EU Blocking Statute Does Not Shield Spanish Company From Defending Helms-Burton Act Lawsuit
In an issue of first impression in the United States courts of appeals, the Eleventh Circuit ruled that an EU company is not automatically shielded from defending against a Helms-Burton Act lawsuit due to the EU's Blocking Statute.
In January 2020, Maria Marti sued Iberostar, a Spanish hotel company, under Title III of the Helms-Burton Act ("HBA"), 22 U.S.C. § 6021 et seq, in the Southern District of Florida. Marti v. Iberostar Hoteles y Apartamentos S.L., No. 21-11906, 2022 WL 17090059 (11th Cir. Nov. 21, 2022). Marti alleged that Iberostar contracted with the Cuban government to operate a hotel that her father previously owned prior to its confiscation by the Castro government.
The European Union's Blocking Statute (Council Regulation (EC) 2271/96) prohibits EU companies from participating in an HBA lawsuit, but includes an exception that allows companies to petition the European Commission ("EC") for authorization to participate in order to avoid a default judgment. Iberostar petitioned for authorization in April 2020. Iberostar then moved for a stay in the Southern District of Florida, which granted the stay pending the EC's decision. Marti sought to lift the stay twice but the district court denied both attempts citing international comity concerns, a potential 600,000 euro fine that Iberostar could face, and judicial economy. Marti appealed to the Eleventh Circuit.
The Eleventh Circuit sided with Marti, vacating the stay in late November 2022. The court determined that the stay should be vacated because it was "immoderate," exceeding the district court's "general discretionary power" to stay proceedings "in the interests of justice." The stay was immoderate because it was "indefinite," given that over two years had passed and the absence of any indication as to when the EC would issue its decision. Furthermore, the Eleventh Circuit disagreed with the district court's reasoning about "international comity," "fairness to litigants," and "judicial efficiency." The EC proceeding is administrative in nature and a decision has no substantive impact on the U.S. litigation.
This decision is the first binding precedent attempting to resolve the tension between the EU Blocking Statute and HBA. Ultimately, the Eleventh Circuit found that the Blocking Statute cannot indefinitely stop a U.S. national's HBA lawsuit against an EU company.
Jones Day publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our “Contact Us” form, which can be found on our website at www.jonesday.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.