Helms-Burton Act Update

• Jurisdiction: United States,Federal
• Law Firm: Steptoe & Johnson
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Arbitration & Dispute Resolution, Sovereign Immunity: Public Sector Government, Trials & Appeals & Compensation
• Author: Mr Steven Davidson, Michael Baratz, Molly Bruder Fox and Michael G. Scavelli
• Published date: 09 February 2023

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...