Minister Karremans (Economic Affairs, VVD) knew from the start that his controversial intervention in Nexperia had little chance of success without judicial intervention. That is why the minister urged the judge for additional interventions just one day after the use of war law, according to documents NRC has. The minister had to act urgently when it became apparent that immediate intervention at the chip maker was necessary.
However, the intervention at Nexperia, owned by the Chinese Wingtech, led to a strong response from China. This created a chip shortage that caused problems for car manufacturers worldwide. Karremans previously stated in a interview with the FD that his intervention was separate from the case in court, which was filed a day later, and that he “did not know that the directors would go to Court.” He knew that dissatisfied directors were preparing a procedure, but it was uncertain whether and when that procedure would take place.
In a response to NRC, Economic Affairs (EZ) states that these facts contain “nothing new”. The minister did not initiate or influence the proceedings before the Enterprise Chamber “at all”. The minister’s intervention “is completely separate from the procedure” in court. “Our (…) involvement as an interested party in the procedure (…) was completely normal,” a spokesperson said.
The ministry wanted to prevent Chinese CEO Wing, who is also a major shareholder, from ’emptying’ Nexperia by replacing the production of chips from Europe with those in China. Wing is said to be planning to do so because he saw his ability to expand Nexperia in the west thwarted by US export restrictions. Those restrictions took effect on September 30. Wing canceled consultations with Economic Affairs to give Nexperia a more European management and thus avoid American export restrictions.
China immediately responded with an export ban on Nexperia chips, causing a global chip shortage.
Act quickly
On September 30, Karremans introduced a never-before-used 1952 law. On the basis of the Goods Availability Act, he immediately prohibited the relocation of Nexperia’s activities and machines.
At the same time, Karremans realized that it is “far from certain whether the order will be complied with”, he informed the judge a day later, and that the issued ban would be difficult to enforce. “Swift action by the Enterprise Chamber can prevent this,” according to documents available to NRC.
The minister registered as an interested party in the proceedings and pointed out that his order based on the law of war would be useless without further interference from the judge. “Without intervention from your Enterprise Chamber,” it will “probably lead to cases of non-compliance with the order,” the state attorney said on behalf of the minister. Because, the minister argued, the penalty for violating the ban “will be insufficient to guarantee compliance with the order.”
This raises the question of whether the Ministry of Economic Affairs was naive in deploying the obscure law, or whether it was clear to the department from the start that the intervention would only be useful in combination with an intervention by the courts.
Internal power struggles
It now appears that the minister sent inspectors from the Economic Security Supervision Department to Nexperia a day after his order. He did this to check whether the semiconductor manufacturer was complying with the order, documents show. But it resulted in a tense situation. “During the visit, a discussion arose between two representatives of the Wing camp and the inspectors. The internal power struggle at Nexperia “constituted (…) a significant obstacle to the cooperation” of the company.
Critics believe that the minister’s intervention was unnecessary political interference: going to court was sufficient
The Enterprise Chamber suspended Wing on suspicion of mismanagement and deprived him of control of his company. That statement, in combination with Karremans’ action, is regarded in China as the Dutch ‘nationalization’ of a Chinese company.
Karremans’ order was the immediate reason for the Chinese authorities to ban the export of Nexperia semiconductors from China to Europe. Critics believe that the minister’s intervention was unnecessary political interference: going to court was sufficient. Even after the intervention of the judge, in which the CEO of Nexperia ended up sidetracked due to suspicions of mismanagement, Karremans continued to enforce his order. Last week, the minister suspended the use of the war law after a delegation of officials in China held consultations to calm the diplomatic conflict. But there is still an obligation to provide information for Nexperia, Karremans reported the House of Representatives. This means that the ministry can still keep an eye on the company.
It is certain that the ministry was well aware of the legal advantages and disadvantages of using the never-applied 1952 law. A year ago, one of the top officials of the Ministry of Economic Affairs pointed out the importance of this law in a scientific volume on “business and the threat of war”. At the 2024 Pre-Advice of the Royal Association of Commercial Law, he discussed some emergency laws that were “directly” related to “the preparation for a state of emergency, including war.” The top official was the first to mention the Availability of Goods Act in the context of “preparation for war”.
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