Volga-Dnepr Airlines on Monday notified its intention to initiate a formal dispute with the Canadian government over Ottawa’s seizure of an Antonov-124 cargo plane that has been parked at Pearson Airport since Russia launched its full-scale invasion. from Ukraine 18 months ago.
A spokesperson for Global Affairs Canada told Breaking: the federal government received a letter from the airline group on Monday formally notifying Canada of their dispute.
“The Government of Canada is evaluating the letter. We will continue to defend the interests of Canadians,” the spokesman wrote in a brief email, confirming a report on the Air Cargo News site that cited a Russian report by the Interfax news agency. .
The Volga-Dnepr letter referred to article 9 of a 1989 bilateral investment agreement between the Russian Federation (still then the USSR) and Canada. At the time, then-Prime Minister Brian Mulroney and then-Soviet President Mikhail Gorbachev were taking the first steps toward a new economic relationship that would enable trade and protect the rights of corporations operating abroad.
The treaty includes Investor-State Dispute Settlement (ISDS) provisions, which allow a Russian corporation that feels unfairly harmed by the actions of the Canadian government to sue for damages.
It is unclear what kind of compensation Ottawa’s Volga-Dnepr might seek.
“If the dispute is not resolved within six months of Canada’s receipt of notification, Volga-Dnepr Airlines will formally initiate arbitration proceedings,” the company said in a press release. “Volga-Dnepr remains open to negotiations with Canadian representatives to resolve the issue and return the aircraft.”
Russia accuses Canada of ‘theft’
During a visit to Kiev in June, Prime Minister Justin Trudeau told reporters that the Canadian government would use powers granted by Parliament in 2022 budget legislation to impound the plane, intending to turn it over to the Ukrainian government for its use. .
Because the plane has been parked on the runway for so long, it is expected to require significant servicing to get it airworthy again. Heavy-duty aircraft manufacturer Antonov Airlines is headquartered in Kyiv and could theoretically put it back into service for its new owner once the asset seizure and transfer process from Canada is complete.
The seizure of the plane by Canada has not been quick or easy.
The federal government must initiate proceedings in Federal Court and offer due process to the owners of any assets it wishes to seize. This process has not yet been developed, which is why those who pass through the Toronto airport have seen this huge plane parked for months.
The aircraft had been contracted by the Canadian government to fly a consignment of COVID-19 rapid test kits from China in late winter 2022. While in Toronto unloading its cargo on February 27, the official notice to airmen ( NOTE ) was issued, banning Russian aircraft from Canadian airspace.
Legislation allowing for the seizure of assets held by sanctioned Russian individuals and entities was passed four months after the full-scale invasion began.
Canada subsequently added Volga-Dnepr to its sanctions list, paving the way for an eventual seizure. Ukrainian Prime Minister Denys Shmyhal discussed the transfer of ownership of the plane during meetings with him in Canada last April.
The Russian Foreign Ministry called the seizure of the cargo plane a “shameless and cynical theft” and warned the Canadian government in an official diplomatic rebuke earlier this summer that relations between the two countries were “on the verge of breaking down.” “.
It is typical in bilateral investment disputes that one party must notify. That is usually followed by a set period of time during which the two parties can try to negotiate a settlement of their problems before going to court.
This case is only the second use by Canada of its seizure powers. Its first move came last December, when Canada announced it would seize $26 million in financial assets from Granite Capital, a company believed to be owned by sanctioned Russian oligarch Roman Abramovich.
The government was warned of legal challenges
No seizure has completed the judicial process required to seize those assets from the Crown, let alone transfer them to Ukraine.
Canada’s original justification for introducing the seizure legislation was a desire to use the proceeds to help finance the reconstruction of Ukraine after the war. The Antonov-124 could also be of value to Ukraine during the current armed conflict, but this latest legal move makes a quick transfer of the aircraft unlikely.
At the time Parliament authorized these seizure powers, Canadian officials were warned that such seizures would be risky and unprecedented and would likely be challenged in court.
International observers have been looking at the Volga-Dnepr and Abramovich seizures as test cases.
Other leased planes originally owned by corporations based in Western democracies that were stranded in Russia when the war broke out have been re-registered as Russian planes. His fate has also triggered costly legal proceedings.