EU, UK, And Canada Companies Reference Libertad Act Impact In Annual Reports; Imperial Brands Projects Damages Could Be US$365 Million
/The Trump Administration on 2 May 2019 made operational Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (known as “Libertad Act” and “Helms-Burton”).
Title III authorizes lawsuits in United States District Courts against companies and individuals who are using a certified claim or non-certified claim where the owner of the certified claim or non-certified claim has not received compensation from the Republic of Cuba or from a third-party who is using (“trafficking”) the asset. Title IV restricts entry into the United States by individuals who have connectivity to unresolved certified claims or non-certified claims. One Canada-based company (Toronto-based Sherritt International) and one Spain-based company (Melia Hotels International) are currently known to be subject to Title IV based upon a certified claim and non-certified claim.
European Union (EU)-headquartered defendants in Libertad Act Title III lawsuits include: Copenhagen, Denmark-based A.P. Moller-Maersk A/S (2019 revenue approximately US$39 billion); Paris, France-based BNP Paribas (2019 revenue approximately US$49 billion); Amsterdam, Netherland-based Booking.com B.V. (2019 revenue approximately US$15 billion); Palma, Spain-based Iberostar Hoteles y Apartamentos S.L. (2019 revenue approximately US$2.6 billion); Palma, Spain-based Melia Hotels International S.A. (2019 revenue approximately US$2 billion); Paris, France-based Pernod Ricard S.A. (2019 revenue approximately US$10.5 billion); Paris, France-based Société Générale S.A. (2019 revenue approximately US$27.4 billion); and Dusseldorf, Germany-based Trivago GmbH (2019 revenue approximately US$940 million). Additional lawsuits are expected to be filed.
Bristol, United Kingdom-based Imperial Brands plc (2020 revenue approximately US$45 billion), is a defendant in a Libertad Act Title III lawsuit. The United Kingdom was a member of the EU.
St. Gallen, Switzerland-based LafargeHolcim Ltd. (2020 revenue approximately US$27 billion), while not located within the EU, is a defendant in Libertad Act Title III lawsuit.
Toronto, Canada-based Sherritt International Corporation (2020 revenues approximately US$497 million) is subject to Title IV sanctions, but is not a Title III defendant.
Imperial Brands
Bristol, United Kingdom
2020 Annual Report
US Helms-Burton litigation
Imperial has been named as a defendant in a civil action in federal court in Miami, Florida under Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (“Helms-Burton”) filed on 6 August 2020. Title III provides US nationals with a cause of action and a claim for treble damages against persons who have “trafficked” in property expropriated by the Cuban government. Title III is largely untested because it did not come into effect until May 2019. Treble damages are automatically available under Helms-Burton. Although the filed claim is for unquantified damages, we understand the claim could potentially reach approximately $365 million, based on the claimants’ claim to own 90% of the property, which they value at $135 million (and then treble). The claim is based on allegations that Imperial, through Corporación Habanos S.A. (a joint venture between one of Imperial’s now former subsidiaries and the Cuban government), has “trafficked” in a factory in Havana, Cuba that the Cuban government confiscated from the claimants’ ancestor in the early 1960s, by using the factory to manufacture, market, sell, and distribute Habanos cigars. Imperial is subject to an EU law known as the EU Blocking Statute (Regulation (EC) No. 2271/96), which conflicts with Helms-Burton, protects Imperial against the impact of Title III, and impacts how Imperial may respond to the threatened litigation. The EU Blocking Statute continues to apply in the UK during the Brexit “transition period” in place until 31 December 2020. After 31 December 2020, the substance of the law is likely to stay the same in the UK, at least in the near future. On 23 September 2020 the US court granted a stay of the action until 9 February 2021 or until further order of the court, while Imperial awaits the European Commission’s response to its request for authorisation to defend the action. Separately, two other groups of prospective claimants have indicated that they intend to file a lawsuit against Imperial in federal court in Miami, Florida. Neither claim has been filed. The threatened claims relate to other properties in Cuba, which the prospective claimants claim were confiscated from their ancestors by the Cuban government in the 1960s and which they claim are now used by Corporación Habanos S.A for commercial activities. The prospective claimants claim to be entitled to treble damages from Imperial.
Booking Holdings, Inc.
Amsterdam, The Netherlands
2020 Annual Report
Legal, Tax, Regulatory, Compliance and Reputational Risks
Another example is that the U.S. Government announced in May 2019 that it will no longer suspend the right of private parties to bring litigation under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, popularly known as the Helms-Burton Act, allowing certain individuals whose property was confiscated by the Cuban government beginning in 1959 to sue anyone who "traffics" in the property in question in U.S. courts. We are a defendant in a number of these lawsuits, which seek remedies including the value of the expropriated property (generally, the applicable hotel), plus interest, treble damages, attorneys' fees and costs. We believe that we have meritorious defenses to existing and potential claims and that the results of any related litigation will not be material to our business, financial condition or results of operations. However, litigation is uncertain and there is little judicial history or interpretation of the relevant claims and defenses, in particular as applied to businesses like ours. As a result, there can be no assurance that there will not be an adverse outcome to any such litigation or that such an outcome would not result in an adverse impact on our business, financial condition or results of operations.
Melia Hotels International
Palma, Spain
2019 Annual Report
Global Risks: Geopolitical Risks The following risks should be noted:
Worsening relations between the governments of the United States and Cuba. The measures taken by the Trump Administration such as the ban on cruise operations in Cuba, the elimination of travel licenses for educational programs for US citizens known as "People to People", the entry into force of Title III of the Helms Burton Law that has caused reactions among operators such as Trivago, which decided to withdraw numerous hotels from Cuba from its sales channels, and other measures that affected the shipping companies responsible for transporting fuel to Cuba, impacted the operation of the hotels. In this context, some representatives of the Company have received a notification from the Department of State of the United States under Title IV of the Helms Burton Act.
Other contingent liabilities
On 3 July 2019 the parent company of the Group received notice of a claim filed in Spain for unlawful enrichment during the last 5 years derived from its hotel management activities of two establishments in Cuba. The Company filed plea for lack of jurisdiction and international jurisdiction, which was accepted in full in September 2019. Such sentence was appealed by the petitioner, and is awaiting a decision as at the date of preparation of these consolidated financial statements. The directors, however, consider that such proceeding will not give rise to equity losses for the Group.
Trivago, N.V.
Dusseldorf, Germany
2020 Annual Report
The U.S. Government announced that, effective May 2, 2019, it will no longer suspend the right of private parties to bring litigation under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, popularly known as the Helms-Burton Act, allowing certain individuals whose property was confiscated by the Cuban government beginning in 1959 to sue in U.S. courts anyone who “traffics” in the property in question. Five purported class actions were filed against us (and other defendants) in 2019. Since then, the plaintiffs in all five cases have dropped trivago as a defendant (while the cases continue against other defendants). These actions seek remedies including the value of the expropriated property (on which the applicable hotel is located), plus interest, treble damages, attorneys’ fees and costs. If trivago were to be named again as a defendant in these cases, or in other similar cases, we believe that we have meritorious defenses to such potential claims and that the results of any related litigation would not be material to our business, financial condition or results of operations. However, litigation is uncertain and there is little judicial history or interpretation of the relevant claims and defenses, in particular as applied to businesses like ours. As a result, there can be no assurance that there will not be an adverse outcome to any such litigation or that such an outcome would not result in an adverse impact on our business, results of operations, financial condition and prospects.
LafargeHolcim Ltd.
St. Gallen, Switzerland
2020 Annual Report
A Group subsidiary has an investment in a joint venture which owns a cement plant in Cuba. The Trump Administration allowed the waiver of Title III of the Helms-Burton Act (formally known as Cuban Liberty and Democratic Solidarity Act of 1996) to lapse as of 2 May 2019. Previously, Title III had been waived by every Administration since President Clinton waived it shortly after the Act became effective. Title III allows certain persons to file lawsuits in U.S. courts relating to certain property allegedly confiscated by the Cuban government since 1959. A Title III claim has been filed in the federal court in Florida. Although the amounts claimed are substantial, LafargeHolcim believes the lawsuit lacks merit and will defend the matter vigorously in court. Consequently, LafargeHolcim believes that the impact of this claim on the group’s results, financial position or liquidity will not be material. [NOTE: Plaintiff in complaint states they are "entitled to reclaim the property's current market value, estimated at $ 270 million, plus attorney's fees, interest and other costs."]
Sherritt International Corporation
Toronto, Canada
2020 Annual Report
RISKS RELATED TO U.S. GOVERNMENT POLICY TOWARDS CUBA
The United States has maintained a general embargo against Cuba since the early 1960s, and the enactment in 1996 of the Cuban Liberty and Democratic Solidarity (Libertad) Act (commonly known as the “Helms Burton Act”) extended the reach of the U.S. embargo.
The U.S. Embargo
In its current form, apart from the Helms Burton Act, the embargo applies to most transactions involving Cuba, Cuban enterprises, and Cuban nationals and it bars all persons “subject to the jurisdiction of the United States” from participating in such transactions unless such persons have general or specific licenses from the U.S. Department of the Treasury (“U.S. Treasury”) authorizing their participation in the transactions. Persons “subject to the jurisdiction of the United States” include U.S. citizens, U.S. residents, individuals or enterprises located in the United States, enterprises organized under U.S. laws and enterprises owned or controlled by any of the foregoing. Subsidiaries of U.S. enterprises are subject to the embargo’s prohibitions. The embargo also targets dealings directly or indirectly involving entities deemed to be owned or controlled by Cuba and listed as specially designated nationals (“SDNs”). The three entities constituting the Moa Joint Venture in which Sherritt holds an indirect 50% interest have been deemed SDNs by U.S. Treasury. Sherritt, however, is not an SDN. The U.S. embargo generally prohibits persons subject to the jurisdiction of the United States from engaging in transactions involving the Cuban related businesses of the Corporation. Furthermore, generally U.S. origin technology, U.S. origin goods, and many goods produced from U.S. origin components or with U.S. origin technology cannot under U.S. law be transferred to Cuba or used in the Corporation’s operations in Cuba. Additionally, the embargo also prohibits imports into the United States of Cuban origin goods, or of foreign goods made or derived, in whole or in part, of Cuban origin goods, including Cuban nickel. In 1992, Canada issued an order pursuant to the Foreign Extraterritorial Measures Act (Canada) to block the application of the U.S. embargo under Canadian law to Canadian subsidiaries of U.S. enterprises. However, the general embargo limits Sherritt’s access to U.S. capital, financing sources, customers, and suppliers.
The Helms Burton Act
Separately from the general provisions of the embargo summarized above, the Helms Burton Act authorizes sanctions on non U.S. individuals or entities that “traffic” in Cuban property that was confiscated from U.S. nationals or from persons who have become U.S. nationals. The term “traffic” includes various forms of use of Cuban property as well as “profiting from” or “participating in” the trafficking of others.
Contingencies
A number of the Corporation’s subsidiaries have operations located in Cuba. The Corporation will continue to be affected by the difficult political relationship between the United States and Cuba. The former U.S. administration had announced that it would no longer suspend the right of claimants to bring lawsuits under Title III of the Helms-Burton Act, effective May 2, 2019. The Corporation has received letters in the past from U.S. nationals claiming ownership of certain Cuban properties or rights in which the Corporation has an indirect interest, however, no lawsuits against Sherritt have been initiated or threatened. In the event that any such lawsuits were to be filed, Sherritt does not believe that its operations would be materially affected because Sherritt’s minimal contacts with the United States would likely deprive any U.S. court of personal jurisdiction over Sherritt. Furthermore, even if personal jurisdiction were exercised, any successful U.S. claimant would have to seek enforcement of the U.S. court judgment outside the U.S. in order to reach material Sherritt assets. The Corporation believes it unlikely that a court in any country in which Sherritt has material assets would enforce a Helms-Burton Act judgment against it.
