The recent decision by the Court of King’s Bench of Alberta in Angophora Holdings Limited v. Ovsyankin, 2022 ABKB 711 exposes the lack of clarity in Canadian sanctions law regarding the definition of ownership and control.
In Angophora, the Court considered whether the proceeds of a debtor’s liquated assets in could be paid out to the creditor. The debtor, Mr. Ovsyankin, argued that the creditor, Angophora Holdings Inc., was controlled or acting on behalf of a designated person, Gazprombank asking for a stay of the proceedings.
Dismissing Mr. Ovsyankin’s application, the Court reasoned that Canada’s sanctions against Russia are not meant to allow debtors to hold off their creditors. The Court acknowledged that “unfortunately, the Russian Sanctions do not provide a definition of control,” proceeding to discuss guidance from other jurisdictions, namely the US, UK, and EU.
While the Court refrained from making a final determination on the matter, it noted there was a strong prima facia case that Angophora was controlled by or acting on behalf of a Canadian sanctioned entity, Gazprombank. The Court placed ultimately responsibility for determining ownership and control on Canadian persons who would be charged with distributing the assets to satisfy themselves that they would not be in breach of the Russian sanctions prior to distributing the proceeds of the enforcement process.
The case evidences the need for immediate guidance to be issued on the definition of ownership and control in the context of Canada’s sanctions regime. Recent amendments to the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act have strengthened Canada’s capabilities to seize assets belonging to sanctioned individuals and entities allowing repatriation to compensate victims affected by grave breaches of international peace and security. However, definitions of ownership and control have not been provided in either legislation or guidance, hampering enforcement efforts.
The Ukrainian Canadian Bar Association (“UCBA”) continues to call on the federal government to provide clear guidance on the definition and meaning of ownership and control in the context of Canada’s sanctions regime. This will not only ensure consistency in application and enforcement of Canadian sanctions legislation but also help safeguard Canada’s foreign policy goals.