New York, USA – The U.S. Supreme Court heard arguments Monday in two cases testing whether U.S. companies can sue for property seized 60 years ago by Cuba’s revolutionary government.
A ruling in favor of the plaintiffs could open the floodgates to billions of dollars in lawsuits against Cuban state-owned companies and foreign companies that do business with them, dealing a new blow to an already devastated tourism industry.
The hearing comes at a particularly tense moment between Washington and Havana as the island faces a humanitarian crisis due to President Donald Trump’s pressure campaign that includes a near-total oil blockade.
Can a property claim outlast a property right?
Both court cases centered on Title III of the 1996 Helms-Burton Act, which allows U.S. companies to sue entities that “traffic” property seized by the Cuban government.
Every president since Bill Clinton has suspended the controversial provision to avoid diplomatic fallout until Trump lifted the moratorium in 2019, making such lawsuits possible for the first time in the law’s history.
The American company Havana Docks Corporation signed a 99-year concession agreement with the pre-Castro Estrada Palma government in 1905. The 11th Circuit ruled that the major cruise lines disembarked nearly 1 million tourists at Havana Docks Corporation sites and paid “at least $130 million to the cash-strapped communist regime” from 2015 to 2019, with the cruise lines ultimately making a net profit. US$1 billion generated from cruises to Cuba.
Havana Docks Corporation argues that Title III of the Helms-Burton Act requires cruise lines to compensate it for trafficking in seized assets.
In a counterfactual, non-revolutionary world, the Havana Docks’ 1905 contract would technically have expired in 2004. Paul Clement, an attorney representing the cruise line, said: “The only interest the petitioners had in this dock was a concession that expired in 2004. Anyone who arrived later would not be in a position to trade in a seized property interest.”
Lawyers for Royal Caribbean and other cruise lines argue they are operating legally in Cuba, where the Obama administration encouraged them to bring business to the island during the U.S.-Cuba thaw of 2014-2016.
The cruise lines argued in their report to the court: “The notion that cruise lines should pay hundreds of millions of dollars in exchange for following the administration’s directive to resume travel to Cuba flies in the face of both common sense and other aspects of the Helms-Burton Act.”
Cuba’s Sovereign Immunity Issue
In addition to the dock dispute, Esso Standard Oil, an Exxon subsidiary, owned and operated hundreds of gas stations and several refineries in pre-revolutionary Cuba.
After the revolution these were confiscated by the government and allocated to various state-owned companies, including CIMEX, the island’s largest commercial conglomerate. With Title III no longer suspended, Exxon is seeking compensation from CIMEX and other Cuban state entities.
The Foreign Sovereign Immunities Act (FSIA) grants foreign states and their entities immunity from the jurisdiction of U.S. federal and state courts, but Exxon argues it does not apply to Cuba-related cases brought under the Helms-Burton Act, which challenges long-accepted norms of international law.
Jules Lobel, a University of Pittsburgh law professor representing CIMEX, emphasized Monday the far-reaching diplomatic and geopolitical implications of rolling back FSIA protections for Cuba. He argued in court that abolition for Cuban businesses meant abolition for all countries that traded with Cuba. “They can sue Russian airlines, they can sue Chinese airlines, they can sue Qatari airlines.”
What’s at stake?
The financial stakes in this case are enormous. Exxon Mobil is seeking more than US$1 billion in damages, and Havana Docks currently has claims worth approximately US$90 million. This figure does not include potential liability if the court rules in favor of the plaintiffs, paving the way for 5,913 Title III claims worth about $8 billion.
“If the court rules against Exxon, every state-owned company in Cuba will be suing for damages.” said William Leogrande, professor of government at American University’s School of International Service. Latin America Report. “If the court rules against the Cuban company, much of the potential litigation by Helms-Burton will be barred.”
But LeoGrande pointed out that regardless of how the court rules, Title III has already achieved one of its key goals. “One of Helms-Burton’s main purposes of Title III is to deter foreign direct investment in Cuba by holding investors accountable in U.S. federal courts, and this has been largely successful,” he said. “Neither of these cases will change that.”
The Obama-era thaw offered a glimpse of what a friendly Washington could mean for Cuba’s tourism sector. With Title III suspended and the Obama administration actively encouraging commercial participation, Cuba has seen a surge in tourist arrivals and revenues. That window narrowed when Trump took office in 2017 and closed completely in 2019 when he lifted the Title III suspension.
The incident comes at a particularly devastating moment for Cuba’s economy, which has yet to recover from a deep contraction in 2021.
The Trump administration’s maximum pressure campaign has halted foreign oil shipments and threatened tariffs on all countries sending fuel to the island. Only last day did the Trump administration announce that it would allow shipments of desperately needed Venezuelan oil. However, this only applies if sold exclusively to the private sector.
Trump’s decision to reactivate Title III has added another layer of pressure, threatening to deal a further blow to the already-shrinking tourism industry and dimming hopes for a revival.
The U.S. Supreme Court is expected to rule by the end of its current term this summer.
Featured image caption: Cuban peso with Che Guevara’s face on it
Main image source: Wikimedia Commons
