Emergency! Can the Federal Government Freeze Assets in a “Public Order Emergency”?

As you all know, the centre of Ottawa is currently occupied by groups protesting a variety of pandemic-related public health measures. In addition, there are blockades at borders elsewhere in the province and in Canada, as well as a variety of protests in cities around the country.

Yesterday, the federal government declared a “public order emergency” under the Emergencies Act. The government’s news release accurately describes the test prescribed by the Act for declaring a public order emergency:

In order to declare a public order emergency, the Emergencies Act requires that there be an emergency that arises from threats to the security of Canada that are so serious as to be a national emergency. Threats to the security of Canada may include the threat or use of acts of serious violence against persons or property for the purpose of achieving a political or ideological objective. A national emergency is an urgent, temporary and critical situation that seriously endangers the health and safety of Canadians that cannot be effectively dealt with by the provinces or territories, or that seriously threatens the ability of the Government of Canada to preserve the sovereignty, security and territorial integrity of Canada. It must be a situation that cannot be effectively dealt with by any other law of Canada.  

The federal government has seven days to table a motion for confirmation of the declaration in both Houses of Parliament: s. 58(1). When it does so there will, no doubt, be further explanation of the “reasonable grounds” the government has for making the declaration: s. 17(1). Of course, there may be legal action between now and then, as the government implements measures under the Act, prompting further elaboration of the legal and factual matrix relied upon by the government.

What measures are to be put in place? There is a list in the news release:

• Regulating and prohibiting public assemblies, including blockades, other than lawful advocacy, protest or dissent
• Regulating the use of specified property, including goods to be used with respect to a blockade
• Designating and securing places where blockades are to be prohibited (e.g. borders, approaches to borders, other critical infrastructure)
• Directing specified persons to render essential services to relieve impacts of blockades on Canada’s economy
• Authorizing or directing specified financial institutions to render essential services to relieve the impact of blockades, including by regulating and prohibiting the use of property to fund or support the blockades
• Measures with respect to authorizing the Royal Canadian Mounted Police to enforce municipal and provincial laws by means of incorporation by reference
• The imposition of fines or imprisonment for contravening on any of the measures declared under this public order emergency  

These track on to s. 19 of the Act, for the most part. But I was struck by the highlighted passage. The goal here seems to be to enable financial institutions to freeze assets being used to fund the protests and blockades. But is it intra vires s. 19 of the Act? I am not so sure.

Section 19(1)(d) enables “the authorization of or direction to any person, or any person of a class of persons, to render essential services of a type that that person, or a person of that class, is competent to provide and the provision of reasonable compensation in respect of services so rendered”. Meanwhile, the regulating and prohibiting language is based on s. 19(1)(a)(iii), which permits regulation or prohibition of “the use of specified property”.

There is no definition of “property” in the Act. The enabling provisions in s. 19 are very broad. They could conceivably authorize the compelling of banks to freeze assets. But there is more to the legislative context. The freezing of assets is authorized elsewhere, for different types of emergency.

Consider s. 30(1)(b), which is available if there is an “international emergency”, enabling “the appropriation, control, forfeiture, use and disposition of property or service”. And s. 8(1)(c), which is available for a “public welfare emergency”, enables “the requisition, use or disposition of property”. Regulations requiring asset freezing would hang more comfortably on these statutory pegs, especially s. 30(1)(b), which makes explicit reference to appropriation, control and forfeiture. Indeed, this grounds an argument by necessary implication: because Parliament provided specific asset-freezing powers for other types of emergency, it did not provide them for a public order emergency. Put another way, if the federal government wants to freeze assets, it should declare an international emergency or a public welfare emergency.

Now, on any judicial review application challenging the vires of its regulations, the federal government would be entitled to deference (albeit not the hyper-deference of times past), but this would be contingent on justifying the broader interpretation of s. 19 on which asset-freezing regulations would hang. Put simply, the government would have to state publicly its reasoned explanation for its position that s. 19 justifies asset-freezing regulations even though other sections of the Act appear to be better fits for such regulations.

There is also the possibility that individuals who are affected by the regulations could claim that the federal government owed them a duty of fairness to notify them in advance. Such an argument would be difficult to make out, however, inasmuch as the regulations are directed at financial institutions, not individuals, and the duty of fairness is attenuated in emergency situations. Nonetheless, I would not be surprised to see the point litigated.

These are hardly insurmountable hurdles for the federal government. But watch carefully for reasoned explanations of its interpretation of the Act as the regulations are rolled out.

UPDATED: some changes made post-publication for greater clarity.

ANOTHER UPDATE: via Louis-Philippe Lampron, here is the actual declaration. One of the specified measures is “measures to authorize or direct any person to render essential services to relieve the impacts of the blockade, including measures to regulate or prohibit the use of property to fund or support the blockade, to require any crowdfunding platform and payment processor to report certain transactions to the Financial Transactions and Reports Analysis Centre of Canada and to require any financial service provider to determine whether they have in their possession or control property that belongs to a person who participates in the blockade”. Quite a bit of this falls comfortably enough, I think, within s. 19, though I still have doubts about anything that could more accurately be described as appropriation, control and forfeiture (and requisition).

This content has been updated on February 15, 2022 at 18:16.