Legal Analysis Of The French Security-Related Screening Mechanism For Foreign Investment

In recent years,protectionism and unilateralism have impeded the free flow of capital on a global scale.In 201 8,starting with the release of the Section 301 investigation report on China by the U.S..the Western countries have successively started a new round of reform and enhancement of their foreign investment security review systems.As a representative of the protectionist camp within the EU,French security-related screening mechanism for foreign investment dates back to the 1960s.Since 2005,the security-related screening mechanism for foreign investment has been improved through several rounds of revisions and has become one of the most stringent systems in the EU.What is even more remarkable is that France seems to have struck a delicate balance between national security interests and maintaining the attractiveness of foreign investment:even under the impact of the COVID19 epidemic,France is still among the most popular investment destinations in Europe.At the same time,economic and trade interactions between France and China are frequent,and according to Annual Report 2020:Foreign investment in France,released in May 2021,there were 53 Chinese investment projects in France in 2020.creating or retaining 1,697 new jobs in France,an increase of 24%compared to 2019.For France,China has been the largest foreign investment inflow country in Asia for two consecutive years.In the above context,it is of theoretical and practical significance to study the foreign investment security review system in France.At present,there is no domestic literature dedicated to the study of the French foreign investment security review legal system.Therefore,in order to fill this gap,this paper compares the system from both legislative and practical levels,studies the concept,theoretical basis,historical development and substantive regulations of the French security-related screening mechanism for foreign investment.analyzes relevant practical cases,and summarizes the characteiistics and development trend of the system.This paper aims to provide some countermeasures and suggestions for Chinese investors and the government to cope with the tightening of the French foreign investment security review,and explains how France strikes a balance between national security interests and attracting foreign investment.Specifically,the first chapter of this paper provides an overview of the basic elements of the French foreign investment security screening mechanism.On the basis of clarifying the basic concept of foreign investment security review,the historical development of French foreign investment security review legislation is introduced.The development of the system is divided into establishment and shaping period,maturity period,and enhancement period after the COVID-19 epidemic.The background,motivations,and contents of the reform or revision of the French security-related screening mechanism for foreign investment at different stages are discussed in order to grasp the general lineage of the evolution of the system,followed by an analysis of the theoretical basis on which the system was established and updated.This chapter covers the core conceptual,theoretical,and fundamental knowledge background to set the stage for the research and discussion that follows.The second chapter reviews the institutional framework,starting from the substantive law,and provides an in-depth discussion and analysis of the subject of the French foreign investment security review and its rights,the scope of the review,the review criteria and the legal responsibilities of investors.Then,from the procedural law perspective,this chapter explores the review process,the supervision mechanism,the transparency requirements and the judicial remedies for investors under the law.After sorting out substantive and procedural provisions,the features and development trends of the legislation are summarized in the last section.Chapter 3 compiles four cases of investments subject to security reviews in recent years,covering four sensitive areas（critical national defense technologies,agri-food distribution,semiconductors and rail transportation）,and investors from North America and China.Furthermore,this chapter attempts to analyze the rationality of the review process and decisions,and then summarizes the characteristics and trends of the practice within French security-related screening mechanism for foreign investment.The selected cases include Teledyne’s acquisition of Photonis,Couche-Tard’s acquisition of Carrefour,Tsinghua Unigroup’s acquisition of Linxens and Jingye Steel’s acquisition of the Hayange plant.This chapter is also the highlight and innovative part of this paper,since few similar papers have discussed the practice of security-related screening mechanism.Finally,because of the frequent trade activities between China and France,China has been the largest foreign investment inflow country in Asia for two consecutive years.The last chapter attempts to respond to the real needs by suggesting responses to the tightening of foreign investment regulation in France at the investor level and at the national level,respectively.The paper adopts a historical research method,a literature analysis method,and a case study method to carry out the research.In terms of conclusion,the paper argues that after more than half a century of evolution,France has successfully developed a comprehensive and well-established legal system of foreign investment security review with French characteristics.However,there are still some problems in the implementation of this increasingly strict system,which undermine the principles of free flow of capital and proportionality.In this regard,on the one hand,there is a need to take an objective view of the problems and trends that have emerged in the legislation and practice of foreign investment security review in France.On the other hand,there is still a need to actively address the challenges encountered in investment practice for investors.And,the government should also actively provide guidance to create a good investment environment for Chinese investors.