The United States Supreme Court dealt yet another blow to international companies that still do business in Cuba: it ruled this Thursday in favor of an American company victim of expropriation by the Castro government, based on the protection of a 1996 law and reinforced during Donald Trump’s first administration.
By 8 votes to 1, the judges ruled that the company Havana Docks Corporation — which before 1960 had the right to use and operate the ports of the Cuban capital’s port — is potentially entitled to receive hundreds of millions of dollars for the use of the port by international cruise companies between 2016 and 2019. The decision directly affects Royal Caribbean, Norwegian, Carnival and MSC.
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Understand the case
In 1928, the US-based Havana Docks Corporation acquired from the Cuban government a property right relating to the development and operation of docks in the Port of Havana. This property right, a concession of usufruct, had a fixed term and was scheduled to expire in 2004. In other words, the Cuban government agreed at the time that, if it expropriated the docks before 2004, it would compensate Havana Docks for the value of the works that the company had built.
But after Fidel Castro took power on the island in 1959, the new Cuban government decreed that it would forcibly seize American properties and businesses in Cuba and specifically identified Havana Docks, which it did.
Havana Docks filed a complaint with the Foreign Claims Settlement Commission, which certified approximately $9 million in losses, plus 6% annual interest. Despite these certified losses, Havana Docks had at the time no means of obtaining this compensation.
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Lei Helms-Burton
This began to change in 1996, when the US Congress enacted the Cuban Freedom and Democratic Solidarity Act, known as the Helms-Burton Act, which tightened and consolidated the embargo on the Caribbean country.
The legislation contained a provision, Title III, that created a private right of action for United States nationals who had claims on “property that was confiscated by the Cuban government on or after January 1, 1959.”
As there was the possibility of suspending this provision, the administrations of Presidents Bill Clinton, George W. Bush and Barack Obama have continuously suspended this right of action since its entry into force. But President Trump allowed the suspension of the Title III right of action to expire in May 2019.
The fact is that, from 2016 to 2019, four commercial cruise lines — Royal Caribbean Cruises, Norwegian Cruise Line Holdings, Carnival Corporation and MSC Cruises — transported nearly one million paying passengers to Cuba, using docks built by Havana Docks to embark and disembark their passengers.
In 2019, Havana Docks invoked Title III and sued the cruise lines in the United States District Court for the Southern District of Florida. The cruise lines argued that they were not responsible because the ownership interest in Havana Docks would have expired in 2004 even in the absence of confiscation.
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The District Court rejected this argument and entered summary judgment against the four cruise lines, ordering each to pay Havana Docks more than $100 million.
The Court of Appeals for the Eleventh Circuit reversed that decision. In his view, a defendant is only responsible for trafficking in confiscated property if his actions would have interfered with the plaintiff’s right to property had there been no confiscation. From this perspective, as the Havana Docks concession would have expired before 2016, the disputed conduct of the cruise lines between 2016 and 2019 would not constitute trafficking.
The Supreme Court’s decision
According to the Supreme Court, a Court of Appeals interpreted the law by formulating a counterfactual scenario in which the Cuban government “never expropriated” the Havana Docks concession, since the concession would have expired in 2004”. That is, it considered that Havana Docks would have had to hand over the docks at that time anyway. and therefore cannot constitute trafficking under Title III of the law.
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But Supreme Court justices ruled Thursday that this counterfactual approach “is difficult to understand and apply.” For them, if the approach requires courts to presume that the original holder maintained his legal rights, it would prevent accountability in cases where the text requires it.
“We conclude that the cruise lines utilized confiscated property to which Havana Docks has a claim. As the Court of Appeals concluded otherwise, it did not examine the cruise lines’ other arguments against liability. These arguments are not subject to our consideration and we did not consider them. We therefore vacate the Court of Appeals’ decision and remand the case for further deliberations in accordance with this opinion,” the decision reads.
