FTDI Holding Ltd's challenge against the chancellor of the duchy of Lancaster

Introduction

The High Court of Justice, King's Bench Division, has delivered its judgment in the case involving FTDI Holding Limited and the Chancellor of the Duchy of Lancaster. The court, presided over by Lord Justice Singh and Mr Justice Chamberlain, refused an application for interim relief by FTDI Holding Ltd. The case centred on a judicial review of the Chancellor's decision to order FTDI Holding Ltd to divest its 80.2% share in Future Technology Devices International Limited under the National Security and Investment Act 2021.

Legal Framework

The case was governed by the National Security and Investment Act 2021, which empowers the Secretary of State to issue a 'call-in notice' if a 'trigger event' is suspected to pose a national security risk. The Act outlines specific timelines and conditions under which such notices can be issued and actions taken.

Factual and Procedural Background

FTDI Holding Ltd, a company with significant Chinese ownership, acquired a major stake in FTDI, a semiconductor company, in December 2021. Concerns arose over the transfer of UK-developed semiconductor technology to China and potential disruptions to critical national infrastructure. Consequently, a call-in notice was issued in November 2023, followed by a final order in November 2024, mandating the divestment of FTDI's shares.

The Test for Interim Relief

The court considered the application for interim relief under the principles established in American Cyanamid Co. v Ethicon Ltd. The claimant argued against the imposition of a higher merits threshold in public law cases, while the defendant emphasised the importance of national security considerations in the balance of convenience.

The Merits of the Claim

FTDI Holding Ltd presented multiple grounds for judicial review, including arguments on timing, procedural fairness, and proportionality under the European Convention on Human Rights. The court acknowledged the complexity of these issues but focused on the balance of convenience in its decision-making process.

Adequacy of Damages

The court recognised that damages might not fully compensate FTDI Holding Ltd for the strategic importance of its investment. However, it emphasised that the public interest in national security could not be compensated through financial means.

Balance of Convenience

In weighing the balance of convenience, the court considered the potential national security risks and the impact on FTDI Holding Ltd's property rights. It concluded that the public interest in national security outweighed the claimant's interests, leading to the refusal of interim relief.

Conclusion

The court's decision highlights the significant weight accorded to national security considerations in cases under the National Security and Investment Act 2021. The judgment underscores the challenges faced by foreign-owned entities in navigating UK national security laws.

Learn More

For more information on shareholder law, see BeCivil's guide to Shareholder Law.