Chinese-controlled firm loses court bid to pause Ottawa's divestment order

A worker wearing a mask waits for visitors to the China Mobile booth promoting 5G technologies during the China International Fair for Trade in Services (CIFTIS) in Beijing, China on Sunday, Sept. 5, 2021. (AP Photo/Ng Han Guan)

OTTAWA -

State-owned China Mobile has lost a court bid for a temporary hold on Ottawa's order that its Canadian affiliate be divested or wound up over national security concerns.

In a ruling made public Tuesday, Federal Court Chief Justice Paul Crampton said the harms to the public interest posed by China Mobile International Canada's continued operation "are significantly greater" than the harms the company has shown it would suffer without a stay of the order.

In January, the federal government informed CMI Canada of a review on security grounds, saying the business could be leveraged by the Chinese state for foreign interference and the compromise of critical infrastructure.

The government issued an order in August directing parent company China Mobile to either wind up or divest the Canadian business within 90 days, though an extension has since been granted.

CMI Canada says the government has no grounds to believe the company would compromise security or engage in espionage on behalf of Beijing, and it wanted a pause on the federal order while the full arguments play out in court next year.

At a hearing last month, CMI Canada said if there was no stay, it would be irreparably harmed, losing customers, regulatory licenses, contracts, revenues and the right to do business in Canada.

Even if the company ultimately succeeds in challenging the federal order during the judicial review process, it would have to start completely from scratch unless the directive were put on hold, said Erica Baron, a lawyer for the firm.

In a written submission to the court, the government said CMI Canada had not filed "any direct evidence on this motion from any officer, executive or employee of any of China Mobile or CMI Canada to establish the nature or extent of the harm their counsel alleges they would suffer by complying with the Order."

China Mobile is a state-owned enterprise of China -- "a country that poses a significant threat to Canada and Canadians through its espionage and foreign interference operations," the submission added.

Federal lawyer Sean Gaudet told the hearing that while CMI Canada contended it should be allowed to continue operating, "we argue, no, it's not in the public's interest for this to happen, that the order should be implemented. And then let the judicial review take its course and there'll be a determination."

This report by The Canadian Press was first published Dec. 7, 2021.