Canada's "Unilateral" Sanctions Regime Under Review: Extraterritoriality, Human Rights, Due Process, and Enforcement in Canada's Special Economic Measures Act.

• Author: Nesbitt, Michael

INTRODUCTION

The House of Commons Standing Committee on Foreign Affairs and International Development (Standing Committee) announced on June 9, 2016, that they would immediately undertake an evaluation of Canada's sanctions legislation, and specifically the Special Economic Measures Act (SEMA). (1) True to their word, the Standing Committee heard testimony on possible amendments to SEMA throughout the fall of 2016 and into 2017. This work helped usher in the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (Magnisky Law), (2) which inter alia makes amendments to SEMA. It received Royal Assent on 18 October 2017. (3)

Such a review and update of SEMA was both long overdue and particularly salient. In the past decade, Canada has been increasingly turning to international sanctions as a foreign policy tool. Economic sanctions have been employed against rogue governments in Iran, Syria, Russia, Burma, and elsewhere. Sanctions have become the stick in the diplomatic toolkit, a sharp contrast to the usual carrots or negotiated deals employed by Canada's Foreign Service. Canada's international economic sanctions against Iran and others are also increasingly being debated in diplomatic and corporate halls, and recently have made their way into the public consciousness, for example, when Canadian and American sanctions on Iran were eased in January 2016, in response to a nuclear accord with that nation. The so-called Magnitsky Law, which now allows Canada to target human rights abusers, particularly those in Russia, with economic sanctions for the first time under SEMA, has helped bring all of this to a head. (4)

According to Parliament, the crux of the issue with respect to SEMA has been whether Canada should be empowered to levy economic sanctions on human rights abusers in foreign countries. But much more not considered in the Magnitsky Law must be done to improve SEMA. Times have changed since SEMA was first introduced in 1992, and the legislation has been far from a success, at least as measured by its ability to sustain prosecutions in Canada. Yet, this is the first governmental review of SEMA, despite increasing pressure from Canada's allies to get with the times and improve the legislation and, particularly, its enforcement.

Unfortunately, the lack of governmental attention has been mirrored by a lack of serious academic attention: there is precious little academic research--particularly legal research--available to help it analyze SEMA and its effectiveness. This paper seeks, at the very least, to shed some light on the historical debates around SEMA, the prosecutorial actions taken under the legislation to date, and how the more salient--and controversial--aspects of SEMA have been legally interpreted. It provides some suggestions for amendment and study that include, but go well beyond, SEMA's application to human rights abusers. In particular, this paper argues that it was the right course of action to amend SEMA to allow Canada to enact Magnitsky Law sanctions where serious violations of human rights have taken place. But it is now also time to go beyond these reforms and to target extraterritorially, that is, to allow for the targeting of entities or individuals in third-party states engaged in the deliberate circumvention of Canadian sanctions. The government should also seize the opportunity provided by its review of SEMA to ensure that the listing of individuals and entities affords proper due process protections, including an amendment to provide for a review of all listings two years after they come into force, and every two years hence. A statutorily-mandated interdepartmental sanctions coordination unit should also be inaugurated, both to ensure proper due process in the listing procedures, and effective investigative and enforcement action. Finally, a review or oversight body should be considered, as there is currently no independent oversight of Canada's sanctions procedures. If these suggestions are not eventually accepted by Parliament, hopefully, the discussion herein can, at the very least, bring some of the potential issues with SEMA to light and, perhaps, provide some grist for future debate.

1. THE PATH AHEAD: THE FOCUS AND SCOPE OF THIS PAPER

   An overview of Canada's sanctions "system," which includes import and export controls, country-specific sanctions, sanctions on corrupt foreign officials, and even terrorist listing regimes, is a worthy though major undertaking, (5) and beyond the scope of this paper. Instead, I propose to focus specifically on those most commonly used sanctions, those that target specific countries and the people and entities therein, rather than sanctions targeting only a particular terrorist group (6) or banning the import or export of potentially dangerous goods regardless of origin or destination. (7) Moreover, I will limit my discussion to what I call "unilateral sanctions" under SEMA, that is, those sanctions imposed by Canada not in fulfillment of an international obligation, but because Canada has taken a strategic decision to limit transactions with a specific country. (8)

   This is to say that I will limit my discussion to sanctions promulgated under the authority of SEMA. I do so for four reasons. First, and arguably a sufficient reason on its own, shortly before publication of this article, Canada passed the Magnitsky Law, which included amendments to SEMA to allow it to target "gross and systemic violations" of international human rights for the first time. Yet, there is a sparse independent, academic record of materials--that is to say, materials produced outside of government--on which Parliament was able to draw to evaluate the merits of this legislative amendment. This paper strives to remedy this, at least in small measure, and to clarify that from a legal perspective, this amendment was long overdue. Second, in the past several years, when the media run stories on international sanctions, they generally refer to country-specific, unilateral restrictions promulgated under the authority of SEMA. For example, when the Magnitsky Act to punish human rights abusers in Russia was in the media in 2016 and 2017, (9) or the Syria sanctions came into effect, or concern arose over what to do about Canada's sanctions on Iran when the United States (US) lifted some of its sanctions under its commitments to an Iran nuclear deal, (10) SEMA was implicated first and foremost, and that will continue to be the case moving forward. Third, while there has been extensive academic discussion of the merits and demerits of terrorist listing regimes, most are promulgated to fulfill UN Security Council obligations--for example, those restrictions targeting specific groups like the Taliban or al-Qaida. (11) Canada's country-specific sanctions regime under SEMA have not received the same attention. There is an inequality of arms in terms of the attention given to two regimes that, frankly, share many similar goals. Fourth, although there is great overlap between the various legislative restrictions Canada places on the import, export, or transfer of goods and services that target countries, businesses, and/or entities, and people, the economic impact of SEMA sanctions on Canadians hits home in an acute way, particularly for diaspora communities whose small businesses wish to continue to trade with their sanctioned home countries. (12)

   With this in mind, the second part of this paper begins with an overview of SEMA (13) and the country-specific regulations promulgated thereunder. In the third part, a case study of the only prosecution to date under SEMA puts the sanctions legislation and some of its shortcomings into perspective. The fourth part discusses the first major limitation of SEMA, that being its strict territorial requirements. In the fifth part, this paper discusses the merits and demerits of the SEMA amendments to allow Canada to sanction for human rights abuses. Finally, this paper concludes with a discussion of several discrete issues related to enforcement and due process under SEMA, with a particular view to both improving enforceability, due process, and transparency of SEMA's listing processes.

2. AN INTRODUCTION TO CANADIAN SANCTIONS, SEMA, ITS PURPOSES, AND ITS SCOPE

   1. What Are SEMA Sanctions and When Are they Used?

      SEMA is Canada's umbrella "unilateral" sanctions legislation. (14) By virtue of section 4, the Governor-in-Council--in practice, the Minister of Foreign Affairs--has the authority to promulgate regulations that impose economic sanctions on foreign countries. Put simply, SEMA allows for the promulgation of country-specific regulations that sanction the territory or individuals and/or entities in or of the targeted state.

      "Unilateral" sanctions under SEMA are relatively new to Canada. While the most prominent coordinated international sanctions were implemented against Apartheid South Africa in the mid-1980s, sanctions in Canada did not come into meaningful use until SEMA was first introduced in 1992. They did not really become regularized as a tool of unilateral foreign policy until around the mid-to-late-2000s.

      Today, there are nine country-specific regulations implementing SEMA sanctions, meaning Canada is currently sanctioning nine countries under SEMA. (15) Targeted countries include Iran, Syria, Russia, Burma, North Korea, Ukraine, Zimbabwe, Libya, and South Sudan. As will be discussed, all countries are sanctioned under SEMA, for now, because they have (somehow) been deemed by the Governor-in-Council to be a "threat to international peace and security." (16)

      Significantly, determining whether there has been a threat to international peace and security and whether a country should be sanctioned as a result, is uniquely Canadian. That is, the regulations targeting specific nations are promulgated by virtue of a sovereign Canadian determination--usually made in cooperation with allies such as the United...