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Canada Initiates Second Forfeiture of Property of Russian Sanctioned Persons, This Time Targeting Russian Aircraft

On June 10, 2023, the Minister of Foreign Affairs (the “Minister”) announced that Canada is seizing and pursuing the forfeiture of a Russian owned Antonov AN-124 cargo airplane that has been stranded at Toronto’s Pearson International Airport since shortly after the Russian invasion of Ukraine began (“the Aircraft”)[1]. This is the second time Canada has used a new mechanism for forfeiting the property of sanctioned persons. The Aircraft is believed to be owned by a subsidiary of Volga-Dnepr Airlines LLC and Volga-Dnepr LLC (collectively, “Volga-Dnepr”), two Russian entities that were listed under the Special Economic Measures (Russia) Regulations (“Russia Regulations”) on April 5, 2023 for their role as “Russian military and logistics companies continuing to provide support to Russia’s invasion of Ukraine.”[2]


Volga-Dnepr is a Russian-based operator of charter freight services.[3] It was the first private airfreight company in Russia to offer usage of the Antonov AN-124, the world’s largest civil cargo aircraft, for civilian purposes. There are currently twenty-six civilian models of the Antonov AN-124 in operation, eleven of which are part of Volga-Dnepr’s fleet.[4]

The Aircraft landed at Toronto Pearson International Airport and has been grounded since February 27, 2022, when the Canadian government ordered a prohibition on Russian planes entering or leaving Canadian airspace.[5] Following that order, the Aircraft has remained grounded.

The Seizure Order

The Aircraft is the first physical asset seized under a new forfeiture mechanism announced in Canada’s Federal Budget 2022.[6] This marks the second use of a new seizure and forfeiture mechanism added to the Special Economic Measures Act (“SEMA”) in the summer of 2022, which we first described in our client alert, “Canada imposes further sanctions against Russia and Belarus as unprecedented asset forfeiture mechanism comes into force”. Canada is the first G7 nation to provide for the forfeiture and redistribution of sanctioned assets.

The seizure mechanism under SEMA allows the Minister, under certain circumstances, to issue an order for the seizure or restraint of property in Canada owned — or held or controlled, directly or indirectly — by a foreign state, any person in that foreign state, or a national of that foreign state who does not ordinarily reside in Canada. These include circumstances where the Minister is of the view that: (i) an international organization of which Canada is a member has called upon its members to impose sanctions against a foreign state, (ii) there is a grave breach of international peace and security that is likely to result in a serious international crisis, (iii) gross and systemic human rights violations have been committed in a foreign state, or (iv) a national of a foreign state is responsible for or complicit in acts of significant corruption.

The first seizure occurred on December 19, 2022, and targeted assets believed to be indirectly held by Russian oligarch Roman Abramovich in a Canadian bank. The Canadian government has indicated that it is pursuing a forfeiture order regarding these funds but no further announcement on its progress has been made.

Asset Forfeiture

Now that a seizure order has been issued for the Aircraft, the Minister may apply to the Superior Court of Ontario for an order that such property be forfeited to the Crown (a “Forfeiture Order”). Such application must be made with notice to Volga-Dnepr and any person who appears to have an interest in or right to the property, and the court may hear from any such person. There appears to be a relatively low bar for obtaining a Forfeiture Order under SEMA. Specifically, the court must issue the Forfeiture Order if it has determined that (i) the property in question is the same property as described in the Seizure Order and (ii) it is owned, held, or controlled directly or indirectly by the person/entity referred to in the Seizure Order.

If a Forfeiture Order is issued, the seized property or proceeds thereof may be used for certain statutorily specified purposes, including the reconstruction of foreign states and compensation for victims of grave breaches of international peace and security, human rights violations, and acts of significant corruption.

In the case of the Aircraft, the Minister has announced that, if a Forfeiture Order is received, Canada “will work with the Government of Ukraine on options to redistribute this asset to compensate victims of human rights abuses, restore international peace and security, or rebuild Ukraine.”[7]


This exercise of the seizure and forfeiture powers on the Aircraft is noteworthy, as it is the first use of these new powers on physical assets. This case is unprecedented among the G7 countries, and will be watched closely as it is the second demonstration of this new mechanism for forfeiture and redistribution to Ukraine of Russian funds and other property located in Western countries.

As we’ve noted in prior discussions, the attempted forfeiture and redistribution of the Aircraft may trigger legal challenges in Canadian courts or through international arbitration pursuant to Canada’s Agreement Between the Government of Canada and the Government of the Union of Soviet Socialist Republics for the Promotion and Reciprocal Protection of Investments. In force since 1991, this bilateral investment treaty allows Russians to claim against the Canadian government for damages arising out of its failure to abide by its investment protection obligations, including its commitment not to engage in expropriation of Russian-owned assets without compensation.[8] It is also possible that the government of Russia will respond to the forfeiture of the aircraft and other Russian property by taking action against Canadian physical assets within the reach of Russian jurisdiction.

The McCarthy Tétrault International Trade and Investment team will continue to monitor these developments and shifting sanctions strategies and countermeasures as the conflict in Ukraine continues.


[1] Global Affairs Canada, “Government of Canada orders seizure of Russian-registered cargo aircraft at Toronto Pearson Airport” (10 June, 2023):

[2] Global Affairs Canada, “Regulations Amending the Special Economic Measures (Russia) Regulations: SOR/2023-72” (April 5, 2023):

[3] Volga-Dnepr Group of Companies, “Volga-Dnepr Group Companies” (2023):

[4] Air Charter Service, “Antonov AN-124” (2023):,26%20civilian%20models%20in%20operation.

[5] Transport Canada, “Government of Canada prohibits Russian aircraft to enter Canadian airspace” (27 February, 2022):

[6]  The Government of Canada, “5.2 Supporting Ukraine” (7 April, 2022):

[7] Supra at note 1.

[8] Government of Canada, “Agreement Between the Government of Canada and the Government of the Union of Soviet Socialist Republics for the Promotion and Reciprocal Protection of Investments” (1991):



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