CFIUS Update -- Dubai Ports World

Randall Jackson. Senior Legal Research Associate.
Maeve Dion. Legal Research Associate. Email.
March 2006.

The CFIUS debate took on an even higher profile when UAE-government-owned Dubai Ports World purchased the P&O Steam Navigation Company of the UK.  The purchase gave DP World the contracts to provide terminal services at some of the terminals at several US ports, including New York, New Jersey, Philadelphia, Baltimore, Miami and New Orleans.  Because of the nature of the industry, CFIUS asked the Department of Transportation and the Department of Energy (not CFIUS members) to participate in the review of the transaction.  CFIUS unanimously determined, at the end of the mandatory 30-day review period, that the transaction would not threaten US national security and that an additional 45-day investigation was not necessary.

When the press reported the transaction, some members of Congress reacted negatively, asking why the deal did not receive a 45-day investigation (given the statutory requirement to conduct a 45-day review of transactions involving foreign government-owned entities), and asking more generally how the new ownership would impact security at these US ports.  Congress then introduced various bills, which in some cases specifically addressed the DP World transaction -- for example, to force a 45-day investigation, or to block the deal entirely.  Other bills more generally addressed perceived problems with the oversight of foreign direct investment in the US -- for example, to move the chair of CFIUS into DHS and DOD; to establish a more active role for Congress in overseeing foreign investment decisions, including giving Congress the same veto power currently held by the President; or to require majority American ownership of US critical infrastructure (including divestiture of critical infrastructure currently not majority American owned).

The Congressional concerns caused DP World to delay closing the transaction and to resubmit the deal so that CFIUS could undertake a 45-day investigation.  While this investigation was still ongoing, DP World announced that within four to six months it would sell to US-owned businesses those parts of the P&O Steam Navigation Company that involve the US terminals.