Canada has imposed further sanctions and an investment ban on Russia due to its continuing invasion of Ukraine. These restrictions are in addition to those already imposed in the Special Economic Measures (Russia) Regulations as described in our blog posts of  February 25,  March 3 and  March 4. Sanctions have also been imposed on Belarus.

Ban on Russian Vessels in Force

The Canadian government has now prohibited “any person to dock in Canada or pass through Canada any ship that is registered in Russia or used, leased or chartered, in whole or in part, by or on behalf of or for the benefit of Russia, a person in Russia or a designated person, unless such docking or passage is necessary to safeguard human life or to ensure navigational safety.

Ban on Russian Oil in Force

The Canadian government has now prohibited any person in Canada and any Canadian outside Canada to import, purchase or acquire any petroleum or related oils or petroleum gas or related gases, wherever situated, from Russia or from any person in Russia.

More Designated Russians and Belarusians

Thirty-two more Russian entities and forty more Russian individuals have been designated and are therefore subject to a general dealing prohibition.

Nineteen Belarusian individuals have been designated in relation to the war in Ukraine. The Belarusians previously sanctioned under the pre-existing sanctions on Belarus were designated in relation to human rights violations in Belarus. Twenty-five Belarusian entities have been designated and are thus subject to a general dealing prohibition.

Russian Investments in Canada to Face Higher Scrutiny

On March 8, 2022 the Government of Canada issued a Policy Statement on Foreign Investment Review and the Ukraine Crisis, which states that approval of Russian acquisitions of control of Canadian businesses (where approval by the Minister of Industry or the Minister of Heritage is required under the Investment Canada Act) will be granted on an exceptional basis only.

The Policy Statement also states that a determination by the Canadian government that an investment, regardless of its value, has ties, direct or indirect, to an individual or entity associated with, controlled by or subject to influence by the Russian state, “will support a finding” by the Minister that there are reasonable grounds to believe that the investment could be injurious to Canada's national security as set out in Part IV.1 of the Investment Canada Act. This is the test for commencing a national security process under the Investment Canada Act. Thus all such investments are likely to receive higher scrutiny that might otherwise be the case.

The Policy Statement recommends that all non-Canadian investors and Canadian businesses carefully review their investment plans to identify any potential connections to Russian investors and entities that may be involved in both controlling and minority investments. It is clear that the Canadian government will until further notice thoroughly scrutinize transactions for any Russian involvement.

Conclusion

Canada's economic sanctions and other measures imposed on Russia and Belarus in response to Russia's invasion of Ukraine continue to expand. This is posing significant challenges for Canadian businesses to quickly assess whether any counterparties have become designated and are thus subject to dealing prohibitions, breaches of which are subject to criminal prosecution. Such assessments must be conducted in order to avoid violating the law.

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