In September 2012, an affiliate of Sany Heavy Industry acquired four wind farm project companies in the United States, which was rejected by the President of the United States on the grounds of national security. The company has since filed a lawsuit accusing the Obama administration of overreaching. The latest development is on the 16th, "A U.S. federal appeals court ruled that the Obama administration violated the legal rights of Chinese company Ralls Corp. in reviewing a foreign acquisition and the company should be allowed to cross-examine. "In fact, this is only a staged progress in the court of second instance, and there is no victory on the substantive issue. The ruling overturns a US federal judge's ruling in favor of the Obama administration last year, which may force the US government to issue a ruling on its national security review. More conversations with businesses on non-confidential information used in

 

In fact, behind the case, the matters that Chinese companies need to pay attention to when investing in the United States are more worthy of attention. Nengdoujun specially invited Wuyang (pseudonym), a senior lawyer from Caixinenergy in Washington, USA, to interpret it for everyone. Wuyang had previously worked in the Ministry of Commerce of China. [Dry goods] The procedure is as follows:

 

Significance of the judgment for Sany Heavy Industry and Chinese enterprises

 

[Omnipotent Text|Wuhang] This is a verdict that lifts the spirits, but for Sany, it is far from a victory. The significance of this verdict is reflected in the following points:

 

Limited short-term effect: Sany will not have practical benefits

 

It does not allow Sany to regain the acquired assets, nor allow it to complete the prohibited M&A transactions as it wishes, nor allow it to have even the slightest hope of obtaining compensation from the U.S. government for the prohibited transactions (U.S. law It is clearly stipulated that, with few exceptions, the government enjoys the sovereign immunity of the state and is not required to make financial compensation). Therefore, in the short term, for Sany, this case will not bring any great practical benefits; on the contrary, litigation in the United States is not cost-free, the litigation is delayed for a long time, and the lawyer's fees are very expensive, and it is impossible to start a lawsuit. to short-term, immediate results.

 

Significant long-term significance: reducing obstacles for Chinese companies to invest in the United States

 

First, this judgment of the court of second instance helps to urge the U.S. government to no longer arbitrarily and rudely reject and prohibit Chinese companies and individuals in the mechanism for national security review of mergers and acquisitions in the United States, and There is extremely limited or even non-existent information communication in the review process; instead, more transparency should be given, including more communication to the censored object of the government’s concerns and concerns, and more targeted at the censored object. Government concerns, rights and opportunities to participate in and submit information, factual evidence, self-defense, explanations, and clearing doubts affect the government's decision-making process. On the other hand, the U.S. government should be more cautious in conducting national security reviews and adopt stricter standards, rather than arbitrarily banning them.

 

Second, if not overturned by the Supreme Court or changed by Congressional legislation, the judgment of the court of second instance, which establishes and improves the constitutional precedent of the United States, will give the United States federal court greater power to formally and procedurally challenge the United States. Administrative decisions of administrative organs are subject to judicial review; and specifically, certain restrictions are imposed on the practice of national security review of government foreign capital mergers and acquisitions.

 

Third, in the judgment of the court of second instance, the court clearly asked: "The wind farms invested by other foreign investors are also near the military bases involved in this case, why are they not prohibited?" This question reveals the US government from a side and objective perspective. The double standards and unfair and non-transparent review methods adopted in the review of Chinese companies and individuals in the U.S. mergers and acquisitions will promote future Chinese companies and individuals to acquire in the United States, reduce obstruction and provide convenience.

 

Fourth, the judgment of the court of second instance and related lawsuits have increased the popularity and exposure of Sany Heavy Industry in the United States, China, and even the world.

 

Fifth, this judgment of the court of second instance can promote the negotiation and negotiation of bilateral investment agreements between China and the United States from the side, and alleviate or even eliminate the national security review of foreign investment in the United States and some investment obstacles in other aspects. In the long run, it will play a positive role in Chinese companies' business, trade and mergers and acquisitions in the United States.

 

In a word, the courageous and pioneering move of Sany to initiate a lawsuit has advantages and disadvantages. Those who are short-sighted think that the disadvantages outweigh the advantages; those who take a long-term view and the overall situation believe that the advantages outweigh the disadvantages.

 

Enlightenment for Chinese enterprises to invest and trade in the United States:

 

First, due diligence should be done before determining the investment project, and intermediaries such as law firms with strong ability and reputation should be hired to conduct a comprehensive assessment of the potential risks that investors may face, including the possibility of involving foreign investment countries. A series of issues such as security review, anti-monopoly review of corporate mergers and acquisitions, labor, environmental protection, and financial compliance. The US legal system is complex and involves many issues, and companies need good legal advice and policy risk advice. For example, in the wind farm investment in this case, Sany did not pay attention to the fact that the acquired wind farm was located within the scope of the U.S. Naval Aviation Flight and Bombing Test Base, and did not fully understand the seriousness of the problem, let alone U.S. law voluntarily submits a declaration to the Committee on Foreign Investment in the United States and requires it to pass a national security review. In fact, Sany was passively involved in the investigation after the U.S. government received objections from the Navy Department. At this time, it was too late and became passive.

 

Second, after encountering legal and policy risks, companies investing in the U.S. should promptly and proactively use the rights conferred by U.S. laws, use various tools such as laws, policies, and lobbying, and use the U.S. legal system and political system to decentralize checks and balances. , the characteristics of multiple interests, and actively advocate their rights and interests. In this regard, Sany has done a good job, hiring the top Bancroft law firm in the capital Washington, DC, and a recognized authoritative litigator Paul Clement (the former chief government lawyer at the deputy minister level of the U.S. Department of Justice, a position representing the U.S. government in The lead attorney before the Supreme Court, a professor at Georgetown University Law School), Viet Dinh (a former Deputy Attorney General of the United States Department of Justice and a professor at Georgetown University Law School), etc., represented his litigation. Sany's bold and pioneering spirit and the courage to challenge the US government's political decision by legal means are worth learning and reference by other domestic enterprises going abroad.

 

Third, investing in the United States should fully understand the political and economic background and macro policy environment, give full play to the role of political consultation and communication, and avoid sensitive political and military projects, sensitive areas and sensitive industries. At the same time, pay attention to cultivate a good and harmonious relationship with the local government, community and people of the investment target.

 

Fourth, the success of Chinese companies’ investment in the United States largely depends on the strengthening of contact, communication, consultation and negotiation between the governments of China and the United States, as well as the strengthening of mutual trust between the two countries from the government to the people; abandoning zero-sum competition Thinking, Cold War hostile thinking, and creating a good macro policy environment conducive to investment and business development by the people of both sides is the fundamental solution.

 

[Rising posture] At present, the media generally use the "Sany Heavy Industry v. Obama case" to describe the case, which is actually inaccurate. The plaintiff in the case is a company called Ralls (Ralls) funded and established in Delaware by two executives of Sany Heavy Industry, and the defendant is the Committee on Foreign Investment in the United States (CFIUS) "and others" (et al). That is to say, the plaintiff is not actually Sany, and the first defendant is not Obama.