In 1996, President Bill Clinton signed into law the Helms-Burton Act, designed to strengthen and continue the United States embargo against Cuba. Title III of the Act created a private right of action and authorizes U.S. nationals with claims to confiscated property in Cuban to file suit in U.S. courts against persons that may be “trafficking” in that property. However, the Act also granted the President the authority to suspend the law for periods of up to 6 months, which Presidents Clinton, Bush, Obama and Trump have all done, such that Title III had never taken effect before 2019.

On May 2, 2019, President Trump allowed his prior suspension to expire.  The rationale for the waiver was that it would avoid entangling companies from U.S.-allied countries in years of complicated litigation that would in turn bring on a wave of trade-related legal claims against the U.S. During a speech in Miami in 2018, National Security Advisor John Bolton outlined the Trump administration’s plan to implement Title III fully as part of a broader effort to ramp up pressure on the Cuban government over its support for Venezuelan President Nicolas Maduro. In early 2019, Secretary of State Mike Pompeo partially suspended Title III, in order to conduct a review of “the national interests of the United States and efforts to expedite a transition to democracy in Cuba.”

Since the lifting of the suspension of Title III, the first lawsuits against companies accused of trafficking in confiscated Cuban property have been filed in Miami. Two of the lawsuits target Carnival Cruise Lines, alleging that the Miami-based cruise company has been using ports in Havana and Santiago de Cuba that belonged to the plaintiffs’ families or families’ companies without compensation. Exxon Mobil filed another lawsuit against two Cuban companies for using an oil refinery and other properties seized by the Cuban government 60 years ago. Other lawsuits may be filed against the Melia and Blau groups for using buildings seized in Holguin; the French firm Pernod Ricard over the sugar fields, factories and distillery used in producing Havana Club rum; and over the use and ownership of Havana’s Jose Marti International Airport and the Cubana de Aviacion airline.

The nearly 60 U.S. companies with presence in Cuban are doing so under authorizations issued by the Treasury Department’s Office of Foreign Assets Control, but having an OFAC license may not be enough to protect the businesses from lawsuits. Several lawsuits may pivot on interpretations of the language in the law itself. Companies in the travel industry could argue that their businesses in Cuba are covered under the “lawful travel” exception in the Helms-Burton Act, but since most of the U.S. companies’ businesses in Cuba did not exist when the law was signed in 1996, federal judges will have to assess the intention of the lawmakers at the time.

Currently, there are 5,913 certified claims of seized American property in Cuba, which the State Department has estimated to be worth $1.9 billion, now $8 billion with interest. However, only 817 claims had an original value of more than $50,000, the minimum amount required for lawsuits filed under Title III. Cubans who attained U.S. citizenship after 1959 are also allowed to sue under the law, with the State Department estimating between 75,000 to 200,000 additional, uncertified claims, although claims for residential property are not permitted. The high number of claims is partly due to the expansive language used by the law, as Title III defines “trafficking” to encompass not only those who own the confiscated property, but also those who profit from its use. The law allows U.S. citizen plaintiffs to sue for three times the current value of the property.

The Cuban government has stated that it will not respond to any lawsuit filed under the Helms-Burton Act and that it does not recognize the jurisdiction of U.S. courts, although it had previously offered to enter into negotiations to repay U.S. companies for seized property. During the Obama administration, U.S. and Cuban representatives met several times to discuss the issue of compensation for seized property, but the talks went nowhere because the Cuban delegation demanded U.S. compensation for damages caused by the U.S. trade embargo, which they estimated to be nearly $1 billion. Therefore even successful plaintiffs might face difficulty collecting judgments, although defendants such as companies from U.S.-allied countries may have assets in the U.S., which could be within the reach of U.S. courts.

Should you wish to discuss these matters with us, please do not hesitate to call our partners Pedro A. Alvarez or Albert Diaz-Silveira.