Hikvision Challenges Government Decision Regarding National Security Under Investment Canada Act
In a significant development, Hikvision Canada Inc., a subsidiary of a Chinese surveillance camera maker, has filed an application for judicial review seeking to set aside the Order issued by the Government of Canada on June 27, 2025. The Order directs Hikvision to wind up its Canadian business and cease all operations in Canada.
The Order comes as part of enhanced national security reviews under the Investment Canada Act (ICA), which has seen increased scrutiny of foreign investments, especially those involving existing Canadian businesses. The government's focus is on protecting economic sovereignty and critical sectors.
The application, currently ongoing, alleges that the government placed too great a focus on Hikvision's parent company's country of origin, China, and that the Order is unsupported by facts. Hikvision also claims that the government failed to engage on the substance of the national security concerns or allow for mitigation efforts.
The Order closely follows the trajectory of the national security review of China Mobile International (Canada) Inc. in August 2021. Previous judicial challenges to national security review orders have not fared well, as seen in the case of CMI in 2021, where the motion to stay the national security order was denied, CMI ceased its operations in Canada in 2022, and ultimately discontinued its judicial challenge in 2023.
Under Section 11 of the ICA, non-Canadians must notify the government of any investment to establish a new Canadian business or acquire control of an existing one. In this case, the review was commenced after the government contacted Hikvision about its failure to file a notification when it commenced operations in 2015.
As an interim step, Hikvision has sought a stay of the Order pending the proceedings, citing the impact of the Order on its 66 Canadian employees. The Attorney General of Canada has agreed that Hikvision can resume normal operations until the stay motion is decided by the Court.
The Order directs Hikvision to immediately cancel all sales orders, terminate any marketing and after-sales support services, terminate all employees and contractors within 120 days, and to refrain from selling or transferring any of its products to other businesses in Canada.
The government's approach is somewhat aligned with the U.S. model exemplified by the Committee on Foreign Investment in the United States (CFIUS), which has expanded its review and blocking powers over foreign deals deemed a national security threat, especially involving Chinese firms. However, Canadian reviews under the ICA still maintain unique aspects tied to Canada's industrial policy goals.
To avoid the fate of Hikvision and CMI, non-Canadian owners of existing businesses with a presence in Canada are advised to consult with regulatory counsel before commencing any type of new operations or business lines in Canada. The ICA regime, including the national security review provisions, have serious consequences on new and ongoing businesses. 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.
In fiscal year 2023-24, over 1,200 ICA applications and notifications were received. Only 26 investments were subjected to an extended review under the ICA's national security provisions, and only two resulted in divestiture orders (9 were withdrawn and 15 proceeded).
Melanie Joly, Minister of Foreign Affairs, issued a statement on Hikvision Canada Inc. following a national security review under the Investment Canada Act. The summary of the decision regarding the Hikvision Canada Inc. case can be found at this link, and the Order is available at this link. The application and the stay motion are both ongoing and will be monitored closely.
- The Order issued by the Government of Canada to Hikvision Canada Inc. is aimed at protecting economic sovereignty and critical sectors, particularly those involving existing Canadian businesses, as part of enhanced national security reviews under the Investment Canada Act (ICA).
- The technologies provided by Hikvision, a subsidiary of a Chinese surveillance camera maker, are affected by the government's focus on economic sovereignty and national security, as seen in the application for judicial review filed by Hikvision, seeking to set aside the Order that directs them to cease all operations in Canada.
