Canada Must Seize Russian State Assets to Help Rebuild Ukraine

Bill Browder is head of the Global Magnitsky Justice Campaign and author of Red Notice. Ratna Omidvar is an independent senator from Ontario.

As Russia has continued its unnecessary, illegal and brutal war in Ukraine, new tools are necessary to hold it to account and make it pay for the reconstruction of Ukraine – now and not some vague time in the future.

The Russian invasion has destroyed the lives and livelihoods of hundreds of thousands. Cities have been reduced to rubble, essential infrastructure has been bombed, and people have been killed, captured and tortured. And still, there is no end in sight.

We see, all over the world, that Russia wants chaos. It desires to destabilize the world and the rules-based order as we know it.

It is difficult to quantify the misery of Ukraine in dollars and cents. But the European Commission has estimated the cost of war at €600-billion ($876-billion). Ukraine estimates that it requires billions a month in aid. And these figures keep growing as Russia refuses to end its military operations in Ukraine and continues to target both civilians and civilian infrastructure.

On Nov. 14, 2022, the United Nations General Assembly passed a resolution recognizing that under international law, Russia will owe Ukraine reparations for this unprovoked war.

Given Russia’s total failure to comply with any international court orders so far, it is unlikely that Russia will heed any future judgments that award reparations to Ukraine. Even if these payments were negotiated at some time in the future, Ukraine needs the money now.

Recently in Canada, Senator Ratna Omidvar tabled Bill S-278, An Act to Amend the Special Economic Measures Act (Disposal of Foreign State Assets), in the Senate. The bill would amend SEMA to allow for a legal pathway to seize and repurpose the state assets, including central bank reserves, of perpetrators that breach international peace and security and redirect them to the victims that have had their lives shattered.

Currently, Canada can freeze Russian funds, but it is legally able to seize and redistribute the frozen assets of only corrupt foreign officials and non-state entities – the result of legislation adopted in 2022.

The government is using this power to seize the assets of a Russian oligarch, Roman Abramovich, and confiscate the Antonov 124 aircraft, a Russian cargo aircraft that’s parked at Toronto Pearson International Airport. As the law intended, these cases are now before the courts, to provide for due process to these private assets.

It is much more difficult to seize state assets. Specifically, the State Immunity Act states that “a foreign state is immune from the jurisdiction of any court in Canada.” This means that, if the Canadian government were to launch judicial actions to confiscate a foreign state’s assets, the foreign state would be able to claim immunity from the court process.

However, prominent Canadian legal minds from the World Refugee and Migration Council and international legal experts have argued that state assets, while shielded from the court, are not shielded from executive actions. (Executive actions are orders effectively issued by the federal cabinet, through the inherent powers of that office.)

So, Bill S-278 amends SEMA to allow for the confiscation of state assets by executive action. If passed, two paths of seizure would then exist – one through the courts for individual assets, and also for state assets through executive action by the Governor in Council.

Why go after state assets? Since the beginning of the war, roughly US$350-billion of Russian state assets have been frozen by various Group of Seven and European Union jurisdictions. (Like Canada, those jurisdictions can freeze Russian state assets but do not have the tools to seize and redistribute them.)

We don’t know exactly how much state assets are in Canada because Russia may have transferred much of their $16-billion of central bank assets out of Canada right before the war started. But whether it is just one dollar or $16-billion, we also have a unique opportunity to set the pace so that others follow. Being the first country to do so puts us in an extraordinary position of leadership by explaining the international rationale and domestic pathway to do so.

Canadians agree. A strong majority of Canadians (81 per cent) support Canada seizing the Canadian-held assets of Russia and using these assets to help victims, according to a new public opinion poll that was commissioned by Ms. Omidvar and fellow senator Donna Dasko, and conducted by Nanos Research.

Parliament needs to move quickly and pass this bill. It gives expression to the sentiments of Ukraine President Volodymyr Zelensky in our Parliament last month when he stated that Canada stands out as a “bright light” to the rest of the world. Let us be that light and shine not just through our aspirations, but through our actions.

Read the article in The Globe and Mail