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The EU-U.S. Compromise on the Helms-Burton and D’Amato Acts

Published online by Cambridge University Press:  27 February 2017

Stefaan Smis  and
Kim Van der Borght
Stefaan Smis
Affiliation:
Vrije Universiteit Brussel
Kim Van der Borght
Affiliation:
Vrije Universiteit Brussel
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Type
Current Developments
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American Journal of International Law , Volume 93 , Issue 1 , January 1999 , pp. 227 - 236
Copyright
Copyright © American Society of International Law 1999

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References

1 Pub. L. No. 104-114, 110 Stat. 785 (1996), reprinted in 35 ILM 357 (1996) [hereinafter Helms-Burton Act]. This Act attempts to stiffen sanctions against Cuba arising out of its expropriations and its form of government.

2 Pub. L. No. 104-172, 110 Stat. 1541 (1996), reprinted in 35 ILM at 1273 [hereinafter D’Amato Act]. The Act is also known under the acronym ILSA. This Act attempts to impose sanctions on Iran and Libya for their actions in support of international terrorism and their efforts to develop weapons of mass destruction.

3 See, e.g., Rene Lefeber, Frontiers of International Law: Counteracting the Exercise of Extraterritorial Jurisdiction, 10 Leiden J. Int’l L. 1 (1997); Peter Glossop & Kelly Harbridge, International Law and the Private Right of Action in Helms-Burton, in Canadian Council on International Law: Fostering Compliance in International Law? 148, 165–68 (Proceedings of the 25th Annual Conference, 1996); H. Scott Fairley, Exceeding the Limits of Territorial Bounds: The Helms-Burton Act, 34 Can. Y.B. Int’l L. 161, 189–95 (1996); Andreas F. Lowenfeld, Congress and Cuba: The Helms-Burton Act, 90 AJIL 419, 430–32 (1996); Rupinder Hans, The United States’ Economic Embargo of Cuba: International Implications of the Cuban Liberty and Democratic Solidarity Act of 1995, 5 J. Int’l L. & Prac. 327, 340–44 (1996); Jonathan R. Ratchik, Cuban Liberty and the Democratic Solidarity Act of 1995, 11 Am. U.J. Int’l L. & Pol’y 343, 362–64 (1996); Luisette Gierbolini, The Helms-Burton Act: Inconsistency with International Law and Irrationality at Their Maximum, 6 J. Transnat’l L. & Pol’y 289, 301–04 (1997); Anthony M. Solis, The Long Arm of U.S. Law: The Helms-Burton Act. 19 Loy. L.A. Int’l & Comp. L.J. 709, 736–38 (1997).

4 See Lowenfeld, supra note 3, at 429–30; Gierbolini, supra note 3, at 304.

5 See Brigitte Stern, Vers la Mondialisation juridique? Les lois Helms-Burton et D’Amato-Kennedy, 100 Revue Générale de Droit International Public 979, 998–99 (1996); Glossop & Harbridge, supra note 3, at 162–65; Fairley, supra note 3, at 183–88; Gierbolini, supra note 3, at 300–01.

6 See, e.g., Kees Jan Kuilwijk, Castro’s Cuba and the Helms-Burton Act—An Interpretation of the GATT Security Exception, 31 J. World Trade 49 (1997); R. Dattu & J. Boscariol, GATT Article XXI, Helms-Burton and the continuing abuse of the national security exception, 28 Can. Bus. L.J. 199 (1997); Dean Bucci, The Cuban Liberty and Democratic Solidarity Act of 1996—Implications for NAFTA, 26 Ga. J. Int’l & Comp. L. 409 (1996); Antonella Troia, The Helms-Burton Controversy: An Examination of Arguments that the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 violates U.S. Obligations under NAFTA, 23 Brook. J. Int’l L. 603 (1997); Brian J. Welke, GATT and NAFTA v. The Helms-Burton Act: Has the United States Violated Multilateral Agreements? 4 Tulsa J. Comp. & Int’l L. 361 (1997); Olivia Q. Swaak-Goldman, Who Defines Members’ Security Interest in the WTO? 9 Leiden J. Int’l L. 361 (1996); David T. Shapiro, Be Careful What You Wish: U.S. Politics and the Future of the National Security Exception to the GATT, 31 Geo. Wash. J. Int’l L. & Econ. 97 (1997). But see Craig Giesze, Helms-Burton in Light of the Common Law and Civil Law Legal Traditions: Is Legal Analysis Alone Sufficient to Settle Controversies Arising under International Law on the Eve of the Second Summit of the Americas? 32 Int’l Law. 51 (1998).

7 See, e.g., Saturnino E. Lucio II, The Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996: A Critical Analysis, 27 Inter-Am. L. Rev. 340 (1996).

8 Canada: Foreign Extraterritorial Measures Act (FEMA), R.S.C., ch. F–29 (1985), as amended Oct. 9, 1996, 1996 S.C., ch. 28, reprinted in 36 ILM 111 (1997). See Fairley, supra note 3, at 173–81; Bucci, supra note 6, at 409–32; Solis, supra note 3, at 729–34; Susan J. Long, A Challenge to the Legality of Title III of Libertad and an International Response, 7 Ind. Int’l & Comp. L. Rev. 467, 492–94 (1997).

9 Council Regulation 2271/96 Protecting against the Effects of the Extra-territorial Application of Legislation Adopted by a Third Country (Nov. 22, 1996), 1996 O.J. (L 309) 1, reprinted in 36 ILM at 125. See Mike Pullen, The Helms-Burton Act: Compliance with International Law and the EU’s Proposed Counter-measures, 2 Int’l Trade L. & Reg. 159, 162–64 (1996); Jurgen Huber, The Helms-Burton Blocking Statute of the European Union, 20 Fordham Int’l L.J. 699, 701–16 (1997); Stern, supra note 5, at 992–97; Vaughan Lowe, Helms-Burton and EC Regulation 2271/96, 56 Cambridge L.J. 248 (1997); Vaughan Lowe, U.S. Extraterritorial Jurisdiction: The Helms-Burton and D’Amato Acts, 46 Int’l & Comp. L.Q. 378, 386–88 (1997); Henry Lesguillons, Helms-Burton and D’Amato Acts: Reactions of the European Union, 1997 Int’l Bus. L.J. 95; Solis, supra note 3, at 726–29, 734–36; Long, supra note 8, at 492, 494–95.

10 The Multilateral Agreement on Investment (MAI) is a text currently being negotiated in the OECD. For the latest version (Apr. 24, 1998), see (visited Dec. 30, 1998) <http://www.oecd.org/daf/cmis/mai/negtext.htm>. The aim of the MAI is to create a fair, transparent and predictable investment regime to complement and benefit the world trading system, see Preamble to the document.

11 Memorandum of Understanding concerning the U.S. Helms-Burton Act and the U.S. Iran and Libya Sanctions Act, Apr. 11, 1997, EU-U.S., reprinted in 36 ILM 529, 529–30 (1997), 91 AJIL 498 (1997) [hereinafter 1997 Understanding], See Kinka Gerke, The Transatlantic Rift over Cuba. The Damage is done, Int’l Spectator, Apr.-June 1997, at 27, 51–52. For an explanation of the 1997 Understanding from a U.S. point of view, see, e.g., Undersecretary of State for Economic, Agricultural and Business Affairs Stuart E. Eizenstat, Remarks before the North American Committee of the National Policy Association (Washington, D.C., Jan. 7, 1998) (visited Aug. 6, 1998) <http://www.state.gov.www.policy_remarks>. For a European perspective, see Statement by Sir Leon Brittan (Apr. 11, 1997) (visited Aug. 7, 1998) <http://www.eurunion.org/news/press/>.

12 The so-called 1998 Agreement consists of the Understanding with Respect to Disciplines for the Strengthening of Investment Protection, and its four annexes (May 18, 1998) [hereinafter 1998 Understanding]; the Understanding on Conflicting Requirements; and the Transatlantic Partnership on Political Cooperation. For the texts of the 1998 Understanding and the Understanding on Conflicting Requirements, see Delegation of the European Commission to the United States, Guide to the EU-U.S. Summit (London, May 18, 1998) (visited Aug. 3, 1998) <http://www.eurunion.org/news/uksummit.htm> [hereinafter Web site].

13 “Discipline” is a term used in international economic law to describe a set or system of rules or regulations. See Webster’s Encyclopaedic Unabridged Dictionary of the English Language 562 (1996).

14 Annex A deals with the setting up of a registry for the administration of property claims allegedly expropriated in contravention of international law. The registry will provide all relevant information concerning these claims for investors, claimants, the participants and other governments.

15 The specific disciplines of Annex B contain additional guidance for the execution of arbitral awards and judicial decisions involving expropriated property and state the conditions for the establishment of “a record of repeated expropriation in contravention of international law.”

16 Annex C defines “covered transactions,” “Government commercial assistance” and “Government support.”

17 The letter in Annex D states that some cases of Cuban expropriations were investigated by the EU Commission and that these cases appear to be contrary to international law.

18 Only the EU Unilateral Statement of May 18, 1998, has been released to the public, see Web site, supra note 12. However, according to the EU Unilateral Statement, a U.S. Non-Paper, dated May 17, 1998, exists, declaring the conditions on the U.S. side.

19 See supra note 12.

20 Helms-Burton Act, supra note 1, §3(2).

21 Id., §101(2).

22 Id., §104(a)(2)(B).

23 Helms-Burton Act, supra note 1, tit. II.

24 Id., §206.

25 Id., §302(a)(1).

26 Id., §4(13).

27 Id., §306(b).

28 Id., §401(a).

29 D’Amato Act, supra note 2, §2.

30 Id., §4(c). This section states:

The President may waive the application of section 5(a) [sanctions with respect to Iran] with respect to nationals of a country if—

(1) that country has agreed to undertake substantial measures, including economic sanctions, that will inhibit Iran’s efforts to carry out activities described in section 2 [supporting international terrorism and developing nuclear, chemical, biological and missile weapons programs] and information required by subsection (b)(1) has been included in a report submitted under subsection (b); and

(2) the President, at least 30 days before the waiver takes effect, notifies the appropriate congressional committees of his intention to exercise the waiver.

31 Id., §9(c)(1). This section provides as follows:

The President may waive the requirement in section 5 to impose a sanction or sanctions on a person described in section 5(c), and may waive the continued imposition of a sanction or sanctions under subsection (b) of this section, 30 days or more after the President determines and so reports to the appropriate congressional committees that it is important to the national interest of the United States to exercise such waiver authority.

32 Id., §6.

33 Id., §9(c)(1). See supra note 31.

34 D’Amato Act, supra note 2, §9(a)(2)(c).

35 Transatlantic Partnership on Political Cooperation, supra note 12, para. 2(h).1 (unofficial text supplied by the EU Commission).

36 EU Unilateral Statement, supra note 18.

37 1997 Understanding, supra note 11, 36 ILM at 529.

38 1998 Understanding, supra note 12, preamble (quoting 1997 Understanding, supra note 11, 36 ILM at 529).

39 1997 Understanding, supra note 11, 36 ILM at 529–30.

40 Id., 36 ILM at 530.

41 EU Unilateral Statement, supra note 18. Moreover, several of the modalities of the 1998 Understanding recall certain commitments made last year by the United States that have not yet materialized:

4. The U.S. Administration will continue intensive consultations with the Congress with a view to obtaining an amendment to Tide TV of the Libertad Act that would provide authority for a waiver that would apply, with respect to the EU, without a specific time limit, so long as this Understanding is in effect. Application of the disciplines and exercise of such waiver authority will be simultaneous.

5. The U.S. Administration is prepared, in the light of the EU’s developing efforts to promote democracy and human rights in Cuba, to take soundings of Congressional opinion and consult Congress with a view to obtaining a Title III waiver provision that would have no specific time limit, so long as these efforts continue and bearing in mind the duration of the presumption of Title III waiver in the April 1997 Understanding.

1998 Understanding, supra note 12, paras. 11(4), (5).

42 EU Unilateral Statement, supra note 18.

43 Capitol Hill Hearing with Defense Department Personnel 18, Fed. News Service, June 3, 1998 (Hearing of the House Committee on International Relations) <http://www.fednews.com> [hereinafter House Hearing].

44 EU Unilateral Statement, supra note 18, para. 8.

45 The participants employ the “Hull formula” for determining the “international standards on expropriation.” (See also pt. II supra.) In fact, the provision relating to expropriation and compensation in the MAI negotiating text of April 24, 1998, supra note 10, requires:

2.1 A Contracting Party shall not expropriate or nationalise directly or indirecdy an investment in its territory of an investor of another Contracting Party or take any measure or measures having equivalent effect (hereinafter referred to as “expropriation”) except:

a) for a purpose which is in the public interest,

b) on a non-discriminatory basis,

c) in accordance with due process of law, and

d) accompanied by payment of prompt, adequate and effective compensation in accordance with Article 2.2 to 2.5 below.

2.2 Compensation shall be paid without delay.

2.3 Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation occurred. The fair market value shall not reflect any change in value occurring because the expropriation had become publicly known earlier.

2.4 Compensation shall be fully realisable and freely transferable.

2.5 Compensation shall include interest at a commercial rate established on a market basis for the currency of payment from the date of expropriation until the date of actual payment.

46 1998 Understanding, supra note 12, para. I.A. For the participants a “covered transaction” means any future transaction related to property expropriated by a state other than a participant insofar as it gives rise to

(a) a direct ownership interest in such a property (e.g. purchase of expropriated property, obtaining mineral rights (to the extent that these were included in the expropriated property));

(b) control of all or part of an expropriated property (e.g. lease of the expropriated property or a management or development contract);

(c) the acquisition of effective control or a determining interest in an entity owning or controlling expropriated property under (a) or (b) insofar as the property constitutes a significant proporaon of the assets of that entity or the expropriated property is a fundamental element of the transaction.

Id., Ann. C.

47 See 1998 Understanding, supra note 12, para. II.4.

48 See id., para. I.C.

49 See id.; House Hearing, supra note 43, at 17.

50 House Hearing, supra note 43, at 12.

51 See General Agreement on Tariffs and Trade, Oct. 30, 1947, Art. XXIII, TIAS No. 1700, 55 UNTS 188; General Agreement on Trade in Services, Apr. 15, 1994, Art. XXIII, reprinted in 33 ILM 1167 (1994).

52 See Secretary of State Madeleine K. Albright, Statement on U.S.-EU Understanding on Expropriated Property (London, May 18, 1998) (visited Aug. 3, 1998) <http://www.secretary.state.gov/www/statements/index.html>; White House Fact Sheet on Expropriation Understanding 2 (London, May 18, 1998) (visited Aug. 3, 1998) <http://www.useu.be/summit>; House Hearing, supra note 43, at 12.