Facilitating and Scrutinizing National Security Measures: Analysis of an Investment Screening Case in the European Union

Abstract

In the current context of global affairs, geopolitical strategies blend into economics, with a slew of new regulatory measures reflecting this trend, among which are mechanisms for the screening of foreign direct investment. The shift in attitude towards economic relations poses a number of challenges to the rule of law, as national security considerations allow for a wide margin of appreciation from the part of states as to what constitutes a threat. Investment screening allows for unilateral measures to contain such threats, whether genuine or perceived, which may ultimately frustrate business ventures. The paper aims to explore the consequences of such a unilateral state measure through the prism of a case from Hungary. The case of VIG’s acquisition of AEGON Group’s subsidiaries shines a light on the effectiveness of the remedies economic actors have against screening decisions, and how such decisions are scrutinized by the EU. The paper argues that the swiftness with which states are able to act is not matched by the effectiveness of the remedies investors are provided with, frustrating business plans. This may prompt investors to seek compensation for their losses through international arbitration.

Keywords: investment screening; European Union; Hungary; VIG AEGON; merger; national security