The long, long arm of American law

Opinion

Hey there, time traveller!
This article was published 27/11/2024 (314 days ago), so information in it may no longer be current.

Has the (over)reach of Helms-Burton been curbed?

Do you remember the ongoing saga of the anti-Cuba U.S. Helms-Burton Law?

It was signed by then-U.S. president Bill Clinton in March 1996 after two civilian aircraft that had violated Cuba’s airspace had been shot down by Cuban fighter jets. Essentially, it sought to tighten the U.S. economic embargo against Cuba and to internationalize it by discouraging other countries from investing in the country.

In other words, this was a clear-cut case of Washington applying its own domestic laws to the rest of the world — or what is known in the business as “extraterritoriality.” Yes, of course it was, and still is, a flagrant violation of international law.

While this outlandish measure had particularly negative ramifications for Cuba’s European friends, it also spelled bad news for Canadian investors on the island. Arguably the most objectionable element of Helms-Burton was its so-called “Title III” provisions which threatened the use of costly lawsuits by Cuban-Americans against those who they charged were “trafficking” in allegedly stolen property (which the government of Fidel Castro had confiscated).

All of this meant that some of the Canadian-Cuban joint ventures, be they factories, hotels, mining operations, etc., were susceptible to lawsuits by aggrieved Cubans now living in the U.S. Simply put, Helms-Burton was intended to raise serious legal concerns/doubts about the viability of doing business on the island — along with the attractiveness of Cuba’s overall investment climate.

It wasn’t always a problem for Canadian governments because various U.S. presidents since 1996 were willing to issue a waiver every six months to nullify the reach of Title III. That changed when Donald Trump, mostly for electoral reasons, decided not to sign the presidential waiver in mid-2019. Ever since then, Canadian investors have had to carefully weigh whether investing in Cuba could now run afoul of Helms-Burton.

Until, of course, a U.S. federal Court of Appeals decision in late October raised serious objections to the use of Title III provisions against foreign-owned cruise lines (such as Royal Caribbean, Norwegian and Carnival) operating out of Miami, and which had been visiting Cuba regularly. A federal judge in Miami had ruled in March 2022 that these cruise lines had engaged in “trafficking activities” and “prohibited tourism,” and thus were subject to US$400 million in legal damages (owed to a company that claimed to have a concession at the Port of Havana).

That U.S.-based company, Havana Docks, filed a lawsuit claiming that cruise ship businesses were using its commercial property to profit from their port visits to Havana between 2015 and 2019. As Florida District Judge Beth Bloom explained: “By using the terminal and one of its piers in various ways, Carnival, MSC SA, Royal Caribbean and Norwegian committed trafficking acts.”

By law, Americans engaging in tourism activities in Cuba are strictly prohibited from doing so, and are subject to fines and imprisonment under U.S. treasury department regulations. But there were 12 legal categories for visitation created under former president Barack Obama’s administration so as to facilitate engagement and travel to the island.

Again, Bloom concluded that the actions of these same companies “constituted tourist activities and not proper people-to-people activities, paying millions of dollars (US$138 million) to the Cuban government to engage in impermissible travel.”

She ruled that they violated these legal categories by hiring Cuban-based tourism entities to take their travellers to nightclubs, beaches and on various excursions.

In addition to throwing out the US$400-million judgment, the three-judge Appeals panel upbraided Judge Bloom for misinterpreting the Helms-Burton Act. They ruled that Havana Dock’s 99-year concession at the Port of Havana had effectively expired in 2004.

More important, the Appeals Court appeared to be putting restrictions around the applicability of Title III.

As the court opined: “We do not believe that Congress, in enacting Title III, meant to convert property interests which were temporarily limited at the time of their confiscation into fee simple interests in perpetuity such that the holders of such limited interests could assert trafficking claims through what Buzz Lightyear called ‘infinity and beyond.’”

This is important for Canada because it could limit the invocation of Title III lawsuits against Canadian investors in Cuba. At the least, it could make “trafficking in stolen property” allegations less likely in cases involving patents, trademarks or time-limited property concessions.

Now, I don’t expect a flood of new Canadian investment to be heading Cuba’s way any time soon. But at least board members of Canadian businesses operating on the island can breathe a little easier.

One should not expect, however, that opponents of Cuba will simply give up and focus their energies somewhere else. There are those in the U.S. that cannot forgive Cuba for committing the ultimate sin — namely, challenging American hegemony in its so-called “backyard.” They just can’t bring themselves to accept defeat and to move on — and that includes U.S. president-elect Trump.

Peter McKenna is professor of political science at the University of Prince Edward Island in Charlottetown.