Covid-19 highlights need to bring clients up to speed on how national security could affect business
A new multi-disciplinary practice group at Fasken Martineau DuMoulin LLP, focused on national security and critical infrastructure protection, is designed to help clients quickly get answers to matters related to mergers and acquisitions, foreign investment, export controls and cybersecurity.
The idea to put together such a practice came before the current worldwide novel coronavirus pandemic erupted in January, says Fasken’s Marcia Mills, a veteran procurement and government contract lawyer who co-heads the practice. However, the national security concerns resulting from the pandemic put into focus the need for a coordinated response to legal issues clients might be experiencing now.
“We needed to find a way to bring national security issues into focus and consolidate our expertise in a way that was readily accessible,” she says. “When you’ve got an element of national security, clients don’t have time to wait for a response.”
Andrew House, co-lead of the unit with Mills, agrees that the pandemic was “the final catalyst” that brought the national security group into being. Clients needed this kind of integrated service in areas such as supply chain assurance, essential business regulation, and critical infrastructure protection.
House, who practises in foreign investment, government relations and political law, adds that many large U.S. law firms have had robust national security practices, while this would be among the first in Canada.
The unit comprises senior legal, policy, and government relations practitioners from multiple practices and Canada’s regions. Areas of focus include foreign investment essential business regulation, critical infrastructure protection, procurement and government contracts, privacy and cybersecurity, export controls, economic sanctions and controlled goods, white-collar defence and investigations, and government security clearances.
As well, both say that for businesses operating in Canada — both domestic and international — there is no guarantee that their operations won’t attract the attention of Canada’s security and law enforcement agencies.
In practical terms, House and Mills say “national security” relates to any action or event that could materially impact the health, safety, security, or economic well-being of Canadians or the effective functioning of Canada’s governments.
Events surrounding COVID-19 have made clear the degree to which Canada’s critical infrastructure can be compromised and adversely impact ordinary Canadians. For example, Mills says, “who would have thought a year ago that a simple mask or other PPE (personal protective equipment) could be a potential matter of national security?”
House adds that because national security is not a defined term in Canadian law, it is “what government says it is.” For this reason, businesses, investors, and individuals are potentially vulnerable to “sudden and arbitrary” actions of the government, which can disrupt M&A, reduce profit and even end commercial viability.
The federal government is concerned about these matters, House says. It even went as far as to release a policy statement last April saying enhanced scrutiny would be given to M&A in certain sectors to see if Canadian companies of national importance are being targeted as distressed assets by foreign investors.
The concept of national security and what that entails has some profound implications these days, House says. “Most of us think of national security in terms of terrorism and espionage,” he says. However, the pandemic has made it clear that “what keeps groceries on shelves, what brings temporary foreign workers to Canada, and how trucking companies operate are all part of national security.
“These were always important, but now they are essential. That really represents a shakeup in thinking, not only on Bay Street, but on Main Street.”
Mills gives examples of two kinds of scenarios for how a business might need the services of a consolidated national security and critical infrastructure practice. The first is a client that is a government contractor, subject to the contract security program and all federal requirements for the protection of information and assets, who has a data breach.
In this case, it might not just be a matter of talking to a lawyer who has expertise in government procurement and contracts. It might need someone expert in the Investment Canada Act’s language, or controlled goods and export control, or cybersecurity. The ability to have an integrated team looking at that issue could save valuable time and expense.
Mills describes another situation, when a technology client, perhaps in the middle of a cross-border deal, doesn’t realize that a Committee on Foreign Investment in the United States questionnaire about technology and export control needs a response to see the deal through.
House notes that when these issues emerge, they are typically urgent matters that need quick attention. “it’s just the nature of the beast. People are facing intervention by government that is both quick and severe and has the potential to cause real business disruption. These types of clients need their lawyers to come back with an answer quickly.”
