US Supreme Court allows ExxonMobil to sue Cuban entities over seized oil assets

The US Supreme Court ruled June 23 that ExxonMobil can sue Cuban government-owned companies operating oil assets that were confiscated by Fidel Castro's regime in 1960, arguing that a 1996 law allows such lawsuits.

ExxonMobil is seeking more than $1 billion from Unión Cuba-Petróleo, or CUPET, and Corporación CIMEX, the Cuban companies that are now profiting from the refinery, terminals, packaging plants and service stations that were taken from ExxonMobil.

The 6-3 ruling could add pressure on the Cuban government as the US simultaneously tightens sanctions on Havana. The US sanctioned CUPET on June 11, saying that Cuba is leveraging the energy trade to further its agenda and repress its people. Crude imports into Cuba have plummeted since the US intervened in Venezuela, which had been a key supplier of crude to the island.

The Supreme Court case concerns Cuba's 1960 confiscation of assets from ExxonMobil, then known as Standard Oil. For decades after that, Exxon had no way to sue Cuban government entities and seek compensation, according to the opinion written by Justice Brett Kavanaugh.

But in 1996, the US passed the Helms-Burton Act, which allows US companies to sue Cuban agencies and instrumentalities that are profiting from confiscated property. Prior presidents blocked suits under the law, but US President Donald Trump gave the green light for such cases in May 2019.

Exxon then sued CUPET, CIMEX, and later also CIMEX's Panamanian alter ego, Corporación CIMEX S. A., seeking more than $1 billion in damages.

The Cuban companies moved to dismiss the case, arguing they have sovereign immunity under the Foreign Sovereign Immunities Act. But ExxonMobil argued that the Helms-Burton Act waived the Cuban government defendants' sovereign immunity.

The US District Court for the District of Columbia sided with the Cuban government, and a divided panel of the US Court of Appeals for the DC Circuit affirmed that ruling. But the US Supreme Court on June 23 agreed with Exxon that the Helms-Burton Act abrogated the foreign sovereign immunity of Cuban agencies and instrumentalities.

"It would make little sense for Congress to construct an elaborate statute authorizing suits against the Cuban government agencies and instrumentalities if, because of the FSIA, almost no suits could ever get through the courthouse door," according to the opinion.

Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito, Neil Gorsuch and Amy Coney Barrett joined Kavanaugh's opinion.

The court reversed the judgment of the DC Circuit and remanded the case for further proceedings.

Justice Elena Kagan, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, dissented, saying the Helms-Burton Act does not eliminate immunity provided by the FSIA. Congress specifically considered amending the FSIA to abrogate jurisdictional immunity in the original version of the Helms-Burton Act and decided against it, the dissent said.

The US embargo on Cuba permits some categories of commercial activity between US nationals and Cuban instrumentalities, the dissent said. "Those activities, in turn, could enable a Helms-Burton suit to meet one of the FSIA's exceptions," the dissent said in a footnote.

An ExxonMobil spokesperson said the Supreme Court's decision is a critical moment in a 60-year effort to be compensated for what the Cuban government illegally seized. "It reflects two things: the merits of our argument and the fact that our company will fight a good fight for as long as it takes," the spokesperson said.

The ruling is significant because it allows a plaintiff to pursue a judgment and try to execute the judgment on its own, rather than waiting for the US Foreign Claims Settlement Commission to settle the claim, said Carlos Loumiet, a partner at the Miami-based law firm Nelson Mullins.

If a plaintiff gets a judgment against a Cuban instrumentality, the question is whether the plaintiff can find property of the instrumentality, presumably overseas, and try to execute the judgment against that property in a court in that country, Loumiet said. "It is a process, and we will have to watch and see how it unfolds."