A Ground-Breaking Ruling In The Xella Hungary Case

In a recent judgment in Case C-106/22, the Court of Justice of the European Union (CJEU) ruled that under one of Hungary's foreign direct investment screening regimes the objective of securing a regional supply of gravel, sand and clay for the construction industry cannot justify restrictions on freedom of establishment. The CJEU declared that this objective is not a fundamental social interest that could justify such restrictions on the grounds of public policy or public security.

Xella Hungary, a Hungarian producer of construction concrete, whose parent company is based in Bermuda and whose beneficial owner is an Irish citizen, was at the centre of this legal milestone. It sought to acquire its supplier Janes & Társa, a company mining gravel, sand and clay (essential raw materials for the construction industry), also registered under Hungarian law.