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The Swiss Federal Council decides to prepare a substantially revised draft investment control law

In brief

Following pressure from parliament, the Swiss Federal Council last year launched a consultation process on new legislation for the review of foreign investments. In May 2023, the Swiss Federal Council has taken note of the results of the consultation on the proposed investment control law. Overall, and not surprisingly, there is widespread skepticism about the draft. A majority of the participants in the consultation argued that the proposed investment control law would weaken Switzerland’s attractiveness as a business location, while a significant minority sees a clear need for action and is in favor of introducing foreign investment screening also in Switzerland.

The Swiss Federal Council has therefore instructed the Federal Department of Economic Affairs, Education and Research (EAER) to prepare a substantially revised draft by the end of 2023 that is limited to the screening of investments of foreign state-controlled investors taking over Swiss companies operating in a particularly critical sector, such as defense equipment, electricity transmission and production, or health and telecom infrastructures.


After the Swiss Federal Council was mandated by the Parliament to create a legal basis to screen foreign direct investments, it published a draft investment control law in May 2022 and conducted a consultation on the preliminary draft of the investment control law from 18 May to 9 September 2022. The investment control law is intended to prevent foreign investments from threatening Switzerland’s public order or public security. The draft published last year covered both investments by a state-owned foreign investor in general and investments into specific sectors by any foreign investor, irrespective of whether it is made by a foreign state-controlled or private investor.

Already at the opening of the consultation, the Swiss Federal Council expressed its opposition to the introduction of an investment review. In the course of the consultation process, the cantons, the political parties, the national umbrella organizations of municipalities, cities and regions, the national umbrella organizations of the business community and other interested parties were invited to submit their statements.

Majority of participants are critical

During the consultation process, 72 statements were received. A majority of 38 participants are generally opposed to the introduction of an investment review, including primarily the business associations. A minority of 29 participants are in favor of the introduction of an investment review. Out of those, 14 are in favor of the preliminary draft as presented. Five agree with the introduction of an investment review but subject to a restriction of the scope, while ten agree with the introduction of an investment review provided that the scope is extended.

Opponents argued that restricting investments would have an economically harmful effect and that the associated encroachment on economic freedom would be too significant. However, if an investment review is to be introduced, they request that the scope be limited. The main proposal is to limit investment screening to foreign state-owned investors, as potential threats are identified in particular with these investors.

Revision of the draft

On the basis of this background, on 10 May 2023, the Swiss Federal Council decided to substantially revise the draft investment control law after the consultation. The Swiss government shares the view that an investment review would weaken the economic attractiveness of Switzerland, especially if the investment control law had a broad scope and would also apply to foreign private investors. Therefore, the Federal Department of Economic Affairs, Education and Research was instructed by the government to prepare a substantially revised draft for the attention of the Parliament, in line with Switzerland’s international obligations. According to the instructions of the Swiss government for the new draft, investment review should only apply when a foreign state-controlled investor takes over a domestic company operating in a particularly critical area. Examples of these critical areas are: Defense equipment, electricity production and transmission, or health and telecom infrastructures. This reduced scope of the revised draft will significantly limit the adverse effects on companies compared with the initial draft that was sent out for consultation. The Swiss Federal Council has instructed the EAER to prepare a corresponding draft by the end of 2023.

Once the revised draft is available, the draft will be submitted to parliament for a detailed deliberation. During the parliamentary debate, everything remains open: from full rejection, acceptance of the proposal to even introducing stricter rules and broadening the scope of the law again. Upon deliberations by parliament, the final law could and likely would be subject to a referendum vote by the Swiss public. It will depend very much what will ultimately see the light of day and how Switzerland will apply such instrument in practice.


Roger Thomi is a counsel in the Antitrust & Competition Practice Group and in the Commercial Practice Group in Zurich. He has extensive experience in his area of expertise and focuses on all aspects of competition law and commercial law, particularly distribution law and product regulatory compliance. The Legal 500 ranked Roger as a “Rising Star" in competition law who is "highly qualified," "pro-active" and "delivering high-quality and practical advice within a short time."


Philippe Reich is a partner of Baker McKenzie Switzerland based in Zurich. He serves as head of the Firm's Antitrust, European and International Trade Practice Group in Switzerland. Philippe is a key member of the Firm's International Trade & Commerce and Antitrust & Competition Law Practice Groups. Philippe is regularly ranked as leader in his field in Who's Who Legal and is a recommended practitioner in Legal 500 and Chambers. In 2022, he was ranked among the top 100 foreign lawyers for India related matters. Philippe is also the European representative on the steering committee of Baker McKenzie's Global India Practice, chairman of the Swiss-Indian Chamber of Commerce and forms the India Desk of Baker McKenzie in Switzerland.


Boris Wenger is a partner in Baker McKenzie's Zurich office, where he advises on competition law, public procurement, healthcare, export control, customs and energy law matters. Chambers Europe and Legal 500 have ranked Mr. Wenger as a leader in the field of competition and antitrust for many years.

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