Seeking clarity on national security reviews
Amendments to the law must not impose unnecessary burdens, says the CBA's Competition Law and Foreign Investment Review Section.
The CBA's Competition Law and Foreign Investment Review Section supports the objectives of Bill C-34 to ensure national security concerns arising from foreign investments are addressed effectively. But as it explains in a letter to the Standing Committee on Industry and Technology, there are ways to strengthen that regime while allowing Canada to benefit from foreign investments. These recommendations to improve the National Security Review of Investments Modernization Act, which Section Chair Sandy Walker and Foreign Investment Review Committee Chair Michael Caldecott reiterated in a May 1 appearance in front of the Committee, are summarized below.
Broadly, the CBA Section encourages the government to ensure the legislative amendments “are clear and do not impose unnecessary requirements and burdens. The twin objectives of encouraging foreign investment and protecting Canada’s national security interests require a carefully balanced approach.”
Terms must be defined clearly and well before the legislation comes into force, to ensure investors have time to factor in potential changes in their planning.
In particular, the terms “material, non-public technical information or material assets,” which are essential components of the criteria for identifying whether a pre-closing filing is required, need to be defined to remove any ambiguity.
The CBA letter says a reorganization that does not involve any change in control over a Canadian business is unlikely to raise national security concerns, and that’s why current uncertainty about the application of pre-closing filing obligations to international reorganization transactions should be removed.
Noting that the new regime will likely result in a significant increase in the number of filings, the Section asks the government to devote appropriate resources, including trained personnel, to handle the volume of pre-closing filings on a timely basis.
Judicial review
Proposed amendments included in Bill C-34 would increase the government’s ability “to assert national security privilege in the context of the judicial review of a national security order,” the letter reads, “and raise serious concerns regarding the ability of investors to effectively exercise the right to seek judicial review of government decisions.”
The Section therefore recommends including procedures, such as an amicus regime, to facilitate effective judicial reviews while recognizing “the limited types of information where disclosure of the information to the investor could itself give rise to national security concerns (e.g., confidential informant sources, communications with allied national security authorities in other jurisdictions).”
