Background
The case, R (on the application of FTDI Holding Ltd) v Chancellor of the Duchy of Lancaster [2025] EWHC 1922 (Admin), concerned a final order requiring FTDI Holding Ltd – a UK holding company ultimately owned by Chinese state-backed funds – to divest its 80.2% stake in a UK semiconductor firm, Future Technology Devices International (FTDI). The acquisition occurred in December 2021, prior to the NSI Act coming into force.
Grounds of challenge
FTDI challenged the divestment order on six grounds, the most prominent being that the Secretary of State had become aware of the acquisition more than six months before issuing the call-in notice. Under section 2(4)(b)(i) of the NSI Act, this would render the notice out of time.
The meaning of “awareness”
The court’s analysis focused on the meaning of “awareness” in this context. It held that awareness is not limited to the individual who made the call-in decision or the personal knowledge of the Secretary of State. Rather, it covers the knowledge of those within the Investment Security Unit.
Moreover, the court clarified that “awareness” requires both knowledge that: (1) a trigger event has occurred and, (2) it may warrant investigation under the NSI Act.
The Court ultimately found that the Secretary of State had not acquired the requisite awareness more than six months before issuing the call-in notice. The notice was therefore validly served within the statutory timeframe.
Insufficient reasons – but no invalidity
While the court rejected all but one of FTDI’s grounds of challenge, it did find that the final order failed to provide adequate reasons as required by section 28(4) of the NSI Act. However, the court concluded that Parliament did not intend for non-compliance with the requirement to give reasons to automatically nullify a final order, especially where sufficient reasons existed in substance. As such, the lack of sufficient reasoning did not undermine the validity of the final order, which remained in effect.
Implications for businesses and practitioners
This decision offers valuable guidance on the procedural aspects of the NSI Act, particularly the interpretation of statutory time limits and the scope of institutional awareness. For legal practitioners and businesses navigating the NSI regime, the judgment reinforces the need for careful consideration of timelines and internal communications when dealing with acquisitions that may fall within the scope of the Act.
