With the EU being Cuba's largest trading partner, this could cause significant compliance challenges for European banks.

Cuban sanctions are maintained under a number of statutes and a code of federal regulations (CFR 515). This blog looks at the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, more commonly known as the Helms-Burton Act. The act has four key sections, one of which - Title III - had been waived since implementation and thus never fully enacted, a state which changed under the Trump administration when they ceased the Title III waivers in May 2019.

Title III allows claims against "any persons" that traffic in property owned by a US national which was confiscated by the Cuban government on or after January 1 1959, as long as the "amount in controversy" exceeds $50,000. Title III was waived by Bill Clinton when it was introduced, a status maintained by every administration since.

Helms-Burton has been widely criticised and led to the European Union introducing the EU Blocking Regulation (2271/96) to protect EU companies and individuals against extra-territorial claims that could be filed under the act. More recently, the EU updated the Blocking Regulation when the US withdrew from the Joint Comprehensive Plan of Action (JCPOA).

On 17 April 2019, Secretary of State, Michael Pompeo, announced that the Trump administration  would no longer sign the waiver for Title III, allowing it to become live for the first time on 2 May 2019.

By its first anniversary in May 2020 25 law suits against 51 companies had been filed. Amazon, Expedia, Iberostar, MasterCard, NH Hotels, Pernod, Royal Caribbean, Trivago and Visa are just some of the companies that have been subject to claims.

The base damages follow a prescriptive format and they use the greater of:

• the current market value of the confiscated property;
• the market value of the property when confiscated, plus interest;
• if the claim is certified by the Foreign Claims Settlement Commission (FCSC), that amount is used, plus interest.

Title III can lead to significant exposure for trafficking[1] as the claim may enable the claimant to recoup the entire value of the property plus interest, not just compensation based on the defendant's benefit from the property in question.

For example, the claim against Carnival Cruise Lines is based on the company's use of a pier which was confiscated in 1959. The claim is for the value of the pier plus interest, which means Carnival is facing a claim of $9 million plus 60 years compound interest (interest is set at six per cent by the FCSC), and the possibility of being hit with treble damages[2] which could amount to a sum in excess of $800 million. This is despite Carnival only using the pier since 2016.

Title III is also specific for the plaintiff; in that they must be an American citizen and they must demonstrate that the defendant "knowingly trafficked"[3] in property that was confiscated.

Section 302 part 4 sets out that the plaintiff must have had a claim on the title of the confiscated property before the Act was enacted. It also states that for any properties confiscated after the enactment, the claimant has to have owned the property before it was confiscated.

Section 305 also sets out that if the trafficking has ceased, then any claim must be brought within two years of the trafficking ceasing.

After being live for only just over a year, Helms Burton Title III cases are still in their early stages and we will see how they progress. There are problems with the clauses on timing of ownership causing an issue for inheritance. Some of the early cases, such as the Amazon/Cuban Charcoal case, have been dismissed due to issues around ownership and also the level of proof required to show that the defendant was "knowingly trafficking" in confiscated property.