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The restriction of foreign investment in German defense companies

by Dr. Anna Labitzke

The author examines the Eleventh Act to Amend the Foreign Trade Act and the Foreign Trade Ordinance. This law makes it possible to prohibit foreign direct investments in German defense companies. The question is investigated whether this possibility of control or actual prohibitions that have been issued represent or can represent an unjustified encroachment on basic rights. This study is conducted against the background that the Eleventh Amendment Act does not provide for a compensation scheme either. In the past, such compensation regulations have often been demanded for other restriction measures in foreign trade law. First of all, the concept of "essential security interests" newly introduced by the Act will be analyzed. Furthermore, the author examines whether the list in Art. 346 (2) TFEU includes dual-use goods as well as war weapons and whether this list refers to the currently available military equipment. Furthermore, an analysis of the relationship between the freedom of capital and the freedom of establishment and the regulation of Art. 346 (2) lit. b) TFEU, which allows Member States to take far-reaching special measures in the field of armaments, is presented.

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