Heightened security

Author: | Published: 1 Sep 2007

Just when experienced foreign investment lawyers think they have a finely honed due-diligence checklist for investments in the US, the US government dusts off a largely dormant statute and begins to scrutinize a wide swath of foreign investments for their national security implications.

The statute, known as the Exon-Florio Amendment to the Defense Production Act (named for its Congressional sponsors), was enacted in 1988 to authorize the President of the US to block investments by foreign interests in US businesses where the investment might impair US national security. The statute, administered by a little-known intra-agency body called the Committee on Foreign Investment in the US, or CFIUS, was thought for much of the first 17 years of its existence to be mostly concerned with foreign investment in defence contractors and companies developing products and technologies of direct significance to US national defence, such as satellite communications and semiconductors.

Then came...