National Security: The Role of Investment Screening Mechanisms

The international investment regime is rapidly changing. Investment law is becoming a much more domestic field of law. A domestic investment institution that has been on the rise in the last years is investment screening mechanisms (ISMs). ISMs operate in parallel to international investment law. National security considerations lie at the epicenter of the screening procedures. Studying the USA, Australia, Canada, and the EU, the chapter shows how the assessment of national security concerns has started leaving the realm of international investment law and investment arbitral tribunals in favor of domestic mechanisms of ex ante evaluation of interference by foreign investment with national security interests. In addition to this move from the international to the domestic, the comparative study shows that there is an opening of the definition of the term of national security to also include considerations beyond national security in the strict sense. Still, the chapter suggests that the world is not necessarily advancing towards more closeness, but rather towards a fairer balance between globalization and national sovereignty.