Cabinet Can Forfeit Foreign State Assets

Summary#

This bill amends the Special Economic Measures Act (SEMA) to let the Governor in Council order the forfeiture and disposal of a foreign state’s assets that were seized without a court order. It carves foreign state property out of SEMA’s existing court-based forfeiture path and creates an executive path instead. It also clarifies cost recovery, creditor treatment, RCMP roles, and how proceeds can be paid out. (Clause 1; Clause 3 adding s.5.4(1.1); Clause 4 adding s.5.41; Clause 5; Clause 6)

• Allows forfeiture by order of the Governor in Council for assets “owned, held or controlled, directly or indirectly” by a foreign state that are already under a SEMA seizure/restraint order (no court order) (Clause 4, s.5.41; s.4(1)(b)).
• Bars use of the existing s.5.4 forfeiture process for foreign state property; uses the new s.5.41 path instead (Clause 3, s.5.4(1.1)).
• Lets the Minister pay out net sale proceeds from assets forfeited under the new s.5.41 for the purposes listed in SEMA s.5.6 (Clause 5).
• Puts seizure, restraint, and disposal costs on the owner as a debt to Canada (Clause 1, s.5).
• Keeps secured and unsecured rights’ ranking unless property is forfeited; if forfeited under s.5.41, those rights may be affected (Clause 1 amending s.5.2(b)).
• Confirms the RCMP can assist with new s.5.41 orders and related information sharing (Clause 6, s.6.2(1)).

What it means for you#

• Households
  • No new taxes or fees in the bill text. Direct effects on most households are unlikely. Data on downstream spending uses is unavailable.
• Financial institutions and asset custodians
  • Must continue to comply with SEMA seizure/restraint orders under s.4(1)(b). For foreign state property under such orders, be prepared to transfer assets to the Crown upon an executive forfeiture order under s.5.41 (Clause 4).
  • Secured and unsecured interests keep their ranking until forfeiture. If forfeiture occurs under s.5.41, those interests may be displaced (Clause 1 amending s.5.2(b)).
• Creditors and counterparties
  • Collateral or other interests tied to foreign state property under s.4(1)(b) orders remain ranked unless forfeiture is ordered. After forfeiture under s.5.41, recovery may change (Clause 1 amending s.5.2(b); Clause 4).
• Foreign governments with assets in Canada
  • Assets under a SEMA seizure/restraint order that are owned, held, or controlled by a foreign state can be forfeited and disposed of by executive order, without a court order (Clause 4, s.5.41; s.4(1)(b)).
  • You are liable for seizure, restraint, and disposal costs, which become a debt to Canada recoverable in court (Clause 1, s.5).
• Federal public servants and RCMP
  • RCMP may assist with making s.4(1)(b) orders, seizures, and new s.5.41 forfeiture orders, and may collect or share information for that purpose (Clause 6, s.6.2(1)).
  • The Minister may pay out net proceeds from s.5.41 forfeitures for the purposes set in s.5.6, after consulting Finance and Foreign Affairs (Clause 5, s.5.6).
• Local and provincial governments
  • No new duties or authorities identified in the bill text.

Expenses#

• Estimated net cost: Data unavailable.

• Fiscal note: No publicly available information.

• Explicit appropriations in the bill: None (Bill text).

• Cost recovery: Seizure/restraint and disposal costs are charged to the owner as a debt to Canada, enforceable in court (Clause 1, s.5).

• Potential proceeds: Net proceeds from disposition of assets forfeited under s.5.41 may be paid out for statutory purposes in s.5.6. Amounts depend on future forfeitures and sales. Data unavailable (Clause 5, s.5.6).

• Administrative impacts: RCMP and departmental workload may rise due to new s.5.41 orders. No amounts provided in the bill. Data unavailable.

Proponents' View#

• Closes a legal gap by enabling disposal of foreign state assets seized without a judicial order, via a clear executive forfeiture power (Clause 3, s.5.4(1.1); Clause 4, s.5.41).
• May speed up decisions and use of net proceeds by avoiding a court application for foreign state property (assumption; timelines not in the bill) (Clause 3; Clause 4).
• Protects creditors’ ranking in most cases, since rights keep their ranking unless and until forfeiture occurs (Clause 1 amending s.5.2(b)).
• Reduces burden on Canadian taxpayers by making owners liable for seizure and disposal costs as a debt to the Crown (Clause 1, s.5).
• Clarifies RCMP authority to assist and share information for enforcement, which can improve compliance with sanctions (Clause 6, s.6.2(1)).

Opponents' View#

• Shifts forfeiture decisions for foreign state assets from a court-based path to an executive order, reducing judicial oversight at the forfeiture stage (Clause 3, s.5.4(1.1); Clause 4, s.5.41).
• Creates uncertainty for lenders and counterparties, since secured and unsecured rights may be affected once forfeiture is ordered (Clause 1 amending s.5.2(b)).
• Uses broad language on ownership and control (“owned, held or controlled, directly or indirectly”), which may be complex to interpret and enforce, leading to disputes (Clause 4, s.5.41).
• Leaves fiscal impact unclear; while costs are assigned to owners, the bill provides no estimates of administrative costs or proceeds, and collection would rely on court action if contested (Clause 1, s.5).