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Trump jeopardizes Spanish investments in Cuba

| News | Cuban Desk

Ignacio Aparicio analyses the consequences of Heading III of the Helms Burton Act which, from April 17, will allow U.S. nationals to sue for property confiscated or nationalized on the island for the El País newspaper

El País | The partner of Andersen Tax & Legal and director of the Cuban Desk of the firm, Ignacio Aparicio, collaborates in an article published in the newspaper El País in which the consequences of the decision of the Government of the United States to limit the term of suspension of Heading III of the Helms Burton Act that would end next April 17 and that, if so, would allow U.S. citizens and companies that own property or land on the island confiscated and nationalized after the Castro Revolution of 1959, to sue their current owners.

The law, enacted in 1996, empowers Americans, or Cubans who have acquired nationality, to seek compensation before U.S. federal courts for the use and benefit obtained from property expropriated from them (a practice that the law defines as trafficking).

Until now, successive U.S. presidents had kept the application of the rule suspended. However, Donald Trump's administration recently announced that it was reducing the suspension to 45 days (the deadline was 17th March) and a few weeks ago granted a further extension of 30 days.

However, this latest extension of the deadline contains a restriction: only companies on a sort of blacklist drawn up by the US Government - the so-called Cuban Restricted List - can be sued. This index, which is public and periodically updated, includes more than 200 entities in Cuba, most of them in the hotel sector.

Cuban law prevents foreign companies from working directly on the island, having to do so through nationalized Cuban sub-entities or subsidiaries (owned by the government). This is relevant for procedural purposes, because the U.S. lawsuit is not directed directly against the multinational, but against a Cuban entity. This, however, does not spare the company from having to respond if it is finally convicted, as Ignacio Aparicio, partner of Andersen Tax & Legal, explains. "The risk is greater for companies that have a presence in the United States," he points out, because since Cuban government companies never resort to litigation before U.S. courts, they pass judgments in absentia "that have repercussions on the foreign parent company with which the island company being filed against works”. In other words, the justice system directs the collection of the debt that the subsidiary does not pay against the parent company and dealing with it is the only method that the latter must avoid problems in the United States, such as seizure of assets or blocking of accounts.

How can an entity affected by the Helms-Burton Act be protected? The first step is to carry out an investigation to check whether it is among the candidates to be the subject to litigation. This must be done through the Office of Foreign Claims Certifications, a U.S. body that validates whether a lawsuit meets the necessary requirements. Since the publication of the standard, a total of 6,000 claims have been certified. However, it is estimated that there are about 200,000 pending validation. "It is normal that the possible claims are already within the validated ones," explains Aparicio, which affects the laboriousness of the verification process, because it must be done by reviewing "file by file".

If a property or land may be the subject of a lawsuit is detected, the next step is to evaluate the possible impact and decide whether to assume it or not. This means assessing the likelihood of a successful claim, what the compensation would be and what protective measures should be taken.

However, this does not eliminate all risk, as a former owner or his descendants may sue in the future. For this reason, and more and more frequently, large companies with businesses on the island (or that intend to open them) contact the former owner and reach out-of-court settlements to avoid a possible lawsuit. A strategy that, in any case, "must be authorized by the U.S. Office of Foreign Assets Control (OFAC)," warns counsel.

You could read the full article in El País.


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