The Mutual Legal Assistance in Criminal Matters Act

Peter Welsh Corporate Law

This is something you should know about. A relatively new and not well known piece of Federal Legislation in Canada can be of considerable help to enforce in Canada a Judgment obtained in a foreign jurisdiction. Under Treaties between Canada and numerous other countries, the legislation allows for some rather severe and effective entitlements in Canada for those who have secured a Judgment in another Country but have been frustrated in their efforts to enforce it.

In essence, this Act allows, in certain circumstances, for the filing in a Canadian Court of an Order obtained for the collection of a Judgment, the enforcement of a payment or the seizure of assets that are in Canada. The Act is similar to the Reciprocal Enforcement of Judgments Act which is long established inter-provincial legislation allowing for a Judgment in one province to be filed and enforced in a Court in another province. The Mutual Legal Assistance in Criminal Matters Act provides that the assets in Canada of a party defendant sued successfully in another jurisdiction may be frozen in Canada. That includes “freeze” Orders on bank accounts and seizure of real estate and personal property.

The Process

The process is simple. The Applicant (with a Judgment in a foreign jurisdiction) applies to The Central Authority of Canada (which means, in Canada, the Federal Minister of Justice) with a mere letter together with the foreign Judgment appended and requests enforcement of the foreign Order.

The Minister of Justice applies to the Canadian Court having jurisdiction for enforcement of the “freeze” Order.

Several recent, somewhat famous, cases illustrate its effectiveness.

Example

The Government of Iran was successfully sued in California for liability arising from the death of a hostage during a ransom case in the Middle East. But Iran had no assets in California. The relatives of the hostage brought a California Judgment into Canada to seize the Iranian Embassy in Ottawa. They got the Court Order in Ontario which froze the Iranian Embassy.

My current case

I currently have a case involving a criminal conviction in the United States. The United States Department of Justice holds a Forfeiture Order from a US Court, forfeiting any assets anywhere that the defendant held. In this case, the United States Department of Justice has claimed that assets of a third party in Canada (who is my client) are actually the assets of the defendant in the United States. The United States Department of Justice obtained an Order from the Ontario Superior Court of Justice to freeze the Canadian assets, claiming that the Canadian assets were “substitute assets”.

But beware of abuse

Now there is a potential for misapplication: by way of obtuse example, if a hotel patron were to not pay a hotel bill in a foreign destination resort or hotel, the foreign hotel could obtain a Judgment in the foreign jurisdiction against the hotel patron and then with unsworn testimony, claim that assets of a third party in Canada are actually the substitute assets of the defaulting hotel patron and obtain a Freeze Order over the third party’s assets in Canada.

As with almost anything, some very good intentions of legislators (possibly the seizure of hidden drug money or fraud proceeds) may spill over in to the seizure or “freezing” of completely legitimate property.

As my case unfolds, I’ll update this blog to let you know what has become of the assets of my client that have been frozen in Canada to satisfy a Judgment obligation of a US convicted felon currently a prisoner in the United States. The frozen assets in Canada may not, in fact, be the “substitute assets” of, in my example above, the hotel patron.

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