U.S. Opens Door To Lawsuits Against Cuba

U.S. Opens Door To Lawsuits Against Cuba
Photo: Raul E. Diego/Anadolu Agency/Getty Images
President Trump in June 2017, when he first announced his sweeping changes to America’s Cuba policy.

Secretary of State Mike Pompeo announced today that the Trump administration will permit U.S. citizens whose business properties were expropriated following the Cuban revolution in 1959 to seek legal recourse in American courts—if those businesses are on the “Cuba Restricted List.”

The list, created in 2017 by Trump administration officials, contains more than 200 stores, hotels and other enterprises administered by GAESA, a military-run conglomerate that oversees numerous Cuban companies in the tourism sector. U.S. citizens are prohibited from spending money with any organization on the list, which includes two rum companies (Ron Caney and Ron Varadero), and two new five-star hotels in Havana, The Packard and the Gran Hotel Manzana Kempinski.

According to the State Department announcement, foreign companies with business interests at those hotels, or other properties on the list, could now be sued in U.S. courts if U.S. companies, or Cuban-Americans in the U.S., had claims to ownership of those properties before the 1959 revolution.

The announcement marks a partial implementation of a clause in the 1996 Helms Burton Act known as Title III that permits legal recourse on “trafficked properties” in Cuba. Fearing thousands of lawsuits against companies from allied countries such as Canada, Germany, Mexico and Spain, the Clinton administration insisted on attaching a waiver clause to this section of the legislation, permitting U.S. presidents to waive, every six months, implementation of Title III. Since Clinton signed the bill, every president, including President Trump, has waived this section of the law.

But in January, Pompeo announced that the State Department would only waive Title III for 45 days, instead of the customary six months—part of a strategy to pressure Cuba to cease support for the teetering government of Nicolás Maduro in Venezuela.

In a report to Congress today, Pompeo stated that the Trump administration would waive Title III for an additional 30 days, but would authorize “the right to bring an action,” starting on March 19, “against a Cuban entity or sub-entity identified by name on the State Department’s List of Restricted Entities and Subentities Associated with Cuba (known as the Cuba Restricted List).”

Today’s move marks the partial implementation of Title III, with the threat of full implementation later in the spring.

According to American University scholar, William LeoGrande, activating Title III would constitute “a quantum leap in hostility” in U.S. policy toward Cuba. The spate of litigation likely to ensue—the State Department predicted between 75,000 and 200,000 potential lawsuits in one report to Congress—would stifle much-needed foreign investment in Cuba and antagonize U.S. allies whose companies have been investing in Cuba for decades.

“If Trump activates the provision,” LeoGrande suggested, it would complicate “already rocky relations with Mexico, Canada, the European Union–and obviously Cuba–at a time when the U.S. needs their help to deal with the crisis in Venezuela.”

With a partial implementation of Title III, the Trump administration is attempting to scare off foreign investment with the threat of legal repercussions. “We encourage any person doing business in Cuba to reconsider whether they are trafficking in confiscated property and abetting the Cuban dictatorship,” Pompeo concluded in his statement.