On April 17, 2019, the Trump Administration announced that it will allow U.S. citizens whose property was seized by the Cuban Government after 1959 to sue foreign companies that “traffic” in their confiscated property. This step implements Title III of the “Cuban Liberty and Democratic Solidarity Act” or “Libertad,” often referenced as the “Helms-Burton Act”, which had been suspended for over 20 years. The announcement reflects the Trump Administration’s goals of rolling back the Obama Administration’s relaxation of sanctions on Cuba and pressuring Cuba to back off its support for Nicolás Maduro in Venezuela.
The Helms-Burton Act was enacted in 1996. Title III of the law allows certain U.S. nationals to sue in federal court a foreign company that knowingly and intentionally “traffics” in property that was confiscated from U.S. nationals by the Castro regime. “Trafficking” is defined broadly and includes transferring or otherwise disposing of, purchasing or otherwise acquiring, making certain improvements to, investing in, entering into a commercial arrangement using or otherwise benefiting from confiscated property “without authorization of any United States national who holds a claim to the property.” This language is relatively vague and its scope likely will have to be determined by the courts.
The statute allows implementation of Title III to be suspended by the President, but the suspension must be renewed every six months. Every U.S. president since the statute was enacted has maintained the suspension of Title III. The Trump Administration continued suspending the provision in accordance with past practice, but then broke with precedent by granting waivers for shorter periods of time, signaling its upcoming shift in policy. Title III will enter into force on May 2, 2019 the day after the last waiver expires.
The Trump Administration partially implemented Title III on March 4, 2019 by allowing implementation with respect to about 200 companies or entities controlled by Cuba’s military, intelligence or security services. Now, the implementation of Title III in its entirety puts all foreign companies that do business with seized property in Cuba at risk of litigation.
The U.S. announcement has already been met with opposition from American allies that conduct business in Cuba. Yesterday, the EU and Canada issued a joint statement that “the EU and Canada consider the extraterritorial application of unilateral Cuba-related measures contrary to international law.” Challenges at the WTO are expected. The EU first challenged the legality of Title III in 1996 when the Helms-Burton Act was initially passed but withdrew its WTO challenge after the Clinton Administration suspended implementation.