WASHINGTON – Senator Chuck Grassley today said that he appreciated ChemChina’s response to his questions following a recent Judiciary Committee hearing of potential mergers of the seed and agrochemical industries, but his concerns remain about the company’s possible use of the Foreign Sovereign Immunities Act.  

“China, through State-owned Enterprises, has made buying western companies an annual tradition over the last several years.  The transactions involve billons of dollars worth of market share and intellectual property,” Grassley said.  “ChemChina’s answers to my questions provide some important insight into its acquisition of Syngenta, but the answer regarding sovereign immunity leaves a number of concerns.”  

In its response, ChemChina wrote that Syngenta would be entirely owned by the Chinese state-owned company, meaning that it would be possible for Syngenta to assert sovereign immunity as a defense to claims brought in U.S. courts.  And, 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.

Grassley introduced legislation in September to make sure that state-owned enterprises don’t attempt to skirt responsibility through the U.S. courts. His State-owned entities Transparency and Accountability Reform (STAR) Act legislation would ensure that state-owned companies engaged with American companies and consumers as market participants would have to respond to claims brought in American courts, just like any other foreign company that isn’t owned by a government.

When he introduced the bill, Grassley said that some state-owned enterprises have tried to use the Foreign Sovereign Immunities Act to their advantage in the U.S. judicial system.  State-owned enterprises often have complex ownership structures and then, when facing court proceedings, claim that immunity given to foreign sovereign governments in U.S. courts is also available to the state-owned enterprise at various levels of the organization.

Grassley led a Senate Judiciary Committee hearing in September on the seed and agrochemical industry deals that have been proposed.  Representatives from Dow, Dupont, Monsanto, Bayer, and Syngenta testified before the committee, but ChemChina declined the invitation to attend.  

Grassley’s letter can be found here.  ChemChina’s response can be found here.

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