THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Wednesday, November 2, 2022
The Standing Senate Committee on Foreign Affairs and International Trade met with videoconference this day at 4:12 p.m. [ET] to conduct a comprehensive review of the provisions and operation of the Sergei Magnitsky Law, and the Special Economic Measures Act.
Senator Peter M. Boehm (Chair) in the chair.
[English]
The Chair: My name is Peter Boehm, I am a senator from Ontario and chair of the committee.
[Translation]
Before we begin, I wish to invite committee members participating in today’s meeting to introduce themselves, starting on my left.
[English]
Senator Ravalia: Welcome to our witnesses. I’m Mohamed Ravalia, representing Newfoundland and Labrador.
[Translation]
Senator Gerba: Amina Gerba, Quebec.
[English]
Senator MacDonald: Michael MacDonald, Nova Scotia.
Senator Greene: Steve Greene, Nova Scotia.
Senator Anderson: Dawn Anderson, Northwest Territories.
Senator Busson: Bev Busson, British Columbia.
Senator Boniface: Gwen Boniface, Ontario.
Senator Coyle: Mary Coyle from Antigonish, Nova Scotia.
Senator Richards: Dave Richards, New Brunswick.
The Chair: As well, I wish to welcome people across our country who might be watching this meeting.
[Translation]
Today, we continue our review of the provisions and operation of the Justice for Victims of Corrupt Foreign Officials Act — also called the Sergei Magnitsky Law — and of the Special Economic Measures Act, pursuant to section 16 of the Sergei Magnitsky Law.
[English]
Today, we have the pleasure of welcoming four experts on sanctions regimes. For the first part of our meeting, we are pleased to welcome two lawyers by video conference: Sabrina A. Bandali, Partner, International Trade and Investment, Bennett Jones; and John W. Boscariol, Leader, International Trade and Investment Law Group, McCarthy Tétrault. Welcome to both of you. Thank you for being with us.
We are now ready to hear your opening statements and remarks which will be followed by questions from senators.
Ms. Bandali, the floor is yours.
Sabrina A. Bandali, Partner, International Trade and Investment, Bennett Jones LLP, as an individual: Good afternoon, Mr. Chair and honourable senators. My name is Sabrina Bandali and I’m a partner in the international trade and investment group at Bennett Jones LLP, a national Canadian law firm.
I’m very pleased to be here today and appreciate the opportunity to share my perspective as a sanctions lawyer in private practice. My views are my own, but they are informed by the work that I do with Canadian and international companies who are affected by our sanctions laws.
I’ll focus my comments and opening statements on enforcement and the need for guidance, although I’m happy to answer questions from senators about other topics as well.
As you have heard, Canada has not historically been an active enforcer of its sanctions laws. There have been so few prosecutions that, as a practical matter, the regime depends on entities and individuals being aware of their obligations and acting accordingly, including by withdrawing from business that was legal before particular sanctions were introduced.
In practice, that means the effectiveness of our sanctions is driven by compliance — by Canadians taking their legal obligations seriously and trying to comply with sanctions laws because they know they should.
That fact puts a responsibility on government to be more transparent and to provide information and guidance to facilitate compliance.
What we lack in Canada — and in this we remain an outlier among our allies — is any kind of meaningful, official policy guidance about how regulations are being interpreted by those tasked with administering and enforcing them. In 2017, this committee recommended that government provide comprehensive, publicly available, written guidance regarding the interpretation of sanctions regulations — and that guidance has not materialized and it is critical.
Notwithstanding the unprecedented scope and speed at which new sanctions have been introduced in recent months, by and large, Canadian businesses have been supportive and willing to comply with sanctions, particularly in response to Russia’s aggression in Ukraine. But not all businesses can afford to hire specialist legal counsel to help them navigate and understand their sanctions obligations.
The EU, its member states, the U.S. and even the U.K. all issue guidance to the public, often within a few weeks of announcing changes in sanctions packages. Canada lags behind, and has never issued the kind of detailed or specific public guidance that its allies do.
You heard from Global Affairs that there have been efforts to communicate with the public more. That outreach is truly appreciated. As of yet, however, they have not had the resources to issue information that is specific or detailed enough to meet this urgent need, let alone in a public and timely fashion.
Some weeks ago, the Prime Minister announced that an additional $76 million worth of funding will be made available to strengthen the implementation of sanctions, but that announcement suggested that the focus of the funding may be related to freezing and seizing sanctioned individuals’ assets. Specific investment is needed to enable Global Affairs to issue guidance that is timely, substantive and helpful, and I sincerely hope your review will recommend it again and forcefully.
At present, the uncertainty and ambiguity in the law unnecessarily amplify the unintended consequences of sanctions on the Canadian economy.
For one, every company and adviser has to interpret the law based on first principles of statutory interpretation, with next to no case law or other authorities to rely on. This results in inconsistency that can engender commercial disputes when parties develop different legal interpretations, for example, about whether or not continuing with a particular contract or transaction is allowed.
But more importantly, and secondly, our sanctions are designed to be targeted. At present, many companies may feel that the only way to mitigate the risk of inadvertently violating sanctions is to overcomply, which then deepens the economic impact of sanctions here at home — and potentially beyond what government had in mind when it designed the measures. Canada is a trading nation facing economic contraction, which makes this all the more significant.
To conclude, the worthy foreign policy objectives of Canada’s sanctions are understood and acknowledged. On the whole, Canadian businesses seek to comply with law, but this is difficult and sometimes unnecessarily costly when businesses cannot rely on specific, meaningful and readily accessible guidance from the government on the types of business activities that are prohibited under targeted sanctions and those that continue to be lawful.
Thank you for the opportunity to appear before you and I look forward to responding to the senators’ questions.
The Chair: Thank you very much, Ms. Bandali. You’re the first witness we’ve ever had to nail it right at five minutes. Thank you for that.
John W. Boscariol, Leader, International Trade and Investment Law Group, McCarthy Tétrault LLP, as an individual: Honourable senators, thank you very much for inviting me to participate again in this parliamentary review of the sanctions laws. I’m especially honoured to be appearing beside Ms. Bandali, a noted expert in this area. You’ll be hearing from Dr. Charron and Dr. Lilly on the next panel, who are also top experts. It’s a special treat for me to be here today and tell you what we’re experiencing in this area.
I’ve submitted to the committee clerk some written submissions. I didn’t get the French version out in time — my fault — so you won’t have those written submissions in front of you, but we’ll be getting those to you in the next day or so. I commend you to those submissions. I’m not going to go through every point here that I have there, but I will hit some highlights.
When I testified before this committee about six years ago, I said the system is broken. Unfortunately, that hasn’t changed. Some positive steps have been taken, but for the most part we are still facing significant challenges when it comes to compliance with Canadian sanctions and the administration of these sanctions programs. We’ve been asking the government to address these issues for well over 10 years. Starting in 2006 or 2007, Canada really started taking the steps to become a sanctions hawk. They imposed the most restrictive sanctions in the world against Burma and Belarus, followed by Iran years later and, in particular, up to 2016. Now, Russia — our latest sanctions program where, in many instances, Canadian sanctions are more aggressive than those of our counterparts in the European Union, the United Kingdom and the United States.
I’m not disputing or challenging those policy decisions. I leave those to the foreign policy experts at Global Affairs Canada and our politicians. But the problem is that Canada has not devoted sufficient resources on the administrative side to keep up with these aggressive measures.
Ms. Bandali has already very effectively outlined the implications of not having guidance to address these issues. I would add that we see this as well in our daily dealings — overcompliance. We see companies filling that vacuum or lack of guidance here in Canada with U.S. guidance or guidance from other countries. It’s no longer a made-in-Canada implementation. Ultimately, there’s a disconnect between what the policy-makers intend and what Canadian companies actually end up doing.
There’s also a real blind spot here, and that’s because of these increased compliance costs. Maybe they can be absorbed by some of the larger organizations that have to deal with this, but I can tell you for small- and medium-sized enterprises, charities, humanitarian organizations and NGOs — many of whom we act for — this is a real challenge. They cannot afford always going to a sanctions lawyer to have to interpret these provisions. Effective guidance will reduce those costs.
Equally as important are the costs for Global Affairs Canada. They are being overwhelmed now with inquiries and permit applications. There have been over 500 permit applications since sanctions against Russia began earlier this year. They are being overwhelmed, and guidance will reduce that workload. We see that in other countries.
Also in my written submissions, you’ll see I talk about a few other issues relating to the use of general licences to enable Canadian companies that are in Russia to pay taxes — something that they have to do in order to ensure the safety of their employees and representatives there and to enable Canadian companies to make payments to protect their intellectual property there. Canada doesn’t use general licences to the same extent that our colleagues do in the United States and United Kingdom. There are also exemptions under the laws of the United States and the United Kingdom that allow for winding down relationships and for terminating relationships to get out of Russia. Canada does not generally extend those to its companies.
The other issue I focus on in my notes is the information available to the public when a company is listed. Typically, it’s just the name, maybe the date of birth and I provide you an example of what the other jurisdictions are doing — information on nationality, place of birth, citizenship and sometimes even addresses. That type of information is necessary for Canadian companies to know whether the person they’re dealing with is on a sanctions list.
Finally, I will end with a point on challenging sanctions listings. Recommendations 8 and 9 of the committee’s report from 2017 implored the government to develop a mechanism that allowed individuals and companies that are listed under sanctions to challenge them and to understand the basis for their listing. That has not been implemented. I can tell you that we’re dealing with individuals who are improperly listed, they can’t open a bank account in another country and they can’t come to see dying family members in Canada. This is a real problem. If those are the consequences for someone who is properly listed, that’s fine. But we need to ensure that they are properly listed. Canada, as a leader in human rights and in ensuring anti-corruption laws are properly followed, this is something we can do as well. We can be transparent and provide a fair system for challenging list-based decisions of the government.
Thank you very much. I’m happy to answer any questions or address any comments from the members.
The Chair: Thank you very much, Mr. Boscariol, for your comments.
Colleagues, as we usually undertake the question period, it will be the same: four minutes each. Please keep your interventions and preambles as concise as you can to allow for more time for our witnesses.
Senator Woo: Thank you to the witnesses. Ms. Bandali, you mentioned that there are ambiguities in the sanctions regime and gave one example of whether it’s permissible to continue with a contract that’s already in place. I wonder if you could give us other examples of ambiguities that could be cleared up with proper guidance. Perhaps our other witness might also want to chime in with his list of examples of ambiguities.
Ms. Bandali: Certainly. Thank you, senator. The example that I gave of the contract is the kind of issue where if two parties to a contract disagree on the interpretation of sanctions, then one party may be claiming that it’s a force majeure event that justifies them not participating in the activity and the other might disagree. That was more about the consequences of ambiguity.
Let me give you some examples. One of the most common provisions that you see in many different regulations under the Special Economic Measures Act, or SEMA, is that Canadians cannot deal in property that is owned, held or controlled on or on behalf of a listed person. When you think about that word “control,” what does control mean? What factors are relevant? Does control strictly refer to legal control, such as holding majority voting rights, or are we talking about influence in decision making that might be control in fact or de facto control?
To give an even more concrete example: When you think about the scope of the dealing provisions, say you have a Canadian citizen who sits on the board of directors of a foreign company. That foreign company isn’t subject to Canadian law. Say they’re doing something that is dealing in the property of a listed person. What are the obligations of that Canadian citizen director? Do our sanctions laws require her to recuse herself from decisions related to that transaction that might be problematic if that foreign company were Canadian, but they’re not? Or does she actually have to resign from the board? If she stays on the board, is her presence on the board or involvement in the dealing facilitating an offence? Or is it not facilitation because the underlying transaction that the foreign entity is involved in is fine because that foreign entity isn’t subject to the jurisdiction of Canadian law? Those are some of the issues, but Mr. Boscariol may have other examples as well.
Mr. Boscariol: Yes. Those are ones that are at the top of our list in terms of what we’re dealing with our clients.
In particular, when you look at ownership, what do you do with an entity that is 100% owned by someone that is listed under the sanctions, or maybe only 75%, 50% or minority owned? That question comes up constantly.
Our allies have issued very explicit guidance on what to do when the entity you’re dealing with is 50% or more owned by someone who’s on the list.
To go to Ms. Bandali’s point about control, our allies, particularly the EU and the U.K., have given great guidance on how you interpret control in various situations. We have none of that in Canada.
For example, when Roman Abramovich was listed as a sanctioned oligarch under Canada’s Russia sanctions, a lot of questions came up as to what we do with the companies that are owned by Roman Abramovich? There are some companies in Canada owned by Roman Abramovich.
Prime Minister Trudeau came out, very helpfully, and said you don’t have to worry about the fact that Abramovich owns 30% of one of our big steelmakers in western Canada. That does not mean you are prohibited from dealing with that steelmaker. That was very helpful in those circumstances, but that’s not happening in every situation.
To have guidance like that would really reduce the questions Canadian companies have about complying with these measures.
Senator Coyle: Thank you to each of our witnesses today. It’s very helpful testimony.
One of the things we’re hearing from both of you — loudly, clearly and, from what I understand, it’s something you’ve been asking for a long time — is the request for guidance. For clear, detailed, timely guidance on the implementation of these sanctions. The companies you represent need them. The organizations you represent need them. You need them to be able to do your job better.
Mr. Boscariol, you have mentioned that this is not a new issue. This has been around for a long time. There’s been some improvement. I’d like to hear what those little improvements have been.
Could either of you explain, if you do understand this, why you’re not getting what you’re asking for? When you’re asking for this guidance, what are you being told?
Mr. Boscariol: Thank you, senator, for that question. I’ll start briefly on some of the positive things that have happened.
Unfortunately, on the issue of guidance, I don’t think much positive has happened in that area.
I will say with the creation of a new sanctions policy and operations coordination division within Global Affairs Canada starting in late 2018, that has improved things. They are very responsive. Unfortunately, they cannot provide the guidance, or they are not providing the guidance so far. I think that’s really a structural issue.
To go on to lean towards the positive side for a moment, there have been developments like the creation of a consolidated sanctions list which we see now on Global Affairs Canada’s website.
It used to be that if you were going to search sanctioned parties, you had to go to each separate regulation and do it. Now you can do it, at least, for the Special Economic Measures Act and the Magnitsky Law on one website.
Unfortunately, it doesn’t include the United Nations Act sanctions, sanctions under the Criminal Code or sanctions under our sanctions designed to target officials who have absconded with assets from their country. If we could get all those measures on there, that would be more helpful.
We still have this challenge of not having enough information on those listed parties. It was a big step forward to at least get a semi-consolidated list. That was helpful.
Ms. Bandali: If there’s time, I can add to that.
Senator Coyle: Please.
Ms. Bandali: When you go on the Global Affairs website, you will see that there is something called a frequently asked questions page. When you look at that frequently asked questions page, it answers questions like, “What are sanctions? What is the purpose of particular pieces of legislation?” They go to the object and purpose in the legislation. Those questions don’t get to the kind of interpretive issues that we’re talking about.
You asked why we are not getting the guidance. It is the million-dollar question, if not more. I understand from Global Affairs that the need for it is understood, but that it is, in part, a resource issue. As Mr. Boscariol said, especially in the last few months, the volume of permit applications that are going through — it’s a small group of people being asked to do a lot, with more and more added to their plate. Certainly, we’re sympathetic to that.
Why, prior to the last few months, we still didn’t have guidance? That I don’t know. It seems odd that Canada is such an outlier when our allies are able to do it, and even in the context of the pace of change that they’re seeing. Small jurisdictions, as well, are able to do it.
Senator Ravalia: Thank you to our witnesses.
In your opinion, how can we enhance the effectiveness and accountability of a given sanctions regime?
Our current regime is imposed through the United Nations Act, SEMA or the Sergei Magnitsky Law. Do you feel there’s any coherence between these three different regimes?
In your opinion, in an ideal world, what would you see as the most effective, accountable tool to impose sanctions?
That’s for either of you. Thank you.
Ms. Bandali: I’m happy to start with a few comments on that.
In my view, the issue isn’t necessarily with the legislation itself, but more with the administration of it and the implementation of sanctions, and that that’s really where effectiveness becomes an issue.
As I said in my opening comments, effectively, we have a compliance-based regime. That is partially a global trend. There’s a notable jurisdiction that is very hot in enforcement, and many other jurisdictions that have autonomous sanctions powers. Clearly, even the existence of autonomous sanctions powers is not something that all countries agree on, but those that do can also be criticized for being low in their enforcement records. What that means is that the burden shifts to companies and individuals to understand their obligations and comply.
There is more coherence now, I suppose, with the legislation that we have by virtue of the alignment of things like the human rights objectives that sanctions are intended to target, and so there’s a synergy there.
But the administration is really where we see the effectiveness start to trip over itself.
Mr. Boscariol: To add to that, I’d agree. The coherence among the various objectives of the sanctions measures is not an issue or a problem. Our allies have the same situation. They’re imposing sanctions for various reasons. It really does lie in how Global Affairs administers this.
In addition to getting more guidance, I think having practical mechanisms like using general permits to allow Canadian companies to engage in things that protect Canadian interests and don’t violate the objectives of sanctions is a really important part of that too.
Having practical exceptions that allow certain activities to take place, or at least winding down your activities with sanctioned entities as opposed to just making it illegal, day one — those are the kinds of mechanisms that introduce flexibility into the system and will ultimately ensure that what is actually happening out there in terms of Canadian companies’ compliance aligns with the policy objectives in each case.
Senator Richards: Thank you for being here.
I’m asking the same question everyone else is.
Over the last few weeks, there were a number of questions about the effectiveness of sanctions and the overall results over time on those countries in which the sanctions are being imposed, or especially on the bad actors upon which those sanctions are being imposed.
If there were a grading scale over the last number of years, how would Canada’s overall performance rate?
Either witness, please, or both.
Mr. Boscariol: I’ll start. I’m sure Ms. Bandali will have some comments on this.
If you’re grading the administration of the sanctions, I’d have to say a C. I really do think we’re failing. Maybe it should be more of a failing grade, like an F. We’re missing opportunities to really put in place effective compliance in these circumstances.
It’s important to also ensure that companies — whether it’s the guidance which we keep on repeating, whether it’s having more flexibility in the measures for companies, being able to be in the same position competitively speaking with our competitors in other countries who get that guidance when we don’t. Those are the types of things that I worry about and I think need to be fixed. Though if you’re talking about the effectiveness of the sanctions in getting Iran to stop committing gross violations of human rights or having Putin withdraw from Russia, obviously, we haven’t seen that happen immediately.
What I would point out is that Canada is an important player. We’re a member of the G7. We’re an important player in the international financial system, and if we don’t have these measures in place, we will become a vehicle for evasion of sanctions essentially through Canada. You’ll have others using Canada as a kind of comfort or a place to commit these sanctions or to park assets of sanctioned persons. That’s something we don’t want. Canada needs to be a part of that. We just need to improve the implementation and administration of those measures.
Ms. Bandali: I agree with Mr. Boscariol’s comments. I just wanted to add that another measure of the effectiveness of sanctions — and this isn’t getting at the kind of issues that the committee has been focused on in its previous sessions about changing the behaviour we are seeking to condemn. It’s important to also think about people’s experiences going through the system.
For example, when you put in a permit. If you have a good justification for why you need to proceed with whatever the activity is — including with respect to issues of being able to wind down or deal with operational issues like that — having a system of administrative processing where, for example, people can track the status of their applications, get feedback on how long it’s going to take, some kind of service standard or any sense of how our actual sanctions administration itself can be efficient is another measure of effectiveness that I hope the committee can also keep in mind as it considers the serious bigger-picture issues of the goals that sanctions are intended to achieve.
Senator MacDonald: I want to pick up on the effectiveness of these sanctions. Both Senator Ravalia and Senator Richards touched upon them.
The Government of Canada has sanctioned about 1200 Russian individuals and corporations, and targeted about 15 different sectors of the Russian economy, many of which may have ties to European corporations and other international enterprises. In terms of our ability to apply these sanctions effectively, do you think Global Affairs has the resources to manage this effort properly?
Ms. Bandali: The short answer is no, I don’t. We’ve already spoken about some of the issues with respect to permit applications and things of that nature, which are an important part of the system working properly.
Even if you look at the publication of sanctions. We’ve had situations where sanctions have been announced and published in the Canada Gazette, but actually came into effect days prior. Those sorts of communication mechanisms are awkward. I don’t have a good alternative to suggest other than to say that care needs to be taken in how we communicate our sanctions, especially considering, again, with a compliance-based regime, that the effectiveness of our sanctions are dependent on companies and individuals being able to check these lists and determine whether or not any of the business activities that they’re already lawfully undertaking is caught and now needs to be stopped immediately.
Compliance regimes depend on, for example, vast databases that can be searched against names. Mr. Boscariol pointed out some of the limitations of the information that published, but also just the timing of some of the sophisticated financial transactions that occur and so on. We could do better in terms of publication and making the communication of changes in sanction regimes more seamless and effective.
Mr. Boscariol: I completely agree with Ms. Bandali. The answer to that is no, but the solution isn’t just throwing more money at it. I think we need to look at models that have been used in other contexts.
First of all, on the export control side in Canada, we have a Trade Controls Bureau that is much more effective. They’re not perfect, and we have our complaints about them as well, but they’re much more effective in administering export and technology transfer controls and brokering controls within the Global Affairs Canada department. They communicate, they issue guidance, they provide timelines for the issuance of permits and they’re relatively responsive in that process. It is like night and day when you’re dealing with export controls versus sanctions.
The other place we might look is the United Kingdom. They have started their sanctions program essentially from scratch. This is something that was handled by the EU prior to Brexit. They have now built up a program that is extremely effective on the administrative side in giving guidance to their companies and organizations.
I know there has been a recent announcement of $76 million being devoted to this for the creation of a sanctions bureau, but I think we have to be smart in how we put this together. We’ve had lots of commitments before in the past of millions of dollars to this and it hasn’t solved it, but we have a couple of models we could look at to solve it properly this time.
[Translation]
Senator Gerba: Thank you to our guests for being with us today. My question is for Ms. Bandali, and the other witnesses could also answer it.
In fact, the sanctions that are being brought in by the government are very difficult to apply by companies and especially small companies that export or import products. One of the witnesses for this committee, Mr. Alexandre Lévêque, Assistant Deputy Minister at Global Affairs Canada, recently confirmed to us that Global Affairs Canada has put in place new ways to help businesses deal with these sanctions.
In your opinion, are the means that will be put in place by Global Affairs Canada going to be sufficient to help businesses, and especially small businesses, that cannot afford to hire large law firms to track their transactions and ensure that they are compliant? Do you think that’s enough? If not, what can Global Affairs Canada do to better assist businesses, especially small Canadian exporters?
[English]
Ms. Bandali: Thank you for the question, senator. When Mr. Lévêque testified, I think some of the mechanisms he discussed were communication mechanisms — having the dedicated division, of course, but also the website, having an information line and so on. But he also said something quite important — which is a refrain that we will hear from Global Affairs many times — which is that they do not give legal advice. That is understood. But the need, particularly for the small businesses that you asked about, is not just for legal advice, although that would be helpful and they would have to go to counsel for that, but for guidance that speaks to the interpretation of terms and the prohibitions in the legislation. Not from the perspective of applying those rules to someone’s particular situation in the way that legal advice does, but as a matter of policy in terms of how those who administer and enforce the sanctions are going to interpret the words in the regulation.
Helping make the regulation more comprehensible to ordinary Canadians is an important thing that government should be doing. Right now, we do have Regulatory Impact Analysis Statements that are issued when regulatory changes are made, but if you look at the Regulatory Impact Analysis Statements that have been issued, particularly in the last several months, they’re very much one after the other. I don’t mean this negatively, but they are very similar to each other. It’s clear that if it’s not boilerplate or cookie cutter, it’s something where the same language is being used again and again, sometimes for prohibitions that are not at all the same. The Regulatory Impact Analysis Statement isn’t getting into the details of what the prohibitions actually mean in plain-language terms for those who may not have legal advisers can understand.
Those sorts of tools require government to roll up its sleeves and get into the details to help. That would assist those who don’t have the ability to have counsel on the other end of the phone to answer their questions. Counsel might like to see it too.
The Chair: Sorry, we’re out of time on that segment, Mr. Boscariol. I want to give everyone a chance here as well.
Senator Boniface: I have just one question, so maybe the witness can finish what he was going to say in answer to Senator Gerba.
Mr. Boscariol: Just very quickly, and thank you. This is a bit of a pet peeve of mine that, on the one hand, we have Global Affairs Canada telling Canadian companies that they need to diversify their exports away from the U.S. and out into the world, and then, on the other hand, not providing sufficient support in dealing with the sanctions issues, which you run into even if you’re not dealing with a company in a sanctioned country. You’ll run into these issues all around the world.
One of the things you can add to the great list that Ms. Bandali just outlined is timelines. Having a response timeline, a service standard. We see that on the export control side in the Trade Controls Bureau. We need them here on the sanctions side. That would be very helpful for small business.
Senator Boniface: Thank you very much. I just want to go back to the guidance that’s required. Do you have a sense of whether or not they’re using an expert panel or anything that would help at least guide Global Affairs Canada to know what type of information is required in that sort of guidance?
Mr. Boscariol: I don’t have a direct sense of that. I know prior to the creation of the sanctions policy and operations coordination division, we dealt directly with the sanctions lawyers within Global Affairs Canada. They are the ones that are drafting some of these sanctions regulations, and there is some institutional expertise in that area.
Unfortunately, we don’t have access to them anymore. We used to talk to them, but now we interface primarily with the sanctions policy and operations coordination division. I don’t know to what extent there is an expert panel they might be using internally. That’s still a bit of a black box to us.
Senator Boniface: Do you have anything that you’re aware of, Ms. Bandali?
Ms. Bandali: No, unfortunately I don’t have anything to add to that.
Senator Boniface: Back then to Mr. Boscariol. I wanted to explore just a little bit the U.K. model, and if it is a model that appears to be effective, what do you see as the three or four components that make it work well? I guess it begs the question why Canada wouldn’t follow suit.
Mr. Boscariol: All I can say as to why Canada wouldn’t follow suit is that my perception is, at least up until now, there haven’t been sufficient resources to do so. Until the U.K. developed its regime post-Brexit, we always used to point to the United States as the example we would want Global Affairs Canada to follow. Understandably, Global Affairs Canada would always say there’s ten times the population in the U.S., they have huge budgets, the Office of Foreign Assets Controls in the U.S. has huge budgets and we can’t replicate that.
The argument becomes a little less effective if you’re comparing us to the U.K. I think if the U.K. can do it, we can do it.
Senator Busson: Thank you for being here to answer our questions. I have a fairly short question with regard to human rights.
Ms. Bandali, you mentioned about human rights and the effect of this Sergei Magnitsky Law on the human rights of folks. My question has to do with the humanitarian consequences of targeted sanctions since this law started being imposed.
Evidently, imposing sanctions on foreign nationals, et cetera, is intended to hold accountable those who violate human rights and engage in corruption, and lately, of course, with Ukraine and Russia’s bad actors, we have so much more to look at.
However, these sanctions also have serious collateral damage and effects on innocents. To your knowledge, does Global Affairs Canada have a process to determine whether sanctions have gone too far, and how they set the balance between holding wrongdoers accountable and protecting innocents?
Ms. Bandali: No, I’m afraid I haven’t come across any kind of transparency around Global Affairs Canada disclosing to members of the public how that decision-making process works. I don’t know if Mr. Boscariol has come across anything like that.
Mr. Boscariol: No. Some sanctions have limited exceptions for humanitarian efforts, but for the most part that discretion is retained by Global Affairs and the Minister of Foreign Affairs, so we don’t get much insight into that at all.
Senator Busson: Thank you.
The Chair: Thank you very much. We’re going to move into the second round, but we don’t have much time. I’d like to use my role as chair as well to ask a question.
In hearings that we’ve had before on this subject, there was much said about best practices, how in most countries and jurisdictions, the Magnitsky-style sanctions are relatively new, and other countries did have their export-type control measures as well, as ours have been in place for some time. But a lot is sort of being coordinated on the fly. Of course, what’s perpetrated this is the unprecedented number of sanctions placed against the Russian Federation.
So everyone is talking to everyone else. Are you talking to fellow practitioners in other jurisdictions in the legal profession, and are they running up against similar difficulties?
Senator Woo: One way in which we have talked our sanction regime to be even more hawkish, to use the words of one of the witnesses, is to allow for the repurposing of assets with the recent bill that was passed.
Do you see any special legal challenges that might arise because of this new tool? I’m thinking not just of SEMA and Magnitsky, but also the Freezing Assets of Corrupt Foreign Officials Act, or FACFOA — not strictly part of the sanctions regime, but definitely covered under the provision to seize and repurpose assets.
Senator Coyle: I believe both of you have mentioned this matter of the tendency towards overcompliance in the face of this lack of clarity around guidance on these sanctions.
Do you ever find that the opposite to overcompliance is also a possibility, given this lack of clarity? Are there companies that therefore think, in the absence of the clarity, there are some ways around this, some loopholes? I’m just curious, the overcompliance response is the opposite response.
Senator MacDonald: You mentioned the U.K. model. I presume that the Government of Canada would coordinate their sanctioning measures with other allies. Do you believe that we are effectively coordinating those efforts with our allies?
The Chair: We’ll each give you a couple of minutes to respond to all of those. Ms. Bandali, would you like to go first?
Ms. Bandali: Sure. Thank you, Mr. Chair. The first question was talking to counsel in other jurisdictions. It’s noteworthy because I’m actually dialling into this meeting from the International Bar Association meetings in Miami, where we have been talking about sanctions a lot with counsel in other jurisdictions. The answer — not just this week, but usually — is yes. What I will say is those exchanges are fruitful, but counsel in other jurisdictions are flabbergasted at the fact we don’t have guidance because their issues are quite different. In jurisdictions like Europe, for example, you might have guidance shopping because different member states’ national authorities have the ability to issue guidance in addition to the EU level guidance. That is some of the discussion among practitioners. The idea that there’s zero guidance is unfathomable.
On the second question with respect to the repurposing of assets and any other legal issues, that’s definitely one to watch. I think the legal issue I would highlight that I think is quite interesting is the question of third parties who have interests in the assets that are potentially the subject of seizure or forfeiture, particularly those that might be in third countries.
It will be interesting to see whether or not there are issues in terms of investment protections that are triggered by virtue of the Canadian government’s targeting of certain assets.
If I had to look into a crystal ball, I am going to guess that the first assets that are looked at are going to be those that are very clean, where there’s a clean case of being able to establish ownership of the asset with someone quite directly where we don’t have those muddy cases. As the regime continues, those muddy cases will be the ones where different legal issues start to pop up around the rights of other parties.
With respect to overcompliance, and whether or not we ever find the opposite, the real tension in the sanctions laws is that we’re dealing with criminal statutes here. The general presumption in criminal law is that you interpret legislation narrowly and in favour of the accused when there’s ambiguity. When you look at the offence provision in SEMA and it talks about wilful contravention, there are interesting discussions to be had there.
On the whole, I would say that Canadian businesses are very compliance-oriented, partially because other members of the private sector — whether they’re banks providing financing or insurance companies that are being asked to insure transactions — the private sector itself will sort of, within itself, enforce the sanctions rules.
The advice that we give is often very conservative because of the lack of guidance. I don’t see companies rushing to take the opposite view — the, “Oh, well, if it’s ambiguity, then we don’t have obligations.” But there is a tension there with the nature of the fact that what you’re talking about is fundamentally a criminal statute that ought to be narrowly construed.
Finally, with respect to the U.K. model and presumed coordination, I’ll defer to Mr. Boscariol because those were his comments on the U.K. model and I want to save some time for him.
Mr. Boscariol: Thank you. Ms. Bandali has covered these quite effectively.
It was Senator MacDonald’s question on the U.K. model and coordination. With these sanctions against Iran and Belarus, a lot has been made about the various countries saying they are coordinated, that we’re doing this in coordination with the United Kingdom. Generally speaking, you could loosely describe that as coordination.
One of the biggest challenges for Canadian companies is that we’ve had lots of instances where Canada has sanctioned entities that the United Kingdom has not. Gazprom, Gazprombank, for a while SberBank, Alpha Bank — big players internationally. Canadians doing business abroad can’t do anything with them. Companies in the U.K., in the United States and in certain circumstances in Europe, can. That’s creating very challenging conflicts among different jurisdictions. The coordination is by no means close or perfect.
The question regarding the opposite happening with lack of guidance and companies not overcomplying, but I suppose undercomplying, I would note that the Canadian government needs to be really careful here about this lack of guidance. If you do have Canadian companies, or even Canadian bad actors, that engage in something that’s considered a violation of the sanctions, as Ms. Bandali pointed out, these are criminal offences. They have to be proven that it was engaged in on a wilful basis, that there was a wilful failure to comply. With that lack of guidance, and the very general language used here, there’s a chance that it will be very difficult to get convictions in these cases.
When it comes to this on the enforcement side, with the government actually enforcing this through charges and convictions, the lack of guidance will be a big challenge.
The Chair: Thank you very much. I’d like to thank both our witnesses, Ms. Bandali and Mr. Boscariol, for enriching us today. It’s great to get a legal and private-sector perspective on this. Thank you very much.
Colleagues, for our second panel, we have two witnesses. We welcome Andrea Charron, Director and Associate Professor, Centre for Defence and Security Studies from the University of Manitoba in Winnipeg.
With us in the room, we welcome Meredith Lilly, Associate Professor and Simon Reisman Chair in International Affairs, Norman Paterson School of International Affairs, of which I am an alumnus, at Carleton University.
We will start with Professor Charron. You have the floor for your five-minute statement.
Andrea Charron, Director and Associate Professor, Centre for Defence and Security Studies, University of Manitoba, as an individual: Thank you, Mr. Chair.
I’ve been studying Canadian sanctions for more than a decade. In that decade, I have noted recurring concerns and challenges. I will focus on three as they relate to the SEMA and the Justice for Victims of Corrupt Foreign Officials Act, or JVCFOA, including unnecessary legislation, the lack of information and notifications and the lack of definitional clarification.
First, I would like to suggest a focus for this committee.
Canada is about to dust off its United Nations Act to give UN Security Council sanctions against Haiti effect. This is the first instance since 2017 when UN sanctions were last adopted against Mali, and Canada adopted its regulations over a year later in 2018. The JVCFOA has also not been used since 2018.
This means that for four-plus years, Canada’s only sanction tool has been the SEMA. Given that we are in an age of autonomous sanctions, and the continued reliance on sanctions as Canada’s go-to foreign policy tool to demonstrate Canada is doing something in a contested geopolitical world, then I suggest improving SEMA will give Canada immediate foreign policy assistance, but not coherence absent a Canadian foreign policy.
My first concern is the general trend for Canada to legislate its way out of issues. Canada created the JVCFOA in 2017 when the SEMA had the potential to achieve what the JVCFOA sought to address, as rightly noted by Meredith Lilly and Delaram Arabi. The JVCFOA target individuals for gross violations of human rights and significant corruption. Instead, hurried legislation in 2017 means we cannot target entities with the JVCFOA, and can only apply an asset freeze and make foreign nationals inadmissible to Canada. Any other measures must be adopted by the SEMA.
To fix a perceived but not real inadmissibility gap of the SEMA, Bill S-8 proposes to make any foreign national sanctioned for any reason inadmissible to Canada, with grave procedural and fairness challenges, which Mario Bellissimo and I outlined to this committee in June 2022.
Finally, Canada’s focus on listing names — indeed, over 2,000 — means it’s a fire-and-forget mindset. There’s no built-in review of lists nor any requirement to reconsider the sanctions in light of other foreign policy efforts. It’s not apparent that the number of delisting requests, permit requests and Global Affairs-sanctioned studies are reviewed and reported, all of which should be publicly available.
My second bucket of challenges include the paucity of information and notifications. First, targets are not informed that they are sanctioned nor are there push notifications by Global Affairs to note a change to a sanctions regime. Allies like the U.K. and EU notify targets, and one can sign up for email notifications of changes for the U.K. sanctions. Triggers for sanctions are meaningless if targets are not notified of the reason for the measures. While Canada has a consolidated autonomous list, it is not searchable, and it organizes data, which is convenient for Global Affairs. For example, there are item numbers and schedule numbers, but not information for third parties primarily responsible for the enforcement of sanctions.
Next, the reasons for triggering sanctions versus the reasons for listing individuals and entities do not need to match. This means that it is very unclear why targets are sanctioned, and the Government of Canada does not communicate the changed behaviour required of targets to lift the sanctions, only the egregious behaviour to fit one of SEMA’s four triggers.
Third and finally, the lack of definitional clarification is a concern. Canada does not have a 50% ownership rule, for example, and so it is very hard for companies and financial institutions to determine the cut-off for culpability. The result is sanctions overcompliance, which is procedurally problematic and poses evidentiary issues.
The references to parliamentary involvement are opaque as well. It is only with Assistant Deputy Minister Lévêque’s testimony that we have a glimpse into the Governor-in-Council process to confirm targets. He noted the trade-off between expediency versus risk management. Global Affairs does not have investigative powers, which I think are key to generating the lists. I hope that the new sanctions bureau will consider the skills needed, ensure that more Canadian-specific sanctions training is offered and that sanctions credentials are recognized and encouraged.
I applaud this committee for ensuring this review takes place, but I also implore it and the Government of Canada to do a fulsome review, consider also the FACFOA and United Nations Act and put a pause on all future legislation to fix problems. Often, it isn’t the legislation. It is the processes, the administration, the lack of resources and lack of a clearly articulated foreign policy that are the problems. Thank you.
The Chair: Thank you very much, Professor Charron.
We will go to Professor Lilly. You have the floor.
Meredith Lilly, Associate Professor and Simon Reisman Chair in International Affairs, Norman Paterson School of International Affairs, Carleton University, as an individual: Thank you for the invitation to contribute to the Senate’s review of the Special Economic Measures Act and the Magnitsky Law. I have been working on Canadian sanctions legislation for a decade, both inside government and as an academic researcher.
I’d first like to acknowledge the number of weaknesses in the Special Economic Measures Act were addressed following the last statutory review in 2016, including the creation of the Magnitsky Law in 2017 and automatic inadmissibility provisions under the Immigration and Refugee Protection Act. In addition, the government’s passage of budget legislation earlier this year to repurpose seized sanctioned assets — largely due to the leadership of Senator Omidvar and the work of this Senate committee — has further augmented Canadian sanctions tools and enforcement.
But the largest effort ever undertaken in applying Canadian sanctions legislation began just this year in response to Putin’s illegal war against Ukraine. In addressing this international crisis, I have been encouraged to see Canada implement sanctions together with allies, and to use long-standing provisions in place under SEMA since the 1990s to do so. These measures have been rolled out on an unprecedented scale, and I recognize the tremendous amount of work undertaken by public servants, ministers and their staff to do so.
I’d like to focus my recommendations today on what this huge explosion of activity means for Canada moving forward. Specifically, I’d like to suggest that there is a need to shift away from an ad hoc implementation approach predicated on the idea that sanctions would be used very rarely to a formal and professionalized approach that reflects the broad systemic nature of sanctions activity we now see happening in Canada and by our allies.
As your committee conducts its review, I would encourage particular attention around the implementation and enforcement of existing Canadian legislation in three areas.
The first thing I’m going to say you’ve already heard about today, and I did not coordinate my comments with your previous witnesses. But as you’ve already heard, while Canada has made a number of improvements in its communication with the public about sanctions over the last five years, we remain well behind countries such as the U.K. and U.S. in providing the useful and specific guidance needed by law firms, financial institutions and businesses as they work to comply with dozens of new sanctions packages, listing at times hundreds of individuals.
Both the U.S. and U.K. provide detailed information about sanctioned individuals, and routinely offer specific interpretive guidance on the types of activities and transactions that would be deemed both permissible and illegal under specific regulations. The information provided on Canada’s website remains very general in comparison. As we have now more than 2,000 individuals and entities sanctioned under Canadian law, it is reasonable that law firms and financial institutions have specific questions, and those should be answerable.
Canadian officials have repeatedly stated that they cannot provide specific guidance issued by our allies, as this would constitute legal advice. But the federal government provides specific and individual guidance to citizens about the laws that impact them every day — from taxation to pensions to Employment Insurance benefits. I’m not sure why our officials uniquely believe it is not the federal government’s role to interpret its sanctions laws for those who are impacted by them.
As the government’s new sanctions bureau becomes established, I recommend that it be mandated to provide specific guidance to the public and stakeholders, and be compelled to do so if necessary by amendments to SEMA.
Second, I recommend that the new bureau also be required to issue a public report annually, itemizing the value of assets frozen and seized under sanctions laws Canada. These should include, at a minimum, country-specific details, and the number of individuals and entities involved. I encourage whatever legislative changes are needed federally and in cooperation with the provinces to ensure these disclosures are required of financial institutions and conveyed by the government to the public.
Finally, I would echo Dr. Charron around the challenges of rescinding sanctions and the need to develop more streamlined processes for their removal when they are no longer needed. One amendment that could be made to the SEMA is to accompany new sanctions with automatic sunsetting clauses of a duration, for instance, of five years. After five years, the sanctions would lapse, unless the government renews them. A sunsetting measure such as that can ensure that outdated and unnecessary sanctions are removed, and it can also decrease the politicization of the sanctions.
Most importantly, automatic sunsetting clauses force a discipline on the public service to continuously monitor and stay abreast of the developments to inform any renewal decisions. Since the introduction of a five-year review clause into SEMA is a key reason for your current study today, I would suggest that those clauses can be very effective at focusing the attention of officials.
I’m happy to answer any questions.
The Chair: Thank you very much. We’ll go back to our four-minute question and answer segments.
Senator Woo: You’re going to get many questions around the effectiveness of sanctions. I’m not going to be the only one asking this question, and it’s a difficult one to answer. I’m going to frame it in such a way that perhaps clarifies the issue.
When we asked this question to Global Affairs, they said that it’s difficult to measure some of the ultimate objectives of sanctions — behaviour change, deterrence and so on. That is an indirect quote. What we did hear was that insofar as they’re trying to punish the targeted individuals, it succeeded for sure. But punishment is not part of the objectives that we explicitly state, I don’t think, in our legislation.
Should we be saying that? Should we be saying publicly, both in terms of our law and our communications with the public, that we sanction and do so aggressively because we want to punish these people? And if we’ve punished them, should we count it as a success?
I know that in previous testimony you have made the point about punishment, so perhaps Dr. Lilly can start.
Ms. Lilly: Thank you, Senator Woo. I have written about punishment, and Professor Kim Nossal from Queen’s University wrote about this many years ago. The argument that he has put forward is that when you think about the effectiveness of sanctions, if the purpose is to punish, then we’re probably doing quite well.
Should it be explicitly stated in legislation? I’m not sure it should be. However, I would suggest that, in fact, many MPs, in passing the Magnitsky Law and in advancing sanctions laws in Canada, do actually want to punish wrongdoers and hold them to account. A lot of the testimony that you heard in the House of Commons a couple of years ago was really focused around that.
Punishment is one area, changing behaviour is another. Are we succeeding in that? That is a very difficult question to answer. We know from the research evidence that if we act together in a coordinated, multilateral approach, we’re more likely to be successful than if we go it alone. It’s important to work with big countries because that is where it’s likely the assets are going to be located.
Finally — I think this has been said by Mr. Lévêque at your last week’s session and it’s been repeated in the past — it’s important for Canada to participate in this in order to not be a safe haven. If part of our purpose is to ensure that capital flight doesn’t find a home here, then that may be one of the reasons.
Ms. Charron: When we talk about punishing, we’re really talking about an old way of thinking about sanctions, this sort of naive theory of sanctions, the terrible weapon that Woodrow Wilson talked about, and we know it doesn’t work. It doesn’t work, especially now, because we are dealing with oligarchs and elites, and they have all sorts of mechanisms to get around sanctions.
We really need to think differently about sanctions. We’re very good at listing the egregious behaviour that has been done, but we don’t make sure they know they’re targeted and we also don’t say what we need them to do to have sanctions lifted. There is no incentive for any target to change behaviour because we’re simply telling them, “You were doing bad things,” with no sort of requirement of what we need changed and here’s the time frame we’re looking at. We spend too much time putting in place the sanctions rather than asking what’s the purpose of sanctions. Ultimately, we want to see better behaviour.
[Translation]
Senator Gerba: Thank you to our witnesses. I would like to come back to Senator Woo’s question, specifically with regard to the populations concerned. A number of witnesses have said that sanctions have a negative impact on people and that targeted sanctions should be used instead.
Professor Lilly, what is your opinion on this issue?
[English]
Ms. Lilly: Thank you, senator, for your question. I’ll answer quickly because I think my colleague Professor Charron is likely more expert.
There certainly is evidence that sanctions that are rolled out on a population level can have very negative humanitarian impacts on the broader population. This is one of the reasons and desires for targeted sanctions. I think targeted sanctions can still create quite a chill. One of the things mentioned at the last session around overcompliance — and I think you had a question about small and medium businesses and what this means for them even in the case of targeted sanctions. I would argue that from a political perspective, sometimes there really is a desire to create a chill on those kinds of relationships. Targeted sanctions are a policy designed for one purpose, but you still have this broader societal impact of a chill on that country in general.
Ms. Charron: Thank you. We are concerned about the gendered effects, especially of sanctions against women and girls. Canada has an obligation with all foreign policy to consider the gender-based analysis, so I do hope that’s happening.
We also know from humanitarian organizations that because of the overcompliance, any time you’re dealing with sanctions, often they have a really difficult time trying to get in aid and money into conflict areas, places like Russia, to help those citizens and the civilians who have nothing to do with the conflict or the issue at hand and to try to assist them. That’s because of the lack of guidance. It’s because many companies just say it’s easier to shut everything down, banks as well. We need to remember that any time we do something, there are going to be these backlash effects that we really need to think about.
Senator Ravalia: Thank you to our witnesses. The imposition of autonomous sanctions requires a regulatory process that needs to balance expediency, procedural fairness and due process. How do you think we rank in this respect when compared to our allies? In your opinion, are there specific best practices from other countries that would perhaps enhance our sanctions regime?
Ms. Lilly: Thank you, senator, for your question. I think that Canada is on par, certainly, with our allies in our determination to impose and implement sanctions and use them as a foreign policy tool. As was said in the previous hour — and I would agree — we are not great on the implementation side, specifically on the guidance piece. I think that the United States and the U.K. do a much better job of this. They offer a great deal of information that is publicly available. If you were to go home tonight and look on websites, I guarantee that within five minutes you would find detailed information on the websites of both the U.K. and the U.S. about very specific sanctions regulations. We have a lot we could learn from them. The U.K. has only been at it for a very short amount of time, so it’s something I certainly think we could do.
Ms. Charron: I’ll add that, on expediency, it really depends on whom we’re sanctioning. When it comes to Russia, we did it very quickly. But, for example, when it came to putting sanctions against Mali, it took us over a year. When it comes to lifting sanctions, it was two years, in some cases three years, after the UN had lifted sanctions for us to get around to lifting our sanctions.
On expediency, it matters who is getting sanctioned, and that poses problems. Why should we be faster to do things for some cases and not others? This seems to suggest that maybe Canada has a sort of discriminatory policy. I would think any time we’re reaching for sanctions, it’s something serious, so we should be seeing the same sort of timings come out.
Senator Ravalia: Thank you.
Senator Coyle: Thank you to both of our witnesses today. Both of you made reference to the new sanctions bureau. I believe, Professor Charron, you spoke about the skills needed for those people working in the new sanctions bureau, and I also believe you spoke about training. I’d like to hear more about setting it up right from your perspective.
Professor Lilly, you talked about requiring a public reporting mechanism to be in place on an annual basis coming out of that bureau. I’d like to hear from both of you about this. This is a new thing. It could be very powerful and helpful. Then again, we could miss the mark. Any advice or recommendations you have more specifically on that, we’d love to hear about them.
Ms. Charron: I’ll start. Thanks.
One of the problems that Canada has is we have no Canadian-specific stand-alone training for sanctions. Often it’s tacked on to how do you deal with U.S. sanctions with a little bit of a Canadian flavour, often to do with Cuba and our particular legislation in that effect. It is the same with the U.K. and the EU. We’re a mention after the fact.
I think anybody who’s working with sanctions, we really should have proper training to understand the ins and outs. I also think because of how we create our lists, we use, apparently, publicly sourced information, but I’d like to make sure that the people that are collecting that information have training and skills about how to research that information, how to evaluate the quality of the publicly sourced information, how to protect it and how to move it on. You need some legal expertise as well, but you also need an understanding of how sanctions fit into the wider foreign policy purview.
These are going to be very highly skilled individuals, and it’s going to take time to get them that training because we really don’t have a culture of recognizing credentials.
When I talk to U.S. and EU colleagues, they are very quick to say, “I’ve gone to the ACAMS; I’ve gone to ACSS; I’ve written the exam; I’m qualified as a sanctions expert.” We don’t really have that kind of culture.
Ms. Lilly: Yes, I completely agree with everything Professor Charron has said. I don’t know what this new bureau has been tasked to do, first of all, other than a couple of lines in an announcement from the Prime Minister and then the testimony last week from Assistant Deputy Minister Lévêque.
I’m excited that it exists and that it’s going to exist. If we could all dream about what it would do, I would really like it to have a public-facing component. I worry very much that it is going to be a government office for the government.
This is not a criticism of the current officials working in that space. Traditionally, our sanctions team within Global Affairs Canada has been very small. It has largely been lawyers, and the view is that their client is the Government of Canada. The client is not the public. The client is not the law firm. The client is not the sanctioned individual.
They’re a small group of people, and they only have so much time, and this is what they’ve been tasked to do, so it’s in no way a criticism of them. But as we think about what this new group could do, legal expertise will be required. It would be great if there was a high level of policy analysis awareness and some ability to speak publicly, and I think that an annual public report would be very beneficial.
I worry that we will constantly be told that due to privacy requirements — be they provincial or federal — the government cannot disclose what it has seized, if anything. It’s really my view that if these are laws on the books, and we say that we want to repurpose assets, then Canadians deserve to know how much or how little of those funds are sloshing around our country.
Senator MacDonald: I heard a lot of discussion here about using sanctions to punish, but, of course, sanctions are not our primary objective. Sanctions are just a means to an end. Our primary objective, surely, is to get Putin to end the war and withdraw from Ukraine.
I guess that begs the question: How effective are these sanctions? How effective are these measures when it comes to our primary objective?
Ms. Lilly: Tough question, senator.
How effective are these sanctions? We still don’t know. He’s not out of Ukraine yet. Certainly, if you think of the counterfactual, though, what if none of us did anything? What if no countries imposed any sanctions, then where would we be at this point? I think he would be further emboldened. I think, perhaps, other countries would be watching and thinking, “Oh, the world didn’t really care when Putin went after Ukraine, so I’ll just move into my neighbour’s territory over here or over there.”
First of all, we can’t see the absence of that behaviour, so we can’t see the absence of countries not invading someone else because they saw the international response to Putin. I think an international response that’s very strong, where we work together, is one of the ways that we can continue to try. Ultimately, Putin is the one who has to leave Ukraine, and we have military options to do that, and we have economic weapons. I don’t have the million dollar answer.
The Chair: Professor Charron, would you have the answer?
Ms. Charron: No, I don’t, but we do know from experience that sanctions take a long time, and it requires all of the allies to hang together, not become leaky and not defect from the goals we’re trying to put in.
What I will say is Canada was a leader in getting the allies to think boldly about sanctions against Russia. I don’t think we would have entertained the idea of ending the SWIFT Code access for Russia if it wasn’t for the fact that our Deputy Prime Minister was front and centre, trying to get the allies to think about how we were going to stop Putin.
It’s going to be sanctions in conjunction with other measures. I want to see an analysis of how they fit together. Let’s make sure that, for example, sanctions aren’t frustrating our ability to get aid into Ukraine. That’s something I would like to make sure isn’t happening.
The Chair: Thank you.
Senator MacDonald: Do we have any intelligence coming from Russia that measures the impact of any of the sanctions to date?
Ms. Lilly: I can’t answer that question, senator. I just don’t know the answer.
Ms. Charron: I don’t know either. I suspect some of our allies might. But Canada specifically, no, I don’t know that.
Senator Richards: Thank you to our witnesses.
This is just about the wording, I suppose, but you mentioned sanctions should not be thought of as a punishment. I would ask first: Why not, if it’s to change the behaviour of the one targeted? Wouldn’t those targeted, no matter how belligerent they are, think of this as punishment? In fact, isn’t it a kind of euphemism to say otherwise?
Ms. Lilly: Senator, I agree with you. I hope I didn’t say that I don’t want them to be a punishment. I don’t think that that is necessarily a concern, and certainly politicians, when they’re imposing sanctions, the evidence that I’ve reviewed and have written about suggests that they are doing this to punish.
If you think about the parallel of something like a prison sentence for committing a crime, some might like to think that that will lead to reforms, changed behaviour and those kinds of things, and there’s some evidence around that. Certainly, part of the purpose of sending people to prison is to punish. There’s a record in other areas of law where we do this.
Ms. Charron: I was going to say that when we used to think about punishing sanctions, it was a blanket against the entire country. Nothing came in or out, and we would basically try to do a siege mentality.
We’ve moved away from that use of sanctions. They are not complete embargoes of countries because we know there are unintended consequences to Russians who we don’t want to harm. It’s more the academic use of the term “punishment” rather than the effect. We want Putin to feel it. We want him to be deterred from this kind of activity.
Senator Richards: My feelings exactly. Thank you.
Senator Coyle: I think my question will be for Professor Charron. I believe you are the person who mentioned UN sanctions against Haiti. I know we’re talking generally about sanctions here.
I would love to hear a little bit more about what you have to say about that. I know this is very targeted. It’s a gang leader, Jimmy “Barbecue” Cherizier, who is being sanctioned. Could you just elaborate a little further on what you had initiated in terms of your remarks about UN sanctions on Haiti?
Ms. Charron: I made the remarks to note that it’s been a while since Canada has used this legislation, and we may need to rethink how we actually go through the mechanics of this.
These sanctions are special. We have never sanctioned a gang member, and we don’t know what that means. It’s not unlike the fact that we are now sanctioning Evin prison in Iran. I don’t know what it means to sanction a prison. It’s one thing to put on paper “Don’t do business with the prison,” but you have to give us a hint as to what kind of effects you want.
Haiti is a huge crisis, and I worry that because of the attention given to Russia and Ukraine, rightly so, we’re going to drag our heels getting going on the sanctions against Haiti. This is Chapter VII. We have the standing legislation. It’s supposed to happen quickly. I don’t want us to take a year to get the sanctions in place.
That being said, I also want to make sure that if we’re also going to send aid or send Canadian Armed Forces or RCMP down there, I don’t want to impede their ability to get goods, aid and the things they need to get stability on the ground as a result of Canada’s sanctions.
The Chair: Thank you. I’m going to ask a question and then we’ll move to round two.
Professor Charron, you and I had a Zoom call in the distant past of the early COVID period. That’s the only way I can characterize it. You made an impression on me in terms of suggesting that there should be more consistency or similitude in terms of the reporting under sanctions laws with our allies, for example. Here we are with an unprecedented number of sanctions — we didn’t really predict it this way, of course — dealing with the war in Ukraine.
Is it your sense that some of this coordination is now taking place? You mentioned specifically — and we heard it in the previous panel as well — basic stuff such as dates of birth and addresses of individuals, children, relatives, that sort of thing — or again, is this something — and I think Professor Lilly mentioned — the wish to not necessarily invoke the Privacy Act, but to say there are privacy issues here.
I’m wondering if you have a comment on that. I’d like to hear Professor Lilly on that as well.
Ms. Charron: Thank you very much. I was tasked by the European Parliament and Global Affairs to coordinate with a U.K. law expert and EU sanctions expert to look at the question: Canadian-EU sanctions for human rights abuses, can we coordinate them better? We discovered that we actually have very few names in common, using what we call these horizontal lists, where you have the Magnitsky-type of sanctions.
We also found that while the EU was able to give us sort of time and information, with Global Affairs, it was really like pulling teeth to get any sort of information that would help us inform the report.
I think there is better coordination at the top level. So leaders of countries say, “Yes, let’s get together and sanction,” but I’m not sure how well it’s dribbling down into the actual administration of sanctions. Certainly, we do have a couple of names the same. We spell them differently, we may or may not have a birth date, but our allies will have rich information and also a narrative on why they’re sanctioned. We have to look at a press release or the Global Affairs sanctions to see the narrative of the idea, but then it’s not necessarily linked to the individual who’s listed. With the SEMA, there can be four reasons they’re sanctioned. So it becomes a bit of an investigation that, frankly, we don’t have time to do.
The Chair: Thank you. Professor Lilly on this point?
Ms. Lilly: Just a couple of things. One thing that’s important to be aware of and sensitive to is the coordination of names and entities in those hours and weeks leading up to an announcement. It’s difficult work because so much of the discussion is subject to operating in very top-secret locations. You can’t just email a list to your colleagues because that will be picked up, potentially, by folks that we don’t want to see those lists until they’re out and until they’re sanctioned.
There is an actual kind of challenge in how to work multilaterally with two or three different countries in coming up with lists of names. It kind of gets fixed over time, but certainly, you’ll see in the early days of sanctioning a new country, it sometimes can appear to be quite disjointed.
That’s my way of giving a bit of a break to the officials who I know do this kind of hard work. I do think, though, that Canada is much less forthcoming about the reasons that specific people are listed. We know that if you go to the U.K. or the U.S., much more detailed information will be provided. Often the government will issue a reason for why they’re sanctioning someone, and we typically don’t see that kind of information on the same level. There have been huge improvements in Canada over the last five years, I would say, in that respect, but we still don’t have the same level as allies.
The Chair: Thank you very much.
Senator Woo: We spend a lot of time talking about sanctions. This discussion illustrates how labyrinthian the whole process is. But the vast majority of countries in the world don’t favour autonomous sanctions. Perhaps you will disagree with me, but I wanted to get your reaction to that.
Have we had a serious think about the perspectives of the vast majority of the world who don’t favour autonomous sanctions and whether there’s some moderation, if I can put it that way, to our zeal to keep ramping up our sanctions regime? As one of the previous witnesses has said, it has a certain self-reinforcing mechanism to it. Once you get a tool, you’re going to use it.
Do you worry at all that we’re in a bit of a vortex, talking to ourselves and being wrapped up in how we want to do this better when maybe this is not the direction we should go in?
Ms. Lilly: I am of the view that Canada should always operate with allies when we are sanctioning. Having said that, the reason that we have autonomous sanctions laws is because it’s very difficult and challenging to get the UN to move. So we all have our own separate laws, but I am of the view that Canada should not be operating unilaterally in the international space, that we should be acting together with allies, ideally more than one.
For the most part, that is exactly what happens in Canada. It is extremely rare that we move ahead with a particular country with no one else. We’ve had provisions in SEMA for a long time that enable us to work together with other countries.
I certainly hear what you’re saying, senator, and I think that we should always be careful about the use of sanctions. I am of the view that we should be doing that together with allies in a coordinated way.
Ms. Charron: I’ll just add that autonomous sanctions is relatively new. We had the SEMA in 1992 because the Organization of American States, to which we belonged, was going to put in place sanctions against Haiti, and we didn’t have the mechanism to do that.
I think in a lot of cases there are many states that just don’t have that mechanism yet, but it also speaks to the wider direction we’re going where it’s democracies versus autocracies and leaving out everyone in the middle.
You’re absolutely right. We do have to be careful about this, especially if we start saying that you’re either with us or against us. There are very practical reasons why lots of states may not be participating. First, because they don’t know what the retaliatory measures will be against them if they decide one way or another because they don’t have the legislation because they have much bigger problems to worry about rather than sanctions that they know will not have great effect if they’re maybe a smaller country.
I think this is going to be the big foreign policy question for Canada and the West going forward.
The Chair: You still have 30 seconds, Senator Woo.
Senator Woo: I need 30 hours to deal with this question, so I’ll pass. Thank you.
The Chair: Thank you. Is there any other senator who would like to ask a question?
Senator MacDonald: Since you brought it up, how does our regulatory process in Canada for imposing autonomous sanctions compare to a country like the U.S. or a bloc like the European Union?
Ms. Lilly: I’m wondering if Dr. Charron would like to answer this one.
Ms. Charron: One of the things we’re finding is that we’re very good at putting sanctions in place and listing targets and entities, but it’s the actual implementation of the measures that are required by third parties where we’re running into trouble. That’s because of the lack of guidance provided by the Government of Canada. I know we have very few cases of sanctions-busting in the Canadian courts. Is that because nobody is doing the sanctions-busting? We cannot put forward court cases. We don’t have the resources to investigate if there have been cases of sanctions-busting.
So I am really concerned that we are very quick to put into place the sanctions, but then we fall apart with the follow-through, the regulation, the review, the lifting — all of those, which are really the tough parts.
The Chair: Thank you.
I’m going to ask another question, and it’s more or less the same one I asked the previous panel.
With all of this unprecedented sanctions activity, both Magnitsky, SEMA and perhaps even other measures that are going to come along, you’re both recognized in the field and you’ve both published on this. Is this a moment of “academic bonanza” for you? Are you working your networks in Canada and around the world?
There are, of course, other countries imposing sanctions. They’re looking at their sanctions policies and trying to get it right. In the current format, and with the five-year review built into the Magnitsky Law, we’re all rather new to this. Sanctions have been around for a long time. Professor Charron mentioned embargoes.
But is this causing the academic community to be a bit more closer knit? Are you collaborating a lot with those offshore?
I’ll start with Professor Lilly.
Ms. Lilly: We certainly collaborate within Canada, and Dr. Charron is a co-investigator of mine. I work on her pieces, and she’s a real leader in this area. There are other experts in Canada, and we all know each other and maintain relationships. I believe you had Clara Portela here last week, and she’s another one that we stay in touch with. It turns out to be a rather small academic community.
I don’t welcome what’s happening in the world, but it does create an interesting research opportunity. Just the sheer size and volume of what’s happening does mean that there’s a lot of research to be done.
Having said that, I’ll take the opportunity to say that there’s not a lot of funding for us to engage in this kind of research. Dr. Charron and I typically work on things on a shoestring and do a lot of this without large research grants. It certainly would be great in a future budget or something like that to see some dedicated funding for sanctions research.
Ms. Charron: Shamefully, there’s still only one book dedicated to Canadian sanctions, and that was Kim Richard Nossal’s, which was published in 1994. It compares Canada and Australia. I’ve done an edited volume on Margaret Doxey, who is a Canadian, and her impact on multilateral sanctions. The thing is that Canadians have been the leaders in terms of changing the way the world thinks about sanctions, when you think of David Malone, Margaret Doxey, David Angell and others. Yet, in Canada, we have two MAs who look at sanctions and no PhDs who look at Canadian sanctions. We really need an injection of resources.
We need to partner with Global Affairs. It’s very difficult to have an academic study of sanctions if you cannot go to Global Affairs and ask, “Please, can you sit down with me and help me understand the challenges you face as well?” Otherwise, you’re just going to get criticism.
The Chair: Thank you very much. I’m happy I asked the question.
I’d like to thank our two witnesses today on behalf of the committee. Professor Charron and Professor Lilly, thank you very much for joining us. We might come back to you at some point as we continue our study.
Colleagues, before we break, I just want to bring two items to your attention. I want to highlight the survey that was sent to members earlier today from our clerk, Ms. Lemay, asking you whether you will come on the committee’s trip to Washington, D.C., from December 4 to 6. We have some responses, but not all. Consult your calendars and respond to Ms. Lemay as soon as possible so we can make the necessary travel arrangements.
For tomorrow’s meeting, we will reconvene in this room, but not at 11:30. We had some witnesses disappear on us, so we will convene at 12:30, and we will have as our chief witness the Honourable Harjit Sajjan, the Minister of International Development. It’s part of the ongoing study on the fit-for-purpose Global Affairs study that we’re taking on.
(The committee adjourned.)