by Benoît Charrière-Bournazel
The provisions of Title III of the Helms Burton Act of 1996, the enforcement of which was suspended for a long period, were reactivated by the United States (“US”) President Donald Trump, on May 2, 2019. It is now possible to bring an action before US courts against any person that is doing business with products confiscated during the Cuban Revolution. This triggers an increase in the risk of law suits in the United States, including against French companies that conduct business activities in Cuba.
A right to bring legal action against persons trading with property confiscated by the Cuban government
Title III of the Helms Burton Act provides Cuban exiles who are also US nationals with a private right of action before US federal courts, against any person who has traded with property confiscated by the Cuban government since 1959.
The claims specified in Title III are nevertheless subject to the following restrictions:
- A statute of limitations of 2 years after the end of the trade concerned;
- A materiality threshold set at 50,000 USD.
The legislation targets natural and legal persons who knowingly and intentionally engage in commercial activity using confiscated property.
Financial consequences for liable persons
Persons who have been declared liable under Title III may face significant financial consequences.
The legislative regime allows claimants to choose between various methods of calculation of the damages incurred, including calculating the current value of products confiscated or the value at the time of the confiscation, plus interest.
Claimants may also recover triple damages for claims certified by the US Foreign Claims Settlement Commission or if the defendants continue to exploit the confiscated property beyond 30 days from formal notice to cease its use.
US and Cuban companies are already being sued before US courts as a result of this reactivation (Carnival Cruise Lines, Corporación Cimex S.A. and Unión Cuba-Petróle).
The Helms Burton Act having an extraterritorial reach, lawsuits may also be filed against foreign companies, including French ones.
Measures to be taken by companies potentially concerned
Companies are advised to do an inventory of their various direct and indirect business activities involving Cuba and to conduct background checks of any property that could be potentially concerned in order to determine whether it has been previously confiscated by the Cuban government.
Companies should also examine the origin of their products in order to determine whether they come from confiscated property or trafficking of these goods.
Such self-assessment may notably mitigate the reputational risks. A company that is being sued, in accordance with Title III, may risk losing its relationship with financial institutions, customers and other business partners who do not want to benefit indirectly from the proceeds of the confiscated property in question.
Towards a new legal battle between the United States and the rest of the world?
Business partners of the United States are very reluctant to the reactivation of these provisions.
Canada and the European Union have already made a joint declaration, in which they assert that the extraterritorial reach of the unilateral implementation of Title III by the United States is contrary to international law.
They have expressed their intention to use Blocking Statutes in order to preclude the submission of legal requests arising from Title III brought against Canadian and European nationals and to block the enforcement and recognition of US judgments. These regulations may further allow counterclaims by Canadian and European nationals.
Another possible option for business partners of the United States would be to challenge the extra territorial reach of Title III through a complaint before the World Trade Organization (WTO). The WTO has a Dispute Settlement Body that could resolve the issue through international arbitration.
Cuban authorities consider that the reactivation of Title III reinforcing the US embargo is purely and simply illegal, inapplicable, and without legal value or effect.
Text of the Helms Burton Act:
https://www.treasury.gov/resource-center/sanctions/documents/libertad.pdf
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