The threat of a wave of claims has put Spanish companies on guard present in Cuba. The reason is the decision of the government of Donald Trump to unblock the law that allows citizens and American companies to own property or land on the island confiscated and nationalized after the Castro Revolution of 1959, sue their current owners. If nothing changes, the so-called Helms-Burton Act will unfold on April 17 and the ban will be opened for hundreds of litigation that could seriously harm Spanish interests in Cuba. The norm, enacted in 1996, empowers Americans, or Cubans who have acquired nationality, to demand from the US federal courts compensation for the use and benefit obtained from the properties that were expropriated (practice defined by law as trafficking).
Until now, the successive American presidents had kept the application of the rule suspended. However, the Trump Administration, much more belligerent with the Cuban regime, recently announced that it reduced that suspension to 45 days (term that ended on March 17) and, a few weeks ago, granted a new extension of 30 days. Therefore, and if a new swing does not occur, the law will be fully applicable from next April 17.
However, this last extension of the term contains a restriction: only a lawsuit may be filed against companies that appear on a sort of blacklist prepared by the US Government; the call Cuban Restricted List. In this index, which is public and updated periodically, there are more than 200 entities in Cuba, the majority of the hotel sector.
The Castro legislation prevents companies foreigners work directly on the island, having to do so through sub-entities or nationalized Cuban affiliates (owned by the government). This is relevant for procedural purposes, because the US demand is not directed directly against the multinational, but against a Cuban entity. This, however, does not free the company from having to answer if it is finally condemned, as explained by Ignacio Aparicio, partner of Andersen Tax & Legal. "The risk is greater for companies that have a presence in the United States," he says, because as Cuban government companies never resort to litigation before US courts, they issue decisions in absentia "that affect the foreign parent with whom the company works. Island company object of denunciation ". That is to say, justice directs the collection of the debt that the subsidiary does not pay against the matrix and confronting it is the only method that the second has to avoid problems in the North American territory such as the seizure of assets or the blocking of accounts.
How can an entity affected by the Helms-Burton law be protected? The first step is to conduct an investigation to see if it is among the candidates to be litigated. This procedure must be done through the Office of Certifications of Foreign Claims, a US body that is responsible for validating whether a claim meets the necessary requirements. Since the publication of the standard, a total of 6,000 claims have been certified. However, it is estimated that there are around 200,000 pending validation. "The normal thing is that the possible claims are already within the validated", explains Aparicio, which affects the laboriousness of the verification process, because it has to be done by reviewing "file by file".
If it is detected that a property or land may be subject to litigation, the next step is to evaluate the possible impact and decide whether it is appropriate to assume it or not. That is, assessing the probability that the claim is processed successfully, what the compensation would be and what protective measures should be taken.
However, this does not eliminate all the risk, since it may happen that a former owner or his descendants sue in the future. Therefore, and more and more frequently, large companies with businesses on the island (or that intend to open them) contact the former owner and reach out-of-court agreements to avoid a possible lawsuit. A strategy that, in any case, "must be authorized by the Office of Foreign Assets Control North American" (OFAC, for its acronym in English), advises the lawyer.
Not all bad news for Spanish companies. The European Union, distanced from US policy with Cuba, has a directive that prevents recognition in community territory of the validity of judgments of the US courts that apply the Helms-Burton Law. Likewise, it enables Europeans to sue those who have denounced them based on that law and to demand compensation for the damages caused.
Therefore, in the case of receiving a notification, "the first thing the company must do is inform the State Secretariat of Commerce or the European Commission," says Hermenegildo Altozano, a partner at Bird & Bird, who will assess whether the company should or not comply with the sentence. Otherwise, if you pay the amount required against the criteria of these bodies, you can violate these regulations and "face penalties of up to 600,000 euros." The lawyer, in addition, is committed to increasing the protection of European companies through more anti-Helms-Burton deterrent measures, such as vetoing the entry into EU territory to Americans who file a claim against European owners. "In this way, the plaintiffs will think twice before filing a complaint."
The Helms-Burton Act was enacted in 1996, under the mandate of Bill Clinton. The standard, named after its promoters, Senator Jesse Helms and Congressman Dan Burton, included an exception that allowed the US president to suspend its application for a period of six months. This option, which responded to the fear of an avalanche of claims collapsing the country's courts, has been applied by all presidents until the arrival of Donald Trump to the White House. The activation of the law includes within the political turn regarding the island, ending the rapprochement initiated by Barack Obama.