During his visit to Kyiv on June 10, 2023, Canadian Prime Minister Justin Trudeau promised to hand over to Ukraine the Russian-registered Antonov An-124 transport aircraft, which was detained last year at the Toronto Pearson International Airport. This may become the first significant success of the special mechanism for the confiscation of Russian assets due to aggression against Ukraine. André Durocher, Canadian lawyer, partner at Fasken (Montreal), analyzes in his publication for the Dnistrianskyi Center and the Ukrainian Bar Association, how this confiscation mechanism works and how the An-124 confiscation will take place.

An Antonov 124 aircraft owned by the Volga-Dnepr Airlines has been grounded at the Toronto Pearson International Airport since February 2022 when the Canadian government closed Canadian airspace to Russian aircraft in response to the invasion of Ukraine. 

The Special Economic Measures Act and the Special Economic Measures (Russia) Regulations

Under the Special Economic Measures Act, the Canadian government may take “economic measures” against certain persons, a concept that includes individual and legal entities, when international organizations of states of which Canada is a member calls on its members to do so or when grave breaches of international peace and security have occurred or when gross and systematic human rights violations have been committed in a foreign state. 

The Canadian government has determined that Russia’s invasion of Ukraine did cross this threshold and has adopted as a result the Special Economic Measures (Russia) Regulations. 

In addition, the Act confers upon the government of Canada the power to issue orders to seize or restrain any property situated in Canada that is owned - or that is held or controlled directly – by any person in a foreign state or a national of that foreign state who does not ordinarily reside in Canada. 

The Regulations do provide for a list of “designated persons” who are in Russia, or are nationals of the Russian Federation, or a political subdivision of the Russian Federation. 

The list includes three schedules and the one that is of interest for our purposes is Schedule 1, Persons, Part 2, Entities - Grave Breach of International Peace and Security.

Items 347 and 348 include the Volga-Dnepr Group and the Volga-Dnepr Airlines (the words Volga Dnepr are painted on the fuselage of the Antonov aircraft). 

This Act confers to the government the power to restrict or prohibit activities, whether carried out in or outside Canada, in relation to a foreign state. 

Included in the list of prohibited activities is “the landing in or flight over Canada by aircraft registered in that foreign state or used, ceased or chartered, in whole or in part, by or on behalf of or for the benefit of that foreign state or any person in that foreign state.”

The Amendments to the Special Economic Measures Act: the Forfeiture Orders

Recently, the Parliament of Canada has amended the Special Economic Measures Act to confer upon a court the power to issue “forfeiture orders” to add more teeth to the existing power to impose economic measures. Under these new provisions, the Minister of Foreign Affairs may file an application to a judge of a superior court in which the property in question is situated, here the Superior Court of Justice of Ontario, asking that the property that is the subject of the application, the Antonov aircraft, be forfeited to Her Majesty. 

The judge shall issue such an order if the judge determines, on the basis of the evidence presented, that the property is described in an order made under the Act and that the property is owned by the person referred to in that order or is held or controlled, directly or indirectly, by that person.

Thus, it suffices to demonstrate that the property in question is the Antonov aircraft that is grounded at the airport and that the aircraft is owned by the Volga-Dnepr Airlines.

Before issuing a forfeiture order, the judge must require that notice be given to any person who, in the opinion of the court, appears to have an interest in or right to the property, and the court may hear any such person.

The notice is to be given in the manner directed by the court or that may be specified in the rules of the court. 

The notice must also specify the period that the court considers reasonable or that may be set out in the rules of the court during which a person may, before an order in relation to the property is made, make an application to the court asserting their interest or right to the property.

Any person, other than a designated (sanctioned) person, who claims an interest in or right to the property that is forfeited to Her Majesty may, within 30 days after the day on which the property is forfeited, apply to the judge for an order declaring that their interest is not affected by the forfeiture, declaring the nature and extent of the interest or right and directing the Minister of Foreign Affairs to pay the sum or amount equal to the value of their interest or right.

Order Respecting the Seizure of Property Situated in Canada (Volga-Dnepr Airlines or Volga‑Dnper Group)

On June 8, 2023, the Canadian government issued the Order respecting the Seizure of Property situated in Canada (Volga-Volga-Dnepr Airlines or Volga-Dnepr Group), the first step in the problem culminating in the forfeiture of the assets (the second step being, as mentioned earlier, the application by the Minister of Foreign Affairs to the court for a forfeiture order).

News Release by Mélanie Joly, Minister of Foreign Affairs

On June 10, 2023, the Minister of Foreign Affairs issued a press release stating that the government of Canada had ordered the seizure of the Antonov aircraft grounded at the Toronto Pearson International Airport and that should the asset be forfeited to the Crown, the government “will work with the government of Ukraine on options to redistribute this asset to compensate the victims of human rights abuses, restore international peace and security, or rebuild Ukraine.”

Canada has set the wheels in motion to seize the aircraft but that are not all the proper steps have been accomplished. The Canadian government, acting on the basis of the recent amendments to the Special Economic Measures Act, has issued the required order-in-council to grant to the Minister of Foreign Affairs the power to file an application to the court to seize the aircraft. And this is where we are, the Minister of Foreign Affairs Mélanie Joly has been granted that power but has not used it yet. As for now, there is no information on when an application to the Superior Court of Justice on Ontario will be filed.

The publication was prepared with the support of the International Renaissance Foundation as the part of the project "#Compensation4UA/Compensation for war losses for Ukraine. Phase II: ensuring the effectiveness of mechanisms at the national and international level" project.

Source: Dnistrianskyi Center