LexSage

What Is A Ministerial Authorization
To Transact With A Sanctioned
Country/Person?

February 7, 2017

Canada imposes various economic sanctions and trade restrictions pursuant to the United Nations Act (“UNA”) and the Special Economic Measures Act (“SEMA”). The specific sanctions are implemented in country specific or targeted regulations.  That being said, most regulations promulgated under SEMA have a sister regulation that grants authority to the Minister of Foreign Affairs and/or Minister of International Trade to grant authorizations (called a “Ministerial Authorization”) to allow certain transactions.  Most regulations promulgated under the UNA contain exemptions that may be granted by way of a Ministerial certificate (we call these Ministerial Authorizations also).

Ministerial Authorizations are only granted pursuant to a specific request that is carefully considered on a case-by-case basis.  One person can be granted a Ministerial Authorization for a transaction and it is not guaranteed that a second Ministerial Authorization will be granted to that same person.

The Ministerial Authorization can be a general authorization or may be granted in specific situations.

General authorizations are set out in SEMA regulations.  For example, the Special Economic Measures (Iran) Authorization Order provides that it:

“hereby authorizes the Minister of Foreign Affairs to issue to any person in Canada or any Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction, that is restricted or prohibited pursuant to the Special Economic Measures (Iran) Regulations.”

Similar provisions are found in respect of Canada’s sanctions against Burma/Myanmar, Iran, Libya, South Sudan, Syria, Russia, Ukraine and Zimbabwe.

The more specific authorizations are contained in UNA regulations.  For example, section 13 of the Regulations Implementing the United Nations Resolutions on the Democratic People’s Republic of Korea (DPRK) provides that:

“(1) A person that wishes to do an act or thing that is prohibited under these Regulations may, before doing the act or thing, apply to the Minister in writing for a certificate to exempt the act or thing from the application of the Regulations.

(2) The Minister may issue the certificate if the Security Council did not intend that such an act or thing be prohibited or if it is established that the requirements of Security Council Resolution 1718 and Security Council Resolution 2270 have been met and, if required by those resolutions, that the Committee of the Security Council has approved the act or thing in advance.”

Section 14 contains an exemption for property:

“(1) A person whose property has been affected by the application of section 3 may apply to the Minister in writing for a certificate to exempt the property from the application of that section if the property

(a) is necessary for basic or extraordinary expenses; or
(b) is subject to a lien, mortgage or security interest, to a hypothec or prior claim, to a charge or to a judicial, administrative or arbitral decision.

(2) If it is established in accordance with Security Council Resolution 1718 that the property is necessary for basic or extraordinary expenses or is subject to a lien, mortgage or security interest, to a hypothec or prior claim, to a charge or to a judicial, administrative or arbitral decision, the Minister must issue a certificate within the following deadlines:

(a) within 15 working days after receiving the application, in the case of property that is necessary for basic expenses, if the Committee of the Security Council does not oppose the application;
(b) within 30 working days after receiving the application, in the case of property that is necessary for extraordinary expenses, if the Committee of the Security Council approves the application; and
(c) within 90 days after receiving the application, in the case of property that is subject to a lien, mortgage or security interest, to a hypothec or prior claim, to a charge or to a judicial, administrative or arbitral decision that

(i) was created or issued before the coming into force of these Regulations,
(ii) is not for the benefit of a designated person, and
(iii) has been brought to the attention of the Committee of the Security Council by the Minister.”

There are no other restrictions on the Minister’s authority to issue Ministerial Authorizations.  That being said, the Minister does not like to ignore the policy considerations behind the sanctions that his office pursues.  The most common reason for granting Ministerial Authorizations are (1) on humanitarian grounds or (2) the proposed transaction does not offend the policy behind the sanctions.

For example, the Minister has issued Ministerial Authorizations for payments to a Canadian company for goods and services provided and/or supplied pursuant to a contract entered into prior to the commencement of the sanctions (where payment is after the sanctions are imposed) because Canadian companies being paid for legal supplies of goods and services is not inconsistent with the policy behind the sanctions.

Ministerial Authorizations are granted where it can be shown that the people who will benefit are not intended targets of the sanctions and are suffering due to the sanctions.  Canada realizes that sanctions can hurt the most vulnerable.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or Cyndee@lexsage.com.