Canada takes a further step to combat international human rights violations and corruption

The Justice for Victims of Corrupt Foreign Officials Act

Overview

On October 4, 2017, the House of Commons has unanimously voted to pass Bill S-226, the Justice for Victims of Corrupt Foreign Officials Act (the “Act”),[1] that is commonly known as the Magnitsky law.[2]  The law is named after Sergey Magnitsky, a Moscow lawyer who uncovered a large tax fraud and was detained and died in a Moscow prison on November 16, 2009.  Bill S-226 received Royal Assent on October 18, 2017.

The Act imposes various sanctions, including freezing of assets and travel bans, on foreign nationals responsible for gross violation of internationally recognized human rights and significant corruption.  Among other things, the Act permits issuing orders against anyone in or outside Canada who are dealing, directly or indirectly, with the property or financial affairs of the foreign national that is the subject of an order or regulation under the Act.

On November 3, 2017, regulations under the Act were enforced combating the activities of 52 foreign nationals who are believed to have been engaged in gross human rights violations or significant corruption activities.  The majority of the named individuals are the nationals of the Russian Federation, in addition to the nationals of Venezuela and South Sudan.  The Russian government has not welcomed the law.  It retaliated with its own list banning the entry of various Canadians into Russia.  As part of the retaliatory measures, Russia’s officials stated that the government viewed the law as yet another attempt to exert pressure on Russia.

A foreign national against whom an order has been made under the Act may apply to the Minister of Foreign Affairs with a request to lift the sanctions, including a certificate to exempt their property from the application of the order or regulation if the property is necessary for meeting reasonable expenses by the named person and their dependents.

The same remedy is not provided in the Act with respect to those who are not the listed foreign national but who may be the subject of the order or regulation under the Act.  It remains to be seen how the regulator applies the procedure. Recourse to courts by means of judicial review may remain a viable option in these circumstances.

The Act

The Act allows Canada to restrict or prohibit dealings in property and freeze the assets of:

  1. foreign nationals who are responsible for gross violation of internationally recognized human rights “committed against individuals in any foreign state who seek to expose illegal activity carried out by foreign public officials” or against those who “obtain, exercise, defend or promote internationally recognized human rights and freedoms”; [3]
  2. foreign nationals who act as agents or on behalf on a foreign state and who are responsible for the above acts of violation; [4] and
  3. foreign public officials and their associates who are “complicit in ordering, controlling or otherwise directing” the acts of “significant corruption” in a foreign state. [5] Aiding and abetting in these activities is targeted as well, and in particular, where a “foreign national has materially assisted, sponsored, or provided financial, material or technological support for, or goods or services in support of,” corruption. [6]

Under the Act, internationally recognized human rights include “freedom of conscience, religion, thought, belief, opinion, expression, peaceful assembly and association, and the right to a fair trial and democratic elections.”[7]  Corruption includes “bribery, the misappropriation of private or public assets for personal gain, the transfer of the proceeds of corruption to foreign states or any act of corruption related to expropriation, government contracts or the extraction of natural resources.” [8]

If the Governor in Council is of the view that any of the above circumstances (which are enumerated in section 4(2) of the Act) has occurred, it may make an order or regulations in relation to a foreign national as it “considers necessary,”[9] and may, “by order, cause to be seized, frozen or sequestrated in the manner set out in the order any of the foreign national’s property situated in Canada.” [10]

Importantly, an order can be made against anyone in or outside Canada who is engaged with and facilitates in the property or financial dealings of the foreign national against whom an order has been made under the Act. [11]

A copy of such an order or regulation must be tabled in Parliament within 15 days after it is made. If the House is not sitting, it may be sent to the Clerk of the House. [12]

The Act also imposes duty on various enumerated entities — authorized foreign banks, credit unions, companies, and other trust, loan, investment and similar institutions of Canada — to determine on a continuing basis whether they are in possession or control of property that they believe is the property of a foreign national who is the subject of an order or regulation made under the Act, [13] and make disclosure, on a monthly basis, to their supervising or regulatory bodies if they are in such possession or control. [14]  Disclosure to the Commissioner of the Royal Canadian Mounted Police (RCMP) or the Director of the Canadian Security Intelligence Service (CSIS) is mandatory at large, and applies to “every person in Canada and every Canadian outside Canada” who knows about the targeted activities. [15] Disclosure that is made in good faith is immune from prosecution. [16]

It is an offence under the Act to knowingly contravene or fail to comply with an order or regulation made under section 4 of the Act. Sanctions include imprisonment and monetary penalties. [17]

Consequential amendments are to be made to the Special Economic Measures Act[18] and the Immigration and Refugee Protection Act.[19]  While the Act contains placeholders for these legislative amendments,[20] the Immigration and Refugee Protection Act, for example, incorporates the Act into its provisions dealing with the inadmissibility of foreign nationals into Canada on the grounds of human or international rights violations and specifically those who are the subject of a section 4 order or regulation made under the Act.[21]

Remedies under the Act

A foreign national who is the subject of an order or regulation under the Act may apply in writing to the Minister of Foreign Affairs with a request to lift the sanctions. [22]  The applicant may also seek from the Minister a certificate exempting their property from the order if the property is necessary to meet reasonable expenses of the person and their dependents. [23]  The Minister is given 90 days to issue a decision with respect to the application or certificate, including a recommendation to the Governor in Council to lift the order or regulation. [24]

The Act does not contain the same provisions with respect to the entities that are not the foreign national but against whom a section 4 order may be made.  Arguably, judicial review is the mechanism for recourse in these circumstances.

 

Regulations

First regulations under the Act, SOR/2017-233, Justice for Victims of Corrupt Foreign Officials Regulations, were enacted on November 3, 2017.

The Regulations list 52 foreign nationals who, in the opinion of the Governor in Council, have committed the enumerated acts. The foreign nationals comprise the nationals of the Russian Federation, South Sudan, and Venezuela.  30 of these are Russian nationals.

Russia responded with its own list of banning Canadians from its territory. After President Putin’s referral to Canada’s Magnitsky law as “unconstructive political games,”[25] Russia’s Ministry of Foreign Affairs stated, relying on the principle of reciprocity, that the Russian Federation “prohibits entry to many Canadian citizens,” and that its “list is long and contains dozens of names – the Russophobic Canadian citizens that have been systematically destroying bilateral relations.”[26]

Further regulations under the Act, SI/2017-71, Justice for Victims of Corrupt Foreign Officials Permit Authorization Order, were enacted on November 15, 2017.  They authorize the Minister of Foreign Affairs to issue a “permit” to or a “general permit” allowing “any person in Canada or any Canadian outside Canada” to carry out a specified activity or transaction, or class of activity or transaction, that is restricted or prohibited under the Act or the Justice for Victims of Corrupt Foreign Officials Regulations.

These latter regulations may pave the path to those who have been affected by the section 4 order but who are not the listed foreign official, to approach the Minister with a petition to lift any of the restrictions associated with the order before commencing a judicial review proceeding in court.

 

[1]    Bill S-226, An Act to provide for the taking of restrictive measures in respect of foreign nationals responsible for gross violations of internationally recognized human rights and to make related amendments to the Special Economic Measures Act and the Immigration and Refugee Protection Act.

[2]    In addition to Canada, the  Magnitsky law has been passed in other countries, including the USA, the United Kingdom, Estonia, and Lithuania.

[3]  Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), S.C. 2017, c. 21, s. 4(2)(a).

[4]  Ibid, s. 4(2)(b).

[5]  Ibid, s. 4(1)(c).

[6]  Ibid, s. 4(2)(d).

[7]  Ibid, s. 4(2)(a)(ii).

[8]  Ibid, s. 4(2)(c).

[9]  Ibid, s. 4(1)(a).

[10]  Ibid, s. 4(1)(b).

[11]  Ibid, s. 4(3).

[12]  Ibid, s. 5.

[13]  Ibid, s. 6.

[14]  Ibid, s. 7(1).

[15]  Ibid, s. 7(2).

[16]  Ibid, s. 7(3).

[17]  Ibid, s. 11.

[18] S.C. 1992, c. 17.

[19] S.C. 2001, c. 27.

[20] Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), S.C. 2017, c. 21, ss. 17, 18.

[21] Immigration and Refugee Protection Act, .C. 2001, c. 27, s. 35(1).

[22]  Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), S.C. 2017, c. 21, s. 8.

[23]  Ibid, s. 10.

[24]  Ibid, ss. 8(2), 8(3), 10(3).

[25]   PИA Новости (RIA News), “Путин: после смерти Магнитского начались неконструктивные политические игры” (“Putin: after the death of Magnitsky non-constructive political games have begun”), October 19, 2017, online at <ria.ru/politics/20171019/1507192330.html>; Mike Blanchfield, “Putin brands Canada’s adoption of new Magnitsky Act as political gamesmanship” CBC / The Canadian Press, October 20, 2017, <www.cbc.ca/news/politics/magnitsky-act-putin-brands-canada-1.4364379>.

[26]    Russian Federation, Ministry of the Foreign Affairs, Comment by Foreign Ministry Spokesperson Comment by Foreign Ministry Spokesperson Maria Zakharova on the introduction of new anti-Russian sanctions by Canada, November 3, 2017, in Russian and English, at <www.mid.ru>.

Alexanda Logvin

Alexanda Logvin