July 02, 2015
Industry Canada’s decision to block the establishment of a factory in Québec by a Chinese state-owned enterprise has focused attention on the use of the national security provision within the Investment Canada Act. In a Globe and Mail analysis of this decision, partner Omar Wakil provided his take on the case within the context of Canada’s foreign investment review activity. Below is an excerpt of the article.
Lawyers who specialize in Canada’s foreign investment rules say the case appears to be the first time an investment has been vetoed for its location. It is also the first known case of the quashing of the establishment of a new business, as opposed to the acquisition of a Canadian asset.
The United States has blocked or reviewed sensitive foreign investments owing to their proximity to military bases. In 2012, President Barack Obama blocked a privately owned Chinese company from building wind turbines close to a U.S. Navy military site in Oregon, citing national security concerns.
Omar Wakil, a lawyer with Torys LLP, said Canadian national security reviews for foreign investments, while still rare, are on the rise. “We are seeing an increased number of transactions being scrutinized under this provision.”
To read the full article, click here.
For more on national security reviews and their effect on business, read our M&A Top Trends 2015 article “Canada’s New Protectionism Will Shape M&A” here.