OTTAWA – The federal government has taken administrative steps to obtain full control over a massive Russian cargo plane parked in Toronto, which Ottawa hopes to use to generate financial support for Ukraine.
“This looks like it’s the government gearing up for its forfeiture of that aircraft,” said William Pellerin, an Ottawa-based trade lawyer with the firm McMillan LLP.
He said he expects the government “to move very quickly on this forfeiture” by seeking a court order to make the plane the property of the Crown.
In June 2023, the federal government officially seized an aircraft that had been sitting on the tarmac at Toronto’s Pearson International Airport since February 2022. The plane hasn’t moved in the 25 months since.
The Russian-registered Antonov AN-124 is owned by the firm Volga-Dneper, which Canada has sanctioned. It is one of the largest aircraft in the world and Ottawa fears Russia could use it to deliver military supplies to support its war on Ukraine.
In June 2023, Ottawa issued a formal cabinet order to seize the plane, ahead of a formal court process to have it forfeited to the Crown. At that point, Moscow warned that relations with Canada were “on the verge of being severed.”
Months later, Ottawa has effectively retracted its original cabinet order and revised it so that it applies to foreign subsidiaries of the Volga-Dneper company.
That means the federal government is sanctioning corporate subsidiaries based in Ireland and the Netherlands, as well as individuals the Canadian government suspects of “ownership interests” in the airplane.
The changes appear in an order-in-council as well as a formal gazette notice, both of which were dated Feb. 14.
“Normally when you sanction (a company), all of its subsidiaries are expressly themselves sanctioned. And so you would never expressly then sanction subsidiaries, especially non-Russian subsidiaries, under the Russian regulations,” Pellerin said.
He said it seems Canada is trying “to make sure that it has everything it needs when it moves to court” because the two regulatory changes “make no sense, unless the government is imminently about to formally forfeit that aircraft to the Crown.”
The Russian embassy in Ottawa is warning it might retaliate if Canada proceeds.
“Russia will perceive the confiscation of the AN-124 aircraft by the Canadian government as hijacking, theft and piracy. The consequences of that decision will definitely impact our bilateral relations,” the embassy wrote Thursday.
“It is worth mentioning that the airplane arrived in Canada in February 2022 with COVID-19 tests at the request of the Canadian government,” the embassy wrote, adding the plane was then barred from departing because Canada had closed its airspace to Russian airlines.
Volga-Dneper argues Canada is violating the terms of the 1989 foreign investment protocol that Moscow signed with Ottawa, which has applied since the days of the Soviet Union.
The company has initiated arbitration proceedings against Ottawa and alleged last August that Canada has cost it upwards of US $100 million.
Mark Kersten, an international law professor at the University of the Fraser Valley, said it’s “remarkable” Ottawa hasn’t actually filed paperwork to take full control of the airplane, more than a year after seizing the property and pledging to gain full control of it.
“These moves that Canada is making have the potential to create incredible precedents,” he said, adding the federal government should be updating Canadians regularly on its efforts to seize Russian assets and send the proceeds to Ukraine.
It’s not clear whether Ottawa would sell the airplane in its current state, use it to generate profits or strip the aircraft for parts. Kersten said it’s possible the plane might not be able to fly in its current state, since aircraft need to be maintained and flown regularly to be operational.
The Canadian Press has contacted Global Affairs Canada for comment.
Canada is the first G7 country to introduce a law that allows it to both seize assets held by sanctioned people and divert the proceeds to victims of a sanctioned regime.
A Senate report warned last month that the law could put Canadian companies abroad at risk, and could undermine the rule of law if the provisions aren’t enforced through due process.
