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National Security/CFIUS

“This firm is best known for its market-leading CFIUS practice. The team receives praise for its in-depth knowledge of the relevant industries as well as the technical side of the process.”—Chambers USA 2013 (Nationwide: International Trade)

Kaye Scholer is renowned internationally for its National Security/CFIUS practice group. We have substantial experience in national security matters before the United States government, including the Department of Defense, the Department of Energy, the Committee on Foreign Investment in the United States (CFIUS), the Department of State, the Department of Commerce and the intelligence community.

CFIUS is a multi-agency committee empowered to review all foreign investments into US companies (including foreign-owned US businesses) that may affect US national security. US national security is interpreted very broadly by CFIUS, and includes not only transactions involving US defense contractors, but also mergers and acquisitions that could result in foreign control of US critical infrastructure, such as, for example, communications, energy, transportation, and mining assets. Following CFIUS review, the President may block transactions that are deemed a threat to the national security, making it essential to structure transactions to address anticipated national security concerns. Short of blocking a transaction, CFIUS can require a broad range of mitigation measures to address national security concerns. CFIUS-based mitigation is becoming increasingly common and can impose significant restrictions on the transaction and the ability of the buyer to control and access the acquired US business. Kaye Scholer lawyers have extensive experience representing clients in complex transactions, including negotiating and assisting companies with implementation of, and compliance with, a wide range of CFIUS-based mitigation arrangements.

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, communications, information systems, manufacturing, mining 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. Kaye Scholer consistently represents clients in nearly a quarter of all transactions notified to CFIUS each year, serving as lead counsel representing the buyers or sellers, or as national security advisors to the buyers or sellers.

In addition to CFIUS matters, we represent clients in all aspects of US national security regulatory issues, both in the context of transactions as well as with respect to general compliance.

Under the National Industrial Security Program Operating Manual (NISPOM), companies under Foreign Ownership, Control or Influence (FOCI) cannot hold facility security clearances unless FOCI has been effectively mitigated through a NISPOM-approved agreement. We have over 30 years of experience in negotiating effective FOCI mitigation arrangements, both in the context of foreign acquisitions of cleared contractors and obtaining facility security clearances for foreign-owned US companies. In fact, our lawyers assisted in the development of the FOCI mitigation arrangements now widely used by the US government, have assisted in government training programs, and drafted an American Bar Association monograph on the CFIUS and FOCI processes. We regularly work with key US government decision-makers to help craft successful FOCI mitigation programs. Over the past quarter century, we have been involved in negotiating and implementing a significant majority of the FOCI mitigation agreements approved by the US government—more than all other law firms combined. In particular, Kaye Scholer has helped establish numerous Special Security Agreements, Proxy Agreements, Security Control Agreements and FOCI Board Resolutions, including for some of America’s largest defense contractors.

We also 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 US affiliates on compliance issues, including the Foreign Corrupt Practices Act and US 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 in voluntary disclosures before the US Departments of State and Commerce, and also have assisted 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.

In the Market

  • Exon-Florio reviews before 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, including Special Security Agreements, Proxy Agreements, Security Control Agreements and FOCI Board Resolutions
  • 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 concerning US national security regulatory approvals for acquisitions
  • Representation of the world’s largest supplier of commercial airplane assemblies and components on national security issues related to $1.65 billion initial public offering and subsequent transactions
  • Representation of a major British defense company in numerous acquisitions of US national security contractors, including a $1.8 billion acquisition
  • Representation of one of the world’s leading aerospace and defense electronics companies in national security issues related to strategic Foreign Direct Investment (FDI) acquisitions in the United States
  • Representation of a leading Canadian information technology company in its $1 billion acquisition of a US defense contractor
  • Representation of a major French company in national security regulatory matters related to its $1 billion acquisition of a company engaged in critical identification technologies as well as numerous other acquisitions covering a variety of fields