FTDI Holding Limited, R (on the application of) v Chancellor of the Duchy of Lancaster in the Cabinet Office

Under the National Security and Investment Act 2021, the six-month period for giving a call-in notice begins when the Investment Security Unit becomes aware that a qualifying acquisition has occurred and may require investigation under the Act. It does not depend on the personal knowledge of the minister who later makes the call-in decision.

Awareness requires knowledge both of the trigger event and of its potential relevance to the exercise of statutory powers. Service by email under the Service Regulations may be effective where the Secretary of State reasonably believes that the document will come to the recipient’s attention. A failure to state adequate reasons in a final order does not necessarily invalidate it where the decision-maker had sufficient reasons and Parliament did not make validity depend on perfect compliance.

FTDI Holding Limited acquired an 80.2% interest in Future Technology Devices International Ltd in December 2021. The acquisition was a trigger event under the National Security and Investment Act 2021. The Secretary of State later called in the transaction and made a final order requiring divestment on national security grounds, principally concerning risks to critical national infrastructure.

FTDIHL sought judicial review on grounds including delay in giving the call-in notice, defective service, procedural unfairness, inadequate reasons, breach of A1P1, and irrationality. The court granted permission and considered the merits in the rolled-up hearing.

Permission and outcome. Permission to apply for judicial review was granted on all grounds. The challenge failed on Grounds 1A, 1B, 2, 4 and 5. Ground 3 was established in part, because the Final Order did not state adequate reasons, but that defect did not invalidate the order. The claim was therefore dismissed.

1. Awareness under NSIA. The relevant awareness under section 2(4)(b)(i) is not confined to the personal knowledge of the Secretary of State or the minister who ultimately makes the call-in decision. It is the awareness of the Investment Security Unit officials charged with investigating potentially relevant trigger events. However, knowledge of officials in another department does not count unless communicated to the ISU.
2. Awareness requires knowledge that a trigger event has occurred and that the acquisition may be relevant to the possible exercise of powers under NSIA. Mere knowledge of a transaction which happens to fall within the statutory definition of trigger event is insufficient. On the facts, the ISU and relevant officials were investigating a possible ECT acquisition and had not appreciated the relevance of FTDIHL’s earlier acquisition. Ground 1B therefore failed.
3. Service. Under regulations 3 and 4 of the Service Regulations, sending the Call-In Notice to FTDI email addresses was effective service on FTDIHL because the Secretary of State reasonably believed that the notice would come to FTDIHL’s attention. The notice was treated as given immediately after sending. The regulation-making power in section 53 was wide enough to authorise that method, and any non-compliance with regulation 3(6) did not invalidate service where the notice promptly reached the relevant persons. Ground 1A failed.
4. A1P1 and proportionality. It was unnecessary to decide whether divestment was deprivation or control of use. The proportionality assessment was substantially the same in either case. The court made its own assessment but gave great weight to the Secretary of State’s institutional expertise and statutory responsibility for national security. Divestment was rationally connected to the objective, struck a fair balance, and was not shown to be replaceable by less restrictive measures capable of achieving the same level of protection. Grounds 4 and 5 failed.
5. Fairness. The common-law and Article 6 duties of fairness had to accommodate national security. FTDIHL received an opportunity to make representations and sufficient information to give effective instructions. Disclosure compliant with AF (No. 3) was assumed without being finally decided, and was in any event provided. Ground 2 failed.
6. Reasons. Section 28(4)(d) required the Final Order itself to state the reasons for making it. The formulaic contents of the order were inadequate. Nevertheless, the decision-maker had considered the ministerial submission and annexes containing the substantive reasons, and the statute did not provide that every failure to comply with section 28 invalidated an order. Ground 3 therefore succeeded only to that limited extent.