On July 7, 2025 Hikvision Canada Inc. (Hikvision), the Canadian subsidiary of a Chinese surveillance camera maker, announced that it is challenging the Government of Canada’s order requiring it to close its Canadian operations following a national security review conducted pursuant to the Investment Canada Act (ICA).
The national security review order that Hikvision is challenging is unusual because it comes several years after Hikvision commenced operations in Canada. It signals enhanced willingness of the Canadian government to scrutinize existing businesses in Canada that it considers may pose a threat to Canadian national security. The case is a reminder of the broad powers available to the government under the ICA, which authorizes the government to initiate reviews of foreign investments that may be injurious to Canada’s national security.1 National security reviews can be initiated for proposed acquisitions of existing businesses, and establishment of new Canadian businesses or business lines, including in relation to such investments that may have been implemented several years prior.
Hikvision National Security Order
On June 27, 2025, the Government of Canada ordered Hikvision to wind up its Canadian business and cease all operations in Canada (the Order).2 While the contents of the Order are confidential, the Minister of Industry, Melanie Joly, posted on X that 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. Minister Joly’s statement also indicates that Hikvision’s continued operations in Canada would be injurious to Canada’s national security and that the government would also prohibit the purchase or use of Hikvision products by federal departments and warned Canadians to discontinue use of them as well.3
Guidelines issued under the ICA indicate that a range of factors inform national security reviews including:
- the potential effects on Canada’s defence capabilities and interests,
- potential transfer of sensitive technology,
- impacts on the critical minerals supply chain, and
- impacts on critical infrastructure that is essential to health, safety, security or economic wellbeing of Canadians or functioning of government.
Other important factors in determining whether national security concerns exist include the jurisdiction where control of the non-Canadian owner is exercised, and whether the non-Canadian entity is owned, controlled or influenced by a foreign government or entity.
One of the unusual features of the Order is that it comes a decade after Hikvision first incorporated in Canada in 2015. According to Hikvision’s Notice of Application filed in the Federal Court on July 7, 2025,4 the national security review was commenced after the government contacted Hikvision about its failure to file a notification under the ICA when it commenced operations in 2015. Under section 11 of the ICA, non-Canadians must notify the government of any investment to establish a new Canadian business .5 It is only after Hikvision filed its late ICA notification that the national security review commenced. Had a notification been filed in 2015 when Hikvision started operations, the deadline for a national security review would have expired 45 days after certification of the notification.6
The Order follows a series of decisions under the national security provisions of the ICA, including three divestiture orders in 2022 in the critical minerals sector, and in 2024, orders to wind-up TikTok Technology Canada Inc., Bluevec Technologies (an anti-drone company), and Pegauni Technology (a wireless security company).
The Order also closely follows the trajectory of the national security review of China Mobile International (Canada) Inc. (CMI) in August 2021, after which CMI was ordered to shut down or divest its Canadian operations because of national security concerns. Like in this case, CMI had been operating in Canada for years before the national security review.
Hikvision’s challenge of the decision before the Federal Court
In its application for judicial review, Hikvision has asked a judge to set aside the Order on the basis that it is unreasonable, driven by improper purposes, unduly broad and grossly disproportionate, and that the national security review was procedurally unfair. Hikvision also alleges that the government placed too great a focus on the fact that its parent company’s country of origin is China, that the Order is unsupported by facts, and that the government failed to engage on the substance of the national security concerns or allow for mitigation efforts.
As an interim step, Hikvision has also 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 application and the stay motion are both ongoing and will be monitored closely. Previous judicial challenges to national security review orders have not fared well. For example, in 2021, CMI sought judicial review of the national security order shuttering its business. In that case, 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.
Key takeaways
The Order is a signal from the government that even businesses currently operated by non-Canadians will be scrutinized from a national security perspective.
It remains to be seen if this is the start of enhanced national security reviews under the ICA, which, up until now, have been rare. 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).
Prospective foreign investors in Canada should still consider that Canada is open for business – but they should also keep in mind that 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 – including the sensitivity of the sector and investor – and ensure that the clearance process is accounted for in deal planning. To avoid the fate of Hikvision and CMI, non-Canadian owners of existing businesses with a presence in Canada should also consult with regulatory counsel before commencing any type of new operations or business lines in Canada.
The authors would like to thank Ola Mirzoeva, summer student, for her contribution to preparing this legal update.