also result in better information sharing and co-operation with other European states.
The Tánaiste said:
“We are a small, open economy. We work hard to create an environment which is welcoming to foreign direct investment. This will be even more important now as we recover from the pandemic and as we face increased competition for investment globally. However, it would be naïve to think that Ireland is immune to those with more sinister intentions. This new law is to give us the power to intervene if a non-EU actor is seeking to make an investment which would threaten our security or public order. Other EU countries are introducing similar legislation, so we will be able to better act in co-operation with them. I think it’s an important safeguard, which I hope we never have to use.”
The Bill has been developed partly in response to the EU Investment Screening Regulation (EU) 2019/452 which is in turn, a response to the growing concerns amongst Member States regarding the purchase of strategic European companies by foreign-owned firms, and in certain cases, state-owned firms.
While any screening of investments can only be conducted by Member States, at their own discretion, with individual Member States deciding exclusively whether any action is called for, this Bill will ensure that Ireland remains aligned with both EU and global best practice in the area of national security and investment - currently, 18 out of the 27 EU Member States operate domestic investment screening mechanisms, with the majority of other Member States indicating their intention to move towards implementing an investment screening mechanism.
Based on ownership and transaction value criteria, third country investments in technologies identified in law as ‘sensitive’ or ‘critical’ infrastructure such as our health services, our electricity grid, military infrastructure, ports and airports will be screened. The current transaction value threshold is set at €2m but this will be reviewed and can be revised by the Minister if required.
The law sets out the factors that will be considered when applying screening to particular foreign investments (i.e. the threat posed as a result of the target being acquired, the means of control being applied, or the risk associated with the acquiring party).
There will also be an appeals mechanism to ensure transparency and certainty for investors, while safeguarding security and public order.