EC Now Has To Decide What It Perhaps Doesn’t Want To Decide- Iberostar Of Spain Libertad Act Lawsuit Is First To Report U.S. Court Recognizing EC’s Interest In Title III Lawsuits
/EC Now Has To Decide What It Perhaps Doesn’t Want To Decide- Iberostar Of Spain Libertad Act Lawsuit Is First To Report U.S. Court Recognizing EC’s Interest In Title III Lawsuits
For the first time, a Libertad Act lawsuit has a transnational dimension because of a decision by a judge of a United States District Court to recognize the appropriateness of international comity- the principle that United States courts should recognize a foreign country’s sovereign interests in matters before it.
Mr. Hermenegildo, Altozano, attorney with Madrid, Spain-based Bird & Bird, informed the court that “On April 15, 2020, I filed an Application for Authorisation under Article 5 paragraph 2 of Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom, on behalf of the Spanish company Iberostar Hoteles y Apartamentos S.L.U. ("Iberostar").”
What can the European Commission (EC) do? What should the EC do? The potential international relations issues relating to the Libertad Act that were modeled for outcomes in 1996 are now a reality in 2020. Having said it will consider “all options” what will it do?
EC may be in a bind. If EC rules against Iberostar Hoteles, and the United States District Court enters a default judgment against the company, the result will portend substantial long-term liability for the company and require extensive and long running global efforts to protect company assets from a court judgement.
Potentially a delicate challenge for H.E. Josep Borrell, High Representative of the European Union Minister for Foreign Affairs and Security Policy, who was Minister of Foreign Affairs, European Union and Cooperation of the Kingdom of Spain. Iberostar Hoteles is headquartered in Palma, Spain.
MARIA DOLORES CANTO MARTI, AS PERSONAL REPRESENTATIVE OF THE ESTATES OF DOLORES MARTI MERCADE AND FERNANDO CANTO BORY V. IBEROSTAR HOTELES Y APARTAMENTOS SL [1:20-cv-20078; Southern Florida District]
Zumpano Patricios P.A. (plaintiff)
Bird & Bird (defendant)
Holland & Knight (defendant)
LINK To Defendant’s Motion To Stay Proceedings
LINK To Exhibit A- EC Council Regulations
LINK To Exhibit B- Declaration Of Hermenegildo Altozano (Bird & Bird)
LINK To Court Order Granting Iberostar’s Motion To Stay
LINK To Libertad Act Lawsuit Filing Statistics
LINK To Post: https://www.cubatrade.org/blog/2020/4/15/iberostar-hoteles-of-spain-sued-by-former-property-owners-using-libertad-act
NOTE: Iberostar Hoteles has two properties in the United States: 70 Park Avenue in New York City and Berkeley in Miami Beach, Florida. Iberostar Hoteles manages eighteen properties in the Republic of Cuba.
Excerpts From Defendant’s Motion To Stay Proceedings
1. Iberostar is caught between the conflicting demands of two legal systems: that of the United States and that of the European Union (“EU”). On the one hand, Iberostar must respond to Plaintiff’s Complaint by May 8, 2020. On the other hand, the European Commission requires an EU-based company to obtain authorization before it can file a response to any lawsuit brought under the Cuban Liberty and Democratic Solidarity (Libertad) Act (the “Helms-Burton Act” or the “Act”). This requirement arises from the EU blocking statute enacted to counteract the effects of the Helm-Burton Act, expressly prohibiting a Spanish entity such as Iberostar1 from complying “whether directly or through a subsidiary or other intermediary person, actively or by deliberate omission, with any requirement or prohibition, including requests of foreign courts, based on or resulting, directly or indirectly, from the laws specified in the Annex [which expressly includes the Act] or from actions based thereon or resulting therefrom.” See Council Regulation 2271/96, Protecting Against the Effects of the Extra-Territorial Application of Legislation Adopted by a Third Country, and Actions Based Thereon or Resulting Therefrom, 1996 O.J. (L 309) 1 (EC) (the “Council Regulation 2271/96”) attached as Exhibit A.
2. On April 15, 2020, Iberostar filed an application for authorization from the European Commission to respond to the Complaint in this action. See Exhibit B.2 Iberostar has also requested the expedited consideration of its application to the European Commission. Iberostar does not know how long it will take to obtain a response to its application given that the applicable European legislation establishes no specific deadline for the European Commission to answer the request. Iberostar will be prepared to respond promptly after it receives a response on or after May 8, 2020. To avoid a protracted delay, this request for a stay is limited to no more than 75 days.
3. Should Iberostar ignore the European Commission’s mandate and actively participate in this action without the Commission’s authorization, each breach would be subject to a penalty of up to EUR 600,000 by the Spanish government pursuant to Spanish Law 27/1998, of July 13, on Sanctions Applicable to Infringements of the Rules Established in Council Regulation 2271/96 (“Law 27/1998”). See Law 27/1998, art. 5. The potential for sanctions is elevated given the Spanish government’s overt repudiation of Title III of the Act.
4. However, if Iberostar fails to timely respond to the Complaint, it risks the possibility of not only waiving certain Rule 12(b) defenses, but also the potential entry of a default judgment pursuant to Fed. R. Civ. P. 55.
5. Therefore, as it awaits a response from the European Commission on its application, Iberostar respectfully requests a brief stay of proceedings based on the principle of international comity that counsels recognition and accommodation by U.S. courts of a foreign jurisdiction’s interests in a matter involving its nationals. A temporary stay will also conserve the parties’ and the Court’s scarce judicial resources. If the motion is granted, Iberostar will provide status reports on the progress of its application every thirty (30) days, or as otherwise directed by the Court. Iberostar further warrants that it will continue to press for an expeditious disposition of its pending application before the European Commission. To that end, Iberostar has already asked the Secretariat of State for Commerce of the Kingdom of Spain to bring to the attention of the European Commission the need to timely address the request for authorization filed by Iberostar.
Defendant has conferred with Plaintiff’s counsel about the request to stay the proceedings in accordance with Local Rule 7.1(a)(3), and Plaintiff’s counsel does not agree to the requested relief.
Excerpt From Judge’s Order Granting Iberostar’s Motion To Stay
This requirement comes from a European Union blocking statute enacted to counteract the effects of the Helms-Burton Act, and Iberostar faces EUR 600,000 in sanctions for failure to first obtain authorization. (ECF No. 16 at ¶ 3.) Iberostar’s request for authorization has already been filed and is currently pending before the European Commission. (Id. at ¶ 18.) In the interest of international comity, this Court has determined that it is appropriate to stay this case pending the Iberostar’s request for authorization from the European Commission.
The Court grants Iberostar’s motion for a stay (ECF No. 16), and the case is stayed until the European Union grants Iberostar’s request for authorization. Iberostar shall submit status reports on its request for authorization every 30 days. In the interim, the Court directs the Clerk to administratively close this case.
