Saturday, 30 November 2019

Spanish Court Refuses to Hear American’s Helms Burton Claim

     In May 2019 the United States ended the suspension of rights of Americans under the Helms-Burton Act to sue for losses arising from the Cuban government’s expropriation of their properties in Cuba.  The following month, a Cuban-American and his company, heirs to former owners of expropriated Cuban land, sued the Spanish hotel chain Melia, which leased that land (in Playa Esmeralda, a popular beach vacation destination) to operate a hotel.

     Why bring such a claim in Melia’s home jurisdiction?  The Spanish Civil Code establishes a right to receive the fruits of possession in bad faith and profiting off confiscated land.    Also, it may be hard to enforce in Spain an American judgment.  Such a judgment, which would be based on the Helms Burton Act, would face the hurdle of an EU blocking law (EU Council Reg. 2271/96) which aims to protect E U residents and companies against the effects of extra-territorial legislation of foreign countries.   

     Not surprisingly the Spanish Court was not receptive. But its analysis was principled and should guide courts in other cases brought under Helms Burton.   The Court noted that the claim is based primarily on “the illegality of Cuba’s nationalization of the land”.  That meant the court would have to “assess the legality of the nationalization, or the confiscation” in order to decide whether Melia was “illicitly enriched” through its use of the land.     

     The Court had at least three reasons not to accept the claim.   One, the nationalization was a state action of a foreign country, exercising its sovereign powers, over which action the Spanish court has no jurisdiction.   Spain, like Canada, has a statute giving foreign states immunity from most legal claims: the Foreign State Immunity Act (Spanish law 16/2015).  This statute, like Canada’s, carves out an exception for commercial dealings.  However,   even though the hotel’s lease and use of the land is commercial, the underlying issue of the expropriation is not, and so the Court held the exception did not apply. 

     Two,  Spanish courts –like Canadian courts – generally will not take jurisdiction over cases pertaining to foreign land.   

     Three, to assess the legality the nationalization would entail an analysis of the law of Cuba as of the time of the expropriation, the circumstances surrounding the expropriation, and the fairness of the compensation offered for the land.    Testimony from Cubans would certainly be necessary.  Some may be very elderly and unable to travel.  If this claim was subjected to a forum non conveniens analysis, a court may well find Cuba to be the more appropriate jurisdiction.

     The ruling is under appeal.