Supreme Court Rules in Favor of Petitioner Seeking Redress for Trafficking in Property Expropriated by Cuba

Amid escalating political tensions between the United States and Cuba, the Supreme Court issued its first decision interpreting Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (commonly referred to as the Helms-Burton Act). Title III of the Helms-Burton Act provides a private right of action for U.S. nationals who own claims to property that was confiscated by the Castro regime, allowing such claimholders to bring lawsuits against persons or entities who knowingly traffic in such confiscated property. 

In the case, Petitioner—Havana Docks Corporation—held a concession from the Cuban Government that allowed it to develop and operate dock facilities at the state-owned port of Havana, which was scheduled to expire in 2004. Havana Docks brought suit against four cruise-line operators that, from 2016-2019, had docked in the Port of Havana and used the docks built and previously-operated by Havana Docks to embark and disembark passengers, seeking damages for the cruise-liners having “trafficked” in Havana Docks’ confiscated property.

The question before the Court in Havana Docks v. Royal Caribbean Cruises, Ltd. was a narrow one: Could the cruise ships avoid liability because their use of the docks took place after 2004, when Havana Docks’ concession was slated to expire? By an 8-1 vote, the Supreme Court held that the cruise-line companies’ use of the docks was sufficient grounds to move the case forward, even though the trafficking at issue took place after the expiration of Havana Docks’ concessionary interest.

The Court’s ruling is a limited one that leaves many questions for future Title III litigation unanswered—including issues relating to foreign sovereign immunity, personal jurisdiction for non-US corporate defendants in such actions, and the application of the statutory exception in Title III for use of property incident to lawful travel to Cuba. Indeed, this same case could well be the subject of further appeals on the lawful travel exception, as that issue was not addressed by the Supreme Court in Havana Docks, and the Supreme Court is considering a different case this term on the relationship between the Helms-Burton Act and the Foreign Sovereign Immunities Act.

The ruling also comes against a backdrop of increasing pressure from the Trump Administration on the Cuban Government. These measures include imposing new sanctions on persons taking acts of repression in Cuba, a months-long, near-total oil embargo which has contributed to widescale fuel shortages and power outages on the island, as well as the Department of Justice’s announcement of a criminal indictment of former Cuban President Raul Castro.

U.S. and non-U.S. companies would be well served to monitor this volatile situation, which may lead to further Helms-Burton Act litigation, broader sanctions restrictions, or conversely sanctions easing if the Cuban Government responds favorably to U.S. pressure. The United States has maintained a comprehensive sanctions regime against Cuba for almost seventy years. The Trump Administration is empowered to broaden those sanctions measures, but an act of Congress will be required to effectuate any major sanctions easing. 

Historical Context of Havana Docks Litigation

In 1960, communist revolutionaries seized the docks at the Port of Havana and confiscated all of Havana Docks’ assets without compensation. Havana Docks subsequently filed a claim with the Foreign Claims Settlement Commission, which was established by Congress to provide a mechanism for certifying the amount and validity of claims held by American businesses whose property had been expropriated by the Castro regime. The Commission certified Havana Docks’ claim to the tune of $9 million in losses, plus six percent annual interest.

In February 1996, Cuban fighter jets shot down two unarmed American civilian airplanes over international waters in the Strait of Florida. Congress responded by passing the Helms-Burton Act, which codified the longstanding embargo first imposed on Cuba by the Kennedy Administration and set conditions for the normalization of relations between the two countries. One of the stated purposes of the statute was “to protect United States nationals against confiscatory takings and the wrongful trafficking in property confiscated by the Castro regime.” 22 U.S.C. § 6022(6). And in Title III, Congress allowed a private right of action against anyone who “traffics in property which was confiscated by the Cuban Government on or after January 1, 1959.” The statute defines “traffics” broadly to include anyone who “uses” the confiscated property, among other activities, and allows for treble damages.

The statute also gave the President the authority to suspend application of Title III for six-month periods where the President finds that it would be “necessary to the national interests of the United States and will expedite a transition to democracy in Cuba.” After successive Presidential administrations from President Clinton through President Obama continued to suspend Title III, President Trump in 2019 allowed the Title III suspension to expire, opening the possibility of lawsuits for the first time. With the private right of action finally available, several plaintiffs brought suit against a variety of defendants, many of whom were in the tourism or aviation industry.

After President Trump lifted the suspension on Title III lawsuits, Havana Docks brought suit against four cruise-line operators that, between 2016-2019, had docked in the Port of Havana and used the docks built and previously-operated by Havana Docks to disembark passengers, seeking damages for the cruise-liners having “trafficked” in Havana Docks’ confiscated property. 

Summary of Havana Docks Litigation

The district court entered judgment for Havana Docks, and awarded it more than $100 million in damages from each of the four defendants. The Eleventh Circuit reversed, finding that because Havana Docks’ property interest was slated to expire in 2004, the trafficking at issue fell outside the scope of Havana Docks’ concessionary interest. The Eleventh Circuit adopted a but-for test, concluding that courts should evaluate the property interest at issue as if there had been no expropriation, and then determine whether the alleged conduct constituted trafficking in that interest. 

The Supreme Court reversed, finding that the property in question had been “tainted” by the confiscation and that a plaintiff in a Title III action need only show that the defendant knowingly “used” the underlying property at issue. Finding that “Title III is simply an antitrafficking right of action,” Justice Thomas’ opinion for the court rejected the “but-for” test adopted by the Eleventh Circuit and concluded that “confiscated property is, as it were, tainted—off limits—such that anyone who uses the property can be liable to those who had an interest in the tainted property.” It therefore made no difference that Havana Docks had a time-limited concession, because “the cruise lines used confiscated property to which Havana Docks owns the claim.” Justice Kagan in a solo dissent would have agreed with the Eleventh Circuit and found that the time-limited nature of Havana Docks’ concessionary interest precluded liability in this case because the trafficking post-dated 2004, when Havana Docks’ property interest would have been extinguished. 

Topics yet Unaddressed by the Supreme Court:

Lawful Travel Exception: The Supreme Court’s ruling is a narrow one, and its broader implications for Title III litigation remain to be seen. Indeed, the cruise ship operators had separately argued in the Eleventh Circuit that the statutory exception for “uses of property incident to lawful travel” to Cuba precluded liability, but the Eleventh Circuit did not reach that question and the Supreme Court also declined to rule on that issue, sending it back to the lower courts. A separate concurring opinion by Justice Sotomayor, joined by Justice Kavanaugh, described this exception as “significant” on remand given that “the Federal Government appears to have previously taken the position that these cruises were lawful and beneficial to both Cuba and the United States.” Cruise ship companies and major airlines have been among the most common defendants in Title III actions thus far, so further judicial consideration on the scope of the lawful-travel exception should help to clarify the scope of Title III litigation going forward. 

Foreign Sovereign Immunity: The Supreme Court also heard oral argument in a separate case under the Helms-Burton Act the same day it heard oral argument in Havana Docks concerning the scope of the Foreign Sovereign Immunities Act, that is, whether the Helms-Burton Act itself abrogates foreign sovereign immunity in cases against Cuban instrumentalities, even if the parties do not satisfy an exception under the Foreign Sovereign Immunities Act. See Exxon Mobil Corp. v. Corporación Cimex, S.A. (Cuba), No. 24-699. Resolution of that case should clarify the extent to which Title III may be used to recover against Cuban instrumentalities who traffic in confiscated property.

Personal Jurisdiction for Foreign Defendants: Likewise, personal jurisdiction over foreign corporations remains a potential roadblock to recovery under Title III. Although Congress could likely amend Helms-Burton to allow for personal jurisdiction over foreign corporations consistent with the Fifth Amendment and the Supreme Court’s decision in Fuld v. PLO, it seems doubtful that Helms-Burton currently authorizes such jurisdiction, meaning that Plaintiffs must rely on state long-arm statutes and the Fourteenth Amendment.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Greta L. Nightingale, an O’Melveny partner licensed to practice law in the District of Columbia; David J. Ribner, an O’Melveny partner licensed to practice law in the District of Columbia and New York; and Alexander N. Ely, an O’Melveny counsel licensed to practice law in the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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