Sany lauds landmark ruling against Obama

US federal appeals court finds White House guilty in Ralls case

Chinese machinery manufacturer Sany Group hailed an unprecedented victory on Wednesday over the White House in a ruling that could give foreign firms more leverage and better legal protection in the review process as they seek to invest in the US.

Sany Group and Ralls Corp, its affiliate firm in the US, welcome the ruling of a US federal appeals court and hail the significant and historic victory in defending its rights and interests in the US, Xiang Wenbo, board director of Sany Group, wrote on his personal blog on Wednesday.

The US Court of Appeals for the District of Columbia Circuit, the federal appeals court, ruled on Tuesday that the Obama administration violated rights of Ralls Corp when it reviewed the company's acquisition of wind farms projects near a Navy site in the state of Oregon under the national security concerns.

The US president banned the purchase in 2012.

The federal appeals court said in a statement on Tuesday that the US president's order deprived the company's "property interests without due process of law," and the company should be given access to any unclassified evidence used by the president to make his decision, and Ralls should have a chance to respond.

The federal appeals court left it to the district court to address Ralls' remaining claims.

Ralls Corp sued US President Obama and the Committee on Foreign Investment in the US (CFIUS) in a district court in October 2012. The district court dismissed in October 2013 most of Ralls' claims on the grounds that the merits of the president's decision were not subject to judicial review.

The latest court decision gestures a setback for the Obama administration and for the CFIUS, which ensures foreign takeover of US companies does not pose a national security threat, the Wall Street Journal (WSJ) reported on Tuesday.

"Sany's case sets an example for Chinese firms to defend their rights in the US," Xiang told the Global Times on Wednesday, noting that the CFIUS makes review decisions randomly and recklessly.

In the past, some Chinese companies have suffered from the CFIUS decisions without fighting back, which is not the right approach in international disputes; the companies should defend their own rights by taking legal actions, Xiang said.

Sany will decide next steps after consulting its lawyer, he noted.

"The ruling is a symbolic victory which is significant in the sense that no Chinese firm has ever successfully defied the US authorities before," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times.

It serves as a reminder for the US government not to set dual standards in treating foreign firms because of its trade and investment protectionism in the name of national security, Bai said.

Sany is one of the Chinese firms that were blocked from entering the US market. Chinese telecom equipment makers Huawei and ZTE Corp also suffered setbacks in recent years in their efforts to invest in the US due to security concerns from the US side.

Huawei declined to comment when reached by the Global Times on Wednesday.

"The federal appeals court's ruling may serve as reference for other cases in the US. It adds pressure on the CFIUS to make prudent decisions on foreign investment or else it will face judicial litigations," Hao Junbo, founder of Beijing-based Hao Junbo Law Firm with expertise in international lawsuits, told the Global Times on Wednesday.

The US Justice Department said it was reviewing the ruling, and US officials declined to comment further, the WSJ reported, stating the Obama administration has more legal options, either by asking the appeals court to rehear the case with all active judges participating, or appealing to the Supreme Court.

It is uncertain if Sany will win the case finally, and it is likely that Ralls will get some compensation for the losses from the blockage of the deal, Hao said.

The Ralls case

Sep 2012,

President Barack Obama blocked Sany's affiliated company in the US from building wind turbines near a navel facility in Oregon, citing national security concerns.

Oct 2012,

Sany and its affiliate firm Ralls Corp sued Barack Obama to the US District Court for the District of Columbia for blocking the wind farm project.

Feb 2013,

the court accepted the Ralls case.

Jul 2013,

the hearing of the case was held by the court.

Oct 2013,

the District Court closed the Ralls case against the Obama administration and dismissed the company's claim. In the same month, the company appealed.

Jul 15, 2014 (US time),

the US Court of Appeals for the District of Columbia Circuit announced that Obama administration violated the legal rights of Sany and its affiliate.