On 20th May 2021, the Swiss-based company LafargeHolcim (formerly Holderbank and then Holcim) reached a settlement with the Claflin family (with up to 20 members involved) in connection with a lawsuit brought under Title III of the Helms Burton Act (HBA).

Let us remember that Title III of the HBA, activated in 2019 by the Donald Trump administration, allows US nationals to sue any person who knowingly and intentionally traffics in property that was confiscated from them by the Cuban government following Castro's revolution. The definition of "trafficking" includes the purchase, receipt, possession, control, management, use or holding of an interest in confiscated property without the owner's consent. It also includes engaging in commercial activities that use or benefit in any way from confiscated property without the owner's consent.

The lawsuit was filed in October 2020 by the Claflin family, alleging the use of a property confiscated by the Cuban government (the Complaint), located in El Guabairo, Cienfuegos province. 

The land in question belonged to the Soledad sugar plantation, owned by the Claflin family, which was confiscated on 6th August 1960 by the Cuban Government by virtue of Resolution No. 1 (in accordance with Law No. 851). Subsequently, the Carlos Marx cement factory was built by the Cuban Government itself with the participation of LafargeHolcim.

In June 2000, the Washington law firm Arnold & Porter, at the time advisor to the Swiss entity, alerted the company that the plant project represented a "significant and immediate risk" under the HBA, since it was located on land confiscated from US citizens, and suggested "reaching a negotiated agreement" with the Claflin family.

The US law firm also advised LafargeHolcim that it should not attempt to conceal its trafficking using various corporate structures, as any attempt at concealment would not avoid liability. However, not only was no agreement reached with the Claflin family at that time, but it continued to operate in the same way.

In the Lawsuit filed in the Florida courts, damages to the amount of USD 270 million were sought. The amount claimed corresponds, in the plaintiff's opinion, to the right to recover the current fair market value of the property, plus attorneys' fees, interest and costs.

Accordingly, the Complaint argues that LafargeHolcim, considered the third largest cement producer in the world, has had a stake in the said cement plant since 2001 through "a complex web of fictitious companies and transactions designed to conceal the fact that LafargeHolcim has owned, operated and benefited from the Plant in association with the Cuban Government since 2000". It is also argued that LafargeHolcim knowingly and intentionally trafficked in the confiscated property, since among other facts it was tipped off by its own lawyers.

The parties entered mediation which commenced on 22nd April 2021. As a result of this mediation, an agreement has been reached between the parties which, although the exact amount is unknown, could consist of annual interest since the asset was expropriated, plus triple damages and lawyers' fees, which could reach the figure of 140 million dollars.

You can download the full PDF file here.

For further information please contact:

Ignacio Aparicio | Partner Corporate / M&A and Director of the Cuban Desk