EU Member State's Foreign Investment Screening Framework Under The CJEU's Lens

On the 13 July, 2023, the Court of Justice of the European Union ("CJEU"), delivered a ruling in the case of Xella Magyarország Építoanyagipari Kft. v. Innovációs és Technológiai Miniszter, that has shaped the way Regulation (EU) 2019/452 on Foreign Direct Investment (the "EU FDI Regulation") is to be interpreted. By means of this judgement, the CJEU has determined that the EU FDI Regulation does not apply to investments made by companies registered in an EU Member State, even where these are controlled by a third country investor and that such investments should not be blocked unless this is mandated on genuine grounds of public policy, public security or public health. The CJEU held that otherwise, such a restriction would violate the principle of freedom of establishment which is enshrined under Article 49 of the Treaty on the Functioning of the European Union ("TFEU").