I move: "That the Bill be now read a Second Time."
I am happy to bring the Bill before the House. It will empower the Minister for Enterprise, Trade and Employment to assess, investigate, authorise, condition or prohibit third-country investments based on a range of security or public order criteria. As well as equipping the State with the means to protect itself against threats arising from third-country investments, the implementation of a screening mechanism will also provide reassurance to key trading partners that Ireland is a responsible global player, cognisant of the threat posed by the strategic and potentially hostile state-backed investment strategies. International evidence suggests that the existence of a screening mechanism does not act as a deterrent to inward investment. The absence of such a mechanism, however, would do untold harm to Ireland's reputation among key investors.
The Bill was developed on foot of the adoption of the EU foreign direct investment, FDI, screening regulation. That regulation, which came into effect in October 2020, was, in turn, a response to the growing concerns among member states about the potential threat posed by unconstrained third-country investment, that is, investment from outside the EU and the European Economic Area, EEA. Notwithstanding the overwhelmingly positive impacts of foreign investment, there is growing appreciation globally that in some instances foreign investment can be used as a tool by hostile actors to achieve a range of goals inimical to the interests of the state. Such goals might include, for example, acquiring access to or control over strategic and sensitive assets or technologies that facilitate disruption to core activities of the state or that permit espionage. Likewise, investment that results in the export of critical, cutting-edge technologies back to the home of the investor may represent a very real threat to our security and public order.
The role played by third-country state-owned firms is of particular importance in this regard. To date, there has been no formal investment screening mechanism for foreign investment in Ireland. While Ireland is not alone in the EU in this regard, the absence of such a screening mechanism leaves Ireland ill-equipped to respond to threats to our security or public order arising from third-country investments. This screening Bill is designed to address this issue. Establishing a formal investment screening mechanism represents an opportunity to design and to tailor a system appropriate to Ireland's needs, and the approach set out in this Bill balances Ireland's long-standing foreign direct investment strategy while also acknowledging the challenge posed by potentially hostile investments. Risks may arise as a result of a wide variety of factors, for instance, based on the source of the investment or the characteristics of the party being acquired across a host of existing and emerging sectors or through a range of deal types, regardless of value.
Our mechanism, therefore, must be flexible enough to respond to such threats while simultaneously providing as much certainty as possible to the enterprise.
In response, the Bill defines the nature, scale, and type of investments that will be required to undergo investment screening and sets out the factors to be considered when applying screening to transactions. It is important to note that the screening mechanism will consider investments through a security and public order lens. This is not about competitive or public interest tests. Other tools are available to the State to address such concerns. It is vital to maintain this exclusive security focus to maximise the effectiveness of the screening mechanism.
Having provided the background and purpose of the Bill, I will now outline some of its main provisions. The Bill contains four Parts. Part 1 primarily deals with matters common to legislation, namely, commencement, interpretation, reporting obligations, and services of documents. However, also contained within Part 1 are provisions on connected persons, the applicable offences and penalties, as well as provisions on any incurred expenses.
Part 2 relates to the notification process and the manner in which applicable transactions are reviewed. The Bill consists of a mandatory element and a discretionary element. A mandatory notification will apply to investments from third countries relating to particular sectors and technologies. These are based on Article 4 of the EU regulation. A range of other criteria relating to ownership and deal-size thresholds also apply and these are expanded upon in the Bill. In addition, the Minister of the day will be able to initiate screening of other investments which do not require a mandatory notification but which the Minister deems, on reasonable grounds, to pose a risk to security or public order. This ensures that the screening system is flexible enough to adapt to changing economic and technological developments and allows the Minister to respond to deliberate attempts to circumvent the screening mechanism.
Section 9 outlines the type of transactions that must be notified to the Minister, while section 10 sets out the notification process itself. Section 12 sets out the requirement for the Minister to review both notified and non-notifiable transactions where he or she believes such a transaction may impact security or public order. Section 12(1)(b) provides the Minister with a safety net to review transactions that did not require a mandatory notification but may still pose a threat to security or public order, as previously mentioned. The applicable time periods during which the Minister can invoke such a provision are set out in the subsection.
Section 13 outlines the factors the Minister shall consider when reviewing the threat to security or public order posed by a particular transaction. In conducting such a review, the Minister must consider whether an investor is controlled by a third-country government; the extent to which parties to the transaction are involved in activities related to security or public order; any evidence of criminality among the parties; the likelihood of the transaction resulting in actions that are disruptive or destructive to people, assets, or undertakings in the State; the views of the European Commission and other EU member states; and the views of the investment screening advisory panel. Under this section, the Minister is also empowered to consult with other Ministers or relevant parties to inform the review process. The Minister also has the option to enter discussions with the parties to the transaction to mitigate any concerns relating to security or public order.
Sections 14 to 17, inclusive, relate to the issuing of a screening notice to parties, the process around the notification of the screening decision, and the limitation on transactions under review. Effectively, a transaction cannot be progressed once screening has commenced and until such point as the review has been completed. In general, the Minister has 90 days to complete the screening process as per section 16.
Section 18 outlines the decisions available to the Minister in respect of the outcome of a screening review. Under section 18(1), once it has been determined that a transaction impacts upon security or public order, the parties to the transaction are required to comply with the Ministers direction. Section 18(2) provides that where such a determination has been made the transaction cannot be completed other than in accordance with the Minister's direction. However, under section 18(3), where it is deemed that a transaction poses a threat to security or public order, the Minister may allow the transaction to proceed subject to certain conditions being fulfilled. Examples of such mitigation measures are set out in section 18(4). Where those mitigation measures are not sufficient, the Minister may prohibit the transaction. Under section 18(5), failure to comply with a ministerial screening decision is an offence.
Section 19 permits the Minister to request additional information from the parties involved in a transaction to assist with the screening review process. The section outlines the process the Minister is required to adhere to along with the prescribed timelines associated with such a request. Section 19(5) deals with the provision of false information or failure to comply with an information request, while section 19(6) addresses the issue of legal privilege.
Section 20 sets out how the timeline for the screening process can be paused upon a request for additional information from the Minister.
Section 21 enables the parties to a transaction to provide written submissions to the Minister.
Part 3 consists of four chapters and sets out the appeals mechanism open to the parties concerned. Significant thought has also gone into the development of these appeals procedures, balancing the need to ensure fair process with the security requirements of the State while also complying with recent case law.
Chapter 1 details the appointment and conduct of independent adjudicators. Section 22 outlines the process for the appointment of an independent adjudicator to hear an appeal against the Minister's decision. The subsequent subsections set out the establishment of an adjudication panel, the necessary qualification criteria, the prevention of conflict of interest, as well as the terms and conditions for appointed adjudicators. Sections 23 to 25, inclusive, provide for the revocation of appointment as adjudicators, the liability of adjudicators and rules concerning the conduct of appeals before adjudicators.
Chapter 2 sets out the procedure for appealing a screening decision. Section 26 provides the avenue for parties to a transaction to appeal a decision of the Ministry.
Section 27 sets out the procedure for initiating an appeal of a screening decision. Under this section, appellants must notify the Minister of his or her intention to submit an appeal against a screening decision within 30 days of being informed of such a decision. Pursuant to section 27(3), the Minister will appoint an adjudicator to hear the appeal once he or she has been made aware the appeal has been filed. The Minister must notify the appellant and provide the details of the designated adjudicator and set out the means by which the appellant may make his or her appeal. Thereafter, the appellant has 14 days to file an appeal. In line with section 27(4), the appellant must state the grounds under which the appeal is being submitted and must provide all documents and evidence upon which the appeal relies. Section 27(5) states that the Minister is the respondent to the appeal and most state the grounds upon which he or she intends to respond to the appeal, as well as the evidence upon which he or she will rely. A party to an appeal may not make written submissions to adjudicator other than submissions relating to the grounds stated for the appeal or related to evidence provided under previous sections. Section 27(9) confirms that an appeal to the adjudicator does not suspend the screening decision that is being appealed.
Section 28 provides that an appeal may be heard without an oral hearing unless such a hearing is deemed necessary by the adjudicator.
Section 29 sets out the powers of the adjudicator in the initial screening decision made by the Minister. The adjudicator may allow the appeal and remit it to the Minister for reconsideration, or the adjudicator may affirm the Minister's decision. This decision must be notified to the parties concerned as soon as is practicable.
Chapter 3 contains provisions on how sensitive material and evidence is handled. Section 30 deals with the ability of the Minister to provide sensitive evidence to the adjudicator in a manner that protects national security.
Section 31 provides that the Minister may determine that an appeal to the adjudicator can be held in public if it does not create a risk to the security or public order of the State. Section 32 addresses the need to maintain confidentiality around certain types of information obtained by a party via the appeals process. Section 33 outlines the grounds for the Minister to approve or designate certain legal representatives in sensitive cases.
Chapter 4 of Part 3 deals with appeals against the decision of an adjudicator. Section 34 provides parties to a transaction with the right of appeal to the courts against the finding of an adjudicator. Subsection (1) states that such an appeal be made by leave of the High Court on a point of law within 30 days of the adjudicator's finding. It should be noted that under subsection (5), the decision of the High Court is final.
Section 35 permits the appellant to ask the High Court to suspend a screening decision until such time as the appeal is determined. Otherwise the lodging of such an appeal does not suspend the initial effect of the screening decision. Section 36 deals with the issues of sensitive material in an appeal to the High Court. Subsection (1) provides limitations on the sharing of evidence where a risk to security or public order exists. Section 37 outlines who may attend an appeal to the High Court. Attendance is limited to persons deemed necessary given the potential sensitivity of the hearing.
The final part of the Bill, Part 4, provides for the establishment of an advisory panel to assist the Minister in the decision-making process. Section 39 looks at the establishment of a screening advisory panel and sets out the process for appointing members to the panel. It also contains provisions on the rules regarding the number of members of the panel as well as the functions applicable to the panel. Subsection (4) permits the panel to request assistance from experts as and when required, while subsection (5) allows the Minister to dissolve the panel at any time.
Section 40 outlines the level of officer to be appointed to the panel as well as the Departments to be represented on it. Section 41 sets out the various rules relating to the frequency of meetings, the associated quorums and the meeting procedures. Section 42 permits the panel to engage such consultants or advisers as necessary in the performance of its functions.
It is essential that we enact the Bill to provide the State with the powers necessary to deter or mitigate the impact from hostile actors acquiring ownership of, or influence over, businesses and assets in order to cause harm to the State. The mechanism that has been developed is tailored to suit Ireland's needs, ensuring that we remain an attractive location for foreign direct investment while being a safe and responsible location in which to do business. I commend the Bill to the House and look forward to engaging with Deputies on the matter.