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UPDATE May 4, 2021 https://www.steptoe.com/en/news-publications/new-ruling-serves-as-guidepost-for-future-claims-involving-cuban-agencies-and-instrumentalities.html?tab=overview

Since the defendants in this case are trafficking in property subject to a certified claim, the Helms-Burton Act further provides that they are liable for treble damages. As a result, Exxon seeks damages equal to $214,833,008.70, plus pre- and post-judgment interest and costs as applicable.

The Court denied defendants’ motion and held the following: (i) Exxon has standing to bring the suit, (ii) Exxon established that CIMEX-Cuba does not have sovereign immunity and is subject to the Court’s jurisdiction under the commercial activity exception of the FSIA, and (iii) Exxon is entitled to jurisdictional discovery on its claims against CUPET and CIMEX-Panama. The Court did not issue a decision on personal jurisdiction as the parties had jointly agreed to postpone the resolution of those claims.

As an initial matter, the Court declined to follow Exxon’s view that Congress intended Title III to provide a separate grant of subject-matter jurisdiction over the defendants. The Court also rejected defendants’ argument that the commercial activity and expropriation exceptions were mutually exclusive. Rather, the Court looked at both exceptions as potentially independent bases for jurisdiction. Ultimately, the Court concluded that the expropriation exception of the FSIA did not provide jurisdiction over the defendants. The Court found that Cuba’s taking of the property of Exxon’s subsidiary was not in violation of international law on the basis that customary international law requires an expropriation of a subsidiary’s property to completely destroy the beneficial and productive value of the subsidiary in order to be a violation of international law. The Court concluded that such a taking did not occur because Exxon’s then-subsidiary continued to operate after Cuba’s taking of its property.

However, the Court concluded that it had subject-matter jurisdiction to hear Exxon’s claim against CIMEX-Cuba under the commercial activities exception and that Exxon pled sufficient facts to warrant jurisdictional discovery as to CIMEX-Panama and CUPET. The commercial activities exception primarily turned on whether the defendants engaged in activity that caused a direct effect in the United States. Exxon showed that CIMEX-Cuba created a direct effect through its remittance business and food imports that were available at service stations that CIMEX-Cuba operated on Exxon’s former property. While the Court concluded that Exxon did not possess sufficient facts at this juncture to show that CUPET and CIMEX-Panama are subject to the Court’s jurisdiction, it granted Exxon jurisdictional discovery to allow Exxon to make these showings.

The Court’s opinion will likely serve as a guidepost for future plaintiffs who wish to file suit under Title III against a foreign sovereign, particularly a Cuban agency or instrumentality, for trafficking in confiscated property. While suits against any foreign sovereign in US courts have unique jurisdictional challenges, those issues may be mitigated through diligent factfinding and a thorough litigation strategy. Title III of the Helms-Burton Act remains available for claimants at the moment, but the Biden Administration may choose to suspend the cause of action in the future. Potential litigants may wish to monitor developments in this area carefully. The Biden Administration must inform Congress of a suspension to Title III at least 15 days before such suspension comes into effect. The Title III lawsuits filed before the new suspension comes into effect would be allowed to proceed despite the suspension.

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