CFIUS said it had found “credible evidence” that Chinese ownership of land near a military facility posed a risk. Ralls challenged that finding, prompting Mr. Obama to issue the first presidential order in 22 years backing a CFIUS ruling.
He issued the executive order at the climax of his presidential campaign, when he was under fire from Mitt Romney for being soft on China. Ralls then filed a suit against the president for exceeding his authority.
Lawyers do not expect the case to go far.
“The government has a pretty good case that once the president issues an executive order, that is the end of the story,” says David Fagan, an expert on cross-border investment with Covington & Burling, a Washington law firm. “The statute is pretty clear that the president has the authority to prohibit a transaction to safeguard national security.”
But the lawsuit has symbolic and psychological value, says Hao Junbo, an independent expert on transnational legal cases. “It will be good publicity in China,” he says. “When you challenge the Titan, the US, you appear a hero.”
At the same time, Mr. Hao adds, “the case presents a confident Chinese company insisting it has not done anything wrong. This case’s meaning is psychological.”
Ralls co-owner Wu, however, says he is suing because “the CFIUS definitely had political reasons [to block the deal] because we are a Chinese company.” Other firms from other foreign countries are operating wind farms on land adjacent to the restricted military area without problems, he points out.
This is not the first time that frustrated Chinese investors have complained about politicized hostility to them in the United States.
Last month a Congressional panel branded two top Chinese telecommunications companies, Huawei and ZTE, as potential threats to US national security, seriously undermining their prospects of doing business in the US.