Steel and the State

Directors face dilemmas
when the state intervenes.

Over the weekend, whilst many were nicely curled up on the sofa watching The Masters, the UK Government was working (no sympathy please), and passed emergency legislation – The Steel Industry (Special Measures) Acts 2025 (“the Act”). The Act provides ministers with the power to compel British Steel to continue operations at its Scunthorpe plant. This is the first time the government has recalled parliament at the weekend since the 1982 Falklands War.

The law was rushed through following the company’s Chinese holding company threatening to halt production, putting thousands of jobs and a key national industry at risk. The Act makes non-compliance by directors a criminal offence, punishable by up to two years in prison or a fine, or both.

This dramatic intervention by the UK government is another warning shot for directors during an era of heightened geopolitical tension, and economic nationalism. Governments around the globe are becoming ever more assertive in seeking to protect their strategic industries, and directors are increasingly finding themselves in the crosshairs. This example shines the light on Anglo-Chinese relations but is a good example of a broader global trend of governments moving away from free-market orthodoxy, and towards interventionist lawmaking.

We commented on this trend back in 2021, when reviewing the potential impact of The National Security and Investment Act 2021 (NSI Act) and the Digital Markets Unit (DMU)(interestingly the NSI Act came shortly after the acquisition of British Steel by the Jingye Group in March 2020). Similar examples from other countries include the Energy Security Act Amendment 2022 in Germany, Critical Infrastructure Protection Acts 2021-2022 in Australia, and the NIS2 Directive (2022/2555) which addresses cyber security in the EU.

What does this all mean for liabilities of directors operating in affected industries? It can be boiled down to: heightened personal responsibility and accountability; reduced autonomy; and greater exposure to regulatory, civil, or even criminal liability.

The good news for directors of course is that proceedings such as those commenced under the Act would normally fall within the definition of a ‘Claim’ under a D&O policy, thereby triggering coverage for defence costs of those directors being prosecuted (up to the point of a non-appealable adjudication that the criminal act did in fact occur). However, at least under UK law, criminal fines would not be insurable.

This may be a one-off intervention which ends up in the nationalisation of British Steel, but the direction of travel is clear. Directors in critical industries may have always played a role in the national interest but that role is now under sharper scrutiny, with higher stakes and less room to manoeuvre. The next crisis may not come with warning, but the expectations of directors will likely be clear… align with public priorities or face legal, regulatory and reputational fallout.