The Committee on Foreign Investment in the United States (CFIUS) recently released its 2019 annual report, which provides information and statistics regarding transactions reviewed by CFIUS during 2019.  CFIUS released its 2018 annual report (as well as summary data for transactions reviewed in 2019) last month, which we wrote about here.  The 2019 annual report confirms and expands on the more limited 2019 data released last month.

Key takeaways include: (i) the number of CFIUS notices has remained relatively consistent over the past three years; (ii) the percentage of notices that proceeded to a second-stage investigation decreased significantly from 69% in 2018 to 48.9% in 2019; (iii) the percentage of notices withdrawn and refiled decreased from 18.6% and 18.3% in 2017 and 2018, respectively, to 7.8% in 2019; and (iv) only 4.3% of transactions reviewed by CFIUS during 2019 were abandoned as a result of CFIUS issues, compared to 10.5% and 8.7% in 2017 and 2018, respectively. Continue Reading CFIUS Releases 2019 Annual Report

On 6 July 2020, the UK Government announced the introduction of a “Global Human Rights” sanctions regime (the “GHR Sanctions”). The regime marks the first time the UK Government has imposed sanctions measures independently from the European Union and the first time it has exercised its ability to impose sanctions directly in response to human rights violations. However, the new measures do not necessarily indicate the UK’s future policy direction, and after Brexit the UK sanctions regime will look broadly similar to that of the EU. Continue Reading New UK Sanctions Regime Introduced

Last night, President Trump issued two Executive Orders establishing a framework for prohibiting transactions involving popular Chinese-owned communications apps WeChat and TikTok.[1]  Contrary to some press reports, the Executive Orders do not prohibit all transactions with their respective parent companies; they do not in fact set out the scope of the restrictions.  Rather, they give the Commerce Department authority to prohibit any transaction involving a U.S. person or within the jurisdiction of the United States involving the two services; each of the Executive Orders clearly states “45 days after the date of this order, the Secretary shall identify the transactions subject to subsection (a) of this section [which contains the broad authority to prohibit].”[2]  Furthermore, the scope of Commerce’s authority is subtly (and no doubt intentionally) different in the two Executive Orders: with respect to TikTok, the authority covers any transaction with ByteDance, TikTok’s parent; with respect to WeChat, the authority covers any transaction relating to WeChat involving its parent, Tencent Holding.  Commerce will, within 45 days, take further action specifying exactly which transactions will be prohibited; it is even possible, particularly with respect to TikTok if the mooted divestiture of U.S. operations occurs, that no restrictions will be imposed.[3]  Unless and until Commerce implements the Executive Orders, no restrictions are in place and their precise future scope is unknown. Continue Reading President Trump Authorizes Restrictions on WeChat and TikTok; Details to Come

On July 23, 2020, the Government published a Decree no. 2020-892 (the “Decree”)[1] and a Ministerial Order (the “Ministerial Order”)[2] both of July 22, 2020 on the temporary lowering of the threshold triggering control of foreign investments in French listed companies.  The Decree aims to temporarily reduce the threshold triggering review of non-EU/EEA investments when targeting French listed companies in the context of the COVID-19 pandemic.  As explained by the French Minister for the Economy, “[w]hile most foreign investment transactions are opportunities for French companies, the volatility of financial markets and the very sharp decline in the valuations of a large number of companies make them particularly vulnerable to potential unfriendly transactions, which calls for increased vigilance ».[3] Continue Reading France Foreign Investment Control – New Rules Temporarily Applicable to non-EU/EEA Investments Enter Into Force Today

Initial press reports last November that the Committee on Foreign Investment in the United States (CFIUS) had commenced a review of ByteDance’s acquisition of Musical.ly, the service that was merged into ByteDance’s video-sharing site TikTok and helped fuel its expansion, were not particularly surprising to those familiar with CFIUS and its concerns.  However, recent departures from established CFIUS processes in the TikTok matter are striking and concerning for persons engaging in cross-border transactions involving the United States, calling into question the scope, apolitical nature, confidentiality, and security focus of the CFIUS process. Continue Reading TikTok: Familiar Issues, Unfamiliar Responses

Yesterday, updated guidance from the U.S. Department of State relating to Section 232 of the Countering America’s Adversaries Through Sanctions Act of 2017 (“CAATSA”) was published in the Federal Register.[1]  The updated guidance, which became effective on July 15, 2020, expands the potential applicability of secondary sanctions pursuant to Section 232 with respect to Nord Stream 2 and the second line of TurkStream.  Any work on or financial involvement in NordStream 2 or the second line of TurkStream will now be sanctionable, even if undertaken pursuant to an existing contract.  This could affect, among other things, lending and other financing to companies (including European companies) with any connection to either project.

Continue Reading Updated Guidance for Section 232 of CAATSA Published

On July 14, President Trump issued an Executive Order pursuant to the Hong Kong Policy Act eliminating the separate status of Hong Kong and China under various provisions of U.S. law, including export controls, immigration, tax, and extradition, as well as providing for the implementation of recent Hong-Kong related sanctions authorities.

Please click here to read the full alert memorandum.

Today, President Donald Trump signed into law the Hong Kong Autonomy Act (“HKAA”), authorizing the U.S. administration to impose blocking sanctions against individuals and entities (as well as visa bans in the case of individuals) determined to “materially contribute” to the erosion of Hong Kong’s autonomy.  The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority.[1] Continue Reading United States Enacts Additional Hong-Kong Related Sanctions; Impact Remains Unclear

On June 3, 2020, the International Chamber of the Paris Court of Appeal rejected an annulment application brought against an arbitral award rendered by a Paris-seated ICC arbitration tribunal. The ICC tribunal on December 27, 2018 rendered an award in favor of the Iranian Natural Gas Storage Company (“NGSC”), in a dispute arising out of the termination of a contract for the conversion of a gas field.

The Court held that the ICC award at issue, which had allegedly failed to take into account the impact of US and international sanctions against Iran on the termination of the contract, did not violate the French conception of international public policy. The court also found that EU and UN sanctions constitute overriding mandatory rules that form part of international public policy, whereas US sanctions do not. This decision provides useful guidance on the potential impact of international sanctions on the validity and enforcement of arbitral awards.

Please click here to read the full alert memorandum.

This Trade Summary provides an overview of WTO dispute settlement decisions and panel activities, and EU decisions and measures on commercial policy, customs policy and external relations, for the first quarter of 2020.

If you have any questions regarding the above, do not hesitate to contact fclaprevote@cgsh.com or tmuelleribold@cgsh.com.