Ontario court blocks attempt by Flight PS752 families to seize Iranian assets

The Ontario Superior Court of Justice has ruled that the families of Flight PS752 victims cannot seize certain properties or bank accounts on Canadian soil because the federal government considers those assets the property of the Islamic Republic of Iran protected under international law.

Last year, the provincial court awarded $107 million, plus interest, to the families of five people who died when Iran's Islamic Revolutionary Guard Corp shot down the commercial plane three years ago, killing all 176 people aboard, including 85 Canadians and permanent residents. Iran did not defend itself in court, making it a default judgment. 

Ever since, lawyers representing the families have been looking to seize Iranian assets in Canada for compensation. The lawyers argued that Iran's rights to diplomatic immunity ended a decade ago when Canada expelled Iranian diplomats from the country.

The families were seeking the court's permission to seize three properties in Ottawa and withdraw money from bank accounts at the Royal Bank of Canada and Scotiabank maintained by Iran.

The Canadian government issued a certificate during a court proceeding in March arguing that under international law, the court doesn't have the power to allow the families to seize the Iranian assets. The certificate said Iran continues to "enjoy the privileges and immunities," according to the ruling.

In a decision issued Tuesday, Ontario Superior Court Justice Grant Dow sided with the federal government and dismissed the families' motion.

While the judge agreed with Global Affairs Canada's position, he also pointed out a disconnect in the government's position.

The ruling noted that Canada severed diplomatic relations with Iran in 2012 "as a result of its involvement with acts of terrorism." The ruling also pointed out the federal government introduced the Justice for Victims of Terrorism act, "which granted victims some ability to commence legal action against terrorist groups."

"While this decision may be inconsistent with the purpose of the Justice for Victims of Terrorism Act ... it would appear to lie with the [federal government] to explain and/or remedy such inconsistencies," Dow wrote.

William Pellerin, a lawyer specializing in sanctions, reviewed the ruling and said the government went back to a foundational principle of international law.

While Canada has expelled diplomats from the country, it still recognizes the existence of Iran, Pellerin said, United Nations agreements and international conventions guarantee countries' sovereignty and authority over their territory, he said.

More practically, Pellerin said, the government could have been trying to avoid a precedent that could later put Canadian assets abroad in jeopardy.

"Canada is present in a number of countries internationally and may not want to set a dangerous precedent, where its assets or assets of its citizens are under threat," said Pellerin, who also worked in the past as a lawyer at Global Affairs Canada.

Families deserve an explanation: lawyer

Mark Arnold, one of the lawyers representing the victims' families, issued a statement calling the decision "highly unusual."

"Surviving family victims are entitled to an explanation from the Government of Canada as to why it continues to maintain that the Iranian property is diplomatic property when there have been no diplomatic relations between Canada and Iran since September 2012," Arnold wrote.

Since the fall, Canada has imposed sanctions on 84 individuals and 24 entities in Iran — an action which Global Affairs Canada said effectively freezes any assets they may have in Canada.

Global Affairs Canada said Iran "bears full responsibility" for the destruction of the plane and it's taking action to seek arbitration with Iran. If the matter can't be resolved by the end of June, Canada and other countries can take the case to the International Court of Justice, the department said in a statement issued to CBC News on Thursday.