(Disponible en français : Les répercussions de la loi Helms‑Burton sur les entreprises canadiennes qui font des affaires à Cuba)
On 11 July 1996, the United States (U.S.) Department of State informed Sherritt International Corporation, a Toronto-based company with significant operations in Cuba’s resource and energy sectors, that its senior executives and their immediate families would be barred from entering the U.S.
The entry ban was imposed pursuant to Title IV of a new U.S. law: the Cuban Liberty and Democratic Solidarity (Libertad) Act, also known as the “Helms-Burton Act.” The bill was enacted on 12 March 1996, weeks after Cuban fighter jets shot down two civilian aircraft, operated by a Florida-based Cuban exile group, killing three American citizens and one legal resident.
Sherritt’s Chief Executive Officer (CEO) continues to be barred from entering the United States, but the law has otherwise received little public attention in Canada. That changed, however, on 17 April 2019, when U.S. Secretary of State Mike Pompeo announced that the U.S. government would allow its nationals to file lawsuits under another portion of the act: Title III.
The application of Title III had been suspended under the Clinton, Bush and Obama administrations. Following Pompeo’s announcement, three Canadian firms – the Bank of Nova Scotia, National Bank of Canada, and Teck Resources Limited – along with dozens of other multinational firms, found themselves facing civil actions in American courts.
The Helms-Burton Act is composed of four parts, or titles. The first codifies the U.S. embargo on trade and financial transactions with Cuba – a framework that has been in place since the 1960s – while the second describes measures to support a future “free and independent Cuba.”
Title III aims to compensate U.S. citizens whose properties were confiscated by the Cuban Government on or after 1 January 1959 by allowing them to sue for damages any person or entity who “traffics” or has “trafficked” in such property.
The private right to sue created by Title III is expansive. In addition to plaintiffs who were U.S. citizens at the time of confiscation, Title III accords a private right to sue to any U.S. national who had a claim to confiscated property when Helms-Burton became law. In other words, Cuban-Americans who became naturalized U.S. citizens after 1959 may seek compensation for property that they, or their relatives, owned while still living in Cuba. The definition of “trafficked” under the act is broad, encompassing virtually any business done in relation to confiscated property.
The Foreign Claims Settlement Commission (FCSC), a quasi-judicial entity within the U.S. Department of Justice, has certified 5,913 claims of expropriated property in Cuba with a value of nearly US$2 billion. With accrued interest, the claims are estimated to be worth more than US$8 billion. Certification of a claim by the FCSC constitutes proof of a U.S. national’s ownership of confiscated property.
Title IV allows the U.S. to deny entry to foreigners that the U.S Department of State determines have profited from confiscated property.
Canadian and International Response
Canada and the European Union (EU), among others, have strongly objected to the Helms-Burton Act. In 1997, Canada’s Parliament amended the Foreign Extraterritorial Measures Act (FEMA) to provide that any judgment under the Helms-Burton Act “shall not be recognized or enforceable in any manner in Canada.”
FEMA provides a mechanism for Canadian citizens, residents or corporations, subject to obtaining an order from the Attorney General of Canada, to seek recovery of any amount that has been obtained against them pursuant to Helms-Burton, including for expenses, losses or damages incurred.
In May 1996, the EU initiated a complaint at the World Trade Organization (WTO) claiming that the Helms-Burton Act was inconsistent with the United States’ WTO obligations. The EU subsequently withdrew its complaint as part of an agreement in which the U.S. agreed to suspend the application of Title III.
Canada’s Minister of Foreign Affairs and senior EU officials reacted to the U.S. announcement in April 2019 on ceasing the suspension of Title III by reiterating their commitment to protecting the interests of their companies through the WTO and their laws.
Title III Cases Involving Canadian Companies
Despite being one of the largest foreign investors in Cuba and having an US$88.3 million certified claim against the Moa nickel mine it operates, Sherritt International Corporation has thus far avoided a Title III lawsuit. In an April 2019 interview, CEO David Pathe said that the company did not believe there was any basis on which a U.S. court could establish jurisdiction.
In an analysis of the implications of Title III for foreign firms, the international law firm Gowling WLG highlighted jurisdiction as a potential obstacle to successful litigation: “establishing personal jurisdiction over non-U.S. defendants who do not themselves do business in the United States may prove difficult.”
Nonetheless, there is one active lawsuit against Canadian firms pursuant to Title III. The American heirs of a Cuban mine owner, Roberto Gomez Cabrera, have sued Vancouver-based Teck Resources Limited for its exploitation and extraction of “minerals and other geological material” from mines that Cuba’s government confiscated from Gomez’s company, Rogoca Minera, S.A.
In their court filings, the plaintiffs claim the U.S. court has jurisdiction over Teck, noting that Teck’s U.S.-based operations have “yielded hundreds of millions of dollars” and that they are publicly traded on the New York Stock Exchange. Teck has disputed that jurisdictional claim, arguing its “principal place of business is in Canada.” At the time of writing, this case was ongoing.
In another case involving Canadian companies, the descendants of Carlos Nuñez and Pura Galvez sued the Bank of Nova Scotia, the National Bank of Canada, the French bank Société Générale, and the Spanish bank Banco Bilbao Vizcaya Argentaria, for trafficking in the property of Banco Nuñez, a twenty-two branch banking operation that was confiscated by Cuba’s government.
The plaintiff voluntarily dismissed, without prejudice, their case against the Canadian banks and the Spanish bank on 16 July 2020.
As of 7 October 2020, 29 lawsuits have been filed pursuant to Title III. While most of the cases remain before the courts, several have been dismissed. Reasons for dismissal have included, among others, failure to establish that the defendant knowingly and intentionally trafficked in expropriated assets. The small number of lawsuits relative to the number of certified claims may suggest that some potential claimants are unwilling to pursue a costly court battle. Other potential claimants may be waiting for further court rulings before making a claim.
U.S. and Cuban officials held three meetings on claim issues between 2015 and 2017 but no agreement was reached. While Cuba has indicated a willingness to negotiate compensation, it does not recognize the FCSC valuation or the accrued interest. Cuba has also maintained that any negotiation regarding settlement should account for the economic losses that have amounted from U.S. sanctions.
The outcome of November’s U.S. presidential election could be consequential for the operationalization of Title III. If elected President, Joe Biden has indicated that he would pursue a policy of re-engagement with Cuba, although he does not appear to have commented specifically on the re-suspension of Title III.
John W. Boscariol, “Bracing for Impact: US Helms-Burton Right of Action Comes into Full Effect on May 2“, McCarthy Tétrault, 18 April 2019.
S.-Cuba Trade and Economic Council, Inc. Libertad Act Lawsuit Filing Statistics.
P. Sullivan, “Cuba: U.S. Policy in the 116th Congress,” Congressional Research Service, 14 May 2020.
Embassy of Canada to Cuba, “Update on the Helms-Burton Act and Canadians doing business in Cuba,” 18 April 2019.
Lana Wylie, “Dark days for Canada-Cuba relations,” Open Canada, 13 June 2019.
A Neil Campbell and Eric Vallières, “The Next Wave of US Extraterritorial Sanctions regarding Cuba – Potential Impacts for Canadian Companies,” McMillan, May 2019.
Authors: Brian Hermon and B.J. Siekierski