Cabinet can forfeit foreign state assets

Summary#

This bill changes the Special Economic Measures Act (SEMA) so the federal Cabinet (Governor in Council) can order the forfeiture and disposal of assets owned or controlled by a foreign state that were seized by executive order, without going to court (Bill Summary; Clause 4 adding SEMA 5.41). It also clarifies who pays costs, how creditors’ rights are treated, how proceeds can be used, and the role of the RCMP.

• Cabinet may order forfeiture of foreign state–owned or controlled assets that are under a SEMA seizure or restraint order (Clause 4; SEMA 4(1)(b), 5.41).
• Court-based forfeiture cannot be used for foreign state property; that category shifts to Cabinet orders (Clause 3 adding SEMA 5.4(1.1)).
• Owners must pay seizure, restraint, and disposal costs; these costs become a debt to Canada (Clause 1 amending SEMA 5).
• The Minister may spend net sale proceeds of assets forfeited under 5.41 for the same purposes already listed in SEMA 5.6 (Clause 5).
• Secured and unsecured creditors keep their ranking while assets are frozen, unless the property is forfeited under 5.4 or 5.41 (Clause 2 amending SEMA 5.2(b)).
• The RCMP can assist with making and enforcing Cabinet forfeiture orders and share information for that purpose (Clause 6 amending SEMA 6.2(1)).

What it means for you#

• Households

  • No direct change to daily life. If government decides to spend proceeds, funds may go to the purposes listed in SEMA 5.6 (e.g., reconstruction, peace and security, victim compensation). Amounts and recipients are not set by this bill (Clause 5; SEMA 5.6).

• Businesses and financial institutions

  • If you hold assets owned or controlled by a foreign state that are subject to a SEMA freeze, you may receive a Cabinet forfeiture order and direction to dispose or transfer proceeds (Clause 4; SEMA 5.41).
  • Your security interests keep their ranking while property is frozen, unless and until the property is forfeited under 5.4 or 5.41 (Clause 2; SEMA 5.2(b)).
  • After forfeiture, normal claims to the property may cease to apply; the bill does not add a compensation process for creditors (Clause 2; SEMA 5.2(b)).
  • You may face information requests from the RCMP and must comply with SEMA orders, as under current law (Clause 6; SEMA 6.2(1)).

• Creditors and counterparties

  • Secured and unsecured rights keep their ranking while freezes are in place, unless the property is forfeited (Clause 2; SEMA 5.2(b)).
  • If property is forfeited, you may not be able to enforce against it. The bill does not create a new right to payment from proceeds (Clauses 2, 5).

• Foreign states and state-owned entities

  • Assets in Canada that are seized or restrained under SEMA may be forfeited by Cabinet order without a court application (Clauses 3–4; SEMA 5.4(1.1), 5.41).
  • You are liable for seizure, restraint, and disposal costs; these are a debt to Canada that can be recovered in court (Clause 1; SEMA 5).

• Victims and eligible recipients under SEMA 5.6

  • The Minister may spend net proceeds from sales of assets forfeited under 5.41 for the same purposes already allowed in SEMA 5.6, after consulting the Ministers of Finance and Foreign Affairs. This is discretionary and case-by-case (Clause 5; SEMA 5.6).

• Timing

  • Effective date and implementation timelines: Data unavailable.

Expenses#

• Estimated net cost: Data unavailable.

• Key points

  • No official fiscal note identified. Data unavailable.
  • The bill sets that owners must pay seizure, restraint, and disposal costs; these amounts become a debt to Canada recoverable in court (Clause 1; SEMA 5).
  • The bill does not set an appropriation. It allows spending of net proceeds already in (or added to) the Proceeds Account from property forfeited under SEMA 5.41, for the purposes listed in SEMA 5.6 (Clause 5).
  • Potential revenues to the Proceeds Account depend on future forfeitures and sales. Data unavailable.

Proponents' View#

• Enables faster, clearer action on foreign state assets by allowing Cabinet to order forfeiture when assets were seized by executive order, rather than requiring a court application (Bill Summary; Clauses 3–4).
• Protects taxpayers by making the owner liable for seizure, restraint, and disposal costs, recorded as a debt to Canada (Clause 1; SEMA 5).
• Reduces collateral harm while assets are frozen by keeping creditors’ ranking intact unless and until forfeiture occurs (Clause 2; SEMA 5.2(b)).
• Turns frozen state assets into usable funds for existing SEMA 5.6 purposes, subject to ministerial decision and consultations (Clause 5; SEMA 5.6).
• Improves enforcement by clarifying the RCMP’s role to assist with Cabinet forfeiture orders and related information sharing (Clause 6; SEMA 6.2(1)).

Opponents' View#

• Lowers judicial oversight by shifting foreign state forfeiture from court-based orders to Cabinet orders, raising due process and litigation risks (Clauses 3–4). Assumption: existing review mechanisms may not fully substitute for court adjudication.
• Legal and diplomatic risk: foreign states may assert immunity or challenge forfeiture under other laws, and could retaliate against Canadian assets abroad. Assumption: the bill does not amend state immunity statutes or treaty obligations (Clauses 3–4).
• Creditor uncertainty: after forfeiture, secured and unsecured claims may be cut off without a new compensation pathway in the bill (Clause 2). Assumption: no express creditor-compensation mechanism is added.
• Implementation costs and recovery risk: managing seizures, information requests, and asset disposal may require resources, and cost recovery from foreign state owners may be slow or contested (Clause 1; SEMA 5). Data unavailable.
• Discretion over proceeds: spending from the Proceeds Account remains optional and limited to existing purposes, so outcomes for victims or reconstruction are not guaranteed (Clause 5; SEMA 5.6).