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A legal first in Sany's US wind farm case

( Updated: 2012-10-30 16:49

Sany Group sues Obama over a blocked Oregon wind farm project

Chinese companies have embarked on a new era of protecting their interests in overseas markets through legal means. Sany Group, the country's largest machinery maker, vowed on Oct 18 to "fight to the very end" in its lawsuit against US President Barack Obama after he blocked its wind farm project on national security grounds, making it the first Chinese company to take such a move.

A legal first in Sany's US wind farm case

Senior executives of Sany Group pledge at a press conference to fight until the end. [Photo/CFP] 

Ralls Corp, an associated company of Sany Group established in August 2010, has invested in a series of wind power projects in the United States in recent years.

Ralls, which is owned by two Sany executives, planned to install wind turbines, made by Sany, close to a naval training site in Oregon, which, according to the facility's website, is used to test unmanned drones - a highly sensitive and prized US technology.

Related reading: Sany will 'fight to the end' in lawsuit against Obama

Obama ordered Ralls to divest its interests in the project, the first time since 1990 that a US president has formally blocked a business transaction on security grounds.

"This measure caused us more than $20 million in direct investment losses, excluding indirect losses," said Ralls Chief Executive Wu Jialiang, one of the Sany executives who own the company, at a press conference in Beijing on Oct 18 where the company disclosed information regarding the lawsuit.

Ralls argues that Obama exceeded his power by dictating the terms of the sale, allowing the government to inspect all aspects of its operations and failing to treat the company equally as required under the law.

Sources close to Ralls have also said there are other wind farms owned by foreign competitors in the vicinity.

Obama's order followed a recommendation from the Committee on Foreign Investment in the United States, or CFIUS, an inter-agency group headed by the Treasury secretary that evaluates the national security risks of foreign investments in US companies or operations. Ralls is suing the committee as well.

Ralls submitted the lawsuit to the US district court for the District of Columbia on Oct 1 and is suing Obama because it says the impact of his decision on the company's operations is huge. The case will be heard on Nov 28.

The prospect

"All procedures and permits required before construction were in place and confirmed by specialist lawyers and the projects had received 'No Hazards' clearance from the Federal Aviation Administration," Wu said.

"Even until today, we don't quite understand why the committee wanted to launch its investigation in the first place," he said.

Wu said he was determined to press ahead.

"We are fully confident that we will win this lawsuit because we are innocent," said Wu at the press conference.

"This is the perfect illustration of our confidence in the US legal system, as well as our firm belief that there is no such threat posed to US national security of any kind, and there never will be," said Wu. "If in the end Sany wins this lawsuit, it would be a true triumph of the US legal system, for it will be viewed as the best demonstration for the world to know that the United States is indeed a country where legitimate investments will be protected by the Constitution regardless of where they come from."

"We will fight to the very end," he said, adding that the US action was partly motivated by politicians seeking to score points ahead of the US presidential election in November.

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