Foreign direct investment screening: between Scylla and Charybdis




foreign direct investment screening, foreign investor, national security, European integration, Regulation 2019/452.


Introduction. Foreign investments can be both a condition for prosperity in the recipient state and carry significant risks for national interests and economic security. That is why the unconditional openness to international investments declared by the states of the world is compensated by mecha­nisms for managing the corresponding risks, which most often take the form of screening mechanisms for foreign investments.

Problem. The conflict between considerations of necessity, the quality of foreign investments, and considerations of national security and public order is Scylla and Charybdis for modern legislators who are trying to build balanced mechanisms of state control. But domestic scientists do not pay enough attention to this issue.

The aim of the article: changes in the direction of policy formation of Ukraine regarding the introduction of screening of direct foreign investments through the prism of the practice of the European Union and ensuring its own national interests.

Results. Developed and developing countries have introduced new or strengthened existing screening mechanisms for foreign direct investment, establishing new regulatory requirements for investors, expanding the range of economic sectors subject to monitoring, and providing additional powers to regulatory authorities. The main criteria for screening foreign direct investments - national security and public order are given a new and expanded interpretation in different jurisdictions, which carries the risks of increasing the volume of foreign investments.

Conclusions. Screening mechanisms of direct foreign investments are traditionally built on the principles of transparency, non-discrimination, reasonableness, objectivity, and confidentiality, which allows to neutralize to a certain extent the negative effect of such a regulatory obstacle. Ukrainian legislators have at their disposal significant foreign experience in the introduction of foreign direct investment screening and can implement best practices and protect Ukraine’s national interests. The introduction of the foreign direct investment screening mechanism is accompanied by certain challenges and risks, to overcome which thorough project work and highly professional training of personnel for the implementation of the foreign direct investment screening mechanism is necessary.

Author Biographies

Nataliia MAZARAKI, State University of Trade and Economics

Doctor of Sciences (Law), Professor, Head of the Department of International, Civil and Commercial Law

Yuliia HONCHAROVA, State University of Trade and Economics

PhD (Law), Dean of Faculty of International Trade and Law


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How to Cite

MAZARAKI Н., & HONCHAROVA Ю. (2022). Foreign direct investment screening: between Scylla and Charybdis. oreign rade: onomics, inance, aw, 123(4), 4–16.