Investment Screening

Over the last two decades, the United States and other governments around the world have implemented a wide range of finance, trade, defense procurement, information sharing, and ownership restrictions to protect national security and public order interests. These measures are often global in scope and effect. Sidley routinely guides clients through this new and evolving set of national security and public order legal requirements. Drawing on their collective years of experience in the public and private sectors, our lawyers and policy advisers — strategically situated in vital financial and industry capitals in 20 offices worldwide — leverage the firm’s global platform and vast cross-servicing opportunities to support our clients.

International Trade and International Arbitration
“Practice Groups of the Year”
Law360, 2020

Achievements

Partner James Mendenhall Recognized for His Broad CFIUS Knowledge and Experience in Chambers USA 2021

Sidley Receives a Total of 106 Practice and 265 Lawyer Rankings

Global Outlook and Influence

United States

The Committee on Foreign Investment in the United States (CFIUS) reviews inbound investments for national security concerns and has the authority to impose conditions on investments, block investments, and order divestment. Even transactions that do not raise apparent national security concerns may nonetheless draw the attention of CFIUS agencies, Congress, and the President. Failing to comply with the statutory and regulatory requirements, and failing to make filings when necessary or appropriate, could result in significant civil monetary penalties, damages, and other remedial measures, and can lead to reputational harm.

Sidley helps clients successfully navigate the complex and sensitive legal, commercial, political, and public relations issues presented by the CFIUS process. Our team includes practitioners with decades of experience in this area, including former government officials who have served on CFIUS. We work with clients who deal in complex investment structures across a wide range of sectors, including aerospace/defense, biopharmaceutical, electric vehicles, energy, financial services, information technology, manufacturing, mining, real estate, satellite, semiconductor, software, telecommunications, and transportation, among others. The breadth of our experience and services allows us to solve even the most complex issues. We advise on deal structuring, risk analysis, and all aspects of CFIUS proceedings, from the pre-filing stage, through the formal process, negotiation of mitigation agreement, and monitoring.

Our seasoned government relations team is particularly well equipped to manage the political aspects of CFIUS proceedings. We represent institutions involved in some of the highest-profile foreign acquisitions. Working closely with members of Congress and their senior staffers — including at the Senate Banking Committee and House of Representatives Financial Services Committee — we help ease the political pressures placed upon agency decision-makers by focusing on the merits of each transaction. Multiple members of our team, while working at the U.S. Department of Defense and the U.S. Department of Justice, assisted with the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) implementation.

Our team includes, among many others: former general counsels to the Office of the U.S. Trade Representative, the National Security Council, and the Office of Management and Budget; a former deputy director in the Office of Foreign Investment Review at the Department of Defense; former associate counsels to the President in three different administrations; a former acting attorney general and assistant attorney general for the Civil Division of the Department of Justice; a vice chairman of the Privacy and Civil Liberties Oversight Board; and a former legal counselor to the European Union.

Outside the United States

Many jurisdictions around the world have adopted, or are considering adopting, regulations to screen foreign investment on national security and public order grounds. In today’s world, investors need to be cognizant of these regulations, as the consequences for failing to comply are potentially severe. Divestment orders, and civil and criminal penalties, are possible in many cases, and such actions can result in significant reputational consequences. Sidley is well positioned to advise clients on these matters worldwide.

Proficiency in Related National Security Areas

The U.S. government and other governments have put in place an array of other processes and requirements that apply in addition to the investment screening process and that may influence investment screening decisions. These processes include the following:

Export Controls: Our export controls lawyers focus on licensing and compliance under the Export Administration Regulations and the International Traffic in Arms Regulations administered by the Departments of Commerce and State, respectively. We regularly advise on export control rules as set out both at the EU and EU Member State levels and, following Brexit, as adopted by the United Kingdom.
Sanctions: Members of Sidley’s economic sanctions team have a clear command of the economic sanctions administered by the Department of the Treasury’s Office of Foreign Assets Control, the Council of the European Union, and, following Brexit, those maintained by Her Majesty’s Treasury of the United Kingdom.
FOCI Mitigation: We advise clients on all aspects of interactions and agreements with the Defense Counterintelligence and Security Agency (DCSA) needed to mitigate FOCI, including mitigation instruments such as Special Security Agreements, Proxy Agreements, and Board Resolutions required by the DCSA. This advice is normally provided in connection with mergers and acquisitions, principally when non-U.S. entities, including private equity funds with non-U.S. investors or offshore intermediary entities, are acquiring U.S. businesses that perform classified work and therefore require DCSA security clearances. Similar advice is also provided for transactions in which Sidley clients are selling entities performing classified work, to ensure that buyers’ counsel and sellers’ counsel can work effectively together to ensure continuity in this area. Recently, our FOCI team has advised clients in the United States, Europe, Asia, and Australia on purchase and sales transactions focused on companies with high-level security clearances.
Team Telecom: Sidley has a dedicated team of lawyers who counsel clients regarding the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (formerly, Team Telecom). Our lawyers handle applications before the Federal Communications Commission that generate Committee/Team Telecom inquiries; respond to Committee/Team Telecom questionnaires; engage with the Executive Branch agencies that make up the Committee/Team Telecom to address questions and negotiate agreements; and generally assist clients in understanding and navigating through the telecommunications foreign ownership process.
Defense Contracting and Procurement: Our firm represents many U.S. and foreign aerospace and other defense contractors in a range of advisory, investigative, and litigation roles related to contracts with departments of the U.S. government. Our advice extends to contract structuring, contract claims and disputes, the Federal Acquisition Regulation’s cost principles, False Claims Act suits, and investigations and compliance programs addressing various ethical and criminal law requirements, including those of the Foreign Corrupt Practices Act.
Privacy and Information Governance: Sidley’s privacy and information governance team has extensive experience in information law. Our lawyers address U.S., EU, Chinese, and other data privacy issues; global data protection programs; information security; internet issues; and representation in connection with data breaches. These issues often intertwine with other national security issues, especially those that involve classified information or cross-border data transfers.

Representative Investment Screening Matters

Sidley has advised clients on national security and public order implications of hundreds of transactions, and our lawyers (while at and prior to joining Sidley) have advised clients on numerous filings before CFIUS and other relevant authorities worldwide. Our recent work includes representing:

Contacts

James Mendenhall

Partner

jmendenhall@sidley.com +1 202 736 8141

Washington, D.C.
Sven De Knop

Partner

sdeknop@sidley.com +32 2 504 6468

Brussels
Jen Fernandez

Partner

jen.fernandez@sidley.com +1 202 736 8824

Washington, D.C.
Grigore Alexandru

Policy Advisor

galexandru@sidley.com +1 202 736 8156

Washington, D.C.

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