industry.”<sup>28</sup> It is conceivable that some of these measures will lead to international arbitrations.

A number of emerging markets also seem to be moving into the direction of a more restrictive regime:  **China** : China strengthened its review system in August 2006, when the Government announced “Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors.”<sup>29</sup> The regulation provides that approval is required if a foreign investor obtains actual control over a domestic enterprise if the transaction involves a critical industry, has or may have an impact on the country’s national economic security, or would result in the transfer of famous trademarks or traditional Chinese brands (none of these categories is defined). This new screening mechanism was further enhanced in November of that year when the 11<sup>th</sup> five-year plan of the National Development and Reform Commission responded to “perceived rising concern over foreign acquisitions of leading Chinese firms in critical sectors” by providing for “ increased supervision of sensitive acquisitions to ensure what are termed ‘critical industries and enterprises’ remain under Chinese control.”<sup>30</sup> The subsequent anti-monopoly law (which took effect in August 2008) “specifically provides that acquisitions of domestic enterprises by foreign investors that may have implications for national security shall be subject to not only competition review, but also national security review.”<sup>31</sup>  **Russia** : A 2008 law “On Procedures for Foreign Investments in Companies of Strategic Importance for National Defense and Security” requires government approval for certain transactions involving foreign investors if (i) the Russian company is engaged in an “activity of strategic importance to the country’s defense and national security” and 28 Anne van Aaken and Jürgen Kurtz, “The global financial crisis: will state emergency measures trigger international investment disputes?” _Columbia FDI Perspectives, No. 3_ , March 23, 2009, pp. 1, 2. The authors observe further (p. 2): “If this trend continues, there may be differentiation against foreign institutions as a matter of fact, even if not on the face of the law.” 29 Provisions of the Ministry of Commerce, State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation, the State Administration for Industry and Commerce, Securities Regulatory Commission of China and the State Administration of Foreign Exchange on “Mergers and Acquisitions of Domestic Enterprises by Foreign Investors,” August 8, 2006, at <u>http://www.fdi.gov.cn/pub/FDI_EN/Laws/law_en_info.jsp?docid=66925. The regulation took</u> effect on September 8, 2006. See also China Economic Information Network, _Semi-monthly Business Review_ , no. 63, November 28, 2006

> 30 OECD, _OECD Investment Policy Reviews: China. Encouraging Responsible Business Conduct_ (Paris: OECD, 2008), p. 15.

31 “China finally enacts anti-monopoly law,” Freshfields Bruckhaus Deringer Briefing, September 2007, at <u>http://www.freshfields.com/publications/pdfs/2007/sept05/19887.pdf, p. 4. It appeared in August 2008 that</u> a “Joint Ministerial-Level Meeting for the Security Review of Mergers & Acquisitions of Domestic Enterprises by Foreign Investors” was in the process of being established to review M&As having national security implications and, apparently, also to review new FDI projects with national security implications; see Nathan Bush and Zhaofeng Zhou, “Chinese Antitrust – Act II, Scene 1,” at http://www.abanet.org/antitrust/at-source/08/10/Oct08-Bush10-24f.pdf, p. 9. As to the possible interpretation of “national security,” see the following comment by Xu Jialu, Vice-Chairperson of the National People’s Congress: “State security includes national defense security, information security, environmental security, and economic security.” Ibid.

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