US Supreme Court Rules ExxonMobil Can Sue Cuban Companies Over Property Seizure

The Supreme Court's Ruling

The United States Supreme Court has ruled that ExxonMobil can sue Cuban state-owned companies in US courts over property on the island nation that was seized after Fidel Castro took power.

The 6-3 decision on Tuesday was the second in as many months in favour of US owners of Cuban property that was confiscated by the Communist government more than 65 years ago.

The Case Details

At issue was whether the 1996 law known as Helms-Burton removes the shield from lawsuits in US courts that typically cover foreign countries and state-owned businesses. The justices reversed a lower-court ruling that found that the Cuban state-owned companies are immune from lawsuits in US courts.

The court said a legal defence called foreign sovereign immunity, which generally prohibits US lawsuits against foreign governments and their agents, is not available in cases like the one ExxonMobil brought against Cuban state-owned firm Corporacion CIMEX.

The Financial Impact

ExxonMobil is seeking compensation for the confiscation of assets owned by subsidiaries of Standard Oil, ExxonMobil's predecessor, including more than 100 service stations and an oil refinery.

The US Foreign Claims Settlement Commission, an arm of the Department of Justice, said in 1969 that the value of ExxonMobil's property in Cuba is $71.6m, plus 6 percent annual interest beginning in 1960. That would be worth about $3bn today, plus treble damages.

In addition, the commission found that nearly 6,000 individuals and businesses held claims worth $1.9bn, before adding in interest or damages.

The Impact Analysis

The outcome in the two cases could be an additional lever for the administration of US President Donald Trump to exert pressure on Cuba, which is already being squeezed by a US oil embargo.

The Prediction

The court's decision may lead to increased litigation by US companies against Cuban state-owned entities over seized properties, potentially escalating tensions between the US and Cuba.