In this post, we describe the Government of Canada's new ban on certain services to Russia's extractive resource and refining and chemical manufacturing sectors.

As discussed below, the key points are:

  • The Canadian government has imposed a ban on the provision of certain services by a person in Canada, or by Canadians outside Canada, to Russia or any person in Russia in relation to certain industries in Russia.
  • The standard ban on causing, facilitating or assisting in prohibited activities also applies to the services ban.

The Ban

The new regulation, which amends the Special Economic Measures (Russia) Regulations and took effect on June 7, 2022, specifies certain services and certain industries. The specified services cannot be provided by any person in Canada or any person outside Canada to Russia or to any person in Russia in relation to the specified industries.

Affected services

The list of services that are within the scope of the regulation is both lengthy and broad. It includes:

  • construction work,
  • specified activities regarding fuel sales and trading;
  • sales of metals, ores, timber, building materials and certain types of chemicals;
  • transport of certain fuels;
  • water transportation,
  • bulk storage services of liquids or gases;
  • leasing of machinery and equipment;
  • computer services;
  • research and development services;
  • accounting, auditing and bookkeeping services;
  • market research and polling services;
  • management consulting and related services;
  • architectural services;
  • engineering services;
  • technical testing and analysis services;
  • advertising services;
  • services incidental to mining;
  • repair services incidental to metal products, machinery and equipment;
  • services incidental to energy distribution;
  • sewage and refuse disposal and sanitation and other environmental protection services.

The regulations should be checked for the precise definition of these services.

Affected industries

The list of industries is generally limited to the mining and oil and gas and chemical sectors. It includes mining of coal and lignite, extraction of crude petroleum and natural gas, mining of metal ores, other mining and quarrying, mining support service activities, manufacture of coke and refined petroleum products and the manufacture of chemicals and chemical products. The regulations should be checked for the precise definition of these services.

The standard ban on causing, facilitating or assisting in a prohibited activity applies to the new services ban.

Potential Implications for Canadian Businesses

Canadian businesses that are involved in any way in the provision of services to Russia or to any person in Russia, in relation to the listed industries in Russia, will need to assess whether their formerly lawful business activities have become unlawful under the new regulation.

The listed industries are quite significant within the Russian economy (crude petroleum and natural gas being the prime example) and Canadian businesses are quite active in providing services to resource extractive sector globally. There is thus the potential for significant impacts on Canadian businesses.

Conclusion

Canada continues to increase sanctions pressure on Russia. This will inevitably have impacts on some Canadian businesses both in terms of compliance activities and loss of business.

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.