Through various actions and enactments, Fidel Castro expropriated the private property of U.S. citizens without compensation. In a lawsuit against Cuba for the expropriation of property, how does one overcome sovereign immunity? This article discusses some of the difficulties in overcoming sovereign immunity in a suit to recover from the Cuban government for the expropriation of private property.
Traditionally, the United States has considered foreign sovereigns immune from legal action in U.S. courts.1 In 1976, the U.S. Congress enacted the Foreign Sovereign Immunities Act (FSIA), statutorily codifying and creating limitations of liability on a foreign sovereign.2 The FSIA provides that “a foreign state shall be immune from the jurisdiction of the courts of the U.S. and of the States” unless an exception applies.3
In a claim against Cuba regarding expropriation of property, a court would need to determine whether the FSIA applies to Cuba.4 Then, a plaintiff would have the burden of establishing the application of an FSIA exception. One glaring challenge to a plaintiff may be that Cuba raises a statute of limitations defense, given that many expropriations took place more than 50 years ago. Setting aside the statute of limitations issue for purposes of this article, the applicable exceptions under the FSIA in non-terrorism actions5 against foreign sovereigns for the expropriation of property have generally been limited. These exceptions are the expropriation exception and the commercial exception.6
To apply the expropriation exception in a suit against Cuba for expropriation of property, a plaintiff would need to establish three elements: (1) that property rights are at issue, (2) those rights were taken in violation of international law, and (3) there exists a jurisdictional nexus between the expropriation and the U.S.7 While a plaintiff may establish plaintiff’s rights in expropriated property as former owner and that the taking was in violation of international law, the challenge would be establishing a nexus with the U.S.
It is possible to argue that an expropriation of private property is a violation of international law if there is a failure to pay compensation for the taking.8 To date, the Cuban government has not compensated claimants.9 Yet, establishing a nexus between the Cuban expropriation and the U.S. may prove exceptionally challenging because the subject properties were expropriated in Cuba by the Cuban government.
To apply the commercial exception to the FSIA, a plaintiff must establish that the offending act was “based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.” 10 A plaintiff may find it challenging to establish a commercial activity in the U.S. on behalf of Cuba in relation to the expropriated property, or that expropriating property in Cuba is a commercial act that had a direct effect inside of the U.S. Thus, it may be that a plaintiff may find it difficult to apply the commercial exception.
The exceptions to the FSIA are clearly narrow, but filing suit in a U.S. court has not been the only avenue of recourse for those who lost property to the Cuban government. Under Title V of the International Claims Settlement Act of 1949, Congress authorized the Foreign Claims Settlement Commission (FCSC) to review and certify as legitimate the claims of U.S. nationals against the government of Cuba for the expropriation of property.11 To date, the FCSC has reviewed nearly 6,000 claims that are valued at approximately $1.9 billion.12 As of today, the claims program is closed for new claims.
While the role of the FCSC is only to certify as legitimate the claims submitted,13 it is the U.S. Department of State that negotiates claims with foreign governments. To date, there has been no resolution. However, on December 17, 2014, President Barack Obama and Raul Castro announced the renewal of diplomatic relations between Cuba and the U.S. In doing so, the two countries have established a bilateral commission charged with addressing various issues, including the settlement of the aforementioned claims.14
Should Cuba wish to truly attract U.S. commerce in the future, Cuba should be first required to adequately resolve the issues regarding its unilateral expropriation of property. Failure to make whole those whose property Cuba expropriated is a disservice to justice, and an insult to those who lost their property to the oppressive Castro regime.
1 See e.g. First Nat’l City Bank v. Banco Nacional de Cuba, 406 U.S. 759 (1972) (citing The Schooner Exch. v. McFaddon, 11 U.S. 116 (U.S. 1812)) (“sovereigns are not presumed without explicit declaration to have opened their tribunals to suits against other sovereigns”).
2 28 U.S.C. § 1602.
3 Id.
4 See generally Liu v. Republic of China, 892 F.2d 1419, 1424 (9th Cir. 1989).
5 See Terrorism Risk Insurance Act of 2002 for actions against state sponsors of terrorism, which has been invoked to overcome FSIA immunities in certain anti-terrorism cases.
6 28 U.S.C. § 1605(a).
7 28 U.S.C. 1605(a)(3); see also Nemariam et al., v. The Federal Democratic Republic of Ethiopia, et al., 491 F. 3d 470, 475 (D.D.C. 2007); see also Peterson v. Royal Kingdom of Saudi Arabi, 332 F. Supp. 2d 189, 196 (D.D.C. 2004).
8 Hans W. Baade, The Legal Effect of Cuban Expropriations in the United States, 1963 Duke L.J. 290, 294 (1963).
9 See Richard E. Feinberg, Reconciling U.S. Property Claims in Cuba: Transforming Trauma into Opportunity, LATIN AMERICA INITIATIVE AT BROOKINGS (December 2015), available at http://www.brookings.edu/~/media/research/files/papers/2015/12/01-reconciling-us-property-claims-cuba-feinberg/reconciling-us-property-claims-in-cuba-feinberg.pdf.
10 28 U.S.C. § 1605(a)(2).
11 See 22 U.S.C. § 1643 et seq.
12 Feinberg, supra note 8, at 2.
13 Foreign Claims Settlement Commission of the United States, Section II Completion of the Cuban Claims Program Under Title V of the International Claims Settlement Act of 1949 (1972), available at https://www.justice.gov/sites/default/files/fcsc/docs/final-report-cuba-1972.pdf.
14 Feinberg, supra note 8 at 3.
Christian Garcia is an Associate at Zumpano Patricios & Winker, P.A. Mr. Garcia concentrates his practice on health law, litigation, and international law. Garcia can be reached at (305) 444-5565 www.zpwlaw.com