March 4, 2019-In an effort to increase pressure on the Cuban government to stop its support for embattled Venezuelan President Nicolás Maduro and end human rights abuses within its own country, the U.S. State Department announced plans to allow U.S. lawsuits against Cuban entities accused of confiscating private property following the 1959 Cuban revolution.
“We should remember that after Fidel Castro seized power, he confiscated private property of thousands of private individuals and companies without any compensation,” a senior State Department official said. “And to date, there’s really been no justice for this theft.”
The list of restricted Cuban entities of restricted entities in Cuba at risk of lawsuits includes government ministries, hotels, stores, holding companies, marinas and tourist agencies.
Foreign Firms on Notice
It is not clear if today’s decision would have an impact on the entities since the lawsuits would be filed in the United States.
What’s more noteworthy is the State Department’s warning for foreign firms doing business in Cuba. U.S. officials said might allow lawsuits against foreign firms doing business in Cuba just as liable to U.S. lawsuits as early as April 17.
“We encourage any person doing business in Cuba to reconsider whether they are trafficking in confiscated property and abetting the Cuban dictatorship,” read a State Department statement.
Legal Basis
Today’s annoucement relates to Title III of the 1996 LIBERTAD Act, which set up legal authority for U.S. nationals with claims to confiscated property in Cuba to sue companies “trafficking” in that property.
The original 1996, the Cuban Liberty and Democratic Solidarity Act, law imposed additional sanctions against Cuba and intended to bring about a democratic transition.
Since the law took effect, every U.S. administration has suspended the portion of the law allowing lawsuits, making it ineffective. U.S. administrations typically suspend Title III on a six-month basis. They have been reluctant to allow lawsuits against foreign firms investing in Cuba out of consideration for European, Mexican and Canadian trading partners.
Testing Period?
In January, the State Department reduced the typical six-month suspension timeframe to 45 days. Today, the department further shortened the suspension to 30 days.
Today’s announcement relates to an “exemption from the suspension.” That means, in effect, the right to sue entities trafficking in confiscated property continues to be suspended for foreign firms. However, the suspension no longer applies to Cuban entities. U.S. nationals can therefore sue Cuban entities in U.S. federal courts.
The State Department plans to use the 30-day period, from March 19 to April 17, to evaluate the impact of the exemption.
