Last week, the Tánaiste and Minister for Enterprise, Trade and Employment announced that he had received Cabinet approval to publish the Screening of Third Countries Investment Bill (the Bill). It is hoped that the Bill will be published before the Oireachtas goes on summer recess later this month. The introduction of foreign direct investment screening legislation in Ireland has long been anticipated, with the drafting of legislation (then called the Investment Screening Bill) publicised back in September 2020.
According to the Tánaiste, the Bill will "give [Ireland] the power to intervene if a non-EU actor is seeking to make an investment which would threaten our security or public order". He went on to say that the new law is "an important safeguard, which I hope we never have to use".
Details of the Bill
Some details were provided by the Tánaiste in last week's press release.
Investments by non-EU entities (so-called 'third country investments') into Ireland will be subject to screening.
Screening measures will initially apply to transactions valued at €2m or above, but this threshold will be reviewed and may be revised by the Minister.
The investments subject to screening will include third country investments in technologies identified as ‘sensitive’ or ‘critical’ infrastructure (such as health services, the electricity grid, military infrastructure, ports and airports).
The legislation will include an appeals mechanism to ensure transparency and certainty for investors, while safeguarding security and public order.
Penalties, including fines of up to €4m or imprisonment, will apply if a company refuses to co-operate with the screening requirements.
The factors that will be considered when applying screening to particular foreign investments in Ireland will include the threat posed as a result of the target being acquired, the means of control being applied and the risk associated with the acquiring party.
The Bill has been developed partly in response to the EU's Regulation on foreign direct investment screening (the Regulation), which has applied across the EU since 11 October 2020. The Regulation did not introduce mandatory screening of foreign direct investments (FDI) into the Union, but all Member States, including Ireland, have obligations of cooperation and information-sharing.
We await publication of the Bill so that we can confirm the exact scope of the screening measures, but it's likely that the Bill draws from the Regulation in setting out the areas where screening may be required. In the Regulation, the targets of FDI which may trigger a need for screening include:
critical infrastructure (for example, energy, transport, water, health, communications, data processing or storage, aerospace, defence, electoral or financial infrastructure)
critical technologies and dual use items (for example, artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies)
supply of critical inputs, including energy or raw materials, as well as food security
access to sensitive information, including personal data, or the ability to control such information
the freedom and pluralism of the media
For further background on the proposed legislation, read our previous articles on the subject here and here.