Excerpts from remarks by David W. Wallace at the Institute for U.S.
Cuba Relations Policy Forum, July 23, 1998, U.S. Capitol
The Joint Corporate Committee on Cuban Claims has always
been ready to challenge any action that would unfairly diminish
the rights of U.S. certified claimants with claims against
the government of Cuba for property that was taken from them
by force of arms and without payment of adequate compensation.
I should point out that the U.S. courts already have ruled
that such taking were in violation of international law for
multiple reasons, and consequently were totally void.
And now, today, we face the May 18th "Understanding"
between the United States and the European Union which, under
the guise of "strengthening international protection
of property rights," appears to do so at great and unfair
cost to U.S. certified claim holders. We have several fundamental
concerns and questions about the "Understanding"
in terms of how it will work and how it will affect the property
rights of U.S. certified claimants:
· It appears that a fundamental flaw in the agreement
is that the principal deterrent provided - the denial of government
commercial support for investment in unlawfully confiscated
properties - is without teeth and will, as a practical matter,
do little to "inhibit and deter" future foreign
investment in these properties. First of all, in order for
us to assess the efficacy of this measure as mild deterrent,
it would be helpful if we had some information as to what
governmental assistance, if any, has been provided to firms
that currently are investing in Cuba. But irrespective of
whatever form of governmental assistance may have been provided
previously, if these companies are willing to take the entrepreneurial
risk and "go it alone" without any governmental
assistance, what is there in the "Understanding"
to stop them beyond the mere exhortations of their governments?
Isn't it the case that pursuant to the "Understanding",
European companies could continue to operate unimpeded in
Cuba so long as any new investments do not receive government
· Apart from the withholding of various governmental
benefits supporting investment in unlawfully confiscated property,
what enforcement mechanisms, if any, are provided in the "Understanding"
to restrict investment in these properties in Cuba?
· The unkindest cut of all is that the accord does
not affect existing investments in unlawfully confiscated
properties. Stolen property is to be legalized and blessed
by the May 18th accord. This element of the "Understanding"
is of profound concern to the certified claimants in that
it appears to represent a marked retreat from the strongly
worded cables issued by our State Department since 1991 underscoring
the fact that transfer of these expropriated properties to
third parties would seriously complicate any restitutionary
remedies. If current foreign investments in expropriated properties
are essentially held harmless by this "Understanding,"
restitutionary remedies that ultimately may prove critical
in resolving many of these claims may be effectively precluded.
How can this provision be said to be in the interest of the
· We also note that the purchase of goods or services
produced on expropriated property is exempted from the definition
of "covered transaction". The right to sell products
or services produced with confiscated property is the most
important attribute of ownership of property. Indeed, in many
cases, the product is part of the property itself. So how
is this provision in the interest of the certified claimants?
Precisely how does this provision operate to deter foreign
investment in these properties? Isn't this a major loophole
that would permit significant foreign transactions in expropriated
property? What is the rationale underlying this exemption?
· A USIA fact sheet notes that the "Understanding"
contains "special measures to deal with countries that
have 'an established record of repeated expropriation in contravention
of international law,' of which Cuba is a notable example."
Precisely what are these "special measures?" According
to press reports, the U.S. sought to subject Cuba, and other
countries with a record of expropriation, to a stricter and
enforceable set of disciplines under the accord. Was the U.S.
position ultimately adopted? Would it not be in our common
foreign policy interest for the U.S. and EU to demonstrate
their strong commitment to upholding important international
law principles through the adoption of stricter disciplines
for such countries?
· The "Understanding" also commits the U.S.
and the EU to other measures, such as encouraging the resolution
of claims. Specifically, how does the U.S intend to meet this
objective, particularly in light of the concerns we note about
the possible impact of this "Understanding" on restitutionary
· The "Understanding" creates a "registry
of claims alleging expropriation in contravention of international
law." How will these alleged claims be treated in comparison
to a claim that has been analyzed, adjudicated and certified
in accordance with the strict rules and precise standards
of the Foreign Claims Settlement Commission? What documentation
will be required or will be available after 38 years? Will
U.S. certified claimants feel obliged to register to protect
their claims? How can these claims possible be comparable
in any way? Isn't giving even limited recognition of alleged
Cuban-American claims via this registry contrary to well established
international law principles? Won't establishment of this
registry further complicate resolution of validated, certified
In conclusion, I think the claimants' fundamental concerns
with this "Understanding" can best be summarized
as follows: we ultimately must depend upon our government
to vigorously support and protect the rights of U.S. property
claimants, and we expect our government to be consistent in
upholding these rights in its statement and actions. But this
"Understanding," in our view, seems to be inconsistent
with and undermines the strong position our government has
taken in the past in the cables it has issued on this subject.
Contrary to those clear and forceful statements on behalf
of the rights of certified claimants, this accord would seem
to impair the important and well recognized remedy of restitution
by, in effect, enfranchising existing "traffickers"
in these expropriated properties. Moreover, while we appreciate
our government's efforts in obtaining EU recognition of U.S.
certified claims, we are concerned about the consequences
of accepting an accord that, in effect, grandfathers existing
investment and permits further investment in unlawfully confiscated
property so long as no governmental assistance is provided.
I would hope that our government, by the May 18th accord,
has not abdicated its responsibility to certified claimants
1. Agreeing to an accord that has no real teeth.
2. Agreeing to a grandfathering provision that gives existing
traffickers a perpetual free ride with stolen U.S. properties.
3. Agreeing to the establishment of a claim registry run
by foreign governments that undermines the careful certification
process of the U.S. Foreign Claims Settlement Commission.
I would hope that our State Department would join our Committee
in seeking to strengthen and protect international property
rights since it is in the best interests of everyone to see
this done. We believe that the May 18th accord is a retreat
from this viewpoint.
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