Contributing Lawyers


Cyndee Todgham Cherniak

United States

Susan Kohn Ross


Andrew Hudson

Canadian Companies Doing Business With Iran Should Prepare For New Sanctions

Canada's role in promoting new United Nations Security Council Resolutions against Iran is public. Canada will be hosting the G8 leaders on March 29-30, 2010 in Gatineau, Quebec (near Ottawa, Ontario).

Canada's Foreign Affairs Minister, Lawrence Cannon, indicated on March 26, 2010 that Canada will be pushing for new sanctions at the G8 Meeting. When referring to what he called a "fast evolving file", Minister Cannon said:

"I will discuss with my G8 colleagues what we can do to put additional pressure on Iran to persuade it to stop its nuclear enrichment activities and convince the Iranian authorities to come back to the table... Unfortunately I believe we are left with little choice but to pursue additional sanctions against Iran, ideally through the United Nations Security Council.”

This statement follows the January 2010 statements by Minister Cannon and Prime Minister Harper, which indicate Canada's support for new sanctions against Iran. The use of the words "fast evolving file" at this time means that Canada is already taking steps to monitor trade and commerce with Iran. There is much going on behind the scenes that is not public. Most significantly, Canada is part of the sanctions promotion team and are committing political capital to the initiative. Companies should take this as a strong indication that Canada is more serious about economic sanctions against Iran than ever before.

The preferred venue for the new sanctions is the U.N Security Council. That being said, both Russia and China have veto powers and have stopped recent initiatives for new sanctions. Some are speculating that the G8 may impose unilateral sanction if China or Russia use their veto powers at the U.N Security Council.

It is not clear at this point in time what will be the content of the proposal for new economic sanctions against Iran. There are conflicting reports on whether the new sanctions being proposed by the United States include prohibitions on financial services being provided in respect or Iranian trade and commerce. The Wall Street Journal reported March 25, 2010 that the U.S. administration had watered down proposed sanctions that would have choked off Iran's access to international banking services, and closed international airspace and shipping lanes to Iranian commercial ships and aircraft. On March 26, 2010, he U.S. administration made a point of saying the news reports are incorrect.

Any Canadian entity or person with business activities in Iran or with Iran should undertake a risk management strategy as the message is loud and clear --- new sanctions will be imposed soon. What the new sanctions will be, we cannot be certain. That being said, a risk management approach would be to move cautiously as if the current U.S. sanction and OFAC rules apply in Canada. find the most restrictive rules and proceed as if those are the rule that will be applied in the future. take steps to preserve legal rights and minimize financial losses based on prohibitions on the activities you wish to engage in.

If you would like to discuss this issue further, please contact Cyndee Todgham Cherniak at 416-307-4168. When considering whether you wish to pay for legal advice, ask the questions:

1) How much would you pay for an insurance policy against costly business mistakes?

2) How much money will this cost the business if the activity I wish to engage in is on the prohibited list before the activity is completed?

3) What are the current penalties for non-compliance and will hey likely increase?

4) Will doing business with Iran and/or prosecution for failure to comply with sanctions damage the reputation of the business and. thereby affect other opportunities?

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