Between Openness and Control: FDI Screening in the Czech Republic
(2026) JAEM01 20261Faculty of Law
Department of Law
- Abstract
- The screening of foreign direct investment (FDI) has emerged as one of the most contested points of intersection between the interests of national security and the free movement of capital under Article 63 TFEU. Within this evolving regulatory landscape, the Czech FDI Screening Act introduces a residual cate-gory of investments that, while falling outside the scope of mandatory screening, remain subject to two mechanisms of considerable reach: the quasi-voluntary consultation proceedings before the Ministry of Industry and Trade (MIT), and a five-year retroactive call-in power exercisable on the Ministry's own motion. Although formally framed as procedural safeguards in the service of public policy and public security, their compatibility... (More)
- The screening of foreign direct investment (FDI) has emerged as one of the most contested points of intersection between the interests of national security and the free movement of capital under Article 63 TFEU. Within this evolving regulatory landscape, the Czech FDI Screening Act introduces a residual cate-gory of investments that, while falling outside the scope of mandatory screening, remain subject to two mechanisms of considerable reach: the quasi-voluntary consultation proceedings before the Ministry of Industry and Trade (MIT), and a five-year retroactive call-in power exercisable on the Ministry's own motion. Although formally framed as procedural safeguards in the service of public policy and public security, their compatibility with the proportionality require-ment of Article 65 TFEU has yet to be subjected to focused doctrinal analysis.
The present thesis addresses that gap. Adopting the doctrinal legal research method, together with its European legal method derivative, it examines the two mechanisms against the standards of restriction developed by the Court of Jus-tice of the European Union (CJEU) and the three-step proportionality test con-sistently applied, inter alia, under Article 65 TFEU. The analysis draws upon Czech national law, EU primary and secondary law, the case law of the Court, and the broader international scholarly debate on FDI screening within the Un-ion.
It is argued that both mechanisms constitute restrictions on the free movement of capital and that, although suitable for pursuing a legitimate security objective, neither satisfies the necessity requirement. The consultation proceedings operate as a de facto mandatory regime in the absence of objectively defined notification thresholds, while the retroactive review power generates legal uncertainty in-compatible with the requirement of foreseeability, owing in particular to the absence of any subjective limitation period running from the moment the MIT becomes aware of the investment. The thesis concludes that, in their present form, the two mechanisms amount to disproportionate restrictions on the free movement of capital that cannot be justified under Article 65(1), point (b) TFEU. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/student-papers/record/9230581
- author
- Kubicky, Lukas LU
- supervisor
- organization
- course
- JAEM01 20261
- year
- 2026
- type
- H1 - Master's Degree (One Year)
- subject
- language
- English
- id
- 9230581
- date added to LUP
- 2026-06-08 16:10:50
- date last changed
- 2026-06-08 16:10:50
@misc{9230581,
abstract = {{The screening of foreign direct investment (FDI) has emerged as one of the most contested points of intersection between the interests of national security and the free movement of capital under Article 63 TFEU. Within this evolving regulatory landscape, the Czech FDI Screening Act introduces a residual cate-gory of investments that, while falling outside the scope of mandatory screening, remain subject to two mechanisms of considerable reach: the quasi-voluntary consultation proceedings before the Ministry of Industry and Trade (MIT), and a five-year retroactive call-in power exercisable on the Ministry's own motion. Although formally framed as procedural safeguards in the service of public policy and public security, their compatibility with the proportionality require-ment of Article 65 TFEU has yet to be subjected to focused doctrinal analysis.
The present thesis addresses that gap. Adopting the doctrinal legal research method, together with its European legal method derivative, it examines the two mechanisms against the standards of restriction developed by the Court of Jus-tice of the European Union (CJEU) and the three-step proportionality test con-sistently applied, inter alia, under Article 65 TFEU. The analysis draws upon Czech national law, EU primary and secondary law, the case law of the Court, and the broader international scholarly debate on FDI screening within the Un-ion.
It is argued that both mechanisms constitute restrictions on the free movement of capital and that, although suitable for pursuing a legitimate security objective, neither satisfies the necessity requirement. The consultation proceedings operate as a de facto mandatory regime in the absence of objectively defined notification thresholds, while the retroactive review power generates legal uncertainty in-compatible with the requirement of foreseeability, owing in particular to the absence of any subjective limitation period running from the moment the MIT becomes aware of the investment. The thesis concludes that, in their present form, the two mechanisms amount to disproportionate restrictions on the free movement of capital that cannot be justified under Article 65(1), point (b) TFEU.}},
author = {{Kubicky, Lukas}},
language = {{eng}},
note = {{Student Paper}},
title = {{Between Openness and Control: FDI Screening in the Czech Republic}},
year = {{2026}},
}