Hon. Ratna Omidvar moved second reading of Bill S-278, An Act to amend the Special Economic Measures Act (disposal of foreign state assets).

She said: Honourable senators, I rise today to speak on Bill S-278, An Act to amend the Special Economic Measures Act, also known as SEMA. The bill before you seeks to amend SEMA to allow for a legal mechanism to seize and repurpose the state assets of perpetrators who breach international peace and security and to redirect those assets to the victims whose lives have been shattered.

The invasion of Ukraine by Russia provides a clear context for this proposal. Russia has launched an unnecessary, illegal and brutal war. It has destroyed the lives and livelihoods of hundreds of thousands of people — fathers, brothers, mothers, sisters and children have been lost. Cities have been reduced to rubble, and infrastructure has been bombed. People have been captured and tortured, and, still, there is no end in sight.

But perhaps the worst crime of all is the wilful kidnapping of thousands of children. As per The Globe and Mail:

In the summer of 2022, Russia began a co-ordinated program to bring children — particularly those living in orphanages and foster homes — from across the occupied areas of Ukraine to summer camps in Russia, hundreds of kilometres away.

These children have not been returned to their parents in Ukraine, but instead have been put up for adoption in Russia. This is so heinous a crime that the International Criminal Court has subsequently issued arrest warrants for Mr. Putin and for his Commissioner for Children’s Rights, Ms. Lvova-Belova.

Just this past week, we have seen with horror the brutal attack of Hamas in Israel. Although there is no proof that Russia supplied weapons to Hamas, we know that Russia supports it. Just last March, for instance, Russia hosted in Moscow a delegation of Hamas leadership, and, further, Russia has yet to condemn Hamas for its brutality. So we see, yet again, that Russia desires chaos. It desires to destabilize the world and the rules-based order as we know it.

For these and many other reasons, we must hold rogue actors like Russia to account, but we must do so by carving out a legal pathway. It is difficult to quantify the misery of Ukraine in dollars and cents, but the World Bank has estimated the cost of war at US$600 billion.

Ukraine itself estimates that it requires $7 billion a month in aid, and these figures keep growing exponentially as Russia refuses to end its military operations and continues to target both the civilian population and the civilian infrastructure in breach of the orders of the International Court of Justice and the European Court of Human Rights decisions made in March of 2022.

Whilst the war is ongoing, the international community is mostly united in its condemnation of Russia’s aggression and support for rebuilding Ukraine. On November 14, 2022, the United Nations General Assembly passed Resolution ES-11/5, recognizing that under international law, Russia will owe Ukraine reparations at the end of the war.

However, given Russia’s total failure to comply with any international court orders so far, it is unlikely that Russia will comply with any future judgments that award reparations to Ukraine, and even if these payments were negotiated at some point in the future, Ukraine needs the money now. This is why timing matters. Funds to repair ongoing damage must be found now, before the damage to Ukraine’s economy and its people becomes irreversible, meaning that Russia wins even if it loses the war.

I remind senators of my previous bill, the frozen assets repurposing act. The spirit of that bill was adopted by the government in its Budget Implementation Act, 2022.

Its principles and the principles of this legislation are the same. They are, first, that this is an illegal war that Russia has waged, and, therefore, Russia must be held accountable. Second, Russia must pay for the misery and damage it has wilfully wrought. Third, Russia must pay now and not at some vague point in the future.

As a result of the previous legislation, which was adopted by Canada, Canada is now legally able to seize the frozen assets of corrupt foreign officials and non-state entities and repurpose them to alleviate the suffering of the people who have been harmed. The government is using this power now to seize the assets of Russian oligarchs. In December of last year, as per the new authority granted to it by law, the Minister of Foreign Affairs moved to seize and pursue the forfeiture of $26 million from Granite Capital Holdings Ltd, a corporation belonging to Roman Abramovich, and is pursuing the forfeiture of his assets through the sanctions outlined in SEMA.

In February of this year, the federal government moved to confiscate the Antonov-124 aircraft, the Russian cargo aircraft owned by a subsidiary of the Volga-Dnepr Airlines and Volga‑Dnepr Group. This aircraft was grounded at Toronto Pearson international airport at the start of the war and is currently still parked on the runway.

As the law intended, these cases are now before the courts to provide for due process to these private assets. If forfeited, these assets can be used to provide necessary funds to help the victims of Russian aggression and to hold the perpetrators to account.

However, as we all well know in this chamber, the devil is always in the details of legislation. So whilst the new law applies and is being applied to oligarch assets, it gets ensnared in other legislation when it comes to the confiscation, seizure and forfeiture of state assets located in Canada.

State assets, particularly central bank assets, are where the big money lies, the big money that is required to rebuild Ukraine. Since the war, roughly $300 billion of Russian state assets have been frozen by various G7 jurisdictions. You will want to know the value of Russian state assets held in Canada today. At the end of 2021, just before Russia launched its war, the sum value of its assets in Canada was $16 billion, which far outstrips, by the way, the sum value of Russian oligarch assets in Canada. But in a pre‑emptive move, I imagine, Russia removed $16 billion of its assets from Canada to Belgium, where they now lie frozen.

I am not able to say with certainty what the remaining value of Russian state assets in Canada now is. I have heard that it is likely negligible, and you may well ask, “Why bother, then?” Whether it is $1 or $16 billion, the principles and objective of my bill still apply, and they are as follows: to create a legal avenue for Canada to seize state assets and, more importantly, to create a legal precedent that can be followed by other like-minded jurisdictions.

This move is urgent. As you likely know, the biggest supporter of Ukraine in absolute dollar terms — the United States — is facing a political challenge in continuing its support of Ukraine through tax dollars. Opposition to Ukraine aid appears to have become a litmus test for some on the far right. The New York Times states that the isolationist views of hard-line Republicans argue that:

. . . sending tens of billions of dollars to Kyiv [in Ukraine] risks dragging the United States into a head-on conflict with Russia and siphons money away from domestic challenges. . . .

The presidential election in the U.S. at the end of 2024 will be a watershed moment — not just for the U.S. or us, but especially for Ukraine.

As we also know, this sentiment may not just be confined to the U.S. as populist nationalism is witnessing a resurgence in many parts of the world. Therefore, the passage of this bill, which has the rich state assets of Russia as its target, will be watched carefully by others who would wish to continue their support for Ukraine, but may be challenged by domestic realities to find new sources of funding for it.

The $300 billion of frozen state assets of Russia is a source for such funding, but frozen assets are technically not good to anyone because they are frozen. They are immobilized. In June of this year, the British government announced that it will keep Russian funds immobilized until Russia compensates Ukraine. The European Union, or EU, has also announced that it will do the same, but might transfer the profits earned on Russian funds to Ukraine.

But, at best, these are mere half measures. They simply leave these assets in permanent limbo — useless to all. Unless a nation is bold enough, or courageous enough, to take the first step of asset seizure, these assets will likely remain frozen long after the war is over.

Because Canada likely only has a small amount of Russian state assets, we also have a unique opportunity to reach for a low‑risk yet high-impact opportunity to set the pace so that others follow. Being the first nation to do so puts us in an extraordinary position of global leadership by explaining the international rationale and the domestic pathway to do so.

That was the intent of the first seizure and forfeiture law I proposed, which has since been adopted into law. Since Canada’s bold move, others have gathered around it.

Obviously, Ukraine has its own legislation covering Russian state assets, but legislation has been proposed in the U.K. in both houses of Parliament. The EU has set up a freeze and seize task force, and the European Parliament has passed a resolution that calls on Russia to provide war reparations to Ukraine, arguing that frozen Russian assets should be legally confiscated in accordance with international law.

In the U.S., Congress has passed amendments to allow for the sale and process of assets from sanctioned Russian oligarchs and entities supporting Putin to be used for the benefit of the Ukrainian people. Estonia is the first member of the EU to table domestic legislation to seize and repurpose Russian oligarch assets for the benefit of Ukraine.

As I had hoped, this Canadian rolling stone is gathering much moss. This is a unique and timely example of middle power Canada charting the way forward so that others follow.

But the way forward has thrown up a challenge; let me call it a mechanical challenge of a legal kind. As we know, there are limitations that impact how Canada and any other state can treat the property of another state, whether that property is assets in banks, real estate or others. The principle of sovereign immunity is a precedent under international law, which stipulates that “. . . one sovereign state cannot be sued before the courts of another sovereign state without its consent.”

Specifically in Canada, the State Immunity Act governs this principle. It states that “. . . a foreign state is immune from the jurisdiction of any court in Canada.” This means that if the Canadian government were to commence judicial proceedings to confiscate a foreign state’s asset, the relevant foreign state would be able to claim its immunity from such proceedings on the basis that no Canadian court has any jurisdiction to adjudicate in any proceedings involving a foreign state, thereby blocking any attempt by the court to make an order as regards its state property.

On the surface, it would appear that this prevents the implementation of the seizure and repurposing of Russian state assets because they are of a sovereign nature.

The current regime under the Special Economic Measures Act, or SEMA, allows for the seizure and repurposing of assets through the courts. I think we all agree that assets owned by individuals or non-state entities must have due process before the state takes them away. This is a fundamental principle in Canada.

However, because this process goes through the courts, Russian state assets are excluded from seizure and repurposing because of sovereign immunity laws.

Recognizing this hurdle, legal experts in Canada, including former Attorney General Allan Rock and noted academic Rob Currie, as well as legal experts outside of Canada, including Jamison Firestone, Tetyana Nesterchuk, Laurence Tribe and Yuliya Ziskina, pointed to a different route, which is presented in this proposal.

Whilst the State Immunity Act limits court action against another state, its reach does not extend to executive actions, such as cabinet orders. As such, state assets are shielded from legal proceedings in court, but they are not shielded from executive actions. The bill before you amends SEMA to allow for the confiscation of state assets by executive action, thereby creating two paths for seizure: one through the courts for individual assets, and another through executive action by the Governor-in-Council. Think of it as two highways with the same destination, but different routes.

Clause 5.41 of the bill says the Governor-in-Council may, by order, have any property that is the subject of an order made under paragraph 4(1)(b) and that is owned — or that is held or controlled directly or indirectly — by a foreign state to be forfeited to His Majesty in right of Canada.

Inserting this language specifically gives the authority of the government to seize and forfeit assets held by a foreign state. To ensure that SEMA follows actions that don’t infringe on the State Immunity Act, the act is amended by adding the following after subsection 5.4(1):

(1.‍1) An order made under subsection (1) cannot relate to property that is owned, held or controlled, directly or indirectly, by a foreign state.

Colleagues, this clause would take the court process out of the seizing and forfeiture of state assets and leave it to executive action if, and only if, the underlying conditions under SEMA have been met. In other words, there must be a breach of international peace and security and/or gross human rights violations.

To be clear, SEMA already provides for the seizure of state assets, but the mechanism is flawed. This bill simply provides for amending the legal mechanism so that the law can fulfill its stated purposes, should Canada choose to seize and repurpose sovereign state assets.

Some will argue that this is a breach of international conventions — that one state cannot simply seize the assets of another state in its jurisdiction — and yet there is no real dispute that Russia has breached international law by its illegal invasion of Ukraine. Authors Allan Rock, Rob Currie and Fen Hampson — in their paper titled “Leading by Example” — argue that state-on-state armed attacks tops the list of breaches of pre‑emptory norms, and are a direct violation of international law. Refraining from aggressive war is a core rule of international law. They go on to say:

. . . given that we are asking questions about international law breaches, it is essential to focus on the direct violation of international law that gives rise to all of this: Russia’s invasion of Ukraine. . . .

The United Nations General Assembly in its Resolution ES-11/1 in March 2022 deplored “. . . in the strongest terms the aggression by the Russian Federation against Ukraine in violation of Article 2(4) of the Charter . . . .” — it’s the article which is said to be the cornerstone of the UN Charter. That resolution was supported by 141 nations, with only 5 voting against it, and you will guess right: Russia, Belarus, North Korea, Syria and Eritrea.

In a Washington Post opinion piece, three prominent U.S. thought leaders — Lawrence Summers, former Secretary of the Treasury and former president of Harvard University; Philip Zelikow; and Robert Zoellick, former president of the World Bank — argue that the roughly $300 billion of Russian central bank assets could legitimately be repurposed for the reconstruction of Ukraine because:

Those who hold Russian assets are entitled, under the international law of state countermeasures for a grave breach of international law, to cancel their obligations to the Russian state and apply Russian state funds to what Russia owes.

Given this, they go further and suggest that Canada and other like-minded states are not only permitted to act against Russian aggression but are, in fact, obliged to do so.

In addition, Article 41 of the articles on Responsibility of States for Internationally Wrongful Acts confirms that Canada and others can invoke countermeasures as provided for in Chapter 11 of this agreement.

The principle behind countermeasures is that a state, in this case Canada, can suspend an obligation it has under international law in a way that is intended to bring the offending state back into compliance with international legal obligation. In this case, it is Russia’s breach with the invasion of Ukraine and its failure to compensate for the devastation it has caused. If it is a valid countermeasure, then seizure of state assets in itself is not a breach of international law. Quite the opposite: It is a valid and lawful response to Russia’s breach of fundamental norms of forbidding one state from mounting an armed attack on another.

There is precedent for this kind of action. As lawyers Jamison Firestone, Tetyana Nesterchuk and Yuliya Ziskina argue:

. . . the most applicable countermeasures precedent is the transfer of Iraqi state funds during the Gulf War in 1992. After Iraq invaded Kuwait in 1990, former U.S. President George Bush issued an October 1992 executive order “directing and compelling” every U.S. bank holding Iraqi state funds to transfer them to the Federal Reserve Bank of New York in compliance with a U.N. resolution that called for the compensation of the victims of that aggression. The executive order “authorized, directed, and compelled” the Federal Reserve Bank of New York to receive these funds and to “hold, invest, or transfer” them to serve the purposes of the U.N. resolution.

Countermeasures have been used by Canada. For example, after the invasion of Afghanistan by the U.S.S.R., Canada suspended Soviet fishing rights in its exclusive economic zone. Canada again suspended landing rights for the Soviet Aeroflot after the shooting down of a Korean Air Lines passenger plane in 1983. Canada again used countermeasures against the apartheid regime of South Africa, and used them again in the 1990s in the conflict in Serbia.

No doubt this proposal sets a precedent, but, if it does so, then it sets a positive one. The norms against aggression, war crimes and genocide are currently being tested to a degree the world has rarely seen. If states considering similar acts of aggression see that their conduct would be met with swift and severe consequences, such as the seizure of their sovereign assets, then they are far more likely to think once, twice and many more times before taking a step.

In short, if Canada and other Western states want to face fewer crises like the one facing Ukraine, then we should send the unmistakable message to the international community that Russia’s conduct will not be tolerated. Hesitation and appeasement only send aggression-encouraging signals. I believe that the world’s appeasement of Russia after its invasion of Crimea in 2014 was misplaced, as we all know now.

I grant that seizing state assets, including central bank assets, is an extraordinary move. These are, however, extraordinary times. If we do not demonstrate resolve, if we fail to act in legal ways to hold Russia accountable, then we will likely open the door for other rogue nations with territorial ambitions to act with impunity.

This proposal, therefore, uses domestic law in accordance with international law mechanisms as a deterrent. It upholds the rule of law in the international legal order.

Russia cannot hide behind international law because it has broken every tenet of it. Laurence Tribe, who is likely the foremost constitutional scholar in the U.S., writes:

It would be a cruel irony to deny Ukraine the funds it needs by invoking respect for Russia’s “sovereignty” and “property rights” when Russia has chosen to trample on [those] of the Ukrainian people.

Now to turn to what Russia is doing in this sphere, in April of 2023 Putin signed a decree allowing Russia to expropriate property from unfriendly countries — basically any country that has placed sanctions against it, of course, including Canada, the U.S., the U.K., all EU countries, Japan and South Korea.

On September 23, when President Zelenskyy was visiting Canada, Canada and Ukraine agreed to create a G7 task force on the seizure and forfeiture of Russian state assets. The bill before you today will provide a way forward for those efforts. The government of Ukraine supports this measure.

Iryna Mudra, the Deputy Minister of Justice for Ukraine, writes:

The Ukrainian government sees Russian sovereign assets as the key source of compensation for victims of Russia’s illegal war and we are very grateful to Canada for taking the lead on this important issue and setting a clear precedent for other nations to follow.

Colleagues, the bill before you today holds Russia to account. It creates a legal pathway for Canada and others who will follow us to use Russian state assets to compensate Ukraine. It does so in a manner that is sensitive to the needs of Ukraine today and not at some future time. It gives expression to the sentiments of President Zelenskyy 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.

It is also a warning light to other bad actors. Although I have spoken primarily in the context of Russia and Ukraine, the proposal will amend SEMA in general, which would allow for similar actions against other bad state actors that perpetuate mass crimes. I hope that is clear. It does not mention Russia or Ukraine in the amendments.

Before I close, I wish to thank my many advisers who have helped me in navigating these tricky waters. They are academics, foreign policy experts, international lawyers from Canada, the U.S., the U.K. and Ukraine. I call them my brain trust, because I know it takes a village to raise a legislative child, especially when that child is a private bill.

On their behalf, and on behalf of the many victims of the Russian war in Ukraine, I ask for your support. Thank you.

Hon. Ratna Omidvar moved second reading of Bill S-262, An Act to amend the Citizenship Act (Oath of Citizenship).

(On motion of Senator Omidvar, debate adjourned.)

On Other Business, Senate Public Bills, Second Reading, Order No. 19:

Second reading of Bill S-263, An Act respecting the National Strategy to Combat Human Trafficking.

Hon. Ratna Omidvar: Thank you, Senator Boniface, for your deep deconstruction of this bill. I appreciate that.

I may not have heard you correctly, but when you spoke of the new thresholds that this bill is bringing into play, I think I heard you say, “behaviour.” This is where I want to ask you a question, because assessment of behaviour is hugely subjective. How can we contract CBSA officers to appropriately judge behaviour and whether or not that is an expression of real concern or an expression of some mental health condition or other physical condition? I need clarity there.

Hon. Ratna Omidvar: Thank you, if Senator Cordy will accept a question. Senator Cordy, this is a simple but important bill. Thank you so much for making it simple for us to grasp.

My question is about the GIS recipients who experienced a fall in their monthly income. As we all know, when someone is on a tight monthly income, every $10 counts.

I am just wondering if you can share with us what proportion of the GIS community experienced the cutbacks.

Senator Cordy: I’m not able to answer that question about how many. I read a number somewhere. I paid attention to it. It probably wasn’t as high as I thought it would be, but that would be another good question to ask.

It was very challenging for seniors who are living on a fixed income and suddenly are not receiving the Guaranteed Income Supplement. I think that’s why this has come forward, because they recognized that indeed was a problem. Seniors and many are not able to work, and are suddenly not receiving the Guaranteed Income Supplement. So that’s why they will be receiving a one‑time payment in May or hopefully a little before May, but March or April for those who are in dire circumstances. They will receive the one-time payment to make up for the fiscal year 2020 into 2021.

If this bill passes, then it will become automatic, and it will be included, as it was previously, on their monthly old age pension income that they receive.

Senator Omidvar: Senator Pate, let me start by saying that I admire your consistent advocacy for low-income people. I think you point out, rightly, that it is a failure of policy and political imagination that results in these aggressive and punitive clawbacks to income-tested regimes. I’m wondering, though, if you believe that this bill sets the stage to amend policies in other related regimes such as the Canada Child Benefit and disability benefits on clawbacks.

Hon. Ratna Omidvar: Would Senator Pate take a question?

Senator Pate: Absolutely.

Senator Omidvar: Senator Pate, thank you for your ongoing advocacy for reform of the criminal justice system. At committee, when we discussed criminal justice reforms in various aspects, the model of the Nordic countries has always been held out to us. My question is: Will we be the trailblazers with this bill or will we follow the lead of other jurisdictions?

Senator Pate: Thank you for that question. We wouldn’t be trailblazers. As I mentioned, there are countries like Germany, New Zealand and others that already have record suspension. You mentioned the Nordic countries. Places like Portugal have essentially created record expiry processes, but they don’t call them that. I think we would have a lot to learn in terms of what kinds of approaches if we didn’t want to take this approach. But what we are proposing in this bill is a streamlined way of allowing records to expire that has been actually suggested by the government.