Divestiture Order Reversal Suggests Evolving Approach To National Security Reviews

The Canadian federal government has reversed a cabinet order issued by the previous Conservative government in July 2015 that sought to unwind a transaction deemed injurious to Canada's national security. The order to unwind the acquisition of Montréal-based ITF Technologies (formerly Avensys Inc.) (ITF) by Hong Kong-based electronics company O-Net Communications (O-Net) was challenged by O-Net before the Federal Court in 2015. That challenge was ultimately successful, as the order has been set aside on consent and a new review will be undertaken, a decision that appears to align with the Liberal government's goals of strengthening trade relations with, and attracting increased foreign investment from, China. The decision is also consistent with the government's commitment to increased transparency in the national security review regime under the Investment Canada Act (ICA).