Canada Expands Russian Sanctions to Target Russian Military Capacity

On March 24, 2022, Canada introduced further sanctions against Russia, introducing new categories of “Restricted Goods” and “Restricted Technologies” that any person in Canada or any Canadian outside of Canada is prohibited from exporting, selling, supplying or shipping to Russia or to any person in Russia. The amendment also provides that any person in Canada or any Canadian in Canada is also prohibited from knowingly doing anything that is intended to cause, facilitate or assist in the export, sale, supply or shipment of such goods.

The goods and technology subject to this new prohibition are wide in scope. They include a range of goods and technology in the areas of electronics, computers, telecommunications, sensors and lasers, navigation and avionics, marine, aerospace and transportation. The specifics of these prohibited goods and technologies are set out in the “Restricted Goods and Technologies List” which can be reviewed here: https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/goods_gechnologies-marchandises_technologies.aspx?lang=eng

The amended regulations do provide some exemptions including goods temporarily exported for use by a representative of the media from Canada or from a “partner country”, goods for use in support of international nuclear safeguards verifications, goods for use in relation to the activities of the International Space Station, software updates for end-users that are civilian entities that are owned, held or controlled by a Canadian, civil aircraft registered in a foreign state that are departing from Canada after a temporary sojourn in Canada or civil aircraft registered in Canada departing for a temporary sojourn abroad, and consumer communication devices that are generally available to the public and designed to be installed by the user without further substantial support. A complete list of the exemptions can be reviewed at https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/russia_regulations-reglement_russie12.aspx?lang=eng

Our team will continue to monitor the sanctions measures related to Russia, Belarus and Ukraine, providing updates that may impact Canadian business operations. The lawyers at Tereposky & DeRose LLP have significant experience in assisting clients with navigating the parameters of sanctions as well as the design and implementation of sanctions-related compliance programs, including policies, procedures, employee training, and internal control mechanisms. They also regularly assist both Canadian and international businesses, financial institutions, and individuals with internal investigations when “red flags” appear and provide advice on compliance in these areas. Where breaches have occurred, they have worked closely with their clients in making voluntary disclosures and in engaging with the ensuing investigations conducted by the RCMP and Global Affairs Canada.

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Vince DeRose
613.237.8862
vderose@tradeisds.com

Canada Expands Sanctions Against Russia in Further Response to Ongoing Ukraine Invasion

On March 10, 2022, Canada again amended the Special Economic Measures (Russia) Regulations to add 32 defense entities.  Most of these entities are owned by the state or have contracts with the Government of Russia.  Specifically, Canada has added five individuals who are “current and former senior officials and associates of the regime”.  It also, in this round of amendments prohibited any person in Canada and any Canadian outside Canada from importing specific petroleum products listed in a new Schedule 5.

On March 14, 2022, Canada further amended the Special Economic Measures (Russia) Regulations to add 15 individuals it has classified as “senior officials of the Government of Russia”. These individuals are now subject to broad dealings ban.

The consolidated Regulations, which itemize the prohibitions and provide lists of all the prohibited entities and individuals may be accessed at: http://laws.justice.gc.ca/eng/regulations/SOR-2014-58/FullText.html

Since February 24, 2022, Canada has sanctioned 540 individuals, 9 individuals for “gross human rights violations”, and 103 Russian entities under the Special Economic Measures (Russia) Regulations.

Our team will continue to monitor the sanctions measures related to Russia, Belarus and Ukraine, providing updates that may impact Canadian business operations. The lawyers at Tereposky & DeRose LLP have significant experience in assisting clients with navigating the parameters of sanctions as well as the design and implementation of sanctions-related compliance programs, including policies, procedures, employee training, and internal control mechanisms. They also regularly assist both Canadian and international businesses, financial institutions, and individuals with internal investigations when “red flags” appear and provide advice on compliance in these areas. Where breaches have occurred, they have worked closely with their clients in making voluntary disclosures and in engaging with the ensuing investigations conducted by the RCMP and Global Affairs Canada.

 

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Vince DeRose
613.237.8862
vderose@tradeisds.com

Canada Imposes Further Sanctions Against Belarus

On March 9, 2022, Canada announced further sanctions against Belarus imposed under the Special Economic Measures Act by way of amendments to the Special Economic Measures (Belarus) Regulations (“Belarus Regulations”).  Earlier this month, Canada also stripped Russia and Belarus of their “most-favored-nation” trade status. Between September 29, 2020, and December 2, 2021, Canada imposed a series of sanctions, mostly in coordination with its allies, including the EU, the UK, and the US. For information on those rounds of sanctions, see Canada Expands Economic Sanctions Against Belarus and Canada Announces New Round Of Sanctions On Belarus.

The involvement of Belarus in the recent Russia-Ukraine conflict, including from Belarusian territory, led to Canada expanding its sanctions against Belarus on the grounds that “the actions of Belarus constitute a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis.” (amendments) Specifically, the recent amendments target an additional 19 individuals and 25 entities.

Our team will continue to monitor the sanctions measures related to Russia, Belarus, and Ukraine, providing updates about important developments affecting trade and services.

The lawyers at Tereposky & DeRose LLP have significant experience in assisting with navigating sanctions to ensure compliance in business transactions, the design and implementation of sanctions-related compliance programs, including policies, procedures, employee training, and internal control mechanisms. They also regularly assist both Canadian and international businesses, financial institutions, and individuals with internal investigations when “red flags” appear and provide advice on compliance in these areas. Where breaches have occurred, they have worked closely with their clients in making voluntary disclosures and in engaging with the ensuing investigations conducted by the RCMP and Global Affairs Canada.

Vince DeRose
613.237.8862
vderose@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Umair Azam
613.237.1208
uazam@tradeisds.com

Canada Imposes Further Sanctions Against Russia

On March 6, 2022, Canada announced a new round of sanctions against Russia imposed under the Special Economic Measures Act by way of amendment to the Special Economic Measures (Russia) Regulations (“Russia Regulations”). Recently, we wrote about Canada’s sanctions as a result of the ongoing Russian-Ukrainian conflict. (See Canada Imposes Additional Sanctions Against Russia and Ukraine)

The March 6, 2022 amendments to the Russia Regulations add the following to a growing list of sanctions:

  • 10 more individuals were added to the list of individuals that are subject to a general dealing prohibition.
  • The Canadian Prime Minister indicated that the names of these individuals come from a list compiled by jailed opposition leader Alexei Navalny and includes former and current senior government officials, oligarchs and supporters of the Russian leadership. Specifically, Schedule 1 of the Russia Regulations added the following names:
    • Mikhail Albertovich MURASHKO (born in 1967)
    • Dmitry Nikolayevich PATRUSHEV (born in 1977)
    • Vladimir Rudolfovich SOLOVYOV (born in 1963)
    • Margarita Simonovna SIMONYAN (born in 1980)
    • Oleg Vladimirovich DERIPASKA (born in 1968)
    • Pavel Vladimirovich KRASHENINNIKOV (born in 1964)
    • Victor Evdokimovich GAVRILOV
    • Dmitry IVANOV
    • Konstantin Lvovich ERNST (born in 1961)
    • Dmitry Sergeyevich PESKOV (born in 1967)
  • Canada also prohibited ships registered in Russia from docking in Canada or passing through Canadian waters when they are used, leased or chartered, in whole or in part, by or for Russia, a person in Russia or a designated person. The only exception to such docking or passage is necessary to safeguard human life or to ensure navigational safety.

Further Sanctions on Russia

Our team will continue to monitor the sanctions measures related to Russia and Ukraine, providing updates to keep clients informed about important developments affecting trade and services. The lawyers at Tereposky & DeRose have significant experience in the design and implementation of sanctions-related compliance programs, including policies, procedures, employee training, and internal control mechanisms. They also regularly assist both Canadian and international businesses, financial institutions, and individuals with internal investigations when “red flags” appear and provide advice on compliance in these areas. Where breaches have occurred, they have worked closely with their clients in making voluntary disclosures and in engaging with the ensuing investigations conducted by the RCMP and Global Affairs Canada.

Vince DeRose
613.237.8862
vderose@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Umair Azam
613.237.1208
uazam@tradeisds.com

 

US Telecommunications Investor Fails to Set Aside Award Dismissing NAFTA Claim Against Mexico

Tereposky & DeRose LLP recently had the privilege of representing The United Mexican States on instructions from La Secretaría de Economía in an investor-state set aside proceeding before the Ontario Superior Court of Justice.

In short, Joshua Dean Nelson (the “Applicant”) and his business, Tele Fácil México SA De CV, failed to convince a Canadian Court that he ought to be allowed to resurrect an investment claim under NAFTA. The Applicant alleged he and Tele Fácil suffered almost US$ half billion in losses following investments in Mexico’s telecommunications industry. The original arbitral Award ( Joshua Dean Nelson v. The United Mexican States ) of 5 June 2020 had dismissed all of the claim and ordered the Applicant to pay over US$2 million in costs to Mexico. (See Mexico Defeats Half a Billion ISDS Arbitration Claim Under NAFTA)

In a Judgment and Reasons dated 16 February 2022, (See  Nelson v. The Government of the United Mexican States, 2022 ONSC 1193), Judge Michael A. Penny of the Ontario Superior Court of Justice upheld the arbitral tribunal’s ruling in its entirety. Penny J. dismissed the application alleging a denial of natural justice and procedural fairness during the arbitral proceedings and ordered the Applicant to pay costs of $100,000 to Mexico.

The Applicant had argued before Penny J. that the arbitral tribunal inappropriately relied on arguments that had not been raised by the parties when it concluded that the Applicant’s business had never actually secured the interconnection rights that it claimed to have been stripped of by Mexican regulators. The Applicant also argued that the arbitral tribunal failed to consider expert evidence.

Penny J. held that fairness and natural justice are well-established principles embodied in Article 34(2)(a)(ii). His Honour went on to confirm that the standard of review in Ontario for setting aside an award under Article 34(2)(a)(ii) is whether the tribunal’s conduct was “sufficiently serious to offend our most basic notions of morality and justice” and “that it cannot be condoned under the law of the enforcing State”. However, a party is not permitted to review the award on its merits under the guise of alleged breaches of Article 34(2)(a)(ii).

Penny J. also recognized that the principle that a tribunal cannot decide a case on a basis that was not pleaded or argued is well established. In dismissing the Applicant’s claims, he made the following observations:

  • there was no failure of fairness or natural justice as both parties put their positions squarely before the tribunal on the issue of the nature of the interconnection rights at issue.
  • it is generally accepted that a trier of fact cannot ignore or fail to evaluate relevant portions of the evidence. The evidence that the Tribunal relied upon was not repeated verbatim in the award but detailed and extensive citations were made referring to the parties’ positions and evidence on each issue and argument. No one could reasonably be in any doubt about whether the tribunal considered the Applicant’s evidence or why the tribunal decided the case the way it did.

Tereposky & DeRose has extensive experience in international investment arbitrations and set-aside proceedings in Ontario.

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Vince DeRose
613.237.8862
vderose@tradeisds.com

Umair Azam
613.237.1208
uazam@tradeisds.com

Canada Imposes Additional Sanctions Against Russia and Ukraine

As a result of the ongoing Russian-Ukrainian conflict, Canada imposed additional sanctions as against Russia and Ukraine on February 24 and 28, 2022. These sanctions are enacted under the Regulations Amending the Special Economic Measures (Russia) Regulations (“Russia Regulations”) and Regulations Amending the Special Economic Measures (Ukraine) Regulations (“Ukraine Regulations”). As a result of these additional sanctions, persons located in Canada and Canadians outside of Canada that have economic dealings with Russia or Ukraine may be significantly affected.

Expansion of List of Designated Persons and Entities

Since 2014, both the Russia Regulations and Ukraine Regulations have included an asset freeze and dealings prohibition. With some very limited exceptions, persons in Canada (regardless of nationality) and Canadians outside of Canada are prohibited from any involvement with designated persons or entities.

The recent amendments dramatically increase the list of designated persons and entities. For Russia, the designated persons increased from 120 to 520 individuals and from 71 to 103 entities. For Ukraine, the designated persons increased from 202 to 206 individuals and has maintained 42 entities.

Financial Sector Sanctions

The Russia Regulations continue to impose restrictions on some Russian entities operating in the financial sector. Most notably, Canada has imposed new sanctions as against the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation and the Ministry of Finance of the Russian Federation.

Expanded Geographical Sanctions in Ukraine

Canada’s previous sanctions against Ukraine included broad prohibitions on dealings with the Crimea Region. Last week’s amendments expanded geographic prohibitions to also include the Donetsk People’s Republic (“DNR Region”) and the Luhansk People’s Region (“LNR Region”). With very limited exceptions, there is a complete prohibition of business between any person in Canada or Canadians outside of Canada and these three regions.

Export Controls Relating to Russia

On February 24, 2022, Canada issued a Notice to Exporters and Brokers – Export and Brokering of items listed on the Export Control List and the Brokering Control List to Russia (“Notice”). The Notice expressly stated that “Canada will stop the issuance of new permits for the export and brokering of controlled goods and technology to Russia”, and that “only permits and applications related to specific end-uses such as medical supply and humanitarian needs may be considered for exception, on a case-by-case basis”.

Canada’s controlled goods are identified in the Export Control List (“ECL”). The ECL includes dual-use technology that may not, on its face, be easily identifiable as controlled. Any persons in Canada or Canadians outside of Canada that continue to do business with Russia must ensure that none of the goods or technology being exported to Russia are subject to the ECL.

Heightened Importance of Understanding and Monitoring Changes to Canadian Sanctions

Canada’s sanctions as against Russia and Ukraine are currently in flux. It is expected that those sanctions will continue to be expended over the upcoming weeks and months. This, in and of itself, creates additional business risk for those that maintain business with Russia or Ukraine.

Our team will continue to monitor the sanctions measures related to Russia and Ukraine, providing updates to keep clients informed about important developments affecting trade and services. The lawyers at Tereposky & DeRose have significant experience in the design and implementation of sanctions-related compliance programs, including policies, procedures, employee training, and internal control mechanisms. They also regularly assist both Canadian and international businesses, financial institutions, and individuals with internal investigations when “red flags” appear and provide advice on compliance in these areas. Where breaches have occurred, they have worked closely with their clients in making voluntary disclosures and in engaging with the ensuing investigations conducted by the RCMP and Global Affairs Canada.

Vince DeRose
613.237.8862
vderose@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Umair Azam
613.237.1208
uazam@tradeisds.com