The Role of Law, the Rule of Law and the Rise of SovereignWealth Funds: The Need for a Greater External and InternalActivism of the European Union

From the point of view of international economic law and global governance studies, the principle of the rule of law should apply to all subjects who enter or aim to access the global market. Amongst them, a crucial role is nowadays played by the so-called ‘sovereign investors’, namely SWFs and SOEs. This paper, which is based on the assumption that sovereign investment has become a major – albeit controversial – element in emerging patterns of governance in this century, deals more specifically with SWFs. In order to put the rule of law ‘in action’ and take it ‘seriously’ with respect to SWFs, the paper focuses on the main concerns and benefits related to the rise of SWFs. In this respect, the main argument implied therein is that the quest for a fair balance between economic benefits deriving from the entry of SWFs in the EU market and the protection of national as well as European strategic/sensitive sectors must be pursued at the EU level and that, in doing so, the EU must be more activist and bolder. The EU should give law a central role, regarding the market as an inherently political, institutional and social construct, rather than a self-referential locus that depends on its internal laws and dynamics. This seems even more urgent when market actors that, at least on paper, should be politically unbiased market-oriented investors, tend to act also as the long arm of State capitalism, that is, of foreign governments wishing to invest abroad in crucial socio-economic sectors and often connected with countries where the rule of law, in its multiple dimensions, is neither promoted nor respected.