New Article Argues that the Helms-Burton Act Has Backfired

In an article recently posted on SSRN, Gergana Sivrieva surveys cases filed under Title III of the Helms-Burton Act for trafficking in expropriated property. She shows that, surprisingly, the principal defendants have not been foreign companies investing in Cuba but rather U.S. companies with only attenuated connections to such property.

Congress passed the Helm-Burton Act in 1996 with the aim of discouraging foreign investment in Cuba. Title III of the Act creates a private cause of action against any person or entity who “traffics” in property expropriated by Cuba, a term defined broadly to include benefiting from the use of expropriated property. Title III allows the President to suspend the cause of action for six-month periods, which every President did until 2019 when President Trump ended the suspension, allowing claims under the Act to be filed.

Here is Sivrieva’s abstract:

On May 2, 2019, the Trump Administration made the historic decision to lift the suspension of Title III of the Helms-Burton Act for the first time since its enactment in 1996. Title III allows US nationals whose property was confiscated by the Cuban government to sue entities and individuals who now “traffic” in that property. Legal scholars believed this activation would trigger an avalanche of lawsuits; however, after two years of the law’s operation, only forty-some suits were filed, many by the same plaintiffs. Even more surprising is that instead of exposing foreign corporations that derive substantial benefits from the expropriated properties to liability, Title III is largely being used to target American businesses that have attenuated connections to the properties, at best. This Article explores the surprising trends born from the parties’ filings and the opinions issued by federal courts in leading Title III cases, and argues that the statute’s violation of international legal norms, failure to secure compensation for US claimants, and unforeseen targeting of domestic companies is ample rationale for the newly elected Biden Administration to urge Congress to repeal the Helms-Burton Act, which has gained the reputation of being one of the most ill-advised foreign policies of the US for a quarter century.

In the article, Sivrieva discusses a number of legal issues raised in the cases, but I would single out one as the main explanation for why the Helms-Burton Act has not worked as Congress intended: U.S. courts generally lack personal jurisdiction over foreign defendants when the claims at issue arise outside the United States. This has been particularly true since the Supreme Court’s 2014 decision in Daimler AG v. Bauman. Limits on personal jurisdiction have similarly thwarted Congress’s attempts to permit suits for victims of terrorism abroad, as Ingrid Wuerth recently noted at TLB.

I have long been critical of the Helms-Burton Act. But the fact that judicially created limits on personal jurisdiction are now effectively limiting Congress’s ability to regulate extraterritorially is a new and disturbing trend.