On March 4, 2019, Secretary of State Pompeo announced that beginning on March 19, the suspension of the right to bring private actions in US federal court against Cuban entities handling confiscated property under Title III of the 1996 Cuban Liberty and Democratic Solidarity (LIBERTAD) Act (known as the “Helms-Burton Act”) will not apply to Cuban entities or sub-entities identified on the State Department’s List of Restricted Entities and Sub-entities Associated with Cuba (the “Cuba Restricted List,” available here). The right to sue all other Cuban entities and foreign entities under Title III has been further suspended, but only for a 45 day period through April 17, 2019.
Title III of the Helms-Burton Act authorizes US nationals (including Cubans who have since become US nationals) who formerly owned commercial property expropriated by the Cuban Government after the country’s 1959 communist revolution to file suit in US courts against persons (including foreign companies) that may be “trafficking” in that property. For purposes of Title III, a person “traffics” in confiscated property if that person knowingly and intentionally, without the authorization of any US national who holds a claim to the property:
- sells, transfers, distributes, dispenses, brokers, manages, or otherwise disposes of confiscated property, or purchases, leases, receives, possesses, obtains control of, manages, uses, or otherwise acquires or holds an interest in confiscated property;
- engages in a commercial activity using or otherwise benefiting from confiscated property; or
- causes, directs, participates in, profits from or otherwise engages in, trafficking by or through another person.
“Trafficking” does not include the delivery of international telecommunication services to Cuba, transactions incident to lawful travel to Cuba, or transactions by a person who is a citizen and resident of Cuba and who is not an official of the Cuban Government or the ruling political party in Cuba. Title III does not generally authorize suits regarding real property used for residential purposes. The aim of Title III is effectively to prevent foreign investment in Cuba by threatening investors with potential lawsuits for trafficking in confiscated property.
Title III has never previously been tested in court. Title III may be suspended by the President for not more than six months if necessary to the national interest of the United States and if suspension will expedite a transition to democracy in Cuba. Successive past US administrations have continuously suspended Title III in six-month increments since the Helms-Burton Act was enacted in 1996. In contrast, the Trump Administration waived Title III for only 45 days beginning February 1, 2019, indicating a potential shift in its enforcement.
As of March 19, US nationals will be authorized to sue the approximately 200 parties listed on the Cuba Restricted List, which includes entities and subentities that are under the control of, act for or on behalf of, the Cuban military, intelligence, or security service or personnel. It includes certain Cuban ministries, holding companies, hotels, tourist agencies, marinas, retail and other stores, and entities directly serving the Cuban defense and security sectors. Our prior blog post on the Cuba Restricted List can be found here.
This exception to the continued suspension is likely an effort to pressure the Cuban government, which has been supportive of the Maduro regime in Venezuela. US Government officials indicate that they will continue to study the impact of the suspension of Title III with regard to all Cuban entities and not just those on the Cuba Restricted List. Foreign investors may also be at risk if the continued suspension as it relates to them is further narrowed or, worst case, allowed to lapse come April 17, 2019. Companies doing business in or with Cuba may wish to begin assessing their potential exposure to potentially trafficked property.