Research On The National Security Review Of Chinese Companies' Acquisition Of AI Companies In The United States

At the present,mergers and acquisitions of AI companies by Chinese companies in the US are vulnerable to US National Security Review,Chinese investors are facing a severe test.It can be seen from the failure of Ant Financial to acquire Money Gram and Canyon Bridge to acquire Lattice,Chinese enterprises' acquisition of AI companies is faced with the dilemma of increasing investment restrictions,increasing difficulty in applying mitigation agreements and insufficient relief.Following the implementation of the Foreign Investment Review Risk Assessment Modernization Act 2018 and supporting measures,the scrutiny will be more intense,the US national security review of foreign mergers and acquisitions has become the biggest obstacle for Chinese companies to go to the US.The review will be more stringent,as the national security review of foreign acquisitions in the US has become the biggest obstacle for Chinese companies to go to the US for mergers and acquisitions.To explore the way for Chinese companies to acquire American AI companies and improve the protection mechanism of investors' rights and interests is the key for Chinese companies to pass the review and acquire in the future successfully.The United States National Security Review has gone through three stages: germination,development and maturity,and each system tends to be perfect.Further study of the legislation system and theoretical basis of the foreign investment national security review in the United States,it can lay a foundation for a comprehensive analysis of the national security issues in foreign mergers and acquisitions of AI companies.The principle of national sovereignty is the theoretical or legal basis for the host country to regulate foreign investment based on national security.As a sovereign country,the host country has the natural right to manage the foreign capital merger and acquisition,the right to decide the conditions for foreign capital to enter and engage in business activities,and the right to protect itself from internal and external threats through legislation.However,the legalization of the national security review system itself will not change its inherent political characteristics.CFIUS and the president's review decisions are highly susceptible to political factors.For AI mergers and acquisitions,the tendency to politicize the review is more obvious.The US is likely to deviate from its original intention of balancing national security protection with the economic interests of foreign investment,and harm the economic interests of AI companies in order to protect national security.For Chinese investors,grasp the relationship between AI and key technologies,clarify the specific impact of foreign mergers and acquisitions of AI companies on national security,it is the key to choosing the right investment strategy.Then,it focuses on the legal dilemma of Chinese companies' acquisition of American AI companies.First,the US National Security Review legislation restricts Chinese companies from acquiring AI companies in the US.In the design of the system content,the United States not only further strengthens the review power of CFIUS,but also expands its review scope and emphasizes the special attention to countries.At the same time,the National Security Committee on Artificial Intelligence and the US-China Economic and Security Review Committee will be established to provide advice or reference for CFIUS.Second,mitigation protocols have become more difficult to apply in AI mergers and acquisitions.After the deal entered the national security investigation phase,the parties to the deal can negotiate with CFIUS on measures that mitigate national security threats in order to pass the review and close the deal.However,FIRRMA has raised the standards and requirements for mitigation agreements,and the special nature of AI companies makes it difficult to apply traditional mitigation measures..Third,the protection mechanism of investors' rights and interests is not perfect,and it is difficult for Chinese investors to obtain effective relief when their legitimate rights and interests are damaged.First,The United States National Security Review are not subject to national judicial review,and the oversight mechanism of Congress is insufficient.Second,the investment dispute settlement mechanism in international arbitration is not applicable to national security review,and there are limitations in WTO rules related to investment,such as TRIMS and GATS.In the end,China's legislation on overseas investment is not perfect,there are some problems,such as lagging legislation,low level,imperfect overseas investment insurance system,and insufficient overseas investment supervision,which can not protect investors' rights and interests in a timely and effective manner.Therefore,in order to protect the rights and interests of Chinese investors,to pass the national security review when acquiring AI companies in the United States successfully,and to avoid unfair review as much as possible,or to get relief when they suffer unfair treatment and their rights and interests are damaged,the Chinese government and companies can seek solutions from the following three aspects.First,Chinese investors can take the initiative to declare to CFIUS to save time and cost.In the review process,Chinese investors can use the "mitigation agreement" suitable for AI mergers and acquisitions to reduce national security risks,and make full use of the consultation mechanism to eliminate national security concerns of CFIUS.After the transaction is blocked,the investor can choose the judicial remedy of the host country and file a lawsuit in the US court against the procedural problems in the review process and decision-making.Second,Second,China's legislation on the protection of overseas investment will be improved as soon as possible.For example,we should formulate a higher-level overseas investment law,establish an overseas investment insurance system and strengthen supervision over overseas investment.Third,China should promote negotiations on a bilateral investment treaty between China and the United States actively.During the negotiations,China should reasonably draw up a "negative list" to clarify the scope of application of the "major security exceptions" clause.