This week, the Secretary of State (SoS) published its first final order under the UK National Security and Investment Act 2021 (NSIA), prohibiting a licensing deal for the use of vision sensor IP on national security grounds. In particular, the SoS found that the IP had dual-use applications and could potentially be used to build defence capabilities by the Chinese tech buyer.

Under the NSIA, asset deals, such as licensing agreements, do not trigger mandatory filing obligations. Instead, parties are encouraged to self-assess their exposure risk of receiving a Government call-in notice.

While we would expect to see an increased deal scrutiny on national security grounds, it is though unexpected that the first prohibition comes in response to a voluntarily notified licensing deal, falling out of the UK’s mandatory regime. One to watch out for.