April 05, 2019

U.S. Temporarily Allows Lawsuits Against Certain Cuban Firms

By Daniel Harris

Cuban businesses with international exposure operate on expropriated assets. (Photo Credit: Kempinski Hotels)



Americans have until May 1 to bring lawsuits against Cuban companies on a U.S. blacklist following a decision by the U.S. State Department to invoke the partial implementation of legislation dating back to the mid-1990s.

The Cuban Liberty and Democratic Solidarity (Libertad) Act, also known as the Helms-Burton Act, provided economic assistance to form a democracy on the island. Title III of the 1996 law allows U.S. nationals with “claims to confiscated property in Cuba” to file suit in U.S. court against persons “trafficking” in that property. The provision allows lawsuits against entities under the control of the Cuban security services, as identified by the U.S. Department of State’s List of Restricted Entities and Subentities Associated With Cuba.

Every administration has suspended its implementation until now. Cuba’s repression of its own people has persisted and worsened over that period of time, a senior Trump administration official told reporters in March.

Secretary of State Mike Pompeo, on March 19, partially enacted Title III for a period of 30 days. This week, he extended the period until May 1. Under the implementation, Americans can bring suit against the Cuban entities, but not their foreign partners in joint ventures.  

When extending the partial implementation this week, the State Department said it continues to examine human rights conditions in Cuba, and that it is monitoring Havana’s support for the Venezuelan government led by Nicolas Maduro.

“We encourage any person doing business in Cuba to reconsider whether they are trafficking in confiscated property and abetting the Cuban dictatorship,” the State Department said.

The Trump administration launched the Cuba Restricted List in 2017 after its reversal of rapprochement between Washington and Havana under President Barack Obama. The list has since been revised periodically.

The Cuba Restricted List contains more than 200 entities operating in Cuba’s defense, tourism, hospitality, and general merchandise sectors. International tourism represents a key source of income for the Cuban government, and hotel operations make up the bulk of state sector earnings, according to a Brookings report.

Grupo de Turismo Gaviota (Gaviota), the largest Cuban hotel operator, is among the Cuba Restricted List entities. Gaviota is owned by Grupo de Administración Empresarial SA (Gaesa), which in turn is controlled by the Cuban Ministry of the Revolutionary Armed Forces, both restricted list entities. Kharon analysis found that Gaviota owns, controls, or operates more than 50 entities on the restricted list.

Gaviota operates the flagship five star Gran Hotel Manzana Kempinski in Havana, another restricted entity, alongside Switzerland-based hotel operator Kempinski. The building was taken over by the Cuban government in 1960. In recent years, the French construction company Bouygues Bâtiment International converted the building to a hotel, which opened in 2017.

Other countries do not follow the restrictions laid out under the Libertad Act. In November 1996, months after the U.S. enacted the law, the European Union passed a blocking regulation that prohibits EU persons and entities from complying with U.S. restrictions set forth in the Libertad Act.