The EU Law Working Group hosts the second instalment of CJEU in Focus.
This series aims to allow researchers to learn about and discuss important judgments recently delivered by the Court of Justice of the EU. One or two expert discussants will set the scene by presenting their opinion on the judgment, followed by a discussion with the attending researchers. Starting next January, CJEU in Focus will happen once in the last week of every month, depending on suggestions from members of the EUI community. Do not hesitate to contact the EU Law Working Group with ideas of judgments that you would like to discuss.
About the judgment:
In 2021, Hungarian investment screening authorities prohibited the purchase of a Hungarian company in the construction sector on the grounds of national interest and security. Expanding the foreign ownership of companies in the construction sector could endanger the long-term security and foreseeability of the supply of strategically important raw materials, they argued. The buyer, a Hungarian based company part of a complex company structure through Germany, Luxemburg and the Bermudas, appealed the decision in front of a Hungarian court, which referred the case to the CJEU.
The judgment is part of a larger trend concerning foreign economic influence in the internal market. It deals with the Regulation (EU) 2019/452 on Foreign Direct Investment Screening, noting that the foreign ownership structure of a company incorporated in Hungary does not make it a "foreign investor". While rejecting to pierce the corporate vail at first, the Court goes on to find a sufficient cross-border element in the parent companies for the application of fundamental freedoms, nonetheless. Dealing with the screening decision under the freedom of establishment – and denying the applicability of the freedom of capital movement –, the Court recalls its settled case-law of the past in order to reject the supply chain arguments. This is in stark contrast to the Advocate General’s Opinion, which opens with: "[20 years ago], concepts like 'friend-shoring' or 'outbound investment screening' […] would certainly have been deemed dirty by the convinced globalisationist. Now, however, those concepts are set to shape the European Union’s new trade policy objectives. The world has changed…" (paras. 3–5).
The judgment may be of particular interest for researchers working on the intersection of trade and security, the fundamental freedoms of movement and the geopolitical shift in EU's trade policy.
The EUI European Union Law Working Group is a forum where EUI members, external researchers, and practitioners working on European Union law discuss their work and interact with other scholars. All interested fellows, PhD researchers, professors and visiting academics are invited to participate.