“The Secretary of State may, during the assessment period, make a final order if the Secretary of State— (a) is satisfied, on the balance of probabilities, that— (i) a trigger event has taken place or that arrangements are in progress or contemplation which, if carried into effect, will result in a trigger event, and (ii) a risk to national security has arisen from the trigger event or would arise from the trigger event if carried into effect, and (b) reasonably considers that the provisions of the order are necessary and proportionate for the purpose of preventing, remedying or mitigating the risk”
“[The Deputy Director] reiterated her comments during an earlier telephone conversation…i.e. that she had no particular concerns about the proposed acquisition, that she could not imagine the Secretary of State intervening under the existing legislation [i.e. theEnterprise Act 2002 ] or calling this investment in under the incoming legislation once in force.”
“the failure to manage the risks now could impact the national security risk to UK telecoms infrastructure generally, including the long-term impacts arising from the longevity of this type of infrastructure and the likelihood of a consolidation of the alt-net market meaning that Upp could form part of a larger network in the medium term.”
“The Secretary of State reasonably suspects that this trigger event has given rise or may give rise to a risk to national security.”
“LetterOne is cognisant of potential theories of harm which the Secretary of State may consider in assessing whether there is a risk to national security in any case, including (i) inappropriate leverage/risk of exploitation; (ii) security of supply of an important or essential input; (iii) access to sensitive technology/information/assets; and (iv) cumulative ownership.”
“LetterOne is not answerable to the demands, and short-termism, of external capital. LetterOne has more than GBP 20 billion of patient capital, and therefore respectfully submits that it is not vulnerable to pressure or exploitation by any third-parties, including its UBOs who cannot direct or influence LetterOne’s business and who have been legally and structurally separated from the group.”
“The Secretary of State considers that, on the balance of probabilities, a risk to national security has arisen from [the] trigger event. The national security risks in this case relate to the ownership of [Upp] by the ultimate beneficial owners of LetterOne Core Investments Sàrl (parent company of L1T FM Holdings UK Ltd.). Specifically, to the indirect ownership of the existing and growing full fibre broadband network that [Upp] is rolling out in the East of England.”
“i. restrictions on flows of information (including personal information) between [Upp] and the LetterOne group of companies; ii. restrictions on physical or virtual access to [Upp’s] sites, data and personnel by representatives of the investor; iii. conducting a security audit of the [Upp] network; and iv. reversing this acquisition by requiring divestment by [the First Claimant] of [Upp]”
“For completeness, outside Board meetings, the Investor Directors regularly engage with [Upp] to ensure they are adequately informed of [Upp’s] current affairs. This may include calls, emails exchange and/or meetings with certain [Upp] Directors, SLT [i.e. senior leadership team] and select senior staff members at SLT invitation.”
“1. The investor would be prohibited from: a. Recommending appointments to the Board of Upp Corporation Ltd.; b. Recommending contractors or suppliers for use by Upp Corporation Ltd. 2. The following actions by Upp Corporation Ltd would no longer require investor consent: a. Appointment or removal [of] any director or other officer or any committee of the board of directors or varying the composition or remit of the board, any such committee or disbanding any such committee; b. Entering into any contract which is not on an arm's length basis; c. Entering into any agreement which is out of the ordinary course of a Group Company's business; and d. Entering into any contract or make any commitment under which the consideration payable or receivable represents more than£500,000 .”
“In reaching the decision to recommend Remedy A (i.e., divestment), the ISU considered in detail whether the package of remedies in Remedy B, including the proposals put forward in representations by the parties, would prevent, remedy or mitigate the national security risks arising from the acquisition. ISU concluded that the measures in Remedy B would not prevent the risks, because Upp would continue to be owned by LetterOne Group, and that Remedy B would only partly remedy or mitigate the risks. ISU determined therefore that the measure in Remedy A was necessary and proportionate to prevent the national security risk arising from the trigger event.”
“The Secretary of State reviewed this submission today… He reviewed the case file, representations from the parties, handling advice and legal guidance. He also noted the letters from other Ministers and the potential economic impact of each remedy. Then, he agreed to the recommended Option A for the reasons noted in the submission…”
“the ownership of Upp Corporation Ltd. by the Ultimate Beneficial Owners of LetterOne Core lnvestments Sàrl (parent company of L1T FM Holdings UK Ltd.), the Ultimate Beneficial Owners' vulnerability to leverage by the Russian State, and Upp's full fibre broadband network rolling out in the East of England.”
“The ownership of Upp Corporation Ltd by the Ultimate Beneficial Owners of LetterOne Core Investments S.a.r.l (parent company of L1T FM Holdings UK Ltd) and the Ultimate Beneficial Owners' vulnerability to leverage by the Russian State means that certain national security risks could arise in relation to the roll out of Upp's full fibre broadband network. These risks include: 1. the risk of access to customer data which could be used for espionage and other activities which undermine national security; 2. the risk of disruption to the operation of the broadband network; 3. the risk of influencing strategic decisions of the company in a way that undermines national security.”
“The risks identified in the ISRA are connected to the current and future state of the Upp network and are predicted to grow along with it. The ISRA also notes that when taking their final decision, the Secretary of State must consider both the situation now and in the future when sanctions may be lifted and the UBOs returned control of LetterOne. Therefore, sanctions, their impact and steps taken by LetterOne in response do not provide robust or enduring mitigation to the risks in this case.”
“The NCSC's telecoms security team played an integral role in advising the ISU in this case. This team leads the NCSC's work on understanding and reducing the national security threats to telecoms networks and engages with industry and government on telecoms security. Part of the telecoms security team's role involves using the team's technical research to inform policy relating to telecoms security. This includes providing technical input on the management of security risks in telecoms networks where a transaction is subject to an assessment under the NSIA. The NCSC first became involved in this case in 2021. In particular, from December 2021 to December 2022, the NCSC advised the ISU on (i) the remedies which were necessary to prevent, remedy, or mitigate the national security risks which had been identified and; (ii) on whether those remedies were proportionate to the level of risk. The NCSC's telecoms security team reviewed iterations of both Remedy A and Remedy B throughout this period. Remedy B comprised a package of restrictions on the relationship between Upp and LetterOne and would have imposed various requirements on Upp. In December 2022 the ISU sought the NCSC's technical expertise on the Remedy B package and, in particular the NCSC's assessment of its effectiveness at mitigating the national security risks which had been identified. Work was done internally on this by the NCSC's experts in telecoms security. In particular, two senior telecoms security experts, who combined have 40 years of experience in telecoms and cyber security across industry and government, reviewed Remedy B and provided their technical comments. They provided detailed feedback and concluded that the Remedy B package of remedies did not mitigate the national security risks identified in this case in any meaningful way. This was conveyed to the ISU.”
“1…The application for disclosure…is a request for documents falling within the following categories: (1) documents supplied to the National Cyber Security Centre by the Department for Business, Energy and Industrial Strategy relating to the claimants between May 2022 and15 December 2022 ; (2) documents supplied or sent by the NCSC to BEIS relating to the claimants in the same period; and (3) documents recording or evidencing oral communications between NCSC and BEIS in that period, including previous drafts of the representations assessment, remedies assessment or investment security risk assessment showing when changes were and were not made. 2. The scope of those classes of documents has been further clarified by the terms of a proposed draft order, which makes it clear that the relevant communications and documents, etc. are ones that concern the perceived advantages or disadvantages of the proposal made by the claimants by way of alternative to the Secretary of State’s proposal that the claimants sell their shares in the interested party. Collectively, the three classes of document cover all communications between the National Cyber Security Centre and the Secretary of State, who took the decision challenged in the period between what was referred to as the ‘call-in decision’ in May 2022 and the date of the decision challenged, which was15 December 2022 . 3. These documents, it is said, go to the issue of whether the Secretary of State ought to have taken steps short of requiring the claimants to sell their shares in the interested party. This is a strand of argument that runs through as an aspect of Grounds 2 and 3 of the claimants’ pleaded case.”
“However widely the power is expressed in the statute, it does not authorise that power to be exercised otherwise than in accordance with fair procedures.”
“the Government expects that businesses will be involved in its discussions about remedies that affect them.”
“the question for the court is, did the Secretary of State ask himself the right question and take reasonable steps to acquaint himself with the relevant information to enable him to answer it correctly?”
“The general principles on the Tameside duty were summarised by Haddon-Cave J in R (Plantagenet Alliance Ltd) v Secretary of State for Justice[2015] 3 All ER 261 , paras 99-100. In that passage, having referred to the speech of Lord Diplock in Tameside, Haddon-Cave J summarised the relevant principles which are to be derived from authorities since Tameside itself as follows. First, the obligation on the decision-maker is only to take such steps to inform himself as are reasonable. Secondly, subject to a Wednesbury challenge…, it is for the public body and not the court to decide upon the manner and intensity of enquiry to be undertaken: see R (Khatun) v Newham LBC[2005] QB 37 , para 35 (Laws LJ). Thirdly, the court should not intervene merely because it considers that further enquiries would have been sensible or desirable. It should intervene only if no reasonable authority could have been satisfied on the basis of the enquiries made that it possessed the information necessary for its decision. Fourthly, the court should establish what material was before the authority and should only strike down a decision not to make further enquiries if no reasonable authority possessed of that material could suppose that the enquiries they had made were sufficient. Fifthly, the principle that the decision-maker must call his own attention to considerations relevant to his decision, a duty which in practice may require him to consult outside bodies with a particular knowledge or involvement in the case, does not spring from a duty of procedural fairness to the applicant but rather from the Secretary of State’s duty so to inform himself as to arrive at a rational conclusion. Sixthly, the wider the discretion conferred on the Secretary of State, the more important it must be that he has all the relevant material to enable him properly to exercise it.”
“67. The protections include the following (by way of example): Section 2, Chapter 5 of the [Code] sets out measures for monitoring and investigating anomalous activity; r.8 of the ECSM Regulations (addressed in section 2, Chapter 7 of the [Code]) imposes requirements to prevent unauthorised access, such as multi-factorial authentication of accounts capable of making changes to security critical functions (r.8(2)(b)), dual approval for manual changes to security critical functions (r.8.(2)(c)), and limitation of security permissions (r.8(4)); the [Code] sets out further stipulations, such as maximum timeframes for patches and updates to systems according to vulnerability (Section 2, Chapter 11, §11.3)…”
“While compliance measures would be paid for by LetterOne, there would remain a significant burden on HMG resources. Even with the assistance of a third party auditor collating a summary of compliance activity, HMG would still be required to review Upp's activities and relationship with LetterOne at least quarterly. That review would likely encompass a large amount of material”
“(1) Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. (2) The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
“The first is a rule of a general nature, set out in the first sentence of the first paragraph, which enunciates the principle of the peaceful enjoyment of property (‘Every natural or legal person is entitled to the peaceful enjoyment of his possessions’). The second is the rule contained in the second sentence of the first paragraph, which covers deprivation of possessions and subjects it to certain conditions (‘No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law’). The third rule, stated in the second paragraph, is an explicit recognition that states are entitled, amongst other things, to control the use of property in accordance with the general interest.”
“The question whether or not an act of a public authority is incompatible with a Convention right will often depend on whether it complies with the principle of proportionality. That principle has been explained in the authorities as having four limbs, as set out by Lord Reed JSC in Bank Mellat v HM Treasury (No 2)[2013] UKSC 39 ;[2014] AC 700 (“BankMellat”), at para 74. It is necessary to determine: (1) whether the objective of the measure is sufficiently important to justify the limitation of a protected right; (2) whether the measure is rationally connected to the objective; (3) whether a less intrusive measure could have been used without unacceptably compromising the achievement of the objective; and (4) whether the measure’s contribution to the objective outweighs the effects on the rights of those to whom it applies. The fourth limb is sometimes referred to as the ‘fair balance’ issue or ‘proportionality stricto sensu’, i.e. in the strict sense. Although Lord Reed was in the minority in Bank Mellat, there was nothing in his formulation of the concept of proportionality with which Lord Sumption JSC (who gave the main judgment for the majority) disagreed: see para 20”
“...the [NCSC] has assessed that [Remedy B] would not be sufficient to address the national security risks. While the various restrictions (if implemented perfectly) would theoretically heavily restrict the relationship between the two parties [i.e. Upp and the Group], there is still a possibility that influence could be asserted. HMG would be placing a substantial amount of trust in the SRC and audit arrangements on an ongoing basis in order to implement this remedy. As full fibre infrastructure is likely to be in place for up to three decades and this network, as planned, is likely to grow to be regionally significant, the NCSC advised that this remedy was not sufficient to mitigate the risks.”
“the taking of property without payment of an amount reasonably related to its value would normally constitute a disproportionate interference which could not be considered justifiable under Article 1. Article 1 does not, however, guarantee a right to full compensation in all circumstances. Legitimate objectives of 'public interest', such as pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value”
“the requirement of proportionality by no means implies that the erstwhile owner of property taken by the State must always be compensated at full value if a violation of A1P1 is to be avoided. Such a rule would frustrate, not fulfil, the search for fair balance.”