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Oral Arguments Held in First-Ever Challenge to CFIUS National Security Review of Foreign Investments in the United States

On May 5, the US Court of Appeals for the District of Columbia (DC Circuit) heard oral arguments in Ralls Corp. v. CFIUS et al. The case is the first-ever challenge to the review process conducted by the Committee on Foreign Investment in the United States (CFIUS) within the US federal government that reviews investments by foreign persons in the United States on national security grounds. In 2012, after the acquisition was completed, CFIUS halted and US President Barack Obama subsequently ordered Ralls Corporation, owned by two Chinese nationals, to divest its acquisition of four wind farm project companies in Oregon due to their proximity to a US Navy weapons testing and training facility. Ralls filed a lawsuit challenging the CFIUS and Presidential orders in the US District Court for the District of Columbia (District Court). The District Court ruled against Ralls, citing, inter alia, its failure to file advance notice of the transaction with CFIUS and the non-reviewable nature of the President's actions. On appeal before the DC Circuit, the oral arguments focused on the issue of transparency in the President's decision-making process. The case is important because it weighs the due process foreign investors are entitled to during CFIUS review. It also underscores the importance for potential investors in the United States to carefully consider engaging and filing notice with CFIUS and to remain alert to potential national security considerations in their investments—no matter how innocuous the target—such as proximity to military facilities.

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