No Oligarch Left Behind: Trump’s Title III Cuba Policy

After the Revolution, Cuba expropriated the property of U.S. nationals and Cubans, including those who (like my family) came to the United States. In May, the Trump administration started enforcing Title III of the Helms-Burton Act, which allows victims of these expropriations from half a century ago to sue companies “trafficking” in their old property.

It might seem fair until you see who wins and at what cost. Supporters of Title III claim that it promotes justice for many. But that’s not true. And it is ordinary Cubans who will suffer from these measures, not island elites.

To encourage litigation, Title III provides for triple damages and attorney’s fees; but the claimant must pay a $6,700 filing fee, show that the property was then worth at least $50,000 (about $400,000 today), and prove ownership. These requirements will screen out most potential claims.

Title III’s Barriers & Narrow Reach

What “trafficking” means to a federal judge remains to be seen, but the statute will only reach a subset of any companies benefitting from expropriated property.

Most U.S. companies are protected because they conduct activities in Cuba pursuant to licenses from the Office of Foreign Assets Control which protect them from Title III liability. As for those foreign corporations without assets in the United States, federal courts will likely dismiss many complaints for lack of personal jurisdiction over the defendants. Is internet advertising to U.S. customers enough to trigger jurisdiction? Maybe. In any event, most of these foreign corporations also have defenses under retaliatory “blocking statutes” that other countries (including U.S. allies) adopted to shield their nationals from Title III liability.

A Title III claimant’s best shot is against a multinational with confiscated property that has attachable assets in the United States and enough presence to give a federal court jurisdiction.  The best place for such a claim is Miami because our pervasive anti-Cuba bias might benefit Title III plaintiffs. Some (like those who have already filed claims against Carnival Corporation) may also sue U.S. companies with business dealings in Cuba. These companies have deep pockets with local assets, but what they do in Cuba is unlikely to qualify as “trafficking.”

Bottom line — a defendant’s potential Title III liability is slim.  

Hitting the Wrong Targets

That said, Title III probably will deter investment as businesses seek to protect themselves from low probability, high cost risks. That will hurt ordinary Cubans seeking jobs, goods, and services to improve their quality of life.  

In contrast, many U.S. companies that had assets confiscated already recouped their losses as tax deductions in the 1960s. Besides, U.S. corporations (and the U.S. Chamber of Commerce) want an open market in Cuba, not more political risk.

Title III’s real winners are a select group of Cuba’s elites and their successors — émigré elites who lost factories, commercial real estate, airlines, and plantations. Helping them might not be so bad but for the inconvenient truth that ordinary Cubans pay the price. Since détente with the United States in 2014, tourism and foreign investment have helped the island’s budding entrepreneurs and their families. Title III tries to stop these capital inflows by scaring away foreign investors. The Trump administration has also limited travel by U.S. nationals and capped the remittances that Cuban-Americans send their families, complementary measures designed to deprive the island of foreign exchange.

Targeting Cuban civilians has always been essential to Helms-Burton. Consider how the embargo is supposed to impact Cuba’s state-run economy. The government imports nearly all of the food, medicine, and other staples needed by its people, especially children, elderly, and other vulnerable groups. Depriving the government of foreign exchange for imports is the best way to promote hunger and deprivation, especially for the worst off. This deprivation is supposed to energize Cubans into a revolt that paves the way for a new government to the liking of the United States.

It has never worked. Deprivation — though serious — has not sparked an uprising. How impoverished people are supposed to topple an armed government with a knack for survival is puzzling.

In 1960, President Dwight Eisenhower imposed a limited trade embargo against Cuba in response to its expropriations of U.S. nationals. Over time, these limited sanctions have morphed into an  blockade of unprecedented scope, duration, and extraterritoriality — not to mention dubious legality. In effect, these measures function as a civil war between island Cubans and a Cuban-American political class that wields U.S. power against their former homeland. Supporters justify the brutality of these measures in the name of promoting democracy. After 30 years of visiting the island, I still cannot find a single Cuban who agrees.

Image: A Carnival Cruise ship is docked at the PortMiami as the company becomes one of the first to be sued under Title III of the Helms-Burton Act at the Wilkie D. Ferguson Jr. U.S. Courthouse on May 02, 2019 in Miami, Florida. The lawsuit filed by Javier Garcia-Bengochea and Mickael Behn claim they are the owners of confiscated property in Cuba and are among the first to file lawsuits against European and American companies doing business on their former properties after the Trump Administration announced that they will allow Title III of the Helms-Burton Act to go into effect. (Photo by Joe Raedle/Getty Images)

 

About the Author(s)

José Gabilondo

Professor of Law at Florida International University, formerly worked in financial market regulation at the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency, the U.S. Department of the Treasury, and the World Bank - Follow him on Twitter at @JMgabilondo