Investment screening can be defined as host state’s sovereign judicial and/or administrative authority to monitor the investments, specifically foreign direct investments of the foreign investors. Naturally, host states would use their rights for legislative power especially in sensitive sectors by nature such as defence systems, energy, transportation, natural resources; or sectors that are vulnerable for the host state. However, on the other edge of the investment, it is clear that, foreign direct investments have an important role for financial growth and direct and indirect effects such as employments. Theoretically it is being accepted that there must be a balance between host states’ legislative power and security of the foreign investment. Hence; investment screening regime is on one side and protection of investors/investments are on the other side.

Investment screening is the process by which a host state uses its sovereign judicial and/or administrative jurisdiction to supervise investments made by foreign investors, in particular direct investments made in the host country. Needless to say, the host nations would use their legislative authority in areas that are extremely important to them, such as defence, energy, transportation, and natural resources. On the other hand, FDI has been shown to have positive effects on economic growth and employment both directly and indirectly. It is generally agreed, at least in principle, that there should be an appropriate balance between the legislative authority of host governments and the safety of foreign investments. Therefore, on one side, we have the investment screening system, and on the other, we have protection for investors and investments. The safeguarding of investments is a crucial aspect not only during the preestablishment phase but also in the post-establishment phase, through ex-post screening conducted by the competent authority of the host state. Irrespective of their sovereign powers, states are obligated to provide a specific degree of legal protection as guaranteed by international treaties in both scenarios. The aforementioned criteria encompass, among others, the principles of impartiality, equal treatment for domestic and foreign entities, preferential treatment for none, and just and unbiased treatment. As will be expounded upon, if the level of obstruction violates any of the principles that are enshrined in said agreements, nations may be held accountable. Notwithstanding, most states have a means of recourse in the event of a violation of treaty obligations, commonly referred to as ‘security exception clauses’ within the doctrine.  The investment screening mechanism is implemented to safeguard national security. In this regard, pertinent exception clauses may be utilised to substantiate treaty violations. The matter at hand shall be examined according to the principles of BIT practice, as well as the Regional and Sectoral Investment Treaties.