undertakings with the investor to address national security concerns, as a result of which the Minister determines that the investment will not be injurious to national security. Third, the Minister may determine that the investment would be injurious to national security, in which case the matter is referred to the federal Cabinet, which is authorized to take any measures that it considers advisable to protect national security, including imposing conditions on the investment or the outright prohibition of a proposed investment (or divestiture in the case of a completed investment). In the context of establishments of new Canadian businesses, the investor may be ordered to wind up the Canadian business. The Minister may also impose interim conditions during an NSR, such as orders to maintain a Canadian business separate from the investor and limit an investor’s access to sensitive intellectual property and data of a Canadian business pending the outcome of an NSR.
Substantive NSR Considerations
Although the ICA does not define the concept of “national security,” the Canadian government’s National Security Review Guidelines (NSR Guidelines) confirm that it includes consideration of an investment’s potential impacts on the following:
1. Canada’s defence capabilities and interests;
2. the transfer of sensitive technology or know-how outside Canada: Canada’s Sensitive Technology List identifies areas of advanced technology with potential national security implications in relation to digital infrastructure, energy, surveillance, space, artificial intelligence and life science, among others;
3. SOE access to sensitive personal information, including through interactive digital media;
4. the supply of critical goods and services;
5. critical minerals, and all stages of the critical minerals value chain: Canada’s Critical Minerals List currently contains 34 minerals and metals, including aluminium, copper, lithium, magnesium, potash and nickel, uranium and zinc; 6. critical infrastructure: Canada’s National Strategy for Critical Infrastructure highlights, among other things, energy and utilities; finance; food; transportation; government; information and communication technology; health; water; safety; and manufacturing; and
7. Canada’s economic security, including impairment of Canadian supply chains.
ICA national security considerations may also involve whether the investment could enable foreign surveillance or espionage; hinder Canadian intelligence, law enforcement operations or foreign relations; facilitate criminal activity; or enable access to sensitive personal data more generally. An investor’s previous conviction of an offence involving corruption, whether in Canada or elsewhere, may also raise national security concerns. Acquiring a business or property in close proximity to sensitive government facilities could also raise national security concerns.
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