MPs to debate law protecting Czechia from risky foreign investment, including in energy

At their next sitting, MPs will consider a law intended to protect the Czech Republic from investments that could pose a security risk. Investments in energy sectors originating from countries outside the European Union will also be screened.

Back in April, the government approved and submitted to the Chamber of Deputies a draft law introducing an entirely new mechanism for screening and approving investments coming into Czechia from countries outside the EU.

Such legislation has so far been lacking in the Czech Republic, which will thus become part of a Europe-wide effort to prevent, or at least limit, investors from high-risk countries from entering key companies. MPs will begin considering it in the coming weeks.

Investments in critical infrastructure, which includes certain energy projects, will newly be subject to prior approval by the Ministry of Industry and Trade. Based on the government's opinion, the ministry will then be able to set conditions for carrying out the investment or even ban it entirely. The main criterion for the decision will be whether the investment would pose a security risk to the Czech Republic.

During the approval process, the ministry will have broad powers to request documents from the investor concerning both its ownership structure and the origin of its financing. If an investor enters the Czech market without approval, it will face not only a fine of tens of millions of crowns, but, more importantly, the ministry will be entitled, with the government's consent, to ban the entire investment retrospectively. The investor will then be required to sell its stake within a set deadline.

At EU level, a regulation was adopted in spring last year, broadly setting out how member states should approach investments from third countries. However, the final decision on whether to restrict foreign investment remains with the member states themselves. Based on the planned law, the Czech Republic will also be able to participate more effectively in this Europe-wide cooperation.

The proposal underwent many conceptual changes already during its consideration by the government, and broad debate can also be expected in the Chamber of Deputies plenary. Given the broad definition of the term "foreign investment", the speed of its adoption and its final form may also be crucial for the construction of new nuclear units at Dukovany and Temelín.