Unintended Consequences for Reversing Rapprochement: Is the US Government Liable for a Loss of Property in Cuba?
By: David Kolansky
In 2014, the United States announced a historic reopening of ties with Cuba. This effort at rapprochement included restoring diplomatic relations and easing regulatory restrictions to facilitate greater business, trade, travel, and communication between the two nations. However, the US government’s decision in 2017 to reverse course and reinstate the economic embargo against Cuba could result in significant legal and financial consequences for both US claimants who hold property in Cuba and the US government. One issue that arises is whether US corporations and individuals, who invested in property in Cuba following the Obama-era easing of restrictions, have a constitutional right to just compensation for their loss. Under the Fifth Amendment of the U.S. Constitution, if the government has expropriated one’s property, a claimant can allege a regulatory taking and may seek fair compensation from the government. In addition to direct takings of US property overseas, the Fifth Amendment may have applications to takings by foreign governments, and therefore there is the potential of a court holding the United States liable for a foreign taking of US property in Cuba. Finally, if a court concludes that a US claimant has not demonstrated evidence of a foreign taking, there remain several alternatives for US claimants seeking compensation for their property that has been seized, frozen, or made inaccessible following the US regulatory shift preventing trade and travel with Cuba.