The Wall Street Journal opinion pages highlighted the lawsuit that American Airlines is facing under the 1996 Helms-Burton law filed by a man who says his family owned the Havana airport before it was taken during the Cuban Revolution.
The 1996 Helms-Burton Act allows Americans to sue companies profiting from land expropriated in Cuba. The law contains a provision allowing U.S. Presidents to suspend implementation of this private right of action for six month periods at a time, which every administration has done up until now. However the Trump administration is now allowing Helms-Burton claims to proceed, and in May Carnival Cruise Lines became the first U.S. company to face a suit under the law.
Sign in support of the Cuban revolution
The Family That Once Owned the Havana Airport Wants American to Pay Them Back
The plaintiff says his father owned the Havana airport when it was taken by the Cuban government during the 1959 revolution. He purchased what was then Rancho Boyeros Airport seven years earlier from Pan Am and made investments to “modernize[.] and improve[.] it by extending the runway and building a new terminal building.”
While the plaintiff hasn’t specified the damages he’s looking for in his suit, he claims that his stake in the airport was worth “$24 million at the time of confiscation” so would presumably be seeking that amount plus 60 years’ of interest or a determined current market value – and by providing statutory prior notice of the suit he’d also likely be seeking treble damages.
That could get him up into the range of $750 million in claims over the airport. He is also pursuing a suit against American’s oneworld partner LATAM.
The Capitolio in downtown Havana
U.S. Law Lets People Whose Property Was Taken By Cuba Sue Corporations for Repayment
Title III of the Act explains that it is in response to “[t]he Cuban Government..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.”
This is referred to as “trafficking” in confiscated property, and the Act seeks to stop the flow of funds to the Cuban government which “undermines the foreign policy of the United States.”
The goal is to avoid “the transfer to third parties of properties confiscated by the Cuban Government” which “would complicate any attempt to return them to their original owners.”
The law seeks to stop “unjust enrichment from the use of wrongfully confiscated property by governments and private entities at the expense of the rightful owners of the property.”
Fishing on the Malecón in Havana
The Lawsuit Against American Should Not Succeed
Since there haven’t been any private lawsuits under the act permitted in the 23 years since it was passed, until this year, there’s not case law directly on point to rely upon. I’ll offer what I think are relevant points while expressly noting that this is not a legal analysis of the case.
- American Airlines has not taken an equity interest in the airport, does not manage the airport, and does not have a joint venture there.
- They do not appear to be “trafficking” in the property of the airport, merely using it.
- Rather than undermining the foreign policy of the United States, their flights have been specifically authorized by the United States and can therefore be presumed to be consistent with its policy.
- American’s use in no way complicates future return of the airport to its rightful owners. In fact the funds paid for use of the airport support airport upkeep – indeed, preservation of the value of the asset in the event it’s ever returned.
- American isn’t receiving unjust enrichment from their Cuba flights. They’re likely losing money.
And in fact American probably isn’t even making money off of the airport since Havana has some of the highest airport costs in the world. They’re paying for the value they’re receiving, and likely overpaying.
And they’re also probably not making money off of travel to Cuba, either. American Airlines loses money much (but not all) of the time flying, making money largely from selling frequent flyer miles to Citibank and Barclays.
Despite Miami – Havana probably being the best US-Cuba route, American likely loses money on its Cuba flying in particular. This is especially likely given the Trump administration’s crackdown on travel to Cuba.
Airlines went into Cuba to squat on limited slots on the expectation that it would be a future gold mine. New routes always start slow, this one has been hindered by the U.S. government, and the nature of the market makes it challenging to begin with given that nearly all of the demand is on the U.S. side (very few Cubans can afford to travel even if they can afford passports), it’s almost all leisure travel, and operating costs are high.
While I can’t speak to the circumstances around which this man’s family may have acquired an ownership interest in the Havana airport, I’m generally in favor of restoring ownership of things to those from whom they’re taken (like when the U.S. government takes cash from Americans while they’re traveling without ever charging them with a crime), this claim doesn’t seem warranted.
Mary Anastasia O’Grady writes in The Journal, “there is a difference between being cleared by Treasury to conduct business in Cuba and using expropriated assets to sustain those businesses.” However ‘using’ expropriated assets isn’t what creates a claim under Helms-Burton, as I’ve explained by actually reading the text of the statute. So her claim that this difference she identifies is dispositive (“[i]n a U.S. court of law that may turn out to be no small distinction”) I believe she’s simply misunderstanding the law.
American isn’t taking ownership of the assets and likely isn’t making money off of them. The flights aren’t against U.S. policy, they’re sanctioned by policy. And while I’m sympathetic to Cuban refugees, American Airlines is reuniting families by making travel between South Florida and Cuba possible rather than harming the Cuban community. Regular readers know I’m often critical of American Airlines. This time they’re 100% in the right.