High Court rejects second judicial review challenge of NSIA final order  

The UK Government used its powers under the National Security & Investment Act 2021 (the NSIA) to require FTDI Holding Limited (the Acquirer) (which is owned by Chinese funds) to unwind its acquisition of Future Technology Devices International, a UK semiconductor company (the Target). On 25 July 2025, the High Court rejected the Acquirer's application for judicial review and upheld the validity of the Final Order. 

This is the second challenge to a Final Order: see our December 2024 update for details of the first challenge (by LetterOne).

What you need to know

• "Awareness" of a transaction (which starts the clock on the six-month period for a call-in notice to be issued) is not limited to the personal awareness of the Secretary of State and can be met by ISU staff. 

• The courts will afford wide discretion to the Government's decision making as national security is a matter for elected officials. 

• A failure to set out adequate reasons for issuing a Final Order is unlikely to invalidate the Final Order, provided there are sufficient reasons for taking the decision. 

The NSIA came into force on 4 January 2022. It significantly strengthened the UK Government's powers to investigate and (if necessary) prohibit transactions on national security grounds. Among other things, it requires mandatory notification for transactions in 17 sectors thought most likely to raise national security concerns. The Act also empowers the government to issue a call-in notice in relation to transactions that may give rise to a risk to national security. This power applies retrospectively to trigger events which took place on or after 12 November 2020, provided the notice is issued within six months of the Secretary of State becoming aware of the transaction and no later than five years after the NSIA entered into force. For further background, see our Quickguide.

FTDI Holding Limited acquired an 80.2% stake in the Target on 7 December 2021. The Target is a UK-based company which develops semiconductor devices and related cables and software which focus on USB connectivity. The Acquirer is a UK based holding company established for the purposes of the transaction: it is ultimately owned by five Chinese funds with Chinese state-backed ownership. 

On 22 November 2023, the Secretary of State issued a call-in notice. The Final Order (issued on 5 November 2024) required the Acquirer sell its 80.2% stake in the Target within a specified timeframe. The Final Order highlighted concerns relating to: 

• UK-developed semiconductor technology and associated intellectual property being deployed in ways that are contrary to UK national security; and

• the ownership of the Target being used to pose a risk to critical national infrastructure which uses the Target's products.

In December 2024, the Acquirer sought judicial review of the Final Order arguing that: 

• the call-in notice was not properly served in the required timeframe and the Secretary of State had become aware of the trigger event more than six months before the call-in notice was issued; 
• the process of decision-making leading up to the Final Order breached requirements of procedural fairness under common law and Article 6 of the European Convention on Human Rights (ECHR);
• no, or no sufficient, reasons were given for the making of the Final Order;
• the Final Order breached Article 1 of Protocol 1 (A1P1) to the ECHR; and
• the Final Order was irrational and/or unreasonable.

The High Court rejected five of the six grounds of challenge. While the High Court concluded that insufficient reasons had been provided for the Final Order, it concluded that this failure did not render the Final Order invalid. 

The Acquirer argued that the call-in notice was not served in time as it was only served on the Target, when it should have been issued to the Acquirer. The High Court rejected this ground on the basis that the call-in notice was sent to an email address which the Secretary of State reasonably believed would bring the notice to the attention of the relevant party or their representatives.  

A call-in notice must be issued within six months of the Secretary of State becoming aware of the transaction. The Acquirer argued that the Secretary of State became aware of the transaction before 23 May 2023 (i.e. more than six months prior to the call-in notice being issued). A case officer in the Investment Security Unit (ISU) had received information relating to the transaction in the context of a different transaction in 2022. The Chancellor of the Duchy of Lancaster (the responsible Secretary of State) argued that, as it was his personal decision to call-in the transaction, only his awareness of the transaction was relevant for assessing the six month time limit. 

The High Court concluded that "awareness" of the transaction is not limited to the personal awareness of the Secretary of State and can be met by ISU staff. "Awareness" requires a sufficient degree of knowledge to give a proper opportunity to investigate a transaction. On the facts of the case, the Court accepted the case officer's evidence that she did not subjectively become aware of the called-in transaction when she received information relating to it in 2022 as she was focused on the transaction under review at that time. 

Flaws with decision-making process

The Acquirer argued that the decision-making process leading to the Final Order breached the requirements of procedural fairness under common law and Article 6 of the ECHR. The Acquirer argued that it should have been given sufficient information to enable it to give effective instructions to the special advocate representing its interests. Specifically, the Acquirer contended that it was not told:

• which of the Target's products could be used to disrupt critical national infrastructure; 

• how the Acquirer's ownership could be used to disrupt critical national infrastructure; and 

• why the measures proposed by the Acquirer were deemed insufficient to address national security concerns. 

The High Court noted that, due to the nature of the decision, aspects of the decision-making process could not have been disclosed to the Acquirer and that withholding this information was not procedurally unfair. The High Court further found that the Acquirer had the opportunity during the decision making process to make representations and there was extensive communication between the ISU and the Acquirer (both in writing and in meetings). The High Court concluded that Acquirer had been given sufficient information to give effective instructions and that the procedure adopted had not been unfair. 

Insufficient reasons 

Under the NSIA, the Secretary of State is required to provide reasons for making a Final Order. The Acquirer argued that the ISU had failed to provide sufficient reasons for making the Final Order and it should therefore be held to be invalid. The High Court agreed with the Acquirer that insufficient reasons had been provided. Holding that the reasons "do not have to be at all lengthy or detailed", the High Court concluded that the relevant paragraphs in the Final Order were "largely formulaic, uninformative and by no means comprehensive". 

However, the High Court held that the evidence provided showed that the Secretary of State had reasons for issuing the Final Order, albeit these had not been included in the Final Order. As a result, the failure to provide reasons in the Final Order itself was not sufficient grounds to invalidate the Order. 

Breach of A1P1 to the ECHR

A1P1 to the ECHR (incorporated into UK law by the Human Rights Act 1998) states that it is unlawful for a public authority to act in a way which is incompatible with one of the rights set out in the ECHR. A1P1 states that every natural or legal person is entitled to the enjoyment of property subject to conditions provided for by law, general principles of international law and with exceptions for the public interest. 

The Acquirer argued that, in breach of the proportionality, the Final Order was not: 

• rationally connected to the aim of protecting national security on the basis that the products sold by the Target did not pose a national security risk; and

• a fair balance between property rights and achieving national security objectives: a less intrusive measure could have been implemented. 

The Acquirer highlighted a number of factors supporting this ground, including that it would suffer substantial harm from the Final Order, the transaction concluded prior to the implementation of the NSIA, the process was unfair, and the security risks were too remote to justify such a draconian intervention. 

Given the NSIA is designed to protect national security, the High Court held that the Secretary of State's assessment should be accorded a high degree of respect. The High Court disagreed with the Acquirer, concluding that the Final Order was clearly rationally connected to the objective of mitigating national security risks. The Court noted that it did not have institutional competence to asses the severity of those national security risks and it was bound to give significant weight to the Secretary of State's assessment of those risks. 

Irrational and unreasonable 

The High Court found that issuing the Final Order was neither irrational nor unreasonable for the same reasons as it rejected the arguments relating to A1P1 to the ECHR.  

Comment 

As in the LetterOne challenge, the High Court's decision showed significant deference to the Secretary of State's assessment of national security considerations and risk. While the High Court upheld the Acquirer's submissions that insufficient reasons had been provided for the Final Order in the Order itself, it is unclear whether this finding will improve the transparency of future Final Orders given that this failure did not invalidate the Order. 

The High Court's finding in relation to awareness of the transaction, while deferential to the ISU, should provide further clarity on when the clock starts to run on the six-month time limit for issuing a call-in notice. Notably, it is not only the awareness of the Secretary of State which is relevant: the awareness of members of the ISU can be sufficient (depending on the particular facts).