European Union dismissed an application for interim measures against the Commission’s first ever dawn raid to access data under the Foreign Subsidies Regulation located outside of the European Union
The President of the General Court of the European Union has, by order, upheld in Case T-284/24 R Nuctech Warsaw Company Limited et al., the European Commission’s (“EC”) investigative power to request access to data from EU subsidiaries of their non-EU parent companies. The case involved a state-owned Chinese security equipment company Nuctech, with European-based subsidiaries in Warsaw and Rotterdam, where the EC carried out dawn raids in April 2024 under the EU’s Foreign Subsidies Regulation (Regulation (EU) 2022/2560, “FSR”). This marked the first time the EC has conducted unannounced inspections (dawn raids) under the FSR, and equally first time the EC has sought, under this instrument, access to data located outside of the European Union. The FSR aims to address distortions to competition within the internal market caused by foreign, non-EU government granted subsidies.
The order, given upon application for interim measures, highlights non-EU companies’ general obligation under the FSR to disclose information on foreign financial contributions even if the information is located outside of the EU. In the present case, the EC sought access to mailboxes of certain Chinese employees. The mailboxes were stored in servers located in China. Given the extraterritorial reach of the mailboxes, the possible breach of the Chinese state secrecy laws, and other procedural matters, Nuctech refused to hand over the data and lodged an application for interim injunction. The President of the General Court concluded that the Nuctech’s entities under investigation were established in the EU. It stated that the extraterritorial application of EU law is allowed where conduct has immediate, substantial and foreseeable effects within the EU. Therefore, Nuctech’s pleas were rebuffed by the President of the General Court.
Nutech’s subsidiaries have appealed the order of the President of the General Court. The appeal on interim measures will be next appraised by the President of the European Court of Justice, and the ruling is expected in the coming months. The present case involves interim measures, and the General Court will give its judgment in due course on Nuctech’s request to annul the EC’s decision on dawn raids.
