U.S./CUBAN SANCTIONS DEVELOPMENTS
By:
Preston Brown
Washington
Much controversy continues to surround the Helms-Burton Act, particularly Titles III and IV.
Under Title III of the Helms-Burton Act, U.S. nationals with claims to property confiscated by the Cuban government are given the right to bring actions for money damages against those persons who "traffic" in such property without the authorization of the U.S. claimant. (See International Reports November 1995 and March 1996.) While the other Titles of the Helms-Burton Act became effective when the legislation was signed by the President on March 12, the effective date of Title III was August 1. The President had the authority to postpone the effective date of Title III for six months upon his determination (and report to Congress) that such action was necessary to the national interest of the United States and would expedite a transition to democracy in Cuba. He could have continued to postpone that effective date for successive six-month periods subject to a similar determination and report for each period. Once Title III became effective, the President was also given the authority to suspend the right to bring an action thereunder for a six- month period based on the same determination and report.
On July 16, the President announced his decision to allow Title III to go into effecton August 1 but to suspend the right to bring an action thereunder for six months (i.e., until February 1, 1997).
In order to encourage persons dealing with property confiscated by Cuba to wind down those activities, Title III only permits lawsuits based on "trafficking" after November 1, 1996 (i.e., three months after the effective date). The effect of the President's decision is that any trafficking after November 1 will expose the "trafficker" to potential liability in the event that the President (or his successor) does not continue to suspend the right of action for successive six-month periods at least until a transition government is in place in Cuba and ultimately until transmittal to Congress of a Presidential determination that a democratically elected government is in power in Cuba. These determinations must include a finding of appropriate steps being taken (in the case of a transitional government) or demonstrable progress being made (in the case of a democratically elected government) with respect to the return of - or full compensation for - property confiscated from U.S. citizens. At the point of a determination that a democratically elected government is in power, all rights created under Title III (including the right to bring an action) cease pursuant to Section 302 (h).
On July 18, 1996, the Treasury Department's Office of Foreign Assets Control published (61 Fed. Reg. 37385) amendments to the Cuban Assets Control Regulations (31 C.F.R. § 515.101 et seq.) to bring them into conformity with the Helms-Burton Act. In particular, to implement Sec. 103 of that Act, § 515.208 was added specifically prohibiting any U.S. national, permanent resident alien or U.S. agency from knowingly making a loan, extending a credit or providing other financing for the purpose of financing transactions involving property confiscated by the Cuban Government the claim to which is owned by aU.S. national - except for a financing by a U.S. national owning such a claim for a transaction permitted by U.S. law. The term "confiscated" not only includes the seizure of ownership or control of property by the Cuban Government after January 1, 1959 without compensation or settlement of the claim thereto but also the repudiation or default by the Cuban Government of specified debts relating to property taken by that government. 31 C.F.R. § 515.336.
On July 10, 1996, exercising its authority under Title IV of the Helms-Burton Act and the guidelines issued thereunder (61 Fed. Reg 30655; June 17, 1996), the State Department notified nine officers and shareholders of Sherritt International, a Canadian corporation, that they would be denied entry into the United States forty-five days from that date unless Sherritt terminated its trafficking in confiscated property. Sherritt and its subsidiaries have mining joint ventures as well as other interests in Cuba. This was the first exercise of that authority by the State Department, but further actions are expected against individuals affiliated with other companies.
NOTE: On August 5, 1996, the President signed into law legislation requiring him to impose specified sanctions on non-U.S. persons whom he determines have made defined "investments" in the petroleum sectors of Iran or Libya as well as on persons who supply Libya with goods, services or technology relating to the aviation and petroleum sectors in contravention of certain U.N. Security Council Resolutions.
