Cuba’s in the Air: The Legal Challenges to Loaning Art from Cuba due to Judgments under the State Sponsored Terrorism Exception

By Mandy Estinville*

Cuba and the United States are closer now than they have been for 50 years. In 2015, the United States officially removed Cuba from its list of State Sponsors of Terrorism. Moreover, the Obama Administration amended the Office of Foreign Assets Control (OFAC) regulations to allow for greater freedom in travel and remittances, and to permit U.S. telecommunications, media, construction, and agricultural companies to establish a physical presence in Cuba. Most recently, the United States loosened certain sanctions on Cuba, including lifting the $100 limit on bringing Cuban rum and cigars into the United States. Although future of the normalization process between the two countries is uncertain under the Trump administration, a continuation of diplomatic relations with Cuba will promote cultural exchanges, such as selling and loaning art to museums and galleries. In fact, The Art Newspaper reports that the “market for Cuban art is booming; 20th-century Modernists such as Wifredo Lam, Amelia Pelaez, and Rene Portocarrero are particularly popular.” 

Despite improved relations between the two countries, there remain many unresolved issues that may affect Cuba’s willingness to export art to the U.S. In particular, Cuba owes about $7 billion dollars in property claims to American citizens and corporations whose property in Cuba was seized by the Cuban government during the Fidel Castro administration. In addition to those claims, Cuba is responsible for default judgments totaling over $3 billion dollars for purported acts of terrorism against U.S. citizens. Until paid, judgment holders of terrorist-related claims may attempt to seize any Cuban governmental owned art that enters the U.S. for a museum exhibition.

The State Sponsor Terrorism Exception

The Foreign Sovereign Immunities Act (“FSIA”) provides that  foreign states are immune from the jurisdiction of state and federal courts. However, Congress has created certain terrorism-related exceptions to the general immunity that foreign sovereigns enjoy within the U.S. Namely, the State Sponsor Terrorism exception (“SST”) allows courts to exercise jurisdiction over claims against foreign state sponsors of terrorism that cause personal injury or death to the U.S. citizens.

Cuba was originally placed on the State Sponsors of Terrorism list in 1982 for reportedly sponsoring communist groups in other countries. After Congress enacted the State Sponsor Terrorism exception to the FSIA, many plaintiffs filed human rights lawsuits against Cuba. Consequently, in many cases, courts found Cuba liable for acts of terrorism against U.S. citizens. These cases were ex parte proceedings, which resulted in default judgments since Cuba failed to appear. In Alejandre v. Republic of Cuba, the Florida Southern District court found jurisdiction under the SST exception and held Cuba liable for the Cuban Air Force’s shoot-down of two U.S. registered civilian planes in 1996, killing four people, three of them U.S. citizens. Each plaintiff, in that case, was awarded between $16 and $17.5 million dollars in compensatory damages as well as $137.7 million dollars in punitive damages.  The Florida Circuit court  also found jurisdiction under SST exception in Hausler v. Republic of Cuba and held Cuba liable for the execution of Bobby Fuller in 1960. Mr. Fuller’s family was awarded $65 million dollars in economic losses, $35 million dollars for non-economic compensatory damages, and—notably—$300 million in punitive damages. Lastly, the court in Villoldo v. Ruz found jurisdiction under the SST exception and held Cuba liable for its role in the imprisonment and torture of Gustavo Villoldo following the Cuban Revolution. As a result, the court awarded the plaintiffs a $2.79 billion dollars judgment against the Republic of Cuba and other Cuban parties.

Enforcing Judgments Against Cuba

Although the plaintiffs in Villoldo, Hausler and other cases won sizable judgments against Cuba, the Cuban government failed to make any payments. Challenges to obtaining payment for these judgments remain since Cuba has no attachable property in the United States. Consequently, the plaintiff’s only current viable option is to go after the estimated $243.2 million dollars worth of assets previously blocked by the Kennedy administration following the Cuban Missile Crisis. These assets were originally blocked, or “frozen,” in order to prevent Cuba from using the United States banking system to transfer money to other Latin countries for use by local communist groups.

Some plaintiffs have been successful in attaching their judgment to Cuban blocked assets under section 201(A) of Terrorism Risk Insurance Act. This Act allows for the liquidation of blocked or frozen assets of a foreign state designated as a state sponsor of terrorism, or its agency or instrumentality, to satisfy a judgment against the foreign state for a claim based on SST. In fact, plaintiffs in Weininger v. Castro collected over $90 million dollars on their terrorist-related judgments against Cuba by liquidating frozen bank accounts owned by Cuban telecommunications companies. Because Cuban assets in the United States  are sparse, plaintiffs are forced to be creative in enforcing their judgments. For instance, a plaintiff unsuccessfully sought to have a $63.6 million judgment paid out of BNP’s forfeiture of funds for its criminal conduct of processing and transferring billions of U.S. dollars to and from entities in Sudan, Iran, and Cuba.

Judgments against Cuba under the State Sponsored Terrorism Act may attach to Art loaned from Cuba

A potential unintended consequence of the normalization between Cuba and the U.S. is that it may provide plaintiffs with another viable option to collect on their judgments against Cuba. Section 1610 (a) of FSIA provides limited exceptions to immunity by allowing claimants to attach their judgments to foreign state’s property in the U.S. under certain circumstances.21 Under § 1610 (a) (7), claimants with judgments related to the State Sponsor Terrorism exception can attach that judgment to any Cuban governmental property. This attachment can occur regardless of whether the property is or was involved with the claim so long as the property is in the U.S. in connection to a commercial activity.

Typically, museums can apply to protect internationally loaned artworks from seizure under the Immunity from Seizure Act (“IFSA”). This protection is not automatic, once a museum submits its application to the State Department, the President or his designee must determine whether the object is of cultural significance and whether the temporary exhibition is in the national interest.  While IFSA may protect Cuban loaned art from attachment for judgments relating to SST claims, it is unclear if the State Department will grant this immunity for Cuban loaned art under the Trump administration since the future of the normalization process between the U.S. and Cuba is uncertain. Without an approved IFSA application, it is likely that the risk of possible attachment for judgments obtained against Cuba will curtail the chances of Cuba exporting its art to the U.S. for temporary exhibits. Relatedly, Cuba recently failed to loan art to the Bronx Museum for the “Wild Noise” exhibit despite a ruling from the Obama administration granting the pieces protection from seizure. Instead, the museum exhibited pieces from private collectors and galleries. Cuba’s reluctance to loan art to museums in the U.S. may be attributed to the diplomatic uncertainties under the Trump administration.

In December 2016, Congress enacted the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act ( the “Immunity Clarification Act””), which amended the Foreign Sovereign Immunity Act in response to the Malewicz v. City of Amsterdam finding that temporary art loans for exhibits are deemed a commercial activity. This new law clarifies that the act of exporting art that has been granted immunity from seizure under IFSA for a temporary exhibit in the U.S. is not considered a commercial activity and is, therefore, immune from U.S litigation. Despite the potential for this new amendment to increase international art exchanges, Cuba may still be vulnerable to expropriation claims if it exports art that was confiscated during Fidel Castro regime. One of the exceptions carved out in the Immunity Clarification Act disallows immunity for works “taken in connection with the acts of a foreign government as part of a systematic campaign of coercive confiscation or misappropriation of works from members of a targeted and vulnerable group.” Cuba may fall under that exception since it had systematically seized all Cuban property including property belonging to American individuals and corporations without compensation after the 1959 revolution led by Castro.

The ongoing disputes and outstanding claims and judgments between Cuba and the United States are not going to disappear. It has been reported that in addition to the  claims the U.S. has against Cuba, Cuba asserts that the United States also owes Cuba billions in reparations and for the economic damage caused by the embargo as well as damages resulting from events such as the Bay of Pigs invasion. Due to the precarious nature of Cuba’s relationship with the U.S, it is imperative that Cuba resolves its outstanding judgments in the U.S. before it risks loaning any of its art to a U.S museum.

From the Editors:

Cuba CollageOn March 22, 2017, Cardozo Law School’s Art Law Society and the Fashion, Arts, Media, and Entertainment Law Center (FAME) hosted a symposium, about Cuban art and the art market called “Not Their Art! Demystifying the Cuban Plunder and Nationalization of Art, Hoping for Restitution, and Predicting the Future of the Embargo and Its Sanctions.” Abigail McEwen, a specialist in Cuban and Porto Rican art of the twenty-century, moderated the event. There were three speakers at the event: Monica Dugot, the current International Director of Restitution at Christie’s, Carmen Melian, the former Director and Senior Specialist in Latin American Art at Sotheby’s New York for 15 years, and Carl Micarelli, a New York lawyer that advises clients on compliance with with regulations from the U.S. Department of Treasury’s Office of Foreign Assets Control.

Presentations at Cardozo centered around how artworks that were confiscated (or nationalized) by the Cuban government following the Cuban Revolution and the complicated relationship between Cuba and the United States have caused long-term problems still affecting the art market. For example, Dugot spoke about how Christie’s strives to make restitution of artwork for families that have had artwork confiscated an easy process for any valid claim that arises and is supported by sufficient documentation. Melian provided many examples of how artwork has come to market outside Cuba, including one involving a Cuban priest who sold artworks that were left with the church in an effort to provide funds for the parish, other examples centered around how many artist such as Wilfredo Lam who fled Cuba left many works behind, and how many forgeries permeate the art market as artworks are being copied from photographs with Cuban art in the background. Questions of authenticity and title have presented significant problems for provenance research and have complicated even the basic determination of whether artworks were privately or state-owned property. Micarelli informed the audience about the various U.S. laws and embargos  imposed vis-a-vis Cuba that affect the art market; he warned the audience about the uncertainty of U.S. policy in relation to Cuba.

The market for Cuban artwork is said to be growing, but the sentiment of the panel was to be cautious when a buyer is going to purchase artwork that is from Cuba because of so much uncertainty surrounds ownership of the artwork that comes from Cuba.

Select Sources and Suggested Reading

  1. Julie Hirshchfield Davis, U.S. Removes Cuba From State-Sponsored Terrorism List, New York Times (May 29, 2015) https://www.nytimes.com/2015/05/30/us/us-removes-cuba-from-state-terrorism-list.html.
  2. Frequently Asked Questions Related to Cuba https://www.treasury.gov/resource-center/sanctions/Programs/Documents/cuba_faqs_ne.w.pdf
  3. Julie Hirshchfield Davis, Obama, Cementing New Ties With Cuba, Lifts Limits on Cigars and Rum, New York Times (October 14, 2016)  http://www.nytimes.com/2016/10/15/world/americas/obama-cuba-trade-embargo.html?_r=0.
  4. David D’Arcy, Cuba refuses to return seized art despite thaw in relations with US, The Art Newspaper (Feb. 23, 2015) http://old.theartnewspaper.com/articles/Cuba-refuses-to-return-seized-art-despite-thaw-in-relations-with-US/36940
  5. Mari-Claudia Jimenez, “RESTITUTING LOOTED CUBAN ART,” ASCA Cuba in Transition (2009), available at http://www.ascecuba.org/c/wp-content/uploads/2014/09/v19-jimenez.pdf
  6. 28 U.S.C. § 1605
  7. 28 U.S.C. § 1605A
  8. CRS Report for Congress: Cuba and the State Sponsors of Terrorism List https://www.fas.org/sgp/crs/row/RL32251.pdf
  9. 996 F. Supp. 1239 (S.D. Fla. 1997).
  10. Hausler v. Republic of Cuba, No. 02-12475, 2007 WL 6870681 (Fla. Cir. Ct.
    Jan. 19, 2007).
  11. Villoldo v. Ruz, No. 08-14505 CA-25, 2009 WL 1832603, at *2 (Fla. Cir. Ct. May
    29, 2009).
  12. Can Creditors enforce Terrorism Judgment against Cuba? https://www.fas.org/sgp/crs/terror/creditors.pdf
  13. Terrorist Assets Report for Calendar Year 2015 https://www.treasury.gov/resource-center/sanctions/Programs/Documents/tar2015.pdf
  14. Cuban Assets in U.S Frozen by Treasury, Chicago Tribune (July 9, 1963) http://archives.chicagotribune.com/1963/07/09/page/1/article/cuban-assets-in-u-s-frozen-by-treasury
  15. Terrorism Risk Insurance Act of 2002, Pub. L. No. 107-297, § 201, 116 Stat. 2322.
  16. 462 F. Supp.2d 457, 98-503 (S.D.N.Y. 2006)
  17. United States v. BNP Paribas S.A., 14 Cr. 460 (LGS) (S.D.N.Y. Apr. 30, 2015)
  18. 28 U.S.C. § 1610(a)
  19. Immunity from Seizure Act: 22 U.S.C § 2459 https://www.gpo.gov/fdsys/pkg/USCODE-2011-title22/html/USCODE-2011-title22-chap33-sec2459.htm
  20. Randy Kennedy, Bronx Museum Won’t Get Loan of Art From Cuba, New York Times (Jan. 23, 2017) https://www.nytimes.com/2017/01/23/arts/design/bronx-museum-of-the-arts-cuba-declines-to-send-art.html
  21. Malewicz v. City of Amsterdam, 517 F. Supp. 2d 322; H.R. 6477
  22. Foreign Cultural Exchange Jurisdictional Immunity Clarification Act: H.R. 6477 https://www.congress.gov/bill/114th-congress/house-bill/6477
  23.  Frances Robles, Cuba Seizures Now Present Opportunities, New York Times (Dec. 21, 2014) https://www.nytimes.com/2014/12/22/world/cuba-seizures-now-present-opportunities.html.
  24. Senior State Department Official on Cuba Claims Discussions https://2009-2017.state.gov/r/pa/prs/ps/2016/07/260666.htm

About the Author: Mandy Estinville is an attorney based in New York, NY. She can be reached at mandyestinville@gmail.com.

Disclaimer: This article is for educational purposes only and is not meant to provide legal advice. Any views or opinions made in the linked article are the authors alone. Readers are not meant to act or rely on the information in this article without attorney consultation.

 

Cuba on My Mind: Legal Implications of Accessing Cuban Art

by Lesley Sotolongo, Esq.Screen Shot 2015-01-09 at 9.10.55 AM

Following the rise to power of Fidel Castro in 1959, a declining economy made preserving Cuba’s cultural property and accessing contemporary artworks increasingly difficult. Because of the Communist regime, the U.S. embargo was ratified in 1962 causing Cuba’s cultural heritage to suffer and art works to be illegally exported into the U.S.  Furthermore, the embargo prohibited U.S. museums from exchanging information relating to its conservation efforts with the Cuban government. Despite the high demand for Cuban fine art worldwide, contemporary Cuban painters were not allowed to sell their paintings to the U.S. or to work with auction houses such as Christie’s or Sotheby’s. In fact, Cuban artists have basically no freedom of speech rights evidenced by recent arrests of more than a dozen artists and activists prior to their participation in an open-mic performance planned in Havana’s Plaza de la Revolucion. (Read about Cuban activists arrests in December 2014). Thus, access to Cuban artworks in the U.S. has been significantly curtailed due to the bureaucratic obstacles for both Cubans and Americans. Recently, President Obama has taken executive action to restore diplomatic ties with Cuba and has called on Congress to formally overturn its sanctions, effectively ending the 55 year embargo. Until Congress takes further action the embargo is still in effect.

Wilfredo Lam Exhibit (MA)Still, there have been some Cuban art exhibitions in the U.S. Last year, the McMullen Museum of Art at Boston College organized an exhibit titled “Wilfredo Lam: Imagining New Worlds” with works by this important Cuban artist contextualized as an international figure in 20th-century art history. Furthermore, Abel Barroso, Jorge López Pardo, J. Roberto Diago, Meira Marrero and José Toirac are the headliners of “Permutations: Contemporary Cuban Art at Pan American Art Projects” in Miami, FL. The show reflects on the various strategies that the artists use to comment on social and political realities in Cuba as well as in a broader global context.

In fact, Cuban pieces are increasingly sought out by collectors, fueling illegal exports of their works from Cuba. According to David D’Arcy writing for The Art Newspaper, a missing Havana painting discovered in a Miami art gallery last year increased the toll of works stolen from Cuba’s National Museum of Fine Art in Havana to 95 works. The theft of Eduardo Abela’s painting, Carnaval Infantil, was originally housed at the Museum of Fine Arts in Havana. Cuban officials from the National Council of Cultural Heritage stated that the works were cut directly from their frames while in storage, making it difficult to detect the theft. The statement made by the Cuban government indicated a willingness to work with proper authorities inside or outside of Cuba in order to alert museums, galleries, auction houses and others of similar thefts. This case is significant because art theft is relatively rare in Cuba given that museums are tightly guarded and artwork is usually inspected by the Cuban military officers before it leaves the country. The Cuban government has become increasingly aware of this problem and is anxious to find a solution to reclaim its valuable works. However, Cuba’s suffering economy and current laws in the U.S. make this a difficult task.

One legal exception makes it feasible for artworks to be exported from Cuba. Marco A. Gonzalez, Jr., Esq., a partner at Nicoll, Davis, & Spinella LLP, sat down with Center for Art Law to discuss some relevant U.S. law and the ongoing effects of the embargo. Gonzalez explained a little-known exception to the U.S. embargo for cultural assets. Under the Cuban Assets Control Regulations § 515.206(a) information and informational materials are exempt types of transactions stating in part,

“the importation from any country and the exportation to any country of information or informational materials as defined in § 515.332, whether commercial or otherwise, regardless of format or medium of transmission, are exempt from the prohibitions and regulations of this part except for payments owed to Cuba for telecommunications services between Cuba and the United States.”  31 C.F.R. § 515.206(a) (West 2013).

Under § 515.332, the term information and informational materials includes, (1) Publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, news wire feeds, and other information and informational articles. Specifically, artworks must be classified under Chapter subheading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the United States. Unlike cigars or rum, which are considered commercial products, the U.S. government classifies Cuban artworks as cultural assets, and thus it is legal for Americans to bring artworks that are included under this law into the U.S. However, this is not always a great idea because the crime of counterfeiting of works and falsifying authentication has become a problem in Cuba. Thus, travelers should be aware of the possibility that they might not be getting what they bargained for.

Since 2003, traveling to Cuba from the U.S. has been highly restricted and now President Obama wishes to ease those restrictions. Previously, only religious, educational, and cultural groups could legally travel to Cuba, and with specific permission from the U.S. State Department. Recently, there were several attempts in the 112th Congress aimed at rolling back the Obama Administration’s actions easing restrictions on travel and remittances, but none of these were approved. Several legislative initiatives were also introduced that would have further eased or lifted such restrictions altogether, but no action was taken on these measures.

Nevertheless, Americans still cannot simply book a flight and head to Cuba. In order to travel to Cuba the traveler must book the trip with a Cuban travel agency that has an official license from the U.S. State Department. While the tour may include stops at museums or historic sites, purely recreational activities such as visiting the gorgeous beaches are prohibited from tour itineraries. Thus, travel and bringing home artwork is possible with the exercise of caution.

Whether exported illegally or not, the fact is that Cuban art remains coveted despite the trade embargo that might very well be overturned in the near future. Thus, the art world awaits the feasibility of obtaining works created by Cuban artists not only to increase accessibility to Cuban cultural production in the U.S., but also to allow for repatriation of many stolen and misplaced works.

Sources:

Cuban Assets Control Regulations, § 515.

D’Arcy, David, “Stolen paintings from Havana turn up in Miami,” The ArtNewspaper (Mar. 2, 2014 ) available at http://goo.gl/R4wM73

About the Author: Lesley Sotolongo is an intellectual property attorney. She may be reached at Lesley.Sotolongo@law.cardozo.yu.edu.

Disclaimer: This article is intended as general information, not legal advice, and is no substitute for seeking representation.