When Prime Minister Justin Trudeau briefed reporters in Kyiv last weekend on plans to seize a Russian cargo plane that has been stranded on the tarmac at Pearson International for over a year, he merely confirmed what trade lawyers and aviation industry watchers had been expecting for weeks.
When Ukrainian Prime Minister Denys Shmyhal got back from meetings in Canada with Trudeau and Finance Minister Chrystia Freeland in April, he took to his Facebook page to point out how Canada’s latest sanctions targeted Volga-Dnepr — a Russian cargo airline a Ukrainian court had already grounded for alleged safety violations.
“Preparing for the confiscation of the [Antonov-124] plane and other assets of the aggressor in Canada and [transferring] them to the benefit of Ukraine,” Shmyhal wrote.
Canada added both the Volga-Dnepr Group and Volga-Dnepr Airlines to its list of sanctioned Russian entities on April 5. But officials said very little about seizing this cargo plane — until Foreign Affairs Minister Mélanie Joly confirmed Canada’s intentions as part of another assistance package for Ukraine announced during Trudeau’s recent surprise trip.
“Should the asset ultimately be forfeited to the Crown, Canada will work with the Government of Ukraine on options to redistribute this asset to compensate victims of human rights abuses, restore international peace and security, or rebuild Ukraine,” says a news release issued Saturday by Global Affairs Canada (GAC).
Notwithstanding this apparent slow walk to an official announcement, Trudeau said his government’s plan is to make this forfeiture happen “as soon as possible.”
“We are one of the first countries to bring in specific legislation that allows us not just to ground this plane but to actually seize it and ensure that it is never used by Russia again in the war effort or any other efforts,” Trudeau told reporters.
“There is a process. This is one of the early processes we’re going through. I can tell you the Ukrainians are very pleased that the path is started, not just for Canada but hopefully for other countries as well.”
Budget bill used for sanctions law
The federal government gave itself the power to seize and sell Russian assets through budget implementation legislation a year ago.
At the time, Freeland was told the seizure powers could be risky for Canada.
Some warned that the new powers played a bit loose with international law. Some predicted that selling off or transferring Russian assets to help rebuild Ukraine (or pursue other worthy causes) would open the door to hostile governments retaliating by liquidating Canadian-owned assets — putting the foreign investments of Canadian citizens and companies at increased risk whenever foreign relations turn sour.
Canada didn’t use its new powers immediately.
Its first move came last December 19, with an order-in-council to seize $26 million US in financial assets held by Granite Capital, a company believed to be owned by sanctioned Russian oligarch Roman Abramovich.
Saturday’s order seizing Volga-Dnepr’s Antonov-124 is only Ottawa’s second use of this power.
Sanctions usually freeze assets as a (hopefully) temporary incentive to change behaviour. When assets are sold as punishment, they can’t be returned if and when the harm stops. Trade experts say that’s a significant departure from past practice.
“Canada is really being viewed as the test case,” said John Boscariol, a Toronto lawyer who represents individuals and businesses affected by sanctions regulations. To date, the U.S. has gone after Russian oligarch money only in connection with criminal activities.
“They’re going to be very careful to dot the i’s and cross the t’s,” Boscariol said. “The last thing they want is for this to be a failure.”
No court filing yet
Issuing an order-in-council to seize an asset is only the first step. Under Canada’s law, these assets remain the property of their Russian owners until a Canadian court orders a forfeiture.
At the time this article was published, the federal government had yet to confirm anything has been filed in an Ontario court on either the cargo plane or the seizure of Abramovich’s assets. Case watchers must diligently check and check again for progress.
Procedural fairness requires the Russian owners to be represented in court. But it’s not yet clear how that would work. A Canadian law firm might require special permission from Joly to act on behalf of a sanctioned entity or individual, as commercial dealings (like being paid for legal services) are otherwise prohibited.
GAC declined to answer questions from CBC News on whether ministerial permits to allow for such legal representation have been granted or are in the works.
A certain amount of uncertainty and chaos comes with any unprecedented legal process. But the Trudeau government’s latest attempt to crack down on Russian President Vladimir Putin’s enablers imposes new burdens on a Canadian sanctions regime that practitioners like Boscariol have long claimed fails to provide effective guidance on how companies and individuals can avoid violations in their business dealings.
This spring’s budget bill — now in the Senate following passage by the House of Commons last week — includes attempts to clarify previous vague definitions of ownership that now become more critical if the government intends to begin seizing assets that may be partly, but not entirely, held or controlled by people or companies on Canada’s sanctions list.
COVID delivery landed plane in Toronto
The only reason this plane is even in Canada now is that it was contracted to deliver massive shipments of COVID tests for the federal government.
Its arrival at Pearson coincided, and then collided, with the swift and firm response of Western allies to Russia’s invasion of Ukraine.
Within hours of offloading its pandemic procurement, Canada closed its airspace to all Russian aircraft.
That left one of the world’s biggest cargo planes stranded at Toronto’s busiest airport. Other Russian transport jets were also grounded in Germany by similar actions.
Parking a plane this size at Pearson carries a hefty price tag, reportedly north of $1,000 US a day.
That means the company may now owe the airport authority hundreds of thousands of dollars. Does Volga-Dnepr have any incentive to pay the bill for a plane it’s about to forfeit?
It’s also unclear whether the aircraft remains airworthy. Massive jets big enough to airlift Leopard tanks for the Canadian military aren’t intended to sit on the tarmac for months. It’s not clear it is even legal to be paid to conduct maintenance on a sanctioned asset.
This Anatov-124 — nicknamed the “T-Rex of heavy lift aviation” — takes 24 wheels to support its weight. Having that sinking into in the same pavement for months takes a toll on already-strained cargo infrastructure.
Today we announced the seizure of the Russian Antonov cargo aircraft at Pearson Airport. This sends a clear message to Russia that their illegal invasion continues to have consequences. We will always be there for the Ukrainian people. ⬇️<a href=”https://t.co/hu7RiZLtw9″>https://t.co/hu7RiZLtw9</a> <a href=”https://t.co/pSLkGqV7lc”>pic.twitter.com/pSLkGqV7lc</a>
On Monday, Deborah Flint, president and CEO of the Greater Toronto Airport Authority, thanked Transport Minister Omar Alghabra for his “leadership on this file” — without specifying exactly what will happen next. The airport authority punted those questions back to the federal government.
Nevertheless, Flint said, “this action will eventually allow us to begin using the parking space currently occupied by the aircraft for operations.”
“While the asset is seized, Public Services and Procurement Canada will take control of and manage the asset in accordance with that order,” GAC spokesperson Jason Kung said in response to questions from CBC News late Sunday. “Public Services and Procurement Canada manages seized property in accordance with federal regulations and disposes of it should the courts declare forfeiture.”
In its coverage of this announcement, Kremlin-friendly Russia Today referred to the plane as “stolen” by Canada.
“The world is watching,” Boscariol said. “Whenever you set a precedent like this, there’s going to be accusations that you’re not doing something in accordance with the international order.”
“I think they now need to be worried about Russia taking action against Canadian investments within the territory of Russia” or making claims under its bilateral investment treaty, he said.
“This won’t be without consequence,” he added.
“At the same time, from the Canadian government’s perspective, the optics of the government acting to seize assets of major Russian corporations in Canada is — they think, at least — very positive. I won’t be surprised to see more like this.”