THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Thursday, April 30, 2026
The Standing Senate Committee on Foreign Affairs and International Trade met with videoconference this day at 10:30 a.m. [ET] to study Bill S-214, An Act to amend the Special Economic Measures Act (disposal of foreign state assets).
Senator Peter M. Boehm (Chair) in the chair.
[Translation]
The Chair: Good morning, honourable senators.
My name is Peter Boehm. I am a senator from Ontario and the chair of the Standing Senate Committee on Foreign Affairs and International Trade.
I wish to invite committee members participating in today’s meeting to introduce themselves.
[English]
Senator Adler: Charles Adler, Manitoba.
Senator Ravalia: Mohamed Ravalia, Newfoundland and Labrador.
[Translation]
Senator Gerba: Amina Gerba from Quebec.
[English]
Senator Busson: Bev Busson, British Columbia.
Senator Coyle: Mary Coyle, Antigonish, Nova Scotia.
[Translation]
Senator Youance: Suze Youance from Quebec.
[English]
Senator Wilson: Duncan Wilson, British Columbia.
Senator Al Zaibak: Mohammad Al Zaibak, Ontario.
[Translation]
Senator Hébert: Martine Hébert from Quebec.
[English]
The Chair: I particularly welcome Senator Youance of Quebec, who has joined us today as a guest.
We welcome all of you and, of course, those who may be watching across the country on ParlVU.
Colleagues, we’re meeting today to begin our examination of Bill S-214, An Act to amend the Special Economic Measures Act (disposal of foreign state assets). Today, we have the honour of welcoming to the committee our colleague the Honourable Senator Donna Dasko, sponsor of the bill — welcome, senator — and the Honourable Ratna Omidvar, our former colleague, who is joining us today from Berlin by video conference. Welcome, senator.
Before we hear opening statements and questions and answers in our usual routine, I would ask everyone present to please mute notifications on your devices. Please observe the best practices card with respect to the use of the microphone and the earpiece. Thank you very much.
I’d like to acknowledge Senator Woo of British Columbia, who has just joined us as well.
Senator Dasko will make an opening statement, and then we’ll go to questions and answers. Senator Dasko, you have the floor.
Hon. Donna Dasko, sponsor of the bill: Thank you, chair and honourable senators, for your invitation to speak to Bill S-214, An Act to amend the Special Economic Measures Act (disposal of foreign state assets).
This bill would amend the Special Economic Measures Act, or SEMA for short, to create a legal pathway to seize and repurpose the state assets, including central bank reserves, of perpetrators that breach international peace and security. More specifically, it creates a pathway to seize these assets through executive order. These assets can then be redirected to the victims who have suffered at the hands of these perpetrators.
This bill was previously introduced in the last Parliament by former senator Ratna Omidvar, and I took stewardship of the bill when she retired from the Senate in 2024. I reintroduced the bill as Bill S-214 after the return of the new Parliament in 2025. I want to commend Senator Omidvar for her far-sighted leadership in advancing these concepts through this bill and, as well, through an earlier bill.
Bill S-214 rests on the widely shared belief that foreign leaders and nations who violate international human rights through violence or oppression or corruption or war must be held accountable for their actions and that asset forfeiture can be a powerful option to help achieve this and to assist the victims of these actions.
A good way to introduce Bill S-214 is to describe the situation with respect to Russia’s invasion of Ukraine in February 2022. After this invasion, Western countries, including the EU, the U.S., the U.K., Canada and other countries, froze hundreds of billions of dollars in Russian state assets, primarily the Russian central bank’s foreign reserves, estimated to be between €210 billion and €300 billion in total, as well as the private assets of oligarchs, such as planes, yachts and real estate. The bulk of the frozen state assets sit in Europe, with Belgium’s Euroclear holding the largest share, around €180 billion.
Soon after these events, Canada took a bold leap. In the BIA — that’s the Budget Implementation Act — of June 2022, this government amended SEMA to permit not only the freezing of the assets of sanctioned individuals and entities but the seizure and forfeiture of such assets. With this move, Canada became the first G7 nation with the power to not only freeze but also permanently confiscate and redistribute the assets of sanctioned individuals and entities.
As currently drafted, however, SEMA can permit the seizure of individual and private assets through a process involving the courts, but it cannot authorize the seizure of state assets. That is because state assets get caught in issues of sovereign immunity embodied in the State Immunity Act, which limits court action with respect to seizing the assets or property of a foreign state which is in Canada.
The bill presented here today carves out a distinct legal pathway for state assets. While the State Immunity Act limits court action against another state, its reach does not extend to executive actions, such as cabinet orders. The bill before you amends SEMA to allow for the seizure of state assets by creating two paths: one through the courts, for individual assets, and another through executive action by the Governor-in-Council, for state assets. We can think of it as two highways with different routes but the same destination.
Of course, SEMA can only be used if any of its four underlying conditions have been met. Thus, there must be a grave breach of international peace and security, gross and systematic human rights violations, acts of significant corruption and/or requests for action from an international agency such as the United Nations, to which Canada belongs.
To be clear, SEMA already provides for the seizure of state assets. It’s already there in the bill, but the mechanism to achieve it is currently flawed. This bill simply provides for amending the mechanism so that the law can fulfill its stated purposes.
Colleagues, these actions are contemplated mainly in the context of the illegal invasion by Russia of the independent and democratic nation of Ukraine. Russia has committed multiple crimes and violations in Ukraine, and the loss of life and destruction have been massive.
On November 14, 2022, the UN General Assembly adopted Resolution ES-11/5, recognizing that Russia must bear the legal consequences, including reparations, for its internationally wrongful acts and aggression against Ukraine. The United Nations’ recent damage assessment estimated that Ukraine requires US$588 billion for recovery over the next decade. So, recognizing that Russia must bear consequences and pay reparations for their illegal acts, the frozen Russian assets represent an important potential source of funds for Ukraine.
There have been some related developments to this bill. A few months ago, our own government amended SEMA in the 2025 BIA, Bill C-15, to permit it to gather more information about sanctioned assets held in Canadian financial institutions and to permit the seizure of profits gained from these sanctioned assets. Colleagues will remember the testimony here in this committee in December. So Canada has taken another step to strengthen our sanctions regime in this direction.
Internationally, much has happened as well, and I will mention only two items. In 2024, the U.S. passed the REPO Act — the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act — which authorizes the U.S. President to seize frozen Russian sovereign assets held within U.S. jurisdiction and to use them for the reconstruction and defence of Ukraine. Although focused specifically on Russia and Ukraine, that act functions as enabling legislation, much like Bill S-214 would.
A very important point is that our European allies are moving forward as well. On April 23, the EU approved a loan agreement of €90 billion to Ukraine, and the agreement reached by the EU explicitly includes mention of the right to use frozen Russian state assets to repay that loan. Therefore, there has been definite and clear movement on the international stage as well.
To conclude, Bill S-214 provides a legal framework that will allow us to act together with our allies in such initiatives as I’ve just described or to act independently if needed. We maintain the flexibility that Canada needs in these situations.
It is another mechanism to hold Russia to account for its actions and — an important point — to hold other nations to account for their illegal actions as well because this is not country-specific. It is country-agnostic. This vital legal framework will enhance Canada’s ability to act responsibly and decisively in these matters.
Colleagues, thank you very much. We look forward to your questions.
The Chair: Thank you very much, Senator Dasko.
[Translation]
Colleagues, I wish to remind you that you will each have three minutes for the first round of questions, including answers.
[English]
As usual, please be concise with your questions, keep your preambles short and indicate clearly which senator you would like to have answer the question, or both, as the case may be.
Senator Wilson: My question is either for our esteemed former colleague or for Senator Dasko. You answered most of my questions in your presentation, senator. It was mostly about what some of our allies are doing and you spoke to what the U.S. and the EU are doing.
What has been done in terms of the actual seizure of assets, and what has the response been from Russia in terms of those actions?
Senator Dasko: The Europeans, so far, have been spending a lot of time trying to come to an agreement about a loan, and that took a long time. They just reached this agreement on April 23, which, in the agreement itself, invokes the possibility that they could seize this massive amount of Russian state assets.
That would happen down the road, but they’ve committed. They have said it’s legal for them to do it, and they’ve stated clearly that they will do this if the loan to Ukraine is not paid by reparations from Russia. Very few people expect Russia to be paying reparations. If you know anything about the situation, I think you’d agree it’s unlikely, so they’ve got this money that they can use to repay the loan. That’s a very major development that has just happened.
In terms of Russia’s actions, Russia doesn’t like anything that is done by any other country to help Ukraine, so they’ve threatened, they’ve taken various actions against countries that have taken these actions against them, and they have sanctioned various Canadian — I’ve got a list of things they’ve done here to Canada. If I have time, I can look at some of these things. They’ve imposed diplomatic and travel sanctions on Canada, and they’ve placed many Canadians on a no-travel list. I’m on that list, and I think that a few of us in this room are on that list. They’ve given us an “unfriendly country” designation. They have been performing disinformation and cybercrimes in Canada, and they warn of irreversible consequences. That’s what they did to Canada before this particular bill was on the table. They’ve done this, and they’ve taken similar actions against other countries.
That’s their kind of response to these actions. They’ve taken these actions already in the past, beginning with the actions taken in 2022 by the EU, Canada and the U.S.
The Chair: Thank you very much.
Senator Al Zaibak: Thank you, Senator Omidvar and Senator Dasko, for your leadership in advancing innovative tools within Canada’s sanctions framework, among other great work you’ve been doing.
I certainly agree this bill is a distinct executive pathway for foreign state assets. In your view, would this bill enable state and individual victims of Russia’s aggression outside of Ukraine to make a claim against frozen, seized and repurposed Russian assets?
Hon. Ratna Omidvar, former senator, as an individual: Individuals who have been sanctioned under SEMA in Canada and whose assets we have seized — at this point, it is one oligarch, Roman Abramovich, and we have seized one cargo jet that belongs to a state entity. Those two assets have been seized under my previous legislation that was embedded in the BIA, and they are now in court, undergoing court proceedings.
Basically — let me be a little shorter with my answer — there are two pathways that Senator Dasko described. One highway is for individual assets, and that includes court proceedings. Currently, sanctioned assets of individuals and state entities in Canada are in court and are going through due process, but the sanctioning of state assets falls outside court procedures. Should Russia take Canada to court, it enters into grave territory because it then exempts itself from the State Immunity Act. There is, at this point, no international court that can hear such a claim, so I believe that this action, which is grounded in a legal framework, as Senator Dasko has proposed, is not applicable to the courts.
Now, if you’re asking if victims will get those assets — am I right in thinking that maybe that’s where you’re going?
Senator Al Zaibak: Victims of Russian aggression outside of Ukraine.
Ms. Omidvar: Outside Ukraine. Sorry, I misunderstood that.
There is a Ukrainian claims commission that has all the claims that are to be made contained in it, but I imagine that once we get so far that the assets have been seized and repurposed, there is a framework that has to be put in place by our government to ensure accountability, transparency and justice for victims.
The Chair: Thank you very much.
Senator Coyle: It’s wonderful to see our former colleague Senator Omidvar. It’s lovely to have you with us. Thank you for your leadership on this, and thank you to Senator Dasko for taking the baton and being with us today.
You mentioned that the estimate of the total worth of Russian sovereign assets that have been frozen by the European Union and other G7 countries since 2022 is approximately, I think you said, €300 billion, with about €210 billion of that estimated to be held in the EU member states. That’s managed by Euroclear. I think that’s in Belgium.
The EU permits the use of the windfall income from the immobilized assets to support Ukraine, but the underlying principal remains frozen. In March, as we’ve heard, SEMA was amended through Bill C-15, our own Budget Implementation Act here, to allow our government to direct federal financial institutions to pay the Receiver General any windfall profits generated from the frozen assets under SEMA. Could you tell us this: What is the current status of discussions in Europe and among G7 countries about what to do with the frozen state assets as we move forward?
Senator Dasko: Thank you for the question, senator. I think it’s important to go back a little bit and to review how the Europeans got to the point they are today.
These assets have been frozen, and they’ve been talking about them for several years. One of the impediments they had was that they had to renew the freezing every six months. That was part of the process they had, and every six months, when it came for renewal, Hungary would step up to say, “We’re not so sure we want this to be kept frozen.” Hungary, in the previous government, was always an impediment to the continuing of the freezing of these assets. That put a cap on what they could actually do. Finally, last December, in 2025, they came to an agreement with a mechanism that sidestepped Hungary, and they were actually able to freeze the money permanently.
That ability was key for the next step, which was for them to create this loan structure because the loan could then be backed by these funds that were now held in a stable situation. That’s what they spent most of last year doing: trying to come up with this loan agreement and trying to secure the money so they wouldn’t have to deal with this six-month renewal every time.
They’ve come up with this loan agreement, and it’s important to note that it’s backed by the assets that are now firmly held without the possibility of them slipping away. That’s where they are. They’ve come up with the agreement — €90 billion, which is going to Ukraine for a number of purposes. Then, they will be able to access, specifically, the state assets that are frozen in Euroclear to repay the loan that they have made if, in fact, Russia doesn’t pay reparations.
The Chair: Thank you, senators. We’ve gone a bit over, but you were making a very valid point.
[Translation]
Senator Gerba: Senator Omidvar, we are delighted to welcome you back here, and I thank you for having launched this initiative, which I fully support. I would also like to thank Senator Dasko for taking over.
Senator Dasko, in your opening remarks, you referred to the principle of sovereign immunity. You said that this principle imposes limitations with respect to the application of the Special Economic Measures Act. Could you tell us more about this principle of sovereignty, limitation or sovereign immunity, and how it undermines the act?
[English]
Senator Dasko: In the context of this bill, sovereign immunity means that a country cannot go through the courts to try to seize the assets of a foreign state, so it’s a blockage. In terms of this bill, it creates a blockage for the fulfillment of what the government had actually intended. They are the ones or we are the ones who drafted and passed the amendments back in 2022. For reasons that perhaps Senator Omidvar might be able to clarify, the bill itself had — I guess we would call it — a flaw or a glitch or whatever mechanism which prevented part of it from being fulfilled.
The intention was that the seizure of assets would go through the courts. It would be a court process, a due process, and then they would be able to seize the assets through forfeiture, but the concept and the act of sovereign immunity mean that the courts cannot be used for state assets, so this creates a different pathway for the seizure of state assets. It creates two pathways: one that exists through the courts, for individual and private entities, and one that exists for the potential seizure of state assets. Those are two different pathways with the same conclusion.
So that principle is there. As I say, it currently blocks the ability of the government to seize state assets. This would unblock it through a separate pathway, which our government has said very specifically is a legal pathway, so this isn’t just us putting it on the table. The government has said that there is a legal mechanism. There is a pathway, and it is legal for governments to seize foreign assets of others.
The Chair: Thank you very much.
Senator Ravalia: Thank you to both of our witnesses. Ratna, it’s such a pleasure to see you again. I wanted to assure you that the “Desi group” misses you very much.
If I could further explore the €90-billion loan through Euroclear to Ukraine, concerns have been expressed about the negative implications of this action, including fiscal, legal, political and strategic ones. I wonder if you could comment on some of this and the potential applicability to your bill.
Ms. Omidvar: It’s lovely to see all of you again. Thank you for inviting me.
Let me address the question of legality first. First of all, it’s legal under international law for an offending country to pay reparations. It’s international law. Second of all, it is legal under international law to take countermeasures against offending states — one state against another or a third party, in this case — to bring the offending state back into the tent of the rule of law. A countermeasure can be something that a country would normally not do but is allowed to do under these extraordinary circumstances. Third, we are strengthening the legality of countermeasures, which is international law, by bringing it into domestic legislation.
This is not going to be an executive order like we hear about in the news. This is an executive order bill that will be debated in Parliament — in the Senate and in the House of Commons — anchoring international countermeasures, which are, frankly, for most Canadians rather obscure, and strengthening them through domestic legislation, transparency and accountability. That’s the legal part of it.
For the financial part, I think you will likely be hearing more witnesses on the financial risk. I will say that for four years, $300 billion roughly have been frozen in Europe in Euroclear, I think, of Russian state assets. There have been no financial implications so far. The idea that we are going to experience flight risk has not actually been in any way experienced because where would this capital fly to? The secure currencies of the world, like the dollar, the euro, the yen and the Canadian dollar, are all reliable and convertible — all those things make them the currencies that nations would invest in.
Given all these factors, I think we are on secure legal ground and secure financial ground. I will say this: There is a risk to everything. This is going to be a political judgment that the Governor-in-Council will make, and the Governor-in-Council makes diplomatic and political decisions every day that could be risky. I will admit that.
But that is our information, and please query this further with other witnesses.
The Chair: Thank you very much, former senator and senator.
Senator Woo: Guten Tag, Ratna. Thank you for being here.
Ms. Omidvar: Guten Morgen!
The Chair: I think we should stick to our two official languages, as tempting as it might be to go further. Go ahead, Senator Woo.
Senator Woo: The two of you have presented a very powerful legal, moral and almost cosmic logic for these changes to our SEMA legislation. The logic would be even more powerful if we were confident that these measures, as agnostic as they are in terms of the country of application, were used universally in all cases where they apply.
Do you have any confidence that, in fact, they will be used in other instances of gross violations of international law, such as what we’re seeing today? And if not, how can you defend against the accusations of double standards and hypocrisy?
Ms. Omidvar: Senator Woo, thank you for that question. I’ve been watching your interventions in the Senate on various matters. I’m always interested in what you have to say.
On the issue of whether these standards will be applied fairly across other situations, I will say that there is a standard that has to be met, and that standard is that the state in question must be sanctioned under SEMA under the conditions that Senator Dasko laid out. There are four conditions. This is a pretty high bar already. Whether a state is included in this list is, ultimately, Senator Woo, a political decision. We are not making that decision. It is a political decision made by the Governor-in-Council. This bill merely provides a legal framework for them to do so should they wish to. I hope that answers your question.
Senator Woo: Not really because it’s obvious that we are not going to put certain countries on the sanctions list because of political considerations, even when the circumstances are as grave and as severe in terms of violations of international law as what we see in Ukraine. I fully defend what you’re trying to achieve in terms of sanctioning Russia.
We don’t hear it much in Canada, but in the Global South, there is a profound awareness of the unfairness of sanctions and the uneven application of these sanctions. Canada prides itself on being a world champion of sanctions. I wonder if you’re aware of The Lancet study that came out just last year which shows that unilateral sanctions, not multilateral sanctions, caused about 600 deaths of children every year.
The Chair: Thank you, Senator Woo. We’re out of time on that segment.
Senator Omidvar, we are having some technical difficulties with your signal. It’s not the positioning of the mic so much as the fading in and out of the signal, just so you’re aware. We’ll see how we can proceed. It’s making it rather difficult for the interpreters.
[Translation]
Senator Hébert: My question is this: Senator Omidvar, you mentioned that such an amendment would not contravene our obligations under other international laws. That led me to wonder why it wasn’t included in the legislation in the first place.
Why was this provision giving the executive the authority to order the seizure of a state’s assets not included in the act when it was passed?
[English]
Ms. Omidvar: It’s nice to meet you, Senator Hébert.
Frankly, after my nine years in the Senate, I realized that there is the biggest law of all, the law of unintended consequences. In effect, I think nobody thought of it. Nobody actually considered that seizing state assets in the way that was defined in the BIA was actually contradictory to the State Immunity Act. That’s the truth.
[Translation]
Senator Hébert: Looking back to that time, my understanding is that there was no debate or reflection on the matter.
I’m not a lawyer, so I apologize if I’m mistaken in asking this question, but could this put Canada at odds with certain provisions that apply to us under international law? We have obligations under international law regarding how we act. Could such an executive power put us at odds with the very spirit of certain international laws to which Canada adheres?
[English]
Ms. Omidvar: As I laid out previously, this law meets all our international obligations in terms of international law, countermeasures, et cetera. Our findings are that we are in compliance with international law, and this law will bring us in compliance domestically as well.
Now, you’re going to speak to a bunch of lawyers. I think you will get more details from them because I, too, am not a lawyer.
I should say, to your first question about why it was not —
The Chair: I’m sorry to interrupt you. We have an issue. We cannot interpret at the moment, so we’ll see if that improves. It is not about the microphone. It is the signal.
I always thought when I lived in Berlin it was a real tech hub, but I guess there’s some difficulty.
Ms. Omidvar: It’s about Germany-Canada relationships.
The Chair: There we are. Thank you.
We’ll persevere. We’ll see if that signal comes back and improves. We are ready for the second round.
Senator Coyle: My question is for Senator Omidvar. Your life’s work has revolved around supporting refugees and people who are displaced. I believe you’re working with Ukrainians who are displaced as well. If this bill were to pass, how do you foresee the use of these frozen assets supporting displaced Ukrainians and rebuilding their lives, communities and homes?
The Chair: I’m sorry.
Senator Dasko is going to have to answer that question because of the technical difficulties we have. If I wasn’t clear, I’m trying to be clearer now. We’ll see if the signal returns sufficiently for us. Sorry, Senator Omidvar.
Senator Dasko: Senator Coyle, the funds, if seized, can serve many purposes: They can be used for reparations, repairing the damage that has been done, for military purposes and for humanitarian purposes. Multi-purpose spending is envisioned in the use of funds.
It’s also part of the Special Economic Measures Act, or SEMA. SEMA describes the way these funds can be used, so, of course, they can be used for humanitarian purposes.
There are various mechanisms that can be put together, like a particular fund for Ukraine or maybe even other countries, and that fund, then, can be directed to any one of these areas — or to all of them — in terms of the way the funds might be spent.
Senator Coyle: I do have another quick question: I’m curious about the level of support for this bill in the other place.
Senator Dasko: Over in the House? Well, I’m hopeful. We’ll see how it goes. I have talked to government officials, and they are coming here next week. In terms of the government response, it will be very interesting to see what they say.
I think there would be support over there, but I’m hopeful that this will go forward.
[Translation]
Senator Gerba: Senator Dasko, you gave the example of the United States and the European Union, which have implemented this type of measure. Can you tell us what the results are? How did it go? Were there any problems? Is it fair to say that these provisions have been successful?
[English]
Senator Dasko: Senator, I like your question very much. I think it can be answered almost by one answer: The bill was passed by the Biden administration. The new administration is — shall we say — less enthusiastic about supporting Ukraine. Nevertheless, the legislation is there, and it is enabling legislation, just like this one is enabling legislation.
I don’t think the Americans have actually seized anything yet. I don’t think they have seized any assets, but they have been part of another loan agreement that was reached by the G7 countries in 2024. That was based on profits from the frozen assets, so the U.S. was definitely part of that agreement and that arrangement. I think that’s important to know. Nevertheless, that is enabling legislation, just like this one. That is generally the situation in the U.S.
Of course, I think we mentioned what the Europeans are doing and the loan arrangement that they have that is backed by frozen Russian state assets in Euroclear. That is just going ahead now. It was just reached a few weeks ago, and that’s going ahead.
The world is there. With the Europeans, especially, this is a very important agreement that is part of this area of reparations and countermeasures, and the legality and the agreement are an important part of the evolution of this issue as we go forward.
Therefore, I think this bill is really well timed to be part of this because it gives us the ability to act as a country alone but especially with other countries. I would say that my observations, in dealing with and talking to government officials over the last year, are that there has been a real emphasis on working with other countries and doing things with them and in coordination with other countries. This gives Canada the flexibility to do that. We will have this particular tool in place to be able to work with the Europeans and other countries as we go forward.
[Translation]
Senator Gerba: Thank you.
Senator Hébert: I would also like to acknowledge the leadership shown by both senators on this file. I had the same question as Senator Gerba, so I won’t repeat it.
That said, I would have liked to hear the response that Senator Omidvar had begun earlier to my question, namely, why this wasn’t originally included in the act at the outset, in addition to the amendments that have been made to that act over the years.
You had begun to address that point. Would it be possible to provide us with additional information, if appropriate? I understand that the senator can’t give us an answer at this time, but it’s a question that I’m interested in.
[English]
The Chair: Senator Omidvar, I know we can’t interpret you right now, but if you want to send something in writing in response to what Senator Hébert has just mentioned, we would, of course, welcome it.
Or, Senator Dasko, do you want to address this point right now?
Senator Dasko: I think my answer is the same as Senator Omidvar’s in terms of what I have learned about the original BIA and how the decision was made. I have heard the same explanation. It was an initiative that the government undertook in 2022, and they didn’t quite look into the details as to the applicability of the mechanism and whether it would actually be fulfilled in that legislation. It was something that came to light after the issues with respect to state immunity, and, as I say, it is in the bill; it’s just not fulfilled.
One reason for this bill is to actually create some clarity with respect to this bill, because if it’s there — it’s already in the legislation — yet it can’t be enacted, it does leave a bit of a doubt about Canada’s intention.
Bill S-214 would actually close the loop and give clarity to what is there. In my opinion, that’s a good development because we have a bill that is a little bit unclear. Now we would provide clarity to it, which, to me, is a positive thing for this country.
The Chair: I’m going to interrupt and say that we’re going to try again with the signal.
Senator Omidvar, did you want to respond a little bit to that, please?
Ms. Omidvar: Thank you, and I hope this works.
It occurred to me — in my fast-fading memory, in the meantime — that the first effort to seize assets was really also about ensuring due process, which is why the courts had a role in seizing assets. But then we determined — as Senator Dasko has pointed out — that, in fact, we were only able to seize individual assets or state entity assets, but we could not seize state assets because of the State Immunity Act. I hope that makes it clear.
Chair, if I may make a small observation, we have talked a lot about Russia and Ukraine. In 2018, I tabled this bill for the first time. It was called — you’re not hearing me, Senator Boehm?
The Chair: No, the system isn’t working.
Ms. Omidvar: I’ll leave you, then. There is no point in wasting time.
The Chair: Sorry about that. I’m not sure what the technical issue is exactly, but it’s somewhere between Berlin and Ottawa.
Senator Woo: The seizure of state assets will be very useful in compensating Ukraine and providing for the rebuilding and rehabilitating the devastation that Russia has wreaked on that country.
But in the meantime, funds may not flow right away and might take time, and there may be legal challenges and so on. Do you worry at all that the optionality of having Russian assets seized provides an excuse for Canada and other Western countries to back off on their own bilateral commitments to Ukraine?
Senator Dasko: Thank you for the question, Senator Woo.
No, I don’t think that is the case. Canada is one of Ukraine’s strongest supporters in the world. We have contributed to humanitarian efforts in Ukraine. We have participated in military assistance to Ukraine. We have helped Ukraine in many ways, so I think those facts would suggest that if we were to be able to use state assets, or, in fact, the other assets — we have seized some private assets, as Senator Omidvar has said. We have been helping Ukraine in so many ways.
This would be another way to assist. The way you have posed the question, I would have to say no as an answer. I also add that we have helped Ukraine and, I trust and hope, will continue to do so.
The Chair: You have a bit more time if you want it, senator.
Senator Woo: I was going to ask about European allies, but you’re probably not in a position to talk about what their attitudes might be.
Senator Dasko: With respect to this issue, I have talked about the loan agreement quite a bit here. The Europeans assist Ukraine in many ways. I have had a chance to speak to many Europeans over the last couple of years. I’m a member of the NATO Parliamentary Association. Every time I go to one of our NATO meetings, I’m engaging parliamentarians in Europe on the topic of Ukraine. There is huge support among parliamentarians in Europe for Ukraine. They are determined to help, and they want to continue to help. They do want Ukraine to be part of NATO. Ukraine is invited to all of these meetings.
Of course, the invasion of Ukraine precipitated two new members of NATO: Sweden and Finland. There is a great deal of support in Europe for Ukraine in many ways. I believe it will continue, and after discussing this loan agreement for well over a year, they finally reached it. I think that’s another indicator of European support.
The Chair: Thank you very much. Senator Al Zaibak, I believe you have a point of order?
Senator Al Zaibak: A point of order, Mr. Chair. Given the technical difficulties, I am wondering if we can have leave to conduct the whole meeting in English at this point. Is that possible at all?
The Chair: I don’t think so. I’m just saying that as chair. We handle our meetings in both official languages here. One option would be just to end the meeting, but that would not be —
Senator Al Zaibak: I’m wondering if we can —
The Chair: It’s an unfortunate situation. We get that sometimes when we have international connections.
Senator Al Zaibak: I appreciate that. I wanted to take advantage of the presence of Senator Omidvar. Can I have a question then?
The Chair: I have Senator Busson next on the list. I was going to ask a question too, but maybe we can squeeze it all in.
Senator Busson: Thank you very much. My question is rather short, for Senator Dasko. Since SEMA was amended in 2022, the Royal Canadian Mounted Police has been reporting upwards of $0.5 billion in private asset seizures, and state seizures are up in the air as far as the amount that could be proposed for that.
This is a question that I have been pondering: As we move forward with the control of this and the forfeiture and the work with SEMA to have these funds moved forward, would it be Canada’s decision on where this money would be appropriated, or would those assets be administered through some SEMA function?
Senator Dasko: Thank you for the question, senator. If Canada seizes the property, then it’s our decision as to where it goes and how we distribute and dispose of it.
Your comment about the RCMP is interesting. You may remember when officials were here in December, and they were talking about the changes to the new BIA with respect to collecting information. Previously, the RCMP was the only one that was able to collect the kind of information that is needed to support SEMA actions. What the government did with the changing of the BIA was to allow them to collect more information outside of law enforcement so they would have more information about assets available for policy purposes. That was an important part of what they were trying to do with the new changes; it was to make sure that information is available to them beyond the RCMP.
It sounds like the way the information channels were structured before that was very limited. The RCMP would collect and were only able to share a certain amount of information and not the rest. So that’s why they wanted to change that, to make it a different process for collecting information. That’s a bit of a segue back to what you said at the beginning. Sorry, did I miss anything?
Senator Busson: No, you answered my question completely. Thank you.
Senator Al Zaibak: What is your assessment of the legal resilience of this bill, particularly in the face of potential challenges grounded in sovereign immunity?
Senator Dasko: I’ll go back to some comments from Senator Omidvar about the international legal basis, which involved concepts of countermeasures and reparations. We will hear more in the next panel, in particular about countermeasures, from Professor Currie, who is an expert on that. He will be able to describe that concept in more detail. That’s the basis of international law.
The Canadian government has said that, in their opinion, it is legal to seize state assets in these situations. So they believe it to be a legal process in Canada as well. I hope that answers your question.
The Chair: Thank you very much. I have more of a comment than a question, but it might turn into a question.
The concern is whether the limelight can stay on this particular issue, recognizing that your bill does have or potentially has a universal application. But at a time when there is another conflict — and that is the one in Iran — where the United States has decided to ease oil sanctions on Russia, it appears that the Americans are not really as convinced of the sanctions’ gain as they may have been before or as they may have been in the last administration. I think I would see this as a concern. Senator Dasko, I wanted to ask you about your concerns in that regard.
Senator Dasko: I have great concerns about that. It’s very disappointing that the Americans — at least the administration — have lost their enthusiasm and interest in helping Ukraine. That’s very unfortunate.
However, we Canadians have not lost our enthusiasm for Ukraine. I have listened to the comments of the Prime Minister and the Minister of Foreign Affairs. I think this country is onside, and I think the Europeans are also very much onside with helping Ukraine. I’m hoping that will be important as we go forward.
The Chair: Thank you very much. On behalf of the committee, I would like to thank our colleague Senator Dasko for being with us today. I would like to offer particular thanks to former senator Ratna Omidvar, who joined us from Berlin, with technical difficulties, unfortunately. Thank you, and it’s always good to see you, Ratna. Thank you.
For our second panel, we welcome, as individuals, Elisabeth Braw, Senior Fellow, Atlantic Council — thank you for joining us again; I know you were part of our study on sanctions a few years ago — and in the room, Preston Jordan Lim, Assistant Professor, Charles Widger School of Law, Villanova University; and Robert Currie, Viscount Bennett Professor of Law at Dalhousie University in Halifax. Thank you all for joining us. We’re ready to hear your opening remarks.
Ms. Braw, you have the floor.
Elisabeth Braw, Senior Fellow, Atlantic Council, as an individual: Thank you very much for the invitation, chair, and committee. It’s a pleasure to be back from afar. And congratulations also — I shouldn’t say congratulations, but I’m glad you’re continuing this important work.
So when it comes to the issue at hand, I think the background against which to see it is or against which to discuss it is that a number of powerful countries have decided the rules-based international order, their own treaty commitments and their own commitments in arrangements short of treaties can be followed or not by them. In other words, they can decide in any given situation whether to adhere to their commitments. As a result, we’re getting countries that violate rules in matters and situations big and small, leaving countries like Canada in the situation of having to decide how to respond to enforce rule compliance without themselves getting dragged into the gutter, as it were. I think this is the situation that Canada finds itself in.
When we look at, for example, the issue of rule violations or criminal activities taking place outside our country, but especially inside our country, the response is — the dilemma for policy-makers is this: Do we respond forcefully; thus, perhaps, being very liberal with our own treaty obligations, or do we say we adhere to our treaty obligations and our commitments to the rule of law, and, in the name of enforcing international order, we respond forcefully?
When we look at, for example, asset freezes and seizures, this is precisely what is taking place at the moment. Russia has obviously and dramatically and brutally violated all kinds of rules and laws internationally and, by the way, nationally, against Ukraine. And what do we do about the fact that we have in our countries assets that belong to Russian entities and individuals that if we were to seize them, we would send a powerful signal — and not just a signal; it would have a dramatic or at least a significant effect on Russia and on those individuals?
We have to be very careful when thinking about asset seizures, as your committee is well aware. The way in which we seize assets is when their owners are shown to have been implicated in criminal activity, and if we were to seize assets after freezing them — if we were to seize them on a more large-scale basis to force another country into rule compliance — it would be a good thing from a moral and ethical point of view, but it further undermines the rules-based international order, such as it is.
And crucially, I think, in a more tactical or shorter perspective, it exposes individuals and companies and entities from our countries, in this case Canada, to retaliatory measures by the country affected. That country can say, “Well, if you do this, we will do such-and-such against you.” And Canada then wouldn’t be able to invoke the rules-based international order and treaty compliance and so forth to say, “What you’re doing is a rule violation.”
Now, it’s easy to then say, “Well, what is an ethical standpoint worth when we are heading into a world which — as your own Prime Minister has said — is more turbulent and leaves mid‑sized countries terribly exposed?” But if a mid-sized country, or indeed any country, gives up its commitment to rules and regulations and treaty commitments, then it doesn’t just contribute to that deteriorating arrangement, but dramatically exposes its own citizens and businesses and other entities to whatever the other country wants to think up, and it would be very difficult to defend them against that. Thank you, chair.
The Chair: Thank you very much. Professor Currie, please.
Robert Currie, Viscount Bennett Professor of Law, Dalhousie University, as an individual: Thank you, Mr. Chair. I’m delighted to receive the invitation to appear today.
This bill has been a long time coming, and I want to honour the work of the World Refugee and Migration Council, or WRMC, who consistently advocated for the kinds of sanctions‑based measures we’re talking about. And I want to honour the work of Senator Omidvar, who championed this measure so tirelessly for so long, and of Senator Dasko, for grasping the baton.
In my allotted time, I want to speak to the international law issues at play with Bill S-214, because there is some controversy and lack of clarity on these points, and I’d like to help clear that up.
The bill amends SEMA to allow the government to seize and dispose of the sovereign assets of a foreign state. It is intended, in particular, to allow for the forfeiture and repurposing of Russian sovereign assets to help Ukraine. What I want to emphasize is that doing this would be lawful for Canada under international law.
I heard the previous speaker mention the rule-of-law structure; that’s what we’re talking about. All that Bill S-214 does is provide maximum clarity under Canadian law about how to do it.
The starting point is that sovereign assets, that is, property owned directly by a foreign state and not used for a commercial purpose, are immune from seizure. This is a rule of international law that’s reflected in Canada’s State Immunity Act. So, normally, to do anything with foreign sovereign assets, let alone confiscate them and dispose of them, would breach the international law of state immunity, particularly if the courts are used.
However, international law allows countries like Canada to impose what are called countermeasures — again, we’ve heard about this earlier today — against countries that have breached international law obligations. A countermeasure is a kind of self‑help remedy that a country can undertake. It is a limited, targeted breach of an obligation owed to the breaching state with the specific purpose of pressuring them to stop their own breach. Here, Russia has breached one of the main rules of international law by unlawfully invading Ukraine, to say nothing of the war crimes and crimes against humanity that have been perpetrated.
These are obligations Russia owes not just to Ukraine but to Canada and every other country in the world. Therefore, Canada can invoke countermeasures.
The idea is that Canada would suspend state immunity over any Russian sovereign assets which Canada controls as a means of pressuring Russia to stop its illegal war. This would be accomplished by an order-in-council, which is quite appropriate because the federal cabinet has the constitutional capacity to speak for Canada on the international plane.
Countermeasures have some procedural requirements, most of which are modest, but one that has attracted a bit of controversy is the requirement that they be revocable or reversible. The question has been asked in the public debate: How can these countermeasures be reversible if the assets are taken and repurposed in some way? Wouldn’t Canada be required — for lack of a better phrase — to give the money back? There are two answers to this question.
First, what the law of countermeasures requires is that the breach of obligation itself be reversible, not that all of its consequences be reversible. The best way to think of it is that Canada can simply lift immunity over Russian assets, and once Russia’s aggression ends, it can reimpose immunity. It’s like turning a light switch off and then back on. Once the countermeasures end, Canada is not required to give the money back.
Second — and I think this will address one of Senator Woo’s concerns from earlier today — even if that option gives some discomfort, there are other options planned that would deal with it. When this war is over, Russia will owe massive damages and reparations to Ukraine for the damage it has done. That being so, Canada can hold the assets in escrow after seizing them and then redirect them to whatever entity is in charge of managing the payment of damages and reparations.
And I say “whatever entity” with the knowledge that Ukraine, in cooperation with the European Union, has created an International Claims Commission, along with a Register of Damage and a compensation fund. I got the up-to-date information about that effort in a LinkedIn post this morning by Iryna Mudra, who is the Deputy Head of the Office of the President of Ukraine. You can find that on her LinkedIn page.
So there will be a legal process by which the forfeited assets can be properly disposed of, and Canada can definitely participate in that.
I would conclude by noting that, as I have written elsewhere, due to the previous work of Senator Omidvar, Senator Dasko, the WRMC and the Trudeau government, Canada has been a leader in enacting laws that allow for the seizure and disposition of assets that are tainted by foreign illegality, corruption, human rights abuses and war profiteering. Bill S-214 is the next logical step that will allow Canada to continue this bold international leadership.
Thank you, and I look forward to your questions.
[Translation]
Preston Jordan Lim, Assistant Professor, Villanova University, Charles Widger School of Law, As an individual: Good morning, honourable senators. Good morning, ladies and gentlemen. Thank you for the opportunity to be here today and share my perspectives on the bill. To begin, I must say that I see Russia’s invasion of Ukraine in 2022 as a serious violation of international law. It is clear to me that the motivations behind this bill are noble.
[English]
That said, I do have at least two major sets of concerns around the legality and the policy wisdom of this bill. I’d like to start with a point on international law.
What this bill does is make a creative and successful attempt to cure a domestic legal inconsistency. Under the State Immunity Act, Canadian courts cannot sit in judgment of foreign sovereigns, except in rare circumstances. The Special Economic Measures Act, as currently framed, arguably allows for Canadian courts to authorize the confiscation or seizure of foreign sovereign assets in circumstances that surpass those articulated in the State Immunity Act. So this bill clears that issue up by stating very clearly that the Governor-in-Council, the executive branch, will henceforth have the power to authorize directly the seizure and confiscation of those assets without the participation of the Canadian judiciary.
From my perspective, however, an issue remains under international law. The majority view, in my reading — not the unanimous view, but the majority view — is that the confiscation or seizure of foreign sovereign assets violates international law, more specifically because it violates bedrock principles around state sovereignty. These principles are given expression in conventional international law as well. Article 2(1) of the UN Charter speaks of the sovereign equality of states, for example.
Analogous measures might be legal. The freezing of Russian central bank assets can be justified under the countermeasures doctrine, but my position — and I’m happy to expand on it in the Q and A — is that the confiscation or seizure of foreign state assets cannot be justified under the countermeasures doctrine.
I’m going to move now briefly to the second point, the point on sound policy. There are reasons, senators, to be hesitant about moving too far ahead of the pack. When we look at the global context here, I can think of no country that has actually gone so far as to seize the principal that belongs to a foreign sovereign sitting in the host state’s bank or jurisdiction.
In Europe — we’ve talked a lot about Europe today — France and Belgium, to take two examples, have come out very strongly against the confiscation of foreign sovereign assets, not only on the grounds of international law, but also because of the potential financial ramifications that might flow.
Of course, were a country to move against the assets of a foreign sovereign, you would see retaliation — in this case, Russian retaliation. There is also a risk of capital flight. Similar countries, non-democratic states like China, might look at their investment portfolios and come to the conclusion that they had better not invest in countries that have this kind of legislation on their books. Do we have the kind of fiscal room to be driving out that kind of investment right now?
I’d like to demonstrate this point with what might sound like a far-fetched hypothetical, but if you can envision in your mind that the Secretary of State of the United States were to have the power to order or authorize the confiscation of Canadian state assets after a unilateral determination that Canada was in contravention of her international obligations, I would feel that almost everyone in this room would oppose such a measure. This is almost, with some amendments for the Canadian context, the power that this bill would grant to our executive branch.
I’ll end here. I look forward to our exchanges in the Q and A.
[Translation]
Thank you all.
[English]
The Chair: Thank you very much, Professor Lim. Thank you to our witnesses for great and provocative opening statements.
It now falls to us to ask great and provocative questions.
Senator Woo: This is not that provocative, but I hope it’s illuminating: I wonder if any of the professors can tell us if there’s anything to be learned from the American seizure of Afghanistan’s central bank assets. You said, Professor Lim, that there have not been any other examples. I wonder if this may be an example of an actual seizure.
As you know, the legality of that seizure is in question, and the courts have held up parts of the monies seized to be further decided. What can we learn from the American experience vis‑à‑vis Afghanistan? Maybe Professor Lim first and then the other witnesses.
Mr. Lim: Thank you, Senator Woo, for the question. I’d like to be clear here that when I was talking about the lack of movement when it comes to confiscation of foreign assets, I was speaking about the Russian-Ukrainian context, but it’s a great question that you raised.
There are reasons why I think, in light of the Afghanistan context, even the United States has been very hesitant about moving forward with this kind of action in the Russian context. We talked about how it was under the Biden administration that Congress passed the REPO Act. President Biden and his cabinet did not use that authority. President Trump has not used that authority. One of the reasons why they haven’t used that authority is because of the international legal problems that flow from that usage.
The last thing I will say is that, in the American experience, we did see very harsh retaliation against American assets by the Russians. Several hours after the REPO Act was passed, the Russians moved against American private assets and seized upward of $400 million worth of JPMorgan assets that were housed in that country.
There are good and practical financial and legal reasons as to why we haven’t seen those moves here.
Mr. Currie: Professor Lim and I are both looking at what is quite a textured set of international law practice but not a lot of practice; there is not a great deal of state practice around the use of countermeasures in this context, precisely for the reason you identify: It’s politically delicate, and states take immense care about what the impacts might be, both from a foreign policy point of view and from an economic point of view.
The American experience is what it is. If I’m not mistaken, the U.S. confiscated Iraqi sovereign assets, as well, and used them to contribute to what they called the rebuilding of Iraq.
There is a limited amount of state practice.
What I think is important is that every case will be decided on its merits. This approach puts Canada in line with the rule of law and with the international law structure that is set up to deal with manifest, flagrant violations of primary international law obligations like this one. So, the policy context has to have at its centre Russia’s aggressive war against Ukraine, and the effects of Canada using this measure, in concert with similar actions taken by other countries, have to be considered in that context. We need to guard against what the implications of it might be, both predictable and unpredictable.
I will close by saying that, again, there is an effort for the assets to be disposed of in a way that is entirely consistent with the rule-of-law structure, which is to say a mechanism reimbursing Ukraine for the war. These assets can absolutely be purposed toward war reparations when it’s over.
The Chair: Thank you, Professor Currie. We have gone over on that segment, but I do want to allow Dr. Braw to make a comment if she wishes to.
Ms. Braw: I will just add a practical consideration.
A good comparison is the “shadow fleet,” which, as we know, is a significant problem and one that generates a lot of revenue for the Russian state. Countries in whose waters shadow vessels sail are faced with a problem that is similar to this one in that they have to deal with rule violations and have the policy option of taking action in an assertive way that would involve a liberal interpretation of the law. If we look at the shadow fleet and Denmark, Denmark would have the option to board and detain a lot of shadow vessels because they all pass through Danish straits. Denmark hasn’t done so because it knows that if it were to board and detain shadow vessels, even though lawyers could find a way to justify those actions, that would expose Danish-flagged or -owned vessels sailing around the world to harm by Russia or friends of Russia, as well as ships carrying Danish cargo.
So, it really puts a law-abiding country like Canada or Denmark in a tricky situation. However, it’s worth remembering — and you mentioned the case of Afghanistan — that the size of the misbehaving country, as it were, really matters. You can take action against Afghanistan because Afghanistan is not likely to retaliate against you, globally, whereas Russia has that option.
The Chair: Thank you very much. That was an interesting exchange.
[Translation]
Senator Youance: I love the discussion. I very much appreciate the restorative justice aspect of Bill S-214, and each of the witnesses has spoken about the potential ethical consequences of this bill — whether it is easier to impose seizures on one country rather than another, for example. We also discussed the sensitivity of the issue.
My question is for Professor Lim. Of course, in the case of Ukraine and Russia, the existence of a broad international condemnation makes it easier to make decisions about the use of seized assets or the potential application of this bill. The Swiss experience has also shown that it is possible to act even in the absence of formal international convictions, particularly when the state structures of the countries of origin are failing or unable to act. I would cite the case of Haiti, where Switzerland took action.
How does Bill S-214 address this specific challenge? To what extent can Canada reconcile restorative objectives with the rule of law when there is no international condemnation, or when that is simply not possible? I’d like to hear your thoughts on that. In such cases, is there a greater risk of retaliation than in the case of Ukraine and Russia?
Mr. Lim: Thank you for the question, senator.
[English]
When we look at the triggers for the underlying act, the Special Economic Measures Act, at least one of those triggers is tied to multilateral behaviour. I don’t have the statute in front of me, but it says something along the lines of the idea that Canada can act when a multilateral organization of which Canada is a part is asking for sanctions.
That is the direction in which I think it’s better to move: to tie Canada’s sanctions mechanisms to true multilateral action, ideally to the UN or a more specific body, like the United Nations Security Council. However, I do have concerns that, given that the other three prongs allow for direct unilateral action, you could see, in practice, fairly large discrepancies in the kinds of actors against which the Canadian executive branch would act.
Of course, it is possible that the Canadian government would act against Russia, but there are questions around whether Canada would act against countries that have drawn the ire of the Global South but that haven’t necessarily drawn the ire of the G7. Perhaps I will stop there.
[Translation]
Senator Gerba: Thank you to our witnesses. I’m going to come back to the issue of the balance among the three branches of government.
Critics of this bill argue that Bill S-214 would grant significant powers to the executive without true parliamentary or judicial oversight. In your opinion — and this question is for all our witnesses — is it justified to think that passing this bill would risk upsetting the balance of the three branches?
[English]
The Chair: I will allow short interventions from all three witnesses, starting with Professor Lim.
Mr. Lim: I will keep this very short.
There needs to be more parliamentary oversight baked into SEMA. As a good idea of that, I look back at one of the recommendations in the 2023 report this committee came to, which was that there ought to be regular review by the foreign affairs committees of both houses of Parliament on the operation of SEMA. This is a very large power that is granted to the executive branch. Parliament must continue its close scrutiny of that power.
The Chair: Thank you, and thanks for the commercial for the report from this committee. It is much appreciated.
Ms. Braw: I will be brief, since Professor Currie may have more to say about it.
It is undeniable that a bill like this could be abused by a government that may have a very liberal interpretation of what should be seized, and that really demonstrates the importance of having that scrutiny. Obviously, nobody would think at the moment that the current Canadian government would avail itself liberally of the powers within this proposed legislation, but one needs to have that oversight in case a government of the future were to avail itself liberally of the powers within it. Thank you.
Mr. Currie: Thank you. I would say that what this bill does is add what is, in essence, a really small tool to an existing tool box. Now, the implications of using this tool might, in a given situation, be very large. But otherwise, this is just a cog in the normal machinery of how Canada administers sanctions.
I don’t know if that has been viewed as necessarily inadequate from a democratic-oversight point of view, but I haven’t noticed this body or the House of Commons shy away from criticizing the government when it makes sanction-based measures either. I don’t disagree with what Professor Lim proposes. I think Canadian democracy is pretty robust.
The Chair: Thank you very much.
[Translation]
Senator Hébert: Thank you to our witnesses. I will follow up on the questions raised by my colleagues. Professor Braw, I understand that we are indeed examining this bill in the current context, with what we know about the international situation and the Canadian government. You are right that all of this can change at any time. I’m not a lawyer, but I’ve taken a few short law courses, in which I learned that the legislator does not speak without intent.
In this case, the legislator remained silent, so what does that mean? In other words, such a power was not conferred in the original bill, nor in the amendments that were subsequently made. Do you think there is a reason for that? My question is for all three of our witnesses.
[English]
Mr. Currie: Thank you for the question. As far as I know, the original legislative package was designed to expand the range of sanctions that were available to the federal government in order to address an array of things, including human rights abuses and corrupt conduct on the part of foreign governments and foreign third actors. It may not have been in active anticipation before that sovereign assets would be targeted.
The only other thing I would add is that there is some lack of clarity in international law about whether immunity over assets actually extends to the entire government of a foreign state or just to its courts. I think there may have been an assessment that the initial legislation was inadequate in that way. I’m not certain it was, to tell you the truth, but I think what this bill does is create a belt-and-braces effect where we can be confident that Canada is acting in a legal manner.
Ms. Braw: Thank you. I’m happy to sit this one out, since I don’t have specific knowledge as to why those changes were enacted.
The Chair: Thank you.
Mr. Lim: I largely agree with Professor Currie’s assessment. What I would add — and we might differ on this point — is I view the effect of this legislative bill as placing the Canadian government’s seizure powers on a much firmer statutory footing. For that reason, I view this change as perhaps a little more dramatic than some of my colleagues do.
The Chair: Thank you.
Senator Ravalia: Thank you to all of our witnesses. I was just wondering, given the €90-billion loan through Euroclear to Ukraine — it has been studied; there have been lots of implications as well as concerns about fiscal, legal and other opportunities for Russia to retaliate — do you see any relationship between that moving forward and this bill being strengthened because of what happened there?
Mr. Lim: I’ll say two things in response, senator. First off, the allied context matters a great deal. Part of why the Senate is considering this bill is that Canada wants to be supportive of our closest allies and also, in some sense, wants to lead the charge a little bit.
I will say, though, that the point about allied context cuts both ways. Again, I’ll return to my original position: While we have seen a variety of measures advanced by allies, we haven’t seen our closest allies actually seize the principal of foreign public assets that are held in those host states. In that respect, if the Canadian government were to actually authorize that kind of move, that would be moving well ahead of the pack.
Senator Ravalia: So a loan versus seizure is an important context?
Mr. Lim: I think it’s a very important differentiation. It’s completely legal, in my view, under the countermeasures doctrine to freeze Russian assets, as this country has done.
Another measure to get on the table, senator, that, in my view, is completely fine is to take the taxation proceeds that flow from the profits generated by immobilized foreign assets and to give those taxation proceeds to the Ukrainians. But to actually move against the principal itself, I view that as problematic from an international legal perspective.
Mr. Currie: I agree with everything Professor Lim said right up to that last point. That’s where we’re going to have a friendly disagreement. I don’t think it’s unlawful for the assets to be actually confiscated and repurposed. You have government legal advisors coming this afternoon. They may be able to help you with that as well. But the collective context is absolutely central. I think what we have seen is the evolution of political will towards this package of measures.
Yes, this one would put Canada out front. In my view, that’s where Canada belongs. Pragmatics must give way to the moral case at some point. Canada has led already in this space, so why should it not continue?
The Chair: Ms. Braw, did you wish to comment to break the tie?
Ms. Braw: Or to even out the difference. Senator, if I understood your question correctly, it was whether this proposed legislation in Canada is the next step following what the European Union has been doing or has been planning and finally managed to execute, thanks to the election victory of Péter Magyar in Hungary: this loan to Ukraine.
If one looks at it that way, a loan is a powerful measure. Asset seizure is an even more powerful measure. If one follows that logic, the next step should be even more dramatic. I don’t think the two are connected. They don’t seem to me to be connected temporally or in some sort of logical causation.
But what is interesting is that so many countries and the European Union are trying to think creatively about how to get money to Ukraine. So the tide has shifted, I think, quite significantly. It used to be that we were passive in thinking about money to Ukraine and support for Ukraine. Some things were permitted and possible; other things were not. Now we’re seeing more creativity.
Perhaps, if I can break the tie, this is an opportunity for Canada to maybe get ahead of the European Union, but maybe not in quite the way that this bill proposes, but something that is perhaps a bit more creative than the European loan to Ukraine.
Senator Woo: What I’m picking up from this discussion, grosso modo, is the thing that Mark Carney said at Davos — the Thucydides comment about the strong doing what they can, and the weak suffering what they must. We will sanction — and powerful countries will sanction — countries that are weak because they can. Weak countries don’t have the ability to retaliate. This was our understanding for many years, certainly up to maybe the beginning of the new century.
I’m wondering if our experts can give some perspective on how the world may be changing in its understanding of sanctions. Another word for sanction, of course, is “economic coercion.” What we have today is not a world where only the strong can sanction the weak. There are other players in the system that can retaliate and can impose countermeasures, if you will.
Then, we have the understanding now that the use of countermeasures, which are the flip side of the sanctions in the first place, is easily weaponized and may not produce the sort of moral outcomes that we assume it might. Do you think there is a change in global thinking around sanctions? If so, how should we adjust our own posture on sanctions? Right now, our view seems to be “Let’s be the world champion on sanctions. Let’s keep refining those tools.”
Professor Braw, maybe you could start because you contributed to our previous study and you had some things to say about sanctions in general.
Ms. Braw: Thank you for the question, senator. Yes, sanctions are the favourite tool of Western governments because, as leading economies and users of legal instruments, we have at our disposal an instrument that is strong and doesn’t violate any rules and also doesn’t involve any activities that could trigger retaliation. It is obvious why sanctions are so popular.
They have worked in the past because we, as Western countries, have been the engine of the global economy. That is no longer the case, so when the West imposed sanctions on Russia, I think we all remember, Russia then shifted a lot of its trade, including its oil exports, to countries that had not sanctioned it, and it has been able to operate virtually uninterrupted ever since. I think this is a reality that we have to bear in mind when considering sanctions. The reality is that sanctions are not as effective as they were in the past.
If we overuse sanctions, that will lead countries to trade more amongst themselves and less with us. That’s a very uncomfortable situation to be in because we consider ourselves the upholders of the international rules-based order and we have had that economic might that has allowed us to use sanctions to shore up the order to impose punishment on those countries that have misbehaved.
Another second-order effect I would flag is that the more the United States, in particular, uses sanctions — which it obviously does on the basis that the U.S. dollar is the currency of choice in international commerce — the more it opens the door and incentivizes countries and commercial entities, so companies, to trade in other currencies, especially Chinese currency. That is surely not a development that is to be saluted by Western countries, but that is the direction in which we are heading, and we are already seeing it, for example, with Iran. Thank you.
The Chair: Thank you very much. We have gone over time there.
[Translation]
Senator Youance: I have one question. The discussion is really interesting, because it shows us different aspects of the bill from what we had seen when we arrived this morning.
This bill promotes reparations, concrete reconstruction and accountability of actors. How should Canada view its own responsibility in a situation where the reconstruction component is included, but the funds are misused?
More specifically, are there other guardrails? We discussed parliamentary oversight, but what institutional guardrails and accountability mechanisms should be considered in this bill so that Canada does not lose its credibility in the application of sanctions?
The Chair: Who is the question for? Professor Lim?
Senator Youance: Yes, or Professor Currie.
[English]
Mr. Currie: I think that is a down-the-road policy question, to an extent, for the government because what this bill does is put another tool in the tool box that allows for the accomplishment of foreign policy goals.
To be clear, this is not a sanction. It comes from within our sanctions framework, but this is Canada accessing a very specific limited rule of international law that has got checks and balances contained within it. We want to be wise in how any seized assets are administered or distributed. Again, I will return to what seems to be the best idea, which is that Canada should use these assets, if they are seized, to contribute to reparations payable by Russia to Ukraine. I think we take our eye off that ball to our peril, as our friends in Norway, Latvia, Lithuania and Poland would be sure to say.
The Chair: Thank you very much. One more last question, and it goes to the sponsor of the bill, Senator Dasko.
Senator Dasko: My question is for Professor Currie. You said Canada has led in this space. Would you say that if we go forward with Bill S-214, we will continue to show leadership and, at the same time, we will do so with very little risk, very little downside? You can say yes or no.
Mr. Currie: I would say yes, senator. This would allow Canada to continue this pattern of leadership that we have shown.
Frankly, the world has caught up with us as we have taken this path. As we discussed earlier, this swirling policy conversation among our closest allies is moving in exactly the direction in which Canada has led thus far. I think we need to be careful. We need to be smart about this as a foreign policy objective, which is another thing our Prime Minister said in Davos, but the moral case is so compelling in this situation that a rules-based legal order that has this rule in it is accessible by Canada. Why would we not use it?
The Chair: Thank you very much.
Elisabeth Braw, Preston Jordan Lim and Robert Currie, on behalf of the committee, thank you for bringing your expertise forward in your statements and your answers to our questions. It’s deeply appreciated.
Colleagues, we will continue our study of Bill S-214 next week.
(The committee adjourned.)