USA Law and Practice Contributed by: G. J. Ligelis Jr., Christopher K. Fargo, Alyssa K. Caples and Margaret T. Segall, Cravath, Swaine & Moore LLP
resolve its concerns. These conditions (referred to as “mitigation measures”) are generally memorialised in a contract (referred to as a “National Security Agree - ment” or a “mitigation agreement”) between the par - ties to the covered transaction and one or more of the CFIUS member agencies. Recent mitigation measures have included: • prohibiting or limiting the transfer or sharing of cer - tain intellectual property, trade secrets or technical knowledge to the foreign investor; • ensuring that the foreign investor does not have access to systems that hold sensitive information; • ensuring that only US citizens handle certain prod - ucts and services; • ensuring that certain facilities, equipment, data and operations are only located in the USA; • notifying (and requiring approval of) relevant US government parties in advance of visits by non-US nationals to the US business; • excluding certain sensitive assets from the transac - tion; • notifying customers of the US business of the change of ownership; and • establishing corporate governance mechanisms (including board committees) to ensure compliance with mitigation measures. As of October 2025, violation of a material provision of a mitigation agreement may result in a civil monetary penalty of up to USD5,000,000 or the value of the transaction, whichever is greater. In addition, in cer - tain circumstances the CFIUS may reopen its review of the transaction and exercise its other authorities, including recommending that the President force a divestiture. 7.4 National Security Review Enforcement If the CFIUS determines that a covered transaction under review or investigation may pose a national security risk, the CFIUS may impose interim mitigation measures or prohibit the parties from consummating the transaction while the CFIUS completes its work. If the CFIUS ultimately determines that the risk cannot be mitigated, the CFIUS may refer the transaction to the President for action.
Following a referral from the CFIUS, the President may suspend or prohibit a covered transaction that threat - ens to impair US national security, including by forc - ing a divestiture if the transaction has already been consummated. The President must announce a deci - sion on whether to suspend or prohibit a transaction no later than 15 days after the earlier of the date on which the CFIUS completed the investigation of the transaction or the date on which the CFIUS referred the transaction to the President. Generally, there is no appeal mechanism within the CFIUS process, and the actions of the President are not subject to judicial review. Legal challenges to US government actions under the CFIUS process are rare and may be brought only in the United States Court of Appeals for the District of Columbia Circuit. See 7.1 Applicable Regulator and Process Overview for a discussion of the consequences of making an investment subject to the jurisdiction of the CFIUS without prior approval from the CFIUS. Depending on the industry in which an FDI transaction is made, there may also be industry-specific regula - tory review or requirements arising at the US federal or state level. Two such examples are described below for illustrative purposes. Foreign investment in a US business in the telecom - munications services sector may require a licence or other authorisation from the Federal Communications Commission (the “FCC”). The FCC may refer an appli - cation for the licence or authorisation to the Commit - tee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (commonly referred to as “Team Telecom”), a multi- agency committee of the US government that assists the FCC in connection with national security and law enforcement concerns that may be raised by foreign participation in the US telecommunications services sector. 8. Other Review/Approvals 8.1 Other Regimes
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