Havana Docks arms the current administration with an additional lever over communist Cuba.
It may not be the largest of steps, but the Supreme Court’s decision this morning in Havana Docks Corporation v. Royal Caribbean Cruises, Ltd. draws the sanctions regime on the Cuban communist government a little tighter. At issue is the Cuban Liberty and Democratic Solidarity Act of 1996, also known as the LIBERTAD Act — part of the blizzard of new legislation passed by the Republican Congress and Bill Clinton in 1995-96. The theory of the LIBERTAD Act was that Cuba had never adequately compensated Americans and American companies whose property was confiscated after the 1959 communist revolution, and that — as a sanction to deter foreign investment in Cuba — businesses who “trafficked” in confiscated property could be sued by the original victims of confiscation. As Justice Clarence Thomas’s opinion for an 8–1 Court observed, however, this provision of the LIBERTAD Act was essentially a dead letter until Donald Trump came along:
This right of action lay dormant for more than two decades. The Act authorizes the President to “suspend” the Title III right of action based on a determination that the suspension is in the national interest and will “expedite a transition to democracy in Cuba. . . .” Presidents Clinton, Bush, and Obama continuously suspended the right of action from its effective date onward. But, in May of 2019, President Trump allowed the suspension to expire, permitting the right of action to go into effect for the first time. That policy change exposed traffickers in confiscated property of United States nationals to Title III liability. [Citation omitted.]
At issue in Havana Docks was whether this sanction applied to trafficking in property that would still be owned in Cuba but for the revolution, or also to property that used to be owned — in this case, a lease that would have expired. The Havana Docks Corporation got a lease from the Cuban government to build and run docks at the Port of Havana in 1928, and it was written to last until 2004, but the company lost the last 44 years of the lease due to confiscation by Fidel Castro in 1960 without compensation. The company sued four major cruise lines — Royal Caribbean Cruises, Norwegian Cruise Line Holdings, Carnival Corporation, and MSC Cruises — for docking passenger ships at the port, using what were once docks built and operated by Havana Docks — between 2016 and 2019. A million people visited Cuba in those voyages, tourism of great financial benefit to the regime.
As Thomas observed, any reading of the law to cover only property that would still be owned by the victim of confiscation
is difficult to understand and apply. If the approach requires courts to assume that the original rightsholder retained his legal rights, it would foreclose liability in cases where the text demands it. Suppose that an American owned land; the Cuban Government expropriated his property interest in the land; the Cuban Government transferred the property interest to a company; and the company sold it to another company. There should be no doubt that both companies are liable under Title III for “trafficking in property which was confiscated” from an American . . : the first, by “selling” the property interest, and the second, by “purchasing” it, . . . But if . . . we treat the property interest as if the Cuban Government had never expropriated it . . . then the American would still own it, in which case the other companies could not have sold or purchased it. It makes little sense to determine whether the alleged conduct constituted trafficking in that interest because the alleged conduct — selling and purchasing — cannot occur in the counterfactual scenario. . . . We decline to adopt an approach that appears to read out of the Act cases of trafficking that should be in the heartland of Title III. [Citations, quotations, and alterations omitted.]
Justice Elena Kagan dissented alone, arguing that Havana Docks had only a lease on property that was still owned by the Cuban government. Thomas was barbed in response:
This assertion would have surprised anyone present in 1960 Havana. As explained, the Act defines “confiscation” to include the seizure of “ownership or control of property. . . .” When armed agents physically occupied the docks facilities, they seized control of the docks even if “Cuba owned the docks.” [Quoting Kagan] Before that seizure, the concessionaire — Havana Docks — was in possession of the works. . . . After the seizure, the Cuban Government stopped Havana Docks from operating, using, enjoying, possessing, or otherwise controlling the docks. . . . The Cuban Government thereby extinguished Havana Docks’ concession and physically occupied the docks. . . . Those actions constitute confiscation of the docks under Title III. [Citations, quotations, and alterations omitted.]
Justice Sonia Sotomayor, in a concurrence joined by Justice Brett Kavanaugh, also worried that “this limitless reading of the statute could permit petitioner to recover millions, if not billions, of dollars over and over again, so long as anyone continues to make any commercial use of the docks,” she wrote. “It is unlikely that Congress intended for someone who suffered a finite loss to reap infinite recoveries.” But the whole point of the sanctions regime is to put pressure on the government to compensate companies such as Havana Docks; so long as any cruise ship that docks there can be sued, there will be less profit motive to take passengers to Cuba. As Thomas explained what the statute was supposed to accomplish: “Title III is simply an antitrafficking right of action. It recognizes that the effect of the Cuban Government’s expropriation was the destruction of the plaintiff ’s interest in the property. . . . It then provides a right to compensation based on the plaintiff ’s former property interest from those who later traffic in the property and thereby help to support the Communist Cuban Government.”
Finally, Sotomayor argued that the passenger voyages had been permitted by Barack Obama’s sanctions relief in 2016, and that the lower courts should consider this as a possible defense. But that’s a question under the control of subsequent administrations’ Cuba policies rather than being part of the statute.
In short, Havana Docks arms the current administration with an additional lever over communist Cuba.