Canada has imposed wide reaching economic sanctions and trade restrictions against Libya. Canada has two sanctions regimes in place against Libya:
1) Multilateral sanctions as agreed by the United Nations imposed pursuant to the Regulations Implementing the United Nations Resolution on Libya and Taking Special Economic Measures, which were implemented pursuant to United Nations Security Council Resolution 1970 (2011) and 1973 (2011), and
2) Unilateral sanctions imposed pursuant to the Regulations Implementing the United Nations Resolution on Libya and Taking Special Economic Measures, which were implemented under the authority of the Special Economic Measures Act.
For more information about the list of prohibitions, please go to my blog post entitled "Summary of Canada's New Trade and economic Sanctions Against Libya" - http://tradelawyersblog.com/blog/archive/2011/march/article/summary-of-canadas-new-trade-and-economic-sanctions-against-libya/?tx_ttnews%5Bday%5D=02&cHash=822eb6f8ee
Also refer to "Libya and Economic Sanctions - What Does It Tell Us About The Future?" - http://www.tradelawyersblog.com/blog/article/libya-and-economic-sanctions-what-does-it-tell-us-about-the-future/
And "CAUTION: Canadian Companies owing Money to Libyan Regime May Be Prohibited Under Canadian Law From Paying" - http://tradelawyersblog.com/blog/archive/2011/march/article/caution-canadian-companies-owing-money-to-libyan-regime-may-be-prohibited-under-canadian-law-from-p/?tx_ttnews%5Bday%5D=01&cHash=eb4649a309
Canada's economic sanctions and trade restrictions against Libya prohibit certain forms of dealings and activities with the Libyan Government itself or its institutions and agencies. The prohibitions in the regulations apply to (1) persons in Canada regardless of nationality and (2) Canadians outside Canada (wherever they may be - even in Libya itself). The term “person" means "an individual, a body corporate, a trust, a partnership, a fund, an unincorporated association or organization or a foreign state." The term "Canadian" is defined to mean "an individual who is a citizen within the meaning of the Citizenship Act or a body corporate incorporated by or continued under the laws of Canada or a province." As a result, branches of Canadian companies operating in foreign jurisdictions are also covered by the prohibitions.
The prohibitions applicable to persons in Canada and Canadians outside Canada may affect their dealings with "designated persons" (which are provided in list form) and property or entities "owned or controlled by a designated person" (not on a list). The coverage of property and entities "owned or controlled by a designated person" means that a mere review of the list of designated persons is not enough to ensure compliance with Canada's export controls laws. It is necessary to obtain information concerning any Iranian person or entity with which you have dealings or propose to have dealings whether or not that person or entity is inside or outside Libya.
There are many Canadian businesses with activities in Libya prior to the recent conflict that has lead to the imposition of the economic sanctions and trade restrictions. The new economic sanctions and trade restrictions can affect the ability of businesses to undertake basic business activities (e.g., paying taxes and other payments to the government, injecting capital into the business, transferring money to pay obligations, etc.).
Canadian persons and Canadians inside and outside Canada must undertake due diligence when dealing in any way with designated persons and entities with connections to Libya. For example, it is well known that the Gadaffi family has interests in a significant number of Libyan businesses in Libya and even institutions that operate abroad. Entities may owned or controlled be the Gadaffis even if their name is not in the business name.
We recommend updating of codes of compliance/conduct and compliance manuals/policies. We recommend having specific questions included in end use certificates to cover these risks in addition to other forms of due diligence (the end use certificate is not enough). We recommend educating employees about the strict rules regarding doing business with Libya. The finance/accounting department must be included in the training as they may write cheques to the Libyan government entities. Th sales department must be included in the training as they may make sales to Libya. The contracting an/or legal department must be included in the training as they must know the identity of persons with whom they contract and ask questions of foreign agents and representatives.
If a Canadian entity is involved in investing Canadian monies in foreign entities or even investing in domestic funds with foreign holdings, questions may be appropriate.
For more information, please contact Cyndee Todgham Cherniak, a Canadian export controls lawyer, at 416-307-4168.