AC-2024-LON-003985 - [2025] EWHC 1922 (Admin)

I will take those Grounds of challenge in the order in which they were addressed by Mr McClelland KC orally, which is somewhat different from that of the Re-Amended Statement of Facts and Grounds, but which makes them, in my view, easier of comprehension.

FTDIHL’s case in relation to this Ground is that CDL was ‘aware’ of the relevant ‘Trigger Event’ before 23 May 2023, and that the Final Order was therefore unlawful, having been made in breach of the mandatory procedure under NSIA.

This argument is based on the following. The relevant ‘Trigger Event’ in this case was FTDIHL’s acquisition of a >75% shareholding in FTDI. There is no dispute that FTDI is a ‘qualifying entity’ within s. 7 NSIA. By the acquisition of more than 75% of its shares, FTDIHL ‘gained control’ of FTDI, as is provided by s. 8(1) NSIA. That acquisition was therefore a ‘trigger event’ for the purposes of s. 5(1)(a) NSIA, and occurred on 7 December 2021. By reason of the knowledge acquired by officials within and cooperating with ISU during 2022, the ‘Secretary of State’, was ‘aware’ of this ‘trigger event’ during 2022 and in any event before 23 May 2023. S. 2(4)(b)(i) NSIA provides that a Call-In Notice may not be given more than 6 months after the Secretary of State ‘became aware of the trigger event’. In the circumstances, the Call-In Notice of 22 November 2023 was given outside the period prescribed by the NSIA and was unlawful.

The CDL denied that there was any relevant awareness of the ‘trigger event’ before 23 May 2023. His case was that, as the CDL had himself taken the Call-In decision personally, it was only his awareness which was relevant, and he had no personal awareness of the ‘trigger event’ until 20 November 2023. Or, even if the relevant awareness was not confined to the CDL’s personal awareness, there was no awareness on the part of any relevant official before 23 May 2023.

The merits of this Ground thus depend, as already mentioned, both on who was aware of what and when, and on whose awareness counts as that of the ‘Secretary of State’. It is convenient to address those two issues in that order, and then express my conclusions on this Ground.

There was both OPEN and some CLOSED evidence as to what was known by officials during the course of 2022 which might be argued to constitute a relevant awareness of the ‘trigger event’. There were witness statements from Amy Newland, Deputy Director of the ISU, from Steven Adcock, and from Jack Irwin and Shakara Lemonious on which they were cross-examined. There was documentary evidence as to what had occurred. I have given a very brief description of what that evidence indicated above. In more detail, I find that the position was as follows.

The Department for International Trade (‘DIT’) had commissioned a report from a private external consultancy firm in or before July 2022, and DIT had shared the report with DCMS. By an email of 3 August 2022 Mr Hugo Carpenter of DCMS had drawn the attention of Mr George Crundwell of the ISU’s Risk ID Team to the fact that there was to be, or might have already been, an acquisition of FTDI by ECT. Mr Carpenter’s email said, in part:

Mr Carpenter’s email was forwarded by Mr Crundwell to Mr Adcock on 4 August 2022. On 10 August 2022 Mr Adcock asked a colleague in ISU, Mr Riten Patel at the MM team to create a MM case. Some initial MM due diligence was then carried out on the putative FTDI/ECT transaction, which obtained some information on ECT. On 16 August 2022 the FTDI/ECT transaction was moved to triage; and on 18 August 2022 a MM case was created and Ms Shakara Lemonious, at the time a Higher Executive Officer in the Risk ID team, was allocated as the case worker.

During the course of her investigation into whether there had been or would be an acquisition of FTDI by ECT, Ms Lemonious looked at various pieces of information. One check which she did was to review the Companies House pages for both FTDI and ECT, and recorded her findings in the ISU’s Risk ID Case Management System (or ‘CMS’). The ‘People’ page for FTDI identified FTDIHL as the one person with significant control of FTDI, with the nature of that control being Ownership of 75% or more of the shares, Ownership of 75% or more of the voting rights, and the Right to appoint or remove directors. This information was stated to have been ‘Notified on 7 December 2021’. The same page identified Ms Cathy Dart as having ceased to be a person with significant control of FTDI on 7 December 2021. Another entry identified there as being 5 current officers, gave their names, nationalities (2 Chinese, 2 Singaporean and 1 American) and countries of residence (4 China, 1 Singapore); and stated that all five had been appointed on 7 December 2021. Ms Lemonious carried out other checks and identified that the shareholders of FTDI were FTDIHL with 80.2% and Stoneyford Investments Ltd with 19.8%.

After Ms Lemonious had completed version 1 of her transaction summary within ISU’s CMS, she requested input from other government departments. DCMS was sent the transaction summary on 16 September 2022, and was asked to provide a return by 17 October 2022. Mr Irwin was asked to prepare DCMS’s response. At the time Mr Irwin was a policy advisor (Band B) at DCMS in the Semiconductor Team within the Economic Security Unit (or ‘ESU’). Mr Irwin’s responsibilities included the development of semiconductor strategy and input concerning NSIA. Mr Irwin has strong Mandarin language skills.

Mr Irwin looked at a number of Chinese language news sources. One article indicated that the Jianguang Guanglian fund had received an investment from ECT and established a limited partnership with JAC; and that only a month later, Jianguang Guanglian and other funds under JAC management ‘jointly established Feite Holdings, and Feite Holdings acquired 80.2% of FTDI’s equity for US$414.14 million through [FTDIHL], a wholly-owned British grandson company’. The article went on to suggest that ECT had then also, subsequently, acquired the remaining 19.8% of the equity.

The DCMS response, once prepared by Mr Irwin, was seen and approved by Mr Robert Fleck, Head of the Semiconductor Sector Team at the ESU. On 18 October 2022 it was submitted on the CMS. This response included that: ‘news reporting indicates that a Chinese electronics firm, [ECT], will or have already invested in UK-based [FTDI]. These sources report that ECT will acquire both shareholdings held by FTDI’s holding company (80.20%) and also the remaining shareholding in FTDI owned by Stoneyford Investments, a Guernsey registered company. This represents a 100% acquisition of FTDI.’ The response also included the statement that ‘as of December 2021’ FTDI was owned as to 80.2% by [FTDIHL] (UK registered) and 19.8% by Stoneyford Ltd. I accept the inference drawn in Mr Payne’s Fourth OPEN witness statement that the reference to December 2021 must have been derived from a source which linked that date to FTDIHL’s acquisition of significant control over FTDI.

On 20 October 2022, Mr Irwin emailed Ms Lemonious to say that DCMS considered there to be a potential for risk, and therefore an Information Notice should be sent to FTDI. Mr Irwin then drafted a list of questions which, after approval from Mr Fleck, he sent to Ms Lemonious. On 4 November 2022, Mr Irwin saw an article which stated that ‘Feite holdings (sic), a wholly-owed subsidiary of jiangguangguangpeng, acquired 80.20% equity of ftdi with domestic self owned funds of US $364 million and overseas bank M&A loans of US $50 million, totaling US $414 million.’ He sent this article to Ms Lemonious, who updated CMS referring to ‘an 80.2% acquisition of FTDI by Feite holdings’, and saying that an Information Notice would be sent to gather more information on the ECT transaction. The first Information Notice was served, as I have set out above, on 8 November 2022, and FTDI’s initial response was received on 16 November 2022. In light of that response, Ms Lemonious told Mr Irwin on 18 November 2022 that there was a high possibility that the transaction would not proceed, and after FTDI’s response of 29 November 2022 she emailed Mr Irwin saying that FTDI had stated that the transaction would not be going ahead.

On 30 November 2022, Mr Irwin wrote to Ms Lemonious asking whether FTDI was saying that ECT was neither acquiring nor had acquired either the 19.8% Stoneyford Investment or the 80.2% FTDIHL stake in FTDI. As he says in his witness statement, his concern was that ECT had not gone ahead with one of those transactions, but had acquired or intended to acquire another shareholding; and that it was not clear to him what had happened or was going to happen. On 1 December 2022, Ms Lemonious stated that her understanding was that the transaction which would not be taking place was ECT’s acquisition of 19.8% of FTDI’s shares. Mr Irwin followed this up on 2 December 2022, asking whether there had been confirmation that ECT had not already acquired a stake in FTDI through Feite. Ms Lemonious’s response was that her understanding was that ‘it’s all the shares in FTDI’, ie, that ECT had not acquired/was not acquiring any shares in FTDI. Mr Irwin came to the same conclusion, which he expressed in an email to Mr Benjamin Walden on 2 December 2022. He was uncertain as to who the UBO of FTDI was. He also recommended that an eye should be kept out for developments in relation to FTDI/ECT.

In overview, Mr Irwin saw evidence which indicated that FTDIHL had acquired an 80.2% holding in FTDI in December 2021. While he will, at the time, have understood that that was what the evidence indicated, such a transaction was not what he was focussed on. His concern was to investigate whether ECT had acquired or was about to acquire a shareholding in FTDI. Accordingly he did not give thought to whether FTDIHL’s acquisition of control in December 2021 was itself a potentially significant ‘trigger event’, and did not realise that it might be. Once he had gained sufficient assurance that ECT had neither already acquired nor was about to acquire a stake in FTDI, he considered that the matter could rest.

In Ms Lemonious’s case, she saw material which would have indicated, to anyone who thought about it, that there had been an acquisition of significant control of FTDI by FTDIHL, which had involved FTDIHL moving from having less than 75% of the shares in FTDI to having more than 75%, in December 2021. I accept her evidence, however, that she was focusing on whether there had been an acquisition of a stake in FTDI by ECT; that she was not looking for dates; and that she did not realise that there had been an acquisition of significant control by FTDIHL in December 2021.

At least some of Ms Lemonious’s superiors within ISU, and in particular Mr Adcock, read the information which she entered onto CMS. It appears that they had no greater understanding or consciousness of whether there had been a ‘trigger event’ by reason of the acquisition of control by FTDIHL than had Ms Lemonious.

There is no dispute that on 23 May 2023 Ms Jacqui Ward, head of the ISU, became aware of the ‘trigger event’ of the acquisition of FTDI by FTDIHL. Nor is there any dispute that the CDL was personally aware of that ‘trigger event’ only on or very shortly after 20 November 2023.

FTDIHL contended that the issue of whose awareness counted as that of the ‘Secretary of State’ for the purposes of s. 2(4)(b)(i) was a matter of statutory construction, and that the draftsman of the Act must have intended to capture the ‘awareness’ of those actually tasked with carrying out the CDL’s investigative functions. That would comprise officials in the ISU, and also officials in other government departments to the extent that they undertook the investigative functions pursuant to NSIA.

CDL’s argument was that only his personal awareness was relevant in this case, because Sir Oliver Dowden had taken the Call-In decision himself. CDL recognised and accepted the principle in Carltona Ltd v Comrs of Works [1943] 2 All ER 560, to the effect that ministerial powers are commonly delegable and that, where this is the case and delegation occurs, the decision of an authorised official falls to be treated as the decision of the minister. CDL sought, however, to draw a distinction between cases which have recognised and given effect to the Carltona principle, and others which have decided that there is no collective knowledge within a government department. Reference was made, in particular, to R (National Association of Health Stores) v Department of Health [2005] EWCA Civ 154, especially at [26], [37] and [74]; R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 3) [2018] 1 WLR 973, especially at [47] per Lord Mance; and Revenue and Customs Commissioners v Tooth [2021] 1 WLR 2811, especially at [70]. The approach demonstrated in Tooth, namely that there is no doctrine of collective knowledge and the focus is on the knowledge of the actual decision maker, was one which was applicable here, especially given: (a) the nature of the decision, which was one which affected vital national interests; (b) the need for clarity and certainty as to whose knowledge is relevant; (c) the impracticalities which would be entailed if the knowledge of even junior officials was relevant; and (d) the fact that there is a safeguard provided for in the NSIA against undue delay in the five year limit provided for by s. 2(4)(b)(ii), as well as by the requirement that the Secretary of State should not abuse the process.

In my judgment, the issue currently under consideration is one of the proper construction of s. 2(4) NSIA, and of whose awareness counts as that of the Secretary of State. I consider it clear that the relevant awareness is not intended to be confined either to the personal knowledge of the Secretary of State himself or to that of the person who ultimately takes the Call-In decision. This is because:

Consistently with this, the stance of CDL before the present challenge was that there was ‘awareness’ on the part of the CDL when the ISU was aware of a ‘trigger event’. Thus, the Information Notices of 10 July 2023, 31 July 2023 and 22 September 2023 stated that the ‘Secretary of State has become aware of the acquisition of [FTDI] by [FTDIHL] in December 2021’. This was at a time when the CDL, who was ultimately the decision-maker, was not personally aware of that acquisition. The understanding of the ISU on the issue was spelled out in terms in the Ministerial Submission (‘MinSub’) of 20 November 2023, which stated:

The cases referred to by CDL in this context do not appear to me to be germane. R (National Association of Health Stores) concerns the issue of whether the knowledge of civil servants can be attributed to a decision-maker at the moment a decision-making power is exercised. That is not the relevant question here: s. 2(4)(b)(i) grants no power and calls for no decision-maker. Similarly, in R(Bancoult) (No. 3), Lord Mance at [47] made the point that where a minister made the decision himself, it was his own knowledge and motives which were relevant when there was a challenge to the decision on the basis of improper motivation on the part of one or more civil servants. The passages in the judgment of Lord Briggs and Lord Sales JJSC in Revenue and Customs Commissioners v Tooth on which CDL relies were not necessary for the decision in that case, and, more significantly, dealt with very different statutory provisions and context from those relevant here. S.29 Taxes Management Act 1970 tied the entitlement to make an assessment by the Board (or by an officer if the Board’s power to make an assessment was delegated to an officer) to the Board’s (or the officer’s as the case may be) discovery that an assessment to tax was or had become insufficient. The statutory link with the state of knowledge of a particular individual or group was not displaced by a principle of collective knowledge within a department. This does not help with the proper construction of s. 2(4) NSIA.

The considerations identified by CDL in support of his construction of s. 2(4) equally do not assist him. The importance of the decision which may be made is neutral. Parliament clearly also regards it as important that any Call-In decision should be made within 6 months of awareness of the ‘trigger event’, doubtless in part precisely because of the potential importance of a Call-In. Clarity and certainty are not better served by an interpretation whereby the relevant knowledge will be that of a decision maker whose identity is not known until the decision comes to be made, as opposed to recognising that the relevant awareness is that of the group set up for the purpose of investigations under the NSIA, namely the ISU. There is no evidence that the interpretation of s. 2(4) which FTDIHL advances will be impractical or unworkable: and, as I have said, it appears to be the interpretation on which the ISU and the CDL have been working. That there is another, long stop provision in s. 2(4)(b)(ii) does not mean that proper effect should not be given to the safeguard against delay in s. 2(4)(b)(i) NSIA.

CDL makes a further submission on this part of the argument. This is that, even if it is right that the awareness of officials can count as that of the Secretary of State for the purposes of s. 2(4) NSIA, nevertheless it could only be the awareness of officials of appropriate grade and experience. Reference was made to R v Secretary of State for the Home Department ex p. Oladehinde [1991] 1 AC 254, esp at 303E/F where Lord Griffiths spoke of there being a proper authorisation of members of the immigration service to take decisions provided that ‘the decisions are suitable to their grading and experience.’

I did not understand that principle to be in dispute. The question is as to its application. In the present case, s. 2(4)(b)(i) is not concerned with the taking of a particular decision; it is concerned with the acquisition of awareness. The ISU has been charged with the assessment of risk to national security, as the evidence of CDL indicates, and as was also recognised in R (L1T FM Holdings UK Ltd) v Chancellor of the Duchy of Lancaster [2024] EWHC 2963 (Admin) at [23]). One part of that role involves ISU being or ensuring that it is apprised of potentially relevant ‘trigger events’. Further, I can see no sound basis for saying that, within ISU, Ms Lemonious was not of an appropriate grade and experience to make an assessment of whether a ‘trigger event’ had occurred. Ms Newland’s account of the MM process in her Second Witness Statement indicates that it is for the assigned case worker, who is carrying out ‘detailed due diligence’ (paragraph 28), to provide an initial view on whether the transaction under consideration constitutes a ‘trigger event’ (paragraph 30). Ms Lemonious accepted in her cross-examination that part of her role when assigned as a case worker was to decide whether a ‘trigger event’ had occurred. Given the relatively straightforward definition of what a ‘trigger event’ is, that would not be a matter which necessarily required the involvement of a more senior official.

By contrast, in my view, the knowledge of officials in other government departments, even if they were consulted by ISU for the purposes of making assessments and taking decisions under NSIA, would not count as the awareness of the Secretary of State for the purposes of s. 2(4)(b)(i). As Ms Newland states in her Second Witness Statement (paragraph 16), the routine information gathering under the NSIA is performed by ‘ISU officials acting on the Secretary of State’s behalf’. Part of the exercise carried out by ISU can be to consult other government departments. This request for input is ‘to inform its [viz ISU’s] review of a transaction and its advice for the Secretary of State’ (paragraph 31). Other government departments submit their responses to the ISU (paragraph 33), which then decides on what action to take, or to take no action (ibid.). From this it appears that it is ISU’s appreciation of the position which is important, and other government departments are used as a resource to feed into that. I do not think that the knowledge of what may be a large number of people, in a range of different departments can be regarded as the relevant knowledge of the Secretary of State. The position can be tested by asking what would be the position if there was positive knowledge of a ‘trigger event’ within another government department, but it was never communicated to ISU. That, in my view, would not be awareness of the Secretary of State because it would be knowledge which never came to the body charged by him with acquiring and having the relevant knowledge for the purposes of NSIA.

Accordingly, in my judgment, and subject to the further question which I will turn to next, the knowledge of Ms Lemonious acquired in 2022 is potentially relevant to the question of whether the Secretary of State was then aware of the ‘trigger event’, but the knowledge of Mr Irwin, unless and until communicated to ISU, was not. I will however, also consider below whether, assuming that Mr Irwin’s state of knowledge was relevant, it was sufficient to constitute ‘awareness’.

There remains the question of whether what was known within ISU, or if relevant by Mr Irwin and within DCMS, during 2022 amounted to ‘awareness’ by CDL of the ‘trigger event’. What constitutes relevant ‘awareness’? The word is one which has a number of possible shades of meaning, and its proper interpretation depends on its context and the purpose of any statutory provision in which it appears. Here, the context in which the term appears, both in subss. 2(2) and 2(4) NSIA is one which limits the time in which the Secretary of State may serve a Call-In Notice, by reference to first ‘awareness’. The statute specifically envisages that this ‘awareness’ may occur some time, indeed, some years, after the happening of the ‘trigger event’, as is clear from subss. 2(2)(b) and 2(4)(b). The purpose of subss 2(2) and 2(4) appears clear: it is to allow for a fixed period in which the Secretary of State can enquire into an acquisition, and take a decision on whether to issue a Call-In Notice. While that purpose reflects a concern by Parliament that there should not remain the possibility of an acquisition being interfered with under the Act for an excessively long period, the existence of a limit tied to ‘awareness’ of the Secretary of State, rather than to the occurrence of the ‘trigger event’ demonstrates that Parliament was also concerned to ensure that the Secretary of State should have a proper opportunity of investigating an acquisition on becoming aware of it. Thus, Parliament provided that, subject to the five year longstop, the Secretary of State should not lose the ability to operate the machinery of the Act while unaware of the acquisition. Given that the NSIA is concerned with countering risks to national security from acquisitions of qualifying entities, this is entirely comprehensible.

The context and purpose of the provisions in which the term ‘became aware’ occurs, which I have just described, strongly indicates, to my mind, that there is relevant ‘awareness’ only when it is known that there has been a ‘trigger event’ and that the acquisition which constitutes the ‘trigger event’ is one which may require investigation, and potentially the exercise of other powers under, the NSIA. A reading of the Act whereby it is sufficient to start the period of 6 months in subss 2(2) and 2(4) running that there should have been knowledge of the existence of a ‘trigger event’ without any appreciation that it might be of relevance to the potential exercise of powers under the NSIA would have most unfortunate and surely unintended consequences. Thus, given the wide definitions of ‘gaining control’, of ‘qualifying entity’ and of ‘trigger event’, it can be expected that there will be knowledge within government of a very large number of ‘trigger events’, in relation to the vast majority of which there is no question of the application of the NSIA. Even if the category of those who have potentially relevant knowledge is confined to ISU, the same is likely to apply, because the definition of ‘trigger event’ encompasses so broad a category of transactions. If knowledge of the occurrence of a ‘trigger event’, even without any realisation that it might be a ‘trigger event’ potentially relevant to the exercise of powers under NSIA, were sufficient to set the period of 6 months running, that might lead to the Secretary of State being left unable to take steps to protect national security in circumstances where it had not been realised that there was any possible need to do so. While the five-year backstop provision in NSIA indicates that Parliament intends that, after that significant period of time, a transaction should no longer be capable of being interfered with under the Act, the provisions of subss. 2(2) and 2(4) also indicate, as I have said, that before that period elapses, the Secretary of State should be able to exercise those powers upon awareness.

Applying this understanding of relevant ‘awareness’ to the facts of the present case, I conclude that there was no ‘awareness’ on the part of the Secretary of State of the ‘trigger event’ during 2022. For reasons I have already given, I am of the view that whether there was such ‘awareness’ should be judged by the knowledge of Ms Lemonious and within ISU. Ms Lemonious did not, however, actually appreciate that there had been an acquisition by FTDIHL of FTDI in December 2021. Even more importantly, she was not looking into the acquisition of FTDI by FTDIHL, but was investigating what was understood to be an actual or potential acquisition of FTDI by ECT. Any acquisition of FTDI by FTDIHL was not seen by her, or others within ISU, as one potentially relevant to the exercise of powers under NSIA. In those circumstances the Secretary of State was not, in my view, ‘aware’ of the ‘trigger event’. The same applies if, contrary to my view, Mr Irwin’s knowledge was potentially relevant. He too was concentrated on an actual or prospective acquisition by ECT and did not appreciate that the acquisition of control by FTDIHL in December 2021 was one potentially relevant to the exercise of NSIA powers.

For those reasons I would reject Ground 1B.

Ground 1A is a contention that, even taking the awareness of the ‘trigger event’ to have been 23 May 2023, the Call-In Notice was not served on FTDIHL in time. Under s. 1(4)(a) the Call-In Notice must be given to ‘the acquirer’, here FTDIHL. The Notice may not be given after the end of 6 months from awareness of the ‘trigger event’, and thus had to be given to FTDIHL by 22 November 2023. Instead, FTDIHL contends, notice was given to FTDI alone on the last day of the 6 month period, viz on 22 November 2023. It was forwarded to FTDIHL on 23 November 2023, but, even if that had constituted service, it was out of time. Accordingly the Final Order is ultra vires.

I consider that Ground 1A is ill-founded. Under reg. 3 of the Service Regulations a document may be ‘given’ to a person by sending it to an email address as provided for in reg. 4. No email address for FTDIHL had been provided or published for the purposes of reg. 4(1) and (2). FTDIHL’s email address was accordingly, in accordance with reg. 4(3), ‘any email address by means of which the Secretary of State reasonably believes that the document will come to the attention of that person (or their representative)’. The Secretary of State reasonably believed that by means of sending the Call-In Notice to FTDI email addresses it would come to the attention of FTDIHL, and the reasonableness of that belief is demonstrated by the fact that the Call-In Notice was indeed passed on to FTDIHL on 23 November 2023. By reason of reg. 3(2) of the Service Regulations, the Call-In Notice was to be ‘treated as having been given immediately after it is sent’, ie on 22 November 2023. It was thus in time.

FTDIHL argued that reg. 4(3) of the Service Regulations had not been available in this case, because it was ‘a fall-back measure’, ‘no doubt intended to address cases in which a person seeks to avoid service by not providing [the Defendant] with their contact details.’ This argument provides no basis for not giving reg. 4(3) effect in accordance with its terms.

FTDIHL made an alternative argument that, if reg. 4(3) of the Service Regulations did permit CDL to serve in the manner he did, it was ultra vires ss. 1 and 53 of NSIA. I could see no foundation for this. S. 53 confers a regulation-making power in terms which are wide enough to enable the terms of the Service Regulations, including reg. 4(3).

FTDIHL also argued that it ‘appeared that [the Secretary of State] was not even attempting to serve [FTDIHL], since he ignored the mandatory statutory requirements for effective service’; and in particular the Call-In Notice was addressed only to FTDI and did not comply with the provisions in reg. 3(5) and 3(6) in relation to FTDIHL. I think it is clear that the Secretary of State was attempting to serve FTDIHL, from the covering email to FTDI, which I have quoted above, and from the nature and terms of the Call-In Notice itself, which included the statement that the Notice was ‘in respect of the entirety of the acquisition’. I further consider that the covering email, with its request that the Call-In Notice be forwarded to FTDIHL was sufficient to comply with reg. 3(5). It is the case that no specific officer or member of FTDIHL was identified for the purpose of compliance with reg. 3(6), but that provision is clearly intended to ensure that the Call-In Notice comes to the attention of an appropriate person, and that purpose was fulfilled in this case by the request that FTDI, who could be expected to know the identity of the appropriate individual(s) at FTDIHL, should forward the Notice to FTDIHL. Insofar as there was non-compliance with reg. 3(6) I do not consider that it invalidates service on FTDIHL, given that there is no dispute that the Call-In Notice was promptly forwarded by FTDI and received by the relevant people at FTDIHL.

Ground 4 is a contention that the Final Order breached A1P1. As there was no significant dispute as to the legal framework, it is convenient to set that out first, before considering the case made by FTDIHL, and then my analysis of that case.

By s. 6(1) Human Rights Act 1998 it is unlawful for a public authority to act in a way incompatible with a Convention right, that is to say one of the rights in the ECHR which are set out in Schedule 1 to that Act.

Those Convention rights include those in A1P1. A1P1 provides:

A1P1 encompasses three distinct rules, which were described in this way in Back v Finland (2004) 40 EHRR 118 (at [52]):

In Axa General Insurance Ltd v HM Advocate [2011] UKSC 46, [2012] 1 AC 868 at [107] Lord Reed explained the three rules as follows:

There is a distinction between ‘deprivation’ of possessions and their ‘control’. In R (British American Tobacco) v Secretary of State for Health [2016] EWHC 1169 (Admin), Green J summarised the then available case law on A1P1. At [783] he said:

In his judgment on the appeal to the Court of Appeal in the same case, Lewison LJ said ([2018] QB 149 at [96]):

While there is a distinction between ‘deprivation’ and ‘control’, as was said by Lord Carnwath JSC in R (Mott) v Environment Agency [2018] UKSC 10, [2018] 1 WLR 1022 at [32], ‘… the distinction is neither clear-cut, nor crucial to the analysis.’ In Axa General Insurance Lord Reed said, at [108]:

In R (L1T Holdings) at [193] Farbey J stated:

The principle of proportionality has been analysed as having four limbs. This was summarised by Singh LJ in Dalston Projects Ltd v Secretary of State for Transport [2024] EWCA Civ 172, [2024] 1 WLR 3327 at [9]: as follows

In relation to the third limb, a summary of the guidance from authority is provided in R (FACT Ltd) v Environment Secretary [2020] EWCA Civ 649, [2020] 1 WLR 3876. At [80] the court said (citations omitted):

In a case which involves a measure concerned with national security, a high degree of respect should be accorded to the assessments and decisions made by the Secretary of State.

Farbey J said the following in R (L1T) at [98]-[103], with which I respectfully agree, albeit it was, in part, said in response to a submission which was not made in the same terms in the present case:

FTDIHL contends that the Final Order in this case orders a ‘deprivation’ of its possessions, rather than merely a control on their use. That is disputed by CDL.

FTDIHL further contended that any interference with possession must be lawful. The principle of lawfulness is referred to in Back v Finland cited above. The Grand Chamber of the ECtHR reiterated in Vistiņš and Perepjolkins v Latvia (App. 71243/01) (25 October 2012), at [95] that any interference by a public authority with the peaceful enjoyment of possessions should be lawful. Here, FTDIHL contends that, because of its Grounds 1, 2, 3 and 5, the Final Order was in breach of domestic law.

In relation to the four limbs of the proportionality assessment described in Dalston Projects and set out above, there was no dispute as to the first. FTDIHL accepted that the objective of the measure was sufficiently important to justify the limitation of an A1P1 right. The other three limbs were in issue. Thus:

As to the issue of whether the Final Order amounts to an order for control or for ‘deprivation’, like Farbey J in R (L1T), at [192], I have a great deal of sympathy with the contention that the type of order involved here does amount to a deprivation. However, like her in that case, I do not consider it necessary to decide this point. The assessment of proportionality is in substance the same whether the measure is classified as a measure of deprivation or of control. In determining whether it is proportionate, that assessment must take into account the actual nature of the measure; and it makes no material difference to this whether the measure is classified as expropriatory, or as imposing a very high degree of control.

In relation to the issue of lawfulness, I do not accept that the existence of any valid public law ground for challenging the decision made means that there is ‘unlawfulness’ for the purpose of the principle referred to in Vistiņš and Perepjolkins v Latvia and other cases, so as to mean that there is a breach of A1P1. Specifically, I do not consider that a breach of an obligation to set out fuller reasons in the Final Order or accompanying materials of itself amounts to ‘unlawfulness’ for these purposes. In any event, I consider that the remedy which the Court should grant for any such breach should be that which is appropriate for that failure, and that the fact that it might also have meant that there was a breach of A1P1 should make no difference to what the remedy is.

In relation to the proportionality assessment, and in particular the three limbs of the principle which are at issue, I proceed on the basis that the decision is one which the court must make for itself. It is not a question of judging the decision of CDL by a rationality standard: R (Lord Carlile of Berriew) v Secretary of State for the Home Department [2014] UKSC 60, [2015] AC 945, [67] and [137]; Dalston Projects at [17]-[18]. Nevertheless, in relation to each of the limbs of the proportionality assessment, the court should give weight to the Secretary of State’s view on the matter. It is the Secretary of State which has the institutional qualification and expertise, especially in relation to matters of evaluation of a risk, not the courts. Further, Parliament has given the primary responsibility for assessing both the nature of the risks to national security and for making an assessment of what is a proportionate response to such risks to the Secretary of State. S. 26(3)(b) NSIA requires the Secretary of State to consider whether an order under the Act is necessary and proportionate for the purpose of preventing, remedying or mitigating the risk to national security. The court will necessarily accord great respect to that assessment. In these circumstances, what Farbey J says in R (L1T) at [201], namely that the difference between a rationality review and an assessment of fair balance is ‘conceptually sound but in practice small’.

I have given careful consideration to the issues as to proportionality, considering in that connexion both the relevant OPEN and CLOSED material. My conclusions in relation to the three disputed limbs of the proportionality assessment follow.

As to limb (2), I regard it as clear that the Final Order is rationally connected to the objective of preventing or mitigating the risks to national security which the Secretary of State considers to exist. While there may be room for argument as to the magnitude of any risk, and as to whether the measure goes further than necessary to address such a risk, there is none, in my view, as to whether the measure is rationally connected to the objective. The removal of FTDIHL from having any connexion with FTDI is plainly a means of reducing any national security risk which may arise from FTDIHL’s association with FTDI.

In relation to limb (4), it is necessary to give full weight to the seriousness of the measure for FTDIHL. I have also taken into account that the acquisition took place before the NSIA came into force, and that the effect of the Final Order will be to deprive FTDIHL of property lawfully acquired. Those matters have to be set, however, against the extreme importance of the interest it is sought to protect, namely national security, and the seriousness of the risk which it seeks to guard against. The assessment of that risk is one for which the court lacks institutional qualification and expertise and on which the court is bound to give great weight to the assessment of the Secretary of State. In light of that assessment, I accept that there is a real risk to national security from the acquisition which is of sufficient seriousness to justify the imposition of significantly intrusive measures on the acquirers. In my judgment, the Final Order is not disproportionate, and does strike a fair balance.

Limb (3) is a matter to which it has been necessary to give particularly anxious scrutiny. The issue as it was put in R (FACT Ltd), is whether the desired level of protection could be achieved equally well by less restrictive measures. In relation to this, I accept that if conditions were imposed on the management of FTDI, and measures introduced to ensure compliance with those conditions, the risks arising from the acquisition could and would be reduced. The fact remains, however, that the assessment of the Secretary of State is that divestment is the way in which the risk can be most effectively mitigated, and that this degree of mitigation cannot be achieved by alternative means. That assessment is one which is to be accorded a high degree of respect. It is an assessment which appears to me to be not only reasonable but one with which, in so far as I have the competence to judge, I am in accord.

I would accordingly reject Ground 4.

Ground 5 is a contention that the Final Order was irrational or unreasonable. The same matters were relied upon by FTDIHL to justify Ground 5 as Ground 4. As I have rejected Ground 4, Ground 5 must also fail.

FTDIHL’s case was that the process of decision-making leading to the Final Order breached the common law and Article 6 ECHR requirements of procedural fairness. A fair procedure required that it should have been given sufficient information to give effective instructions, the right recognised in SSHD v AF (No. 3) [2020] 2 AC 269 being engaged. It should have been given this information during the assessment period and prior to the making of the Final Order. Such information was not given. The First and Second Requests for Representations did not provide FTDIHL with sufficient information to permit it a fair opportunity to be heard. Specifically it was not told: which CNI could be endangered by FTDI’s products or how; the basis on which it was considered that the ownership of FTDI and its control by JAC Capital could be used to disrupt CNI; why the measures proposed by FTDIHL to address any risks arising were not sufficient; or why CDL believed that even if FTDIHL’s control over FTDI were fully removed, that would not meet any national security risks.

In its response, CDL did not dispute that Article 6 is applicable to this case. He equally did not dispute that he had a duty to act fairly. However, in a case involving national security, as this does, the standards of fairness have to be adapted to take this into account. Here, especially given that the court has made a declaration under the 2013 Act, it is self-evident that there will be aspects of CDL’s decision-making which could not have been disclosed to FTDIHL. That does not mean that the process was procedurally unfair.

CDL does not accept that the requirement of fairness required him, in this case, to give AF (No. 3) compliant disclosure. In any event, even if AF (No. 3) does apply, FTDIHL was actually given sufficient information for it to provide effective instructions. This was decided by Chamberlain J at a CLOSED hearing on 28 February 2025. At that point Chamberlain J had decided that, on the assumption that FTDIHL must be provided with disclosure in accordance with AF (No. 3) fairness did not require any further detail to be added to the gist of the national security risk that had been provided to FTDIHL in the Second Request for Representations.

Under both Article 6 ECHR and at common law, CDL had a duty to act fairly. Like Farbey J in R (L1T Holdings) at [128], I am not persuaded that the requirements of fairness are exhaustively set out by the procedure specified in the NSIA. Nevertheless, what fairness involved had to take account of the requirements of national security. Concerns as to national security made it necessary that FTDIHL should not be given full information as to the national security risks involved.

In my view, in the present case the process leading up to the Final Order has not been shown to be unfair, given the national security concerns involved. FTDIHL was given the opportunity to make representations. There were extensive communications between ISU and FTDIHL, both in writing and in meetings. The Second Request for Representations gave FTDIHL the opportunity to comment on whether the acquisition of FTDI posed a risk to CNI, and in response FTDIHL could and did comment on whether ownership of FTDI and control by JAC Capital could be used to disrupt CNI, and could and did propose remedies to address any risks which there might be. The representations made by FTDIHL were considered by CDL.

It is in issue as to whether the obligation to give AF (No. 3) compliant disclosure applied in this case in view of, first, the stage of the process concerned (ie before the executive decision) and, second, the nature of the Final Order. I do not consider that it is necessary to resolve that question because, in my view, it does not make a difference to the outcome on this Ground. Even if it is assumed that there was an obligation to give disclosure compliant with AF (No. 3), such disclosure was given.

In this regard, CDL relies on the decision of Chamberlain J. I do not consider that that decision is a ‘complete answer’ to FTDIHL’s complaints in this area. It was a decision given in CLOSED at which neither FTDIHL nor its privies were present. Strictly, moreover, the issue which Chamberlain J was called on to resolve, namely whether there should be further disclosure for the purposes of this hearing, was not identical to the issue which is before the court now. Nevertheless, Chamberlain J’s decision, having seen the CLOSED material, was that no further disclosure was required as to the gist of the national security risk than had already been given in the Second Request for Representations. Even if not identical, that was a decision on a very closely related question and is one to which, naturally, respect is due.

More significantly, Edis LJ and I have now seen the CLOSED material and have had submissions in relation to it by Special Advocates. My view is that sufficient information was given in the Second Request for Representations ‘to enable [FTDIHL] to give effective instructions’ (to use the language of AF (No. 3) at [59]) in respect of the national security concerns identified. This was demonstrated by the fact and nature of the representations made by FTDIHL in response.

As stated in R (Doody) v Home Secretary [1994] 1 AC 531 at 560-561 per Lord Mustill, it is not enough for an applicant to persuade the court that some procedure other than the one adopted would be better or more fair; it must be shown that the procedure adopted was actually unfair. I do not consider that that has been shown.

Ground 3 is that CDL provided no or insufficient reasons for his decision.

FTDIHL points to the fact that s. 28(4)(d) provides that each order, or explanatory material accompanying the order ‘must … state the reasons for making or varying the order.’ Here, the Final Order contained only the following which could, even arguably, be ‘reasons’:

Those, FTDIHL contends, are not ‘reasons’; they are ‘no more than an incantation of phrases that had already been conveyed by [CDL] in correspondence.’ Furthermore, although s. 28(5) NSIA permits CDL to exclude from the copy of an order served on any person anything the disclosure of which CDL considers ‘would be contrary to the interests of national security’, that only permits CDL to exclude some matters from a copy of the Order; it does not permit there not to be reasons in the original of the Final Order. If the original of the Final Order contained no further reasons than those in the copy sent to FTDIHL, and which are quoted above, then it was non-compliant with s. 28(4)(d) NSIA. (I note that it has since been confirmed in OPEN that it was in fact the case that there were no more reasons in the original of the Final Order than in the copy given to FTDIHL.)

Alternatively, if what was contained in the Final Order counted as ‘reasons’ at all, they were inadequate. They did not enable FTDIHL to understand why the matter was decided as it was, and give rise to substantial doubt as to whether CDL erred in law. The Final Order was therefore ultra vires and must be quashed.

CDL for his part contended that FTDIHL was provided with adequate information, consistent with the protection of national security, as to why he had made the Final Order. The provision of further information would have been contrary to the interests of national security.

I accept FTDIHL’s submission that s. 28 NSIA provides that an order, and here the Final Order, must state ‘the reasons’ for the making of the order, and that, even though material may be omitted on grounds of national security from a copy of the order, that does not remove the requirement for the statement of reasons in the original of the order. I am also of the view that what was contained in paragraphs 2-4 of the Final Order, which I have quoted, were not ‘the reasons’ for the making of the order. While the reasons which should be stated in the order pursuant to s. 28(4)(d) doubtless do not have to be at all lengthy or detailed, the only potentially relevant paragraphs of the Final Order are largely formulaic, uninformative and by no means comprehensive.

I should say, however, that this non-compliance with the obligation to give reasons in the Order does not, in the present case, reflect the absence of a focus by the decision-maker on what the reasons were.

There is an email of 5 November 2024, which indicates more as to the nature of the CDL’s decision-making process in relation to the Final Order and the reasons for it. This shows that, after Mr McFadden MP was provided with the MinSub and all annexes, he held a meeting with officials from ISU, and Cabinet Office Legal Advisers. He raised some points of clarification in relation to the material provided to him. In reaching his decision, he had regard to the MinSub and its Annexes. Specifically he noted the ISRA, the Remedies Assessment, and the Summary of Representations. Accordingly, there is good reason to consider that the reasons for the Final Order are those which are contained in the MinSub and annexes.

The question of what are the consequences of a failure to set out adequate reasons in the Final Order in accordance with NSIA s. 28(4)(d) must be one of the proper construction of the statute. Given the matters which are provided for in s. 28(4), I consider it clear that Parliament did not intend that any and all non-compliance should invalidate the order. Had that been intended it would have needed to be expressly provided for. Specifically, the failure to set out sufficient reasons in the order in the present case, given that the Secretary of State actually had sufficient reasons, does not invalidate the Final Order.