Exxon sues over seized Cuban assets

WASHINGTON — Six decades ago, the Cuban revolutionary Fidel Castro ordered federal inspectors to raid Standard Oil offices there, seizing maps and geological records in what was to become the first step in an expropriation that would go on to include a refinery, ports and more than 100 gas stations.

Now Exxon Mobil, Standard’s successor, is suing Cuba’s national oil company and a state-owned industrial conglomerate for approximately $280 million, filing a lawsuit in federal court in Washington on Thursday seeking compensation for the value of the assets plus almost six decades of interest.

The legal action followed an announcement by the White House last month that President Donald Trump would allow companies and individuals to go ahead and sue in U.S. federal court for assets seized during the Cuban Revolution, breaking with more than two decades of diplomatic norms.

Exxon, the first publicly traded company to file a claim , declined to comment on the reason for the litigation Friday. But in the lawsuit, Exxon claimed the assets seized six decades ago, “are still in use today even though (Exxon) has never received any compensation for this property.”

The Cuban embassy did not respond to a request for comment.

Ranging from hotels to ports to communications systems, the assets seized by Cuban forces beginning in the late 1950s have been valued at approximately $8 billion by the Justice Department’s Foreign Claims Settlement Commission. Congress passed a law allowing companies to sue for compensation in 1996, but European nations, concerned about how such a law might affect their trade relations with the Caribbean nation, threatened to file a claim against the United States at the World Trade Organization if the lawsuits went ahead.

The Maduro factor

Former presidents Bill Clinton, George W. Bush and Barack Obama all chose to suspend the provision of the law that allows companies to sue. But unhappy with Cuba’s decision to support Venezuelan President Nicolas Maduro amid growing international outrage over the regime’s human rights in Venezuela, Trump has decided to allow the litigation to move ahead.

“Havana continues to prop up Maduro and help him sustain the brutal suffering of the Venezuelan people,” National Security Adviser John Bolton said in a speech in Miami in April. “As President Trump has said, Maduro is quite simply a‘Cuban puppet.’ ”

Under Trump’s order, companies were allowed to begin filing suit for Cuban claims as of midnight Thursday. So far, Exxon is the only publicly traded company to do so, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, a business organization advocating for greater trade between the two nations.

“Exxon has said nothing. This is hugely surprising,” he said. “Exxon Mobil is going to be the accelerant for others to decide to sue. It gives a lot of companies political cover and commercial justification to move ahead on their claims.”

Political decision

Other companies with claims against Cuba include the hotel group Marriott International, retail giant Office Depot and oil major Chevron, which has a claim on a refinery seized by Cuba valued at $56.2 million. But it’s unclear whether they and other companies will follow Exxon Mobil.

Cuban companies do not recognize the jurisdiction of U.S. courts, making it difficult to recoup any damages assessed against them by U.S. courts, said Philip Brenner, a professor studying U.S.-Cuba relations at American University in Washington. He added that many U.S. companies have deals in place or plans to develop business in Cuba in the future and might be reluctant to anger politicians there through litigation.

“The reality is Exxon Mobil has written this off long ago, as have other large companies,” Brenner said. “It looks wholly like a political decision to support the Trump administration.”

So far, only two other lawsuits have been filed seeking compensation for assets seized by Cuba, both by individuals against the Miami-based cruise line Carnival, Kavulich said. They claimed Carnival operates on docks and other port facilities seized from their family by the Cuban government. james.osborne@chron.com twitter.com/osborneja