Robert Diab

This past November, the federal government ordered TikTok’s Canadian subsidiary to wind up its operations in Canada, though it didn’t ban the platform itself. The power to make this order is found in the Investment Canada Act, which allows the Minister of Innovation, Science, and Industry to recommend to the Governor in Council that a foreign company be wound up on the basis that allowing it to continue here “would be injurious to national security.”

In a press release in November, Industry Minister François-Philippe Champagne said only that “The decision was based on the information and evidence collected over the course of the review and on the advice of Canada's security and intelligence community and other government partners.”

The fact that TikTok having offices in Vancouver and Toronto would be injurious to our national security is something we’re being asked to take on faith. I mused about what the reasons could be here, but I could only speculate.

The latest chapter in this story is TikTok’s challenge of the wind-down order in Federal Court, filed in December. TikTok alleges that the Minister’s recommendations and the Governor in Council’s decision to issue the order involved procedural unfairness, were unreasonable, were driven by improper purposes, and were grossly disproportionate in their impact (affecting hundreds of employees and some 250,000 contracts with Canadian advertisers).

But at the very end of their filing, TikTok Canada asks for disclosure “of all materials in the possession of the Minister, the Public Safety Minister and the GIC” when making the decisions to move forward with the ban. This raises two questions.

Will the government have to disclose this material? And can TikTok Canada make a case for the order being improper in some way without the government having to disclose this material?

The government hasn’t responded yet, but we can get a sense of what is likely to unfold by looking at what happened in a recent case involving China Mobile Communications Group. What the government did there it is likely to do here.

In 2021, Minister Champagne recommended that China Mobile’s Canadian subsidiary be wound up and the Governor in Council issued that order. Notably, the preamble to the order offers more specifics as to why it was being issued (as revealed in a case discussed below). The main concerns were:

a) that China Mobile and its subsidiaries and affiliates may be subject to the influence or demands of, or control by, a foreign government;

b) that China Mobile and its subsidiaries and affiliates may disrupt or otherwise compromise Canadian critical telecommunications infrastructure; and

c) that China Mobile and its subsidiaries and affiliates may gain access to highly sensitive telecommunications data and personal information that could be used for non-commercial purposes such as military applications or espionage.

(To my knowledge, there was no equivalent to this in the order against TikTok.)

China Mobile challenged the order. It made some of the same arguments TikTok is making - that the security review of the company was motivated by improper purposes, the final decision was lacking an evidentiary basis, and it was based on the wrong test (‘might be’ injurious rather than ‘would be’).

The company’s challenge to the removal order also contained a request that the government be made to disclose documents used in the decision to issue the order.

In response to the disclosure request, the government issued a certificate under section 39 of the Canada Evidence Act to assert the cabinet confidentiality over the documents. China Mobile then challenged the validity of that certificate.

While it was waiting for a hearing on the certificate, the company sought a stay of the removal order. This entailed showing that it would suffer “irreparable harm” if a stay were not granted and the harm would outweigh harm to the public. The harm alleged here were the many job losses and lost contracts.

The Federal Court held in late 2021 that China Mobile would suffer irreparable harm without a stay of the removal order, but it wouldn’t outweigh the harm to the public in allowing them to remain in Canada. This is as close as a court in Canada appears to have come to assessing the substance of the security concerns motivating the removal of Chinese owned tech companies.

In his reasons (beginning at paragraph 88), Chief Justice Crampton held that the government had provided “some evidence to justify their concerns regarding CMI Canada’s facilitation of espionage and foreign interference activities in Canada by the People’s Republic of China.” This included various third-party threat assessments cited in the judgment. These do little more than repeat what are essentially speculative concerns, but I digress.

Then in early 2022 the Federal Court held that the assertion of cabinet confidentiality over other documents in this case was valid.

China Mobile appealed this ruling and, in late 2023, the Federal Court of Appeal upheld it. The government did all it needed to do under section 39 by attaching a schedule to the certificate describing the date of correspondence between the Ministers of Industry and Public Safety and the fact the documents at issue were (as the schedule put it) “used for or reflecting communications or discussions between ministers of the Crown on matters relating to the making of government decisions or the formulation of government policy.”

And that is where the trail ends for China Mobile, as far as I can tell (it closed operations in BC in early 2022). Without obtaining disclosure of the government’s reasons for having the concerns about national security set out in the preamble to the order, China Mobile couldn’t establish the impropriety (procedural unfairness, unreasonableness) of the decision to issue the order.

To put this another way, the fact that the government can rely on secret information and shield from judicial oversight the reasons for or the manner of arriving at the decision to make the order does not mean it was unfair, involved improper purposes, and so on.

The whole framework in the Investment Canada Act is constructed so as to allow the government to issue an order directing a foreign company to leave Canada based on a belief that it would otherwise be injurious to national security — and the reasons for that belief can remain confidential.

The judge in the China Mobile trial court decision on disclosure comments on this conundrum directly:

The applicants, and the Court, may have nothing to refer to in the assessment of the reasonableness of the Order, other than the Order itself. I am not, however, persuaded that this evidentiary vacuum arises from an improper exercise of authority. Rather, it arises from the nature of the proceedings and the confidences claimed.

At the end of the day, on a challenge to these orders, the government need only show that certain steps were taken: the Industry Minister consulted the Public Safety Minister, a belief was formed, and recommendations were made to the Governor in Council. Again, we have to take it on faith that the belief was reasonable and the decision to order a company like TikTok to leave did not involve improper purposes.

I suspect that TikTok Canada’s challenge to the order is just a means of buying time — possibly until a change of policy around TikTok down south? Or is that too late? Time will tell.

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