US heavyweights score roles on CSX’s court battle with UK funds

A quartet of US firms snared lead roles on a bitter foreign investment dispute involving UK hedge funds The Childrens’ Investment Fund (TCI) and 3G Capital Partners.


US heavyweights score roles on CSX's court battle with UK funds
A quartet of US firms snared lead roles on a bitter foreign investment dispute involving UK hedge funds The Childrens’ Investment Fund (TCI) and 3G Capital Partners.

Kaye Scholer is advising rail group CSX on Committee for Foreign Investment in the US (CFIUS) matters after CSX – in other matters represented by Cravath Swaine & Moore – attempted to limit TCI’s and 3G’s control of the rail operator in a court battle earlier this month (11 June).

The rail group sued the hedge funds to stop them replacing five of its 12-member board, thereby gaining significant economic control of the company.

Cravath ;New ;York partner Rory Millson has been representing CSX.

Judge Kaplan ruled in June that TCI and 3G did not make the public disclosures required of 5 per cent shareholders.

A source close to the case said: “This is extremely significant because it relates to the control of US companies. The relevance of this has grown dramatically since the likes of sovereign wealth funds have been actively investing in US institutions.”

Kirkland & Ellis partner Peter Doyle advised 3G, while Schulte Roth & Zabel partner Howard Godnick represented UK fund TCI.

Both funds are able to continue with their proxy fight to place members on the board of CSX, raising questions in the US regarding foreign ownership and control of domestic entities.

As reported by The Lawyer earlier this month (26 May), Washington DC firms such as Arnold & Porter, Covington & Burling, Kaye Scholer and WilmerHale have built up successful CFIUS-focused practices.

New York heavyweight Skadden ;Arps ;Slate Meagher & Flom is also highlighted, with partner Ivan Schlager noted as one of the top lawyers in the field.