Overview
First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. This month we return to Title III of the Helms-Burton Act — a unique provision of a federal law passed in 1996 that provides the owners of claims to property confiscated by the Cuban government during the Cuban revolution a private cause of action against any entity that is "trafficking" (broadly defined to include a range of commercial activity and joint ventures) in that confiscated property.
From the Act's passage through 2019, each US president has exercised his authority to suspend the private right of action. But, in 2019, the Trump administration, as part of broader efforts to sanction the Cuban regime, first allowed the private right of action to proceed and a wide range of lawsuits have since been brought under the Act. Claims have since been brought by a range of plaintiffs, including both corporations and the descendants of individuals who are the "rightful owners" of the confiscated property, against a range of defendants, including both domestic and foreign companies in industries spanning mining, tourism/hospitality, and tobacco whose business intersects with Cuba. Claims have also been brought against putatively sovereign entities controlled by the Cuban state, including two high-profile cases brought by Steptoe on behalf of Exxon Mobil Corp. and King Ranch.
In the last three years, plaintiffs have faced a great number of challenges in prosecuting their claims. Issues like lack of personal jurisdiction and whether plaintiffs "acquired" their claims to the property prior to a 1996 cut-off date have led to pre-trial dismissal of a number of claims. But, particularly in the last year, some plaintiffs have had success.
The cases brought against non-US entities have provoked some controversy as some of the home countries of these entities have passed "blocking" statutes protecting their companies from Helms-Burton liability. These countries—some of which are US allies—have been doing business with Cuba for many years and view Helms-Burton as an affront to their sovereignty.
In April 2021, a federal district court in Washington, DC denied a motion to dismiss Exxon Mobil’s claims against three Cuban state-owned companies on sovereign immunity grounds—ordering the case to proceed as to one Cuban entity and ordering jurisdictional discovery for the two other putatively sovereign entities.1 The district court notably found, among other things, that processing of remittance transactions between the United States and Cuba and the sale of food in Cuba imported from the United States by Defendant CIMEX, S.A. (a Cuban state-owned mercantile conglomerate) was "commercial activity" having a "direct effect" in the United States under the Foreign Sovereign Immunities Act. Thus, Exxon has sufficiently pled an exception to sovereign immunity and the case, as to CIMEX, could proceed to the merits of whether CIMEX was trafficking in confiscated property. That order is presently on appeal. Exxon is represented by Steptoe in this case.
In July 2021, a federal district court in south Florida denied in part Defendant Seaboard Marine Ltd.'s motion to dismiss in favor of the Blanco Rosell siblings who owned Maritima Mariel SA, a Cuban corporation, "to which the Cuban Government granted a 70-year concession to develop docks, warehouses, and port facilities in Mariel Bay, Cuba."2 Odette Blanco De Fernandez née Blanco Rosell (Ms. Fernandez), the estates of the four Blanco Rosell siblings, and the descendants of the four Blanco Rosell siblings all sought to hold Seaboard Marine Ltd. liable for trafficking in the property under the Act. The district court dismissed the claims of the estates and the descendants from the action because 1) the descendants of the siblings did not acquire the claims before March 12, 1996 and 2) the estates did not have an actionable ownership interest in the confiscated property.3 However, the court did find that Ms. Fernandez sufficiently demonstrated that Seaboard Marine Ltd. engaged in commercial activity using or otherwise benefitting from a port that plaintiffs had developed. The court was, thus, willing to "plausibly infer" that Seaboard Marine Ltd. engaged in trafficking under the Act. The remaining parties are currently in the process of drafting summary judgment motions.
In March 2022, Ms. Fernandez also survived a motion to dismiss filed by defendant Crowley Holdings Inc. in a separate action to recover under Helms-Burton for the same confiscated property.4 The Southern District of Florida held that, while the ports, docks, warehouses, and facilities on the property did not exist at the time of the confiscation, Ms. Fernandez had a claim to the terminal as a whole, irrespective to how it was presently developed. The case is set for trial in 2023.
In March 2022, a federal district court in South Florida granted summary judgment as to liability under the Helms-Burton Act in favor of the former owner of a marine terminal in Havana against several large cruise lines that used the terminal to, among other things, disembark passengers.5 The district court notably construed the term "trafficking" in Title III broadly—concluding that an entity that merely participates in or profits from the use of confiscated property can be deemed to be "trafficking." The court also set a fairly low bar for establishing that an entity is knowingly trafficking in confiscated property—finding that it was sufficient that the defendant recklessly disregarded the existence of a claim to the property (the Foreign Claims Settlement Commission publishes a list of claims against Cuba that it certified, including the relevant claim) and continued to use the property. Finally, the court rejected several broader challenges to Title III, including due process, excessive fines, separation of powers, and the act of state doctrine.
But, the window for plaintiffs to file lawsuits could be closing as the Biden administration appears to be charting a different course in Cuba policy from its predecessor. Last year, the administration announced, among other things, that it was re-staffing the American embassy in Havana and was reviewing the US’s policies in connection with remittances sent by Americans to friends and family in Cuba. Last month, the administration announced: (1) the relaxing of certain policies related to remittances; (2) the reinstatement of a program intended to facilitate emigration of the family members of Americans from Cuba, and (3) the relaxing of certain travel restrictions. These executive orders are all clearly geared toward a more constructive, less adversarial relationship with Cuba. While likely not without inviting controversy, once again suspending Title III could be a fairly simple means for the administration to placate the Cuban regime, while relieving foreign and domestic corporations from the risk of a Helms-Burton lawsuit that could flow from doing business with Cuba or those who do business with Cuba. Title III gives the President wide discretion to suspend the right of action.6
Because the statute does not allow the president to suspend already-pending claims7, it is critical that the entities and individuals with potential claims assess, in the near-term, whether to prosecute those claims.
Endnotes
1 Exxon Mobil Corp. v. Corporacion CIMEX, S.A. et al., No. 19-cv-01277 (D.D.C. Apr. 20, 2021) (ECF No. 64).
2 de Fernandez v. Seaboard Marine, Ltd., No. 20-CV-25176 (S.D. Fla. July 27, 2021) (ECF No. 66), reconsideration denied sub nom. Fernandez v. Seaboard Marine, Ltd., No. 20-CV-25176, (S.D. Fla. Oct. 21, 2021) (ECF No. 75).
3 The recurring issue of whether descendants who inherit claims after 1996 are proper plaintiffs remains hotly contested and, as of this writing, has yet to be decided by an appellate court.
4 de Fernandez v. Crowley Holdings, Inc., No. 21-CV-20443 (S.D. Fla. Mar. 23, 2022) (ECF No. 75).
5 See, e.g. Havana Docks Corp. v. Carnival Corp., No. 19-cv-21724 (S.D. Fl. Mar. 21, 2022) (ECF No. 477); Havana Docks Corporation v. MSC Cruises SA CO et al., No. 19-cv-23588 (S.D. Fla. Mar. 21, 2022) (ECF No. 330); Havana Docks Corporation v. Royal Caribbean Cruises, Ltd., No. 19-cv-23590 (S.D. Fla. Mar. 21, 2022) (ECF No. 254); Havana Docks Corp. v. Norwegian Cruise Line Holdings, Ltd., No. 19-cv-23591 (S.D. Fla. Mar. 21, 2022) (ECF No. 367).
622 U.S.C. §6082(h)(1).
722 U.S.C. §6082(h)(2).
