February 17, 2022 – Canada needs a national security “amicus” to boost confidence in the foreign investment review process, according to a new report from the C.D. Howe Institute.
With the Canadian government either blocking or restructuring a growing number of investments under the Investment Canada Act on national security grounds over the last five years, the review process has been the subject of significant criticism.
In “A Friend in High Places: A Proposal to Add a National Security Amicus to Canada’s Investment Review Regime,” authors Joshua Krane, Stephen Wortley and Connor Campbell argue such an amicus, a legal term akin to “friend of the court,” would serve as an impartial go-between in national security reviews, giving investors the opportunity to test the government’s evidence and conclusions on national security matters while still keeping the evidence confidential – a solution that would allow the government to screen investments in a manner that demonstrates a commitment to fairness and transparency.
“We appreciate that a fully transparent process could have implications for Canada’s national security and its relationship with its intelligence partners, particularly because Canada is a net importer of intelligence,” Krane, Wortley and Campbell explain. “However, investors are practically shooting in the dark in terms of the concerns and, while an amicus process would not provide full transparency, it would allow investors an opportunity to respond meaningfully and perhaps, via the amicus, correct some of factual underpinnings of the government’s conclusion.”
Under their vision, an amicus would be appointed once the Minister of Innovation, Science and Industry has ordered a national security review, and consist of a small roster of lawyers and former government officials who have experience with the Canadian government’s trade and investment portfolios and have been pre-cleared to receive classified information. They would then be able to provide counsel to the investor, while being bound to certain conditions designed to protect the confidentiality of sensitive information.
This proposal would not require legislative change and would balance the need for transparency while protecting the integrity of the national security process.
Similar to the “special advocate” system used for national security assessments in an immigration context, the amicus would have access to the background documents that informed the minister’s assessment. It could also challenge the government’s decision to withhold facts from the investor that demonstrate national security concern, either on the basis that the facts are erroneous, unreliable or insufficient to raise a national security concern. As well, the costs of engaging an amicus could be downloaded onto investors.
“At the end of the day, the ability for all parties to make fully informed decisions would help to achieve the aims of Canada’s investor rights treaties, while ensuring that Canada’s national security interests are protected,” say Krane, Wortley and Campbell.
For more information contact: Joshua Krane, Partner, Competition, Antitrust & Foreign Investment, McMillan LLP; Stephen Wortley, Chief Client Officer, Partner, Capital Markets & Securities, and Chair, Hong Kong Office; Connor Campbell, Associate, Litigation & Dispute Resolution; or Lauren Malyk, Communications Officer, 416-865-1904 Ext. 0247, lmalyk@cdhowe.org
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.