By:
Preston Brown
Washington, D.C.
With debate intensifying in the United States as to the merits of maintaining the economic embargo of Cuba, actions taken by the Executive and Legislative branches reflect the differing viewpoints in that debate: the President announced steps relaxing the embargo while Congress considered legislation restricting it.
Executive Action
On October 6, 1995, President Clinton announced steps easing the Cuban embargo by loosening restrictions on remittances to close relatives and on travel, educational, humanitarian and journalistic activities in Cuba. Amendments to the Cuban Assets Control Regulations implementing those policy changes were published in the Federal Register on October 20. The new regulations also authorize the registration and renewal in the United States of patents, trademarks and copyrights in which the Government of Cuba or a Cuban national had an interest and permit the payment of fees in connection with such registration or renewals out of blocked accounts.
Specifically, the amended regulations allow news organizations to open offices in Cuba; allow a wider range of people to travel between Cuba and the U.S. for religious, educational, research and human rights purposes and authorize transactions in connection with such travel; and authorize remittances to close relatives in Cuba in cases of extreme humanitarian need or one-time payments to enable emigration to the United States.
The Administration insisted that these actions were consistent with the policy established in the Cuban Democracy Act of 1992 of increasing communication between the Cuban and American peoples while maintaining a strict trade embargo.
Legislation
The House of Representatives
On September 21, the House of Representatives passed its version of the "Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1995" by a vote of 294 to 138.
Aside from provisions which enunciate U.S. opposition to Cuba's membership in international organizations until it establishes a democratic regime, the proposed legislation contains provisions which have provoked considerable controversy:
(1) Trafficking in Confiscated Property. Title III of the bill provides that any person (including any agency or instrumentality of a foreign state in the conduct of a commercial activity) who, after the end of a 6-month period beginning on the date the bill becomes law, traffics in property confiscated by the Cuban government will be liable to any U.S. national who owns the claim to such property for money damages as calculated pursuant to the bill.
This provision assumes, of course, that the U.S. national claiming damages could obtain U.S. jurisdiction over the person trafficking in confiscated property. The U.S. District Courts are given exclusive jurisdiction regardless of the amount in controversy, although diplomatic missions of foreign states are immune from attachment. In any case, "confiscated" refers to the nationalization, expropriation or other seizure by the Cuban government of ownership or control of property on or after January 1, 1959 without (i) adequate compensation for or return of that property, or (ii) the claim to the property having been settled in a claims settlement agreement or otherwise. It also refers to the repudiation, default or failure to pay by the Cuban Government after January 1, 1959 of (1) a debt of any nationalized enterprise (2) a debt which is a charge on nationalized property or (3) a debt incurred by the Cuban Government in settlement of a confiscated property claim.
A person "traffics" in property if that person knowingly (with knowledge or having reason to know) and intentionally, and without the authorization of the U.S. national holding a claim to the property:
deals in confiscated property or manages, uses or otherwise acquires an interest in confiscated property;
"engages in a commercial activity using or otherwise benefitting from confiscated property;" or
participates in, or profits from, trafficking by another person or otherwise engages in trafficking by another person.
However, the bill itself states that the term trafficking does not include (i) the delivery of international telecommunications signals to Cuba that are authorized under the Cuban Democracy Act of 1992 or of greater importance in this case or (ii) the trading or holding of securities publicly traded or held -- unless the trading is with or by a person determined by the Secretary of the Treasury to be a specifically designated national. (Under the Cuban Asset Control Regulations, the Secretary has extremely broad authority to designate an entity as a Cuban national -- regardless of the nationality of that person or entity.)
With respect to property confiscated before the date of enactment of the legislation, no U.S. national may bring an action unless such national acquired ownership of the claim before such effective date.
In that regard, in any action brought under the Libertad Act by a U.S. national who was eligible to file the underlying claim with the U.S. Foreign Claims Settlement Commission but did not do so, a court may hear the case only if it determines that the U.S. national had good cause for not filing the claim. In the case of any action brought by a U.S. national whose claim was filed on a timely basis with the FCSC but was denied, the court may assess the basis for denial and may accept the findings of the FCSC as conclusive "unless good cause justifies another result."
In the case of property confiscated on or after the date of enactment of the legislation, no U.S. national who acquired ownership of a claim to confiscated property by "assignment for value after such date of enactment" may bring an action on the claim under that section.
(2) Exclusion of Certain Aliens. Title IV of the House bill authorizes the Secretary of State, in consultation with the Attorney General, to exclude from the United States any alien whom the Secretary determines is a person who (1) has confiscated or has directed or overseen the confiscation of property, a claim to which is owned by a U.S. national, or who has converted such property for personal gain; (2) traffics in confiscated property, a claim to which is owned by a U.S. national; (3) is a corporate officer, principal or shareholder with a controlling interest in an entity which has been involved in the confiscation of, or trafficking in, such property; or is a spouse, minor child or agent of a person excluded under the foregoing.
(3) Prohibited Financings. The legislation would prohibit a U.S. national (which would include U.S. entities), permanent resident aliens or U.S. agencies from extending any loan, credit or other financing to a foreign national, U.S. national or permanent resident alien in order to finance transactions involving confiscated property, the claim to which is owned by a U.S. national as of the date of enactment of the legislation.
(4) Sanctions Against Countries Assisting Cuba. The Cuban Democracy Act of 1992 authorized the President to suspend assistance to any government that provided assistance to Cuba and to declare such country ineligible under any program for forgiveness or reduction of debt owed to the U.S. Government. Assistance to Cuba was essentially defined to mean dealing with Cuba on terms more favorable than those generally available in the market, although it excluded certain food donations and certain exports of medical supplies.
The definition of "assistance to Cuba" would, under the House bill, be expanded to include the exchange, reduction or forgiveness of Cuban debt owed to a foreign country in return for a grant of an equity interest in a property, investment or operation of the Government of Cuba (including any political subdivision, agency or instrumentality thereof).
The Senate
On October 19, 1995, after prolonged debate, the Senate passed its version of the Cuban sanctions bill by a vote of 74-24. In order to secure support for the legislation (and to cut off debate), the provisions (i) giving a right of action to U.S. nationals with claims to property confiscated by the Cuban Government to sue persons trafficking in such property in U.S. courts and (ii) authorizing the denial of visas to persons trafficking in such property, were not included in the bill as passed by the Senate.
House-Senate Conference
Because the Senate version of the legislation differs from that passed by the House, there will be a conference of the two chambers to reconcile the differences. Should the conferees agree on a compromise version, then that version will go back to each chamber for a floor vote. If the revised bill is passed by both, it then will be sent to the President for signature. The President had threatened to veto an earlier version of the legislation. If he should veto any revised bill, it will not become law unless the House and the Senate each vote to override the veto by at least a two-thirds majority.
