Under the Exon-Florio Amendment to the Defense Production Act, CFIUS was empowered to review foreign acquisitions that may affect U.S. national security, including not only transactions involving U.S. defense contractors, but also mergers and acquisitions that could result in foreign control of critical infrastructure. Transactions not properly structured to address national security concerns or otherwise deemed a threat to the national security may be blocked by the President after CFIUS review.
Our lawyers have been recognized by Chambers USA: America’s Leading Lawyers for Business and Chambers Global: The World’s Leading Lawyers for Business as leading practitioners before CFIUS. Our experience includes matters involving the defense, aerospace, and technology sectors. Over the past 20 years, we have helped clients around the globe negotiate the CFIUS process, including clients from Australia, Austria, Bermuda, Canada, China, Denmark, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Singapore, Sweden, Switzerland and the United Kingdom. In 2007 alone, there were nearly 150 CFIUS filings. In roughly 20 percent of these cases, Kaye Scholer was involved as lead counsel representing the buyers or sellers, or as national security advisors to the buyers or sellers. With enactment of the Foreign Investment and National Security Act (“FINSA”) in 2007, foreign acquisitions came under additional scrutiny. In 2008 and continuing into 2009, we have been involved in nearly one out of every four CFIUS filings.
We advise companies on cross-border investments and foreign direct investments on all aspects of the U.S. national security review process. Under the National Industrial Security Program Operating Manual (“NISPOM”), companies under Foreign Ownership, Control or Influence (“FOCI”) cannot receive facility security clearances unless FOCI has been effectively mitigated through a NISPOM-approved agreement. We have more than 25 years of experience in negotiating effective FOCI mitigation arrangements. Indeed, our lawyers assisted in the development of the FOCI mitigation arrangements now widely used by the U.S. government, have assisted in government training programs, and are currently helping to draft an American Bar Association monograph on the CFIUS and FOCI processes. We regularly work with key U.S. government decision-makers to help craft successful FOCI mitigation programs. Over the past quarter century, we have been involved in negotiating a significant majority of the FOCI agreements approved by the U.S. government — more than all other law firms combined — and have drafted more than 60 percent of the Special Security Agreements currently in place at foreign-owned companies, including some of America’s largest defense contractors.
We have advised a multitude of foreign and foreign-owned companies on regulatory and legislative matters, and represent a broad range of international companies and their U.S. affiliates on compliance issues involving U.S. export control laws, including the International Traffic in Arms Regulations (“ITAR”) and the Export Administration Regulations (“EAR”), as well as trade sanctions administered by the Office of Foreign Assets Control (“OFAC”). In particular, we have successfully represented numerous companies before the U.S. Departments of State and Commerce with respect to voluntary disclosures, and also assist clients in a wide variety of export compliance matters, including securing export licenses and Technical Assistance Agreements, preparing commodity jurisdiction requests and meeting ITAR registration requirements. We also perform comprehensive due diligence reviews and assessments in conjunction with new acquisitions.
Representative Matters
- Exon-Florio reviews before the CFIUS on hundreds of transactions ranging in value from less than $1 million to $38 billion.
- FOCI mitigation arrangements in compliance with national industrial security regulations.
- Export control compliance matters before the Department of State and the Department of Commerce.
- Representation of principal Italian industrial group operating globally in aerospace, defense and security sectors; advice and counsel concerning U.S. national security regulatory approvals for acquisitions.
- Representation of the world’s largest supplier of commercial airplane assemblies and components; advice and counsel on national security issues related to $1.65 billion initial public offering and subsequent transactions.
- Representation of major British defense company in numerous acquisitions of U.S. national security contractors, including a $1.8 billion acquisition.
- Representation of one of the world’s leading aerospace and defense electronics companies; advice and counsel in national security issues related to strategic Foreign Direct Investment (“FDI”) acquisitions in the United States.
Representative Clients
- Cobham plc
- EADS N.V.
- Ericsson Inc.
- Finmeccanica S.p.A.
- GKN plc
- MBDA
- Meggitt PLC
- Nortel Government Solutions Incorporated
- QinetiQ Group plc
- Reed Elsevier PLC
- Rolls-Royce plc
- Saab Holdings U.S., Inc.
- SAFRAN
- Selex Sensors and Airborne Systems (U.S.) Inc.
- Spirit AeroSystems Holdings, Inc.
- Thales
- Ultra Electronics Holdings plc
- VT Group plc