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Sanctions for Iran, Modern Slavery, Directors and Officers Liability & More: Timely Topics December 2022 Edition

Timely Topics with McCarthy Tétrault curates the latest market trends on a monthly basis to help you stay informed of developments that can affect your business. This content is current as of December 1, but please connect with us if you have any questions on any of the topics below.

Here are this month’s trending topics:

1) Canada and Its Allies Implement Multiple Rounds of Sanctions Against Iran

In the wake of significant human rights violations in Iran, including the apparent killing of Mahsa Amini by the Iranian regime’s “morality police”, Canada has taken decisive action. On October 7, 2022, Prime Minister Trudeau announced that Canada would implement sanctions on over 10,000 additional Iranian officials. These new sanctions follow the Federal Government’s earlier announcement of the sanctioning of dozens of influential Iranian individuals and entities.

Canada had previously imposed a full trade embargo against Iran for a number of years until those measures were in large part repealed in 2016. Canada is seeking to make its sanctions against Iran among the most aggressive in the world, and so we are expecting these latest measures to be followed by further government action in coming weeks and months. The sanctions follow increased action by the Federal Government against other authoritarian regimes, such as Russia. Companies doing business directly or indirectly involving Iran or parties based in that region of the world should be reviewing their compliance policies and screening policies to ensure they are in line with these developments.

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If you’d like to speak about how the sanctions impact your business, please connect with a member of our International Trade and Investment Law Group

2) Forced Labour and Modern Slavery Update – Canadian Firms Now Facing Greater Scrutiny of Their Supply Chains

Canadian legislators and their international counterparts are continuing to take action on forced labour and modern slavery in the global supply chain. Since July 2020, Canada has prohibited the importation and distribution of items made in whole or in part from forced labour. Pending legislation will expand this prohibition to include child labour and will require the public reporting of companies’ due diligence efforts to prevent and reduce the risk of forced labour and child labour being used in their supply chains.

Part IV in our series on forced labour and modern slavery provides an overview of recent developments in this area outside of Canada, the ongoing legislative initiatives in Canada and how these developments may impact businesses in Canada and abroad. In March 2022, following similar developments in the United States, Employment and Social Development Canada (“ESDC”) released a report on labour exploitation containing several recommendations on how the Canadian government can legislatively tackle forced labour. The ESDC Report follows Canada’s public announcement of its commitment to implement modern slavery legislation. In this context, Canadian companies should be prepared for increased enforcement activity in the near future, and should be working to ensure their supply chains are fully compliant with existing forced labour and modern slavery laws as well as those soon to be implemented in Canada. Beyond Canada and the United States, the European Union has recently moved to ban products made with forced labour in the European market in a sign of increased global cooperative action on these issues.

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We will continue to keep our clients appraised of these legislative and regulatory developments as they arise. We invite you to connect with a member of our International Trade and Investment Law Group to discuss the implications to your business. 

3) Directors and Officers in the Hot Seat: Maximum Fines Under the Occupational Health and Safety Act Now $1.5-million

Earlier this year, amendments to Ontario’s Working for Workers Act, 2022 (Bill 88) came into force, making significant changes to Ontario’s Occupational Health and Safety Act (“OHSA”). Among these changes are increases to the maximum penalties, including a significant increase to the maximum fine for corporate directors and officers for convictions under the OHSA.

What does this mean for corporations and directors and officers? Check out our recent blog post outlining some steps corporations and their directors and officers can take to ensure they are taking all reasonable precautions to safeguard worker safety, which not only improves health and safety outcomes, but establishes a defence in the event of any charges.

The recent changes now in effect in Ontario are a timely reminder that regulators expect corporations and their directors and officers to treat worker safety seriously. Organizations should ensure that their policies and procedures remain up-to-date with ever-changing local worker safety regulations.

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Please connect with our National Labour & Employment Group to discuss what this means for your organization. 

4) Virtual Questioning: Here to Stay

The pandemic continues to have lasting impacts on the Canadian legal system. The Court of Appeal of Alberta’s recent decision in Mostafa Altalibi Professional Corporation v Lorne S. Kamelchuk Professional Corporation has determined that there is no right to in-person questioning in the province of Alberta.

The decision centred on a dispute over the Appellants’ argument that a party’s ability to assess a witness’ credibility is impaired if the questioning proceeds virtually. The Court of Appeal dismissed the argument, finding that the Court has the jurisdiction to order remote questioning under the Alberta Rules of Court and concluded that “videoconferencing is a successful and effective way of conducting legal matters and advancing litigation”.

Given the Court of Appeal’s broad endorsement of virtual questioning in Mostafa, it is clear that it is here to stay.

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If you’d like to discuss trends in litigation and Canadian courts, please connect with our National Litigation Group.

5) Government of Canada Orders Divestitures in the Critical Minerals Sector

Over the past few years, the Government of Canada has asserted a more aggressive posture towards investments by state-owned enterprises (“SOE”), focusing most recently on those from “hostile or non-likeminded regimes or states, in Canada’s critical minerals sector. On November 2, 2022, in furtherance of the government’s policies, the government announced that it has ordered the divestiture of investments by three Chinese firms in Canadian-headquartered companies that have actual or potential operations in lithium and, in certain cases, other critical minerals. These steps are the latest in a series of measures the Canadian government has taken to strengthen Canada’s national security regime, in particular with respect to investments by SOEs or private companies with ties to nations of higher sensitivity (which the government regards to constitute a SOE), such as Russia or China. As well, these steps represent a notable change in enforcement policy compared with Canada’s decision earlier in 2022 to allow an investment by a different Chinese investor in a Canadian company that had lithium operations outside of Canada.

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Please connect with a member of our Competition/Antitrust & Foreign Investment Group if you’d like to learn more. 

This newsletter is designed to provide general information only. This newsletter does not provide legal advice on specific issues. You are encouraged to consult with legal counsel should you require assistance in addressing a particular issue or concern.

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