Diarmuid Wilson (Fianna Fail)
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The Minister of State, Deputy Calleary, is very welcome to the House.

Dara Calleary (Mayo, Fianna Fail)
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Tá sé iontach an Seanadóir Wilson a fheiceáil sa Chathaoir. Gabhaim buíochas leis an Teach as ucht an deis seo labhairt ar an mBille seo.

This Bill will empower the Minister for Enterprise, Trade and Employment to respond to threats posed by certain types of third country investments to our security and public order. It will permit the Minister 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 Irish 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 strategic and potentially hostile state-backed investment strategies.

The international evidence suggests that the existence of a screening mechanism does not act as a deterrent to inward investment. Conversely, however, the absence of such a mechanism would do untold harm to Ireland’s reputation among key investors. 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. For example, such goals might include acquiring access to or control over strategic and sensitive assets or technologies that facilitate disruption to core activities of the State or which 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.

This Bill was developed on foot of the adoption of the EU foreign direct investment, FDI, screening regulation. To date, there has been no formal investment screening mechanism for foreign investment in Ireland. 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 tailor a system appropriate to Ireland’s needs. The approach set out in this Bill balances Ireland’s long-standing FDI strategy while 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 and through a range of deal types regardless of value. Therefore, our mechanism must be flexible enough to respond to such threats while simultaneously providing as much certainty as possible to enterprise.

In response, the Bill, defines the nature, scale and types 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 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. To maximise the effectiveness of the screening mechanism, it is vital to maintain this exclusive security focus.

Having outlined the background and purposes of the Bill, I will now outline some of the main provisions of the Bill. 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. Mandatory notification will apply to investments from third countries relating to particular sectors and technologies, 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 will be able to initiate screening of other investments which do not require mandatory notification but which the Minister deems, on reasonable grounds, to pose a risk to security or public order. This ensures 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 types 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 transitions where the Minister believes such a transaction may impact security or public order.

Section 13 outlines the factors the Minister shall consider when reviewing the threat to security or public order posed by a particular transaction. These considerations include 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; and the views of the European Commission and other EU member states.

Under this section the Minister is also empowered to consult other Ministers or other 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. 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 on the outcome of a screening review. Where it 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 or, where mitigation is not appropriate, the Minister may prohibit the transaction. Significant detail is provided throughout the Bill on the process, timeline and interaction between the parties to ensure fair process is adhered to at all times.

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 the appeals procedures, balancing the need to ensure fair process with the security requirements of the State while also complying with recent case law. An initial independent adjudication process is provided for, and sections 22 to 25, inclusive, deal with all aspects of the appointment of adjudicators.

Sections 26 to 29, inclusive, set out the procedures for appealing a screening decision via the adjudication process. Sections 30 to 33, inclusive, contain provisions on how sensitive material and evidence is handled, ensuring the Minister can provide sensitive evidence to the adjudicator in a manner that protects national security and provides scope for hearings to be held in public where appropriate.

Sections 34 to 38, inclusive, deal with appeals against the decision of an adjudicator, ensuring parties to a transaction have the right of appeal to the courts against the finding of an adjudicator.Such an appeal may be made, by leave of the High Court on a point of law within 30 days of the adjudicator's finding. Similar provisions to safeguard sensitive evidence are set out in this regard, as apply to adjudication.

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. This panel will be composed of senior civil servants from across a range of relevant Departments. It is essential that we enact this 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. I believe the mechanism we have developed is tailored to suit Ireland’s needs, ensuring that we remain an attractive location for foreign direct investment, FDI, while being a safe and responsible location in which to do business. The Screening of Third Country Transactions Bill passed Final Stage in the Dail on Wednesday, 4 October. I thank the Oireachtas Committee on Enterprise, Trade and Employment and Opposition spokespeople for their input into that process. I now commend the Bill to the Seanad and look forward to constructive engagement with Senators on the matter.

Eugene Murphy (Fianna Fail)
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On my own behalf and on behalf of the Senators, I welcome the Minister of State, Deputy Calleary, to the House. I call on Senator Ollie Crowe, who has eight minutes.

Ollie Crowe (Fianna Fail)
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I welcome the Minister of State, Deputy Calleary, to the House. Overall this Bill is to be welcomed. It serves an important purpose in addressing the potential threat posed to security and public order from some third country investments. It is important to highlight that the record of FDI into Ireland has been outstanding and is something that should be acknowledged when discussing this Bill. The IDA has done and continues to do outstanding work in that regard, with the quality of investment coming into Ireland being first class. FDI has played a hugely significant role in the development of our economy and while we all welcome that the job growth which has occurred in every region of the country as a result of FDI is important, we do not take it for granted. In my own city of Galway, for example, FDI has played a huge role in the development of the local economy where Boston Scientific, Thermo King, Medtronic and Creganna Medical provide thousands of jobs and have done so for decades. Not only are the jobs they provide directly important but so are the indirect snap-on benefits to locally-owned SME's, to family businesses which have all benefited from the foreign direct investment.

Having said that, we must recognise that as with any country, our environment is not without threat. The investment screening regulation is in response to growing concerns among member states regarding the purchase of, and investment in, strategic European companies and assets by foreign-owned firms, and in certain cases, State-owned firms, that may undermine a member state's security or public order. Specifically, the concern relates to third-country parties acquiring control or influence over certain companies, assets, technology, data, research or intellectual property.

The Bill will provide an opportunity to design and tailor a screening mechanism appropriate to Ireland's needs, an approach that balances Ireland's continued attractiveness as a location for inward investment with the robust but proportionate screening mechanism that protects security and public order and enhances the State's ability to respond to those potential threats. This Bill will offer reassurance to our key trading partners that Ireland is acting appropriately and responsibly to deal with a potential threat. Ireland is a responsible global player aware of the threat posed by the strategic and potentially hostile State-backed investment strategics being deployed by some third-country corporations. It should also be highlighted that our intentions in this area are being closely followed by key trading partners with strong encouragement to establish a formal screening mechanism. I welcome the legislation and believe it is necessary but as I have outlined it is important that it is not seen in any way as a mark against the key FDI Ireland has attracted up until this point.

Garret Ahearn (Fine Gael)
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I will be brief because I pretty much agree with what Senators have said. I welcome the Bill. I welcome the Minister of State and thank him and his officials for the work they are doing.

As Senators have said, this is an important Bill which has to be passed. There is always a fear about more cumbersome work that has to be done by multinational companies. Obviously, a large number of people work for these companies. It is easier for them than it is for small farmers to do such work. That is different. It is important that we protect the sector. I come from a town in Clonmel that is heavily dependent on large multinationals in terms of employment and money coming into the area. It is important for us in that region that that is protected.

The previous Senator mentioned the Farrells. I suspect there might be a Tipperary connection. He spoke about his nephew. There are good Farrells in Cashel. My mother knew them very well, as the Senator knows. I support the Bill and some of the points that have been made can be brought up at a later stage. I look forward to having further discussion on the Bill.

Vincent P Martin (Green Party)
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The Green Party will support the Bill because it brings us a step in the right direction. It protects us from what are often more subtle threats which influence or could or have control over strategic assets by hostile foreign actors. It will also help to guard against the interlinked threat of cutting-edge technology being exported from Ireland and getting into the wrong hands. One of the criteria that will be considered when reviewing transactions is whether it is an opportunity to undertake espionage. Will the Minister of State expand a little on this aspect?

According to the latest CSO figures from quarter 1 of this year, the stock of FDI in Ireland equates to €1.26 trillion. Although this figure showed a reduction on the previous quarter, the medium-term trends indicate fluctuations from quarter to quarter of tens of billions of euro. It is important that these huge sums of money being invested in Ireland and all of the employment associated with them are properly screened. We have been left exposed to threats to our national security and public order by a lack of screening mechanisms for third-party investments up to this point. Considering the volume of new investments is quite low compared with existing investments, will the Minister of State consider further action to provide more transparency on existing investments in Ireland?

I understand from the legislative provisions that there will be a certain amount of sensitivity appropriate to the nature of the transactions, and that is covered in the adjudication process. Furthermore, section 12 provides for a limit on a retrospective period within which a Minister can review a transaction. Can the Minister of State outline the purpose of the stipulated window of retrospectively taking action? If something is missed initially, beyond this period is there no way that it can be reconsidered? Does the five-year limit apply to transactions conducted before the Bill is enacted?

I thank the Minister of State for working closely with party colleagues, Deputies Francis Noel Duffy and Marc Ó Cathasaigh, on amendments in the Dáil, in particular the amendment to ensure that the cumulative total of investment across 12 months was notifiable, rather than just individual transactions. It is an important move to strengthen the Bill as it will ensure that a party cannot hide several smaller transactions.

The purpose of the Bill is to bring in a screening mechanism for investments into Ireland for potential threats to our security and public order. That has to be welcomed. I welcome this legislative initiative and will be happy to support it.

Paul Gavan (Sinn Fein)
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It is always good to see the Minister of State. I am grateful to have the opportunity to say a few words on this important Bill. I shall start by saying how pleasantly surprised I am to find out that Senator McDowell's nephew was one of the co-authors of a book that was recommended to me. I will certainly go out and buy it at lunchtime. It seems to be very timely in its concerns about US power and influence.

Unlike many other EU member states, Ireland does not have a regime for screening FDI in key infrastructure. The Bill seeks to change this and give significant powers to the Minister of Enterprise, Trade and Employment. The Bill, which aims to provide the Government with powers to protect security or public order from hostile actors using ownership of or influence over businesses and assets to harm the State, introduces an FDI screening process. This will allow the Minister to assess, investigate, authorise, condition or prohibit third-country investments in key Irish industries and sectors.

All investments in strategic assets and sectors should be screened, but it is important to note that the Bill will place a significant burden on the estate compared with our European neighbours. One key ask is that we are assured that ample resources will be set aside to make sure the screening time is as quick as it can possibly be. I am sure businesses would very much appreciate this certainty.

The Bill as drafted creates a mandatory notification obligation for parties of third-country transaction acquisitions, agreements or other activities with a value of €2 million or more in designated sectors or involving sensitive or strategic activities that result in a change of control of an asset or undertaking in the State. As we know, the Bill forms part of a broader effort by the European Union to encourage co-operation and information exchanges between member states and the European Commission on FDI from third countries. Given the work of IDA Ireland in attracting FDI to the State, the Bill creates a change but one that can be of benefit. Nevertheless, it will place additional burdens on the State, Departments and businesses. For instance, when requested by other EU member states and-or the Commission, Ireland is obliged under the EU FDI screening regulation to provide information on any relevant transaction involving FDI, including details of the targets, ownership structure, products, services and business operations. It is also obliged to declare to other EU member states where the target conducts relevant business operations.

At the core of the Bill, from a purely technical perspective is the protection of security and public order from hostile actors who would seek to use ownership of or influence over businesses and assets to harm the State. It will empower the Minister to respond to threats to Ireland's security or public order posed by particular types of foreign investments and prevent or mitigate such threats. While I understand the need for this, I ask for further clarification of the powers of the Minister to assess, investigate, authorise, condition or prohibit third-country investments based on a range of security and public order criteria.This is so that, when legislation is passed, there is certainty on the part of investors and the State and we do not leave ourselves open to accusations of bias or of being used as a pawn in geopolitics. I say this because we should not forget from where the EU regulation came. It came about following a European Parliament resolution and a joint letter sent by three member states – Italy, Germany and France – asking the European Commission to adopt a new regulation on the screening of FDI.

The EU regulation comes in the middle of the crisis of the globalisation dogma being threatened by the commercial wars between the global powers. Anyone who reads over the speeches about this regulation in the European Parliament will see that the extreme neoliberal approach that EU policies pursued and made the EU the most open economy in the world was rarely questioned and the real target of this EU legislation is most likely China.

Regarding the timeframes for screening decisions, the legislation states that the decision must be made by the Minister within 90 days from the date of notification and that this may be extended by a period of up to 135 days at the discretion of the Minister. Is the 90-day limit for extreme cases or is it the Minister of State’s expectation that all cases will take 90 days?

On allowing the Minister to use discretion in this instance but also to use national security as a reason not to give information for why an investment is rejected, I hope these powers are wielded with careful consideration. Security is important, but so are openness, transparency and trust.

Dara Calleary (Mayo, Fianna Fail)
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Gabhaim buíochas leis na Seanadóirí as ucht na focail inniu. I will go through each of the Senators' queries and then wrap up.

I believe every Senator who spoke agreed on the importance of FDI. Establishing a formal investment screening mechanism is an opportunity to design and tailor a system to Ireland’s needs that specifically suits our economy and our country and maintains our attractiveness as a location for investment while also putting in place a robust but proportionate – I will revert to Senator McDowell’s remarks in this respect – screening mechanism that protects security. Our FDI partners will be comfortable that this is not too onerous a burden. I welcome Senator McDowell's recognition that there is a gap and that we are trying to fill it.

The screening Bill is targeted and is focused on what we call a risk-assessed basis. As of now, it only applies to critical technology and infrastructure, as laid out in section 9. Notification outside these areas is not required. As such, construction and agriculture, which Senator Ahearn referred to, are not within the scope of the Bill. The Bill provides powers for the Minister of the day to call in transactions that were not notified over a period of the past five years. This will give us a chance to examine some of the cases to which Senators referred. The Bill sets out a range of mitigating measures the Minister can impose if risks are identified.

To Senator Gavan, my officials assure me they are familiar with Underground Empire. It will be climbing up the sales lists this week.

I acknowledge the work our officials – those with me today and those back at base – have put into this Bill. It is complex and complicated and they have worked in co-operation with multinational partners from across the world while remaining focused on EU-specific tools. My officials are more than happy to brief any Senator on the matter. If Senator McDowell wishes to engage with them afterwards, we will be more than happy to brief him and his team.

I thank Senator Martin for his remarks. I acknowledge the role played by Deputies Duffy and Ó Cathasaigh in enhancing the Bill.

It is important the House notes that the bulk of FDI poses no risk. It is actually a good thing, and this Bill only applies to a very small range of criteria. Section 13 sets out the screening criteria for the Minister of the day to use. The potential to disrupt state espionage is one of those criteria.

There is a window for retrospective review. By setting out that time period, we avoid creating disproportionate uncertainty for investors in particular. We view five years as a good balance.

We will be putting in place resources and, in particular, a robust IT system, allowing us to fulfil the Bill’s potential.

We do not want to put Ireland at a disadvantage in terms of securing future FDI. The majority of EU member states have already implemented screening mechanisms similar to ours.

The 90-day period is the upper limit. The majority of notifications should not give rise to any concerns and will be cleared in much shorter periods. We will be investing in IT to assist us in this.

It will be in the rarest of circumstances that reasons for decisions will be withheld. They will be wrapped up in national security issues.

I thank Senators for supporting the Bill. This is complex legislation and we are available to assist any Senator between now and Committee Stage. I am anxious to get it passed as soon as possible. As well as my own officials, I thank the Office of the Attorney General and the Office of the Parliamentary Counsel, which have assisted us throughout this process. Our aim is to put in place a screening mechanism that will strengthen the powers available to the State to protect the State’s vital national interests while reinforcing our commitment that we are open to free trade and free investment.

Eugene Murphy (Fianna Fail)
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When is it proposed to take Committee Stage?

Ollie Crowe (Fianna Fail)
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Next Tuesday.

Eugene Murphy (Fianna Fail)
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Is that agreed? Agreed.

Eugene Murphy (Fianna Fail)
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I thank the Minister of State, his officials, Seanadóirí, the staff of the House and the ushers, who are here with us during all our debates and who are of the utmost help to us all.