Jupiter Out of Orbit: Court Grants Receivership in First Ever CFIUS Divestment Enforcement Litigation

Following filing of a suit to enforce an Executive Order issued by President Trump upon the recommendation of the Committee on Foreign Investment in the United States (CFIUS or the Committee) requiring a Chinese company to divest its interest in a U.S. company, the U.S. District Court for the District of Columbia (the Court) granted a motion for preliminary injunction ordering the appointment of a receiver to take control of the U.S. business pending completion of the divestment. 

In February 2026, the Department of Justice filed a lawsuit against Suirui International Co., Limited (Suirui) and Jupiter Systems, Inc. (Jupiter) to enforce President Trump’s July 2025 Executive Order (the Order) requiring Suirui to divest its interest in Jupiter on national security grounds. The Order followed a review conducted by CFIUS into the national security risk posed by Suirui’s 2020 acquisition of Jupiter. As discussed in our previous post, this case marks a significant moment for CFIUS enforcement, offering rare public insight into the Committee’s approach to national security reviews and the challenges of mandating divestment. 

The decision is a significant win for CFIUS. It should give the Committee greater confidence when issuing orders or recommending that transactions be blocked, as well as when exercising its broader national security authorities. Most notably, the court concluded that the government is likely to succeed in showing that CFIUS's use of “due process letters” (DPLs) satisfies procedural due process — a strong early signal, though the court stopped short of a final merits ruling. Through these letters, CFIUS informs parties of its national security concerns and, to the extent possible, provides the unclassified information on which those concerns are based.

That is important because this case represents the first real judicial test of the due process framework CFIUS implemented after the Court of Appeals for the Federal Circuit ruled in Ralls Corp. v. CFIUS that CFIUS must provide parties with notice, including an unclassified summary of the record, and an opportunity to respond. The decision also reinforces that federal courts are likely to be highly deferential to the national security judgments of the President and CFIUS, even if they will scrutinize the process undertaken to reach those judgements, with the effect being that parties are unlikely to litigate their way out of a bad CFIUS outcome. The better strategy is to identify national security risk at the outset, allocate that risk in the deal documents, and avoid transactions where the regulatory downside is too severe.

Key Takeaways:

• National Security Claims Accepted: The Court confirmed that it would give deference to the President’s finding that Suirui, through its ownership of Jupiter, poses a national security threat, and it accepted the evidence the government offered to establish that irreparable harm would occur without interim relief.
• CFIUS Withstood Due Process Challenge: The Court rejected defendants’ constitutional challenge at the preliminary-injunction stage, concluding that the government is likely to show that CFIUS’s use of DPLs satisfied constitutional procedural due process requirements articulated in relevant case law (Ralls Corp. v. CFIUS).
• Receivership Ordered as Interim Relief: The Court accepted that the circumstances of the case necessitated an extraordinary remedy in the form of the appointment of a receiver, a restructuring and fiduciary professional, to take control of Jupiter pending full litigation on the government’s request to enforce the President’s divestment order.
• Significant Consequences for Non-Cooperation: The case reinforces that failure to notify CFIUS of a transaction is likely to draw Committee scrutiny and failure to fully cooperate with the review process or comply with a divestment order can lead to extraordinary remedies in and out of court.
• Voluntary Divestment is Usually in the Best Interests of CFIUS and the Parties: The case demonstrates that CFIUS’s preferred approach of voluntary divestment ordinarily leads to faster divestments, which is better for national security and protects the value of the U.S. business through a non-public, orderly divestment. While the Court’s ruling is a win for CFIUS, the ongoing legal proceedings will continue to delay the ultimate divestment beyond the time it typically takes for parties to effectuate a voluntary divestment, leaving the identified national security risk unresolved. As the receiver’s June 17, 2026 status report illustrates, failure to voluntarily divest likely exacerbated Jupiter’s precarious financial situation. Accordingly, it is in the interests of the government to look for a commercially reasonable path to achieve divestment and incentivize voluntary compliance. Further, it is in the interests of the foreign investor and the U.S. company to recognize that failure to cooperate and recognize when it is time to negotiate on CFIUS’s terms will ultimately be to their detriment.

Background 

The road to this unprecedented decision started in 2020, when Chinese-owned Suirui bought Jupiter—a company that provides display wall processors, displays, and related software to commercial and government customers, including U.S. intelligence and defense agencies—without notifying CFIUS. As explained in our July 2025 post, the transaction nonetheless came to CFIUS’s attention, ultimately leading to an order by President Trump that Suirui divest its interest in Jupiter. When the parties failed to follow the Order, the Department of Justice filed an enforcement action in February 2026 and then requested a preliminary injunction ordering the appointment of a receiver pending litigation of the government’s request for a final injunction.

The Government’s Position: National Security Concerns Necessitate Immediate Action

• After filing its initial complaint to enforce the Order, CFIUS—through the DOJ, its litigation counsel—asked the Court for a preliminary injunction to appoint a receiver. The government’s position, which the Court accepted, was that the only way to effectively mitigate the risk and limit irreparable harm from Suirui’s ownership of Jupiter was to remove Suirui’s operational control of Jupiter pending completion of litigation.
• The government reiterated its core national security concerns: Jupiter provides technology used by highly sensitive U.S. defense and intelligence agencies and critical infrastructure customers; Suirui has ties to Chinese entities, such as China Mobile, which holds the right to appoint a board member; and Chinese law compels cooperation with intelligence authorities, creating risks of espionage and cybersecurity compromise.
• The government also emphasized the defendants’ missed deadlines, incomplete responses, failure to present compliant divestment proposals, and other actions impeding a sale as evidence that they had not made meaningful efforts to divest and were unlikely to comply with the President’s divestment order without court intervention.

The Defense’s Rebuttal: No Imminent Harm, Due Process Violated

• Defendants argued that the government’s claim of irreparable harm was undermined by its delay in reviewing the transaction and bringing suit, which they contended showed the alleged threat was not imminent. The Court rejected this argument, finding that the government pursued an orderly and expeditious divestment process and filed suit promptly after defendants failed to meet the final divestment deadline.
• Defendants maintained they had cooperated with CFIUS’s call-in review and were continuing to pursue divestment, arguing that the process had been complicated by the need to obtain approval from the Chinese government.
• Defendants also raised a constitutional due process challenge, arguing that CFIUS’s letters to the parties provided only summaries of the government’s concerns and did not disclose the underlying unclassified information on which CFIUS relied, depriving defendants of a meaningful opportunity to rebut the evidence.
• Finally, defendants argued that appointment of a receiver would cause significant business disruption, including potential harm to customer relationships, employee retention, and enterprise value.

Judicial Decision: Applying the Preliminary Injunction Framework

This decision highlights the balance courts must strike between national security and procedural fairness. As the first suit to enforce a presidential CFIUS divestment order, the decision provides a roadmap for future CFIUS litigation. The Court ultimately granted the government’s motion after finding that all four preliminary injunction factors weighed in its favor:

1. Likelihood of Success: The Court found the government is very likely to succeed in enforcing the Order, noting there was no real dispute that the President acted within his statutory authority. As discussed below, the Court also rejected the defendants’ due process challenge. It emphasized the defendants’ failure to comply and pointed to evidence that they did not make meaningful efforts to divest—highlighting missed deadlines, failure to produce compliant divestment proposals, and actions that impeded a sale, such as limiting potential buyers and coordinating with the Chinese government regarding any divestment.
2. Irreparable Harm: The Court held that, even though the President’s findings in the Order are not judicially reviewable, the government’s assertion of irreparable harm is not enough to obtain a preliminary injunction. Even then, the Court found that the government had established that Suirui’s continued control of Jupiter creates an ongoing national security risk. It agreed with the government that Jupiter’s products and technology could potentially be compromised while remaining under Suirui’s control. The key point, the Court explained, is that the national security risk arises from Suirui’s control of Jupiter itself, not from any proven misconduct by Suirui.
3. Equities and Public Interest: The Court found the balance of harms clearly favors the government. While it recognized that placing Jupiter into receivership could harm the defendants, it concluded that those concerns are outweighed by the national security risks, especially because the defendants repeatedly failed to comply with the Order despite having multiple chances to do so. The Court emphasized that protecting national security is an “urgent objective of the highest order.”
4. Receivership as the Appropriate Remedy: The Court found that a receivership is necessary because no less drastic option would adequately address the risks. It concluded that measures like monitoring, reporting, or simply allowing more time would not work, since they would leave Suirui in control. Instead, the Court described receivership as a temporary solution that keeps operations running while removing the source of the risk until the case is fully resolved. As a result, Suirui has lost operational control of the company, though it still retains ownership until a final divestment is decided. Notably, the Court largely accepted the terms of receivership proposed by the government, noting that the defendants had essentially forfeited their opportunity to propose changes by sticking to their frontline position that Suirui should maintain control of Jupiter.

CFIUS Due Process Under Scrutiny: Court Endorses the DPL

A central issue in the case was Defendants’ challenge to CFIUS’s process, particularly its use of DPLs. Defendants argued the government relied on undisclosed evidence and provided only summaries of its concerns, depriving them of a meaningful opportunity to respond.

The Court rejected this argument, concluding the process provided to defendants satisfies constitutional due process requirements. In particular, the Court found defendants were notified of the national security concerns, given opportunities to respond, and engaged in extended exchanges with the government. This is an important validation of the procedures implemented by CFIUS following the Ralls decision to provide transaction parties due process, which, to date, have not been reviewed by the Court. 

In doing so, the Court followed the D.C. Circuit’s 2014 decision in Ralls Corp. v. CFIUS, which requires that parties be informed of the government’s concerns and have a chance to respond, but does not require disclosure of the underlying classified or sensitive evidence. 

Control is the Risk, No Smoking Gun Necessary

The Court’s acceptance of the government’s irreparable-harm theory is another win for CFIUS because it validates the Committee’s focus on the risks inherent in foreign control itself. The Court found that Suirui’s continued control of Jupiter creates an ongoing national security risk because Jupiter’s technology could be exposed to misuse while under the control of a foreign owner presenting national security concerns. Critically, the Court did not require evidence of specific misconduct or a “smoking gun”; it accepted the argument in the Order that the risk flowed from what Suirui’s control of Jupiter could enable.

For transaction parties, this serves to reinforce that trying to persuade the Committee that no risk exists will almost always devolve into shadowboxing with hypotheticals. CFIUS reviews often turn on forward-looking judgments about how foreign control of a U.S. business could exploit vulnerabilities of the U.S. business, rather than proof that harm has already occurred. Once CFIUS has identified a risk, absent a clear factual misunderstanding, the best approach is usually to work with the Committee to mitigate that risk rather than arguing with the Committee about its existence. The basic reality remains that, if CFIUS identifies a compelling national security vulnerability in the U.S. business, it generally is not difficult for the Committee to construct a compelling enough threat argument with respect to a Chinese investor.   

What’s Next?

Following the preliminary injunction on May 26, 2026, defendants filed an appeal in the D.C. Circuit and sought to stay the receivership in the District Court, but the Court denied that request on June 3, 2026, concluding that defendants had not justified a stay, that Suirui’s continued control poses an ongoing national security risk, and that any resulting business harm is largely attributable to defendants’ own delays in divesting. The case has since moved forward procedurally. On June 10, 2026, defendants filed their Answer in the District Court case, formally contesting liability, denying any violation of legal obligations, and asserting constitutional and equitable defenses—including due process and takings claims, as well as arguments that the receivership is overly sweeping relative to any legitimate national security concerns. 

The case now proceeds on parallel tracks while the company is placed under receivership: in District Court, the parties are litigating whether and how to enforce the Order on the merits, while the D.C. Circuit is reviewing the narrower question whether the receiver was properly appointed at the preliminary stage. Practically, however, both the legal battle and the divestment efforts are now racing against Jupiter’s financial reality—the receiver's June 17, 2026 status report indicates that Jupiter is on the brink of financial collapse, with its remaining cash projected to run out by mid-July 2026.   

The Suirui ruling sends a clear message to cross-border investors: a strategy of trying to fly a high-risk case under the CFIUS radar or slow down the eventual divestment process is unlikely to be a worthwhile strategy. When parties are uncooperative, courts have proven willing to step in with strong measures, including taking control away from owners well before a final decision is made. For companies handling cross-border deals, assessing the national security profile of the transaction, assessing what remedies might seek, and then adjusting your M&A and regulatory strategy with a realistic view of CFIUS’s powers is essential. 

For more guidance on this case or similar transactions, please contact our CFIUS team with any questions or inquiries.

Freshfields Summer Associate, Adit Roy, is a contributing author.

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