Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-25T07:27:36.747Z Has data issue: false hasContentIssue false
  • English
  • Français

Title III of the Helms-Burton Act Is Consistent with International Law

Published online by Cambridge University Press:  27 February 2017

Brice M. Clagett
Get access Rights & Permissions [Opens in a new window]

Extract

The Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, otherwise known as the Helms-Burton Act, became law on March 12, 1996. Title III of the legislation creates a federal cause of action, on behalf of U.S. citizens whose property was confiscated without compensation by Cuba, against those who “traffic” in that property. Several governments—notably Canada, Mexico and those of the European Union, whose corporate citizens are the principal “traffickers”—have denounced the legislation as an exercise of extraterritorial jurisdiction that violates customary international law. These governments apparently see nothing wrong with permitting—even encouraging—their nationals to use and profit from property that rightfully belongs to others. The United States not only commands the moral high ground on this issue; it also has the better of the legal argument.

Type
Agora: The Cuban Liberty and Democratic Solidarity (Libertad) Act
Information
American Journal of International Law , Volume 90 , Issue 3 , July 1996 , pp. 434 - 440
Copyright
Copyright © American Society of International Law 1996

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Pub. L. No. 104-114, 110 Stat. 785 (1996) [hereinafter Act].

2 “Traffics” is broadly defined in §4(13), 110 Stat, at 790–91, and includes any dealing in, use of or benefiting from confiscated, property or causing, directing or profiting from trafficking by others. One purpose of the definition was to reach direct traffickers’ affiliates that may be subject to U.S. jurisdiction. To be actionable, trafficking must be knowing and intentional, and it must begin or continue three months after August 1, 1996.

As with virtually any legislation, questions of interpretation of this key term will be raised in the courts. Opponents have advanced hypotheticals that border on reductio ad absurdum; e.g., the suggestion that a foreign manufacturer could be deemed a trafficker because goods produced by him are ultimately resold in Cuban premises that had been confiscated.

3 Space does not permit addressing these governments’ claims that title III also violates NAFTA and GATT/WTO. As of this writing, I have not seen those claims developed in any detail.

4 Tide III makes it clear that the United States is not “espousing” the Cuban-American claims. Act, §§302(g), 303(b), 110 Stat, at 819–20. In addition, their right to bring tide III lawsuits is deferred until March 1998. Id. §302 (a)(5)(C), 110 Stat, at 817.

5 See, e.g., Cuba in Transition: Options for Addressing the Challenge of Expropriated Properties (JoAnn Klein ed.) (papers presented by the Inter-American Law Committee and the Task Force on Cuban Technical Assistance, 1994 Annual Meeting, American Bar Association); Milan Jezovica, Restitution of Property in the Czech and Slovak Federal Republic, 29 Comp. Jurid. Rev. 45 (1992); Steven E. Hendrix, The Crisis of Land Law and Policy in Nicaragua, 29 Comp. Jurid. Rev. 3 (1992); Laszlo Takacs, Objectives of Property Indemnification in Post-Cold War Hungary, 29 Comp. Jurid. Rev. 61 (1992); Jessica Heslop &Joel Roberto, Property Rights in the Unified Germany: A Constitutional, Comparative, and International Legal Analysis, 11 B.U. Int’l L.J. 243 (1993).

Restitution in kind is the preferred remedy under international law for unlawful confiscations of property. See, e.g., Factory at Chorzow (Ger. v. Pol.) (Indemnity), 1928 PCIJ (ser. A) No. 17; F. A. Mann, Further Studies in International Law 126 (1990); 2 Marjorie M. Whiteman, Damages in International Law 827 (1937). Granting a restitution remedy recognizes that rightful tide to the property remains in the expropriated owner. B. A. Wortley, Expropriation in Public International Law 76 (1959).

Restitution was explicitly recognized, as an option to which a claimant is entitled, in the Agreement Concerning the Settlement of Certain Property Claims, May 13, 1992, U.S.-FRG, Arts. 2(7), 3, TIAS No. 11,959.

6 See Christopher, note 7 infra. This and every other basis for title III discussed herein are set forth in congressional Findings, Act, §301, 110 Stat, at 814.

7 Secretary Warren Christopher, Circular to all diplomatic and consular posts, Sept. 1993, reprinted in Cuban Liberty and Democratic Solidarity Act: Hearings Before the Subcomm. on Western Hemisphere and Peace Corps Affairs of the Senate Comm. on Foreign Relations, 104th Cong., 1st Sess. 192–93 (1995). Since this message was in the diplomatic context, it dealt only with die claims of preconfiscation U.S. nationals.

8 Restatement (Third) of the Foreign Relations Law of the United States §§402(1) (C), 403 (1987) [hereinafter Restatement].

9 See id. §402 reporters’ note 2, §403 reporters’ notes 2–6, §415 and comments and notes thereto.

10 Id. §403. The Restatement’s elaborate system of jurisdictional rules (§§401–433) derives primarily from principles developed by U.S. courts as matters of “comity” or “good neighborliness.” It is less than clear that they have attained the status of binding international law. Cf. Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 421 (1964).

11 See Restatement, supra note 8, §905 and authorities there discussed; Elisabeth Zoller, Peacetime Unilateral Remedies: An Analysis of Countermeasures, passim (1984); Elisabeth Zoller, Enforcing International Law Through U.S. Legislation, passim (1985); cf. Restatement, supra, §703 comment f;Lori Fisler Damrosch, Retaliation or Arbitration–or Both? The 1978 United States-France Aviation Dispute, 74 AJIL 785 (1980). If the governments of other states, including those whose nationals are the traffickers, are abetting Cuba in its unlawful confiscations, “countermeasures” concepts may be applicable to them as well.

12 Tide III makes no change in the statutory, common law and constitutional requirements that must be met to obtain personal jurisdiction over a defendant.

13 Some opponents have called title III a “secondary boycott,” on the theory that its real purpose or effect is to stop other countries from trading with Cuba. Even if international law forbade secondary boycotts, there is nothing in title III that proscribes or penalizes trade with Cuba as such. A company that can find ways to trade with Cuba without becoming a trafficker in stolen property need have no fear of this legislation.

14 A conspicuous exception, of course, is the Iran–United States Claims Tribunal, whose consensual establishment was possible because of the unique circumstances of 1979–1981: the United States wanted the hostages back and the claims of its nationals resolved according to law, and it held a “bargaining chip”—some $13 billion of Iranian assets—that ultimately brought Iran to the negotiating table and resulted in the Algiers Accords of 1981, the adjudication of a significant body of confiscation cases under international law and the payment of the Tribunal’s awards. See Dames & Moore v. Regan, 453 U.S. 654 (1981).

As a result of the Tribunal’s work and other developments over the last generation, the unlawfulness of uncompensated or otherwise wrongful confiscations, at least of alien-owned property, is better established and more universally recognized today than it was 20 or 30 years ago. See generally, e.g., Ibrahim Shihata, Legal Treatment of Foreign Investment: “The World Bank Guidelines” (1993); C. F. Amerasinghe, Issues of Compensation for the Taking of Alien Property in the Light of Recent Cases and Practices, 41 Int’l & Comp. L.Q. 22 (1992); John A. Westberg, International Transactions and Claims Involving Government Parties: Case Law of the Iran–United States Claims Tribunal 101–47, 211–52 (1991); Patrick M. Norton, A Law of the Future or a Law of the Past? Modern Tribunals and the International Law of Expropriation, 85 AJIL 474 (1991); John A. Westberg, Compensation in Cases of Expropriation and Nationalization: Awards of the Iran–United States Claims Tribunal, 5 ICSID Rev. 256 (1990); Elihu Lauterpacht, Issues of Compensation and Nationality in the Taking of Energy Investments, 8 J. Energy & Nat. Resources L. 241 (1990); William C. Lieblich, Determinations by International Tribunals of the Economic Value of Expropriated Enterprises, J. Int’l Arb. 37 (1990); Lewis D. Solomon & David H. Mirsky, Direct Foreign Investment in the Caribbean: A Legal and Policy Analysis, 11 Nw. J. Int’l L. & Bus. 257 (1990); Brice M. Clagett & Daniel B. Poneman, The Treatment of Economic Injury to Aliens in the Revised Restatement of Foreign Relations Law, 22 Int’l L. 35 (1988); Ibrahim Shihata, Factors Influencing the Flow of Foreign Investment and the Relevance of a Multilateral Investment Guarantee Scheme, 21 Int’l L. 671 (1987).

15 See generally RICHARD B. LILLICH & Burns H. Weston, International Claims: Their Settlement by Lump Sum Agreements (1975); Asociacion de Reclamantes v. United Mexican States, 735 F.2d 1517, 1523 (D.C Cir. 1984). Lillich and Weston calculated in 1975 that payments pursuant to lump sum settlements up to that time were made an average of 20 years after the expropriations in question, and ranged from 4.59% to 60.6% of the adjudicated value of the claims, with no interest. Lillich & Weston, supra, at 208–14, 218 n.55, 239.

In 1979 the Carter administration made a settlement with China that it claimed to yield 40 or 41 cents on the dollar. Agreement Concerning the Setdement of Claims, May 11, 1979, PRC-U.S., 30 UST 1957, 1153 UNTS 289, amended Sept. 28, 1979, 31 UST 5596; Wash. Post, Mar. 3, 1979, at D8; Wall St. J., Mar. 2, 1979, at 8. That, however, was the percentage only of principal amounts; if the statutory simple interest over 30 years is considered an integral part of the claims (as it should be), the setdement was for less than 14 cents on the dollar.

Even in the case of newly reunified Germany—a solvent country, and one that supposedly shares U.S. views on the international law of expropriation—the Bush administration was willing in 1992 to enter into a lump sum settlement that, while paying principal in full, was sufficient to satisfy only approximately half of the modest 6% statutory simple interest on the Foreign Claims Settlement Commission’s East German Claims Program awards. See note 5 supra. The German example suggests that the State Department will rarely be able, even after many decades of justice denied, to negotiate a settlement that fairly reflects the international law requirement of just compensation.

16 “[T]he absence of more direct means of enforcement tends to endow the principle of nullity of illegal acts with particular importance in the international sphere.” Hersch Lauterpacht, Recognition in International Law 421 (1947).

17 According to Mann, note 5 supra, at 186:

The chattel confiscated in a manner considered to be internationally illegal should be treated as having been stolen. The original owner, therefore, has retained his tide …. If the person in possession of “hot products” knows their origin he may also become liable in damages to the true owner, not only for such a tort as conversion, but also for conspiracy committed by co-operating with others to deprive the true owner of his rights.

18 See, e.g., 1 Oppenheim’s International Law 371–75 (Robert Jennings & Arthur Watts eds., 9th ed. 1992) [hereinafter Jennings & Watts]; Nationalization and International Law: Testimony of Etihu Lauterpacht, Q.C., 17 Int’l L. 97 (1983); F. A. Mann, Studies in International Law 373–90, 420–65 (1973); Mann, note 5 supra, at 177; Martin Domke, Foreign Nationalizations, 55 AJIL 585, 610–15 (1961) (citing many other authorities); Ignaz Seidl-Hohenveldern, Title to Confiscated Foreign Property and Public International Law, 56 AJIL 507, 508–09 (1962); Statement by the U.S. Department of State on Policy on “Hot” Libyan Oil (May 7, 1974), 13 ILM 767 (1974).

19 Seidl-Hohenveldern, note 18 supra, at 509 (emphasis added). Accord, Mann, note 18 supra, at 385–86:

If, then, the sacrosanctity of the foreign act of State is treated as a rule of the municipal law of the United States, Britain, and Holland, it cannot be so extended as to lead to the legalization of an international wrong. Such a consequence would be opposed to the very “comity of nations” which was invoked to justify the maxim. On the contrary, … if a State commits an international wrong and the court of another State, the forum, refuses recognition to that wrong, the latter does what international law expects it to do and what it must do in order not to become an accessory to the delinquency. (Emphasis added)

20 See cases discussed by Mann, note 5 supra, at 183–86, and Jennings & Watts, note 18 supra, at 371–75.

21 Concern has been expressed that the Act provides for liability for the full value of the confiscated property even if the trafficking is limited, §302(a) (1), 110 Stat. at 815, and in some circumstances for treble damages, §302(a) (3) (C) (ii), 110 Stat, at 816. Such concerns implicate domestic due process considerations more than international law. If particular applications of the Act raise legitimate due process concerns, the courts are equipped to address them.

22 GA Res. 217A (III), UN Doc. A/810, at 71, Art. 17 (1948); see Sei Fujii v. State, 217 P.2d 481, 487 (Cal. Ct. App. 1950).

23 See generally Restatement, supra note 8, §§701–702 and comments and notes thereto. The House of Lords has held that a statute authorizing such discrimination constituted “so grave an infringement of human rights that the courts of this country ought to refuse to recognise it as a law at all.” Oppenheimer v. Cattermole, 1976 App. Cas. 249, 278. A confiscation by a state of its own citizen’s property should be deemed a nullity by other states “in the event of arbitrary discrimination on some such ground as political views, religion or race.” Mann, note 5 supra, at 188.

24 Castro’s confiscation of U.S.-owned property violated international law “because, inter alia, its purpose was to retaliate against United States nationals for acts of their government, and was directed against United States nationals exclusively.” Restatement, supra note 8, §712 reporters’ note 5; Banco Nacional de Cuba v. Farr, 243 F.Supp. 957 (S.D.N.Y. 1965), aff’d, 383 F.2d 166 (2d Cir. 1967), cert, denied, 390 U.S. 956 (1968). Castro’s confiscations of Cuban-owned property were largely based on such grounds as the owner’s having left Cuba “in any manner whatsoever,” having committed “offenses defined by [Castro’s] law as counterrevolutionary,” and the like. See International Commission of Jurists, Cuba and the Rule of Law 100 (1962).

25 Restatement, supra note 8, §701; cf. Theodor Meron, The Continuing Role of Custom in the Formation of International Humanitarian Law, 90 AJIL 238 (1996).

26 Any evolved and meaningful system of human rights must include a right against uncompensated, discriminatory or otherwise illegitimate expropriation. Without protection of that right, a “human rights” code is virtually meaningless. The 20th century’s experience with totalitarian systems, including Castro’s Cuba, has demonstrated that guarantees of whole panoplies of other “rights” are worth very litde if the state reserves the power to confiscate the property of its citizens without compensation. See, e.g., Carol M. Rose, Property as the Keystone Right?, 71 Notre Dame L. Rev. 329 (1996).

27 See, e.g., Republic of Iraq v. First Naf’l City Bank, 353 F.2d 47, 51–52 (2d Cir. 1965), cert, denied, 382 U.S. 1027 (1966). Similarly, French courts have consistently refused, on public policy grounds, to give effect to foreign confiscations “even when affecting solely the nationals of the legislating country within its territory.” Jennings & Watts, note 18 supra, at 372 n.6.

28 Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 428 (1964).

29 Act, §302(a)(6), 110 Stat, at 817.

30 22 U.S.C. §2370(e)(2) (1994). Congress has likewise carved out other areas in which it has directed that the act of state doctrine not be applied. See §15 of the Federal Arbitration Act, 9 U.S.C. §15 (enforcement of arbitral agreements; confirmation of arbitral awards).

Arguably, the Sabbatino Amendment itself authorizes lawsuits of the type contemplated by title III of Helms-Burton, at least where the plaintiff is a preconfiscation U.S. national. However, the U.S. Court of Appeals for the Second Circuit narrowly construed the amendment to apply only where the confiscated property (or its proceeds) has been brought to the United States. Banco Nacional de Cuba v. First Nat’l City Bank, 431 F.2d 394, 399–402 (2d Cir. 1970), rev’d on other grounds, 406 U.S. 759 (1972). The D.C. Circuit suggested that the amendment should be construed more broadly, and that Congress’s purposes in enacting it “include the promotion and protection of United States investment in foreign countries (which characteristically has always principally been land, minerals, and large fixed immovables).” Ramirez de Arellano v. Weinberger, 745 F.2d 1500, 1541–42 n.180 (D.C. Cir. 1984), vacated and remanded on other grounds, 471 U.S. 1113 (1985). In a sense, §302(a) (6) of the Helms-Burton Act simply enacts the D.C. Circuit’s understanding of what Congress intended in the Sabbatino Amendment.

The language of Sabbatino itself makes it clear that the Second Circuit’s restrictive interpretation of the amendment was not required by international law. Application by the forum of “its own law to parties or property before it” does not violate “some principle of international law.” Sabbatino, 376 U.S. at 421 (emphasis added).

31 376 U.S. at 421–22, 427. There is a consensus on this point. See, e.g., Mann, note 18 supra, at 385; Jennings & Watts, note 18 supra, at 369–71. Indeed, an English court will disregard a foreign state’s act when the executive branch declares that “taking cognizance of it would be inconsistent with the foreign policy of the UK” Id. at 369 (citing GUR Corp. v. Trust Bank of Africa Ltd., [1987] 1 Q.B. 599).

32 See, e.g., Michael J. Bazyler, Abolishing the Act of State Doctrine, 134 U. Pa. L. Rev. 325 (1986); Richard Young, Remedies of Private Claimants Against Foreign States, 3 Ann. Proc. Inst, on Prtv. Inv. Abroad 45, 55–56 (1961); Mann, note 18 supra, at 466–91; Mann, note’5 supra, at 157–58; International Rule of Law Act: Hearing on S. 1434 Before the Subcomm. on Criminal Law of the Senate Comm. on the Judiciary, 97th Cong., 1st Sess. (1981).

33 Monroe Leigh, Sabbatino’s Silver Anniversary and the Restatement: No Cause for Celebration, 24 Int’l L. 1, 3 (1990).

* Member, Covington & Burling, Washington, D.C. Mr. Clagett and his firm advise clients concerning title III of the Helms-Burton Act.