In this article, we describe the Government of Canada’s new ban on certain services to Russia’s extractive resources, refining and chemical manufacturing sectors.
As discussed below, the key points are:
- The Canadian government has imposed a ban on the provision of certain services by a person in Canada, or by Canadians abroad, to Russia or any person in Russia in relation to certain industries in Russia.
- The standard prohibition against inducing, facilitating or aiding prohibited activities also applies to the prohibition of services.
The new regulationswhich modifies the Special Economic Measures (Russia) Regulations and entered into force on June 7, 2022, specifies certain services and certain industries. The specified services may not be provided by any person in Canada or any person outside of Canada to Russia or any person in Russia in relation to the industries specified.
The list of services that fall within the scope of the regulation is both long and broad. He understands:
- construction work,
- specified activities relating to the sale and trade of fuel;
- sales of metals, minerals, timber, construction materials and certain types of chemicals;
- transportation of certain fuels;
- water transportation,
- bulk liquid or gas storage services;
- leasing of machinery and equipment;
- IT services;
- research and development services;
- accounting, auditing and bookkeeping services;
- market research and polling services;
- management consulting and related services;
- architectural services;
- engineering services;
- technical testing and analysis services;
- advertising services;
- services incidental to mining;
- repair services relating to metal products, machinery and equipment;
- services ancillary to energy distribution;
- sewage and garbage disposal and remediation services and other environmental protection services.
The regulations should be checked for the precise definition of these services.
The list of industries is generally limited to the mining, oil, gas and chemical sectors. It includes coal and lignite mining, crude oil and natural gas mining, metal ore mining, other mining and quarrying activities, mining support service activities, manufacturing of coke and refined petroleum products and the manufacture of chemicals and chemical products. The regulations should be checked for the precise definition of these services.
The standard prohibition on causing, facilitating or aiding a prohibited activity applies to the new prohibition on services.
Potential Implications for Canadian Businesses
Canadian companies that are involved in any way in providing services to Russia or anyone in Russia, in relation to listed industries in Russia, will need to assess whether their once legal business activities have become illegal under the new regulations.
The industries listed are quite significant within the Russian economy (crude oil and natural gas being the best example) and Canadian companies are very active in providing services to the resource extraction sector globally. world. So there is potential for significant impacts on Canadian businesses.
Canada continues to increase sanctions pressure against Russia. This will inevitably impact some Canadian businesses in terms of compliance activities and loss of business.