the legality of the helms-burton act (international law)

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Written by Franklyn Hernandez Jr.

I. Introduction and background

This paper addresses the legality of Title III of the Helms-Burton Act (Title III)1 under

international law. Specifically, this paper will examine whether Title III, which allows U.S.

nationals to sue foreign citizens in U.S. courts,2 would be in violation of the effects doctrine if

ever put into action. This paper focuses on the effects doctrine analysis because the effects

doctrine is quoted directly by the Act itself as a central justification for Title III.3 This paper will

go through an in depth analysis of the effects doctrine, as it appears in the Restatement (Third) of

Foreign Relations Law (the Restatement).4 Finally this paper will come to the conclusion that

Title III does not pass the effects doctrine analysis and is irreconcilable with the reasonableness

standard of the effects doctrine.

II. Events leading up to the passage of the Helms-Burton Act

Fidel Castro assumed power over Cuban affairs on January 1, 1959.5 Castro aligned himself

with communist ideology and began dealing heavily with the former Soviet Union, a known

1 Cuban Liberty and Democratic Solidarity Act of 1996, Pub. L. No. 104-114, 110 Stat. 785.

2 (10) The United States Government has an obligation to its citizens to provide protection against wrongful confiscations by foreign nations and their citizens, including the provision of private remedies.

(11) To defer trafficking in wrongfully confiscated property, United States nationals who were the victims of these confiscations should be endowed with a judicial remedy in the courts of the United States that would deny traffickers any profits from economically exploiting Castro's wrongful seizures. Cuban Liberty and Democratic Solidarity Act of 1996 § 6081(10)-(11), 22 U.S.C.A. § 6081 (2008).

3 (9) International law recognizes that a nation has the ability to provide for rules of law with respect to conduct outside its territory that has or is intended to have substantial effect within its territory. § 6081(9).

4 RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES §§ 402(1)(c), 403 (1987) [hereinafter RESTATEMENT]

5 See Jeffrey Dunning, The Helms-Burton Act: A Step in the Wrong Direction for United States Policy Toward Cuba, 73 Wash. U. J. Urb. & Contemp. L. 213, 214 (1998)

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enemy of the United States.6 The United States reacted with trade sanctions, lessening trade with

Cuba until it eventually eliminated Cuba’s sugar quota entirely.7 It was soon after that that Castro

nationalized foreign owned businesses and property without compensation to the original

owners.8 This led to a complete deterioration of the relationship between Cuba and the United

States.

Situations escalated in February 1996 when two Cuban fighter jets shot down two civilian

aircrafts carrying Anti-Castro Cuban Americans.9 The Anti-Castro Cuban Americans, called

Brothers to the Rescue, had flown planes over Cuba several times, sometimes dropping

pamphlets from the air.10 Cuba warned the United States that the activity of Brothers to the

Rescue violated Cuban airspace and threatened to shoot down the planes if they continued to

violate Cuban airspace before actually doing so.11 Whether the planes were actually in Cuban

airspace at the time they were shot down by the Cuban fighter jets remained in question.12 In the

aftermath of the destruction, there was much outrage in the United States over Cuba’s aggressive

approach in shooting down unarmed civilian planes.13 It was these events that set the stage for

the passage of the Helms-Burton Act.

6 See Id.

7 See Id.

8 See Id.

9 See Tim Weiner, Clinton Considers Punishing Cubans for Plane Attack, N.Y. Times, February 26, 1996, at A1.

10 See Id.

11 See Id.

12 See Id.

13 See Id.

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The Cuban Liberty and Democratic Solidarity Act of 1995 was passed by Congress on

February 9, 1995,14 and is commonly referred to as the Helms-Burton Act, named for its co

sponsors Senator Jesse Helms (R-North Carolina) and Representative Dan Burton (R-Indiana).15

The act was a part of a continuing effort by the United States to put economic pressure on Fidel

Castro’s regime in Cuba through a long standing economic embargo.16 Title III represented a

daring legislative effort by the United States to fulfill its goals in Cuba and protect the property

rights of U.S. citizens. Title III attempts to attain these goals through an extraterritorial exercise

of jurisdiction, and has been seen as a controversial attempt by the U.S. to advance its own

agenda. 17

Title III creates a liability for any foreign person who “traffics” in Cuban property that was

expropriated by the Castro Regime without just compensation on or after January 1, 1959.18 The

act authorizes a U.S. national holding proper title to such land to bring an action against a foreign

investor in the U.S. court system.19 Thus, the act is an extraterritorial extension of U.S. 14 Cuban Liberty and Democratic Solidarity Act of 1996, Pub. L. No. 104-114, 110 Stat. 785.

15 David M. Shamberger, The Helms-Burton Act: A Legal and Effective Vehicle for Redressing U.S. Property Claims in Cuba and Accelerating the Demise of the Castro Regime, 21 B.C. Int’l & Comp. L. Rev. 497 (1998) (“U.S. Senator Jesse Helms (R-North Carolina) and U.S. Representative Dan Burton (R-Indiana) co-sponsored the Cuban Liberty and Democratic Solidarity Act”)

16 See Dunning, supra note 5, at 216 (describing United States’ efforts to constrict Castro’s power through an economic embargo).

17 See Shamberger, supra note 10, at 506 (“Shortly after the passage of the Helms-Burton Act, U.S. allies around the globe expressed their opposition to the Act”).

18 Cuban Liberty and Democratic Solidarity Act of 1996 § 6082(a)(1), 22 U.S.C.A. § 6082 (2008) (stating the Act’s intention to hold “[A]ny person that … traffics in property which was confiscated by the Cuban Government on or after January 1, 1959, … liable to any United States national who owns the claim to such property for money damages …”).

19 (a) Evidence of ownership(1) Conclusiveness of certified claimsIn any action brought under this subchapter, the court shall accept as conclusive proof of ownership of an interest in property a certification of a claim to ownership of that interest that has been made by the Foreign Claims Settlement Commission under title V of the International Claims Settlement Act of 1949 (22 U.S.C. 1643 and following).

(2) Claims not certifiedIf in an action under this subchapter a claim has not been so certified by the Foreign Claims Settlement Commission, the court may appoint a

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jurisdiction over foreign citizens. The act deems U.S. jurisdiction over any such claim to be

proper based on the notion that “International law recognizes [] a nation[‘s] ability to provide for

rules of law with respect to conduct outside its territory that has or is intended to have substantial

effect within its territory.”20 This justification for jurisdiction is better known as the effects

doctrine.21

The enactment of Title III met immediate opposition in the international community.22 A

U.N. General Assembly in 1996, by a vote of 138-3, opposed the U.S. embargo against Cuba and

called for the repeal of the Helms-Burton Act.23 Many countries passed retaliatory legislation in

response to Title III, which would have essentially made it a crime for its citizens to respect any

judgment made by a U.S. court in respect to Title III of the Act.24

Interestingly enough, the Helms-Burton Act has been in a state of suspension since it was

passed into law by Congress in 1995.25 Section 6085 of Title III allows the President the power

special master, including the Foreign Claims Settlement Commission, to make determinations regarding the amount and ownership of the claim. Such determinations are only for evidentiary purposes in civil actions brought under this subchapter and do not constitute certifications under title V of the International Claims Settlement Act of 1949.

§ 6083(a)(1)-(2).

20 § 6081(9).

21 See Antroy A. Arreola, Who’s Isolating Whom? Title III of the Helms-Burton Act and Compliance with International Law, 20 Hous. J. Int’l L. 353, 364 (1998) (describing how Title III quotes verbatim the language of the Restatement, Section 402 in relation to the effects doctrine).

22 See Shamberger, supra note 10, at 506 (“Shortly after the passage of the Helms-Burton Act, U.S. allies around the globe expressed their opposition to the Act”).

23 Id. at 507.

24 See Id. at 509 (“…the EU has adopted retaliatory legislation instructing EU companies to ignore the Helms-Burton Act…”). See also at 510 (…Canada may [] implement [legislation], which would undermine the embargo by making it illegal for Canadian companies to refuse to trade with Cuba). See also at 513 (…Mexico has followed in Canada’s and EU’s footsteps, enacting retaliatory legislation).

25 See Franchesco Soto, The Helms Burton Act: The Final Piece to Bring Down the Tyrant’s Regime, 8 J. Int’l & Comp. L. 237, 241 (2001) (stating that Title III has been suspended consecutively since it was passed)

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to suspend the effective date of the Act for a “period of not more than six months if the President

determines [] that the suspension is necessary to the national interests of the United States and

will expedite a transition to democracy in Cuba.”26 The two men who have held the Presidency

since the Act’s passage in 1995, Presidents William Jefferson Clinton and George W. Bush, have

continued to exercise and renew the power of suspension, at least through 2001.27 This has

rendered Title III practically ineffective, and a U.S. national has yet to recover anything under

Title III of the Helms-Burton Act.28

III. The Effects Doctrine

a. Intro

In the 1945 case, U.S. v. Aluminum Co. of America, Judge Learned Hand’s decision

established the early conceptual underpinnings of the effects doctrine.29 The decision stated: “any

state may impose liabilities, even upon persons not within its allegiance, for conduct outside its

borders that has consequences within its borders which the state reprehends.”30 His

announcement of this principle evolved into the Effects doctrine, and was published in Sections

402 and 403 of the Restatement.31

26 Cuban Liberty and Democratic Solidarity Act of 1996 § 6085(b)(1), 22 U.S.C.A. § 6085 (2008).

27 See Soto, supra note 20, at 241 (stating that the presidential power to suspend the act has been used consecutively since the signing of the Act).

28 Id. at 242 (stating that more than 6511 lawsuits have been filed under Title III and have been suspended by the presidential power of suspension).

29 U.S. v. Aluminum Co. of America, 148 F.2d 416, 443 (S.D.N.Y. 1945).

30 Id.

31 See Arreola, supra note 16, at 263 (“Judge Hand’s rule is not the Effects Doctrine and is embodied in section 402 of the Restatement (Third) of the Foreign Relations Law of the United States…”).

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The effects doctrine sets the boundaries for which extraterritorial U.S. legislative action

must respect to be proper under international law. Whenever the United States legislates, it is

attempting to exert legislative jurisdiction.32 Legislative jurisdiction gives a nation the right to

prescribe or regulate conduct.33 Nations regularly legislate and regulate the conduct of

individuals within its own borders, but when a nation attempts to legislate and regulate the

conduct of individuals outside of its own borders the nation is exerting extraterritorial

jurisdiction.34 Whenever a nation attempts to exercise extraterritorial jurisdiction, an effects

doctrine analysis is appropriate.35

Sections 402 and 403 of the Restatement summarize the analytical steps of the effects

doctrine. The issue of whether jurisdiction is proper under the Restatement is a two prong

analysis. Section 402 of the Restatement establishes that “[A] state has jurisdiction to prescribe

law with respect to… conduct outside its territory that has or is intended to have substantial

effect within its territory…”36

The second prong of the analysis, found in section 403, adds a reasonableness

requirement.37 After the first prong of the analysis is satisfied, a state must make a showing that

the exercise of such jurisdiction is reasonable.38 The section lists several factors that should be

32 Austen Parrish, The Effects Test: Extraterritoriality’s Fifth Business, 61 Vand. L. Rev. 1455, 1462 (2008)

33 Id.

34 Id. (When a state uses its legislative jurisdiction to regulate the conduct of those outside its borders, the law has been applied extraterritorially).

35 Id. at 1463.

36 See RESTATEMENT, supra note 4, § 402(1)(c).

37 Id. § 403(1).

38 Id.

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taken into consideration when ascertaining whether jurisdiction is reasonable.39 Although the list

is not meant to be exhaustive, it does provide significant guidance on how to properly analyze

extraterritorial laws.40 The restatement lists the following factors as some that should be taken

into account:

(a) the link of the activity to the territory of the regulating state, i.e., the extent to which the activity takes place within the territory, or has substantial, direct, and foreseeable effect upon or in the territory;(b) the connections, such as nationality, residence, or economic activity, between the regulating state and the person principally responsible for the activity to be regulated, or between that state and those whom the regulation is designed to protect;(c) the character of the activity to be regulated, the importance of regulation to the regulating state, the extent to which other states regulate such activities, and the degree to which the desirability of such regulation is generally accepted.(d) the existence of justified expectations that might be protected or hurt by the regulation;(e) the importance of the regulation to the international political, legal, or economic system;(f) the extent to which the regulation is consistent with the traditions of the international system;(g) the extent to which another state may have an interest in regulating the activity; and(h) the likelihood of conflict with regulation by another state.41

Therefore any state who wishes to exercise jurisdiction based on the effects doctrine must

make a showing that, (1) the offending conduct occurring outside its territory has or is intended

to have a substantial effect within its territory; and (2) the exercise of such jurisdiction would be

reasonable with respect to the several factors listed.

39 Id. § 403(2)(a)-(h).

40 Id. § 403 cmt. b (stating “The list of considerations in Subsection (2) is not exhaustive).

41 Id. § 403(2)(a)-(h).

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IV. Analysis

a. Section 402

In order for the United States to have jurisdiction to regulate conduct occurring outside of

U.S. territory by a foreign individual, the United States must show the conduct “has or is

intended to have substantial effect within [U.S.] territory.”42 In the case of the United States and

foreign investors in Cuba, the United States must show that the conduct of foreign investor

activity in Cuba has or is intended to have a substantial effect within the U.S.

It should first be noted that in all of the many findings made by Congress in Title III as a

justification for the Act, no finding asserted that the foreign investors had a purposeful intent to

affect the interests of the U.S.43 There is no other available way to show the conduct of foreign

investors in Cuba as conduct designed with intent to have a substantial effect within U.S.

territory. Therefore, without a proper showing of foreign investor intent to have an effect within

the U.S., Congress must have felt foreign investor activity in Cuba was enough, in and of itself,

to have a substantial effect within the U.S. territory.44 This conclusion is unsupported by the

facts.

The fact is, most of the findings of Congress deal with the conduct of the Cuban

Government, and refer mainly to the Cuban Government’s intent to have a substantial effect on


43 Cuban Liberty and Democratic Solidarity Act of 1996 § 6081, 22 U.S.C.A. § 6081 (2008).

44 See RESTATEMENT, supra note 4, § 402(1)(c) (implicitly stating that only two types of conduct would justify jurisdiction under the effects doctrine by listing only two types of conduct: (1) conduct which has a substantial “effect within [U.S.] territory,” and; (2) conduct which “is intended to have a substantial effect within [U.S.] territory”).

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U.S. interests.45 Yet, Title III seeks to place liability directly on the foreign investors, even

though Title III seems to submit that the substantial effect being felt within U.S. territory is the

result of actions of the Cuban government and not actions of the foreign investors in Cuban

property.

Nevertheless, some argue that the conduct of foreign investors in expropriated Cuban

property has an effect within the United States.46 This argument claims foreign investment

activity in Cuba leads to foreign investors’ purchasing illegally expropriated property which

properly belongs to U.S. nationals.47 “The intermediary sale of the property may cloud title and

45 The Congress makes the following findings:

… (2) The wrongful confiscation or taking of property belonging to United States nationals by the Cuban Government, and the subsequent exploitation of this property at the expense of the rightful owner, undermines the comity of nations, the free flow of commerce, and economic development.

(3) Since Fidel Castro seized power in Cuba in 1959--

(A) he has trampled on the fundamental rights of the Cuban people; and

(B) through his personal despotism, he has confiscated the property of--

(i) millions of his own citizens;

(ii) thousands of United States nationals; and

(iii) thousands more Cubans who claimed asylum in the United States as refugees because of persecution and later became naturalized citizens of the United States.

(4) It is in the interest of the Cuban people that the Cuban Government respect equally the property rights of Cuban nationals and nationals of other countries.

(5) The Cuban Government is offering foreign investors the opportunity to purchase an equity interest in, manage, or enter into joint ventures using property and assets some of which were confiscated from United States nationals…

Cuban Liberty and Democratic Solidarity Act of 1996 § 6081(2)-(5), 22 U.S.C.A. § 6081 (2008).

46 See Arreola, supra note 16, at 365 (“When a foreign citizen purchases expropriated property in Cuba, the sale has an effect upon the former owner”).

47 Id.

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make claim settlement for the U.S. national difficult.”48 As a result, there is a supposed

substantial link between the foreign investors and U.S. territory.

The activities of foreign investors in expropriated Cuban property must create a

substantial effect within the United States in order to satisfy Section 402 of the restatement.49

The issue of whether Title III is a proper exercise of jurisdiction under Section 402 is then

dependent on the understanding of the word “substantial,” as it is used in the doctrine. If we

understand “substantial” effects to include “intermediary” conduct then it may be possible to

conclude that foreign investment activity in Cuban property satisfies Section 402. Yet by the fact

that foreign investment in Cuba is only “intermediary” in nature, it seems that any argument that

foreign investment in Cuba is substantially responsible for the effects being felt in U.S. territory,

would be weak at best. This seems especially clear when it is considered that Congress conceded

that Cuba is substantially responsible for the effects.

b. Section 403 analysis: the reasonableness standard

When analyzing an issue under the effects doctrine, it is necessary to apply a Section 403

reasonableness analysis if the Section 402 substantial effect standard is met. Section 403 of The

Restatement (Third) of Foreign Relations Law provides several factors to be considered in

determining the reasonableness of any exercise of extraterritorial jurisdiction.50 For arguments

sake, even if foreign investment in expropriated Cuban property has satisfied the Section 402

48 Id.


50 Id. § 403(2)(a)-(h).

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substantial effects analysis, Section 403 requires a reasonableness standard to be met before

extraterritorial jurisdiction is deemed proper.51

The first factor examines, “the link [between] the [offending] activity [and] the territory

of the regulating state, i.e., the extent to which the activity takes place within the territory, or has

substantial, direct, and foreseeable effect upon or in the territory [emphasis added].”52

SUBSTANTIAL

The activities of foreign investors in expropriated Cuban property must create a

substantial effect upon the United States in order to satisfy the reasonableness standard of

Section 403(2)(a) of the Restatement.53 The issue of whether Title III is reasonable depends on

the understanding of the word “substantial” as it is used in the doctrine. The word substantial is

not defined in Section 403(2)(a) of the Restatement therefore one must look elsewhere for a

definition. When looking for cases that may use “substantial” in an analogous way, one good

place to look is a case dealing with the “minimum contacts” analysis.

The minimum contacts analysis deals with the issue of whether there is a “substantial

connection” between a foreign defendant and a forum state which would justify the exercise of

jurisdiction.54 Both the minimum contacts and the Section 403(2)(a) analyses deal with the

applicability of a states jurisdiction to foreign individuals. The requisite “substantial connection”

between a defendant and the forum State necessary for a finding of minimum contacts must

51 Id. § 403(1) (“Even when one of the bases for jurisdiction under § 402 is present, a state may not exercise jurisdiction to prescribe law with respect to a person or activity having connections with another state when the exercise of such jurisdiction is unreasonable”).

52 Id. § 403(2)(a).

53 Id. ([T]he link of activity to the territory of the regulating state [must be] substantial…).

54 Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102 (1987).

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derive from an action purposely directed by the defendant toward the forum State.55 In the Asahi

case, the Supreme Court adopted the position that “mere foreseeability” that conduct may have

an effect in the forum state is not enough to establish the requisite “substantial connection.”56

There must also be the existence of some purposeful intent directed against the forum state.57

This is consistent with the Restatement’s position that there must be a finding of “substantial,

direct, and foreseeable” effects in a territory.58 It is not too much to conclude that in order for

something to be substantial, there must be a purposeful intent associated with the action.

The argument that there is a substantial connection between U.S. territory and the foreign

investment activity attempts to link foreign investors in Cuban property to U.S. territory through

the foreign investors’ purchase of illegally expropriated property. “The intermediary sale of the

property may cloud title and make claim settlement for the U.S. national difficult.”59 As a result,

there is a supposed substantial link between the foreign investors and U.S. territory.

If we look to the “minimum contacts” analysis of “substantial” for direction, the United

States would have to prove that foreign investors in Cuba have a purposeful intent to adversely

affect the interests of the U.S. territory.60 Once again it should be noted that in all of the many

55 Id. at 107.

56 Id.

57 Id.

58 See RESTATEMENT, supra note 4, § 403(2)(a) (stating that the activity must have a substantial, direct, and foreseeable effect to the regulating state).

59 See Arreola, supra note 16, at 365.

60 See Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 107 (1987) (There must be the existence of some purposeful intent by the actor directed against the forum state in order to find a substantial connection between the forum state and the actor).

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findings made by Congress in Title III as a justification for the Act, no finding asserted that the

foreign investors had a purposeful intent to adversely affect the interests of the U.S.61

Common sense economic and business principles would lead one to conclude that foreign

investment activity in expropriated Cuban property is occurring because the transaction is

economically attractive. Congress did not make the claim that foreign investment in expropriated

Cuban property was occurring with the purposeful intent to harm the interest of the U.S. or its

nationals. It is possible that such investment activity could arguably be seen as foreseeably likely

to affect U.S. interest, but the Supreme Court has ruled in Asahi, that “mere foreseeability” that

an action may cause a specific result is not sufficient in proving the existence of a “substantial

connection” between the actor and the result.62

DIRECT

The foreign activity must have a direct effect upon or in the United States to satisfy

Section 403(2)(a) the Restatement’s reasonability requirement.63 The injury suffered by the

United States, which Title III attempts to remedy, is the uncompensated expropriation of

property rightly held by U.S. citizens in Cuba. This injury is not a direct effect of any foreign

investment activity in expropriated Cuban land, but rather it is the direct effect of Castro’s

expropriation of the Cuban land.64 If anyone is to be held liable under U.S. law as an individual

who has had a direct effect on U.S. interests, it should be Castro’s regime, not foreign investors


62 See Asahi, 480 U.S. at 107.

63 See RESTATEMENT, supra note 4, § 403(2)(a) (stating that the activity must have a … direct … effect to the regulating state).

64 See Runa Kinzel, Helms Burton: A View From Abroad, 10 U. Miami Int’l & Comp. L. Rev. 81, 94 (2002) (“the effect was caused by the expropriation of the Cuban government, not by persons now being held liable under the liability provision”).

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in expropriated property. If the foreign investors are to be held directly liable under Title III there

would be an inexplicable gap between the act which caused the harm to the U.S. and those being

held liable under Title III.65 The exercise of jurisdiction over foreign investors in such a situation

would do great violence to the express intent of the effects doctrine.

FORESEEABILITY

The restatement, similar to the Supreme Court in Asahi, endorses the view that

foreseeability by a foreign person that an action may have effects in the U.S. is not enough to

reasonably exert jurisdiction over said foreign person. This is clear by the language of Section

403(2)(a) requiring that “the activity … has substantial, direct, and foreseeable effect upon or in

the territory” (emphasis added).66 It is clear that the restatement meant for the three elements of

(1) substantiality; (2) directness; and (3) foreseeability to all be present at once before finding the

requisite link67 between the offending activity and the territory attempting to claim jurisdiction.

Therefore, if any one of the three is not present, the link between the offending activity and the

United States must be deemed to be broken.

Making a clear showing that the offending activity does not have a substantial or direct

effect upon U.S. territory should be enough to break the link between the offending activity and

the United States. The argument that there is not a substantial connection between the activity

and the regulating state is strong, and should be enough to deem jurisdiction unreasonable under

Section 403(2)(a) of the Restatement.

65 See Id.

66 RESTATEMENT, supra note 4, § 403(2)(a).

67 See Id. (stating that there must be substantial, direct, and foreseeable effects upon the regulating state).

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Another relevant factor in the reasonableness analysis looks to “the connections, such as

nationality, residence, or economic activity, between the regulating state and the person

principally responsible for the activity to be regulated.”68 The connection between the regulating

state and “those whom the regulation is designed to protect,” is also relevant to this part of the

reasonableness analysis.69

Title III creates an interesting scenario with respect to the analysis of the connections

between the regulating state and “the person principally responsible for the activity to be

regulated.” The U.S. is clearly the regulating state, and the act being regulated is clearly the

investment activities of foreign citizens in Cuba. The United States is clearly attempting to

protect property rights that are held by U.S. nationals. The question that is less clear is: who is

principally responsible for the activity that is being regulated? The problem here is the Act

improperly deems the foreign investor as “the person principally responsible for the activity to be

regulated,”70 when in actuality Castro’s Cuban government is the person principally responsible

for the activity to be regulated.71 It was Castro’s government who was principally responsible for

the expropriation of Cuban land which was properly held by current U.S. nationals.72 This is

clearly supported by the findings of Congress in Title III.73

68 Id. § 403(2)(b).

69 Id.

70 See Cuban Liberty and Democratic Solidarity Act of 1996 § 6082(a)(1), 22 U.S.C.A. § 6082 (2008), supra note 13.

71 See Kinzel, supra note 59, at 94.

72 See Id.

73 See Cuban Liberty and Democratic Solidarity Act of 1996 § 6081(2)-(5), 22 U.S.C.A. § 6081 (2008), supra note 40.

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But even if we assumed that the foreign investor is the person principally responsible for

the activity to be regulated, there is still an insufficient justification for the United States to exert

its jurisdiction. As Section 403(2)(b) Restatement notes, the nationality of the offender is an

important factor in deciding which state holds proper jurisdiction.74 The principle of nationality

is also widely recognized in customary international law as necessary for a state to impose

extraterritorial jurisdiction on an individual.75 Based on this principle, “the United States could

impose rules concerning the conduct of U.S. nationals abroad, but as for the conduct of non-

nationals abroad the nationality principle would not qualify as a justification (emphasis

added).”76

In the same sense, it cannot be said that a foreign investor has any residency connection

to the United States as required by the Restatement. Foreign investors are citizens of foreign

nations, residing in foreign nations. There is no residency connection.

The connection between the economic activity of the foreign investors in expropriated

Cuban property and the United States appears to be the strongest connection of the three listed in

Section 403(2)(b) of the Restatement. This argument links the economic activity of foreign

investors in Cuba to U.S. territory by way of the U.S. interest in the expropriated Cuban land.77

Proponents of Title III rely on this economic connection to justify the exercise of U.S.

jurisdiction over the foreign investors in Cuba.

74 See RESTATEMENT, supra note 4, § 403(2)(b) (listing nationality as an important consideration in applying the section).


76 Id.


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It was already established earlier in this paper that there was not a substantial or direct

connection between the economic activities of foreign investors in Cuban property and the

United States. If we revisit that argument for a moment, we will see that although it might be

foreseeable that foreign investment in expropriated Cuban property would have some effect on

U.S. interests, “mere foreseeability” is not enough for a finding of a substantial connection.78 A

substantial connection must derive from an action purposely directed by the defendant toward

the forum state.79 Of all the findings made by congress in Title III, there was not any finding that

foreign investors in Cuba were purposely designing their investment activities as a way to

adversely affect the economic interests of the United States.80 Therefore, at the most, any

economic connection between foreign investors and the United States must be less than

substantial.

On the other hand, there appears to be a stronger connection between the state and those

whom the regulation is designed to protect. Title III was designed in large part to protect the

property rights of U.S. nationals.81 Therefore U.S. nationals who properly held title to

expropriated Cuban land are the class of individuals whom the Act attempts to protect. The

protection is justified because “[t]he intermediary sale of the property may cloud title and make

claim settlement for the U.S. national difficult.”82 Furthermore, the Foreign Claims Settlement

78 See Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 107 (1987).

79 See Id.

80 See Cuban Liberty and Democratic Solidarity Act of 1996 § 6081, 22 U.S.C.A. § 6081 (2008) (listing several factors where the purposeful behavior of the Cuban Government is cited as causing effects within the U.S., but listing no purposeful behavior of foreign investors as having effects within the U.S.).

81 Id. § 6081(1) (stating that “Individuals enjoy a fundamental right to own and enjoy property which is enshrined in the United States Constitution”).

82 See Arreola, Supra note 16, at 365.

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Commission has estimated that more than six billion dollars ($6,000,000,000) in property claims

by U.S. nationals are outstanding. This is the United States’ most compelling justification for

enacting Title III, in regards to Section 403(2)(b).

But Title III may still be overreaching its boundaries in attempting to protect U.S.

nationals who were expropriated by Castro’s Cuba. Title III extends its protections beyond U.S.

citizens to U.S. nationals. 83 Some have noted that some individuals who qualify as U.S. nationals

at the time of the acts signing were citizens of Cuba at the time of the expropriations.84 citizens.

For this specific class of U.S. nationals, there is not the requisite nationality connection to the

United States.85 These citizens were expropriated by their own government; therefore Cuban

domestic law should apply to these individuals and not United States law.86 Any attempt by the

United States to adjudicate the rights of property holders who were Cuban citizens at the time of

expropriation would infringe on Cuba’s recognized sovereign right to govern its own citizens.87

Not only would this act violate customary international law, but it would also expressly violate

the reasonableness standard of the effects doctrine which requires an analysis of “the extent to

which [another] state may have an interest in regulating the activity.”88

83 See Cuban Liberty and Democratic Solidarity Act of 1996 § 6082(a)(1)(A), 22 U.S.C.A. § 6082 (2008) (stating that anyone who traffics in property confiscated by the Cuban Government will be liable to “any United States national who the claim to such property).


85 See Id.

86 See Id. (“An injured person must have the nationality of the claimant State at the time the injury occurs and must retain it at least until the claim is presented, which is clearly not the case here”).

87 See Id.

88 See RESTATEMENT, supra note 4, § 403(2)(g).

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In order to satisfy the reasonableness standard of Section 403(2)(d), one must analyze

whether there are any justified expectations that will be hurt by the regulation.89 Cuba has a

justified expectation to regulate investment activity taking place within its own territory. The fact

that states have the right to exercise jurisdiction “full and absolute” within its own territory is an

established principle of international law.90 Foreign countries also have a justified expectation to

their sovereign right to legislate with respect to their domestic affairs free of the disturbances of

other states.91

The section 403(2)(d) analysis is also interested in any “justified expectation[s]” which

might be protected by the regulation.92 Some commentators argue that U.S. nationals have a

justified expectation to have their property rights respected extraterritorially.93 These

commentators point to the fact that over $6 billion of land has been expropriated from U.S.

nationals, and there is no international remedy available that can quickly and efficiently

adjudicate the rights of the victims of the expropriation without Title III.94 As a result, Title III

becomes necessary because U.S. nationals are deprived of fundamental property rights without

compensation and without remedy in violation of their justified expectations.95 Some even claim

89 See RESTATEMENT, supra note 4, § 403(2)(d).

90 Kinzel, supra note 59, at 92.

91 See Id. at 91.

92 See RESTATEMENT, supra note 4, § 403(2)(d).

93 See Shamberger, supra note 10, at 525.

94 Id. at 522.

95 Id.

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that Castro has “embarked on [a] systematic plan of using foreign investors to erect barriers to

U.S. recovery or compensation for the confiscated property.”96

As a result, under Section 403(2)(d) the justified expectations of Cuba and other foreign

nations investing in Cuba must be balanced against the justified expectations of U.S. nationals

who want their property rights respected. It can be argued that Cuba is not entitled to have its

justified expectations respected due to Cuba’s history of human rights violations which Congress

has cited as the root cause of the present controversy,97 but the same cannot be said for the

foreign nations whose citizens are investing in Cuba.

Once again, the lack of substantial connections between the U.S. and foreign investors in

Cuba make it hard to argue that the U.S. has a greater right in protecting its citizen’s expectations

than foreign nations have in protecting their citizen’s expectations. If anything, both nations have

an equal right to protect their own citizen’s justified expectations. When you look to the fact that

foreign nations have enacted counter regulations that forbid their citizens from respecting

judgments made under Title III it is clear that foreign nations are acting upon their own justified

expectations, leaving Title III’s effectiveness is doubt.98

The regulation should be deemed important to the “international political, legal, or

economic system” in order to be reasonable.99 Some insist that Helms-Burton has significant

96 Id. at 525.


98 See Areola, supra note 16, at 359 (discussing the various legislative responses to Title III by foreign nations).

99 See RESTATEMENT, supra note 4, § 403(2)(e).

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importance to the “international political, legal, or economic system.”100 This argument points to

“Cuba's geographical proximity,” to the United States and its “persistence in suppressing

democracy, violating human rights, and refusing to satisfy international law claims against it,” as

being justification for Title III’s extraterritorial reach.101 These abuses are held to be a threat to

the prevailing political, legal, and economic systems of the world, and thus provide a

justification for Title III’s measures.

This style of argument by those who defend Title III leaves something to be desired. The

problem with this line of reasoning is it continues to focus on the conduct of Castro’s Cuba while

ignoring conduct of the foreign investors being held liable under Title III. If the importance of

the Title III to the international political, legal, or economic system is held to be enough to

justify Title III’s measures, then we would effectively be waiving the requirement of a

substantial and direct connection between the foreign investors in expropriated Cuban property

and the United States under Section 403(2)(a) of the Restatement.102 Therefore it cannot be said

that Title III’s importance to the “international political, legal, or economic system” is enough to

justify Title III without a finding of a substantial connection between the foreign investor activity

in Cuba and U.S. territory.

The interest of other nations must be evaluated with respect to foreign investment in

Cuba as a part of the reasonableness analysis as well.103 Section 403(2)(g) of the Restatement

encourages an analysis of “the extent to which another state may have an interest in regulating 100 Id.

101 See Shamberger, supra note 10, at 524-525.

102 See RESTATEMENT, supra note 4, § 403(2)(a) (requiring substantial, direct, and foreseeable effects to be felt by the regulating state for a showing of reasonability).

103 See RESTATEMENT, supra note 4, § 403(2)(g).

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the activity.” When thinking of the nations besides the U.S. which might have an interest in

regulating the activity of foreign investors in Cuba, the two obvious selections are Cuba and the

nations to whom the foreign investors are citizens.

Cuba is a candidate for consideration because the investment activity is taking place

within Cuban territory. The fact that states have the right to exercise jurisdiction “full and

absolute” within its own territory is an established principle of international law.104

The claim is also made that some foreign nations involved in Cuban investments may

have a stronger interest in regulating the activity than the U.S.105 The argument is based on a

claim of territoriality.106 Foreign nations claim they have a recognized right under international

law to conduct their domestic affairs free and clear of U.S. legislative interference.107 Therefore,

the foreign nations claim exclusive right to regulate actions of its citizens.

Some argue that no other state has as strong an interest in regulating the activity of the

foreign investors as the United States. Proponents of this view dismiss any interest Cuba may

have in regulating the foreign investment activity even though the activity is occurring in Cuba’s

own territory. Commentators point to Cuba’s abuses of international law in expropriating Cuban

land without providing just compensation, as a part of a general attack on the legitimacy of

Castro’s Cuba.108 By casting Castro’s Cuba in this light, some hope to undermine the legitimacy 104 Kinzel, supra note 59, at 92.

105 Id. at 252.

106 See Kinzel, supra note 59 at 91 (“Because all States are subject to international law, a somewhat general freedom to exercise jurisdiction is to be applied within the limits imposed by the basic principles of international law, like state sovereignty, equality of States and non-interference in domestic affairs”).

107 See Id.

108 See Soto, supra note 20, at 251 (stating “The only interest Cuba has is in profiting from property that has been illegally confiscated from the United States”).

23

of any claim to sovereignty that is made by Cuba.109 The end result of this argument undermines

Cuba’s sovereignty due to its international law abuses, and holds U.S. interests in that region

above those of Castro’s government. With respect to the other foreign nations claiming

sovereignty over its own citizens, proponents of Title III point out that foreign nations were on

notice that Castro’s government illegally seized land without compensation to the original

owners, and therefore should have refrained from making the investment.110

The final factor the Restatement lists for its reasonableness analysis is “the likelihood of

conflict with regulation by another state.”111 The likelihood that Title III will come into conflict

with regulations by another state has already matured into definite conflicts with regulations that

have been enacted by other states in specific response to Title III.112 Canada has enacted

amendments to their Foreign Extraterritorial Measures Act (FEMA) that could be aimed at

counteracting the effect of Title III.113 The FEMA measure serves three major purposes: (1) it

allows “the Canadian Attorney-General the power to identify foreign laws that infringe upon

Canadian sovereignty;” (2) “blocks the enforcement of judgments rendered by courts of targeted

countries and allows Canadians to recover court costs;” and (3) provides stiff fines for Canadian

companies that comply with the laws of targeted countries.114

109 See Id.

110 See Soto, supra note 20, at 252 (“These foreign nations that are profiting from United States confiscated property are fully aware that the Castro government seized those properties without compensating the United States nationals for the property”).

111 See RESTATEMENT, supra note 4, § 403(2)(h)

112 See Arreola, supra note 16, at 359 (“The international community immediately denounced the passage of Helms-Burton”).

113 See Id. (reviewing the effect of the FEMA measures taken by Canada).

114 See Id.

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Mexico has responded by enacting an “Antidote Law,” specifically meant to counter the

effects of Title III.115 The law seeks to prohibit two activities: (1) “acts that affect trade or

investment, when those acts are a consequence of the extraterritorial effects of foreign laws;” and

(2) acts that provide “information to foreign governments or foreign courts if the information

relates to proceedings under the extraterritorial foreign law.”116 Violation of the law is punishable

by fines.117 The European Union has also passed very similar “Antidote Laws” aimed at

rendering the Helms-Burton Act ineffective against its citizens.118

The Latin American Economic System (SELA) has disputed the legality of the entire

Helms-Burton Act.119 In a 159 page report, the organization condemned the Act for “not only

negatively [affecting] Cuba’s interest and its development, but also [damaging] the interests of

Latin America and the Caribbean and the international community [] by interfering in its

sovereign decisions and the management of its foreign relations.”120 SELA “is a regional

intergovernmental organization that [consists of] 26 Latin American and Caribbean countries.”121

Based on the Restatement’s effects doctrine analysis of Title III it appears that: (1) there

is not a sufficient connection between foreign investment activity in Cuba and the United States

as required by Section 402 of the Restatement; and (2) even if there was, the exercise of

115 See Id. at 360.

116 Id. at 360-361.

117 Id.

118 See Shamberger, supra note 10 at 509 (“the EU has adopted retaliatory legislation instructing EU companies to ignore the Helms-Burton Act if their interests are threatened by compliance with the law”).


120 Id.

121 What is SELA?, http://www.sela.org/sela/sela_e.asp

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jurisdiction by the United States, pursuant to Title III, over foreign investors in Cuba is an

unreasonable exercise of extraterritorial jurisdiction under Section 403 of the Restatement.

the legality of the helms-burton act (international law)

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