Edwin D. Williamson*
The recent agreement between the United States and the European
Union designed to settle their differences over the Helms-Burton
Act offers a great opportunity to negotiate a treaty that would
confirm internationally recognized rules protecting property rights.
Last April, the U.S. and the EU undertook to "develop agreed
disciplines and principles for the strengthening of investment protection"
which "inhibit and deter the future acquisition" of property
expropriated in violation of international legal principles. The
parties set a deadline of Oct. 15, 1997. The U.S. agreed to continue
its suspension of Title III of Helms-Burton, which permits U.S.
nationals to bring claims in U.S. courts against anyone "trafficking"
in property confiscated by the Cuban government, and to seek from
Congress a legislative waiver of Title IV of Helms-Burton, which
requires the U.S. to deny visas to "traffickers." The
EU agreed to suspend its Helms-Burton challenge in the World Trade
The U.S.-EU agreement provides a splendid opportunity to establish,
clearly and conclusively, in the form of a binding international
agreement among the major industrialized countries of the world,
international legal rules recognizing and protecting property rights.
This is sorely needed, because the international recognition of
property rights lags behind the recognition of other human rights.
By concluding an agreement confirming property rights, not only
would future expropriations in violation of international law be
discouraged; a framework would be established for working out the
existing claims involving Cuban property. Politically such an agreement
is necessary. President Clinton must go back to Congress to get
a waiver of Title IV. In addition, continued suspension of Title
III will cause, at a minimum, an attempt in Congress to limit the
president's suspension authority. Congress is unlikely to accept
a deal with the EU that falls short of establishing binding rules
protecting property rights and providing some promise of settling
(or at least recognizing) the claims by U.S. citizens, including
those who were Cuban nationals at the time their property was confiscated
by the Cuban government.
Reaching an agreement establishing binding international rules
regarding property rights should be quite easy. Such an agreement
would prohibit expropriation of property unless done for a public
purpose, without discrimination and with "prompt, adequate
and effective" compensation. Parties to the agreement ("contracting
parties"), as well as their nationals, would be permitted to
institute arbitration proceedings against other contracting parties
who violated the rules on expropriation. There is nothing unusual
about these principles in the context of investment treaties. They
are found in the North American Free Trade Agreement (NAFTA) and
most bilateral investment treaties, and they are included in the
draft multilateral agreement on investment (MAI) currently being
negotiated in the Organization for Economic Cooperation and Development.
To provide additional deterrence to those who would seek to gain
by the expropriation of the property of others, an international
registry would be established for the registration of claims (whether
by contracting parties of non-contracting parties) without meeting
the standards prescribed in the agreement. Claims could be registered
by a contracting party or by a national of a contracting party and
would have to be registered within, say, two years of the alleged
expropriation. The appropriateness of the registration of any claim
could be contested in an arbitration proceeding brought by any contracting
party or the national of a contracting party. A national of a contracting
party would be able to institute arbitration proceedings for the
uncompensated value of the property placed on the claims registry
against nationals of other contracting parties who acquire the property.
Such a claim could not be asserted by a national of a contracting
party with respect to property expropriated by that contracting
party, unless that contracting party had failed to provide the claimant
with an effective domestic remedy. Such a claim could be asserted
with respect to property wrongfully expropriated by a non-contracting
party, notwithstanding the fact that the claimant was a national
of the expropriating state at the time of the expropriation.
The treaty would confirm that everyone enjoys the right to own
property and not to arbitrarily deprived of his or her property.
The principle that confiscation does not pass good title to confiscated
property would also be embodied in the treaty. Contracting parties
would agree not to provide financing and other support for the development
of property that had been placed on the claims registry.
Having established the principles for the protection of property
rights, the U.S. and EU will have provided a framework for working
out existing claims, particularly those involving Cuba. Title III
could be replaced with the dispute settlement regime established
under the agreement. The breadth and vagueness of the term "traffics"
used in Helms-Burton could be replaced by a more precise concept
of ownership. In deciding the existing claims, an arbitration panel
would be instructed to take into account the innocence of any acquisition
of confiscated property. Claims established before the U.S. Foreign
Claims Settlement Commission would be presumed to provide a subsequent
investor in the property with notice of the outstanding claim.
The first meeting between the U.S. and EU to negotiate the "disciplines
and principles for the strengthening of investment protection"
took place in Washington in June. A human rights treaty dealing
with property rights should be adopted as the vehicle for the "disciplines
*Edwin D. Williamson, a former legal adviser of the US. Department
of State, is a partner in the Washington, D.C. office of Sullivan