Controlling Foreign Direct Investment in the Wake of the COVID Pandemic: Enhanced and Supplementary Screening Procedures among EU Member States

The article explores the profound impact of the COVID-19 pandemic on international investment law, with a focus on how this global health crisis reshaped the regulation of Foreign Direct Investment (FDI). It argues that the pandemic served as a catalyst for governments to reassess and fortify their national security and economic stability frameworks, particularly in relation to critical industries such as healthcare and technology. The economic disruptions caused by the pandemic—including recessions, reduced consumer spending, and supply chain interruptions—exposed vulnerabilities in many sectors. These challenges prompted the rapid evolution and tightening of FDI screening mechanisms worldwide, reflecting a shift towards prioritizing the protection of strategic industries while maintaining an open investment environment. In the European Union, Regulation 2019/452 emerged as a cornerstone of the FDI regulatory landscape during the pandemic. This framework aimed to harmonize the screening practices of EU member states, fostering cooperation and establishing minimum standards for reviewing foreign investments. Despite this effort, significant disparities persist among member states regarding how these mechanisms are implemented, highlighting the complexity of aligning national security interests within a unified market. The pandemic also underscored the growing importance of strategic autonomy, particularly in safeguarding critical supply chains and sectors essential to public health and technological advancement. The geopolitical context further amplified the regulatory momentum. The health crisis accelerated pre-existing concerns about foreign investments from state-owned enterprises and non-EU countries, particularly China and Russia. These investments were increasingly viewed through the lens of national security, with heightened scrutiny over their potential to compromise critical assets or disrupt economic stability. This trend reflects broader global tensions and a recalibration of economic policies to address both immediate threats and long-term strategic challenges. Overall, the article highlights a dynamic tension between the need to remain open to foreign investments as drivers of economic growth and innovation, and the imperative to safeguard national security and economic resilience. The pandemic has reinforced the role of FDI screening as a key policy tool, with regulatory frameworks evolving to address emerging risks. Moving forward, the balance between openness and security is likely to remain a central theme in the governance of international investments.