On Friday, July 14, 2017, the Trump administration joined the administrations of Presidents Clinton, Bush, and Obama in suspending Title III of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, also known as the Helms-Burton Act, a controversial provision that would authorize lawsuits in U.S. courts to recover damages related to confiscated property in Cuba.
When the Castro regime came to power in Cuba in the late 1950s, it confiscated property from thousands of U.S. and other foreign individuals and companies. The U.S. Foreign Claims Settlement Commission (FCSC) evaluated the validity of claims for losses resulting from the expropriation and nationalization of property owned by U.S. nationals. In total, the Commission considered 8,821 claims and certified 5,913 claims to be compensable for a value of $1.9 billion (most, but not all, claims related to confiscated property).
Cuba has resolved claims for confiscated property with several other countries, including Canada, France, Italy, Mexico, Spain, Switzerland, and the United Kingdom, but it has not resolved claims with the United States. After July 2015, when the United States re-established diplomatic relations with Cuba, both governments have held information-sharing discussions regarding the outstanding claims. However, no funds have yet been made available for the claims, nor has a settlement with the Cuban government been reached.
Title III of the Helms-Burton Act provides for a private cause of action in U.S. courts against any person who “traffics in property” confiscated by the Cuban Government that is subject to a claim by a U.S. national valued in excess of $50,000. The statute defines “trafficking” broadly, including the sale, transfer, distribution, brokering, or managing of confiscated property; the possession or lease of any interest in confiscated property; engaging in commercial activity “using” the property; or causing, directing, or profiting from any act of trafficking property. The statute also defines “U.S. national” broadly, to include Cuban-Americans who were Cuban nationals at the time their property was taken — which goes beyond the class of persons whose claims were certified by the FCSC. Title III authorizes treble damages for trafficking in property subject to a claim certified by the FCSC, or for uncertified claims if a person deals in confiscated property after receiving notice that the property is subject to a claim.
Title III of the Helms-Burton Act has been controversial because of its effect on third-country nationals. Defendants in litigation under Title III almost certainly would be foreign persons doing business in Cuba. Potential litigation would add considerable risks to conducting business in Cuba given the numerous pre-existing certified claims by U.S. nationals. Because of its likely impact on third-country nationals, a number of foreign government strongly objected to Title III when the Helms-Burton Act was passed.
Because of these foreign policy sensitivities, the Helms-Burton Act authorizes the President to suspend the implementation of Title III for a period of not more than six months if the suspension is “necessary to the national interests of the United States and will expedite a transition to democracy in Cuba.” For over 20 years, Presidents of both parties or their delegates have suspended Title III of the Helms-Burton Act for six-month periods.
Some had questioned whether President Trump would continue the suspension of Title III. In June, President Trump announced that he was “canceling the last administration’s completely one-sided deal with Cuba” and released a Presidential Memorandum setting out a new policy that requires the tightening of some sanctions on Cuba in the coming months. For a summary of changes to the U.S. Cuba sanctions program announced by President Trump, please see our prior advisory. However, on July 14, with little fanfare, the Department of State issued a press release indicating that the right to file lawsuits under Title III would be suspended for another six months beyond August 1, 2017.
By statute, the suspension of Title III must be renewed every six months. Thus, while Title III has been suspended by the Trump administration until February 2018, it remains to be seen whether the Trump administration will follow in the ways of the Clinton, Bush, and Obama administrations and suspend the application of Title III throughout his administration.
We will continue to monitor changes in the U.S. Cuba sanctions program.