Canada: Canada Further Restricts Trade With Iran: New Economic Sanctions

On May 29, 2013, Canada imposed new economic sanctions against Iran, citing Iran's failure to address international concerns about its nuclear program. These new sanctions, effective immediately, include a virtual blanket prohibition on importing goods from Iran into Canada, exporting goods from Canada to Iran and investing in Iran, as well as a ban on transferring technical data related to activities in sectors already the subject of prohibitions.

The new sanctions do not apply to goods meeting certain criteria that are to be imported, exported, purchased, sold, acquired, supplied or shipped under a contract entered into before May 29, 2013.

Canada's economic sanctions regime against Iran

Canada imposes economic sanctions on countries pursuant to two schemes: the United Nations Act, which implements Canada's obligations relating to UN Security Council Resolutions, and the Special Economic Measures Act (SEMA), which authorizes the Governor in Council to order sanctions on countries where he believes a situation in a given country constitutes a grave breach of international peace and security that has resulted or is likely to result in an international crisis.

Canada has issued regulations in respect of Iran under both the United Nations Act and SEMA. The new economic sanctions against Iran have been introduced through an amendment to the Special Economic Measures (Iran) Regulations (the SEMA Regulations). The SEMA Regulations were amended in December 2012 to include prohibitions relating to the goods used in shipbuilding, mineral exploration, mining, metal production, and telecommunications industries, as well as vessels designed to transport or store crude oil or its products, and new goods of proliferation concern. The new sanctions constitute a virtual blanket prohibition designed to quash trade with Iran in every industry sector.

The prohibitions

The amendments to the SEMA Regulations prohibit, as of May 29, 2013, any person in Canada and any Canadian outside Canada from:

  • exporting, selling, supplying or shipping goods, wherever situated, to Iran, to a person in Iran, or to a person for the purposes of a business carried on in, or operated from, Iran, subject to certain exemptions; or
  • importing, purchasing, acquiring, shipping or transhipping any goods that are exported, supplied or shipped from Iran, whether the goods originated in Iran or elsewhere;
  • transferring, providing or communicating to Iran or any person in Iran technical data required for prohibited activities in certain sectors or related to any goods in Schedule 2 of the SEMA Regulations; or
  • making an investment in an entity in Iran.

The amendments also add 30 individuals and 82 entities to the list of "designated persons" subject to a complete dealings prohibition.


The amendments include an exemption to the above prohibitions relating to goods that are required to be exported, imported, sold, purchased, acquired, supplied, shipped or transhipped under a contract entered into before May 29, 2013, provided the following criteria are met:

Exports to Iran

Imports from Iran

1. the goods are not:

(a) goods used in the petrochemical, oil or natural gas industry other than goods used in refining oil or liquefying natural gas;

(b) (i) equipment/machinery designed for the building, maintenance or refitting of vessels, (ii) vessels designed for the transportation or storage of crude oil, or (iii) petroleum or petrochemical products;

(c) goods designed for drilling, mineral surveying and exploration,

required to be exported, sold, supplied or shipped after the cut-off date for doing so under the Regulations1; or

(d) goods listed in Schedule 2 of the SEMA Regulations; and

1. the goods are not natural gas, crude oil or petroleum, or petrochemical products; and

2. the consideration received or to be received complies with the SEMA Regulations and the Regulations Implementing the United Nations Resolutions on Iran.

2. the consideration received or to be received complies with the SEMA Regulations and the Regulations Implementing the United Nations Resolutions on Iran.

Other important exemptions have been introduced, such as exemptions relating to facilitating secure and widespread communications via information technologies, and purifying water for civilian and public health purposes. These exemptions apply broadly to all prohibitions in the SEMA Regulations, except the prohibitions against dealing with designated entities.

Additionally, an exemption has been introduced to the prohibition against dealing with "designated persons" and entities in respect of financial services required for a "designated person" to obtain legal services in Canada with respect to the application of any of the prohibitions set out in the SEMA Regulations.

The implications of non-compliance

Any person in Canada and any Canadian outside Canada in non-compliance with the SEMA Regulations is subject to enforcement measures ranging from a fine to imprisonment for up to five years on indictment.

Canadians and other persons in Canada subject to SEMA and the SEMA Regulations should assess any ongoing commercial dealings with Iran and Iranian entities, as well as any commercial dealings that may indirectly involve Iran or an Iranian entity, and take steps to ensure any new arrangements comply with the prohibitions in effect as of May 29, 2013.


1 The cut-off date in relation to goods used in the petrochemical, oil or natural gas industry is November 22, 2011; the cut-off date in relation to (i) equipment/machinery designed for the building, maintenance or refitting of vessels, (ii) vessels designed for the transportation or storage of crude oil, or (iii) petroleum or petrochemical products is December 12, 2012.

Norton Rose Fulbright Canada LLP

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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