First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. This month we return to Title III of the Helms-Burton Act—a unique provision of a federal law passed in 1996 that provides the owners of claims to property confiscated by the Cuban government during the Cuban revolution a private cause of action against any entity that is "trafficking" (broadly defined to include a range of commercial activity and joint ventures) in that confiscated property. Since 2019, when the Trump administration authorized lawsuits under the dormant statute, we have seen a wide range of claims by "rightful owners" against international corporations and sovereign entities for "trafficking" in confiscated property. Nearly four years later, Title III cases are finding their way to the Courts of Appeal. In this month's update, we will discuss some of these cases.
Steptoe had the distinction of being able to argue one of these early appeals in the United States Court of Appeals for the DC Circuit on behalf of Exxon Mobil Corporation, on January 19, 2023, as plaintiff/appellee, against CIMEX and CUPET (agencies/instrumentalities of the Cuban state).1 The appeal arose from the district court's denial of the defendants' motion to dismiss the complaint on sovereign immunity grounds. In particular, the district court found that the commercial activities exception2 to the Foreign Sovereign Immunities Act (FSIA) abrogated CIMEX's sovereign immunity because the "trafficking" alleged by Exxon—CIMEX's operation of service stations, confiscated from Exxon, to process millions of dollars of remittance transactions from the United States and sell food imported from the US—was commercial activity having a "direct effect" on the United States.3 In its appeal, CIMEX argued, among other things, that: (1) the commercial activity exception could not apply to this case because Exxon's claims involved expropriation and therefore only the expropriation exception should apply and (2) CIMEX's use of the service stations was not commercial but sovereign activity because putting expropriated property to commercial use was part of Cuba's sovereign prerogative to organize a socialist economy. Exxon cross-appealed—arguing that the FSIA's expropriation exception4 does apply to this case and, regardless, Title III itself abrogates any claim of sovereign immunity.
The lengthy oral argument featured a wide-ranging discussion of issues of statutory construction, international law, and the structure of the Cuban economy. Of particular interest for Helms-Burton litigants was the panel's discussion of whether sovereign defendants facing Helms-Burton claims can invoke the FSIA in the first place. At argument, Exxon focused on the plain language of the statute, which expressly defines a "person" subject to suits under Title III as "any person or entity, including any agency or instrumentality of a foreign state."5 CIMEX, on the other hand, argued the US Supreme Court has concluded that cases against sovereigns can only proceed under the FSIA. In responding to questions from Judge Randolph, Exxon explained that the "specific" must control the "general" here and that Congress must have been well aware of the case law cited by CIMEX when it passed Title III. A decision from the court is forthcoming.
Elsewhere, the Eleventh Circuit has recently released a series of decisions weighing in who can bring Title III claims. In Garcia-Bengochea v. Carnival, the court weighed in on a hotly contested issue in Title III cases—whether an individual that inherits a claim to confiscated property after Title III's 1996 cut-off date for "acquiring" a claim can bring a lawsuit under Title III. After receiving an amicus brief from the United States government on the subject, the Eleventh Circuit concluded that the plaintiff, who inherited his claim after 1996, could not assert a claim under Title III based on the text of the statute.6 In Del Valle v. Trivago, the Eleventh Circuit took on another often-litigated issue—under what circumstances a Helms-Burton plaintiff has Article III standing. Agreeing with the Fifth Circuit and numerous district courts, the court rejected defendants' narrow arguments on standing and found that the plaintiff (the rightful owner of land on which hotels were built) did suffer a "concrete injury" where the defendants (travel booking websites) "trafficked" in the property by facilitating online bookings.7
Finally, of note to foreign litigants, is the Eleventh Circuit's recent decision in Marti v. Iberostar Hotels y Apartmentos S.L.8 The appeal in Marti arose from a trial court's decision to stay Title III claims pending a determination from the European Commission as to whether the defendant, a Spanish hotel company, could defend the litigation in American courts. The need for a determination from the commission arose from an EU "blocking statute" that generally bars EU companies from participating in Helms-Burton suits without express permission from the Commission.9 After three years of waiting and multiple denials of requests to lift the stay, the plaintiff appealed to the Eleventh Circuit. The Eleventh Circuit lifted the stay, noting that "European discretion appears absolute. The blocking regulation includes no deadlines of timetables for the application process[.]"10 The stay had thus put the defendant "effectively out of court."11
Endnotes
1. Exxon Mobil Corp. v. Corporacion CIMEX, S.A. et al., No. 22-7127 (D.C. Cir 2022)
2. 28 USC § 1605(2)
3. Exxon Mobil Corp. v. Corporacion CIMEX, S.A. et al., 534 F. Supp. 3d 1, 17 (D.D.C. 2021).
4. 22 USC §1605(3)
5. 22 USC § 6021(11).
6. No. 20-12960, 2022 WL 17170885 (11th Cir. Nov. 23, 2022)
7. 56 F.4th 1265, 1279 (11th Cir. 2022)
8. 54 F.4th 641 (11th Cir. 2022)
9. European Council Regulation 2271/96, arts. 5, 11, annex, 1996 O.J. (L 309) 1, 2–5 (EC)
10. Marti, 54 F.4th at 648.
11. Id. at 649
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
