Foreign Investment Screening in Russia
The chapter reviews the mechanism of foreign direct investment controls as implemented in Russia under the auspices of the Federal Law “On Foreign Investments in Russia” No. 160-FZ and Federal Law No. 57-FZ “On the procedure for making foreign investments in companies which are of strategic importance for ensuring the country’s defence and state security”. The author examines the definition of the foreign investor provided by the laws, analyzes the types of activities deemed of strategic importance for national defence and security and describes the thresholds triggering obligations of obtaining prior clearance of foreign investment transactions. A separate section of the chapter is devoted to the analysis of the procedures for obtaining clearances and the consequences of non-compliance. The paper also addresses other rules of the Russian legislation that restrict foreign direct investment to Russia. In the last section of the chapter, the author summarizes the experience of 10 years of application of foreign direct investment control mechanisms in Russia and poses questions on the possible implications of Russia’s experience for the EU Regulation establishing a framework for the screening of foreign direct investments into the Union.