Lawyers are bracing for a possible wave of lawsuits against people who knowingly “traffic” in private properties seized during the early years of the 1959 revolution.
Title III of the 1996 Helms-Burton Act allows such lawsuits, but U.S. presidents have traditionally suspended enactment of Title III.
Now, though, there are rumblings that the Trump administration might allow Title III to go forward.
King & Spalding, an international law firm, said today in a client alert:
Should the Trump administration decline to further suspend Title III, that could enable thousands of claims over confiscated Cuban property to finally be brought and heard in U.S. courts.
Any U.S. national “who owns the claim to … property” confiscated by the Cuban government on or after January 1, 1959 may sue in federal courts for the expropriation of that property by the Cuban government. Those who may sue include U.S. businesses and citizens, as well as those who were Cuban nationals at the time their property was taken by the Cuban government but have since then become naturalized U.S. citizens.
Title III of the Act imposes civil liability on “any person” that “traffics in property which was confiscated by the Cuban government on or after January 1, 1959. A “person” under the Act can include both corporations and individuals, and not
just those from Cuba. Indeed, corporations, regardless of nationality, could be subject to suit, including persons from the European Union, Canada, and Mexico.
Section 4(13) of the Act defines “trafficking” broadly and would apply to a person or company that knowingly and intentionally sells, transfers, distributes, conducts financial operations or disposes in any other manner confiscated property or purchases, receives, holds, controls, manages or holds an interest in confiscated property or engages in a commercial activity using, or otherwise benefits from, confiscated property. This expansive definition encompasses not just those who are directly involved in trafficking, but also those who profit from the use of confiscated property.
A broad array of companies from a cross-section of industries could also be exposed to civil liability and could include, for example, mining companies that extract minerals from mines on expropriated property, and even cruise ships calling at expropriated ports or using expropriated port facilities. Moreover, even subsidiaries of those companies with operations in Cuba and potentially other entities in the ownership chain of those companies could be exposed to possible suit in the U.S.
But recovering any assets may be difficult, the law firm says.
Knowing who can be sued and which of their acts fall under the expansive definition of “trafficking” is crucial for potential claimants because the Helms-Burton Act imposes a two-year statute of limitations on claims. Section 305 of the Act provides that claims “may not be brought more than two years after the trafficking giving rise to the act has ceased to occur.” Determining when an act of trafficking has ceased is therefore critical, but in any event, potential claimants must
act decisively in bringing potential claims, to obviate running against the statute of limitations.
Even after prevailing in a claim under the Helms-Burton Act, claimants must consider how and where to enforce judgments in Title III cases especially when the respondent does not have assets in the U.S. To begin, the U.S. is not a signatory to any international agreement on the reciprocal recognition and enforcement of court judgments. That the U.S. has not signed such an international instrument could make enforcement of such U.S. judgments difficult on the basis of comity, particularly in countries with friendly relations with Cuba.
Moreover, the laws of certain jurisdictions specifically render judgments arising from the Helms-Burton Act unenforceable. For example, in response to the Act and because of concerns about its extra-territorial reach, U.S. allies such as Canada and the European Union enacted or fortified measures to counteract the possible effects of the Act.
Such types of retaliatory measures typically include so-called “blocking” features. Council Regulation (EC) No. 2271/96 (“EC Regulation 2271/96”) provides that any “judgment of a court or tribunal … [or] of an administrative authority … giving effect, directly or indirectly, to the [Helms-Burton Act] or to actions based thereon or resulting there from, shall [not] be recognized or be enforceable in any manner.”11 Claimants therefore must assess whether the respondent in any Title III case only has or has most of its assets in jurisdictions with these types of blocking statutes. Where the assets are located, and whether most or if all of them are located in jurisdictions with blocking statutes, will be relevant in determining where to focus enforcement efforts, or even whether to commence an action at all.
Claimants should also consider the possibility that they could be sued for damages, the firm said.
For example, Article 6 of EC Regulation 2271/96 allows the recovery of “any damages, including legal costs, caused … by the application of the [Helms-Burton Act] or by actions based thereon or resulting therefrom.” This provision essentially allows the “clawback” of any damages awarded in Title III cases, plus legal costs, and extends to any “natural or legal person or any other entity causing the damages or from any person acting on its behalf or intermediary.” These clawback features may negate any potential recovery by a Title III claimant.