On May 25, 2012, the Minister of Industry Christian Paradis announced that the Government had issued a Mediation Guideline to “make formal mediation procedures available under the Investment Canada Act” (ICA) and that the ICA regulations would be amended to gradually increase the threshold for review of investments involving WTO investors to C $1 billion based on enterprise value (increased from the current threshold of C $330 million based on the book value of the Canadian target company’s assets).

In making the announcement, the Industry Minister said:

“Canada has a strong investment climate, and these targeted changes will ensure that our foreign investment review process continues to encourage investment and spur economic growth,” said Minister Paradis. ‘Foreign investment is vital to the Canadian economy. It helps Canadian companies find new capital and enables them to expand, innovate and create jobs for Canadians.’”

Increased Review Threshold

The announced increase to the WTO investor review threshold follows 2009 amendments to the ICA that had not come into force and that were based on suggestions by the Competition Policy Review Panel, which recommended in its final 2008 Report Compete to Win, among other things, that the ICA review threshold be raised to $1 billion (except for cultural businesses) for two reasons.

First, a higher threshold was, in the Review Panel’s view, consistent with an appropriately narrower and “exceptional” test for intervention under the ICA; and second, to align Canada’s foreign investment review regime with Canada’s position that foreign investment is, except in unique circumstances, beneficial to Canada.

The Review Panel also recommended that the test to calculate the review threshold be changed from the current test (based on the book value of the Canadian business’ assets) to an enterprise value test (to more appropriately reflect the growth of knowledge-based industries and intangible assets – e.g., know-how, IP and other intangible assets).

Once the new Regulations are in force (revised Regulations have not yet been published in the Canada Gazette), the WTO review threshold will initially rise to C $600 million (for two years), then to $800 million (for another two years) and then to $1 billion (and then be indexed going forward based on Canadian GDP as is the case currently).

Mediation Guideline

According to the Minister, the new Mediation Guideline is intended to provide a “voluntary means of resolving disputes when the Minister believes an investor has failed to comply with an undertaking”.

Some of the key features of the new Guideline (presumably based, at least in part, on the prolonged litigation relating to the alleged failure by U.S. Steel to comply with undertakings provided in connection with its acquisition of Stelco) include setting out a process for discussions to resolve concerns relating to the performance of undertakings, the discretion by the Minister to accept new undertakings (both within and independent of the new mediation process) and compliance demands (which may be followed by court proceedings).

The new Guideline also establishes a process for the agreed use of mediators as an alternative to “potentially lengthy and costly legal proceedings.”

Revised Regulations for Comment

Original Regulations that were first published when the ICA was amended in 2009 have been revised to reflect comments received and additional changes to the methodology to calculate enterprise value, and will be subject to a 30-day public comment period before final publication.


Industry Canada has also issued a Report on the administration of the ICA in 2009 and 2010 and has announced that it will be resuming its earlier practice of annual reporting.  The new Report, the first annual report relating to the administration of the ICA since 1993, includes an overview of the ICA and its administration, discussions of recent policy developments and a summary of activities under the ICA in 2009 and 2010.

For more see:

Industry Canada News Release

Minister Paradis Announces Additional Improvements to the Foreign Investment Review Process


Proposed Amendments to the Investment Canada Regulations

Mediation Guideline

Mediation Guideline

ICA Report

Annual Report 2009-2010

Competition Policy Review Panel Report (2008)

Compete to Win


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