The suspension of Title III of the Cuban Liberty and Democratic Solidarity Act (LIBERTAD), also known as the Helms-Burton Act1, will be lifted as of May 2, 2019.2 (See Holland & Knight's alert, "Cuba Policy in Flux: Seven Unanswered Questions," April 25, 2019.) Pursuant to Title III, any person who is found to "traffic"3 in property confiscated by the Cuban government as of Jan. 1, 1959, could be held responsible for the monetary damages caused to any U.S. citizen through the property under claim. Under that title, U.S. district tribunals are granted jurisdiction over lawsuits of which the amount exceeds $50,000.
The government of Mexico has already stated that it will "protect Mexican companies that do or have an interest in doing business with Cuba and that could be affected." Although to date there are no further details on how such protection will be provided, one possibility is that Mexico would initiate a dispute at the World Trade Organization. A second possibility is use of Mexico's "antidote law," which was adopted and has been in full force since 1996.
Similar to the European Union, Japan and Canada, in 1996 Mexico adopted an "antidote" law4 against the application of Title III of the Helms-Burton Act.
The Mexican antidote law forbids 1) persons within Mexico, 2) persons under Mexico's jurisdiction and 3) persons whose acts take effect totally or partially in Mexico to perform acts that affect trade or investment by virtue of compliance or requirements of a law with characteristics similar to those found in Title III of the Helms-Burton Act. Mexico's antidote law even prohibits such persons from providing information to foreign authorities or courts prosecuting Helms- Burton type laws.
The main objective of the Mexican law is to prevent and overrule the judgments issued under laws such as the Helms-Burton Act, leaving these judgments without effect in Mexico, as well as the possibility of instituting proceedings before Mexican tribunals in order to obtain favorable convictions with equivalent economic effects against those who have filed lawsuits under such laws.
Additionally, the antidote law empowers Mexico's Ministry of Foreign Affairs to impose fines, and establishes an alert mechanism according to which affected persons must inform the Ministry of Foreign Affairs and Ministry of Economy of any impact on their activities or investment, or any requirements or notifications they have received.
It is estimated that at least 40 Mexican companies have operations in Cuba and more than 100 have commercial relations with that country, including many in the hospitality and transportation industries. Although Mexico's bilateral commercial relationship with Cuba is not significant5, prosecution of a Mexican company under Title III and use of the antidote statute by Mexico in reaction could be an additional source of tension between Mexico and the United States. How this issue might play out within the larger context of the new U.S.-Mexico-Canada Agreement (USMCA, or NAFTA 2.0), immigration issues and the Donald Trump-Andrés Manuel López Obrador dynamic remains to be seen.
For more information on how the application of Title III could affect you or your company, contact the author or another member of Holland & Knight's International Trade Group or International Arbitration and Litigation Team in Mexico or the United States.
3 The term refers to any transaction or activity that involves a confiscated property, which includes leasing, possessing, controlling, administering and obtaining the benefits of said property without the authorization of the citizen who is entitled to the property.
4 "Ley de protección al comercio y la inversión de normas extranjeras que contravengan el derecho internacional" published on the Diario Oficial de la Federación on Oct. 23, 1996.
5 Mexico and Cuba have signed an Economic Complementation Agreement, in force since 2001, which has been amended several times to facilitate greater trade flows between both countries and solve possible disputes. The main exports from Mexico to Cuba are: aluminum packaging, food preparations for animals, milk powder, fats and vegetable oils, aluminum caps and coffee. Mexico imports from Cuba in a much smaller proportion, including products such as rum and tobacco products. Source: SAT, SE, BANXICO, INEGI. Balanza Comercial de Mercancías de México (Balanza comercial 1993-2018, productos 2008-2018). SNIEG. Información de Interés Nacional.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.
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