MISSISSAUGA, Ontario — Three days after Russia invaded Ukraine last year, an Antonov-124 aircraft landed here at Toronto’s Pearson International Airport to deliver 77 tons of coronavirus kits.
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It would be the last one for some time.
On February 27, 2022, ahead of the scheduled departure of the AN-124, Canada banned Russian aircraft from entering or leaving its airspace, thus blocking the aircraft at the country’s busiest air hub. The government imposed sanctions on its operator, Russia’s Volga-Dnepr Airlines. .
Visible from a highway, the plane, one of the world’s largest shipping planes, with a Russian flag painted on its fin and a blue stripe along its 226-foot white frame, has sparked interest here, attracting attention from its shelves. An exorbitant fine for parking at the airport.
Now, he’s locked in a broader fight over a new law in which Canada calls for the force to freeze the assets of sanctioned entities, even if they are not related to any crime, and use them to gain advantages from “harmed” foreign states. ” through external security breaches.
In June, the government ordered the seizure of the plane. The government wants to work with Kiev to use it “to compensate those suffering human rights violations, repair peace and security abroad, or rebuild Ukraine. “
The new powers are the first of their kind in the Group of Seven industrialized nations, and the government has admitted that “the new regime is yet to be shown and will most likely face legal challenges. “The Kremlin called the seizure a “cynical and brazen theft” act.
As the West seeks to use frozen Russian assets for Kyiv to defeat invaders and rebuild Ukraine, the clash is being closely watched by allies and enemies alike.
“Canada is surely pushing the boundaries when it comes to sanctions law,” said William Pellerin, spouse of the foreign industry organization at Ottawa-based business law firm McMillan. “Other jurisdictions have done the same thing and concluded they can’t do it. »
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John W. Boscariol, director of McCarthy Tétrault’s foreign industry organization in Toronto, said Canada, as a middle power, “goes beyond its weight in terms of the scope of those measures. “His allies, he said, are “watching very closely how this plays out. “
The World Bank estimated in March that rebuilding Ukraine could require at least $411 billion. Kyiv’s Western allies need Russia to foot the bill.
U. S. Treasury Secretary Janet L. Yellen last month voiced a European proposal to tax the source of war revenue from Russia’s $300 billion worth of frozen reserves held in the West and shift war profits to Ukraine.
“Countries face some of the same disorders they faced after World War II,” said John E. Smith, former director of the U. S. Treasury Department’s Office of Foreign Assets Control. “How do we take assets that belong to aggressor countries to rebuild countries?”that have been destroyed or damaged? There are no simple answers to those questions in our legal systems.
U. S. law allows the president to surrender secure foreign assets when the country is “engaged in armed hostilities or has been attacked through a foreign country or foreign nationals. “
The government can also seize assets if a court determines that there is a likely explanation for why those assets are similar to a crime: they are the proceeds of fraud, for example, or violations of sanctions or cash laundering.
Last year, Congress passed and President Biden signed into law a law requiring the Department of Justice, in a limited number of circumstances, to direct proceeds from certain seized assets to the State Department to obtain benefits from Ukraine.
Some justices have said it would be helpful to expand those powers.
Attorney General Merrick Garland announced in February the transfer of $5. 4 million seized and confiscated from the accounts of a Russian oligarch accused of violating U. S. sanctions at the State Department to “support the Ukrainian people. “
Canada’s new powers, an extension of its existing sanctions law, are broader.
They allow the government to freeze assets located in Canada that are held or controlled, directly or indirectly, through an entity on its sanctions list. The assets do not have to be related to a crime.
The government can then go to court to obtain a forfeiture order, dispose of the property, and use the proceeds to rebuild a foreign state or compensate its population.
“We believe it is vital to expand our legal powers because it will be vital to locate the money to rebuild Ukraine,” Finance Minister Chrystia Freeland said last year. “I can’t think of a more suitable source of investment than the confiscated Russians. “assets. “
Freeland, who is of Ukrainian descent, was invited to an assembly of European finance ministers in April on Canada’s approach, according to a Western official who spoke on condition of anonymity to discuss personal meetings. British lawmakers debated whether to copy it.
Analysts say the new regime will most likely face demanding situations for a number of reasons, adding whether the expropriation of personal assets is appropriate by foreign legal standards, whether it violates constitutional protections against unreasonable search and seizure, or whether it violates bilateral treaties.
But some believe it can overcome those challenges. In a June discussion paper, Robert J. Currie, a law professor at Dalhousie University, Fen Osler Hampson, president of the World Council on Refugees and Migration, and Allan Rock, a former Canadian justice minister, wrote that Canada has “compelling and compelling arguments on its side, as well as a ‘spirit of law’ as the measures at issue are fully aligned with the basic objective of foreign law.
“Canada’s measures may be creative,” they write, “but they are by no means illegal. “
The government has announced the use of those new powers in two cases, but has few updates.
In December, the government ordered the freezing of $26 million in a Canadian bank account of Granite Capital Holdings, a company they say is owned by Russian oligarch Roman Abramovich, whom Canada imposed sanctions on last year.
Questioned about the case through a parliamentary committee in June, Alexandre Lévêque, Canada’s deputy assistant minister for global affairs, said it was a “complex undertaking” because the law is new and officials are prioritizing maximizing the “chances of success” over speed.
“Russian oligarchs are very clever at hiding their assets,” Lévêque said. “In this case, several foreign jurisdictions are holding them accountable. International law and the legislation of the respective countries come into play. “
Volga-Dnepr said in August that it had informed the Canadian government of its preference for resolving the dispute under a provision of a 1989 investment treaty between the two countries that deals with disputes arising from expropriation.
“If the dispute is resolved within six months . . . Volga-Dnepr will officially initiate arbitration proceedings,” the company said in a statement. Volga-Dnepr needs its planes back and “remains open to negotiations. “
Volga-Dnepr responded to a request for comment. If the government succeeds in securing the plane’s seizure, Transport Canada said, it will need maintenance before it can take off.
Global Affairs Canada responded to questions about the prestige of the two cases, but defended the regime and said it had several “safeguards. “
“Numerous measures of procedural fairness for the owner and affected third parties are included in the asset seizure and forfeiture regime and related court proceedings,” spokesman Jean-Pierre J. Godbout said in a statement to the Washington Post: “Canada believes in the rule of law and will abide by the decisions of the courts. “
Canada has raised broader questions about the purpose of the sanctions.
The sanctions are “like a carrot,” said Jessica B. Horwitz, Bennett Jones’ wife in Toronto. If you avoid adopting bad habits, the assets will thaw. . . The prospect of forfeiture is that if those assets are confiscated, the incentive to replace the habit no longer exists.
Smith, a former director of the Office of Foreign Assets Control, said countries are looking to balance “a bad set of options. “
“They are looking to find a balance between cutting their bargaining chip to replace the habit and desire to rebuild Ukraine and holding those guilty guilty of the damage done to Ukraine,” he said.
Canada is turning to sanctions as a foreign policy tool.
“We’re holding our breath to see how this plays out,” said Clifford Sosnow, president of Fasken’s foreign industrial organization in Toronto. “There’s a lot of regime-related fog, and because there’s fog, there’s a threat of adverse consequences and accidental consequences. “
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