FURTHER SUSPENSION OF TITLE III OF HELMS-BURTON
By:
Preston Brown
David Baron
Washington, D.C.
On July 16, 1996 President Clinton allowed Title III of the Cuban Liberty and Democratic Solidarity Act (the "Helms-Burton Act") to come into force on August 1 (subject to a grace period ending November 1) but simultaneously suspended the right of potential plaintiffs to file suit thereunder until February 1, 1997. That Title gives U.S. nationals with claims to property confiscated by the Cuban Government a right of action against persons who "traffic" in such property. The President was given the authority under the Helms-Burton Act to continue suspending the right to file suit for successive six-month periods. On January 3, 1997, the President suspended the right to file suit under Title III for an additional six months beginning February 1, 1997. Under the Helms-Burton Act, in exercising his authority to suspend the right of plaintiffs to file suit against "traffickers" in confiscated property, the President must certify that a suspension is "necessary to the national interests of the United States and will expedite a transition to democracy in Cuba." Libertad Act § 306(b)(2). In suspending Title III again the President so certified and commented in his accompanying statement:
The law requires that I review Title III every six months. I would expect to continue suspending the right to file suit so long as America's friends and allies continue their stepped-up efforts to promote a transition to democracy in Cuba.
Interestingly, the fact sheet that accompanied the President's announcement also indicated that "[w]hile the U.S. seeks to discourage investment in Cuba, we recognize that some foreign investment will go forward. Where it does, we seek to ensure that an investment benefit the Cuban people, not the government."
Although the President continued to suspend the right to bring suit under Title III, potential liability of "traffickers" continues to accrue because the President permitted Title III to come into force. This last point was emphasized in the President's statement announcing the initial suspension in July:
"Our allies and friends will have a strong incentive to make real progress [in promoting democracy in Cuba] because, with Title III in effect, liability will be established irreversibly during the suspension period and suits could be brought immediately when the suspension is lifted. And for that very same reason, foreign companies will have a strong incentive to immediately cease trafficking in expropriated property -- the only sure way to avoid future lawsuits."
In the fact sheet issued by the White House in support of the President's July Statement, this point is reiterated:
Liability will be established for any act of trafficking in American expropriated property that takes place after November 1, 1996.
Once liability attaches for activities taking place after November 1, 1996, it cannot be extinguished -- even if the person subsequently ceases all trafficking in expropriated property.
Liability will be established irreversibly, and companies will not be able to prevent lawsuits if suspension is lifted or not renewed at any later time.
With respect to a potential defendant's ultimate release from exposure to liability, Section 302(h) provides that "all rights created under this section [section 302 creates the right of action under Title III] to bring an action for money damages with respect to property confiscated by the Cuban Government" (1) may be suspended under Section 204(a) upon the President's determination that a transition government (as defined in Section 205) in Cuba is in power and (2) shall cease upon transmittal to Congress of a determination of the President under Section 203(c)(3) that a democratically elected government is in power in Cuba.
In a related development, on February 20, 1997, the Director-General of the World Trade Organization ("WTO") nominated three panelists who will be charged with hearing the EU's complaint that Titles III and IV of Helms-Burton violate articles of both the General Agreement on Tariffs and Trade and the General Agreement on Trade in Services. The EU originally requested the formation of the panel in October 1996. Under WTO dispute settlement procedures the United States was able to delay but not stop the formation of the panel.
The United States, which has been meeting with the European Union to try to resolve this dispute outside the WTO, had previously indicated that it would invoke the national security exception to block the panel's consideration of the EU's claims as permitted by GATT rules. In this regard the United States had taken the position that the national security exception is self-defining and that therefore a WTO panel may not decide whether it is properly invoked. The EU position is that while such a claim could properly be invoked against Cuba, it should not apply in a trade dispute among friendly trading partners.
With the naming of the WTO panelists, however, the U.S. intimated it might boycott the WTO panel altogether if ongoing discussions with the EU do not otherwise resolve the dispute. If the United States either boycotts the panel entirely or appears in order to invoke the national security exception, it may significantly weaken and undermine the authority of the two-year old WTO, with serious ramifications above and beyond the EU's complaints about the Helms-Burton Act.
