The international community observes closely as Canada takes steps to seize a Russian cargo jet on behalf of Ukraine. Prime Minister Justin Trudeau's recent briefing in Kyiv confirmed what trade lawyers and aviation industry experts had anticipated for weeks regarding the stranded Russian cargo plane at Pearson International Airport. Ukrainian Prime Minister Denys Shmyhal had previously mentioned the Ukrainian court's grounding of Volga-Dnepr, a Russian cargo airline targeted by Canada's latest sanctions due to alleged safety violations.
Canada's decision to seize the Antonov-124 plane and other assets of the Russian aggressor was highlighted by Shmyhal on his Facebook page, expressing Ukraine's anticipation of the asset's confiscation and its subsequent transfer to benefit Ukraine. Volga-Dnepr Group and Volga-Dnepr Airlines were officially added to Canada's list of sanctioned Russian entities on April 5. However, specific details about seizing the cargo plane remained scarce until Foreign Affairs Minister Mélanie Joly confirmed Canada's intentions as part of an assistance package for Ukraine during Trudeau's recent surprise visit.
According to a news release from Global Affairs Canada (GAC), if the asset is ultimately forfeited to the Crown, Canada will collaborate with the Government of Ukraine to explore options for redistributing the asset. This could involve compensating victims of human rights abuses, restoring international peace and security, or contributing to the rebuilding of Ukraine. Trudeau emphasized the government's plan to facilitate the forfeiture process promptly, highlighting Canada's pioneering legislation that not only grounds the plane but allows for its actual seizure to prevent Russia from utilizing it for war or other purposes.
Canada granted itself the authority to seize and sell Russian assets through budget implementation legislation a year ago. However, concerns were raised about the potential risks associated with these powers. Some cautioned that such powers could disregard international law and trigger retaliation from hostile governments, putting Canadian-owned assets abroad at risk.
The order-in-council issued last December, seizing $26 million US in financial assets held by Granite Capital (believed to be owned by sanctioned Russian oligarch Roman Abramovich), marked Canada's first utilization of these powers. The recent order to seize Volga-Dnepr's Antonov-124 is only the second use of this authority by the Canadian government.
Sanctions typically freeze assets temporarily to incentivize behavioral changes. However, selling off assets as a form of punishment prevents their return even when the harmful actions cease. Trade experts note that this approach diverges significantly from past practices.
John Boscariol, a Toronto lawyer representing individuals and businesses affected by sanctions regulations, stated that Canada is seen as the test case in this matter. The government will be meticulous in ensuring all necessary measures are taken to avoid any failures. However, as of the time of this article's publication, the federal government had not confirmed whether any filings had been made in an Ontario court regarding the cargo plane or the seizure of Abramovich's assets.
The process of asset seizure involves several procedural steps. Under Canadian law, the assets remain the property of their Russian owners until a Canadian court orders their forfeiture. The representation of Russian owners in court is required to ensure procedural fairness, although it is unclear how this will be facilitated. Permission from Joly may be necessary for a Canadian law firm to act on behalf of a sanctioned entity or individual, given that commercial dealings are otherwise prohibited.
GAC declined to respond to laexcelsa News' inquiries regarding whether ministerial permits have been granted or are being considered to allow legal representation. The unprecedented nature of this legal process introduces a degree of uncertainty and complexity. The latest attempt by the Trudeau government to crack down on individuals enabling Russian President Vladimir Putin poses new challenges for Canada's sanctions regime, which has long been criticized for lacking effective guidance on avoiding violations in business dealings.
The cargo plane's presence in Canada is due to its contractual obligation to deliver massive shipments of COVID-19 tests for the federal government. However, it coincided with Western allies' swift response to Russia's invasion of Ukraine, resulting in Canada closing its airspace to all Russian aircraft. Consequently, one of the world's largest cargo planes became stranded at Toronto's busiest airport. The extended parking of such a large plane at Pearson incurs substantial costs, which may now be owed by the company. The airworthiness of the aircraft is also uncertain, as it is not designed to remain grounded for months.
Deborah Flint, president and CEO of the Greater Toronto Airport Authority, expressed gratitude to Transport Minister Omar Alghabra for his leadership in this matter. However, specific details about future actions were deferred to the federal government.
While the aircraft remains seized, Public Services and Procurement Canada will assume control and management of the asset in accordance with the order. If the courts declare forfeiture, Public Services and Procurement Canada will handle the seized property's disposal, following federal regulations.
The Kremlin-friendly Russia Today referred to the plane as "stolen" by Canada in its coverage of the announcement. Setting a precedent like this attracts accusations of acting contrary to the international order. Boscariol believes Canada should be concerned about potential retaliatory actions by Russia, such as targeting Canadian investments in Russian territory or making claims under the bilateral investment treaty.
Despite the potential consequences, the Canadian government perceives the seizure of major Russian corporations' assets within Canada as a positive step. It wouldn't be surprising to witness more actions of this nature in the future.
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