Canada-U.S. Blog Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Canadian Government Export Controls Policies Under A Microscope

Posted in Aerospace & Defence, Border Security, Canada's Federal Government, Cross-border deals, Cross-border trade, Export Controls & Economic Sanctions, Exports, Politics

On July 28, 2017, Global Affairs Canada issued a statement of concern relating to escalating violence in eastern Saudi Arabia. In the Statement entitled “Canada concerned by escalating tensions in eastern Saudi Arabia”, Global Affairs stated:

“Canada is concerned by the escalating violence in eastern Saudi Arabia, which has resulted in civilian and security force casualties. We recognize that Saudi Arabia faces security challenges, but we urge local authorities to work with all communities to defuse tensions. All such challenges must be addressed in a manner that abides by international human rights law.

“In light of recent executions and the decision of the supreme court of Saudi Arabia to uphold the death sentences of 14 individuals, Canada reiterates its firm opposition to the death penalty, in all cases, everywhere.

“Canada will continue to closely monitor the situation. Canadians expecting to travel to the region are advised to check Travel Advice and Advisories (www.Travel.gc.ca) for the latest information.”

The words and phrases “Saudi Arabia” and “civilian casualties” and “human rights laws” were enough to trigger renewed questions about the Government of Canada’s export controls polices and approvals of export permits for certain military equipment and technology to certain countries.  The current situation in Saudi Arabia should bring to mind concerns raised only a year ago about whether Canada should approve export permits for military goods and technology destined for use in Saudi Arabia due to the human rights record of the Kingdom of Saudi Arabia.

Last year, Professor Turp commenced a judicial review of the minister of Foreign Affairs’ approval of export permits to Saudi Arabia and attempted to halt the sale of certain General Dynamics Land Systems Canada light armoured vehicles (LAVs) (see Turp v. Minister of Foreign Affairs, 2017 FC 84).  The Court ultimately dismissed the application for judicial review on the grounds that the Minister has legal authority to issue the permits and had reasonably considered the relevant facts.  We wrote an article about the Federal Court of Canada decision in Turp earlier this year – See Canada’s Minister of Foreign Affairs Has Broad Export Controls Discretion Says Federal Court.

In 2016, Global Affairs posted a March 21, 2016 “Secret” Memorandum for Action to the Minister of Foreign Affairs regarding the sale of light armoured vehicles to Saudi Arabia.  It was posted on the Global Affairs Canada web-site along with an April 11, 2016 Notice.  The Memorandum is significant because it sets out the Canadian process for reviewing politically sensitive export permits, such as those relating to LAV sales to Saudi Arabia.

Fast forward to today.  It should have been expected that reporters and Amnesty International Canada (and other public interest or activist organizations) would raise questions about sales of Canadian goods to Saudi Arabia as soon as the news of the violence in eastern Saudi Arabia broke. Where any Canadian goods used by Saudi Arabia against its own citizens during the current violence?  Is there news media of the government actions and what does the video, footage or photos indicate?  Is there a Canada connection – because you cannot do anything after the goods have been sold and exported to Saudi Arabia?

Steven Chase is a reporter who has followed this issue closely for Canada’s Globe and Mail newspaper.  I have spoken to Steven Chase in the past about Canada’s export controls laws. I expected to see Steven Chase asking all the right questions of all the right people.  On July 28, 2017, Steven Chase and Robert Fife published an online article entitled “Ottawa calls for investigation into Saudi Arabia’s apparent use of Canadian-made armoured vehicles against citizens” in which they detail their investigation into the use of Canadian made LAVs and the government’s statements in response to facts uncovered. Steven Chase and Robert Fife write:

“Military equipment experts consulted by The Globe identified the machines appearing in these videos and photos as Gurkha RPVs, produced by Terradyne Armored Vehicles in Newmarket, Ont., just north of Toronto.”

Steven Chase and Robert Fife went straight to the office of Canada’s Minister of Foreign Affairs and were informed that:

“The government is actively seeking more information about Saudi Arabia’s current efforts to deal with its security challenges, the reports of civilian casualties, and the reports that Canadian-made vehicles have been used by Saudi Arabia in its current security operations,” … “Canada will review all available information as it determines an appropriate course of action.”

Canada’s CBC is also covering this story.  Levon Sevunts published an online article entitled “Ottawa ready to review Saudi arms deal amid crackdown” in which he writes about the following statements made by Global Affairs spokesperson John Babcock:

  • “Minister of Foreign Affairs Chrystia Freeland is “deeply concerned about this situation and has asked officials to review it immediately.”
  • “If it is found that Canadian exports have been used to commit serious violations of human rights, the minister will take action.”
  • “The end use and end user of exports, as well as regional stability and human rights, are essential considerations in the authorization of permits for the export of military goods from Canada.”
  • “The government has expressed its concerns to the Kingdom of Saudi Arabia that its internal security operations be conducted in a manner consistent with international human rights law.”

Canadian aerospace and defence companies should expect changes to Canada’s export controls policies relating to military equipment relating to sales to Saudi Arabia and other countries with human rights abuse concerns.  The human rights record of a government is a consideration (behind the scenes) at Global Affairs Canada, Export Controls Division, when reviewing export permit applications.  Most, if not all, exports of military equipment require an export permit be obtained prior to the export of the goods and technology.  As is set out in great detail in the Memorandum, exports permit applications are reviewed by a number of Canadian government departments and political cases end up on the Minister’s desk (with a research memo and recommendations attached).

There are questions whether foreign subsidiaries or sister companies of Canadian companies are restricted by Canada’s Export and Import Permits Act (the legislation setting out Canada’s export prohibitions and requirements to obtain an export permit).  Changes to Canada’s export controls laws are currently before the government.  See

What the news reports and scrutiny by human rights organizations tell Canadian export controls experts and Canadian companies who make and sell aerospace and defence equipment and technology is that the spotlight has a stronger light now (more than ever before).

For more information or to arrange an export controls diagnostic, please contact Cyndee Todgham Cherniak at 416-307-4168 or at Cyndee@LexSage.com. If you would like assistance in managing the process, Heather Innes, formerly in-house counsel at a company with export controls processes, would be happy to assist. Please call Heather at 416-350-1234.