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Clifford Chance

Clifford Chance


The evolving concept of national security

16 December 2021

Emily Xueref-Poviac, Jennifer Storey, Mark Currell and Renée Latour* discuss how the regulation of foreign investments under national security and foreign investment regimes has been growing ever more comprehensive, with sectoral coverage expanding to unprecedented levels.

In terms of mergers and acquisitions, foreign direct investment (FDI) regimes broadly fall into two categories: (1) those that apply only to investments made directly in domestic companies and aim to give domestic businesses in certain sectors a degree of protection from foreign competition (e.g., Indonesia, Malaysia and the United Arab Emirates), and (2) those that apply also to indirect investments (e.g., the acquisition of a foreign parent company that has a subsidiary in the jurisdiction in question).

The second type of regime, which is the focus of this article, tends to concentrate on the national security implications of foreign investments, and has historically recognised defence and critical infrastructure (such as energy and transport) as being fundamental to national security.

In a striking turn of events, a new viewpoint has been gaining traction globally during the past decade; in short, that national security should be seen to include everything from defence and critical infrastructure to artificial intelligence, healthcare, nanotechnology and the media, to name but a few examples. As a result, national FDI regimes have gradually expanded to the communications and advanced technology sectors and, subsequently, have been further extended to new areas such as healthcare, food security and water. It is clear that the concept of national security has begun to drift into national interest and may be blurred still further. This chapter examines this shift by looking at the evolution of FDI regimes in Australia, the European Union, the United Kingdom and the United States.

*Emily Xueref-Poviac is a counsel and Jennifer Storey, Mark Currell and Renée Latour are partners at Clifford Chance.

This article is an extract from GCR’s Foreign Direct Investment Regulation Guide - First Edition. The whole publication is available at

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