The Cause And Response To Foreign National Security Review System Of Foreign M&A

Compare to the extreme hunger for foreign investment when the financial crisis outbroke, with the economic recovery in recent years, states began to strengthen the control to foreign investment. As the most powerful means of control of foreign investment, national security review system of foreign M&A has been fully utilized, even become a political tool, hindering the freedom of international investment. From a series of failed cases such as BAIC Group vs. OPEL in2009, Chinalco vs. Rio Tinto Group in2009, and Huawei vs.3Leaf in2011, we found that the investments abroad of Chinese enterprises frequently got stuck by foreign national security review. To improve and apply the legal system, it is very important to clarify the bases of legal theory and legal norms, elaborate the proper meaning, affirm it the reflection of national sovereignty in the investment field and demonstrate the value of protecting the freedom of international investment. With normative and empirical analysis on the national security review system of foreign M&A of Germany in Europe, Australia in Australia and the United States in America, we found that the new development of the legal system in the2007financial crisis stimulus had already deviated from the proper meaning. The legal system has been used for political purposes instead of counterbalance interests between investors and host countries, also relationship between investment freedom and national sovereignty, even has led a negative impact on international investment, including Chinese overseas investment. Consequently, Chinese enterprises should not only make efforts to accommodate the foreign review, but to respond it, namely Chinese enterprises should rationally evade the legal risk and fully use the legal remedies. For rationally evading the legal risk, Chinese enterprises should firstly dilute their state-sector camaraderie, then choose to invest non-sensitive industries and gradually infiltrate the sensitive ones, communicate with review institution and strengthen political lobbying and public relations to through the review, last but not least slow down to reach agreement when necessary. Unfortunately, for now it has often seemed that Chinese enterprises have already got stuck by the review, thus legal remedies would be more effective. Besides taking advantage of the inbuilt judicial examination of the host country review system, Chinese enterprises could further seek the domestic legal protection for private property of the host country, they could also submit the eligible disputes to ICSID or DSB. However, the comprehensive response made by Chinese enterprises can not solve the problem the international investments meet for now, as a condition the national level legislation is required. When improving legislation, China should firmly protect the freedom of investment, at the same time, it should take appropriate anti-measures in respond to certain countries, which have deviated from the system insight of protecting the freedom of international investment and abused the national security review, to promote the future long-term win-win cooperation based on equality and mutual among states.