In this post, we describe the economic sanctions imposed by Canada since our November 5, 2022 update, as well as Russian asset freezing order and a judicial decision in the sanctions law area. We expect more sanctions and increased levels of sanctions enforcement.
Russia
On December 7, 2022, the Canadian government amended the Special Economic Measures (Russia) Regulations to add 33 individuals on the stated basis that they are “connected to the systematic suppression of protest and opposition to Russia’s illegal war in Ukraine, forced mobilization and anti-democratic decisions of the Russian government” and 6 entities on the stated basis that they are “federal Russian institutions involved in the investigation, prosecution and detention of Russian citizens who oppose or criticize Russia’s policies in Ukraine.”
Also on December 7, 2022 the Canadian government amended the Special Economic Measures (Russia) Regulations to prohibit the provision of 8 services in relation to the maritime transport of Russian crude oil, unless the oil is purchased at or below the price in the G7+ Coalition Oil Price Cap List. This prohibition was extended to the maritime transport of certain Russian petroleum products on February 5, 2022.
On February 2, 2023, the Canadian government amended the Special Economic Measures (Russia) Regulations to designate an additional 38 individuals and 16 entities on the stated basis of being “involved in Russia’s disinformation and propaganda actions.”
On February 23, 2023, Canada further amended the Special Economic Measures (Russia) Regulations to designate 129 individuals and 63 entities. The individuals are reported by Canada to be senior managers in Russia’s leading defence companies, senior officials in the Russian government facilitating Russia’s invasion of Ukraine, a Russian oligarch and the family members of sanctioned individuals. The Canadian government stated that the entities include decision-making and implementing institutions involved in Russia’s ongoing violation of Ukraine’s sovereignty and territorial integrity, as well as private and state-owned-enterprises in Russia’s defence industry.
Also on February 23, 2023, the Canadian government further amended the Special Economic Measures (Russia) Regulations to (i) prohibit persons in Canada and Canadians outside Canada from importing, purchasing or acquiring from Russia or from any person in Russia any type of weapon, ammunition, military vehicle or military or paramilitary equipment, or a spare part for any of those goods and (ii) prohibit such persons from exporting, selling, suppling or shipping to Russia or to any person in Russia chemical elements doped for use in electronics, in the form of discs, wafers or similar forms and chemical compounds doped for use in electronics.
On March 10, 2023, the Canadian government further amended the Special Economic Measures (Russia) Regulations to prohibit the import of certain aluminum and steel products originating from Russia.
Iran
On November 29, 2022, the Canadian government amended the Special Economic Measures (Iran) Regulations to designate 4 Iranian individuals and 5 entities on the stated basis of “gross and systematic human rights violations and actions that … threaten international peace and security.”
On December 7, 2022, the Canadian government amended the Special Economic Measures (Iran) Regulations to designate 22 Iranian individuals on the stated basis that the designations were “in relation to Iran’s gross and systematic violations of human rights, ongoing grave breach of international peace and security and continued state-sponsored disinformation activities.”
On January 6, 2023, the Canadian government amended the Special Economic Measures (Iran) Regulations to list an additional two individuals and three entities on the stated basis that the designations were “in relation to Iran’s gross and systematic violations of human rights, ongoing grave breach of international peace and security and continued state-sponsored disinformation activities.”
On February 23, 2023, the Canadian government amended the Special Economic Measures (Iran) Regulations to list an additional twelve individuals, reportedly in relation to gross and systematic violations of human rights.
Haiti
On December 2, 2022, Canada amended the Special Economic Measures (Haiti) Regulations to designated three individuals in order to “target the economic elite who use their influence and resources to support criminal armed gangs spreading terror and violence in Haiti”.
On December 15, 2022, the Canadian government amended the Special Economic Measures (Haiti) Regulations to designate two former Haitian ministers on the stated basis they “have engaged in significant acts of corruption such as fraud, drug trafficking as well as embezzlement and mismanagement of funds.”
On January 12, 2023, and again on February 15, 2023, the Canadian government amended the Special Economic Measures (Haiti) Regulations to designate a total of four further individuals on the stated basis that they have “engaged in significant acts of corruption.”
Myanmar
On December 7, 2022, in coordination with the United Kingdom and to mark International Human Rights Day, the Canadian government amended the Special Economic Measures (Burma) Regulations to designate twelve individuals and three entities on the stated basis that they “have performed key functions on behalf of the military regime, lead misinformation efforts and the weaponization of the judiciary, and facilitated arms flows to the regime”.
On January 27, 2023, which marked the two-year anniversary of the Myanmar coup, the Canadian government amended the Special Economic Measures (Burma) Regulations to designate an additional 6 individuals who were stated by Canada to be “senior figures in the Myanmar military responsible for … international humanitarian and human rights law violations”. Another amendment imposed a prohibition on the export, sale, supply or shipment of aviation fuel to Myanmar.
Sri Lanka
Canada has enacted a new sanctions program in respect of Sri Lanka on the stated basis that “the Government of Sri Lanka has taken limited meaningful and concrete action to uphold its human rights obligations” in relation to “gross and systematic violations of human rights during armed conflict in Sri Lanka, which occurred from 1983 to 2009.” The new sanctions are intended by the Canadian government to “send a clear message that Canada will not accept continued impunity for those that have committed gross human rights violations in Sri Lanka.” On January 6, 2023, the Special Economic Measures (Sri Lanka) Regulations came into force. The Regulations include a list of names of four individuals in whom the Canadian Government considers having engaged in activities that constitute gross and systematic human rights violations.
Freezing Order on Assets in Canada of Prominent Russian Individual
On December 15, 2022, pursuant to authority in the Special Economic Measures Act, the Canadian government issued an order to a financial institution in Canada to restrain (freeze) a substantial specified amount that is owned, held or controlled by a designated Russian individual and credited to an account in the name of an entity is such a manner that no dealing can be carried out with respect to that amount. This order may be a prelude to forfeiture of the funds. It is a significant development that may signal the Canadian government’s intention to pursue assets owned, held or controlled by designated Russian persons.
Angophora
On October 25, 2022, the Court of King’s Bench of Alberta issued its decision in Angophora Holdings Limited v. Andrei Mikhailovich Ovsyankin et al. While there are several interesting aspects to this case there are two key takeaways.
The Court cited case law to confirm that the Special Economic Measures (Russia) Regulations are, like other legislation, to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme and object of the legislation and the intentions of the maker of the law. The Court cited the Regulatory Impact Statement that was published with the Special Economic Measures (Russia) Regulations and noted that the regulations seek to impose an economic cost on Russia, including through entities that are or have engaged in activities that support or contribute to the violation of the sovereignty or territorial integrity of Ukraine. These are important considerations to keep in mind when assessing whether a prohibition in the Special Economic Measures (Russia) Regulations is applicable to any given set of facts.
This Court’s decision was rendered following an application for a stay of an enforcement order where the Court had to consider whether a strong prima facie case was shown that an entity was controlled by a person designated under Canadian sanctions. After considering US sanctions law on the meaning of control the Court focused on whether there was de facto control. It found that there was a strong prima facie case that control of entity was established where a designated person was one of two 50% owners of an entity and engaged in acts demonstrating control. Thus 50% ownership, not 50% + 1 share, may be sufficient in some cases to establish control. The Court also found that there was a strong prima facie case that the entity in which the designated person had the interest was acting on behalf of the designated person. This analysis will potentially be relevant when assessing control for purposes of the Special Economic Measures (Russia) Regulations, and potentially other Canadian sanctions regulations.
Looking Ahead: More Sanctions, More Enforcement
Given the deteriorating state of Canada’s international relations, widespread human rights violations in other countries and Canada’s ongoing albeit slow motion pivot towards greater attention to national security issues and human rights concerns, further rounds of Canadian economic sanctions seem likely.
On the enforcement side, press reports have indicated that the U.S. government is quietly but increasingly pressing its allies to tighten up law enforcement regarding sanctions on Russia. Increased enforcement in Canada is likely.
