Safeguarding Croatian Strategic Industries Within the Scope of the EU Foreign Direct Investment Regime

Keywords: European Union, foreign direct investment, Regulation (EU) 2019/452, screening mechanisms, CEE countries, Croatia, Foreign Trade and Payments Act


A European Union (EU)-wide screening regime entered into force in October 2020, marking the turning point in the Member States’ investment relations with third countries, most notably, the emerging economies of the Far East. Most Central and Eastern European (CEE) states have recently embraced novel screening solutions; some legislative proposals are still pending in a few states. These regulatory changes are the result of the socio-economic turmoil caused by the COVID-19 epidemic, which threatens a major fire sale of resources that are deemed critical for the Member States’ national security and public order. In this paper, the authors examine the existing screening mechanisms regarding foreign direct investment (FDI) in five EU countries: Austria, Germany, Hungary, Slovenia, and Poland. Given the apparent lack of comprehensive FDI screening mechanisms in Croatia, the authors consider that the findings of this comparative analysis could help Croatian legislator establish a comprehensive legal regime for FDI pouring into Croatian strategic industries. This paper argues that Croatia should introduce novel screening mechanisms along the lines of the Germanic legal tradition, most notably, the CEE and the German foreign trade and payments law. The authors suggest potential solutions de lege ferenda that would fit the scope and objectives of the screening regulation. Following the introduction, the second section of the paper glances through FDI screening mechanisms in four CEE countries. In the third section, the paper revisits the existing Croatian legislation on FDI control. The fourth section considers possible amendments thereof within the context of the German foreign trade and payments law. The fifth section summarises and concludes the paper.