Question

Economics: Efficient markets require well-defined and well-enforced property rights.

A Day in Court for Cuban Property Owners

Those who traffic in assets confiscated after the revolution can be held liable.

By

Mary Anastasia O’Grady

Dec. 29, 2019 2:39 pm ET

The first US-to-Cuba cruise ship, Adonia from the Carnival cruise line, May 2, 2016. Photo: adalberto roque/Agence France-Presse/Getty Images

Thanks to the Trump administration, Americans whose property in Cuba was expropriated by the military dictatorship of Fidel Castro may finally have their day in court.

New Year’s Day marks the 61st anniversary of the fall of Cuban dictator Fulgencio Batista. A week later, on Jan. 8, 1959, Castro triumphantly entered Havana.

Many Cubans had risked all to unseat Batista with the goal of restoring constitutional government. But Castro sought absolute power. He refused to hold elections and instead launched a purge. There were firing squads, dungeons and exile. Whole communities of peasants in central Cuba—where resistance to the tyranny was strongest—were displaced and sent to concentration camps on the western end of the island.

To lock down power, Castro stripped citizens and foreigners alike of their property. State terrorism explains how the regime has survived. More remarkable is the tenacity of the Cuban diaspora. Most made meaningful new lives wherever they ended up. But many families have never abandoned the hope of getting justice for the crimes of the regime.

In March 1996 President Clinton signed the Cuban Liberty and Democratic Solidarity Act, also known as Helms-Burton, to strengthen the U.S. embargo on Cuba. He had resisted the legislation for months. But Mr. Clinton acquiesced after the Cuban air force shot down two Cessna aircraft carrying members of a Cuban liberation group Brothers to the Rescue in international airspace.

Mr. Clinton won a concession from Helms-Burton backers in Congress: The president would have the power to waive Title III of the act, which makes liable those who traffic in the property of U.S. nationals confiscated by the regime. Mr. Clinton used his waiver power, as did his successors—until President Trump declined to do so this April.

Title III allows Americans—including Cuban-Americans who naturalized after Castro came to power—to seek compensation in U.S. courts from those trafficking in property seized from them by the Cuban regime.

Some 20 claims have been filed since April, including one against Miami-based Carnival Cruise Lines by the owner of Havana Docks for its use of that expropriated facility. A separate action against Carnival is by a different owner, for its use of the Santiago de Cuba port, also taken at gunpoint by the regime. There’s a lawsuit against American Airlines (Links to an external site.), brought by the son of the owner of the José Martí Airport in Havana at the time it was confiscated.

One challenge for plaintiffs will be establishing whether their targets are within reach of U.S. law. A class-action suit originally filed in May on behalf of American owners of Cuban properties named the Cuban regime and its officials as defendants. But Cuba may claim that sovereign immunity precludes its being sued. The suit was amended on Dec. 6 to allege that “Expedia (Links to an external site.), and Booking.com (and their affiliates)—have used, trafficked in, and benefited from these confiscated properties without permission from, or compensation to, the properties’ rightful owners.”

Exxon Mobil (Links to an external site.) has a claim that is certified by the U.S. government, which means ownership is already recognized. In May it brought a complaint against the Cuban state-owned holding company, Cimex, and Unión Cuba-Petróleo for “unlawful trafficking” in Exxon’s “confiscated property in violation of Title III.” The defendants filed a motion to dismiss in October, claiming sovereign immunity. In November Exxon filed an amended complaint to demonstrate jurisdiction.

Expedia said Friday that it “does not comment on pending litigation.” Booking.com could not be reached for comment. On Thursday Judge Cecilia Altonaga denied the companies’ motion to dismiss the class action and permitted jurisdictional discovery to go forward. If the plaintiffs can show that the defendants are subject to U.S. courts and that a judgment can be secured, the case is likely to be heard.

NPR reported (Links to an external site.) in May that Carnival “said it has a U.S. Treasury license to do business in Cuba.” In a Saturday email a company spokesman wrote, “We believe in the merits of our case and remain optimistic that we will prevail.”

American Airlines told me Friday that its “service to José Martí International Airport in Havana, Cuba, is expressly authorized by the U.S. government including the Department of Transportation and the U.S. Office of Foreign Assets Control. In addition, the Helms-Burton Act specifically exempts lawful travel, which is what American provides.”

It is true that the Obama administration, eager to play ball with the regime, gave licenses to American Airlines and Carnival to operate in Cuba. But there is a difference between being cleared by Treasury to conduct business in Cuba and using expropriated assets to sustain those businesses. In a U.S. court of law that may turn out to be no small distinction.

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Comments?

Answer 1

Cuba and USA relations are bilateral relations involving the Republic of Cuba and the United States of America. Cuba was originally a Spanish colony that was won by America during the Spanish American war . Batista was a soldier who twice became the president of Cuba. Even though he was progressive in his first tenure in his second tenure he turned into a tyrant dictator having least of concern for the nation's problem. Although the US government initially supported the dictatorship regime but later on they saw through the vice motives of Batista and agreed to his removal. In March 1952 coup Fidel Castro then a young lawyer and activist led an armed rebellion to over throw the government of the dictator.

As an aftermath of the Cuban Revolution Cuba faced several changes economically and politically. The US government was initially willing to acknowledge the Castro's government but since their ideological differences were colossal it actually resulted in US severing all diplomatic ties with the country. The new government nationalised all US property in Cuba in August and In turn US ceased all Cuban assets on American Land and strengthened embargo of Cuba.

Barack Obama in 2014 diluted the economic policies for the Cuban bilateral relations and started compensating the Americans who had lost their land on Cuban land and even provided them with license to do business in Cuba. This has enabled for market flow between both the countries .

The statement mentioned above that efficient markets need efficient property rights to function. This is quite true because if there are no efficient property rights the business dealers are always in a sense of insecurity for their land. And not just about commercial property even the residents are in a constant sense of insecurity. This hinders them from investing in large amounts in the country and it is not just a domestic issue. Foreign investors also take it as a major issue and refrain from investing in such countries as they have no surity of the protection of their assets in that nation. This leads to decreased investment and an economy that has to completely survive on its own without any help from other countries . Not only is the trade affected like in the case of Cuba a country can go in the situation of a cold war and the countries allied to the opposite nations also lose contact with that nation.

Conclusively protection of property through efficient property rights that cannot e changed according to the wills at any given moment is crucial for an efficient market.