Sovereign wealth funds (“SWFs”) have been around for a while—at least since the 1950s. But only in the past fifteen to twenty years have they become of global power and interest. As of 2015, there were seventy-three SWFs owning assets amounting to an estimated $6.3 trillion. In comparison, private hedge funds managed assets of around $3 trillion in the same year. As James Surowiecki for the New Yorker put it: “These funds now have the buying power to shape market prices and acquire assets throughout the developed world. Were China’s fund so inclined, it could buy Ford, G.M., Volkswagen, and Honda, and still have a little money left over for ice cream.”
This emerging power of SWFs has not solely triggered joyous reactions. At times, one could even get the impression that hedge funds had found a(n evil) bigger brother—SWFs, the new “villains of the global economy.” Their lack of transparency and regulation, the number of recent corruption scandals, and their vast financial power—combined with inextricable ties to politics—are only some of the factors raising suspicion among domestic politicians. Therefore, in 2008, when China announced its plans to establish a SWF with assets of up to $300 billion, German politicians felt obliged to take action. The German Foreign Trade and Payments Act (Außenwirtschaftsgesetz, “FTPA”) and the appendant Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, “FTPO”) were first amended in 2009, with provisions of the FTPO having been revised very recently. These acts now grant the Federal Ministry of Economics and Technology (Bundesministerium für Wirtschaft und Technologie, “the Ministry”) the ability to review and prohibit investments of third-country nationals in domestic companies across all sectors. This Article illustrates the issues related to this cross-sectoral examination power. For this purpose, this Article will take a closer look at the characteristics, opportunities, and risks of SWFs in Part I and the new regulations established by the FTPA and the FTPO in Part II. The focus in Part III will then shift towards the question of whether the new legislation infringes the right to free movement of capital, as granted by European Union (“EU”) law in article 63(1) of the Treaty on the Functioning of the European Union (“TFEU”). Finally, the Article will conclude with some critical remarks on the new FTPA and FTPO.
