BEIJING (Reuters) - A powerful U.S. senator said he is concerned that state-owned ChemChina, which is buying Swiss crop protection and seed group Syngenta (SYNN.S) for $43 billion, could use U.S. sovereign immunity laws to shield itself from claims in U.S. courts.
Some Chinese state-owned entities have argued that they have sovereign immunity and thus can’t be sued in U.S. courts under the U.S. Foreign Sovereign Immunities Act (FSIA) of 1976.
The acquisition by China National Chemical Corp (ChemChina) [CNNCC.UL] of Syngenta, the largest global investment by a Chinese company, won U.S. regulatory clearance in August despite concerns from some lawmakers over U.S. food security.
This week, a U.S. congressional panel urged lawmakers to take action to ban Chinese state-owned firms from acquiring U.S. companies.
In a Nov. 9 letter to U.S. Senator Chuck Grassley that was posted on his website, ChemChina said its U.S.-incorporated businesses are subject to U.S. civil law, and that FSIA does not apply to commercial activity.
Grassley, who represents the U.S. agricultural powerhouse state of Iowa, said in a Nov. 16 response that he remained concerned that ChemChina could seek to shield itself from U.S. court jurisdiction.
“While ChemChina indicated that immunity would not extend to Syngenta’s U.S. business, the company failed to note that immunity would otherwise apply to a wholly state-owned entity,” he said on his website.
Some legal experts say the sovereign immunity defense, intended under international law to shield governments from legal rulings made by a foreign power, typically does not apply to commercial cases.
ChemChina’s acquisition is now in the process of gaining approval from the European Commission, and the deal is expected to be closed around the end of March.
In its letter to Grassley, ChemChina said the Chinese government does not interfere with ChemChina’s operations and has not directed ChemChina or any of its affiliates to engage in price-fixing with competitors.
“Syngenta will continue to have its same strategy, management, people and culture and its headquarters in Basel. No jobs will be lost and no jobs will go overseas as a result of this transaction,” it said.
ChemChina also said the Chinese government does not interfere with its operations and has not directed ChemChina or any of its affiliates to engage in price fixing with competitors.
Reporting by Chen Aizhu; Edited by Tony Munroe and Tom Hogue