Andrew Morse files this dispatch from Tokyo.

The Japanese government officially ordered The Children’s Investment Fund to halt additional investment in one of the country’s main electric power companies, the latest step in a long-running — if slow-moving — confrontation.

London-based TCI, run by combative investor Christopher Hohn, has sought to increase its 9.9% stake in Tokyo’s Electric Power Development Co., more commonly known as J-Power, to 20%. But because J-Power is considered a national security asset, it needs government permission to own more than 10%.

Tuesday’s order follows months of hearings, an initial government recommendation to refuse any greater investment and a rebuttal from TCI to that recommendation. If the fund, which also has picked fights in Europe and the U.S., buys more J-Power shares, the fund will be in violation of Japanese law. That could lead to prison terms of up to three years and fines of up to three times the fund’s investment in J-Power.

In rejecting TCI’s application to raise its stake, the government defended Japan’s national security investment laws, which it says are in line with international norms. It also expressed concern that J-Power might not be able to pay for maintenance of its facilities if it tried to meet the performance criteria TCI has set forth, which would threaten the transmission of electricity in the world’s second-largest economy. It was also concerned that TCI, which has influenced other companies with small stakes, will have a voice in J-Power that is disproportionate with its shareholding.

“From the past investment activity shown by TCI, TCI succeeded in changing board members and the management of the portfolio company by using its shareholder’s right, although TCI’s equity stake was only around 10%,” the Ministry of Economy, Trade and Industry said in a fact sheet that accompanied its order.

John Ho, who runs the fund’s investments in Asia, said the government’s decision ran counter to the spirit of free markets. “In effect, the government is picking and choosing shareholders for J-POWER,” Mr. Ho said in a statement. “This decision is contrary to sound shareholder democracy.”

Whatever TCI does next, don’t expect the process to be quick. The fund has 60 days to appeal the government’s decision. The government then has another three months or so to respond.