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Court rules for Exxon Mobil in Cuban confiscation case
The Supreme Court on Tuesday ruled in Exxon Mobil v. Corporación Cimex that a lawsuit by Exxon Mobil against Cuban state-owned companies for the confiscation of assets owned by subsidiaries of the oil giant’s predecessor can go forward.Writing for the majority, Justice Brett Kavanaugh explained that the Helms-Burton Act, a federal law passed in 1996, cancels the immunity that the Cuban government and its companies would normally have, so that plaintiffs seeking to rely on that statute to sue them are not required to satisfy an exception to the Foreign Sovereign Immunities Act, a federal law that generally prohibits lawsuits in U.S. courts against foreign governments and their “agencies and instrumentalities.” “Stacking an FSIA requirement on top of the Helms-Burton Act would thwart Congress’s design and directly contravene the President’s foreign policy judgments,” Kavanaugh wrote.Justice Elena Kagan, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, dissented. She argued that “[n]othing in the text or ‘architecture’ of the Helms-Burton Act suggests that Congress abrogated the sovereign immunity of these defendants—much less that it did so with the requisite unmistakable clarity.”The law at the center of the case was the Cuban Liberty and Democratic Solidarity Act, also known as the LIBERTAD Act or the Helms-Burton Act. It allows U.S. nationals to bring lawsuits in federal court against anyone who “traffics in property which was confiscated by the Cuban Government on or after January 1, 1959.” It also gives the president the power to suspend the right to bring a lawsuit when he believes that doing so is “necessary to the national interests of the United States and will expedite a transition to democracy in Cuba.” From 1996 until 2019, when President Donald Trump declined to renew the suspension, U.S. presidents repeatedly suspended the right to bring a lawsuit.Exxon filed the case in federal court in Washington, D.C. It contended that three Cuban-owned companies violated the Helms-Burton Act by trafficking in confiscated property that Exxon owned – specifically, by (among other things), extracting, importing, and refining crude oil and operating service stations using property that Exxon’s subsidiaries had possessed but the Cuban government had confiscated in 1960.The Cuban companies urged U.S. District Judge Amit Mehta to dismiss the case, arguing that it was barred by the FSIA. Mehta ruled that the Helms-Burton Act does not itself overcome the immunity normally conferred by the FSIA. But, he concluded, one of the exceptions to that immunity – for lawsuits involving “commercial activity” in the United States – did apply to one of the Cuban companies because of its operation of gas stations in Cuba that process money transfers from U.S. residents to Cuba and sell products imported from the United States.A divided panel of the U.S. Court of Appeals for the District of Columbia Circuit agreed that the FSIA generally bars lawsuits against Cuban state-owned companies in U.S. courts. In an opinion by Chief Judge Sri Srinivasan, the court sent the case back to the lower court for it to take another look at whether the commercial-activity exception applies – namely, whether the Cuban company’s money transfers and sales of U.S. goods at its gas stations have effects in the United States “and whether the effects are sufficiently ‘direct.’”.Exxon appealed to the Supreme Court, which granted review last year. On Tuesday, the justices reversed.In his 22-page opinion, Kavanaugh emphasized that “one Congress cannot bind another—meaning that a later Congress always may repeal or modify an old law, or enact a new law that is exempt from the old law. In 1996, when Congress passed the Helms-Burton Act, Congress was free to directly abrogate the foreign sovereign immunity of Cuban agencies and instrumentalities, thereby overriding the FSIA.”That is exactly what it did, Kavanaugh concluded. Among other things, he wrote, the Helms-Burton Act creates a right to sue that “expressly applies against Cuban agencies and instrumentalities” and was intended to “supply a meaningful remedy” against them – something that would generally not be possible if plaintiffs also had to satisfy one of the exceptions to the FSIA.In her dissent, Kagan countered that whether the Cuban-owned companies are immune from lawsuits in U.S. courts “depends on whether an FSIA exception is met.” The majority’s contrary conclusion, she said, rests “on the ground that a different law, the Helms-Burton Act, abrogates (in nonlegal speak, eliminates) the immunity that the FSIA may otherwise grant. The problem for the majority is that the bar for finding” that Congress has repealed the general presumption of immunity in the FSIA “is high, and the Helms-Burton Act falls short.”
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