Hikvision Contests National Security Directive Issued under Investment Canada Act
In a significant development, Hikvision Canada Inc., a subsidiary of a Chinese surveillance camera maker, has announced it is challenging the Government of Canada's order to close its Canadian operations following a national security review.
The order, issued in June 2025, directed Hikvision to wind up its Canadian business and cease all operations in Canada by June 27, 2025. As an interim step, Hikvision has sought a stay of the Order, citing the impact on its 66 Canadian employees.
The government's decision follows a series of orders under the national security provisions of the Investment Canada Act, including three divestiture orders in 2022 and orders to wind-up TikTok Technology Canada Inc., Bluevec Technologies, and Pegauni Technology in 2024.
The national security review order was unusual as it came several years after Hikvision commenced operations in Canada. The Order is a signal from the government that businesses currently operated by non-Canadians will be scrutinized from a national security perspective.
Under section 11 of the Investment Canada Act, non-Canadians must notify the government of any investment to establish a new Canadian business. Hikvision failed to file a notification when it commenced operations in 2015.
The Order closely follows the trajectory of the national security review of China Mobile International (Canada) Inc. in August 2021. Non-Canadian owners of existing businesses with a presence in Canada should also consult with regulatory counsel before commencing any type of new operations or business lines in Canada.
Key factors considered in national security reviews under the Investment Canada Act (ICA) include a broad assessment of risks to Canada’s security, especially in light of recent amendments that have expanded the scope and depth of such reviews.
The main factors are:
- Potential risks to national security posed by the investment, including safeguarding critical infrastructure, sensitive technology, and innovation ecosystems.
- Economic security, defined broadly to evaluate whether the investment could undermine Canada’s economic interests through foreign control or integration with a foreign economy.
- Transfer or control of sensitive technology as outlined in the new Sensitive Technology List.
- Impact on supply chains and domestic assets, intellectual property, and capital, especially to prevent opportunistic or predatory acquisitions.
- Political and economic considerations tied to safeguarding Canadian interests amid geopolitical trends and trade tensions.
In summary, the ICA's national security review now incorporates a wider, more flexible range of factors, moving beyond traditional security concerns to also include economic resilience and protection of innovation-critical sectors. This shift aims to ensure foreign investments do not threaten Canada's sovereignty, critical technologies, or economic stability.
Hikvision, however, alleges that the government placed too great a focus on the parent company's country of origin and failed to engage on the substance of national security concerns or allow for mitigation efforts. The application and the stay motion are both ongoing and will be monitored closely.
Investors should involve regulatory counsel early in deal planning to assess potential ICA risks and ensure that the clearance process is accounted for in deal planning. The Attorney General of Canada has agreed that Hikvision can resume normal operations until the stay motion is decided by the Court.
[1] Investment Canada Act, Government of Canada, https://laws-lois.justice.gc.ca/eng/acts/I-3.6/index.html [2] Guidelines for the Review of Non-Treaty Investments, Investment Canada, https://www.ic.gc.ca/eic/site/062.nsf/eng/00012.html [3] National Security Review of Investments, Investment Canada, https://www.ic.gc.ca/eic/site/062.nsf/eng/00059.html
The government's decision to wind up Hikvision's Canadian business, following a national security review under the Investment Canada Act, indicates a focus on scrutinizing businesses currently operated by non-Canadians from a national security perspective, especially those involving finance, industry, and business. To prevent potential risks to national security, investors should consult with regulatory counsel before commencing new operations or business lines in Canada, considering factors such as safeguarding critical infrastructure, sensitive technology, and innovation ecosystems.
