Source · Select Committees · Foreign Affairs Committee
Recommendation 4
4
Businesses, investors and the Secretary of State and the Investment Security Unit need clarity and...
Recommendation
Businesses, investors and the Secretary of State and the Investment Security Unit need clarity and guidance on the factors that should be considered as part of national security assessments. We recommend that the new legislation and accompanying guidance should clearly distinguish between ‘national security’ and the broader ‘public interest’ or ‘solely economic’ concerns that are not within scope, to prevent undue uncertainty for businesses and avoid any misuse of the term ‘national security’. (Paragraph 26) 16 Striking the balance: Protecting national security through foreign investment legislation
Government Response
Acknowledged
HM Government
Acknowledged
As I have set out above, the Government does not believe that it would be appropriate to define ‘national security’. However, the Bill is explicit in its references to ‘national security’ rather than any broader considerations. For example, the legal tests for the Secretary of State’s call-in power, the extension of a national security assessment, and making a final order all refer to ‘national security’ and these tests must be met before the respective powers can be used. The right to apply for judicial review of the Secretary of State’s decisions is also an important check and balance on the powers in the Bill. This means that parties will be able to challenge through the courts if they believe that the Secretary of State has taken irrelevant considerations into account when applying the term ‘national security’ or otherwise failed to comply with public law duties. This will ensure that the regime operates in practice as intended – solely concerned with national security, rather than wider public or economic interest. In addition, I believe that the Statement which the Bill requires the Secretary of State to publish before he is able to exercise the call-in power, and to have regard to when using the power, will be an important source of guidance for businesses and investors. It will explain how the Secretary of State expects to use the call-in power and is intended to detail some of the factors he is likely to consider when making such decisions—namely: the target risk (what is being acquired), the ‘trigger event’ risk (how control is being acquired), and the acquirer risk (who is doing the acquiring). The contents of the Statement will clearly underline that this regime is solely about national security. A draft of the Statement was published alongside the Bill’s introduction and the Government will formally consult on a further version, which will take into account the comments of your Committee and the feedback from other Parliamentarians.