In a pair of oral arguments on Monday, the Supreme Court wrestled with disputes over whether U.S. companies can recover under U.S. law for losses resulting from the confiscation of property that they owned in Cuba more than 65 years ago. In Havana Docks Corporation v. Royal Caribbean Cruises, the justices considered a claim by Havana Docks, which before 1960 had owned a right to use and operate the docks in the port of Havana, that it was entitled to receive hundreds of millions of dollars from cruise lines that brought tourists to the port between 2016 and 2019 – even if the company’s right to use the docks had been scheduled to expire in 2004. And in the second case, Exxon Mobil v. Corporacion Cimex, the justices heard arguments over whether Cuban state-owned companies are immune from a lawsuit brought by Exxon Mobil, seeking compensation for the confiscation of assets owned by subsidiaries of Standard Oil, Exxon Mobil’s predecessor. In both cases, several justices had tough questions for both sides, and Chief Justice John Roberts was all but silent, making it difficult to predict how the court will rule.
Both cases involve the interpretation of the Cuban Liberty and Democratic Solidarity Act, also known as the LIBERTAD Act or as the Helms-Burton Act, after its sponsors. Title III of the law allows U.S. nationals to bring lawsuits in federal court against anyone who “traffics in property which was confiscated by the Cuban Government on or after January 1, 1959.”
A separate provision of the law gives the president the power to suspend the right to bring a lawsuit when he believes that doing so is “necessary to the national interests of the United States and will expedite a transition to democracy in Cuba.” Until 2019, presidents from Bill Clinton to Donald Trump repeatedly suspended the right to bring a lawsuit.
The plaintiff in the first case, Havana Docks, filed its lawsuit in 2019 against four cruise lines – Royal Caribbean, Norwegian, Carnival, and MSC. It contended that from 2016 to 2019 the cruise lines had “trafficked” in property that it owned by bringing tourists to the Havana Cruise Port Terminal.
A federal court in Miami agreed and awarded Havana Docks more than $400 million. By a vote of 2-1, a federal appeals court reversed that ruling. Because Havana Docks’ interest in the use and operation of the docks would have ended in 2004, the majority reasoned, before the cruise lines began bringing tourists to Havana, the cruise lines could not be held liable under the Helms-Burton Act.
Representing Havana Docks, Richard Klingler told the justices that the “confiscated property” covered by the Helms-Burton Act includes property of which Cuba seized control in 1960, including the docks. “Stopping trafficking in such facilities,” Klingler argued, “locks them up as tainted until Cuba pays for what it took.” Therefore, he suggested, it doesn’t matter that Havana Docks would no longer have an interest in the property after 2004, because the cruise lines had been “trafficking … in facilities.” The contrary ruling by the U.S. Court of Appeals for the 11th Circuit, he said, would put “an ‘open for business’ sign on property taken from Americans,” despite Congress’ purpose in enacting Title III.
Paul Clement, representing the cruise lines, countered that “Title III of the Helms-Burton Act provides an action against someone who traffics in property which was confiscated from the Cuban government.” “The plain text of the statute,” he said, “requires a one-to-one correspondence between … the property interest that was confiscated, and the property interest that was trafficked” – so, for example, someone who harvests timber on a piece of property cannot be held liable for trafficking in a confiscated property interest if only a mining interest in that property was confiscated. “The same principles apply to time limits on the property,” Clement contended.
Justice Elena Kagan appeared sympathetic to the cruise lines’ argument. “What the statute is saying,” she said to Klingler, is that someone can sue for property that has been confiscated from them. “And once … you read the statute like that, it seems as though … the property that was confiscated from that person is here not the docks,” but instead simply an interest in the docks. And that interest, she continued, expired in 2004.
Justice Samuel Alito was more skeptical. Summing up his view of the dispute, he told Clement that Congress had indicated that Havana Docks had a right to use the docks “for 44 more years and that had a value, and the Cuban government has not compensated them for what they’ve taken, and, therefore, nobody is to use” the docks “in the future until there’s compensation from the Cuban government. … [Y]ou go into this … with your eyes open,” Alito concluded.
Justice Amy Coney Barrett suggested to Klingler that Havana Docks’ interest was limited in a different way – specifically, that Havana Docks had the right to use the docks for cargo, while the cruise lines used them to load and unload tourists.
Klingler pushed back, telling Barrett that the district court had rejected such an argument by the cruise lines, and that Havana Docks had maintained “complete … control over the docks and the land” before Cuba confiscated its interest. And in response to a question from Alito, Klingler indicated that the court of appeals had not ruled on this question, so that it might remain open if the case were sent back to the lower courts.
Barrett seemed more disturbed by the possibility that defendants like the cruise lines could be held liable for trafficking in property that they never used, simply because the plaintiff had owned a range of property around the island of Cuba that was included as part of a claim certified in 1971 by the Foreign Claims Settlement Commission, a government agency set up to hear claims against foreign governments. For example, she said, Havana Docks’ “claim that was certified includes not just the docks but also some office supplies, some office buildings.” What if, she asked Klingler, Havana Docks “had a grocery store … in the middle of the island [that] has nothing to do with the docks, but it’s also part of your claim? Are” the cruise lines “liable for that?”
When Klingler responded that they would be, Barrett later observed that it was “kind of unbelievable to me” that “if you have these disparate interests all over the island” and “someone who uses the docks is going to be liable for the value of the grocery store,” “there’s no way for the defendant to get out from under that huge liability” when another plaintiff might have only owned docks.
Clement later emphasized that Barrett’s hypothetical was not a hypothetical but was in fact reality. He told the justices that Havana Docks’ claim “didn’t just cover the docks” but “also covered a thousand shares of Cuban telephone stock” and “about $300,000 in repudiated debts.” The district court, he stressed, awarded Havana Docks the whole claim “even though there’s no question that we didn’t traffic in Cuban telephone stock” or “in the confiscated debts.”
Justice Sonia Sotomayor voiced a related concern about fairness – specifically, about whether companies like Havana Docks should be allowed to recover indefinitely for the use of the property, even if that means that they ultimately receive much more than what Cuba should have paid them in the first place. “There’s a due process problem in thinking that you’re entitled to multiple recovery from infinite number of people who might use this dock that far exceeds … the amount that you were owed.”
Klingler responded that the cruise lines and other defendants are being treated fairly because they were put on notice, by “Congress, through the statute, and the Commission,” which designated confiscated property “off limits.”
Justice Brett Kavanaugh echoed Sotomayor’s questions. “[W]hat is the theory,” he asked Klingler, “you have of why Congress would enact a statute that allows you to obtain compensation from a variety of American businesses potentially that vastly exceeds the value of your property?”
Klingler reiterated that “Congress had at least dual objectives, and the principal one was to rule off limits from trafficking property that Cuba had seized or the property interest … because that was what was fueling or stopping the transition to democracy in Cuba.”
Aimee Brown, an assistant to the U.S. solicitor general who argued on behalf of the federal government, which filed a “friend of the court” brief supporting Havana Docks, told the justices that they didn’t need to decide whether the Helms-Burton Act allows companies like Havana Docks to recover the value of their claims more than once. But even if it does, Brown continued, “I don’t think that that should dissuade you from reversing in this case because that does reflect that this is not a purely compensatory regime. It’s a foreign policy tool that Congress is … using in order to deter trafficking and to impose harsh economic pressure on the Cuban government.”
Justice Ketanji Brown Jackson, the justice who was perhaps the most consistently supportive of Havana Docks, seemed to agree. The entire aim of Title III, she posited, “was to try to keep Cuba from trafficking in this property.” And although she acknowledged that “it may seem pretty draconian to suddenly give multiple recoveries to all these people … if you think of it in light of Congress’s intention to really, really make it hard for Cuba to traffic in these properties, that kind of a sanction makes at least some sense.”
Exxon Mobil also filed its lawsuit in 2019, against three entities owned by the Cuban government. Exxon Mobil contended that the three state-owned companies had violated the Helms-Burton Act by (among other things) extracting, importing, and refining crude oil, and operating gas stations using property that its subsidiaries had owned.
The Cuban companies countered that they were immune from suit under the Foreign Sovereign Immunities Act, which generally bars lawsuits in U.S. courts against foreign governments and their “agenc[ies] and instrumentalit[ies].” A federal judge in Washington, D.C., agreed with the Cuban companies that the Helms-Burton Act does not trump the FSIA. But Exxon’s lawsuit could go forward, U.S. District Judge Amit Mehta ruled, under an exception to the FSIA for commercial activity by a defendant that causes a direct activity in the United States – here, the operation of gas stations in Cuba that process money transfers from U.S. residents to Cuba and sell products imported from the United States.
On appeal, the U.S. Court of Appeals for the District of Columbia Circuit upheld Mehta’s ruling that the FSIA applies to Exxon’s claim, requiring it to show that one of the exceptions to that law applies. But the court of appeals sent the case back to the lower court for it to reconsider whether the commercial activity exception actually applied.
Representing Exxon Mobil, Morgan Ratner repeated a theme from the first argument of the day. She told the justices that if they “read the Helms-Burton Act from front to back, you’ll have one clear take-away”: “the 1996 Congress wanted to put crushing diplomatic and economic pressure on the Cuban government,” including by rescinding sovereign immunity of state-owned companies. She acknowledged that there is “admittedly a high bar” to do so, but she emphasized that the Supreme Court “has said again and again that Congress doesn’t need to use magic words to get there. It just needs to make its intent clear,” she said, which is precisely what it did in the Helms-Burton Act.
Moreover, the Supreme Court “often says Congress doesn’t enact meaningless statutes. And the notion that it would circulate these claims over to a separate immunity regime” – the FSIA – “that depends on commercial activity with the United States while simultaneously banning commercial activity … with the United States is a pretty glaring neon sign,” Ratner concluded.
Representing the Cuban-owned companies, Jules Lobel offered a different take on the interaction between the FSIA and the Helms-Burton Act. He told the justices that the FSIA creates a general presumption of immunity, which Title III of the Helms-Burton Act does not rescind. Indeed, he noted, “Congress considered whether to create another exception to immunity” when it was drafting the Helms-Burton Act “and decided not to when the … executive objected.” The Supreme Court, he continued, “should not read in an exception” to the FSIA’s general presumption of immunity “where Congress did not enact one.” And in this case, he emphasized, courts can harmonize the two statutes, because “Title III allows lawsuits against foreign instrumentalities where one of the FSIA’s exceptions” –such as the commercial activity exception – “are met.”
Lobel pushed back against Exxon’s contention that requiring it to meet one of the exceptions to the FSIA would render Title III meaningless. He noted that because “Helms-Burton gave the president the power to ease the embargo” against Cuba, “there are now 70 general licenses that have resulted in $8 billion of exports from the United States, billions of dollars in remittances, and millions of travelers flowing to Cuba in the last two decades.”
Sotomayor appeared to agree with the Cuban-owned companies that requiring companies like Exxon to satisfy an exception to the FSIA would not render their claims a “dead letter.” She observed to Ratner that Exxon still had a claim against one of the Cuban-owned companies. And indeed, Sotomayor continued, “there’s been so much investment in Cuba even before the current president.” One of the defendants, she said, “itself operates Western Unions on confiscated property. There’s over a hundred companies since 2001 that have exported products to Cuba. There’s ongoing agricultural and other exports.”
Kagan also appeared sympathetic to the Cuban companies’ argument. She characterized the FSIA as a “background law” that “assumes that there are going to be other causes of action all around.” But it is the FSIA that “tells you, for purposes of all those causes of action,” whether you can be sued or not, “and, here, the FSIA sets up a series of tests when you’re immune, when you’re not immune.”
But Alito was more skeptical. “[I]f we knew that Congress thought that the immunity conferred by the Foreign Sovereign[] Immunities Act would wipe out 99.999 percent of the potential claims that could be asserted under Helms-Burton, wouldn’t it be a fair inference that it did not intend to preserve” immunity under the FSIA? “[I] don’t understand,” he told Lobel, “why the inference stops the minute you can find one in a million claims that might get through” under an exception to the FSIA.
Justice Neil Gorsuch joined the debate, asking Lobel how many viable claims would be required to lead to the inference that Congress did intend to preserve immunity under the FSIA. “How about 90?” Gorsuch queried. When Lobel declined to commit to a specific number, telling Gorsuch that the remedy “[i]f you think that too many cases are being excluded” is to ask Congress “to enact a new statute,” Gorsuch then suggested that Lobel was imposing a requirement that Congress use “magic words” to rescind sovereign immunity.
Barrett focused on a different question: the prospect that the Helms-Burton Act applies not only to Cuban-owned companies but also to other state-owned companies, so that a ruling in favor of Exxon would strip other state-owned companies of immunity from suit.
Ratner acknowledged that the Helms-Burton Act “probably” would have such an effect, but that the justices did not need to answer that question now, because this case involves only Cuban-owned companies.
But Barrett countered that “it’s … a slightly different question, whether the statute is clear enough” in rescinding sovereign immunity for other countries in addition to Cuba. “And so even though I agree with you and the government that we wouldn’t have to answer that question directly,” Barrett said, “I think it lurks in the background of deciding whether this waiver” of sovereign immunity “is clear enough.”
Representing the federal government, Deputy Solicitor General Curtis Gannon addressed this question by emphasizing that “there’s not a single pending Title III case that brings any claims against third-country agencies and instrumentalities.” Moreover, he added, if it appears that such claims might pose foreign relations problems, the president could invoke his power to “suspend or partially suspend the right to bring Title III actions.”
Kavanaugh had mixed feelings about the significance of the president’s power to suspend the right to bring claims under Title III. On the one hand, he said to Gannon, there’s an argument that Congress felt so strongly that lawsuits for trafficking in confiscated property should be able to go forward that it wanted to rescind the general presumption against immunity under the FSIA, but on the other hand, Congress gave the president sweeping power to pause such lawsuits altogether. At another point in the argument, he suggested that if Congress intended to rescind the requirements of the FSIA and give the president broad powers, we would expect Congress to make that delegation very clear.
Gorsuch interpreted the president’s power to suspend the right to bring a lawsuit – which he nicknamed a “toggle switch” – as evidence that Congress intended to rescind immunity under the FSIA. “Why would Congress [have] put that toggle switch in, giving the President the opportunity to turn on and off liability, if it weren’t concerned that” the Helms-Burton Act would create international law problems, so that Congress “was essentially saying … we’re not doing the FSIA” but instead returning to the prior regime in which “the State Department tells us whether or not a suit” against a foreign sovereign “should proceed?”
Lobel emphasized that the Helms-Burton Act gives the president “the power to suspend the cause of action. The text says nothing about the President’s power to suspend immunity.”
Jackson saw the “toggle switch” question very differently. “[I]f the Congress’ intention was to give … the President a toggle switch with respect to sovereign immunity, wouldn’t we have expected to see that in the statute? Because that’s like an extraordinary thing.”
A decision in both cases is expected by summer.
