Revolutionary Precedent: Canada Allows Confiscation of Russian Assets for Rebuilding Ukraine

Monday, 4 July 2022

Canada was the first Western country to legislate the possibility of seizing sanctioned Russian assets for Ukraine's reconstruction.

This is the first practical step toward seizing Russian assets abroad and using them to rebuild Ukraine. Candidate of legal sciences, director of Dnistrianskyi Center, Ivan Horodyskyi, and Vice-Rector of the Ukrainian Catholic University, Dmytro Sherenhovskyi, write in their article Canadian Precedent: How Seized Russian Assets to Help Ukraine.

On April 28, Deputy Prime Minister and Finance Minister, Chrystia Freeland, declared Canada's intention to pursue the seizure-of-assets route based on the House of Commons decision (final voting took place on June 9).

The Senate of Canada approved the relevant amendments to the Special Economic Measures Act on June 23.

Thus, Canada has become the first country in the world whose legislation allows seizing sanctioned Russian assets on behalf of Ukrainian war victims.

The updated bill envisages not just seizure but a sufficiently balanced procedure in which both executive and judicial branches of government take part.

Under Canadian law, the circumstances referred to in the subsection are the following:

- an international organization of states or association of states, of which Canada is a member, has made a decision or a recommendation;

- a grave breach of international peace and security;

- gross and systematic human rights violations have been committed in a foreign state;

- significant acts of corruption involving a citizen of a foreign state.

Obviously, in the case of "association of states," they mean the G7 or a conditional coalition for Ukraine formed within the framework of a multilateral international agreement to ensure compensation for Ukrainian war victims.

The second reason, a grave breach of international peace and security, allows for the unilateral step. Given the unprecedented nature of the situation, the Canadian government will likely make the decision synchronously with international partners.

After seizing, the funds, according to the government's decision, can be used for:

- the reconstruction of the foreign state adversely affected by a grave breach of international peace and security;

- the restoration of international peace and security;

- to compensate victims when that security is breached and their rights are violated.

However, this bill should set a significant precedent regardless of the scenarios for using frozen assets.

First of all, Ukrainian diplomats can use the approaches used by Canada as an example in negotiations regarding the fate of frozen assets with other managing states.

Secondly, the reference to a possible decision of an international organization or association of states shows that the multilateral solution to the issue of compensation for Ukraine is the highest priority for partners.

And thirdly, this is a powerful signal for the aggressor and the international community about the inevitability of paying Ukraine compensation for the damage caused by the Russian invasion.

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