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Helms-Burton Act, what will happen in Cuba from April 17?

| News | Cuban Desk

Ignacio Aparicio Ramos, partner of Andersen Tax & Legal and director of the firm’s Cuban Desk.

The 45-day suspension of Title III of the Helms-Burton Act (LHB) expires on March 17. If the suspension was not renewed, U.S. nationals will be allowed to sue for damages suffered by the confiscation or nationalization of property owned at the time of the Castro revolution.

Yesterday, the Secretary of State of the Treasury Department announced that it will keep the title suspended for another 30 days (until April 17), although it allows the filing of lawsuits against entities identified by Washington in its "black list" (Cuba Restricted List). Among these are entities under the control of Cuban intelligence, its armed forces or security services and Cuban hotel chains, with hotels in Havana, Santiago, Varadero or the Keys, to cite a few examples.

Last November, Trump's government announced sanctions against Venezuela, Cuba and Nicaragua and so, on January 16, the U.S. dictated a new measure of pressure on investment in Cuba by reducing from six months to 45 days the period of suspension of application of Title III.

The U.S. embargo is based on a network of laws and presidential decrees that try to internationalize it, among which stand out: the Cuban Assets Control Regulations (1963), which seek to freeze Cuban assets in the US and prohibit transactions with Cuba; the Cuban Democracy Act (1992), which seeks to sustain the extraterritoriality of the embargo by prohibiting ships that have touched Cuban ports from entering the US for 180 days; and, more recently, The Cuban Liberty and Democratic Solidarity Act (1996), known as the Helms-Burton Act, passed during Clinton's mandate to extend the extraterritorial scope of the blockade.

Its Title III deals with the protection of the property rights of US nationals (including Cubans who emigrated and acquired such nationality), by the confiscation -according to the US- or nationalization -according to Cuba- of property belonging to those after the revolution.

The application of the same would allow foreign investors who benefit from those properties (by means of what is widely defined as "trafficking") to sue for damages before the U.S. courts, considering that this would provide resources to the Cuban government to perpetuate its regime.

The initiation of legal action would take place against those who, within three months of the entry into force of the title, "traffic" in property confiscated from 1959 until the entry into force of the law.

There are about 6,000 claims certified before the Foreign Claims Settlement Commission (FCSC), for an estimated amount of US$9 billion, but it is estimated that the claims of Cuban exiles could be around 300,000.

However, an exception was included to the entry into force of Title III, which authorizes the president to suspend its application (waiver) if deemed necessary in the national interest or if this would contribute to speeding up the democratic transition in Cuba. Since the enactment of the Law, the suspension for successive periods of 6 months has been uninterruptedly agreed, until last January 16, Trump decreed a new suspension, but for 45 days, which made alarm bells ring, due to the attack on the investment process in Cuba, reborn after Obama's measures of rapprochement and the new Cuban law on Foreign Investment.

Far from extending the suspension for another longer period, yesterday it was reduced by only 30 more days and establishes an exception that allows the U.S. courts to sue before certain entities that the U.S. considers responsible for the "repression of the Cuban people.

It was difficult to think that Title III would not be suspended again, both because of the legal viability of this type of claim and the extraterritorial nature of the rule - which may harm the US's relations with other countries - and because US companies have investments that could be affected, the most striking case being that of hotel chains on claimed properties, that of the land at Havana airport or the port of Santiago, where US companies operate and on which there is a certified claim.

However, the fact that the period of validity of the suspension has been reduced and an exception to it has been introduced, aimed at entities already on Washington's "black list", will produce investment uncertainty.

In terms of pure risk assessment, both at the time of making a new investment in Cuba and for existing investments, it may be convenient to investigate the claims certified before the FCSC to prove that the affected assets would not be the subject of a claim. In this sense, there are news reports that there are companies in contact with former owners with whom they have signed agreements to avoid possible lawsuits before U.S. courts.

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