(The Center Square) – A U.S. Supreme Court decision on Tuesday cleared a legal path for ExxonMobil to sue a Cuban state-owned conglomerate over energy infrastructure seized during the 1959 Cuban Revolution
In a 6-3 vote, the ruling by the high court establishes a firm judicial precedent that allows American companies to use U.S. courts to seek judicial remedies for assets confiscated by the Cuban government.
Writing the majority opinion, Justice Brett Kavanaugh noted Congress designed the 1996 Helms-Burton Act to target Cuban government agencies and state-run companies that confiscated assets of U.S. corporations.
The Cuban energy company, Corporación CIMEX, attempted to block the lawsuit by claiming immunity under the Foreign Sovereign Immunities Act (FSIA), a federal law that generally shields foreign governments from being sued in U.S. courts.
“To allow the FSIA to block these suits would effectively rewrite the statute and nullify the very accountability Congress intended to enforce,” Kavanaugh wrote.
The ruling for Exxon follows a related case recently decided by the Supreme Court involving a $440 million dispute brought against major cruise lines that include Carnival and Royal Caribbean for using docks in Havana confiscated by the Cuban government in 1960. That decision officially cleared the way for lower courts to potentially enforce the judgments against the cruise operators.
Tuesday’s ruling for ExxonMobil similarly returns the lawsuit to a lower court to determine the potential liability of the Cuban conglomerate.
ExxonMobil is seeking to recoup a claim now valued at more than $1 billion due to decades of accrued interest in a refinery and service stations that once belonged to Standard Oil, the owner of the assets before the company changed its name to Exxon in 1972.
In the majority opinion, Kavanaugh wrote that “Congress does not ordinarily authorize a suit against a sovereign with one hand, only to bar it with another.”
In legal briefs backing ExxonMobil, Department of Justice lawyers argued before the court that the country has an interest in protecting U.S. corporations. “The United States has compelling foreign-policy interests in ensuring that U.S. nationals whose assets were illegally expropriated by Fidel Castro’s communist regime receive recompense and in preventing the Cuban government from further benefiting from its wrongdoing,” Justice Dept. lawyers contended.
If ExxonMobil were to recoup the full $1 billion claim, federal taxes on that recovery could reach approximately $285 million, based on the company’s estimated effective corporate tax rate of 28.5%, though the case first returns to a lower court to determine liability.
ExxonMobil’s $1 billion claim and the $440 million cruise-line dispute are among 40 pending Helms-Burton lawsuits whose combined value has not been independently tallied.