US Supreme Court OKs ExxonMobil lawsuit over Castro-era property seizure

The US Supreme Court made it easier for US companies to seek compensation from Cuba’s government for assets seized decades ago.

The United States Supreme Court has ruled that ExxonMobil can sue Cuban state-owned companies in US courts over property on the island nation that was seized after Fidel Castro took power.

The 6-3 decision on Tuesday was the second in as many months in favour of US owners of Cuban property that was confiscated by the Communist government more than 65 years ago.

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The outcome in the two cases could be an additional lever for the administration of US President Donald Trump to exert pressure on Cuba, which is already being squeezed by a US oil embargo.

At issue was whether the 1996 law known as Helms-Burton removes the shield from lawsuits in US courts that typically cover foreign countries and state-owned businesses. The justices reversed a lower-court ruling that found that the Cuban state-owned companies are immune from lawsuits in US courts.

The court said a legal defence called foreign sovereign immunity, which generally prohibits US lawsuits against foreign governments and their agents, is not available in cases like the one ExxonMobil brought against Cuban state-owned firm Corporacion CIMEX.

Conservative Justice Brett Kavanaugh, who authored the ruling, wrote that the 30-year-old federal law eliminates “the sovereign immunity of Cuban agencies and instrumentalities”.

“The Helms-Burton Act authorizes private suits against Cuban agencies and instrumentalities – suits that would largely be nonstarters if subjected to the FSIA’s requirements,” Kavanaugh wrote, referring to the Foreign Sovereign Immunities Act of 1976.

The court’s six conservative justices were in the majority. Justice Elena Kagan wrote a dissent that was joined by the court’s two other liberal members.

Kagan said that the plaintiffs should be required to show that their suit was exempt from the Foreign Sovereign Immunities Act, arguing that “nothing in the text or ‘architecture’ of the Helms-Burton Act suggests that Congress abrogated the sovereign immunity of these defendants – much less that it did so with the requisite unmistakable clarity”.

ExxonMobil is seeking compensation for the confiscation of assets owned by subsidiaries of Standard Oil, ExxonMobil’s predecessor, including more than 100 service stations and an oil refinery.

More cases

Last month, the court ruled in another case involving confiscated property in Cuba, reviving claims by the US company that operated docks in Havana against four cruise lines that brought tourists to Cuba during the brief thaw in relations during the administration of former US President Barack Obama. That case turned on the same section of Helms-Burton, allowing lawsuits over seized property.

Congress passed the law in response to the 1996 downing of civilian planes flown by Miami-based exiles.

Title III of the law allows Americans to sue almost any company that engages in commercial activity or benefits from property confiscated by Cuba’s government.

Before the first Trump administration, every president had suspended the provision because of objections from US allies doing business in Cuba and the effect on future negotiated settlements between the US and Cuba.

But Trump lifted the suspension in 2019, and ExxonMobil filed its lawsuit the same day against CIMEX.

The US Foreign Claims Settlement Commission, an arm of the Department of Justice, said in 1969 that the value of ExxonMobil’s property in Cuba is $71.6m, plus 6 percent annual interest beginning in 1960. That would be worth about $3bn today, plus treble damages.

In addition, the commission found that nearly 6,000 individuals and businesses held claims worth $1.9bn, before adding in interest or damages.