Protecting the Crown Jewels: Covid-19 and the EU Foreign Direct Investment Screening Regulation

By Thomas Verellen

Covid-19 represents a shock to global capital flows. As companies see the value of their assets tumble, they may become attractive targets to foreign investors – in particular, state-backed foreign investors less exposed to the economic fallout of the pandemic. To address what has been described as ‘opportunistic investment behaviour’ and – less euphemistically – ‘predatory buying’ practices, jurisdictions with well-established foreign investment screening mechanisms such as Australia and Canada have tightened scrutiny: the Australian government has reduced the value threshold for screening of all foreign investments to zero dollars, and the government of Canada has announced it will subject public health related investments and all investments by state-owned investors, regardless of their sector of activity, to enhanced scrutiny.

For the European Union, Covid-19 came at an interesting time. The EU recently introduced its own FDI screening framework – a mechanism which leaves the ultimate decision-making power over individual investments with Member State screening authorities, but which sets up a framework for cooperation between EU and Member State authorities. The framework will go live on 11 October 2020 and thus was not operational when the pandemic hit in the spring of 2020. Against this backdrop, this blog post explores how the EU has responded to the Covid-19 crisis and in particular to the aforementioned risk of predatory buying that flows from the pandemic’s impact on asset prices. Given the multi-level set up of the EU’s approach to FDI screening, an analysis of the EU response to this risk needs to take into account developments at both the EU and Member State levels. This blog post focusses on the EU side of the equation.

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Not letting the COVID-19 crisis go to waste, ensuring the effective enforcement of the European value of the rule of law in Hungary during times of Corona

By Kees Cath

In this post Kees Cath argues in respect to the situation in Hungary that the European Commission should act without any delay to prevent further rule of law backsliding. The opinions expressed in this article are the author’s own point of view and do not represent the government’s official position.

Orbán an unlikely student of Jean Monnet?

“People only accept change when they are faced with necessity and only recognize necessity when crisis is upon them.”

Paraphrased, Jean Monnet seemed to underline the age-old adagio “never waste a good crisis”. There have been plenty of crises within the EU. Over the past few years the Union is engaged in what seems addressing one crisis after the other, from the Euro-crisis to the migration-crisis and from the Brexit-crisis to the Corona-crisis.

Yet there seems to have been one European leader – though not evidently a student of Jean Monnet – that ironically did follow this advice scrupulously, yet erroneously. The changes instituted by the Orbán government are more far reaching, and have the effect of (further) undermining the Hungarian democracy. By amongst others declaring a state of emergency, ruling by decree indefinitely – with only the Fidesz two-thirds majority in parliament to provide for a possible check or reverse – Orbán has effectively legalized his (informal) hold over the Hungarian state. Within a package of already far reaching emergency measures the high penalties for spreading ‘fake news’ stand out as particularly disheartening. Even if no journalist is (ever) sentenced, the chilling effect on an already crippled media landscape, can be further reason for alarm. With Hungary effectively in lock-down, public demonstrations against the measures, as were visible against the 2018 elections or the 2019 ‘slave law’, seem impossible. So what has happened and who has been able to respond, and if so in what way?

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How Covid-19 reveals the tensions between the EU’s Single Market and the protection of public health

By Sybe de Vries

Erst kommt das Fressen, dann kommt die Moral (Bertold Brecht, 1928)

During these almost surreal weeks questions were frequently raised in the media and in politics why the EU Member States (and globally) have adopted different measures and strategies to contain the spread of the Corona virus. Especially within the context of the EU one may have expected a common approach to fight Covid-19. On the contrary, some even argued that Corona rather reveals the relatively poor status of European cooperation.

The problem in Europe is that the field of health is in principle a matter for the Member States. In most cases the EU could only adopt supportive action. Whereas paragraph 1 of Article 168 TFEU reiterates that a high level of health protection shall be ensured in the definition and implementation of all Union policies and activities, paragraphs 5 and 7 stipulate that harmonisation of national laws to protect and improve human health is excluded, and that management, organisation and delivery of medical care and health services are a matter and responsibility for the Member States. In other words, according to Article 6 TFEU, the protection and improvement of human health belongs to the EU’s supplementary competences.

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Obligations to accommodate irregular migrants: will the local bed-bath-bread facilities survive?

By Paul Minderhoud

1. Introduction

Thousands of irregular migrants reside in the Netherlands. This number includes migrants who have exhausted all legal remedies and whose claim to stay is rejected and therefore must leave the Netherlands on their own initiative. Since 2019, those who do not immediately do so can – for a certain period – be accommodated in one of the five recently established National Aliens Facility locations (Landelijke Vreemdelingenvoorzieningen, LVV) in Amsterdam, Rotterdam, Utrecht, Eindhoven and Groningen, supervised by the Repatriation & Departure Service of the Ministry of Justice and Security in cooperation with municipalities. These LVVs are an addition to the so-called central freedom-limiting location (Vrijheidsbeperkende Locatie, VBL), based in Ter Apel and are currently still in a pilot stage. It is the intention to extend the number of LVVs to eight locations. Migrants who are accommodated in these LVVs will have to cooperate in finding a lasting solution to their situation, which in most cases means they have to return. The existing local bed-bath-bread facilities in these municipalities and, in time, in all municipalities, must be closed. But is this closure possible in light of international obligations? Do the plans really result in ending this form of municipal facilities?

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Implementing the right to erasure: the judgment of the EU Court of Justice in Google v CNIL

By Cedric Ryngaert and Mistale Taylor

On 24 September 2019, the Court of Justice of the EU (CJEU) rendered its judgment in Google v CNIL on the geographic scope of implementation of the right to erasure (also known as the right to be forgotten or the right to be de-referenced). The judgment has received substantial media coverage (see, e.g., here and here), but press reports have paid little attention to its legal nuances. This blogpost provides such legal analysis, and reflects on the jurisdictional aspects of the judgment,in particular on the territorial reach of decisions to de-reference search results. The post argues that the CJEU deserves credit for displaying jurisdictional reasonableness, and on that basis rejecting an obligation for search operators to de-reference search results on all versions of their search engine. However, the CJEU pays conspicuous deference to EU Member State authorities, and gives little specific guidance as to how exactly these authorities are to determine the scope of implementation of the right to erasure.

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The European Citizens’ Initiative – Direct Democracy as a parallel to parliamentary democracy?

By Hanneke van Eijken and Simona de Heer

EU citizens have a political right to submit an initiative for new legislation to the European Commission. This is called the European citizens’ initiative, enshrined in Article 11 TEU, and further regulated in Regulation 211/2011. This form of direct, participatory democracy could be seen as a tool to foster citizen participation and to bring the EU closer to its citizens. It was introduced in the Lisbon Treaty as a response to even out the EU’s democratic deficit. Recent citizens’ initiatives cover issues as climate change, education for children with disabilities and evaluation mechanisms to see whether Member States adhere to European values.

From a regulatory perspective it is interesting to see whether regulation of direct democracy through the introduction of the EU citizens’ initiative is an effective tool for strengthening democracy and where its pitfalls lie. Since its introduction the citizens’ initiative has been subject to criticism as to its effectiveness. Currently, the European citizens’ initiative is being reformed. This raises questions about the effectiveness of the reformed citizens’ initiative and how it relates to parliamentary democracy. First, the weaknesses of the current citizens’ initiative will be discussed. Secondly, the reform and its achievements will be elaborated on. Finally, the relationship between parliamentary democracy and direct democracy will be examined.

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The Reform of the Common European Asylum System: Between Recast and New Regulation

By Salvatore Nicolosi

Twenty years after the European Council of Tampere that in 1999 set out the political roadmap to establish a Common European Asylum System (CEAS), the European Union and its Member States still struggle to design a solid and future-proof system. The migratory pressure on the EU increases the need for effective responses. With more than 1 million people reaching Europe in 2015 and more than 18,000 drowning at sea in the period between 2014 and 2019, a solid asylum system becomes all the more urgent.

The reform of the CEAS certainly constitutes a relevant context to reflect on the dynamics of regulation in a particular sensitive area of European integration. Nonetheless, a closer look at the ongoing reform illustrates how this lays behind the actual way forward to the realisation of the goals established in Tampere twenty years ago.

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Brexit and the ways forward for the UK and EU agencies

By Lisette Mustert, Béla Strauss, Miroslava Scholten and Matthew Wood

Brexit raises the question of which way forward for the UK in its relationship with the EU and with EU agencies. For future research and legislative design, this in turn raises a more fundamental question of when which type of agreement between a third country and EU agencies is appropriate, in light of factors such as salience and the interests on both sides. Having analysed all EU agencies’ founding acts, we show in this post that there are three types of formal relationships that exist at this moment between EU agencies and other countries: full membership, observership and cooperation. We argue that the type of this relationship would vary for the UK depending on the score of ‘Brexit salience’, a concept that we introduce. The higher the ‘Brexit salience’ rating is, the more formal the arrangement – full membership or observer – the UK (and the EU) would need to have with an EU agency. According to our scores, this would concern the European Medicines Agency (EMA) and the European Aviation Safety Agency (EASA). In the case of EU agencies that score low on our salience rating, the UK (and the EU) would want to opt for a relatively limited form of cooperation with EU agencies. This would be the case for Cepol, EIGE, ACER, Frontex and CPVO. Surprisingly, the seemingly highly salient agency in the public debate – the European Border and Coast Guard Agency (also known as Frontex) – scores the joint lowest rating. How is this possible, when for the UK immigration is so important during the Brexit vote? It is because, first, our Brexit salience measures do not focus on what is salient in general for the British or European public. Rather, we are concerned with practical matters of policy implementation. As a matter of policy, Frontex has a clear and well-resourced opposite agency – the UK Border Agency – and its operation does not affect a discrete and well-defined policy area.

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EU-Japan Economic Partnership Agreement: Data Protection in the Era of Digital Trade and Economy

By Machiko Kanetake and Sybe de Vries

On 12 December 2018, the European Parliament approved the EU-Japan Economic Partnership Agreement (EPA) which the parties have been negotiating since April 2013. The Agreement, sometimes called as the “cars-for-cheese” deal in a symbolic sense, aims to vitalize economies which represent approximately 30% of global gross domestic product. The Commission presented the final text to the Council on 18 April 2018, which authorized, on 6 July, the signing of the deal. The parties have signed the agreement on 17 July, and, on 8 December 2018, the National Diet of Japan approved the agreement. In light of the Court of Justice’s Opinion 2/15 on the EU-Singapore Free Trade Agreement, the Commission assumes that the EU-Japan EPA does not require ratification by individual EU member states since the agreement is within the EU’s exclusive competence. Investment protection standards and investment protection dispute resolution, which fall under shared competences, have been subject to separate negotiations. The EPA, which is expected to enter into force on 1 February 2019, is arguably the biggest trade-related achievement of the current Commission, which ends its mandate in 2019.

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